Registration No. 33-51623
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to Form S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES
OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust:
The First Trust Special Situations Trust, Series 89
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agents for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
E. Title and Amount of Securities Being Registered:
An indefinite number of Units pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as
amended
F. Proposed Maximum Aggregate Offering Price to the Public of
the Securities Being Registered: Indefinite
G. Amount of Filing Fee (as required by Rule 24f-2): $500.00*
H. Approximate date of proposed sale to public:
As soon as practicable after the effective date of the
Registration Statement.
|XXX|Check box if it is proposed that this filing will become
effective on January 12, 1994 at 2:00 p.m. pursuant to Rule
487.
________________________________
*Previously paid
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 89
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
Form N-8B-2 Item Number Form S-6 Heading in Prospectus
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust Prospectus front cover
(b) Title of securities issued Summary of Essential
Information
2. Name and address of each depositor Information as to
Sponsor, Trustee and
Evaluator
3. Name and address of trustee Information as to
Sponsor, Trustee and
Evaluator
4. Name and address of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
5. State of organization of trust The First Trust
Special Situations
Trust
6. Execution and termination of Other Information
trust agreement
7. Changes of name *
8. Fiscal year *
9. Litigation *
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer Public Offering
securities
(b) Cumulative or distributive The First Trust
securities Special Situations
Trust
(c) Redemption Rights of Unitholders
(d) Conversion, transfer, etc. Rights of Unitholders
(e) Periodic payment plan *
(f) Voting rights Rights of Unitholders
(g) Notice of certificateholders Other Information
(h) Consents required Rights of Unitholders;
Other Information
(i) Other provisions The First Trust
Special Situations
Trust
11. Types of securities comprising The First Trust
units Special
Situations Trust
Schedule of
Investments
12. Certain information regarding
periodic payment certificates *
13. (a) Load, fees, expenses, etc. Summary of Essential
Information; Public
Offering; The First
Trust Special
Situations Trust
(b) Certain information regarding
periodic payment certificates *
(c) Certain percentages Summary of Essential
Information; The
First Trust Special
Situations Trust;
Public Offering
(d) Certain other fees, etc.
payable by holders Rights of Units
Holders
(e) Certain profits receivable
by depositor, principal,
underwriters, trustee or The First Trust
affiliated persons Special
Situations Trust
(f) Ratio of annual charges *
to income
14. Issuance of trust's securities Rights of Unit Holders
15. Receipt and handling of payments
from purchasers *
16. Acquisition and disposition of
underlying securities The First Trust
Special Situations
Trust; Rights of Unit
Holders;
17. Withdrawal or redemption The First Trust
Special Situations
Trust; Public
Offering; Rights of
Unit Holders
18. (a) Receipt, custody and Rights of Unit Holders
disposition of income
(b) Reinvestment of distributions Rights of Unit Holders
(c) Reserves or special funds Information as to
Sponsor, Trustee and
Evaluator
(d) Schedule of distributions *
19. Records, accounts and reports Rights of Unit Holders
20. Certain miscellaneous provisions
of trust agreement
(a) Amendment Other Information
(b) Termination Other Information
(c) and (d) Trustee, removal Information as
and successor to Sponsor, Trustee
and Evaluator
(e) and (f) Depositor, removal Information as
and successor to Sponsor, Trustee
and Evaluator
21. Loans to security holders *
22. Limitations on liability The First Trust
Special Situations
Trust;
Information as to
Sponsor, Trustee
and Evaluator
23. Bonding arrangements Contents of
Registration
Statement
24. Other material provisions *
of trust agreement
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor Information as to
Sponsor, Trustee and
Evaluator
26. Fees received by depositor *
27. Business of depositor Information as to
Sponsor, Trustee and
Evaluator
28. Certain information as to
officials and affiliated *
persons of depositor
29. Voting securities of depositor *
30. Persons controlling depositor *
31. Payment by depositor for certain
services rendered to trust *
32. Payment by depositor for certain
other services rendered to trust *
33. Remuneration of employees of
depositor for certain services
rendered to trust *
34. Remuneration of other persons
for certain services rendered *
to trust
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's Public Offering
securities by states
36. Suspension of sales of trust's
securities *
37. Revocation of authority to *
distribute
38. (a) Method of distribution Public Offering
(b) Underwriting agreements Public Offering
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as
underwriters to Sponsor, Trustee
and Evaluator
(b) N.A.S.D. membership of
principal underwriters Information as to
Sponsor, Trustee and
Evaluator
40. Certain fees received by See Items 13(a) and
principal underwriters 13(e)
41. (a) Business of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) Branch offices of
principal underwriters *
(c) Salesmen of principal *
underwriters
42. Ownership of trust's securities
by certain persons *
43. Certain brokerage commissions
received by principal *
underwriters
44. (a) Method of valuation Summary of Essential
Information; The
First Trust Special
Situations Trust,
Public Offering
(b) Schedule as to offering *
price
(c) Variation in offering Public Offering
price to certain persons
45. Suspension of redemption rights *
46. (a) Redemption valuation Rights of Unit Holders
(b) Schedule as to redemption *
price
47. Maintenance of position in Public Offering;
underlying securities Rights
of Unit Holders
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of Information as
trustee to Sponsor, Trustee
and Evaluator
49. Fees and expenses of trustee The First Trust
Special Situations
Trust
50. Trustee's lien The First Trust
Special Situations
Trust
VI. INFORMATION CONCERNING THE INSURANCE OF HOLDERS OF
SECURITIES
51. Insurance of holders of
trust's ecurities *
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust The First Trust
agreement with respect to Special
selection or elimination of Situations Trust;
underlying securities Rights of Unit Holders
(b) Transactions involving
elimination of underlying *
securities
(c) Policy regarding substitution The First Trust
or elimination of underlying Special
securities Situations Trust;
Rights of Unit Holders
(d) Fundamental policy not
otherwise covered *
53. Tax status of Trust The First Trust
Special Situations
Trust
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during *
last ten years
55.
56.
57. Certain information regarding
period payment certificates *
58.
59. Financial statements Report of Independent
(Instruction 1(c) to Statement of Net
Assets
Form S-6 Auditors
* Inapplicable, answer negative or not required.
Target Equity Trust
Value Ten Series 3
The Trust. The First Trust Special Situations Trust, Series 89
(the "Trust") is a unit investment trust consisting of a portfolio
containing common stocks issued by companies which provide income
and are considered to have the potential for capital appreciation
(the "Equity Securities"). The Trust consists of common stocks
of the ten companies in the Dow Jones Industrial Average (Dow
Jones Industrial Average is not affiliated with the Sponsor and
is the property of Dow Jones & Company, Inc.) having the highest
dividend yield as of the opening of business on the date of this
Prospectus. Dow Jones & Company, Inc. has not granted to the Trust
or the Sponsor a license to use the Dow Jones Industrial Average.
Dow Jones & Company, Inc. has not participated in any way in the
creation of the Trust or in the selection of stocks included in
the Trust and has not approved any information herein relating
thereto.
The objective of the Trust is to provide an above-average total
return through a combination of dividend income and capital appreciation
by investing the Trust's portfolio in selected common stocks of
companies which meet the criteria stated above. See "Schedule
of Investments." Units are not designed so that their prices will
parallel or correlate with movements in the Dow Jones Industrial
Average, and it is expected that their prices will not parallel
or correlate with such movements. The Trust has a Mandatory Termination
Date of approximately one year from the date of this Prospectus
as set forth under "Summary of Essential Information." There is,
of course, no guarantee that the objective of the Trust will be
achieved.
Each Unit of the Trust represents an undivided fractional interest
in all the Equity Securities deposited in the Trust. The Equity
Securities deposited in the Trust's portfolio have no fixed maturity
date and the value of these underlying Equity Securities will
fluctuate with changes in the values of stocks in general. See
"Portfolio."
The Sponsor may, from time to time after the Initial Date of Deposit,
deposit additional Equity Securities in the Trust. Such deposits
of additional Equity Securities will, therefore, be done in such
a manner that the original proportionate relationship amongst
the individual issues of the Equity Securities shall be maintained.
Any deposit by the Sponsor of additional Equity Securities will
duplicate, as nearly as is practicable, the original proportionate
relationship established on the Initial Date of Deposit, and not
the actual proportionate relationship on the subsequent date of
deposit, since the actual proportionate relationship may be different
than the original proportionate relationship. Any such difference
may be due to the sale, redemption or liquidation of any Equity
Securities deposited in the Trust on the Initial, or any subsequent,
Date of Deposit. See "What is the First Trust Special Situations
Trust?" and "How May Equity Securities be Removed from the Trust?"
Public Offering Price. The Public Offering Price per Unit of the
Trust during the initial offering period is equal to the aggregate
underlying value of the Equity Securities in the Trust (generally
determined by the closing sale prices of the Equity Securities)
plus or minus a pro rata share of cash, if any, in the Capital
and Income Accounts of the Trust, plus a maximum sales charge
of 3.6% (equivalent to 3.734% of the net amount invested). The
secondary market Public Offering Price per Unit will be based
upon the aggregate underlying value of the Equity Securities in
the Trust (generally determined by the closing sale prices of
the Equity Securities) plus or minus a pro rata share of cash,
if any, in the Capital and Income Accounts of the Trust plus a
maximum sales charge of 3.1% (equivalent to 3.199% of the net
amount invested) prior to the
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.
First Trust
The date of this Prospectus is January 12, 1994
Page 1
first Income Distribution Record Date, and 1.95% (equivalent to
1.989% of the net amount invested) on or after the first Income
Distribution Record Date. A pro rata share of accumulated dividends,
if any, in the Income Account is included in the Public Offering
Price. The minimum purchase is $1,000. The sales charge is reduced
on a graduated scale for sales involving at least 10,000 Units.
See "How is the Public Offering Price Determined?"
Estimated Net Annual Distributions. The estimated net annual dividend
distributions to Unit holders (based on the most recent quarterly
dividend declared with respect to the Equity Securities in the
Trust) at the opening of business on the Initial Date of Deposit
for the Target Equity Trust, Value Ten Series 3 was $37.61 per
100 Units. The estimated net annual dividend distributions per
Unit will vary with changes in fees and expenses of the Trust,
with changes in dividends received and with the sale or liquidation
of Equity Securities; therefore, there is no assurance that the
annual dividend distributions will be realized in the future.
Dividend and Capital Gains Distributions. Distributions of dividends
received by the Trust will be paid semi-annually in cash on the
Distribution Date to Unit holders of record on the Record Date
as set forth in the "Summary of Essential Information." The first
such distribution will be made on June 30, 1994 to Unit holders
of record on June 15, 1994. The second distribution will be made
as part of the final liquidation distribution. Distributions of
funds in the Capital Account, if any, will be made as part of
the final liquidation distribution, and in certain circumstances,
earlier. Any distribution of income and/or capital gains will
be net of the expenses of the Trust. See "What is the Federal
Tax Status of Unit Holders?" Additionally, upon termination of
the Trust, the Trustee will distribute, upon surrender of Units
for redemption, to each remaining Unit holder his pro rata share
of the Trust's assets, less expenses, in the manner set forth
under "Rights of Unit Holders-How are Income and Capital Distributed?"
Unit holders who elect to become Rollover Unit holders will not
receive the final liquidation distribution, but will receive units
in the new Target Equity Trust, Value Ten Series (the "1995 Trust")
created in conjunction with the termination of this series of
the Target Equity Trust, Value Ten Series, if one is being offered.
See "Special Redemption, Liquidation and Investment in New Trust."
Any Unit holder may elect to have each distribution of income
or capital on his Unit, other than the final liquidating distribution
in connection with the termination of the Trust, automatically
reinvested in additional Units of the Trust subject to a sales
charge of 1.95% (equivalent to 1.989% of the net amount invested).
See "Rights of Unit Holders-How are the Income and Capital Distributed?"
Secondary Market for Units. While under no obligation to do so,
the Sponsor may maintain a market for Units of the Trust and offer
to repurchase such Units at prices which are based on the aggregate
underlying value of Equity Securities in the Trust (generally
determined by the closing sale prices of the Equity Securities)
plus or minus cash, if any, in the Capital and Income Accounts
of the Trust. If a secondary market is not maintained, a Unit
holder may redeem Units through redemption at prices based upon
the aggregate underlying value of the Equity Securities in the
Trust (generally determined by the closing sale prices of the
Equity Securities) plus or minus a pro rata share of cash, if
any, in the Capital and Income Accounts of the Trust. A Unit holder
tendering 2,500 Units or more for redemption may request a distribution
of shares of Equity Securities (reduced by customary transfer
and registration charges) in lieu of payment in cash. See "How
May Units be Redeemed?"
Special Redemption, Liquidation and Investment in New Trust. Unit
holders who hold their Units in book entry form will have the
option, subject to any necessary regulatory approval, of specifying
by January 10, 1995 (the "Rollover Notification Date") to have
all of their Units redeemed in-kind on the Rollover Notification
Date and the distributed Equity Securities sold by the Trustee,
in its capacity as Distribution Agent, during the Special Redemption
and Liquidation Period. (Unit holders so electing are referred
to herein as "Rollover Unit holders".) The Distribution Agent
will appoint the Sponsor as its agent to determine the manner,
timing and execution of sales of underlying Equity Securities.
The proceeds of the redemption will then be invested in Units
of the 1995 Trust, if one is offered, at a reduced sales charge.
The Sponsor may, however, stop creating new Units of the 1995
Trust at any time in its sole discretion without regard to whether
all the proceeds to be invested have been invested. Cash which
has not been invested on behalf of the Rollover Unit holders in
the 1995 Trust will be distributed at the end of the Special Redemption
and Liquidation Period. However, the Sponsor anticipates that
sufficient Units can be created, although moneys in this Trust
may not be fully invested on the next business day. Rollover Unit
holders may purchase Units of the 1995
Page 2
Trust at a reduced sales charge. The portfolio of the 1995 Trust
will contain the ten common stocks in the Dow Jones Industrial
Average having the highest dividend yield as of the day prior
to the Initial Date of Deposit of the 1995 Trust. Rollover Unit
holders will receive the amount of dividends in the Income Account
of the Trust which will be included in the reinvestment in Units
of the 1995 Trust.
Termination. The Trust will terminate approximately one year after
the Initial Date of Deposit regardless of market conditions at
that time. Commencing on the Mandatory Termination Date, Equity
Securities will begin to be sold in connection with the termination
of the Trust. The Sponsor will determine the manner, timing and
execution of the sale of the Equity Securities. Written notice
of any termination of the Trust specifying the time or times at
which Unit holders may surrender their certificates for cancellation
shall be given by the Trustee to each Unit holder at his address
appearing on the registration books of the Trust maintained by
the Trustee. At least 30 days prior to the Mandatory Termination
Date of the Trust, the Trustee will provide written notice thereof
to all Unit holders and will include with such notice a form to
enable Unit holders to elect a distribution of shares of Equity
Securities (reduced by customary transfer and registration charges)
if such Unit holder owns at least 2,500 Units of the Trust, rather
than to receive payment in cash for such Unit holder's pro rata
share of the amounts realized upon the disposition by the Trustee
of Equity Securities. To be effective, the election form, together
with surrendered certificates and other documentation required
by the Trustee, must be returned to the Trustee at least five
business days prior to the Mandatory Termination Date of the Trust.
Unit holders not electing the "Rollover Option" or a distribution
of shares of the Equity Securities will receive a cash distribution
within a reasonable time after the Trust is terminated. See "Rights
of Unit Holders-How are Income and Capital Distributed?"
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-January 12, 1994
Sponsor: Nike Securities L.P.
Trustee: United States Trust Company of New York
Evaluator: Securities Evaluation Service, Inc.
<TABLE>
<CAPTION>
General Information
<S> <C>
Initial Number of Units 50,000
Fractional Undivided Interest in the Trust per Unit 1/50,000
Public Offering Price:
Aggregate Offering Price Evaluation of Equity
Securities in Portfolio (1) $ 481,511
Aggregate Offering Price Evaluation of Equity
Securities per 100 Units $ 963.02
Sales Charge of 3.6% of the Public Offering Price per 100 Units
(3.734% of the net amount invested) $ 35.96
Public Offering Price per 100 Units (2) $ 998.98
Sponsor's Initial Repurchase Price per 100 Units $ 963.02
Redemption Price per 100 Units (based on aggregate underlying
value of Equity Securities) (3) $ 963.02
</TABLE>
First Settlement Date January 20, 1994
Rollover Notification Date January 10, 1995
Special Redemption and Liquidation
Period Beginning on January 13, 1995
until no later than January 31, 1995
Mandatory Termination Date February 1, 1995
Discretionary Liquidation Amount A Trust may be terminated if
the value of the Equity Securities is
less than the lower of $2,000,000 or
20% of the total value of Equity
Securities deposited in a Trust during
the primary offering period.
Trustee's Annual Fee $.90 per 100 Units outstanding.
Evaluator's Annual Fee $.30 per 100 Units outstanding. Evalua-
tions for purposes of sale, purchase or
redemption of Units are made as of the
close of trading (4:00 p.m. Eastern
time) on the New York Stock Exchange
on each day on which it is open.
Supervisory Fee Maximum of $.25 per 100 Units outstand-
ing annually payable to an affiliate of
the Sponsor.
CUSIP Number 33734W 392
Income Distribution Record Date (4) June 15, 1994
Income Distribution Date (4) June 30, 1994
[FN]
(1) Each Equity Security listed on a national securities exchange
is valued at the last closing sale price on the New York Stock
Exchange, or if no such price exists at the closing ask price
thereof.
(2) On the Initial Date of Deposit there will be no accumulated
dividends in the Income Account. Anyone ordering Units after such
date will pay a pro rata share of any accumulated dividends in
such Income Account. The Public Offering Price as shown reflects
the value of the Equity Securities at the opening of business
on the Initial Date of Deposit and establishes the original proportionate
relationship amongst the individual securities. No sales to investors
will be executed at this price. Additional Equity Securities will
be deposited during the day of the Initial Date of Deposit which
will be valued as of 4:00 p.m. Eastern time and sold to investors
at a Public Offering Price per Unit based on this valuation.
(3) See "How May Units be Redeemed?"
(4) At the Rollover Notification Date for Rollover Unit holders
or upon termination of Trust for other Unit holders, amounts in
the Income Account (which consist of dividends on the Equity Securities)
will be included in amounts distributed to or on behalf of Unit
holders.
Page 4
Target Equity Trust, Value Ten Series 3
The First Trust Special Situations Trust, Series 89
What is The First Trust Special Situations Trust?
The First Trust Special Situations Trust, Series 89 is one of
a series of investment companies created by the Sponsor under
the name of The First Trust Special Situations Trust, all of which
are generally similar but each of which is separate and is designated
by a different series number (the "Trust"). This Series consists
of an underlying separate unit investment trust designated as:
Target Equity Trust, Value Ten Series 3. The Trust was created
under the laws of the State of New York pursuant to a Trust Agreement
(the "Indenture"), dated the Initial Date of Deposit, with Nike
Securities L.P., as Sponsor, United States Trust Company of New
York, as Trustee, Securities Evaluation Service, Inc., as Evaluator,
and First Trust Advisors L.P., as Portfolio Supervisor.
On the Initial Date of Deposit, the Sponsor deposited with the
Trustee confirmations of contracts for the purchase of common
stocks issued by companies which provide income and are considered
to have the potential for capital appreciation (the "Equity Securities"),
together with an irrevocable letter or letters of credit of a
financial institution in an amount at least equal to the purchase
price of such Equity Securities. In exchange for the deposit of
securities or contracts to purchase securities in the Trust, the
Trustee delivered to the Sponsor documents evidencing the entire
ownership of the Trust.
The objective of the Trust is to provide an above-average total
return through a combination of dividend income and capital appreciation
by investing in Equity Securities of 10 companies which are in
the Dow Jones Industrial Average (Dow Jones Industrial Average
is not affiliated with the Sponsor and is the property of Dow
Jones & Company Inc.) having the highest dividend yield as of
the opening of business on the date of this Prospectus. There
is, of course, no guarantee that the objective of the Trust will
be achieved.
With the deposit of the Equity Securities on the Initial Date
of Deposit, the Sponsor established a percentage relationship
between the amounts of Equity Securities in the Trust's portfolio.
See "What are the Equity Securities Selected for Target Equity
Trust, Value Ten Series 3?" From time to time following the Initial
Date of Deposit, the Sponsor, pursuant to the Indenture, may deposit
additional Equity Securities in the Trust and Units may be continuously
offered for sale to the public by means of this Prospectus, resulting
in a potential increase in the outstanding number of Units of
the Trust. Any additional Equity Securities deposited in the Trust
will maintain, as nearly as is practicable, the original proportionate
relationship of the Equity Securities in the Trust's portfolio.
Any deposit by the Sponsor of additional Equity Securities will
duplicate, as nearly as is practicable, the original proportionate
relationship and not the actual proportionate relationship on
the subsequent date of deposit, since the actual proportionate
relationship may be different than the original proportionate
relationship. Any such difference may be due to the sale, redemption
or liquidation of any of the Equity Securities deposited in the
Trust on the Initial, or any subsequent, Date of Deposit. See
"How May Equity Securities be Removed from the Trust?" The original
percentage relationship of each Equity Security to the Trust is
set forth herein under "Schedule of Investments." Since the prices
of the underlying Equity Securities will fluctuate daily, the
ratio, on a market value basis, will also change daily. The portion
of Equity Securities represented by each Unit will not change
as a result of the deposit of additional Equity Securities in
the Trust.
On the Initial Date of Deposit, each Unit of the Trust represented
the undivided fractional interest in the Equity Securities deposited
in the Trust set forth under "Summary of Essential Information."
To the extent that Units of the Trust are redeemed, the aggregate
value of the Equity Securities in the Trust will be reduced and
the undivided fractional interest represented by each outstanding
Unit of the Trust will increase. However, if additional Units
are issued by the Trust in connection with the deposit of additional
Equity Securities by the Sponsor, the aggregate value of the Equity
Securities in the Trust will be increased by amounts allocable
to additional Units, and the fractional undivided interest represented
by each Unit of the Trust will be decreased proportionately. See
"How May Units be Redeemed?" The Trust has a Mandatory Termination
Date as set forth herein under "Summary of Essential Information."
Page 5
What are the Expenses and Charges?
At no cost to the Trust, the Sponsor has borne all the expenses
of creating and establishing the Trust, including the cost of
the initial preparation, printing and execution of the Indenture
and the certificates for the Units, legal and accounting expenses,
expenses of the Trustee and other out-of-pocket expenses. The
Sponsor will not receive any fees in connection with its activities
relating to the Trust. 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 under "Summary of
Essential Information," for providing portfolio supervisory services
for the Trust. Such fee is based on the number of Units outstanding
in the Trust on January 1 of each year except for the year or
years in which an initial offering period occurs in which case
the fee for a month is based on the number of Units outstanding
at the end of such month. The fee may exceed the actual costs
of providing such supervisory services for this 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.
Subsequent to the initial offering period, the Evaluator will
receive a fee as indicated in the "Summary of Essential Information."
The Trustee pays certain expenses of the Trust for which it is
reimbursed by the Trust. The Trustee will receive for its ordinary
recurring services to the Trust an annual fee computed at $.90
per annum per 100 Units in the Trust outstanding based upon the
largest aggregate number of Units of the Trust outstanding at
any time during the calendar year. For a discussion of the services
performed by the Trustee pursuant to its obligations under the
Indenture, reference is made to the material set forth under "Rights
of Unit Holders."
The Trustee's and Evaluator's fees are payable from the Income
Account of the Trust to the extent funds are available and then
from the Capital Account of the Trust. Since the Trustee has the
use of the funds being held in the Capital and Income Accounts
for payment of expenses and redemptions and since such Accounts
are noninterest-bearing to Unit holders, the Trustee benefits
thereby. Part of the Trustee's compensation for its services to
the 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 are or may be incurred by the
Trust: all legal expenses of the Trustee incurred by or in connection
with its responsibilities under the Indenture; the expenses and
costs of any action undertaken by the Trustee to protect the 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 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 the Trust (no such taxes or charges
are being levied or made or, to the knowledge of the Sponsor,
contemplated). The above expenses and the Trustee's annual fee,
when paid or owing to the Trustee, are secured by a lien on the
Trust. In addition, the Trustee is empowered to sell Equity Securities
in the Trust in order to make funds available to pay all these
amounts if funds are not otherwise available in the Income and
Capital Accounts of the Trust. Since the Equity Securities are
all common stocks and the income stream produced by dividend payments
is unpredictable, the Sponsor cannot provide any assurance that
dividends will be sufficient to meet any or all expenses of the
Trust. As described above, if dividends are insufficient to cover
expenses, it is likely that Equity Securities will have to be
sold to meet Trust expenses. These sales may result in capital
gains or losses to Unit holders. See "What is the Federal Tax
Status of Unit Holders?"
What is the Federal Tax Status of Unit Holders?
The following is a general discussion of certain of the Federal
income tax consequences of the purchase, ownership and disposition
of the Units. The summary is limited to investors who hold the
Units as "capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Internal Revenue
Page 6
Code of 1986 (the "Code"). Unit holders should consult their tax
advisers in determining the Federal, state, local and any other
tax consequences of the purchase, ownership and disposition of
Units in the Trust.
In the opinion of Chapman and Cutler, special counsel for the
Sponsor, under existing law:
1. The Trust is not an association taxable as a corporation for
Federal income tax purposes; each Unit holder will be treated
as the owner of a pro rata portion of the assets of the Trust
under the Code; and the income of the Trust will be treated as
income of the Unit holders thereof under the Code. Each Unit holder
will be considered to have received his pro rata share of the
income derived from each Equity Security when such income is received
by the Trust.
2. Each Unit holder will have a taxable event when the Trust
disposes of an Equity Security (whether by sale, exchange, redemption,
or otherwise) or upon the sale or redemption of Units by such
Unit holder. The price a Unit holder pays for his Units, including
sales charges, is allocated among his pro rata portion of each
Equity Security held by the Trust (in proportion to the fair market
values thereof on the date the Unit holder purchases his Units)
in order to determine his initial cost for his pro rata portion
of each Equity Security held by the Trust. For Federal income
tax purposes, a Unit holder's pro rata portion of dividends as
defined by Section 316 of the Code paid with respect to an Equity
Security held by the Trust is taxable as ordinary income to the
extent of such corporation's current and accumulated "earnings
and profits." A Unit holder's pro rata portion of dividends paid
on such Equity Security which exceeds such current and accumulated
earnings and profits will first reduce a Unit holder's tax basis
in such Equity Security, and to the extent that such dividends
exceed a Unit holder's tax basis in such Equity Security shall
generally be treated as capital gain. In general, any such capital
gain will be short-term unless a Unit holder has held his Units
for more than one year.
3. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Equity Securities held
by the Trust will generally be considered a capital gain except
in the case of a dealer or a financial institution and will be
long-term if the Unit holder has held his Units for more than
one year. A Unit holder's portion of loss, if any, upon the sale
or redemption of Units or the disposition of Equity Securities
held by the Trust will generally be considered a capital loss
except in the case of a dealer or a financial institution and,
in general, will be long-term if the Unit holder has held his
Units for more than one year. However, a Rollover Unit holder's
loss, if any, incurred in connection with the exchange of Units
for Units in the next new series of the Target Equity Trust, Value
Ten Series (the "1995 Trust"), created in conjunction with the
termination of this series of the Target Equity Trust, will generally
be disallowed with respect to the disposition of any Equity Securities
pursuant to such exchange to the extent that such Unit holder
is considered the owner of substantially identical securities
under the wash sale provisions of the Code taking into account
such Unit holder's deemed ownership of the securities underlying
the Units in the 1995 Trust in the manner described above, if
such substantially identical securities were acquired within a
period beginning 30 days before and ending 30 days after such
disposition. However, any gains incurred in connection with such
an exchange by a Rollover Unit holder would be recognized. Unit
holders should consult their tax advisers regarding the recognition
of gains and losses for Federal income tax purposes.
4. 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
Trust, including fees of the Trustee and the Evaluator.
Dividends Received Deduction. A corporation that owns Units will
generally be entitled to a 70% dividends received deduction with
respect to such Unit holder's pro rata portion of dividends received
by the Trust (to the extent such dividends are taxable as ordinary
income, as discussed above) in the same manner as if such corporation
directly owned the Equity Securities paying such dividends. However,
a corporation owning Units should be aware that Sections 246 and
246A of the Code impose additional limitations on the eligibility
of dividends for the 70% dividends received deduction. These limitations
include a requirement that stock (and therefore Units) must generally
be held at least 46 days (as determined under Section 246(c) of
Page 7
the Code). Proposed regulations have been issued which address
special rules that must be considered in determining whether the
46 day holding requirement is met. Moreover, the allowable percentage
of the deduction will be reduced from 70% if a corporate Unit
holder owns certain stock (or Units) the financing of which is
directly attributable to indebtedness incurred by such corporation.
It should be noted that various legislative proposals that would
affect the dividends received deduction have been introduced.
Unit holders should consult with their tax advisers with respect
to the limitations on and possible modifications to the dividends
received deduction.
Recognition of Taxable Gain or Loss Upon Disposition of Securities
by the Trust or Disposition of Units. As discussed above, a Unit
holder may recognize taxable gain (or loss) when an Equity Security
is disposed of by the Trust or if the Unit holder disposes of
a Unit (although losses incurred by Rollover Unit holders may
be subject to disallowance, as discussed above). For taxpayers
other than corporations, net capital gains are subject to a maximum
stated marginal tax rate of 28%. However, it should be noted that
legislative proposals are introduced from time to time that affect
tax rates and could affect relative differences at which ordinary
income and capital gains are taxed.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raises
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.
Special Tax Consequences of In-Kind Distributions Upon Redemption
of Units, Termination of the Trust and Investment in New Trust.
As discussed in "Rights of Unit Holders-How are Income and Capital
Distributed?", under certain circumstances a Unit holder who owns
at least 2,500 Units may request an In-Kind Distribution upon
the redemption of Units or the termination of the Trust. The Unit
holder requesting an In-Kind Distribution will be liable for expenses
related thereto (the "Distribution Expenses") and the amount of
such In-Kind Distribution will be reduced by the amount of the
Distribution Expenses. See "Rights of Unit Holders-How are Income
and Capital Distributed?" As previously discussed, prior to the
redemption of Units or the termination of the Trust, a Unit holder
is considered as owning a pro rata portion of each of the Trust
assets for Federal income tax purposes. The receipt of an In-Kind
Distribution upon the redemption of Units or the termination of
the Trust would be deemed an exchange of such Unit holder's pro
rata portion of each of the shares of stock and other assets held
by the Trust in exchange for an undivided interest in whole shares
of stock plus, possibly, cash.
There are generally three different potential tax consequences
which may occur under an In-Kind Distribution with respect to
each Equity Security owned by the Trust. An "Equity Security"
for this purpose is a particular class of stock issued by a particular
corporation. If the Unit holder receives only whole shares of
an Equity Security in exchange for his or her pro rata portion
in each share of such security held by the Trust, there is no
taxable gain or loss recognized upon such deemed exchange pursuant
to Section 1036 of the Code. If the Unit holder receives whole
shares of a particular Equity Security plus cash in lieu of a
fractional share of such Equity Security, and if the fair market
value of the Unit holder's pro rata portion of the shares of such
Equity Security exceeds his tax basis in his pro rata portion
of such Equity Security, taxable gain would be recognized in an
amount not to exceed the amount of such cash received, pursuant
to Section 1031(b) of the Code. No taxable loss would be recognized
upon such an exchange pursuant to Section 1031(c) of the Code,
whether or not cash is received in lieu of a fractional share.
Under either of these circumstances, special rules will be applied
under Section 1031(d) of the Code to determine the Unit holder's
tax basis in the shares of such particular Equity Security which
he receives as part of the In-Kind Distribution. Finally, if a
Unit holder's pro rata interest in an Equity Security does not
equal a whole share, he may receive entirely cash in exchange
for his pro rata portion of a particular Equity Security. In such
case, taxable gain or loss is measured by comparing the amount
of cash received by the Unit holder with his tax basis in such
Equity Security.
Because the Trust will own many Equity Securities, a Unit holder
who requests an In-Kind Distribution will have to analyze the
tax consequences with respect to each Equity Security owned by
the Trust. In analyzing
Page 8
the tax consequences with respect to each Equity Security, such
Unit holder must allocate the Distribution Expenses among the
Equity Securities (the "Allocable Expenses"). The Allocable Expenses
will reduce the amount realized with respect to each Equity Security
so that the fair market value of the shares of such Equity Security
received (if any) and cash received in lieu thereof (as a result
of any fractional shares) by such Unit holder should equal the
amount realized for purposes of determining the applicable tax
consequences in connection with an In-Kind Distribution. A Unit
holder's tax basis in shares of such Equity Security received
will be increased by the Allocable Expenses relating to such Equity
Security. The amount of taxable gain (or loss) recognized upon
such exchange will generally equal the sum of the gain (or loss)
recognized under the rules described above by such Unit holder
with respect to each Equity Security owned by the Trust. Unit
holders who request an In-Kind Distribution are advised to consult
their tax advisers in this regard.
As discussed in "Rights of Unit Holders-Special Redemption, Liquidation
and Investment in New Trust," a Unit holder may elect to become
a Rollover Unit holder. To the extent a Rollover Unit holder exchanges
his Units for units of the 1995 Trust in a taxable transaction,
such Unit holder will recognize gains, if any, but generally will
not be entitled to a deduction for any losses recognized upon
the disposition of any Equity Securities pursuant to such exchange
to the extent that such Unit holder is considered the owner of
substantially identical securities under the wash sale provisions
of the Code taking into account such Unit holder's deemed ownership
of the securities underlying the Units in the 1995 Trust in the
manner described above, if such substantially identical securities
were acquired within a period beginning 30 days before and ending
30 days after such disposition under the wash sale provisions
contained in Section 1091 of the Code. In the event a loss is
disallowed under the wash sale provisions, special rules contained
in Section 1091(d) of the Code apply to determine the Unit holder's
tax basis in the securities acquired. Rollover Unit holders are
advised to consult their tax advisers.
General. Each Unit holder will be requested to provide the Unit
holder's taxpayer identification number to the Trustee and to
certify that the Unit holder has not been notified that payments
to the Unit holder are subject to back-up withholding. If the
proper taxpayer identification number and appropriate certification
are not provided when requested, distributions by the Trust to
such Unit holder (including amounts received upon the redemption
of Units) will be subject to back-up withholding. Distributions
by the Trust will generally be subject to United States income
taxation and withholding in the case of Units held by non-resident
alien individuals, foreign corporations or other non-United States
persons. Such persons should consult their tax advisers.
Unit holders will be notified annually of the amounts of income
dividends includable in the Unit holder's gross income and amounts
of Trust expenses which may be claimed as itemized deductions.
Dividend income and long-term capital gains may also be subject
to state and local taxes. Investors should consult their tax advisers
for specific information on the tax consequences of particular
types of distributions.
Unit holders desiring to purchase Units for tax-deferred plans
and IRAs should consult their broker for details on establishing
such accounts. Units may also be purchased by persons who already
have self-directed plans established. See "Why are Investments
in the Trust Suitable for Retirement Plans?"
In the opinion of Carter, Ledyard & Milburn, Special Counsel to
the Trust for New York tax matters, under the existing income
tax laws of the State of New York, the Trust is not an association
taxable as a corporation and the income of the Trust will be treated
as the income of the Unit holders thereof.
Why are Investments in the Trust Suitable for Retirement Plans?
Units of the Trust may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other tax-deferred
retirement plans, certain of which are briefly described below.
Generally, the Federal income tax relating to capital gains and
income received in each of the foregoing plans is deferred until
distributions are received. Distributions from such plans are
generally treated as ordinary income but may, in some cases, be
eligible for special 10 year averaging or tax-deferred rollover
treatment. The Code substitutes 5 year averaging for 10 year averaging
for qualifying lump sum plan distributions after December
Page 9
31, 1986 although certain transition rules apply which retain
10 year averaging for qualifying recipients who attained age 50
before January 1, 1986. Moreover, the Code contains provisions
which adversely affect the continued deductibility of annual contributions
to an IRA beginning in 1987. Investors considering participation
in any such plan should review specific tax laws related thereto
and should consult their attorneys or tax advisers with respect
to the establishment and maintenance of any such plan. Such plans
are offered by brokerage firms and other financial institutions.
Fees and charges with respect to such plans may vary.
Individual Retirement Account-IRA. The deductible amount an individual
may contribute will be reduced to the extent an individual has
adjusted gross income over $25,000 ($40,000 if married, filing
jointly or $0 if married, living apart and filing separately),
if either an individual or that individual's spouse (if married,
filing jointly) is an active participant in an employer maintained
retirement plan. If an individual has adjusted gross income over
$35,000 ($50,000 if married, filing jointly or $0 if married,
living apart and filing separately), and if an individual or that
individual's spouse is an active participant in an employer maintained
retirement plan, no IRA deduction is permitted. Under the Code,
an individual may make nondeductible contributions to the extent
deductible contributions are not allowed. The combined deductible
and nondeductible limit for an individual under the Code is the
lesser of $2,000 ($2,250 in the case of a spousal IRA) or 100
percent of compensation. Generally, the Federal income tax relating
to capital gains and income received in an IRA is deferred until
distributions are received. Distributions from an IRA (other than
the return of certain excess contributions) are treated as ordinary
income, except that under the Code an individual need not pay
tax on the return of nondeductible contributions. The Code provides
that if amounts are withdrawn from an IRA which includes both
deductible and nondeductible contributions, the amount excludable
from income for the taxable year is the same proportion to the
total amount withdrawn for the taxable year that the individual's
aggregate nondeductible IRA contributions bear to the aggregate
balance of all IRAs of the individual.
It should be noted that certain transactions which are prohibited
under the Code will cause all or a portion of the amount in an
IRA to be deemed to be distributed and subject to tax at that
time. A participant's entire interest in an IRA must be, or commence
to be, distributed to the participant not later than April 1 of
the calendar year following the year during which the individual
attains age 70 1/2. Excess contributions are subject to an annual
6% excise tax. Distributions made before attainment of age 59
1/2, except in the case of the participant's death or disability,
separation from service after attaining age 55, qualified domestic
relations orders or distributions applied to certain medical expenses
or where the amount distributed is to be rolled over to another
IRA, or if distributions are in a form of substantially equal
periodic payments over the life or life expectancy of the individual,
or over the joint lives of the individual and the individual's
beneficiary, are generally subject to a surtax in an amount equal
to 10% of the taxable portion of the distribution.
Retirement Plans for the Self-Employed-Keogh Plans. Units of the
Trust may be purchased by retirement plans established pursuant
to the Self-Employed Individuals Tax Retirement Act of 1962 ("Keogh
Plans"). Such plans are available for self-employed individuals,
partnerships or unincorporated companies. Under existing law,
qualified individuals may generally make annual tax-deductible
contributions to a defined contribution Keogh Plan of up to the
lesser of 25% of annual compensation (less the Keogh Plan contribution)
or $30,000 for taxable years beginning after December 31, 1983.
A defined benefit Keogh Plan is limited to providing benefits
each year which do not exceed the lesser of $90,000 (as adjusted
for inflation) or 100% of average compensation for the highest
three consecutive calendar years. The assets of the Keogh Plans
must be held in a qualified trust or other arrangement which meets
the requirements of the Code. Generally, a participant's entire
interest in a Keogh Plan must be, or commence to be, distributed
to the participant not later than April 1 of the calendar year
following the year during which the individual attains age 70
1/2. Excess contributions to a Keogh Plan are subject to an annual
10% excise tax. Distributions made before attainment of age 59
1/2, except in the case of the participant's death or disability,
separation from service after attaining age 55, qualified domestic
relations orders or distributions applied to certain medical expenses
or where the amount distributed is to be rolled over to an IRA
or another qualified plan, or if
Page 10
distributions are in a form of substantially equal periodic payments
over the life or life expectancy of the individual, or over the
joint lives of the individual and the individual's beneficiary,
are generally subject to a surtax in an amount equal to 10% of
the distribution.
Corporate Pension and Profit-Sharing Plans. An employer who has
established a pension or profit-sharing plan for employees may
purchase Units of the Trust for such a plan.
Excess Distributions Tax. In addition to the other taxes due by
reason of a plan distribution, a tax of 15% may apply to certain
aggregate distributions from IRAs, Keogh Plans, and qualified
corporate retirement plans to the extent such aggregate taxable
distributions exceed specified amounts (generally $150,000, as
adjusted or $112,500, as adjusted, if the recipient has made a
"grandfather election") during the tax year. This 15% tax will
not apply to distributions on account of death, qualified domestic
relations orders or amounts rolled over to an eligible plan. In
general, for qualifying lump sum distributions the excess distribution
over $750,000, as adjusted, or $562,000, as adjusted, if the recipient
has made a "grandfather election," will be subject to the 15%
tax.
Excess Accumulations Tax. On the participant's death, a 15% tax
will be imposed on aggregate balances remaining in IRAs, Keogh
Plans and qualified corporate retirement plans to the extent those
balances exceed specified levels. If a spouse is the death beneficiary
of all balances and makes a spousal election, the imposition of
the tax may be postponed until the spouse's death unless such
spouse receives excess distributions during the spouse's life.
In such a case, the spouse will be treated as the participant
and will be liable for the 15% tax on excess distributions, as
described above.
PORTFOLIO
What are Equity Securities?
The Trust consists of ten common stocks in the Dow Jones Industrial
Average ("DJIA") (which is unaffiliated with the Sponsor) having
the highest dividend yield as of the opening of business on the
date of this Prospectus. The yield for each Equity Security was
calculated by annualizing the last quarterly or semi-annual ordinary
dividend declared and dividing the result by the market value
of the Equity Security as of the opening of business on the date
of this Prospectus. An investment in the Trust involves the purchase
of a quality portfolio of attractive equities with high dividend
yields in one convenient purchase. Investing in DJIA stocks with
the highest dividend yields may be effective in achieving the
Trust's investment objective because regular dividends are common
for established companies and dividends have accounted for a substantial
portion of the total return on DJIA stocks as a group.
The Dow Jones Industrial Average comprises 30 common stocks chosen
by the editors of The Wall Street Journal as representative of
the broad market and of American industry. The companies are major
factors in their industries and their stocks are widely held by
individuals and institutional investors. Changes in the components
of the DJIA are made entirely by the editors of The Wall Street
Journal without consultation with the companies, the stock exchange
or any official agency. For the sake of continuity, changes are
made rarely. Most substitutions have been the result of mergers,
but from time to time, changes may be made to achieve a better
representation. The components of the Dow Jones Industrial Average
may be changed at any time for any reason. Any changes in the
components of the Dow Jones Industrial Average after the date
of this Prospectus will not cause a change in the identity of
the common stocks included in the Trust Portfolio, including any
additional Equity Securities deposited in the Trust.
Investors should note that the above criteria were applied to
the Equity Securities selected for inclusion in the Trust Portfolio
as of the opening of business on the date of this Prospectus.
Since the Sponsor may deposit additional Equity Securities which
were originally selected through this process, the Sponsor may
continue to sell Units of the Trust even though the yields on
these Equity Securities may have changed subsequent to the Initial
Date of Deposit or the Equity Securities may no longer be included
in the Dow Jones Industrial
Page 11
Average, and therefore the Equity Securities would no longer be
chosen for deposit into the Trust if the selection process were
to be made again at a later time.
The Dow Jones Industrial Average, Historical Perspective
The Dow Jones Industrial Average was first published in The Wall
Street Journal in 1896. Initially consisting of just 12 stocks,
the DJIA expanded to 20 stocks in 1916 and its present size of
30 stocks on October 1, 1928. The companies which make up the
DJIA have remained relatively constant over the life of the DJIA.
Taking into account name changes, 9 of the original DJIA companies
are still in the DJIA today. For two periods of 17 consecutive
years, March 14, 1939-July 1956 and June 1, 1959-August 6, 1976,
there were no changes to the list. The following is a comparison
of the list as it appeared on October 1, 1928 and the current
DJIA.
The Dow Jones Industrial Average
List as of October 1, 1928 Current List
________________________ ________________________________
Allied Chemical AlliedSignal
American Can Aluminum Company of America
American Smelting American Express Company
American Sugar American Telephone & Telegraph Company
American Tobacco Bethlehem Steel Corp.
Atlantic Refining Boeing Company
Bethlehem Steel Corp. Caterpillar Inc.
Chrysler Corp. Chevron Corp.
General Electric Company Coca-Cola Company
General Motors Corp. Walt Disney Company
General Railway Signal E.I. du Pont de Nemours & Company
Goodrich Eastman Kodak Company
International Harvester Exxon Corp.
International Nickel General Electric Company
Mack Trucks General Motors
Nash Motors Goodyear Tire & Rubber Company
North American International Business Machines Corp.
Paramount Publix International Paper Company
Postum, Inc. McDonald's Corp.
Radio Corporation of America (RCA) Merck & Co., Inc.
Sears Roebuck & Company Minnesota Mining & Manufacturing
Company
Standard Oil of New Jersey J.P. Morgan & Co., Inc.
Texas Corporation Philip Morris Companies Inc.
Texas Gulf Sulphur Procter & Gamble Company
Union Carbide Corp. Sears, Roebuck & Company
United States Steel Company Texaco Inc.
Victor Talking Machine Union Carbide Corp.
Westinghouse Electric Corp. United Technologies Corp.
Woolworth Corp. Westinghouse Electric Corp.
Wright Aeronautical Woolworth Corp.
What are the Equity Securities Selected for Target Equity Trust,
Value Ten Series 3?
The Trust consists of common stocks of companies which are in
the Dow Jones Industrial Average, having the highest dividend
yield as of the opening of business on the day prior to the date
of this Prospectus.
American Express Company, headquartered in New York, New York,
provides travel-related, diversified financial, international
banking and investment services worldwide. The company's products
and services
Page 12
include credit cards, traveler's cheques, investment and merchant
banking, private and institutional banking, foreign exchange and
various other financial products including annuities and mutual
funds.
Chevron Corp., headquartered in San Francisco, California, is
an international oil company with activities in the United States
and abroad. The company is involved in worldwide, integrated petroleum
operations which explore for, develop and produce petroleum liquids
and natural gas as well as transporting the products. The company
is also involved in the mineral and chemical industry.
E.I. du Pont de Nemours & Company, headquartered in Wilmington,
Delaware, is a diversified international company primarily involved
in petroleum, coal and other energy sources. The company is also
a large chemical manufacturer with interests in chemicals, fibers,
transportation, construction, electronics, health care and agriculture.
Eastman Kodak Company is divided into business activities which
include imaging, information, chemicals and health segments. With
its headquarters in Rochester, New York, Eastman Kodak Company
produces products and provides services which include cameras,
photofinishing services, film, audiovisual equipment, chemicals,
plastics and pharmaceutical and healthcare products.
Exxon Corp., headquartered in Irving, Texas, is principally involved
in the energy industry. The company explores for and produces
crude oil and natural gas, manufactures petroleum products, explores
for and mines coal and minerals and transports and sells crude
oil, natural gas and petroleum products.
J.P. Morgan & Company, Inc., headquartered in New York, New York,
is a holding company for Morgan Guaranty Trust. The company places
emphasis on its wholesale banking services and offers corporate
finance and capital markets services. The company provides bond,
precious metals and currency trading, Eurobond underwriting and
deals in government securities. Operations are both domestic and
international.
Philip Morris Companies, Inc., headquartered in New York, New
York, operates a large international consumer goods company through
its tobacco, food and beer segments. The company's major subsidiaries
include Phillip Morris U.S.A., Phillip Morris International, Inc.,
Kraft General Foods Group and The Miller Brewing Company.
Texaco, Inc., headquartered in White Plains, New York, is engaged
in the worldwide exploration, production, transportation, refining
and marketing of crude oil, natural gas and petroleum products,
including petrochemicals. Texaco owns, leases or has interests
in extensive production, manufacturing, marketing, transportation
and other facilities throughout the world.
Union Carbide Corporation, headquartered in Danbury, Connecticut,
manufacturers and sells chemicals and plastics worldwide. The
company's products include fabricated plastic products, specialty
polymers, industrial chemicals, solvents and coatings and specialty
chemicals such as biocides, silicone and plastic additives.
Woolworth Corporation, headquartered in New York, New York, is
a multinational retailer of general merchandise and men's, women's
and children's apparel, sporting goods, footwear and accessories.
The company sells through retail stores and leased departments
in the United States, Puerto Rico, US Virgin Islands, Canada,
Mexico, Germany, Australia, Belgium, Italy, Netherlands and the
United Kingdom.
Dow Jones & Company, Inc., owner of the Dow Jones Industrial Average,
has not granted to the Trust or the Sponsor a license to use the
Dow Jones Industrial Average. Units are not designed so that their
prices will parallel or correlate with movements in the Dow Jones
Industrial Average, and it is expected that their prices will
not parallel or correlate with such movements. Dow Jones & Company,
Inc. has not participated in any way in the creation of the Trust
or in the selection of stocks included in the Trust and has not
approved any information herein relating thereto.
The following table compares the actual performance of the Dow
Jones Industrial Average and approximately equal values of the
ten stocks in the DJIA having the highest dividend yield in each
of the past 20 years (the "10 Highest Yielding DJIA Stocks"),
as of December 31 in each of these years.
Page 13
<TABLE>
<CAPTION>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
10 Highest Yielding DJIA Stocks (1) Dow Jones Industrial Average (DJIA)
Actual Actual
Dividend Total Dividend Total
Year Appreciation (2) Yield (3) Return (4) Appreciation (2) Yield (3) Return (4)
_____ ________________ _________ __________ ________________ _________ __________
<S> <C> <C> <C> <C> <C> <C>
1974 -16.32 7.37 -8.95 -27.57 4.43 -23.14
1975 48.78 7.95 56.73 38.32 6.08 44.40
1976 27.70 7.10 34.80 17.86 4.86 22.72
1977 -6.75 5.92 -0.83 -17.27 4.56 -12.71
1978 -6.92 7.11 0.19 -3.15 5.84 2.69
1979 3.97 8.41 12.38 4.19 6.33 10.52
1980 17.83 8.54 26.37 14.93 6.48 21.41
1981 -0.94 8.29 7.35 -9.23 5.83 -3.40
1982 17.24 8.22 25.46 19.60 6.19 25.79
1983 30.20 8.25 38.45 20.30 5.38 25.68
1984 0.24 6.65 6.89 -3.76 4.82 1.06
1985 21.45 6.97 28.42 27.66 5.12 32.78
1986 23.74 6.13 29.87 22.58 4.33 26.91
1987 1.87 5.10 6.97 2.26 3.76 6.02
1988 15.80 5.80 21.60 11.85 4.10 15.95
1989 20.28 6.94 27.22 26.96 4.75 31.71
1990 -13.00 5.06 -7.94 -4.34 3.77 -0.57
1991 28.32 5.22 33.54 20.32 3.61 23.93
1992 3.44 4.82 8.26 4.17 3.17 7.34
1993 23.06 4.20 27.26 13.72 2.99 16.72
</TABLE>
[FN]
(1) The 10 Highest Yielding DJIA Stocks for any given period
were selected by ranking the dividend yields for each of the stocks
in the DJIA as of the beginning of the period, based upon an annualization
of the last quarterly or semi-annual regular dividend distribution
(which would have been declared in the preceding year) divided
by that stock's market value on the first trading day on the New
York Stock Exchange in the given period.
(2) Appreciation for the 10 Highest Yielding DJIA Stocks ("Stocks")
is calculated by subtracting the market value of the Stocks as
of the first trading day on the New York Stock Exchange in a given
period from the market value of the Stocks as of the last trading
day in that period, and dividing the result by the market value
of the Stocks as of the first trading day in that period. Appreciation
for the DJIA is calculated by subtracting the opening value of
the DJIA as of the first trading day in a given period from the
closing value of the DJIA as of the last trading day in that period,
and dividing the result by the opening value of the DJIA as of
the first trading day in that period.
(3) Actual Dividend Yield for the Stocks is calculated by adding
the total dividends received on the Stocks in a given period and
dividing the result by the market value of the Stocks as of the
first trading day in that period. Actual Dividend Yield for the
DJIA is calculated by taking the total dividends credited to the
DJIA and dividing the result by the opening value of the DJIA
as of the first trading day of the period.
(4) Total Return represents the sum of Appreciation and Actual
Dividend Yield. Total Return does not take into consideration
any sales charges, commissions, expenses or taxes. Total Return
does not take into consideration any reinvestment of dividend
income. Based on the year-by-year returns contained in the table,
over the last 20 years, the 10 highest yielding stocks achieved
an average annual total return of 17.53%, as compared to the average
annual total return of all of the stocks in the DJIA, which was
12.56%. These stocks also had a higher average dividend yield
in each of the last 20 years and outperformed the DJIA in 15 of
these years. When viewed for at least three consecutive years,
this strategy never lost money. Although the Trust seeks to achieve
a better performance than the DJIA, there can be no assurance
that the Trust will outperform the DJIA over its one-year life
or over consecutive rollover periods, if available.
Page 14
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The returns shown above are not guarantees of future performance
and should not be used as a predictor of returns to be expected
in connection with the Trust Portfolio. Both stock prices (which
may appreciate or depreciate) and dividends (which may be increased,
reduced or eliminated) will affect the returns. As indicated in
the above table, the 10 Highest Yielding DJIA Stocks underperformed
the DJIA in certain years and there can be no assurance that the
Trust Portfolio will outperform the DJIA over the life of the
Trust or over consecutive rollover periods, if available. A Holder
of Units in the Trust would not necessarily realize as high a
Total Return on an investment in the stocks upon which the returns
shown above are based. The Total Return figures shown above do
not reflect sales charges, commissions, Trust expenses or taxes,
and the Trust may not be able to invest equally in the 10 Highest
Yielding DJIA Stocks and may not be fully invested at all times.
See "What are the Equity Securities Selected for Target Equity
Trust, Value Ten Series 3?"
What are Some Additional Considerations for Investors?
The Trust consists of different issues of Equity Securities, all
of which are listed on a national securities exchange. In addition,
each of the companies whose Equity Securities are included in
the portfolio are actively traded, well established corporations.
Page 15
The Trust consists of such of the Equity Securities listed under
"Schedule of Investments" as may continue to be held from time
to time in the Trust and any additional Equity Securities acquired
and held by the Trust pursuant to the provisions of the Trust
Agreement together with cash held in the Income and Capital Accounts.
Neither the Sponsor nor the Trustee shall be liable in any way
for any failure in any of the Equity Securities. However, should
any contract for the purchase of any of the Equity Securities
initially deposited hereunder fail, the Sponsor will, unless substantially
all of the moneys held in the Trust to cover such purchase are
reinvested in substitute Equity Securities in accordance with
the Trust Agreement, refund the cash and sales charge attributable
to such failed contract to all Unit holders on the next distribution
date.
Because certain of the Equity Securities from time to time may
be sold under certain circumstances described herein, and because
the proceeds from such events will be distributed to Unit holders
and will not be reinvested, no assurance can be given that the
Trust will retain for any length of time its present size and
composition. Although the Portfolio is not managed, the Sponsor
may instruct the Trustee to sell Equity Securities under certain
limited circumstances. Pursuant to the Indenture and with limited
exceptions, the Trustee may sell any securities or other property
acquired in exchange for Equity Securities such as those acquired
in connection with a merger or other transaction. If offered such
new or exchanged securities or property, the Trustee shall reject
the offer. However, in the event such securities or property are
nonetheless acquired by the Trust, they may be accepted for deposit
in the Trust and either sold by the Trustee or held in the Trust
pursuant to the direction of the Sponsor (who may rely on the
advice of the Portfolio Supervisor) . See "How May Equity Securities
be Removed from the Trust?" Equity Securities, however, will not
be sold by the Trust to take advantage of market fluctuations
or changes in anticipated rates of appreciation or depreciation
or if the Equity Securities are no longer among the ten common
stocks in the Dow Jones Industrial Average with the highest dividend
yield.
Whether or not the Equity Securities are listed on a national
securities exchange, the principal trading market for the Equity
Securities may be in the over-the-counter market. As a result,
the existence of a liquid trading market for the Equity Securities
may depend on whether dealers will make a market in the Equity
Securities. There can be no assurance that a market will be made
for any of the Equity Securities, that any market for the Equity
Securities will be maintained or of the liquidity of the Equity
Securities in any markets made. The investigation by the Securities
and Exchange Commission of illegal insider trading in connection
with corporate takeovers, and possible congressional inquiries
and legislation relating to this investigation, may adversely
affect the ability of certain dealers to remain market makers.
In addition, the Trust may be restricted under the Investment
Company Act of 1940 from selling Equity Securities to the Sponsor.
The price at which the Equity Securities may be sold to meet redemptions,
and the value of the Trust, will be adversely affected if trading
markets for the Equity Securities are limited or absent.
An investment in Units should be made with an understanding of
the risks which an investment in common stocks entails, including
the risk that the financial condition of the issuers of the Equity
Securities or the general condition of the common stock market
may worsen and the value of the Equity Securities and therefore
the value of the Units may decline. Common stocks are especially
susceptible to general stock market movements and to volatile
increases and decreases of value as market confidence in and perceptions
of the issuers change. These perceptions are based on unpredictable
factors including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic
expansion or contraction, and global or regional political, economic
or banking crises. Shareholders of common stocks have rights to
receive payments from the issuers of those common stocks that
are generally subordinate to those of creditors of, or holders
of debt obligations or preferred stocks of, such issuers. Shareholders
of common stocks of the type held by the Trust have a right to
receive dividends only when and if, and in the amounts, declared
by the issuer's board of directors and have a right to participate
in amounts available for distribution by the issuer only after
all other claims on the issuer have been paid or provided for.
Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the
same degree of protection of capital as do debt securities. The
issuance of additional debt securities or preferred stock will
create prior claims for payment of principal, interest and dividends
which could adversely affect the ability and inclination of the
issuer to declare or pay dividends on its common stock or the
rights of holders of common stock with respect to assets of the
issuer upon liquidation or bankruptcy. The
Page 16
value of common stocks is subject to market fluctuations for as
long as the common stocks remain outstanding, and thus the value
of the Equity Securities in the Portfolio may be expected to fluctuate
over the life of the Trust to values higher or lower than those
prevailing on the Initial Date of Deposit.
Holders of common stocks incur more risk than holders of preferred
stocks and debt obligations because common stockholders, as owners
of the entity, have generally inferior rights to receive payments
from the issuer in comparison with the rights of creditors of,
or holders of debt obligations or preferred stocks issued by,
the issuer. Cumulative preferred stock dividends must be paid
before common stock dividends and any cumulative preferred stock
dividend omitted is added to future dividends payable to the holders
of cumulative preferred stock. Preferred stockholders are also
generally entitled to rights on liquidation which are senior to
those of common stockholders.
Unit holders will be unable to dispose of any of the Equity Securities
in the Portfolio, as such, and will not be able to vote the Equity
Securities. As the holder of the Equity Securities, the Trustee
will have the right to vote all of the voting stocks in the Trust
and will vote such stocks in accordance with the instructions
of the Sponsor.
Investors should be aware of certain other considerations before
making a decision to invest in the Trust.
The value of the Equity Securities will fluctuate over the life
of the Trust and may be more or less than the price at which they
were deposited in the Trust. The Equity Securities may appreciate
or depreciate in value (or pay dividends) depending on the full
range of economic and market influences affecting these securities,
including the impact of the Sponsor's purchase and sale of the
Equity Securities (especially during the primary offering period
of Units of the Trust and during the Special Redemption and Liquidation
Period) and other factors.
The Sponsor and the Trustee shall not be liable in any way for
any default, failure or defect in any Equity Security. In the
event of a notice that any Equity Security will not be delivered
("Failed Contract Obligations") to the Trust, the Sponsor is authorized
under the Indenture to direct the Trustee to acquire other Equity
Securities ("Replacement Securities"). Any Replacement Security
will be identical to those which were the subject of the failed
contract. The Replacement Securities must be purchased within
20 days after delivery of the notice of a failed contract and
the purchase price may not exceed the amount of funds reserved
for the purchase of the Failed Contract Obligations.
If the right of limited substitution described in the preceding
paragraphs is not utilized to acquire Replacement Securities in
the event of a failed contract, the Sponsor will refund the sales
charge attributable to such Failed Contract Obligations to all
Unit holders of the Trust and the Trustee will distribute the
principal attributable to such Failed Contract Obligations not
more than 120 days after the date on which the Trustee received
a notice from the Sponsor that a Replacement Security would not
be deposited in the Trust. In addition, Unit holders should be
aware that, at the time of receipt of such principal, they may
not be able to reinvest such proceeds in other securities at a
yield equal to or in excess of the yield which such proceeds would
have earned for Unit holders of the Trust.
The Indenture also authorizes the Sponsor to increase the size
of the Trust and the number of Units thereof by the deposit of
additional Equity Securities in the Trust and the issuance of
a corresponding number of additional Units.
The Trust consists of the Equity Securities listed under "Schedule
of Investments" (or contracts to purchase such Securities) as
may continue to be held from time to time in the Trust and any
additional Equity Securities acquired and held by the Trust pursuant
to the provisions of the Indenture (including provisions with
respect to deposits into the Trust of Equity Securities in connection
with the issuance of additional Units).
Once all of the Equity Securities in the Trust are acquired, the
Trustee will have no power to vary the investments 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, but
may dispose of Equity Securities only under limited circumstances.
See "How May Equity Securities be Removed from the Trust?"
To the best of the Sponsor's knowledge, there is no litigation
pending as of the Initial Date of Deposit in respect of any Equity
Security which might reasonably be expected to have a material
adverse effect on the Trust.
Page 17
At any time after the Initial Date of Deposit, litigation may
be instituted on a variety of grounds with respect to the Equity
Securities. The Sponsor is unable to predict whether any such
litigation will be instituted, or if instituted, whether such
litigation might have a material adverse effect on the Trust.
Petroleum Refining Companies. The Trust is considered to be concentrated
in common stocks of companies engaged in refining and marketing
oil and related products. According to the U.S. Department of
Commerce, the factors which will most likely shape the industry
to 1996 and beyond include the price and availability of oil from
the Middle East, changes in United States environmental policies
and the continued decline in U.S. production of crude oil. Possible
effects of these factors may be increased U.S. and world dependence
on oil from the Organization of Petroleum Exporting Countries
("OPEC") and highly uncertain and potentially more volatile oil
prices. Factors which the Sponsor believes may increase the profitability
of oil and petroleum operations include increasing demand for
oil and petroleum products as a result of the continued increases
in annual miles driven and the improvement in refinery operating
margins caused by increases in average domestic refinery utilization
rates. The existence of surplus crude oil production capacity
and the willingness to adjust production levels are the two principal
requirements for stable crude oil markets. Without excess capacity,
supply disruptions in some countries cannot be compensated for
by others. Surplus capacity in Saudi Arabia and a few other countries
and the utilization of that capacity prevented during the Persian
Gulf crisis, and continue to prevent, severe market disruption.
Although unused capacity contributed to market stability in 1990
and 1991, it ordinarily creates pressure to overproduce and contributes
to market uncertainty. The likely restoration of a large portion
of Kuwait and Iraq's production and export capacity over the next
few years could lead to such a development in the absence of substantial
growth in world oil demand. Formerly, OPEC members attempted to
exercise control over production levels in each country through
a system of mandatory production quotas. Because of the crisis
in the Middle East, the mandatory system has since been replaced
with a voluntary system. Production under the new system has had
to be curtailed on at least one occasion as a result of weak prices,
even in the absence of supplies from Kuwait and Iraq. The pressure
to deviate from mandatory quotas, if they are reimposed, is likely
to be substantial and could lead to a weakening of prices. In
the longer term, additional capacity and production will be required
to accommodate the expected large increases in world oil demand
and to compensate for expected sharp drops in U.S. crude oil production
and exports from the Soviet Union. Only a few OPEC countries,
particularly Saudi Arabia, have the petroleum reserves that will
allow the required increase in production capacity to be attained.
Given the large-scale financing that is required, the prospect
that such expansion will occur soon enough to meet the increased
demand is uncertain.
Declining U.S. crude oil production will likely lead to increased
dependence on OPEC oil, putting refiners at risk of continued
and unpredictable supply disruptions. Increasing sensitivity to
environmental concerns will also pose serious challenges to the
industry over the coming decade. Refiners are likely to be required
to make heavy capital investments and make major production adjustments
in order to comply with increasingly stringent environmental legislation,
such as the 1990 amendments to the Clean Air Act. If the cost
of these changes is substantial enough to cut deeply into profits,
smaller refiners may be forced out of the industry entirely. Moreover,
lower consumer demand due to increases in energy efficiency and
conservation, due to gasoline reformulations that call for less
crude oil, due to warmer winters or due to a general slowdown
in economic growth in this country and abroad, could negatively
affect the price of oil and the profitability of oil companies.
No assurance can be given that the demand for or prices of oil
will increase or that any increases will not be marked by great
volatility. Some oil companies may incur large cleanup and litigation
costs relating to oil spills and other environmental damage. Oil
production and refining operations are subject to extensive federal,
state and local environmental laws and regulations governing air
emissions and the disposal of hazardous materials. Increasingly
stringent environmental laws and regulations are expected to require
companies with oil production and refining operations to devote
significant financial and managerial resources to pollution control.
General problems of the oil and petroleum products industry include
the ability of a few influential producers significantly to affect
production, the concomitant volatility of crude oil prices and
increasing public and governmental concern over air emissions,
waste product disposal, fuel quality and the environmental effects
of fossil-fuel use in general.
Page 18
In addition, any future scientific advances concerning new sources
of energy and fuels or legislative changes relating to the energy
industry or the environment could have a negative impact on the
petroleum products industry. While legislation has been enacted
to deregulate certain aspects of the oil industry, no assurances
can be given that new or additional regulations will not be adopted.
Each of the problems referred to could adversely affect the financial
stability of the issuers of any petroleum industry stocks in the
Trust.
Legislation. From time to time Congress considers proposals to
reduce the rate of the dividends-received deductions. Enactment
into law of a proposal to reduce the rate would adversely affect
the after-tax return to investors who can take advantage of the
deduction. Unit holders are urged to consult their own tax advisers.
Further, at any time after the Initial Date of Deposit, legislation
may be enacted, with respect to the Equity Securities in the Trust
or the issuers of the Equity Securities. Changing approaches to
regulation, particularly with respect to the environment or with
respect to the petroleum industry, may have a negative impact
on certain companies represented in the Trust. There can be no
assurance that future legislation, regulation or deregulation
will not have a material adverse effect on the Trust or will not
impair the ability of the issuers of the Equity Securities to
achieve their business goals.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. During the initial
offering period, the Public Offering Price is based on the aggregate
underlying value of the Equity Securities in the Trust, plus or
minus cash, if any, in the Income and Capital Accounts of the
Trust, plus a sales charge of 3.6% (equivalent to 3.734% of the
net amount invested) divided by the amount of Units of the Trust
outstanding.
During the initial offering period, the Sponsor's Repurchase Price
is based on the aggregate underlying value of the Equity Securities
in the Trust, plus or minus cash, if any, in the Income and Capital
Accounts of the Trust divided by the number of Units of the Trust
outstanding. For secondary market sales after the completion of
the initial offering period, the Public Offering Price is also
based on the aggregate underlying value of the Equity Securities
in the Trust, plus or minus cash, if any, in the Income and Capital
Accounts of the Trust, plus a maximum sales charge of 3.1% of
the Public Offering Price (equivalent to 3.199% of the net amount
invested) prior to the first Income Distribution Record Date and
1.95% (equivalent to 1.989% of the net amount invested) on or
after the first Income Distribution Record Date divided by the
number of outstanding Units of the Trust.
The minimum purchase of the Trust is $1,000. The applicable sales
charge for primary market sales is reduced by a discount as indicated
below for volume purchases:
<TABLE>
<CAPTION>
Percent of Percent of
Offering Net Amount
Number of Units Price Invested
_______________ _________ __________
<S> <C> <C>
10,000 to 24,999 0.25% 0.2506%
25,000 to 49,999 0.50% 0.5025%
50,000 to 99,999 0.75% 0.7557%
100,000 or more 1.50% 1.5228%
</TABLE>
For secondary market transactions, a dealer will receive from
the Sponsor a dealer concession of 65% of the total sales charges
for Units sold.
Any such reduced sales charge shall be the responsibility of the
selling Underwriters or dealer. The reduced sales charge structure
will apply on all purchases of Units in the Trust by the same
person on any one day from any one underwriter or dealer. Additionally,
Units purchased in the name of the spouse of a purchaser or in
the name of a child of such purchaser under 21 years of age will
be deemed, for the purposes of calculating the applicable sales
charge, to be additional purchases by the purchaser. The reduced
sales charges will also be applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary
account. The purchaser must inform the Underwriter or dealer of
any such combined
Page 19
purchase prior to the sale in order to obtain the indicated discount.
In addition, with respect to the employees, officers and directors
(including their immediate family members, defined as spouses,
children, grandchildren, parents, grandparents, mothers-in-law,
fathers-in-law, sons-in-law and daughters-in-law, and trustees,
custodians or fiduciaries for the benefit of such persons) of
the Sponsor, Underwriters, Dealers and their affiliates, the sales
charge is reduced by 1.0% of the Public Offering Price for purchases
of Units during the primary offering period.
Had the Units of the Trust been available for sale on the business
day prior to the Initial Date of Deposit, the Public Offering
Price would have been as indicated in "Summary of Essential Information."
The Public Offering Price of Units on the date of the prospectus
or during the initial offering period may vary from the amount
stated under "Summary of Essential Information" in accordance
with fluctuations in the prices of the underlying Equity Securities.
During the initial offering period, the aggregate value of the
Units of the Trust shall be determined on the basis of the aggregate
underlying value of the Equity Securities therein plus or minus
cash, if any, in the Income and Capital Accounts of the Trust.
The aggregate underlying value of the Equity Securities will be
determined in the following manner: if the Equity Securities are
listed on a national securities exchange or the NASDAQ National
Market System, this evaluation is generally based on the closing
sale prices on that exchange or that system (unless it is determined
that these prices are inappropriate as a basis for valuation)
or, if there is no closing sale price on that exchange or system,
at the closing ask prices. If the Equity Securities are not so
listed or, if so listed and the principal market therefore is
other than on the exchange, the evaluation shall generally be
based on the current ask prices on the over-the-counter market
(unless it is determined that these prices are inappropriate as
a basis for evaluation). If current ask prices are unavailable,
the evaluation is generally determined (a) on the basis of current
ask prices for comparable securities, (b) by appraising the value
of the Equity Securities on the ask side of the market or (c)
by any combination of the above.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the aggregate underlying
value of the Equity Securities therein, plus or minus cash, if
any, in the Income and Capital Accounts of the Trust 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. See "Rights of
Unit Holders-How may Units be Redeemed?" for information regarding
the ability to redeem Units ordered for purchase.
How are Units Distributed?
During the initial offering period (i) for Units issued on the
Initial Date of Deposit and (ii) for additional Units issued after
such date as additional Equity Securities are deposited by the
Sponsor, Units will be distributed to the public at the then current
Public Offering Price. During such period, the Sponsor may deposit
additional Equity Securities in the Trust and create additional
Units. Units reacquired by the Sponsor during the initial offering
period (at prices based upon the aggregate underlying value of
the Equity Securities in the Trust plus or minus a pro rata share
of cash, if any in the Income and Capital Accounts of the Trust)
may be resold at the then current Public Offering Price. Upon
the termination of the initial offering period, unsold Units created
or reacquired during the initial offering period will be sold
or resold at the then current Public Offering Price.
Upon completion of the initial offering, Units repurchased in
the secondary market (see "Will There be a Secondary Market?")
may be offered by this prospectus at the secondary market public
offering price determined in the manner described above.
It is the intention of the Sponsor to qualify Units of the Trust
for sale in a number of states. Sales initially will be made to
dealers and others at prices which represent a concession or agency
commission of 2.0% of the Public Offering Price, and, for secondary
market sales, an amount of the Public Offering Price set forth
under "How is the Public Offering Price Determined?" However,
resales of Units of the Trust by such dealers and
Page 20
others to the public will be made at the Public Offering Price
described in the prospectus. The Sponsor reserves the right to
change the amount of the concession or agency commission from
time to time. Certain commercial banks may be making Units of
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 in the amounts indicated in the fourth preceding
sentence. Under the Glass-Steagall Act, banks are prohibited from
underwriting Trust Units; however, the Glass-Steagall Act does
permit certain agency transactions and the banking regulators
have not indicated that these particular agency transactions are
not permitted under such Act. In Texas and in certain other states,
any banks making Units available must be registered as broker/dealers
under state law. Any broker/dealer or bank will receive additional
concessions of 2.30% for purchases of $250,000 or more made from
the Sponsor on the Initial Date of Deposit.
What are the Sponsor's Profits?
The Underwriters of the Trust will receive a gross sales commission
equal to 3.6% of the Public Offering Price of the Units (equivalent
to 3.734% of the net amount invested), less any reduced sales
charge for quantity purchases as described under "Public Offering-How
is the Public Offering Price Determined?" See "Underwriting" for
information regarding the receipt of the excess gross sales commissions
by the Sponsor from the other Underwriters and additional concessions
available to Underwriters, dealers and others. In addition, the
Sponsor may be considered to have realized a profit or to have
sustained a loss, as the case may be, in the amount of any difference
between the cost of the Equity Securities to the Trust (which
is based on the Evaluator's determination of the aggregate offering
price of the underlying Equity Securities of such Trust on the
Initial Date of Deposit as well as on subsequent deposits) and
the cost of such Equity Securities to the Sponsor. See "Underwriting"
and Note (2) of "Schedule of Investments." During the initial
offering period, the Underwriters also may realize profits or
sustain losses as a result of fluctuations after the Date of Deposit
in the Public Offering Price received by the Underwriters upon
the sale of Units.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between
the price at which Units are purchased and the price at which
Units are resold (which price includes a sales charge of 3.1%
prior to the first Income Distribution Record Date, and 1.95%
on or after the first Income Distribution Record Date) or redeemed.
The secondary market public offering price of Units may be greater
or less than the cost of such Units to the Sponsor. The Sponsor
may also realize profits or sustain losses in connection with
the creation of additional Units for the Distribution Reinvestment
Option.
Will There be a Secondary Market?
After the initial offering period, although it is not obligated
to do so, the Sponsor intends to, and the Underwriters may, maintain
a market for the Units and continuously offer to purchase Units
at prices, subject to change at any time, based upon the aggregate
underlying value of the Equity Securities in the Trust plus or
minus cash, if any, in the Income and Capital Accounts of the
Trust. All expenses incurred in maintaining a secondary market,
other than the fees of the Evaluator and the costs of the Trustee
in transferring and recording the ownership of Units, will be
borne by the Sponsor. If the supply of Units exceeds demand, or
for some other business reason, the Sponsor may discontinue purchases
of Units at such prices. IF A UNIT HOLDER WISHES TO DISPOSE OF
HIS UNITS, HE SHOULD INQUIRE OF THE SPONSOR AS TO CURRENT MARKET
PRICES PRIOR TO MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE.
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
Page 21
certificate with signature guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such
other signature guaranty program in addition to, or in substitution
for, STAMP, as may be accepted by the Trustee. In certain instances
the Trustee may require additional documents such as, but not
limited to, trust instruments, certificates of death, appointments
as executor or administrator or certificates of corporate authority.
Record ownership may occur before settlement.
Certificates will be issued in fully registered form, transferable
only on the books of the Trustee in denominations of one Unit
or any multiple thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form.
Only Unit holders who elect to hold Units in uncertificated form
are eligible to participate as a Rollover Unit holder. 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 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 issuer and any adverse claims to
which such Units are or may be subject or a statement that there
are no such liens, restrictions or adverse claims; and the date
the transfer was registered. Uncertificated Units are transferable
through the same procedures applicable to Units evidenced by certificates
(described above), except that no certificate need be presented
to the Trustee and no certificate will be issued upon the transfer
unless requested by the Unit holder. A Unit holder may at any
time request the Trustee to issue certificates for Units.
Although no such charge is now made or contemplated, a Unit holder
may be required to pay $2.00 to the Trustee per certificate reissued
or transferred and to pay any governmental charge that may be
imposed in connection with each such transfer or exchange. For
new certificates issued to replace destroyed, stolen or lost certificates,
the Unit holder may be required to furnish indemnity satisfactory
to the Trustee and pay such expenses as the Trustee may incur.
Mutilated certificates must be surrendered to the Trustee for
replacement.
How are Income and Capital Distributed?
The Trustee will distribute any net income received with respect
to any of the securities in the Trust on or about the Income Distribution
Dates to Unit holders of record on the preceding Income Record
Date. See "Summary of Essential Information." Because dividends
are not received by the Trust at a constant rate throughout the
year, such distributions to Unit holders may be more or less than
the amount credited to the Income Account as of the Record Date.
Persons who purchase Units will commence receiving distributions
only after such person becomes a Record Owner. Notification to
the Trustee of the transfer of Units is the responsibility of
the purchaser, but in the normal course of business such notice
is provided by the selling broker-dealer. Proceeds received on
the sale of any Equity Securities in the Trust, to the extent
not used to meet redemptions of Units or pay expenses, will, however,
be distributed on the last day of each month to Unit holders of
record on the fifteenth day of such month if the amount available
for distribution equals at least $1.00 per 100 Units. The Trustee
is not required to pay interest on funds held in the Capital Account
of a Trust (but may itself earn interest thereon and therefore
benefit from the use of such funds). Notwithstanding, distributions
of funds in the Capital Account, if any, will be made as part
of the final liquidation distribution, and in certain circumstances,
earlier. See "What is the Federal Tax Status of Unit Holders?"
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a specified percentage of any
distribution made by the Trust if the Trustee has not been furnished
the Unit holder's tax identification number in the manner required
by such regulations. Any amount so withheld is transmitted to
the Internal Revenue Service and may be recovered by the Unit
holder under certain circumstances by contacting the Trustee,
otherwise the amount may be recoverable only when filing a tax
return. Under normal circumstances the Trustee obtains the Unit
holder's tax identification number from the selling broker. However,
a Unit holder should examine his or her statements from the Trustee
to make sure that the Trustee has been provided a certified tax
identification number in order to avoid this possible "back-up
withholding." In the event the Trustee has not been previously
provided such number, one should be provided as soon as possible.
Page 22
Within a reasonable time after the Trust is terminated, each Unit
holder who is not a Rollover Unit holder will, upon surrender
of his Units for redemption, receive (i) the pro rata share of
the amounts realized upon the disposition of Equity Securities,
unless he elects an In-Kind Distribution as described below and
(ii) a pro rata share of any other assets of the Trust, less expenses
of the Trust. Not less than 30 days prior to the Mandatory Termination
Date of the Trust the Trustee will provide written notice thereof
to all Unit holders and will include with such notice a form to
enable Unit holders to elect a distribution of shares of Equity
Securities (an "In-Kind Distribution"), if such Unit holder owns
at least 2,500 Units of the Trust, rather than to receive payment
in cash for such Unit holder's pro rata share of the amounts realized
upon the disposition by the Trustee of Equity Securities. An In-Kind
Distribution will be reduced by customary transfer and registration
charges. To be effective, the election form, together with surrendered
certificates and other documentation required by the Trustee,
must be returned to the Trustee at least five business days prior
to the Mandatory Termination Date of the Trust. A Unit holder
may, of course, at any time after the Equity Securities are distributed,
sell all or a portion of the shares.
The Trustee will credit to the Income Account of the Trust any
dividends received on the Equity Securities therein. All other
receipts (e.g., return of principal, capital gains, etc.) are
credited to the Capital Account of the Trust.
The Trustee may establish reserves (the "Reserve Account") within
the Trust for state and local taxes, if any, and any governmental
charges payable out of the Trust.
Distribution Reinvestment Option. Any Unit holder may elect to
have each distribution of income or capital on his Units, other
than the final liquidating distribution in connection with the
termination of the Trust, automatically reinvested in additional
Units of the Trust. Each person who purchases Units of the Trust
may elect to become a participant in the Distribution Reinvestment
Option by notifying the Trustee of their election. The Distribution
Reinvestment Option may not be available in all states. In order
to enable a Unit holder to participate in the Distribution Reinvestment
Option with respect to a particular distribution on his Units,
the card must be received by the Trustee within 10 days prior
to the Record Date for such distribution. Each subsequent distribution
of income or capital on the participant's Units will be automatically
applied by the Trustee to purchase additional Units of the Trust
without a sales charge. IT SHOULD BE REMEMBERED THAT EVEN IF DISTRIBUTIONS
ARE REINVESTED, THEY ARE STILL TREATED AS DISTRIBUTIONS FOR INCOME
TAX PURPOSES.
What Reports will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and
the amount of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per Unit. Within a reasonable
period of time after the end of each calendar year, the Trustee
shall furnish to each person who at any time during the calendar
year was a Unit holder of the Trust the following information
in reasonable detail: (1) a summary of transactions in the Trust
for such year; (2) any Equity Securities sold during the year
and the Equity Securities held at the end of such year by the
Trust; (3) the redemption price per Unit based upon a computation
thereof on the 31st day of December of such year (or the last
business day prior thereto); and (4) amounts of income and capital
distributed during such year.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Securities in the Trust furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his Units by tender
to the Trustee at its 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
Page 23
by the Trustee, except that as regards Units received after 4:00
p.m. Eastern time, the date of tender is the next day on which
the New York Stock Exchange is open for trading and such Units
will be deemed to have been tendered to the Trustee on such day
for redemption at the redemption price computed on that day. Units
so redeemed shall be cancelled.
Any Unit holder tendering 2,500 Units or more for redemption may
request by written notice submitted at the time of tender from
the Trustee in lieu of a cash redemption a distribution of shares
of Equity Securities in an amount and value of Equity Securities
per Unit equal to the Redemption Price Per Unit as determined
as of the evaluation next following tender. To the extent possible,
In-Kind Distributions ("In-Kind Distributions") shall be made
by the Trustee through the distribution of each of the Equity
Securities in book-entry form to the account of the Unit holder's
bank or broker-dealer at the Depository Trust Company. An In-Kind
Distribution will be reduced by customary transfer and registration
charges. The tendering Unit holder will receive his pro rata number
of whole shares of each of the Equity Securities comprising the
portfolio and cash from the Capital Account equal to the fractional
shares to which the tendering Unit holder is entitled. The Trustee
may adjust the number of shares of any issue of Equity Securities
included in a Unit holder's In-Kind Distribution to facilitate
the distribution of whole shares, such adjustment to be made on
the basis of the value of Equity Securities on the date of tender.
If funds in the Capital Account are insufficient to cover the
required cash distribution to the tendering Unit holder, the Trustee
may sell Equity Securities in the manner described above.
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a specified percentage of the
principal amount of a Unit redemption if the Trustee has not been
furnished the redeeming Unit holder's tax identification number
in the manner required by such regulations. Any amount so withheld
is transmitted to the Internal Revenue Service and may be recovered
by the Unit holder only when filing a tax return. Under normal
circumstances the Trustee obtains the Unit holder's tax identification
number from the selling broker. However, any time a Unit holder
elects to tender Units for redemption, such Unit holder should
make sure that the Trustee has been provided a certified tax identification
number in order to avoid this possible "back-up withholding."
In the event the Trustee has not been previously provided such
number, one must be provided at the time redemption is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of the Trust to the extent that funds
are available for such purpose. All other amounts paid on redemption
shall be withdrawn from the Capital Account of the Trust.
The Trustee is empowered to sell Equity Securities of the Trust
in order to make funds available for redemption. To the extent
that Equity Securities are sold, the size and diversity of the
Trust will be reduced. Such sales may be required at a time when
Equity Securities would not otherwise be sold and might result
in lower prices than might otherwise be realized.
The Redemption Price per Unit and the Public Offering Price per
Unit (which includes the sales charge) during the initial offering
period (as well as the secondary market Public Offering Price)
will be determined on the basis of the aggregate underlying value
of the Equity Securities in the Trust plus or minus cash, if any,
in the Income and Capital Accounts of the Trust. The Redemption
Price per Unit is the pro rata share of each Unit determined by
the Trustee by adding: (1) the cash on hand in the Trust other
than cash deposited in the Trust to purchase Equity Securities
not applied to the purchase of such Equity Securities; (2) the
aggregate value of the Equity Securities (including "when issued"
contracts, if any) held in the Trust, as determined by the Evaluator
on the basis of the aggregate underlying value of the Equity Securities
in the Trust next computed; and (3) dividends receivable on the
Equity Securities trading ex-dividend as of the date of computation;
and deducting therefrom: (1) amounts representing any applicable
taxes or governmental charges payable out of the Trust; (2) any
amounts owing to the Trustee for its advances; (3) an amount representing
estimated accrued expenses of the Trust, including but not limited
to fees and expenses of the Trustee (including legal fees), the
Evaluator and supervisory fees, if any; (4) cash held for distribution
to Unit holders of record of the Trust as of the business day
prior to the evaluation being made; and (5) other liabilities
incurred by the Trust; and finally dividing the results of such
computation by the number of Units of the Trust outstanding as
of the date thereof.
Page 24
The aggregate value of the Equity Securities will be determined
in the following manner: if the Equity Securities are listed on
a national securities exchange or the NASDAQ National Market System,
this evaluation is generally based on the closing sale prices
on that exchange or that system (unless it is determined that
these prices are inappropriate as a basis for valuation) or, if
there is no closing sale price on that exchange or system, at
the closing bid prices. If the Equity Securities are not so listed
or, if so listed and the principal market therefore is other than
on the exchange, the evaluation shall generally be based on the
current bid prices on the over-the-counter market (unless these
prices are inappropriate as a basis for evaluation). If current
bid prices are unavailable, the evaluation is generally determined
(a) on the basis of current bid prices for comparable securities,
(b) by appraising the value of the Equity Securities on the bid
side of the market or (c) by any combination of the above.
The right of redemption may be suspended and payment postponed
for any period during which the New York Stock Exchange is closed,
other than for customary weekend and holiday closings, or during
which the Securities and Exchange Commission determines that trading
on the New York Stock Exchange is restricted or any emergency
exists, as a result of which disposal or evaluation of the Securities
is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit. Under
certain extreme circumstances, the Sponsor may apply to the Securities
and Exchange Commission for an order permitting a full or partial
suspension of the right of Unit holders to redeem their Units.
The Trustee is not liable to any person in any way for any loss
or damage which may result from any such suspension or postponement.
Special Redemption, Liquidation and Investment in the New Trust
It is expected that a special redemption and liquidation will
be made of all Units of the Trust held by any Unit holder (a "Rollover
Unit holder") who affirmatively notifies the Trustee in writing
that he so desires by the Rollover Notification Date specified
in the "Summary of Essential Information."
All Units of Rollover Unit holders will be redeemed In-Kind on
the first day of the Special Redemption and Liquidation Period
and the underlying Equity Securities will be distributed to the
Distribution Agent on behalf of the Rollover Unit holders. During
the Special Redemption and Liquidation Period (as set forth in
"Summary of Essential Information"), the Distribution Agent will
be required to sell all of the underlying Equity Securities on
behalf of Rollover Unit holders. The sales proceeds will be net
of brokerage fees, governmental charges or any expenses involved
in the sales.
The Distribution Agent will engage the Sponsor as its agent to
sell the distributed Equity Securities. The Sponsor will attempt
to sell the Equity Securities as quickly as is practicable during
the Special Redemption and Liquidation Period. The Sponsor does
not anticipate that the period will be longer than 10 business
days, and it could be as short as one day, given that the Equity
Securities are usually highly liquid. The liquidity of any Equity
Security depends on the daily trading volume of the Equity Security
and the amount that the Sponsor has available for sale on any
particular day.
It is expected (but not required) that the Sponsor will generally
follow the following guidelines in selling the Equity Securities:
for highly liquid Equity Securities, the Sponsor will generally
sell Equity Securities on the first day of the Special Redemption
and Liquidation Period; for less liquid Equity Securities, on
each of the first two days of the Special Redemption and Liquidation
Period, the Sponsor will generally sell any amount of any underlying
Equity Securities at a price no less than 1/2 of one point under
the closing sale price of those Equity Securities on the preceding
day. Thereafter, the Sponsor intends to sell without any price
restrictions at least a portion of the remaining underlying Equity
Securities, the numerator of which is one and the denominator
of which is the total number of days remaining (including that
day) in the Special Redemption and Liquidation Period.
The Rollover Unit holders' proceeds will be invested in the 1995
Trust, if then registered in such state and being offered, the
portfolio of which will contain the ten highest yielding stocks
in the Dow Jones Industrial Average as of the day prior to the
Date of Deposit of the 1995 Trust. The proceeds of redemption
available on each day will be used to buy 1995 Trust Units as
the proceeds become available.
The Sponsor intends to create 1995 Trust Units as quickly as possible,
dependent upon the availability and reasonably favorable prices
of the Equity Securities included in the1995 Trust portfolio,
and it is intended
Page 25
that Rollover Unit holders will be given first priority to purchase
the 1995 Trust Units. There can be no assurance, however, as to
the exact timing of the creation of the 1995 Trust Units or the
aggregate number of 1995 Trust Units which the Sponsor will create.
The Sponsor may, in its sole discretion, stop creating new Units
(whether permanently or temporarily) at any time it chooses, regardless
of whether all proceeds of the Special Redemption and Liquidation
have been invested on behalf of Rollover Unit holders. Cash which
has not been invested on behalf of the Rollover Unit holders in
1995 Trust Units will be distributed at the end of the Special
Redemption and Liquidation Period. However, since the Sponsor
can create Units, the Sponsor anticipates that sufficient Units
can be created, although moneys in the 1995 Trust may not be fully
invested on the next business day.
Any Rollover Unit holder may thus be redeemed out of the Trust
and become a holder of an entirely different Trust, the 1995 Trust,
with a different portfolio of Equity Securities. The Rollover
Unit holders' Units will be redeemed In-Kind and the distributed
Equity Securities shall be sold during the Special Redemption
and Liquidation Period. In accordance with the Rollover Unit holders'
offer to purchase the 1995 Trust Units, the proceeds of the sales
(and any other cash distributed upon redemption) will be invested
in the 1995 Trust, at the public offering price, including the
applicable sales charge per Unit (which for Rollover Unit holders
is currently expected to be 1.95% of the Public Offering Price
of the 1995 Trust Units).
This process of redemption, liquidation, and investment in a new
Trust is intended to allow for the fact that the portfolios selected
by the Sponsor are chosen on the basis of growth and income potential
only for a year, at which point a new portfolio is chosen. It
is contemplated that a similar process of redemption, liquidation
and investment in a new trust will be available for the 1995 Trust
and each subsequent series of the Trust, approximately a year
after that Series' creation.
The Sponsor believes that the gradual redemption, liquidation
and investment in the Target Equity Trust, Value Ten Series will
help mitigate any negative market price consequences stemming
from the trading of large volumes of securities and of the underlying
Equity Securities in Target Equity Trust, Value Ten Series in
a short, publicized period of time. The above procedures may,
however, be insufficient or unsuccessful in avoiding such price
consequences. In fact, market price trends may make it advantageous
to sell or buy more quickly or more slowly than permitted by these
procedures. Rollover Unit holders could then receive a less favorable
average Unit price than if they bought all their Units of the
Target Equity Trust, Value Ten Series on any given day of the
period.
It should also be noted that Rollover Unit holders may realize
taxable capital gains on the Special Redemption and Liquidation
but, in certain unlikely circumstances, will not be entitled to
a deduction for certain capital losses and, due to the procedures
for investing in the 1995 Trust, no cash would be distributed
at that time to pay any taxes. Included in the cash for the Special
Redemption and Liquidation will be an amount of cash attributable
to the second semi-annual distribution of dividend income; accordingly,
Rollover Unit holders also will not have cash distributed to pay
any taxes. See "What is the Federal Tax Status of Unit holders?"
In addition, during this period a Unit holder will be at risk
to the extent that Equity Securities are not sold and will not
have the benefit of any stock appreciation to the extent that
moneys have not been invested; for this reason, the Sponsor will
be inclined to sell and purchase the Equity Securities in as short
a period as they can without materially adversely affecting the
price of the Equity Securities.
Unit holders who do not inform the Distribution Agent that they
wish to have their Units so redeemed and liquidated ("Remaining
Unit holders") will continue to hold Units of the Trust as described
in this Prospectus until the Trust is terminated or until the
Mandatory Termination Date listed in the Summary of Essential
Information, whichever occurs first. These Remaining Unit holders
will not realize capital gains or losses due to the Special Redemption
and Liquidation, and will not be charged any additional sales
charge. If a large percentage of Unit holders become Rollover
Unit holders, the aggregate size of the Trust will be sharply
reduced. As a consequence, expenses, if any, in excess of the
amount to be borne by the Trustee would constitute a higher percentage
amount per Unit than prior to the Special Redemption, Liquidation
and Investment in the 1995 Trust. The Trust might also reduce
to the Discretionary Liquidation Amount listed in the Summary
of Essential Information because of the lesser number of Units
in the Trust, and possibly also due to a value reduction, however
temporary, in Units caused by the Sponsor's sales of Equity Securities;
if
Page 26
so, the Sponsor could then choose to liquidate the Trust without
the consent of the remaining Unit holders. See "How May the Indenture
be Amended or Terminated?" The Equity Securities remaining in
the Trust after the Special Redemption and Liquidation Period
will be sold by the Sponsor as quickly as possible without, in
its judgment, materially adversely affecting the market price
of the Equity Securities.
The Sponsor may for any reason, in its sole discretion, decide
not to sponsor the 1995 Trust or any subsequent series of the
Trust, without penalty or incurring liability to any Unit holder.
If the Sponsor so decides, the Sponsor shall notify the Unit holders
before the Special Redemption and Liquidation Period would have
commenced. All Unit holders will then be remaining Unit holders,
with rights to ordinary redemption as before. See "How May Units
be Redeemed?" The Sponsor may modify the terms of the 1995 Trust
or any subsequent series of the Trust. The Sponsor may also modify
the terms of the Special Redemption, Liquidation and Investment
in the 1995 Trust upon notice to the Unit holders prior to the
Rollover Notification Date specified in the Summary of Essential
Information.
INVESTORS SHOULD BE AWARE THAT THE STAFF OF THE DIVISION OF INVESTMENT
MANAGEMENT OF THE SECURITIES AND EXCHANGE COMMISSION IS OF THE
VIEW THAT THE ROLLOVER OPTION DESCRIBED IN THIS PROSPECTUS CONSTITUTES
AN "EXCHANGE OFFER" FOR THE PURPOSES OF SECTION 11(C) OF THE INVESTMENT
COMPANY ACT OF 1940, AND WOULD THEREFORE BE PROHIBITED ABSENT
AN EXEMPTIVE ORDER. THE SPONSOR HAS APPLIED FOR AN EXEMPTIVE ORDER
UNDER SECTION 11(C) WHICH WOULD PERMIT IT TO OFFER THE ROLLOVER
OPTION, BUT NO ASSURANCE CAN BE GIVEN THAT THE SEC WILL ISSUE
SUCH AN ORDER.
Also, because of the Special Redemption and Liquidation in the
1995 Trust, there is a possibility that the Trust may be reduced
below the Discretionary Liquidation Amount and that the Trust
could therefore be terminated at that time before the Mandatory
Termination Date of the Trust.
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase
such Units by notifying the Trustee before 1:00 p.m. Eastern time
on the same business day and by making payment therefor to the
Unit holder not later than the day on which the Units would otherwise
have been redeemed by the Trustee. Units held by the Sponsor may
be tendered to the Trustee for redemption as any other Units.
In the event the Sponsor does not purchase Units, the Trustee
may sell Units tendered for redemption in the over-the-counter
market, if any, as long as the amount to be received by the Unit
holder is equal to the amount he would have received on redemption
of the Units.
The offering price of any Units acquired by the Sponsor will be
in accord with the Public Offering Price described in the then
effective prospectus describing such Units. Any profit or loss
resulting from the resale or redemption of such Units will belong
to the Sponsor.
How May Equity Securities be Removed from the Trust?
The Portfolio of the Trust is not "managed" by the Sponsor or
the Trustee; their activities described herein are governed solely
by the provisions of the Indenture. The Indenture provides that
the Sponsor may (but need not) direct the Trustee to dispose of
an Equity Security in the event that an issuer defaults in the
payment of a dividend that has been declared, that any action
or proceeding has been instituted restraining the payment of dividends
or there exists any legal question or impediment affecting such
Equity Security, that the issuer of the Equity Security has breached
a covenant which would affect the payments of dividends, the credit
standing of the issuer or otherwise impair the sound investment
character of the Equity Security, that the issuer has defaulted
on the payment on any other of its outstanding obligations, that
the price of the Equity Security has declined to such an extent
or other such credit factors exist so that in the opinion of the
Sponsor, the retention of such Equity Securities would be detrimental
to the Trust. Except as stated under "Portfolio - What are Some
Additional Considerations for Investors?" for Failed Obligations,
the acquisition by the Trust of any securities or other property
other than the Equity Securities is prohibited. Pursuant to the
Indenture and with limited exceptions, the Trustee may sell any
securities or other property acquired in exchange for Equity Securities
such as those acquired in connection with a merger or other transaction.
If offered such new or exchanged securities or property, the Trustee
shall reject the offer. However, in the event such securities
or property are nonetheless acquired by the Trust, they may be
accepted for
Page 27
deposit in the Trust and either sold by the Trustee or held in
the Trust pursuant to the direction of the Sponsor (who may rely
on the advice of the Portfolio Supervisor). Proceeds from the
sale of Equity Securities by the Trustee are credited to the Capital
Account of the Trust for distribution to Unit holders or to meet
redemptions.
The Trustee may also sell Equity Securities designated by the
Sponsor, or if not so directed, in its own discretion, for the
purpose of redeeming Units of the Trust tendered for redemption
and the payment of expenses.
The Sponsor, in designating Equity Securities to be sold by the
Trustee, will generally make selections in order to maintain,
to the extent practicable, the proportionate relationship among
the number of shares of individual issues of Equity Securities.
To the extent this is not practicable, the composition and diversity
of the Equity Securities may be altered. In order to obtain the
best price for the Trust, it may be necessary for the Sponsor
to specify minimum amounts (generally 100 shares) in which blocks
of Equity Securities are to be sold.
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 $7.5 billion in First Trust unit investment
trusts have been deposited. The Sponsor's employees include a
team of professionals with many years of experience in the unit
investment trust industry. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and Securities Investor
Protection Corporation and has its principal offices at 1001 Warrenville
Road, Lisle, Illinois 60532; telephone number (708) 241-4141.
As of August 31, 1993, the total partners' capital of Nike Securities
L.P. was $14,270,063 (unaudited). (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 Trust 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 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 Equity Securities. For information relating
to the responsibilities of the Trustee under the Indenture, reference
is made to the material set forth under "Rights of Unit Holders."
The Trustee and any successor trustee may resign by executing
an instrument in writing and filing the same with the Sponsor
and mailing a copy of a notice of resignation to all Unit holders.
Upon receipt of such notice, the Sponsor is obligated to appoint
a successor trustee promptly. If the Trustee becomes incapable
of acting or becomes bankrupt or its affairs are taken over by
public authorities, the Sponsor may remove the Trustee and appoint
a successor as provided in the Indenture. If upon resignation
of a trustee no successor has accepted the appointment within
30 days after notification, the retiring trustee may apply to
a court of competent jurisdiction for the appointment of a successor.
The resignation or removal of a trustee becomes effective only
when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Page 28
Any corporation into which a Trustee may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which a Trustee shall be a party, shall
be the successor Trustee. The Trustee must be a banking corporation
organized under the laws of the United States or any State and
having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit
holders for taking any action or for refraining from taking any
action in good faith pursuant to the Indenture, or for errors
in judgment, but shall be liable only for their own willful misfeasance,
bad faith, gross negligence (ordinary negligence in the case of
the Trustee) or reckless disregard of their obligations and duties.
The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Equity Securities.
In the event of the failure of the Sponsor to act under the Indenture,
the Trustee may act thereunder and shall not be liable for any
action taken by it in good faith under the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Equity Securities or
upon the interest thereon or upon it as Trustee under the Indenture
or upon or in respect of the Trust which the Trustee may be required
to pay under any present or future law of the United States of
America or of any other taxing authority having jurisdiction.
In addition, the Indenture contains other customary provisions
limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or becomes incapable of acting or becomes bankrupt or
its affairs are taken over by public authorities, then the Trustee
may (a) appoint a successor Sponsor at rates of compensation deemed
by the Trustee to be reasonable and not exceeding amounts prescribed
by the Securities and Exchange Commission, or (b) terminate the
Indenture and liquidate the Trust as provided herein, or (c) continue
to act as Trustee without terminating the Indenture.
Who is the Evaluator?
The Evaluator is 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.
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment
is (1) to cure any ambiguity or to correct or supplement any provision
of the Indenture which may be defective or inconsistent with any
other provision contained therein, or (2) to make such other provisions
as shall not adversely affect the interest of the Unit holders
(as determined in good faith by the Sponsor and the Trustee).
The Indenture provides that the Trust shall terminate upon the
Mandatory Termination Date indicated herein under "Summary of
Essential Information." The Trust may be liquidated at any time
by consent of 100% of the Unit holders of the Trust or by the
Trustee when the value of the Equity Securities owned by the Trust
as shown by any evaluation, is less than the lower of $2,000,000
or 20% of the total value of Equity Securities deposited in such
Trust during the primary offering period, or in the event that
Units of the Trust not yet sold aggregating more than 60% of the
Units of the Trust are tendered for redemption by the Underwriter,
Page 29
including the Sponsor. If the Trust is liquidated because of
the redemption of unsold Units of the Trust by the Underwriter,
the Sponsor will refund to each purchaser of Units of the Trust
the entire sales charge paid by such purchaser. In the event of
termination, written notice thereof will be sent by the Trustee
to all Unit holders of the Trust. Within a reasonable period after
termination, the Trustee will follow the procedures set forth
under "How are Income and Capital Distributed?" Also, because
of the Special Redemption and Liquidation in New Trust, there
is a possibility that the Trust may be reduced below the Discretionary
Liquidation Amount and that the Trust could therefore be terminated
at that time before the Mandatory Termination Date of the Fund.
Commencing on the Mandatory Termination Date, Equity Securities
will begin to be sold in connection with the termination of the
Trust. The Sponsor will determine the manner, timing and execution
of the sale of the Equity Securities. Written notice of any termination
of the Trust specifying the time or times at which Unit holders
may surrender their certificates for cancellation shall be given
by the Trustee to each Unit holder at his address appearing on
the registration books of the Trust maintained by the Trustee.
At least 60 days prior to the Mandatory Termination Date of the
Trust the Trustee will provide written notice thereof to all Unit
holders and will include with such notice a form to enable Unit
holders to elect a distribution of shares of Equity Securities
(reduced by customary transfer and registration charges), if such
Unit holder owns at least 2,500 Units of the Trust, rather than
to receive payment in cash for such Unit holder's pro rata share
of the amounts realized upon the disposition by the Trustee of
Equity Securities. To be effective, the election form, together
with surrendered certificates and other documentation required
by the Trustee, must be returned to the Trustee at least five
business days prior to the Mandatory Termination Date of the Trust.
Unit holders not electing a distribution of shares of Equity Securities
and who do not elect the Rollover Option will receive a cash distribution
from the sale of the remaining Equity Securities within a reasonable
time after the Trust is terminated. Regardless of the distribution
involved, the Trustee will deduct from the funds of the Trust
any accrued costs, expenses, advances or indemnities provided
by the Trust Agreement, including estimated compensation of the
Trustee and costs of liquidation and any amounts required as a
reserve to provide for payment of any applicable taxes or other
governmental charges. Any sale of Equity Securities in the Trust
upon termination may result in a lower amount than might otherwise
be realized if such sale were not required at such time. The Trustee
will then distribute to each Unit holder his pro rata share of
the balance of the Income and Capital Accounts.
Legal Opinions
The legality of the Units offered hereby and certain matters relating
to Federal tax law have been passed upon by Chapman and Cutler,
111 West Monroe Street, Chicago, Illinois 60603, as counsel for
the Sponsor. Carter, Ledyard & Milburn, will act as counsel for
the Trustee and as special New York tax counsel for the Trust.
Experts
The statement of net assets, including the schedule of investments,
of the Trust at the opening of business on the Initial Date of
Deposit appearing in this 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.
Page 30
UNDERWRITING
The Underwriters named below, including the Sponsor, have purchased
Units in the following respective amounts:
<TABLE>
<CAPTION>
Number of
Name Address Units
____ _______ __________
<S> <C> <C>
Sponsor
Nike Securities L.P. 1001 Warrenville Rd., Lisle, IL 60532 15,500
Underwriters
A.G. Edwards & Sons, Inc.* One North Jefferson Avenue, St. Louis, MO 63103 5,000
Gruntal & Co., Incorporated* 14 Wall Street, 14th Floor, New York, NY 10005 5,000
Kemper Securities, Inc.* 77 West Wacker Drive, 28th Floor, 5,000
Chicago, IL 60601
B.C. Christopher Division 4717 Grand Ave., Suite 700, Kansas City, MO 64112 1,500
of Fahnestock Inc.
Advest, Inc. One Commercial Plaza, 280 Trumbull Street, 18th Floor, 1,000
Hartford, CT 06103
Boenning & Scattergood Inc. Four Falls Corporate Center, Suite 212, Rte. 23, 1,000
West Conshohochen, PA 19428
Bryn Mawr Investment Group, Inc. 919 Conestoga Road, Bldg. 2, Suite 306,
Rosemont, PA 19085 1,000
Dain Bosworth Incorporated Dain Bosworth Plaza, 60 S. 6th Street, 14th Floor, 1,000
Minneapolis, MN 55402-4422
D.A. Davidson D.A. Davidson Building, Great Falls, MT 59401 1,000
First of Michigan Corporation 100 Renaissance Center, 26th Floor, Detroit, MI 48243 1,000
Huntleigh Securities Corporation 222 South Central, Suite 300, St. Louis, MO 63105 1,000
John G. Kinnard 1700 Northstar West, Minneapolis, MN 55402-9963 1,000
& Co., Incorporated
Legg Mason Wood Walker, Inc. 111 South Calvert Street, Baltimore, MD 21203-1476 1,000
McDonald & Company Securities, Inc. 800 Superior Street, Suite 2100, Cleveland, OH 44114 1,000
Morgan Keegan & Morgan Keegan Tower, 50 Front Street, Memphis, 1,000
Company, Incorporated TN 38103
W.H. Newbold's Son & Co., Inc. 1500 Walnut Street, 15th Floor, Philadelphia, PA 19102 1,000
Oppenheimer & Co., Inc. Oppenheimer Tower, One World Financial Center, 1,000
New York, NY 10281
Rauscher Pierce Refsnes, Inc. Plaza of the Americas, 2200 Rauscher Pierce
Refsnes Tower, Dallas, TX 75201 1,000
Raymond James & Associates, Inc. 880 Carillon Parkway, St. Petersburg, FL 33710 1,000
Roosevelt & Cross Incorporated 20 Exchange Place, 47th Floor, New York, NY 10005 1,000
Spelman & Co. , Inc. 2355 Northside Drive, Suite 200, San Diego, CA 92018 1,000
Stern (M.L.) & Co., Inc. 8350 Wilshire Blvd., Beverly Hills, CA 90211 1,000
__________
50,000
==========
</TABLE>
[FN]
* These Underwriters have purchased a minimum of 50,000 Units
on the Initial Date of Deposit, and have indicated their intention
ated their intention
to purchase a total of at least 100,000 Units from the Sponsor
during the initial offering period enabling them to qualify for
a 2.60% Underwriting Concession.
On the Initial Date of Deposit, the Underwriters of the Trust
became the owners of the Units of the Trust and entitled to the
benefits thereof, as well as the risks inherent therein.
The Underwriter Agreement provides that a public offering of the
Units of the Trust will be made at the Public Offering Price described
in the prospectus. Units may also be sold to or through dealers
and others during the initial offering period and in the secondary
market at prices representing a concession or agency commission
as described in "Public Offering-How are Units Distributed?"
The Underwriters have agreed to underwrite additional Units of
the Trust as they become available. The Sponsor will receive from
the Underwriters the excess over the gross sales commission contained
in the following table:
Page 31
Underwriting Concessions
________________________
$100,000-999,999 $1,000,000 or more
Underwritten Underwritten
________________ ___________________
2.30% 2.60%
From time to time the Sponsor may implement programs under which
Underwriters and dealers of the Trust may receive nominal awards
from the Sponsor for each of their registered representatives
who have sold a minimum number of UIT Units during a specified
time period. In addition, at various times the Sponsor may implement
other programs under which the sales force of an Underwriter or
dealer may be eligible to win other nominal awards for certain
sales efforts, or under which the Sponsor will reallow to any
such Underwriter or dealer that sponsors sales contests or recognition
programs conforming to criteria established by the Sponsor, or
participates in sales programs sponsored by Sponsor, an amount
not exceeding the total applicable sales charges on the sales
generated by such person at the public offering price during such
programs. Also, the Sponsor in its discretion may from time to
time pursuant to objective criteria established by the Sponsor
pay fees to qualifying Underwriters or dealers for certain services
or activities which are primarily intended to result in sales
of Units of the Trust. Such payments are made by the Sponsor out
of its own assets, and not out of the assets of the Trust. These
programs will not change the price Unit holders pay for their
Units or the amount that the Trust will receive from the Units
sold.
The Sponsor may from time to time in its advertising and sales
materials compare the returns on the Trust and returns over specified
periods on other similar Trusts sponsored by Nike Securities L.P.
with returns on investments such as corporate or U.S. Government
bonds, bank CDs and money market accounts or money market funds,
each of which has investment characteristics that may differ from
those of the Trust. U.S. Government bonds, for example, are backed
by the full faith and credit of the U.S. Government and bank CDs
and money market accounts are insured by an agency of the federal
government. Money market accounts and money market funds provide
stability of principal, but pay interest at rates that vary with
the condition of the short-term debt market. The investment characteristics
of the Trust are described more fully elsewhere in this Prospectus.
Information on percentage changes in the dollar value of Units,
on the basis of changes in Unit price plus the amount of dividends
and capital gains distributed or reinvested may be included from
time to time in advertisements, sales literature, reports and
other information furnished to current or prospective Unit holders.
Total return figures are not averaged, and may not reflect deduction
of the sales charge, which would decrease the return. Average
annualized return figures reflect deduction of the maximum sales
charge. No provision is made for any income taxes payable.
Past performance may not be indicative of future results. The
Trust is not actively managed. Unit price and return fluctuate
with the value of the common stocks in the portfolio, so there
may be a gain or loss when Units are sold.
Trust performance may be compared to performance on the same basis
(with distributions reinvested) of the Dow Jones Industrial Average,
the S&P 500 Composite Price Stock Index, or performance data from
Lipper Analytical Services, Inc. and Morningstar Publications,
Inc. or from publications such as Money Magazine, The New York
Times, U.S. News and World Report, Business Week, Forbes Magazine
or Fortune Magazine. As with other performance data, performance
comparisons should not be considered representative of the Trust's
relative performance for any future period.
Page 32
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 89
We have audited the accompanying statement of net assets, including
the schedule of investments, of Target Equity Trust, Value Ten
Series 3, comprising The First Trust Special Situations Trust,
Series 89 as of the opening of business on January 12, 1994. This
statement of net assets is the responsibility of the Trust's Sponsor.
Our responsibility is to express an opinion on this statement
of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the statement
of net assets is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the statement of net assets. Our procedures included
confirmation of the letter of credit held by the Trustee and deposited
in the Trust on January 12, 1994. An audit also includes assessing
the accounting principles used and significant estimates made
by the Sponsor, as well as evaluating the overall presentation
of the statement of net assets. We believe that our audit of the
statement of net assets provides a reasonable basis for our opinion.
In our opinion, the statement of net assets referred to above
presents fairly, in all material respects, the financial position
of Target Equity Trust, Value Ten Series 3, comprising The First
Trust Special Situations Trust, Series 89 at the opening of business
on January 12, 1994 in conformity with generally accepted accounting
principles.
ERNST & YOUNG
Chicago, Illinois
January 12, 1994
Page 33
Statement of Net Assets
Target Equity Trust, Value Ten Series 3
The First Trust Special Situations Trust, Series 89
At the Opening of Business on the Initial Date of Deposit
January 12, 1994
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by purchase
contracts (1) (2) $ 481,511
==========
Units outstanding 50,000
==========
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (3) $ 499,493
Less sales charge (3) (17,982)
__________
Net Assets $ 481,511
==========
</TABLE>
NOTES TO STATEMENT OF NET ASSETS
[FN]
(1) Aggregate cost of the Equity Securities listed under "Schedule
of Investments" is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $600,000 issued
by Bankers Trust Company has been deposited with the Trustee covering
the monies necessary for the purchase of the Equity Securities
pursuant to purchase contracts for such Equity Securities.
(3) The aggregate cost to investors includes a sales charge computed
at the rate of 3.6% of the Public Offering Price, (equivalent
to 3.734% of the net amount invested), assuming no reduction of
sales charge for quantity purchases.
Page 34
Schedule of Investments
Target Equity Trust, Value Ten Series 3
The First Trust Special Situations Trust, Series 89
At the Opening of Business on the Initial Date of Deposit
January 12, 1994
<TABLE>
<CAPTION>
Market Cost of
Number Percentage Value Equity Current
of Ticker Symbol and of Aggregate per Securities Dividend
Shares Name of Issuer of Equity Securities (1) Offering Price Share to Trust (2) Yield (3)
______ _______________________________________ ______________ ______ ____________ _________
<C> <S> <C> <C> <C> <C>
1,574 AXP American Express Company 10.05% $30.750 $ 48,401 3.25%
531 CHV Chevron Corp. 10.01% 90.750 48,188 3.86%
916 DD E.I. du Pont de Nemours &
Company 9.89% 52.000 47,632 3.38%
1,037 EK Eastman Kodak Company 9.91% 46.000 47,702 4.35%
743 XON Exxon Corp. 9.95% 64.500 47,923 4.47%
695 JPM J.P. Morgan & Company, Inc. 10.00% 69.250 48,129 3.93%
826 MO Philip Morris Companies, Inc. 10.01% 58.375 48,218 4.45%
732 TX Texaco, Inc. 10.05% 66.125 48,403 4.84%
2,179 UK Union Carbide Corporation 10.07% 22.250 48,483 3.37%
1,947 Z Woolworth Corporation 10.06% 24.875 48,432 4.66%
_______ _______
Total Investments 100% $481,511
======= =======
</TABLE>
[FN]
(1) All Equity Securities are represented by regular way contracts
to purchase such Equity Securities for the performance of which
an irrevocable letter of credit has been deposited with the Trustee.
The purchase contracts for the Equity Securities were entered
into by the Sponsor on January 11, 1994.
(2) The cost of the Equity Securities to the Trust represents
the aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the closing sale prices of the
Equity Securities on January 11, 1994). The valuation of the Equity
Securities has been determined by the Evaluator, certain shareholders
of which are officers of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit
was $481,511. Cost and loss to Sponsor relating to the Equity
Securities sold to the Trust were $481,602 and $91, respectively.
(3) Current Dividend Yield for each Equity Security was calculated
by annualizing the last quarterly or semi-annual ordinary dividend
received on that Equity Security and dividing the result by that
Equity Security's closing sale price on January 11, 1994.
Page 35
<TABLE>
<CAPTION>
CONTENTS:
<S> <C>
Summary of Essential Information 4
Target Equity Trust, Value Ten Series 3
The First Trust Special Situations Trust, Series 89
What is The First Trust Special Situations Trust? 5
What are the Expenses and Charges? 6
What is the Federal Tax Status of Unit Holders? 7
Why are Investments in the Trust Suitable
for Retirement Plans? 10
Portfolio:
What are Equity Securities? 11
The Dow Jones Industrial Average, Historical
Perspective 12
The Dow Jones Industrial Average 12
What are the Equity Securities Selected for
Target Equity Trust, Value Ten Series 3? 12
What are Some Additional Considerations
for Investors? 15
Public Offering:
How is the Public Offering Price Determined? 19
How are Units Distributed? 20
What are the Sponsor's Profits? 21
Will There be a Secondary Market? 21
Rights of Unit Holders:
How is Evidence of Ownership Issued
and Transferred? 21
How are Income and Capital Distributed? 22
What Reports will Unit Holders Receive? 23
How May Units be Redeemed? 23
Special Redemption, Liquidation and
Investment in the New Trust 25
How May Units be Purchased by the Sponsor? 27
How May Equity Securities be Removed
from the Trust? 27
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 28
Who is the Trustee? 28
Limitations on Liabilities of Sponsor and Trustee 29
Who is the Evaluator? 29
Other Information:
How May the Indenture be Amended
or Terminated? 29
Legal Opinions 30
Experts 30
Underwriting 31
Report of Independent Auditors 33
Statement of Net Assets 34
Schedule of Investments 35
</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 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
Target Equity Trust,
Value Ten Series 3
First Trust
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
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
January 12, 1994
Page 36
-APPENDIX-
The graph which appears on page 15 of the prospectus represents
a comparison between a $10,000 investment made on January 1, 1974
in those stocks which comprise the Dow Jones Industrial Average
and an identical investment in the 10 common stocks in the Dow
Jones Industrial Average having the highest dividend yield as
of December 31 of each respective year. The chart indicates that
$10,000 invested on January 1, 1974 in the stocks which comprise
the Dow Jones Industrial Average would presently be worth $106,495
as opposed to $252,889 had the $10,000 been invested in the 10
common stocks in the Dow Jones Industrial Average having the highest
dividend yield as of December 31 of each respective year. Both
figures assume that dividends received during each year will be
reinvested at year end and sales charges, commissions, expenses
and taxes were not considered in determining total returns.
Page 37
CONTENTS OF REGISTRATION STATEMENT
A. Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Brokers' Fidelity Bond,
in the total amount of $1,000,000, the insurer being
National Union Fire Insurance Company of Pittsburgh.
B. This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
S-1
SIGNATURES
The Registrant, The First Trust Special Situations Trust,
Series 89, hereby identifies The First Trust Special Situations
Trust, Series 4 Great Lakes Growth and Treasury Trust, Series 1
and The First Trust Special Situations Trust, Series 18 Wisconsin
Growth and Treasury Securities Trust, Series 1, for purposes of
the representations required by Rule 487 and represents the
following:
(1) that the portfolio securities deposited in the series
as to the securities of which this Registration Statement is
being filed do not differ materially in type or quality from
those deposited in such previous series;
(2) that, except to the extent necessary to identify the
specific portfolio securities deposited in, and to provide
essential financial information for, the series with respect to
the securities of which this Registration Statement is being
filed, this Registration Statement does not contain disclosures
that differ in any material respect from those contained in the
registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and
(3) that it has complied with Rule 460 under the Securities
Act of 1933.
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The First Trust Special Situations Trust, Series
89, has duly caused this Amendment to Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the Village of Lisle and State of Illinois on
January 12, 1994.
THE FIRST TRUST SPECIAL SITUATIONS
TRUST, SERIES 89
By NIKE SECURITIES L.P.
Depositor
By Carlos E. Nardo
Senior Vice President
S-2
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below by the following person in the capacity and on the date
indicated:
NAME TITLE* DATE
Robert D. Van Kampen Sole Director )
of Nike Securities )
Corporation, the ) January 12, 1994
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-3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated January 12, 1994 in
Amendment No. 1 to the Registration Statement (Form S-6) (File
No. 33-51623) and related Prospectus of The First Trust Special
Situations Trust, Series 89.
ERNST & YOUNG
Chicago, Illinois
January 12, 1994
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF SECURITIES EVALUATION SERVICE, INC.
The consent of Securities Evaluation Service, Inc. to the
use of its name in the Prospectus included in the Registration
Statement will be filed as Exhibit 4.1 to the Registration
Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 22 and
certain subsequent Series, effective November 20, 1991
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and First Trust
Advisors L.P. as Portfolio Supervisor (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
43693] filed on behalf of The First Trust Special
Situations Trust, Series 22).
1.1.1 Form of Trust Agreement for Series 89 among Nike
Securities L.P., as Depositor, United States Trust
Company of New York, as Trustee, Securities Evaluation
Service, Inc., as Evaluator, and First Trust Advisors
L.P., as Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities
L.P., Depositor (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-
6 [File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
1.6 Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42755] filed on
behalf of The First Trust Special Situations Trust,
Series 19).
2.1 Copy of Certificate of Ownership (included in Exhibit
1.1 filed herewith on page 2 and incorporated herein by
reference).
S-5
3.1 Opinion of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal income tax status of
securities being registered.
3.3 Opinion of counsel as to New York income tax status of
securities being registered.
3.4 Opinion of counsel as to advancement of funds by
Trustee.
4.1 Consent of Securities Evaluation Service, Inc.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on
page S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
S-6
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 89
TRUST AGREEMENT
Dated: January 12, 1994
The Trust Agreement among Nike Securities L.P., as
Depositor, United States Trust Company of New York, as Trustee,
Securities Evaluation Service, Inc., as Evaluator, and First
Trust Advisors L.P., as Portfolio Supervisor, sets forth certain
provisions in full and incorporates other provisions by reference
to the document entitled "Standard Terms and Conditions of Trust
for The First Trust Special Situations Trust, Series 22 and
certain subsequent Series, Effective November 20, 1991" (herein
called the "Standard Terms and Conditions of Trust"), and such
provisions as are incorporated by reference constitute a single
instrument. All references herein to Articles and Sections are
to Articles and Sections of the Standard Terms and Conditions of
Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II and Part III hereof,
all the provisions contained in the Standard Terms and Conditions
of Trust are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully and
to the same extent as though said provisions had been set forth
in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit is 50,000 Units.
(2) The initial fractional undivided interest in and
ownership of the Trust represented by each Unit thereof shall be
1/50,000.
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio is as follows on the Initial Date
of Deposit:
10.05% American Express Company, 10.01%
Chevron Corp., 9.89% E.I. du Pont de Nemours
& Company, 9.91% Eastman Kodak Company, 9.95%
Exxon Corp., 10.00% J.P. Morgan & Company,
Inc., 10.01% Philip Morris Companies, Inc.,
10.05% Texaco, Inc., 10.07% Union Carbide
Corporation, 10.06% Woolworth Corporation.
D. The Record Date shall be as set forth in the prospectus
for the sale of Units dated the date hereof (the "Prospectus")
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee of $0.30 per 1,000 Units, calculated based on
the largest number of Units outstanding during each period in
respect of which a payment is made pursuant to Section 3.05.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee of $0.90 per 1,000 Units, calculated based on
the largest number of Units outstanding during each period in
respect of which a payment is made pursuant to Section 3.05.
However, in no event, except as may otherwise be provided in the
Standard Terms and Conditions of Trust, shall the Trustee receive
compensation in any one year from any Trust of less than $2,000
for such annual compensation.
I. The Initial Date of Deposit for the Trust is January
12, 1993.
J. The minimum amount of Equity Securities to be sold by
the Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
K. Section 1.01(26) shall be amended to read as follows:
"(26) The term "Rollover Unit holder" shall be
defined as set forth in Section 5.05, herein."
L. Section 1.01(27) shall be amended to read as follows:
"(27) The "Rollover Notification Date" shall be
defined as set forth in the Prospectus under "Summary
of Essential Information."
M. Section 1.01(28) shall be amended to read as follows:
"(28) The term "Rollover Distribution" shall be
defined as set forth in Section 5.05, herein."
N. Section 1.01(29) shall be amended to read as follows:
"(29) The term "Distribution Agent" shall refer
to the Trustee acting in its capacity as distribution
agent pursuant to Section 5.02 herein."
O. Section 1.01(30) shall be amended to read as follows:
"(30) The term "Special Redemption and
Liquidation Period" shall be as set forth in the
Prospectus under "Summary of Essential Information."
PART III
A. The term "Capital Account" as set forth in the
Prospectus shall be deemed to refer to the "Principal Account."
B. The following sentence shall be substituted for the
second sentence of paragraph (b) of Section 2.01:
The Depositor, in each case, shall ensure that each
deposit of additional Securities pursuant to this Section
shall be, as nearly as is practicable, in the identical
ratio as the Percentage Ratio for such Securities as is
specified in the Trust Agreement for each Trust (provided,
however, that any deposit of additional securities made
subsequent to the 90-day period following the first deposit
of securities in the Trust shall exactly replicate such
Percentage Ratio), and the Depositor shall ensure that such
Securities are identical to those deposited on the Initial
Date of Deposit.
C. The second paragraph of Section 3.02 of the Standard
Terms and Conditions is hereby deleted and replaced with the
following sentence:
"Any non-cash distributions (other than a non-
taxable distribution of the shares of the distributing
corporation which shall be retained by the Trust) received
by the Trust shall be dealt with in the manner described at
Section 3.11, herein, and shall be retained or disposed of
by the Trust according to those provisions. The proceeds of
any disposition shall be credited to the Income Account of
the Trust. Neither the Trustee nor the Depositor shall be
liable or responsible in any way for depreciation or loss
incurred by reason of any such sale."
D. Paragraph (c) of Subsection II of Section 3.05 of the
Standard Terms and Conditions of Trust is hereby amended to read
as follows:
"On each Distribution Date the Trustee shall distribute
to each Unit holder of record at the close of business on
the Record Date immediately preceding such Distribution Date
an amount per Unit equal to such Unit holder's pro rata
share of the balance of the Principal Account (except for
monies on deposit therein required to purchase Contract
Obligations) computed as of the close of business on such
Record Date after deduction of any amounts provided in
Subsection I."
E. Section 3.05.II(a) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (a) On each Distribution Date, the Trustee shall
distribute to each Unit holder of record at the close of
business on the Record Date immediately preceding such
Distribution Date an amount per Unit equal to such Unit
holder's Income Distribution (as defined below), plus such
Unit holder's pro rata share of the balance of the Principal
Account (except for monies on deposit therein required to
purchase Contract Obligations) computed as of the close of
business on such Record Date after deduction of any amounts
provided in Subsection I, provided, however, that the
Trustee shall not be required to make a distribution from
the Principal Account unless the amount available for
distribution shall equal $1.00 per 1,000 Units.
The Trust shall provide the following distribution
elections: (1) distributions to be made by check mailed to
the post office address of the Unit holder as it appears on
the registration books of the Trustee, or (2) the following
reinvestment option:
The Trustee will, for any Unit holder who provides
the Trustee written instruction, properly executed and
in form satisfactory to the Trustee, received by the
Trustee no later than its close of business 10 business
days prior to a Record Date (the "Reinvestment Notice
Date"), reinvest such Unit holder's distribution from
the Income and Capital Accounts in Units of the Trust,
purchased from the Depositor, to the extent the
Depositor shall make Units available for such purchase,
at the Depositor's offering price as of the fifth
business day prior to the following Distribution Date,
and at such reduced sales charge as may be described in
the prospectus for the Trust. If, for any reason, the
Depositor does not have Units of the Trust available
for purchase, the Trustee shall distribute such Unit
holder's distribution from the Income and Capital
Accounts in the manner provided in clause (1) of the
preceding paragraph. The Trustee shall be entitled to
rely on a written instruction received as of the
Reinvestment Notice Date and shall not be affected by
any subsequent notice to the contrary. The Trustee
shall have no responsibility for any loss or
depreciation resulting from any reinvestment made in
accordance with this paragraph, or for any failure to
make such reinvestment in the event the Depositor does
not make Units available for purchase.
Any Unit holder who does not effectively elect
reinvestment in Units of the Trust pursuant to the preceding
paragraph shall receive a cash distribution in the manner
provided in clause (1) of the second preceding paragraph."
F. Section 3.05.II(b) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (b) For purposes of this Section 3.05, the Unit
holder's Income Distribution shall be equal to such Unit
holder's pro rata share of the cash balance in the Income
Account computed as of the close of business on the Record
Date immediately preceding such Income Distribution after
deduction of (i) the fees and expenses then deductible
pursuant to Section 3.05.I. and (ii) the Trustee's estimate
of other expenses properly chargeable to the Income Account
pursuant to the Indenture which have accrued, as of such
Record Date, or are otherwise properly attributable to the
period to which such Income Distribution relates."
G. Section 3.11 of the Standard Terms and Conditions of
Trust is hereby deleted in its entirety and replaced with the
following language:
"Section 3.11. Notice to Depositor.
In the event that the Trustee shall have been notified
at any time of any action to be taken or proposed to be
taken by at least a legally required number of holders of
any Securities deposited in a Trust, the Trustee shall take
such action or omit from taking any action, as appropriate,
so as to insure that the Securities are voted as closely as
possible in the same manner and the same general proportion
as are the Securities held by owners other than the Trust.
In the event that an offer by the issuer of any of the
Securities or any other party shall be made to issue new
securities, or to exchange securities, for Trust Securities,
the Trustee shall reject such offer. However, should any
issuance, exchange or substitution be effected
notwithstanding such rejection or without an initial offer,
any securities, cash and/or property received shall be
deposited hereunder and shall be promptly sold, if
securities or property, by the Trustee pursuant to the
Depositor's direction, unless the Depositor advises the
Trustee to keep such securities or property. The Depositor
may rely on the Portfolio Supervisor in so advising the
Trustee. The cash received in such exchange and cash
proceeds of any such sales shall be distributed to Unit
holders on the next distribution date in the manner set
forth in Section 3.05 regarding distributions from the
Principal Account. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by
reason of any such sale.
Neither the Depositor nor the Trustee shall be liable
to any person for any action or failure to take action
pursuant to the terms of this Section 3.11.
Whenever new securities or property is received and
retained by the Trust pursuant to this Section 3.11, the
Trustee shall, within five days thereafter, mail to all Unit
holders of the Trust notices of such acquisition unless
legal counsel for the Trust determines that such notice is
not required by The Investment Company Act of 1940, as
amended."
H. Section 5.02 of the Standard Terms and Conditions of
Trust is amended by adding the following after the second
paragraph of such section:
"Notwithstanding anything herein to the contrary, in
the event that any tender of Units pursuant to this Section
5.02 would result in the disposition by the Trustee of less
than a whole Security, the Trustee shall distribute cash in
lieu thereof and sell such Securities as directed by the
Sponsors as required to make such cash available.
Unit holders may redeem 2,500 Units or more and request
a distribution in kind of (i) such Unit holder's pro rata
portion of each of the Securities in the Trust, in whole
shares, and (ii) cash equal to such Unit holder's pro rata
portion of the Income and Principal Accounts as follows:
(x) a pro rata portion of the net proceeds of sale of the
Securities representing any fractional shares included in
such Unit holder's pro rata share of the Securities and
(y) such other cash as may properly be included in such Unit
holder's pro rata share of the sum of the cash balances of
the Income and Principal Accounts in an amount equal to the
Unit Value determined on the basis of a Trust Fund
Evaluation made in accordance with Section 5.01 determined
by the Trustee on the date of tender less amounts determined
in clauses (i) and (ii)(x) of this Section. Subject to
Section 5.05 with respect to Rollover Unit holders, to the
extent possible, distributions of Securities pursuant to an
in kind redemption of Units shall be made by the Trustee
through the distribution of each of the Securities in book-
entry form to the account of the Unit holder's bank or
broker-dealer at the Depository Trust Company. Any
distribution in kind will be reduced by customary transfer
and registration charges."
I. The following Section 5.05 shall be added:
"Section 5.05. Rollover of Units. (a) If the
Depositor shall offer a subsequent series of Focus
Investment Trust, Series 1 (the "new Series"), the Trustee
shall, at the Depositor's sole cost and expense, include in
the notice sent to Unit holders specified in Section 8.02 a
form of election whereby Unit holders, whose redemption
distribution would be in an amount sufficient to purchase at
least one Unit of the New Series, may elect to have their
Units(s) redeemed in kind in the manner provided in Section
5.02, the Securities included in the redemption distribution
sold, and the cash proceeds applied by the Distribution
Agent to purchase Units of the New Series, all as
hereinafter provided. The Trustee shall honor properly
completed election forms returned to the Trustee,
accompanied by any Certificate evidencing Units tendered for
redemption or a properly completed redemption request with
respect to uncertificated Units, by its close of business on
the Rollover Notification Date.
All Units so tendered by a Unit holder (a "Rollover
Unit holder") shall be redeemed and cancelled on the
Rollover Notification Date. Subject to payment by such
Rollover Unit holder of any tax or other governmental
charges which may be imposed thereon, such redemption is to
be made in kind pursuant to Section 5.02 by distribution of
cash and/or Securities to the Distribution Agent on the
Rollover Notification Date of the net asset value
(determined on the basis of the Trust Fund Evaluation as of
the Rollover Notification Date in accordance with
Section 4.01) multiplied by the number of Units being
redeemed (herein called the "Rollover Distribution"). Any
Securities that are made part of the Rollover Distribution
shall be valued for purposes of the redemption distribution
as of the Rollover Notification Date.
All Securities included in a Unit holder's Rollover
Distribution shall be sold by the Distribution Agent during
the Special Redemption and Liquidation Period specified in
the Prospectus pursuant to the Depositor's direction, and
the Distribution Agent shall employ the Depositor as broker
in connection with such sales. For such brokerage services,
the Depositor shall be entitled to compensation at its
customary rates, provided however, that its compensation
shall not exceed the amount authorized by applicable
Securities laws and regulations. The Depositor shall direct
that sales be made in accordance with the guidelines set
forth in the Prospectus under the heading "Special
Redemption, Liquidation and Investment in New Trust."
Should the Depositor fail to provide direction, the
Distribution Agent shall sell the Securities in the manner
provided in the prospectus for " less liquid Equity
Securities." The Distribution Agent shall have no
responsibility for any loss or depreciation incurred by
reason of any sale made pursuant to this Section.
Upon each trade date for sales of Securities included
in the Rollover Unit holder's Rollover Distribution, the
Distribution Agent shall, as agent for such Rollover Unit
holder, enter into a contract with the Depositor to purchase
from the Depositor Units of the New Series (if any), at the
Depositor's public offering price for such Units on such
day, and at such reduced sales charge as shall be described
in the prospectus for the Trust. Such contract shall
provide for purchase of the maximum number of Units of the
New Series whose purchase price is equal to or less than the
cash proceeds held by the Distribution Agent for the Unit
holder on such day (including therein the proceeds
anticipated to be received in respect of Securities traded
on such day net of all brokerage fees, governmental charges
and any other expenses incurred in connection with such
sale), to the extent Units are available for purchase from
the Depositor. In the event a sale of Securities included
in the Rollover Unit holder's redemption distribution shall
not be consummated in accordance with its terms, the
Distribution Agent shall apply the cash proceeds held for
such Unit holder as of the settlement date for the purchase
of Units of the New Series to purchase the maximum number of
units which such cash balance will permit, and the Depositor
agrees that the settlement date for Units whose purchase was
not consummated as a result of insufficient funds will be
extended until cash proceeds from the Rollover Distribution
are available in a sufficient amount to settle such
purchase. If the Unit holder's Rollover Distribution will
produce insufficient cash proceeds to purchase all of the
Units of the New Series contracted for, the Depositor agrees
that the contract shall be rescinded with respect to the
Units as to which there was a cash shortfall without any
liability to the Rollover Unit holder or the Distribution
Agent. Any cash balance remaining after such purchase shall
be distributed within a reasonable time to the Rollover Unit
holder by check mailed to the address of such Unit holder on
the registration books of the Trustee. Units of the New
Series will be uncertificated unless and until the Rollover
Unit holder requests a certificate. Any cash held by the
Distribution Agent shall be held in a non-interest bearing
account which will be of benefit to the Distribution Agent
in accordance with normal banking procedures. Neither the
Trustee nor the Distribution Agent shall have any
responsibility or liability for loss or depreciation
resulting from any reinvestment made in accordance with this
paragraph, or for any failure to make such reinvestment in
the event the Depositor does not make Units available for
purchase.
(b) Notwithstanding the foregoing, the Depositor may,
in their discretion at any time, decide not to offer Trust
Series in the future, and if so, this Section 5.05
concerning the Rollover of Units shall be inoperative.
(c) The Distribution Agent shall receive no fees for
performing its duties hereunder. The Distribution Agent
shall, however, be entitled to receive reimbursement from
the Trust for any and all expenses and disbursements to the
same extent as the Trustee is permitted reimbursement
hereunder."
J. Paragraph (g) of Section 6.01 of the Standard Terms and
Conditions of Trust is hereby amended by inserting the following
after the first word thereof:
"(i) the value of any Trust as shown by an evaluation
by the Trustee pursuant to Section 5.01 hereof shall be less
than the lower of $2,000,000 or 20% of the total principal
amount of Securities deposited in such Trust, or (ii)"
K. Section 1.01(4) shall be amended to read as follows:
"(4) "Portfolio Supervisor" shall mean First Trust
Advisors L.P. and its successors in interest, or any
successor portfolio supervisor appointed as hereinafter
provided."
IN WITNESS WHEREOF, Nike Securities L.P., United States
Trust Company of New York, Securities Evaluation Service, Inc.
and First Trust Advisors L.P. have each caused this Trust
Agreement to be executed and the respective corporate seal to b
hereto affixed and attested (if applicable) by authorized
officers; all as of the day, month and year first above written.
NIKE SECURITIES L.P.,
Depositor
By Carlos E. Nardo
Senior Vice President
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By Thomas Porrazzo
Vice President
[SEAL]
ATTEST:
Rosalia A. Raviele
Assistant Secretary
SECURITIES EVALUATION
SERVICE, INC., Evaluator
By James R. Couture
President
[SEAL]
ATTEST:
James G. Prince
Vice President and
Assistant Secretary
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Carlos E. Nardo
Senior Vice President
STATE OF ILLINOIS )
) SS
COUNTY OF DUPAGE )
I, John P. Byron, a Notary Public in and for the said County
and State aforesaid, do hereby certify that Carlos E. Nardo,
personally known to me to be the same person whose name is
subscribed to the foregoing instrument, and personally known to
me to be a Senior Vice President of Nike Securities L.P., a
limited partnership, appeared before me this day in person and
acknowledged that he signed and delivered the said instrument as
his free and voluntary act as such Senior Vice President and as
the free and voluntary act of said Nike Securities L.P., for the
uses and purposes therein set forth.
GIVEN UNDER my hand and notarial seal on January 12, 1994.
John P. Byron
Notary Public
[SEAL]
My Commission expires: March 14, 1997
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
On January 12, 1994 before me personally came Thomas
Porrazzo, to me known, who being by me duly sworn said that he
resides at 3584 Manhasset Street, Seaford, New York 11783, that
he is Vice President of United States Trust Company of New York,
one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to the said instrument is such corporate
seal; that it was so affixed by authority of the Board of
Directors of the said corporation; and that he signed his name
thereto by like authority.
Dorothy S. Bochino
Notary Public
[SEAL]
My Commission expires: May 8, 1995
STATE OF ILLINOIS )
) SS
COUNTY OF DUPAGE )
I, Jacqueline A. Morris, a Notary Public in and for the said
County and State aforesaid, do hereby certify that James R.
Couture and James G. Prince, personally known to me to be the
same persons whose names are subscribed to the foregoing
instrument, and personally known to me to be a President and Vice
President and Assistance Secretary, respectively, of Securities
Evaluation Service Inc., a corporation, appeared before me this
day in person and acknowledged that they signed, sealed with the
corporate seal of said Securities Evaluation Service, Inc. and
delivered the said instrument as their free and voluntary act as
such President and Vice President and Assistant Secretary,
respectively, and as the free and voluntary act of said
Securities Evaluation Service, Inc. for the uses and purposes
therein set forth.
given under my hand and notarial seal on January 12, 1994.
Jacqueline A. Morris
Notary Public
[SEAL]
My Commission expires: February 24, 1994
STATE OF ILLINOIS )
) SS
COUNTY OF DUPAGE )
I, John P. Byron, a Notary Public in and for the said County
and State aforesaid, do hereby certify that Carlos E. Nardo,
personally known to me to be the same person whose name is
subscribed to the foregoing instrument, and personally known to
me to be a Senior Vice President of First Trust Advisors L.P., a
limited partnership, appeared before me this day in person and
acknowledged that he signed and delivered the said instrument as
his free and voluntary act as such Senior Vice President and as
the free and voluntary act of said First Trust Advisors L.P., for
the uses and purposes therein set forth.
Given under my hand and notarial seal on January 12, 1994.
John P. Byron
Notary Public
[SEAL]
My Commission expires: March 14, 1997
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
The First Trust Special Situations Trust, Series 89
(Note: Incorporated herein and made a part hereof for the
Trust is the "Schedule of Investments" for the Trust as set forth
in the Prospectus.)
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
January 12, 1994
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: The First Trust Special Situations Trust, Series 89
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of The First Trust Special Situations
Trust, Series 89 in connection with the preparation, execution
and delivery of a Trust Agreement dated January 12, 1994 among
Nike Securities L.P., as Depositor, United States Trust Company
of New York, as Trustee, Securities Evaluation Service, Inc., as
Evaluator, and First Trust Advisors L.P., as Portfolio
Supervisor, pursuant to which the Depositor has delivered to and
deposited the Securities listed in Schedule A to the Trust
Agreement with the Trustee and pursuant to which the Trustee has
issued to or on the order of the Depositor a certificate or
certificates representing units of fractional undivided interest
in and ownership of the Fund created under said Trust Agreement.
In connection therewith, we have examined such pertinent
records and documents and matters of law as we have deemed
necessary in order to enable us to express the opinions
hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. the execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units
in the Fund have been duly authorized; and
2. the certificates evidencing the Units in the Fund when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will
constitute valid and binding obligations of the Fund and the
Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-51623)
relating to the
Units referred to above, to the use of our name and to the
reference to our firm in said Registration Statement and in the
related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EFF:jlg
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
January 12, 1994
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
United States Trust Company of New York
770 Broadway
New York, New York 10003
Re: The First Trust Special Situations Trust, Series 89
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of The First Trust Special Situations Trust, Series 89 (the
"Fund"), in connection with the issuance of units of fractional
undivided interests in the Trust of said Fund (the "Trust"),
under a Trust Agreement, dated January 12, 1994 (the
"Indenture"), between Nike Securities L.P., as Depositor, United
States Trust Company of New York, as Trustee, Securities
Evaluation Service, Inc., as Evaluator and First Trust Advisors
L.P., as Portfolio Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents we have deemed pertinent. The opinions
expressed herein assume that the Trust will be administered, and
investments by the Trust from proceeds of subsequent deposits, if
any, will be made, in accordance with the terms of the Indenture.
The Trust holds Equity Securities as such term is defined in the
Prospectus.
Based upon the foregoing and upon an investigation of such
matters of law as we consider to be applicable, we are of the
opinion that, under existing federal income tax law:
I. The Trust is not an association taxable as a
corporation for Federal income tax purposes; each Unit holder
will be treated as the owner of a pro rata portion of the assets
of the Trust under the Internal Revenue Code of 1986 (the
"Code"); the income of the Trust will be treated as income of the
Unit holders thereof under the Code; and an item of Trust income
will have the same character in the hands of a Unit holder as it
would have in the hands of the Trustee. Each Unit holder will be
considered to have received his pro rata share of income derived
from each Trust asset when such income is received by the Trust.
II. Each Unit holder will have a taxable event when the
Trust disposes of an Equity Security (whether by sale, exchange,
redemption, or otherwise) or upon the sale or redemption of Units
by such Unit holder. The price a Unit holder pays for his Units,
including sales charges, is allocated among his pro rata portion
of each Equity Security held by the Trust (in proportion to the
fair market values thereof on the date the Unit holder purchases
his Units) in order to determine his initial cost for his pro
rata portion of each Equity Security held by the Trust. For
Federal income tax purposes, a Unit holder's pro rata portion of
dividends as defined by Section 316 of the Code paid by a
corporation are taxable as ordinary income to the extent of such
corporation's current and accumulated "earnings and profits." A
Unit holder's pro rata portion of dividends which exceed such
current and accumulated earnings and profits will first reduce a
Unit holder's tax basis in such Equity Security (and accordingly
his basis in his Units), and to the extent that such dividends
exceed a Unit holder's tax basis in such Equity Security shall be
treated as gain from the sale or exchange of property.
III. A Unit holder's portion of gain, if any, upon the sale
or redemption of Units or the disposition of Equity Securities
held by the Trust will generally be considered a capital gain
except in the case of a dealer or a financial institution and
will be generally long-term if the Unit holder has held his Units
for more than one year. A Unit holder's portion of loss, if any,
upon the sale or redemption of Units or the disposition of Equity
Securities held by the Trust will generally be considered a
capital loss except in the case of a dealer or a financial
institution and will be generally long-term if the Unit holder
has held his Units for more than one year. However, a Rollover
Unit holder's loss, if any, incurred in connection with the
exchange of Units for Units in the next new series of the Target
Equity Trust (the "1995 Trust") will generally be disallowed with
respect to the disposition of any Equity Securities pursuant to
such exchange to the extent that such Unit holder is considered
the owner of substantially identical securities under the wash
sale provisions of the Code taking into account such Unit
holder's deemed ownership of securities underlying the Units in
the 1995 Trust in the manner described above, if such
substantially identical securities were acquired within a period
beginning 30 days before and ending 30 days after such
disposition. However, any gains incurred in connection with such
exchange by a Rollover Unit holder would be recognized.
IV. 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 Trust, including fees of the Trustee and the
Evaluator.
For taxable years beginning after December 31, 1986 and
before January 1, 1996, certain corporations may be subject to
the environmental tax (the "Superfund Tax") imposed by Section
59A of the Code. Income received from, and gains recognized from
the disposition of, an Equity Security by the Trust will be
included in the computation of the Superfund Tax by such
corporations holding Units in the Trust.
The scope of this opinion is expressly limited to the
matters set forth herein, and, except as expressly set forth
above, we express no opinion with respect to any other taxes,
including state or local taxes or collateral tax consequences
with respect to the purchase, ownership and disposition of Units.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-51623)
relating to the Units referred to above and to the use of our
name and to the reference to our firm in said Registration
Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
EFF/jlg
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
January 12, 1994
The First Trust Special Situations
Trust, Series 89
Target Equity Trust, Value Ten Series 3
c/o United States Trust Company
of New York, as Trustee
770 Broadway - 6th Floor
New York, New York 10003
Re: The First Trust Special Situations Trust, Series 89
Target Equity Trust, Value Ten Series 3
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for The First Trust Special Situations Trust, Series
89 Target Equity Trust, Value Ten Series 3 (the "Trust"), which
will be established under a Standard Terms and Conditions of
Trust dated November 20, 1991, and a related Trust Agreement
dated as of today (collectively, the "Indenture"), among Nike
Securities L.P., as Depositor (the "Depositor"); Securities
Evaluation Service, Inc., as Evaluator; First Trust Advisors
L.P., as Portfolio Supervisor and United States Trust Company of
New York, as Trustee (the "Trustee"). Pursuant to the terms of
the Indenture, units of fractional undivided interest in the
Trust (the "Units") will be issued in the aggregate number set
forth in the Indenture.
We have examined and are familiar with originals or
certified copies, or copies otherwise identified to our
satisfaction, of such documents as we have deemed necessary or
appropriate for the purpose of this opinion. In giving this
opinion, we have relied upon the two opinions, each dated today
and addressed to the Trustee, of Chapman and Cutler, counsel for
the Depositor, with respect to the matters of law set forth
therein.
Based upon the foregoing, we are of the opinion that:
1. The Trust will not constitute an association taxable as
a corporation under New York law, and accordingly will not be
subject to the New York State franchise tax or the New York City
general corporation tax.
2. Under the income tax laws of the State and City of New
York, the income of the Trust will be considered the income of
the holders of the Units.
We consent to the filing of this opinion as an exhibit to
the Registration Statement (No. 33-51623) filed with the
Securities and Exchange Commission with respect to the
registration of the sale of the Units and to the references to
our name under the captions "What is the Federal Tax Status of
Unit Holders?" and "Legal Opinions" in such Registration
Statement and the preliminary prospectus included therein.
Very truly yours,
CARTER, LEDYARD & MILBURN
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
January 12, 1994
United States Trust Company
of New York, as Trustee of
The First Trust Special Situations
Trust, Series 89
Target Equity Trust, Value Ten Series 3
770 Broadway - 6th Floor
New York, New York 10003
Attention: Mr. C. William Steelman
Executive Vice President
Re: The First Trust Special Situations Trust, Series 89
Target Equity Trust, Value Ten Series 3
Dear Sirs:
We are acting as counsel for United States Trust Company of
New York (the "Trust Company") in connection with the execution
and delivery of a ure.
In rendering the foregoing opinion, we have not considered,
among other things, whether the Securities have been duly
authorized and delivered.
Very truly yours,
CARTER, LEDYARD & MILBURN
SES
Securities Evaluation Service, Inc.
Suite 200
531 E. Roosevelt Road
Wheaton, Illinois 60187
January 12, 1994
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 89
Gentlemen:
We have examined the Registration Statement File No. 33-
51623 for the above captioned fund. We hereby consent to the use
in the Registration Statement of the references to Securities
Evaluation Service, Inc. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
Securities Evaluation Service, Inc.
James R. Couture
President
