Registration No. 33-54311
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 97
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
NIKE SECURITIES L.P.
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agent 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 July 14, 1994 at 2:00 p.m. pursuant to Rule
487.
*Previously paid
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 97
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
Form N-8B-2 Item Number Form S-6 Heading in Prospectus
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust Prospectus front cover
(b) Title of securities issued Summary of Essential
Information
2. Name and address of each depositor Information as to
Sponsor, Trustee and
Evaluator
3. Name and address of trustee Information as to
Sponsor, Trustee and
Evaluator
4. Name and address of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
5. State of organization of trust The First Trust
Special Situations
Trust
6. Execution and termination of Other Information
trust agreement
7. Changes of name *
8. Fiscal year *
9. Litigation *
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer Public Offering
securities
(b) Cumulative or distributive The First Trust
securities Special Situations
Trust
(c) Redemption Rights of Unitholders
(d) Conversion, transfer, etc. Rights of Unitholders
(e) Periodic payment plan *
(f) Voting rights Rights of Unitholders
(g) Notice of certificateholders Other Information
(h) Consents required Rights of Unitholders;
Other Information
(i) Other provisions The First Trust
Special Situations
Trust
11. Types of securities comprising The First Trust
units Special
Situations Trust
Schedule of
Investments
12. Certain information regarding
periodic payment certificates *
13. (a) Load, fees, expenses, etc. Summary of Essential
Information; Public
Offering; The First
Trust Special
Situations Trust
(b) Certain information regarding
periodic payment certificates *
(c) Certain percentages Summary of Essential
Information; The
First Trust Special
Situations Trust;
Public Offering
(d) Certain other fees, etc.
payable by holders Rights of Units
Holders
(e) Certain profits receivable
by depositor, principal,
underwriters, trustee or The First Trust
affiliated persons Special
Situations Trust
(f) Ratio of annual charges *
to income
14. Issuance of trust's securities Rights of Unit Holders
15. Receipt and handling of payments
from purchasers *
16. Acquisition and disposition of
underlying securities The First Trust
Special Situations
Trust; Rights of Unit
Holders;
17. Withdrawal or redemption The First Trust
Special Situations
Trust; Public
Offering; Rights of
Unit Holders
18. (a) Receipt, custody and Rights of Unit Holders
disposition of income
(b) Reinvestment of distributions Rights of Unit Holders
(c) Reserves or special funds Information as to
Sponsor, Trustee and
Evaluator
(d) Schedule of distributions *
19. Records, accounts and reports Rights of Unit Holders
20. Certain miscellaneous provisions
of trust agreement
(a) Amendment Other Information
(b) Termination Other Information
(c) and (d) Trustee, removal Information as
and successor to Sponsor, Trustee
and Evaluator
(e) and (f) Depositor, removal Information as
and successor to Sponsor, Trustee
and Evaluator
21. Loans to security holders *
22. Limitations on liability The First Trust
Special Situations
Trust;
Information as to
Sponsor, Trustee
and Evaluator
23. Bonding arrangements Contents of
Registration
Statement
24. Other material provisions *
of trust agreement
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor Information as to
Sponsor, Trustee and
Evaluator
26. Fees received by depositor *
27. Business of depositor Information as to
Sponsor, Trustee and
Evaluator
28. Certain information as to
officials and affiliated *
persons of depositor
29. Voting securities of depositor *
30. Persons controlling depositor *
31. Payment by depositor for certain
services rendered to trust *
32. Payment by depositor for certain
other services rendered to trust *
33. Remuneration of employees of
depositor for certain services
rendered to trust *
34. Remuneration of other persons
for certain services rendered *
to trust
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's Public Offering
securities by states
36. Suspension of sales of trust's
securities *
37. Revocation of authority to *
distribute
38. (a) Method of distribution Public Offering
(b) Underwriting agreements Public Offering
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as
underwriters to Sponsor, Trustee
and Evaluator
(b) N.A.S.D. membership of
principal underwriters Information as to
Sponsor, Trustee and
Evaluator
40. Certain fees received by See Items 13(a) and
principal underwriters 13(e)
41. (a) Business of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) Branch offices of
principal underwriters *
(c) Salesmen of principal *
underwriters
42. Ownership of trust's securities
by certain persons *
43. Certain brokerage commissions
received by principal *
underwriters
44. (a) Method of valuation Summary of Essential
Information; The
First Trust Special
Situations Trust,
Public Offering
(b) Schedule as to offering *
price
(c) Variation in offering Public Offering
price to certain persons
45. Suspension of redemption rights *
46. (a) Redemption valuation Rights of Unit Holders
(b) Schedule as to redemption *
price
47. Maintenance of position in Public Offering;
underlying securities Rights
of Unit Holders
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of Information as
trustee to Sponsor, Trustee
and Evaluator
49. Fees and expenses of trustee The First Trust
Special Situations
Trust
50. Trustee's lien The First Trust
Special Situations
Trust
VI. INFORMATION CONCERNING THE INSURANCE OF HOLDERS OF
SECURITIES
51. Insurance of holders of
trust's securities *
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust The First Trust
agreement with respect to Special
selection or elimination of Situations Trust;
underlying securities Rights of Unit Holders
(b) Transactions involving
elimination of underlying *
securities
(c) Policy regarding substitution The First Trust
or elimination of underlying Special
securities Situations Trust;
Rights of Unit Holders
(d) Fundamental policy not
otherwise covered *
53. Tax status of Trust The First Trust
Special Situations
Trust
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during *
last ten years
55.
56.
57. Certain information regarding
periodic payment plan *
certificates
58.
59. Financial statements Report of Independent
(Instruction 1(c) to Auditors, Statement of
Form S-6) Net Assets
* Inapplicable, answer negative or not required.
First Trust Corporate Income Trust
Laddered Series
The First Trust (registered trademark) Special Situations Trust,
Series 97 is a unit investment trust consisting of a portfolio
of interest-bearing corporate debt obligations of well established
companies (the "Bonds") including delivery statements relating
to contracts for the purchase of certain such obligations and
an irrevocable letter of credit. The Sponsor has a limited
right to substitute other bonds in the Trust portfolio in the
event of a failed contract. The weighted average maturity of the
Bonds in the Trust is 7.85 years.
The Objectives of the Trust are a high level of current income
and conservation of capital through investment in a portfolio
of interest-bearing corporate debt obligations of well established
companies issued after July 18, 1984. The Trust has been created
as a laddered portfolio such that Bonds representing approximately
20% of the principal amount of the Trust will mature and be distributed
annually to Unit holders commencing on February 29, 2000. The
payment of interest and the conservation of capital are, of course,
dependent upon the continuing ability of the issuers and/or obligors
to meet their respective obligations. The Trust has a mandatory
termination date (the "Mandatory Termination Date" or "Trust Ending
Date") as set forth under "Summary of Essential Information."
Attention Foreign Investors: Your interest income from the Trust
may be exempt from federal withholding taxes if you are not a
United States citizen or resident and certain conditions are met.
See "What is the Federal Tax Status of Unit Holders?"
Income and Principal Distributions. Distributions of income and
principal received, if any, by the Trust will be paid in cash
on the Distribution Date to Unit holders of record on the Record
Date as set forth in "Special Trust Information." Any distribution
of income and/or principal will be net of the expenses of the
Trust. Distribution of funds in the Principal Account, if any,
will be made at least annually in December of each year. Distributions
to Unit holders may be reinvested as described herein. See "How
Can Distributions to Unit Holders be Reinvested?"
Secondary Market for Units. After the initial offering period,
although not obligated to do so, the Sponsor intends to maintain
a market for the Units at prices based upon the aggregate bid
price of the Bonds in the portfolio of the Trust. In the absence
of such a market, a Unit holder will nonetheless be able to dispose
of the Units through redemption at prices based upon the bid prices
of the underlying Bonds. See "How May Units be Redeemed?"
The Sponsor may, from time to time during a period of up to approximately
360 days after the Initial Date of Deposit, deposit additional
Bonds in the Trust. Such deposits of additional Bonds will, therefore,
be done in such a manner that the original proportionate relationship
amongst the individual issues of the Bonds shall be maintained.
See "What is the First Trust Special Situations Trust?" and "How
May Bonds be Removed from the Trust?"
The Public Offering Price of the Units during the initial offering
period is equal to the aggregate offering price of the Bonds in
the portfolio divided by the number of Units outstanding, plus
a sales charge equal to 3.9% of the Public Offering Price (4.058%
of the aggregate offering price of the Bonds). For sales charges
in the secondary market, see "Public Offering." During the initial
offering period, the sales charge is reduced on a graduated scale
for sales involving at least $250,000. The minimum purchase is
1 Unit.
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.
The date of this Prospectus is July 14, 1994
Page 1
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Bonds-July 14, 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>
Principal Amount of Bonds in the Trust $ 2,500,000
Number of Units 2,577
Fractional Undivided Interest in the Trust per Unit 1/2,577
Principal Amount (Par Value) of Bonds per Unit (1) $ 970.12
Public Offering Price:
Aggregate Offering Price Evaluation of Bonds in the Portfolio $ 2,476,508
Aggregate Offering Price Evaluation per Unit $ 961.00
Sales Charge (2) $ 39.00
Public Offering Price per Unit (3) $ 1,000.00
Sponsor's Initial Repurchase Price per Unit $ 961.00
Redemption Price per Unit (4) $ 956.15
Excess of Public Offering Price per Unit Over Redemption Price per Unit $ 43.85
Excess of Sponsor's Initial Repurchase Price per Unit Over
Redemption Price per Unit $ 4.85
</TABLE>
First Settlement Date July 21, 1994
Mandatory Termination Date (5) November 30, 2004
Supervisory Fee Maximum of $.25 per Unit outstanding annually,
payable to an affiliate of the Sponsor.
Evaluator's Fee $.50 per Unit
Evaluations 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.
[FN]
(1) Many unit investment trusts issue a number of Units such
that each Unit represents approximately $1,000 principal amount
of underlying securities. The Sponsor, on the other hand, in determining
the number of Units for the Trust, has elected not to follow this
format but rather to provide that number of Units which will establish
as close as possible as of the opening of business on the Initial
Date of Deposit a Public Offering Price per Unit of $1,000.
(2) The sales charge for the Trust, expressed as a percentage
of the Public Offering Price per Unit and in parenthesis as a
percentage of the Aggregate Offering Price Evaluation per Unit
is 3.9% (4.058%).
(3) Anyone ordering Units for settlement after the First Settlement
Date will pay accrued interest from such date to the date of settlement
(normally five business days after order) less distributions from
the Interest Account subsequent to the First Settlement Date.
For purchases settling on the First Settlement Date, no accrued
interest will be added to the Public Offering Price. After the
initial offering period, the Sponsor's Repurchase Price per Unit
will be determined as described under the caption "Will There
Be a Secondary Market?"
(4) See "How May Units be Redeemed?"
(5) The Trust may be terminated earlier if the principal value
thereof is less than 20% of the original principal amount of Bonds
deposited in the Trust during the primary offering period.
Page 2
First Trust Corporate Income Trust, Laddered Series
The First Trust Special Situations Trust, Series 97
What is The First Trust Special Situations Trust?
The First Trust Special Situations Trust, Series 97 is one of
a series of investment companies created by the Sponsor under
the name of The First Trust Special Situations Trust, each of
which is separate and is designated by a different series number.
This Series 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 interest-bearing corporate debt obligations of
well established companies (the "Bonds") including delivery
statements relating to contracts for the purchase of certain such
obligations and an irrevocable letter of credit issued by a financial
institution in the amount required for such purchases. The Trustee
thereafter credited the account of the Sponsor for Units of the
Trust representing the entire ownership of the Trust which Units
are being offered hereby.
The objectives of the Trust are a high level of current income
and conservation of capital through investment in a portfolio
of interest-bearing corporate debt obligations of well established
companies issued after July 18, 1984. The Trust has been created
as a laddered portfolio such that Bonds representing approximately
20% of the principal amount of the Trust will mature and be distributed
annually to Unit holders commencing on February 29, 2000. THERE
IS, OF COURSE, NO GUARANTEE THAT THE TRUST'S OBJECTIVES WILL BE
ACHIEVED. AN INVESTMENT IN THE TRUST SHOULD BE MADE WITH AN UNDERSTANDING
OF THE RISKS WHICH AN INVESTMENT IN FIXED RATE LONG-TERM DEBT
OBLIGATIONS MAY ENTAIL, INCLUDING THE RISK THAT THE VALUE OF THE
UNITS WILL DECLINE WITH INCREASES IN INTEREST RATES.
With the deposit of the Bonds on the Initial Date of Deposit,
the Sponsor established a percentage relationship between the
amounts of Bonds in the Trust's portfolio. From time to time following
the Initial Date of Deposit, the Sponsor, pursuant to the Indenture,
may deposit additional Bonds 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 Bonds deposited in the Trust will maintain,
as nearly as is practicable, the original proportionate relationship
of the Bonds in the Trust's portfolio. Any deposit by the Sponsor
of additional Bonds 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 Bonds deposited
in the Trust on the Initial, or any subsequent, Date of Deposit.
See "How May Bonds be Removed from the Trust?" Since the prices
of the underlying Bonds will fluctuate daily, the ratio, on a
market value basis, will also change daily. The portion of Bonds
represented by each Unit will not change as a result of the deposit
of additional Bonds in the Trust.
On the Initial Date of Deposit, each Unit of the Trust represented
the undivided fractional interest in the Bonds 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 Bonds 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 Bonds by the Sponsor,
the aggregate value of the Bonds 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."
In selecting Bonds, the following facts, among others, were considered:
(i) the Standard & Poor's Corporation rating of the Bonds was
in no case less than "BBB," or the Moody's Investor Service, Inc.
rating of the Bonds was in no case less than "Baa," including
plus or minus signs or provisional or conditional ratings, or,
Page 3
if not rated, the Bonds had, in the opinion of the Sponsor, credit
characteristics sufficiently similar to the credit characteristics
of interest-bearing corporate debt obligations that were so rated
as to be acceptable for acquisition by the Trust (see "Description
of Bond Ratings"); (ii) the prices of the Bonds relative to other
bonds of comparable quality and maturity; (iii) the diversification
of Bonds as to industry of issuer and maturity of Bonds; (iv)
whether the Bonds were issued after July 18, 1984 and (v) whether
the Bonds are non-callable. See "Notes to Portfolio" for additional
information on extraordinary call provisions. Subsequent to the
Initial Date of Deposit, a Bond may cease to be rated or its rating
may be reduced below the minimum required as of the Initial Date
of Deposit. Neither event requires elimination of such Bond from
the portfolio, but may be considered in the Sponsor's determination
as to whether or not to direct the Trustee to dispose of the Bond.
The Trust consists primarily of Bonds which, in many cases, do
not have the benefit of covenants which would prevent the issuer
from engaging in capital restructurings or borrowing transactions
in connection with corporate acquisitions, leveraged buyouts or
restructurings which could have the effect of reducing the ability
of the issuer to meet its debt obligations and might result in
the ratings of the Bonds and the value of the underlying Trust
portfolio being reduced. See "Rights of Unit Holders-How May Bonds
be Removed from the Trust?"
Certain of the Bonds in the Trust may have been acquired at a
market discount from par value at maturity. The coupon interest
rates on the discount bonds at the time they were purchased and
deposited in the Trust were lower than the current market interest
rates for newly issued bonds of comparable rating and type. If
such interest rates for newly issued comparable bonds increase,
the market discount of previously issued bonds will become greater,
and if such interest rates for newly issued comparable bonds decline,
the market discount of previously issued bonds will be reduced,
other things being equal. Investors should also note that the
value of bonds purchased at a market discount will increase in
value faster than bonds purchased at a market premium if interest
rates decrease. Conversely, if interest rates increase, the value
of bonds purchased at a market discount will decrease faster than
bonds purchased at a premium. In addition, if interest rates rise,
the prepayment risk of higher yielding, premium bonds and the
prepayment benefit for lower yielding, discount bonds will be
reduced. A discount bond held to maturity will have a larger portion
of its total return in the form of capital gain and less in the
form of interest income than a comparable bond newly issued at
current market rates. Market discount attributable to interest
changes does not indicate a lack of market confidence in the issue.
Neither the Sponsor nor the Trustee shall be liable in any way
for any default, failure or defect in any of the Bonds.
Certain of the Bonds in the Trust may be original issue discount
bonds or zero coupon bonds. Under current law, the original issue
discount, which is the difference between the stated redemption
price at maturity and the issue price of the Bonds, is deemed
to accrue on a daily basis and the accrued portion is treated
as interest income for Federal income tax purposes. On sale or
redemption, any gain realized that is in excess of the earned
portion of original issue discount will be taxable as capital
gain unless the gain is attributable to market discount in which
case the accretion of market discount is taxable as ordinary income.
See "What is the Federal Tax Status of Unit Holders?" The current
value of an original discount bond reflects the present value
of its stated redemption price at maturity. The market value tends
to increase in greater increments as the Bonds approach maturity.
The effect of owning deep discount zero coupon bonds which do
not make current interest payments is that a fixed yield is earned
not only on the original investment, but also, in effect, on all
earnings during the life of the discount obligation. This implicit
reinvestment of earnings at the same rate eliminates the risk
of being unable to reinvest the income on such obligations at
a rate as high as the implicit yield on the discount obligation,
but at the same time eliminates the holder's ability to reinvest
at higher rates in the future. For this reason, the zero coupon
bonds are subject to substantially greater price fluctuations
during periods of changing interest rates than are securities
of comparable quality which make regular interest payments.
Certain of the Bonds in the Trust may have been acquired at a
market premium from par value at maturity. The coupon interest
rates on the premium bonds at the time they were purchased and
deposited in the Trust were higher than the current market interest
rates for newly issued bonds of comparable rating and type.
Page 4
If such interest rates for newly issued and otherwise comparable
bonds decrease, the market premium of previously issued bonds
will be increased, and if such interest rates for newly issued
comparable bonds increase, the market premium of previously issued
bonds will be reduced, other things being equal. The current returns
of bonds trading at a market premium are initially higher than
the current returns of comparable bonds of a similar type issued
at currently prevailing interest rates because premium bonds tend
to decrease in market value as they approach maturity when the
face amount becomes payable. Because part of the purchase price
is thus returned not at maturity but through current income payments,
early redemption of a premium bond at par or early prepayments
of principal will result in a reduction in yield. Redemption pursuant
to call provisions generally will, and redemption pursuant to
sinking fund provisions may, occur at times when the redeemed
Bonds have an offering side valuation which represents a premium
over par or for original issue discount Bonds a premium over the
accreted value. To the extent that the Bonds were deposited in
the Trust at a price higher than the price at which they are redeemed,
this will represent a loss of capital when compared to the original
Public Offering Price of the Units. Because premium bonds generally
pay a higher rate of interest than bonds priced at or below par,
the effect of the redemption of premium bonds would be to reduce
Estimated Net Annual Unit Income by a greater percentage than
the par amount of such bonds bears to the total par amount of
Bonds in the Trust. Although the actual impact of any such redemptions
that may occur will depend upon the specific Bonds that are redeemed,
it can be anticipated that the Estimated Net Annual Unit Income
will be significantly reduced after the dates on which such Bonds
are eligible for redemption. See "Rights of Unit Holders: How
May Bonds be Removed from the Trust?" and "Other Information:
How May the Indenture be Amended or Terminated?"
Because certain of the Bonds may from time to time under certain
circumstances be sold or redeemed or will mature in accordance
with their terms 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. Neither the Sponsor
nor the Trustee shall be liable in any way for any default, failure
or defect in any Bond. Certain of the Bonds contained in the Trust
may be subject to being called or redeemed in whole or in part
prior to their stated maturities pursuant to optional redemption
provisions, sinking fund provisions or otherwise. A bond subject
to optional call is one which is subject to redemption or refunding
prior to maturity at the option of the issuer. A refunding is
a method by which a bond issue is redeemed, at or before maturity,
by the proceeds of a new bond issue. A bond subject to sinking
fund redemption is one which is subject to partial call from time
to time at par or from a fund accumulated for the scheduled retirement
of a portion of an issue prior to maturity. The exercise of redemption
or call provisions will (except to the extent the proceeds of
the called Bonds are used to pay for Unit redemptions) result
in the distribution of principal and may result in a reduction
in the amount of subsequent interest distributions; it may also
affect the Estimated Long-Term Return and the Estimated Current
Return on Units of the Trust. Redemption pursuant to call provisions
is more likely to occur, and redemption pursuant to sinking fund
provisions may occur, when the Bonds have an offering side valuation
which represents a premium over par or for original issue discount
bonds a premium over the accreted value. Unit holders may recognize
capital gain or loss upon any redemption or call.
The contracts to purchase Bonds delivered to the Trustee represent
obligations by issuers or dealers to deliver Bonds to the Sponsor
for deposit in the Trust. Contracts are typically settled and
the Bonds delivered within a few business days subsequent to the
Initial Date of Deposit. The percentage of the aggregate principal
amount of the Bonds of the Trust relating to "when, as and if
issued" Bonds or other Bonds with delivery dates after the date
of settlement for a purchase made on the Initial Date of Deposit,
if any, is indicated in the section for the Trust entitled "Portfolio."
Interest on "when, as and if issued" and delayed delivery Bonds
begins accruing to the benefit of Unit holders on their dates
of delivery. Because "when, as and if issued" Bonds have not yet
been issued, as of the Initial Date of Deposit the Trust is subject
to the risk that the issuers thereof might decide not to proceed
with the offering of such Bonds or that the delivery of such Bonds
or the delayed delivery Bonds may be delayed. If such Bonds, or
replacement bonds described below,
Page 5
are not acquired by the Trust or if their delivery is delayed,
the Estimated Long-Term Return and the Estimated Current Return
(if applicable) shown in "Special Trust Information" may be reduced.
In the event of a failure to deliver any Bond that has been purchased
for the Trust under a contract, including those Bonds purchased
on a "when, as and if issued" basis ("Failed Bonds"), the Sponsor
is authorized under the Indenture to direct the Trustee to acquire
other specified bonds ("New Bonds") to make up the original corpus
of the Trust. The New Bonds must be purchased within twenty days
after delivery of the notice of the failed contract and the purchase
price (exclusive of accrued interest) may not exceed the amount
of funds reserved for the purchase of the Failed Bonds. The New
Bonds (i) must satisfy the criteria previously described for Bonds
originally included in the Trust, (ii) must have a fixed maturity
date not exceeding the maturity date of the Failed Bonds, (iii) must
be purchased at a price that results in a yield to maturity and
in a current return, in each case as of the Initial Date of Deposit,
at least equal to that of the Failed Bonds, (iv) shall not be "when, as
and if issued" bonds. Whenever a New Bond has been acquired for the Trust,
the Trustee shall, within five days thereafter, notify all Unit holders of
the Trust of the acquisition of the New Bond and shall, on the
next monthly distribution date which is more than 30 days thereafter,
make a pro rata distribution of the amount, if any, by which the
cost to the Trust of the Failed Bond exceeded the cost of the
New Bond plus accrued interest. Once the original corpus of the
Trust is acquired, the Trustee will have no power to vary the
investment 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.
If the right of limited substitution described in the preceding
paragraph shall not be utilized to acquire New Bonds in the event
of a failed contract, the Sponsor shall refund the sales charge
attributable to such failed contract to all Unit holders of the
Trust, and the principal and accrued interest (at the coupon rate
of the relevant Bond to the date the Sponsor is notified of the
failure) attributable to such failed contract shall be distributed
not more than thirty days after the determination of such failure
or at such earlier time as the Trustee in its sole discretion
deems to be in the interest of the Unit holders of the Trust.
Unit holders should be aware that at the time of the receipt of
such refunded principal they may not be able to reinvest such
principal in other securities at a yield equal to or in excess
of the yield which such principal would have earned to Unit holders
had the Failed Bond been delivered to the Trust. The portion of
such interest paid to a Unit holder which accrued after the expected
date of settlement for purchase of his Units will be paid by the
Sponsor.
To the best knowledge of the Sponsor, there is no litigation pending
as of the Initial Date of Deposit in respect of any Bonds which
might reasonably be expected to have a material adverse effect
upon the Trust. At any time after the Initial Date of Deposit,
litigation may be initiated on a variety of grounds with respect
to Bonds in the Trust. Such litigation may affect the validity
of such Bonds. In addition, other factors may arise from time
to time which potentially may impair the ability of issuers to
meet obligations undertaken with respect to the Bonds.
Each Unit initially offered represents that fractional undivided
interest in the Trust as is set forth in the "Summary of Essential
Information" for the Trust. To the extent that any Units of the
Trust are redeemed by the Trustee, the fractional undivided interest
in the Trust represented by each unredeemed Unit will increase,
although the actual interest in the Trust represented by such
fraction will remain substantially unchanged. Units will remain
outstanding until redeemed upon tender to the Trustee by any Unit
holder, which may include the Sponsor, or until the termination
of the Trust Agreement.
What are Estimated Long-Term Return and Estimated Current Return?
At the opening of business on the Initial Date of Deposit, the
Estimated Current Return (if applicable) and the Estimated Long-Term
Return, under the monthly and semi-annual distribution plans,
are as set forth in "Special Trust Information." Estimated Current
Return is computed by dividing the Estimated Net Annual Interest
Income per Unit by the Public Offering Price. Any change in either
the Estimated Net Annual Interest Income per Unit or the Public
Offering Price will result in a change in the Estimated Current
Return. The Public Offering Price will vary in accordance with
fluctuations in the prices of the underlying Bonds and the Net
Annual Interest Income per Unit will change as Bonds are redeemed,
paid, sold or exchanged in certain
Page 6
refundings or as the expenses of the Trust change. Therefore,
there is no assurance that the Estimated Current Return (if applicable)
indicated in "Special Trust Information" will be realized in the
future. Estimated Long-Term Return is calculated using a formula
which (1) takes into consideration and determines and factors
in the relative weightings of the market values, yields (which
takes into account the amortization of premiums and the accretion
of discounts) and estimated retirements of all of the Bonds in
the Trust; and (2) takes into account the expenses and sales charge
associated with each Unit of the Trust. Since the market values
and estimated retirements of the Bonds and the expenses of the
Trust will change, there is no assurance that the Estimated Long-Term
Return indicated in "Special Trust Information" will be realized
in the future. Estimated Current Return and Estimated Long-Term
Return are expected to differ because the calculation of Estimated
Long-Term Return reflects the estimated date and amount of principal
returned while Estimated Current Return calculations include only
Net Annual Interest Income and Public Offering Price as of the
Initial Date of Deposit. Neither rate reflects the true return
to Unit holders, which is lower, because neither includes the
effect of certain delays in the distributions to Unit holders.
Record Dates for the distribution of interest under the semi-annual
distribution plan are the fifteenth day of June and December with
the Distribution Dates being the last day of such month. It is
anticipated that an amount equal to approximately one-half of
the amount of net annual interest income per Unit will be distributed
on or shortly after each Distribution Date to Unit holders of
record on the preceding Record Date. See "Special Trust Information."
Record Dates for monthly distributions are the fifteenth day of
each month. The Distribution Dates for distributions of interest
under the monthly distribution plan is the last day of the month
in which the related Record Date occurs. All Unit holders will
receive the first distribution of interest regardless of the plan
of distribution chosen and all Unit holders will receive such
distributions, if any, from the Principal Account as are made
as of the Record Dates for monthly distributions.
How is Accrued Interest Treated?
Accrued interest is the accumulation of unpaid interest on a bond
from the last day on which interest thereon was paid. Interest
on Bonds generally is paid semi-annually to the Trust, although
the Trust accrues such interest daily. Because of this, the Trust
always has an amount of interest earned but not yet collected
by the Trustee. For this reason, with respect to sales settling
subsequent to the First Settlement Date, the Public Offering Price
of Units will have added to it the proportionate share of accrued
interest to the date of settlement. Unit holders will receive
on the next distribution date of the Trust the amount, if any,
of accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest which would
otherwise have to be paid in addition to the Public Offering Price
in the sale of Units to the public, the Trustee will advance the
amount of accrued interest as of the First Settlement Date and
the same will be distributed to the Sponsor as the Unit holder
of record as of the First Settlement Date. Consequently, the amount
of accrued interest to be added to the Public Offering Price of
Units will include only accrued interest from the First Settlement
Date to the date of settlement, less any distributions from the
Interest Account subsequent to the First Settlement Date. See
"Rights of Unit Holders-How are Interest and Principal Distributed?"
Because of the varying interest payment dates of the Bonds, accrued
interest at any point in time will be greater than the amount
of interest actually received by the Trust and distributed to
Unit holders. Therefore, there will always remain an item of accrued
interest that is added to the value of the Units. If a Unit holder
sells or redeems all or a portion of his Units, he will be entitled
to receive his proportionate share of the accrued interest from
the purchaser of his Units. Since the Trustee has the use of the
funds held in the Interest Account for distributions to Unit holders
and since such Account is non-interest-bearing to Unit holders,
the Trustee benefits thereby.
What is the Federal Tax Status of Unit Holders?
In the opinion of Chapman and Cutler, Counsel for the Sponsor,
under existing law:
(1) The Trust is not an association taxable as a corporation for
Federal income tax purposes.
Page 7
(2) Each Unit holder of the Trust is considered to be the owner
of a pro rata portion of each of the Trust assets for federal
income tax purposes under subpart E, subchapter J of chapter 1
of the Internal Revenue Code of 1986 (hereinafter the "Code").
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. Each Unit holder will also be required
to include in taxable income for Federal income tax purposes,
original issue discount with respect to his interest in any Bonds
held by the Trust at the same time and in the same manner as though
the Unit holder were the direct owner of such interest.
(3) Each Unit holder will have a taxable event when the Trust
disposes of a Bond (whether by sale, exchange, redemption, or
payment at maturity) or when the Unit holder redeems or sells
his Units. Unit holders must reduce the tax basis of their Units
for their share of accrued interest received, if any, on Bonds
delivered after the date the Unit holders pay for their Units
and, consequently, such Unit holders may have an increase in taxable
gain or reduction in capital loss upon the disposition of such
Units. Gain or loss upon the sale or redemption of Units is measured
by comparing the proceeds of such sale or redemption with the
adjusted basis of the Units. If the Trustee disposes of Bonds
(whether by sale, exchange, payment on maturity, redemption or
otherwise), gain or loss is recognized to the Unit holder. The
amount of any such gain or loss is measured by comparing the Unit
holder's pro rata share of the total proceeds from such disposition
with his basis for his fractional interest in the asset disposed
of. In the case of a Unit holder who purchases his Units, such
basis is determined by apportioning the tax basis for the Units
among each of the Trust assets ratably according to value as of
the date of acquisition of the Units. The basis of each Unit and
of each Bond which was issued with original issue discount must
be increased by the amount of accrued original issue discount
and the basis of each Unit and of each Bond which was purchased
by the Trust at a premium must be reduced by the annual amortization
of bond premium which the Unit holder has properly elected to
amortize under Section 171 of the Code. The tax cost reduction
requirements of the Code relating to amortization of bond premium
may, under some circumstances, result in the Unit holder realizing
a taxable gain when his Units are sold or redeemed for an amount
equal to or less than his original cost.
(4) Each Unit holder's pro rata share of each expense paid by
the Trust is deductible by the Unit holder to the same extent
as though the expense had been paid directly by him, subject to
the following limitation. It should be noted that as a result
of the Tax Reform Act of 1986 (the "Act"), certain miscellaneous
itemized deductions, such as investment expenses, tax return preparation
fees and employee business expenses will be deductible by an individual
only to the extent they exceed 2% of such individual's adjusted
gross income. Temporary regulations have been issued which require
Unit holders to treat certain expenses of the Trust as miscellaneous
itemized deductions subject to this limitation.
If a Unit holder's tax basis of his pro rata portion in any Bonds
held by the Trust exceeds the amount payable by the issuer of
the Bonds with respect to such pro rata interest upon maturity
of the Bonds, such excess would be considered "acquisition premium"
which may be amortized by the Unit holder at the Unit holder's
election as provided in Section 171 of the Code. Unit holders
should consult their tax advisors regarding whether such election
should be made and the manner of amortizing acquisition premium.
Certain of the Bonds in the Trust may have been acquired with
"original issue discount." In the case of any Bonds in the Trust
acquired with "original issue discount" that exceeds a "de minimis"
amount as specified in the Code, such discount is includable in
taxable income of the Unit holders on an accrual basis computed
daily, without regard to when payments of interest on such Bonds
are received. The Code provides a complex set of rules regarding
the accrual of original issue discount. These rules provide that
original issue discount generally accrues on the basis of a constant
compound interest rate over the term of the Bonds. Unit holders
should consult their tax advisers as to the amount of original
issue discount which accrues.
Special original issue discount rules apply if the purchase price
of the Bond by the Trust exceeds its original issue price plus
the amount of original issue discount which would have previously
accrued based upon its issue price (its "adjusted issue price").
Similarly these special rules would apply to a Unit holder if the
tax basis of his pro rata portion of a Bond issued with original
Page 8
issue discount exceeds his pro rata portion of its adjusted issue
price. Unit holders should consult their tax advisers regarding
these special rules.
It is possible that a Corporate Bond that has been issued at an
original issue discount may be characterized as a "high-yield
discount obligation" within the meaning of Section 163(e)(5) of
the Code. To the extent that such an obligation is issued at a
yield in excess of six percentage points over the applicable Federal
rate, a portion of the original issue discount on such obligation
will be characterized as a distribution on stock (e.g., dividends)
for purposes of the dividends received deduction which is available
to certain corporations with respect to certain dividends received
by such corporation.
If a Unit holder's tax basis in his pro rata portion of Bonds
is less than the allocable portion of such Bond's stated redemption
price at maturity (or, if issued with original issue discount,
the allocable portion of its "revised issue price"), such difference
will constitute market discount unless the amount of market discount
is "de minimis" as specified in the Code. Market discount accrues
daily computed on a straight line basis, unless the Unit holder
elects to calculate accrued market discount under a constant yield
method. Unit holders should consult their tax advisers as to the
amount of market discount which accrues.
Accrued market discount is generally includable in taxable income
to the Unit holders as ordinary income for Federal tax purposes
upon the receipt of serial principal payments on the Bonds, on
the sale, maturity or disposition of such Bonds by the Trust,
and on the sale by a Unit holder of Units, unless a Unit holder
elects to include the accrued market discount in taxable income
as such discount accrues. If a Unit holder does not elect to annually
include accrued market discount in taxable income as it accrues,
deductions for any interest expenses incurred by the Unit holder
which is incurred to purchase or carry his Units will be reduced
by such accrued market discount. In general, the portion of any
interest expense which was not currently deductible would ultimately
be deductible when the accrued market discount is included in
income. Unit holders should consult their tax advisers regarding
whether an election should be made to include market discount
in income as it accrues and as to the amount of interest expense
which may not be currently deductible.
The tax basis of a Unit holder with respect to his interest in
a Bond is increased by the amount of original issue discount (and
market discount, if the Unit holder elects to include market discount,
if any, on the Bonds held by the Trust in income as it accrues)
thereon properly included in the Unit holder's gross income as
determined for Federal income tax purposes and reduced by the
amount of any amortized acquisition premium which the Unit holder
has properly elected to amortize under Section 171 of the Code.
A Unit holder's tax basis in his Units will equal his tax basis
in his pro rata portion of all of the assets of the Trust.
A Unit holder will recognize taxable capital gain (or loss) when
all or part of his pro rata interest in a Bond is disposed of
in a taxable transaction for an amount greater (or less) than
his tax basis therefor. Any gain recognized on a sale or exchange
and not constituting a realization of accrued "market discount,"
and any loss will, under current law, generally be capital gain
or loss except in the case of a dealer or financial institution.
As previously discussed, gain realized on the disposition of the
interest of a Unit holder in any Bond deemed to have been acquired
with market discount will be treated as ordinary income to the
extent the gain does not exceed the amount of accrued market discount
not previously taken into income. Any capital gain or loss arising
from the disposition of a Bond by the Trust or the disposition
of Units by a Unit holder will be short-term capital gain or loss
unless the Unit holder has held his Units for more than one year
in which case such capital gain or loss will be long-term. For
taxpayers other than corporations, net capital gains are presently
subject to a maximum stated marginal tax rate of 28 percent. 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 tax
cost reduction requirements of the Code relating to amortization
of bond premium may under some circumstances, result in the Unit
holder realizing taxable gain when his Units are sold or redeemed
for an amount equal or less than his original cost.
The Revenue Reconciliation Act of 1993 (the "Tax Act") raised
tax rates on ordinary income while capital gains remain subject
to a 28 percent maximum stated rate. Because some or all capital
gains are taxed at a comparatively
Page 9
lower rate under the Tax Act, the Tax Act includes a provision
that recharacterizes capital gains as ordinary income in the case
of certain financial transactions that are "conversion transactions"
effective for transactions entered into after April 30, 1993.
Unit holders and prospective investors should consult with their
tax advisers regarding the potential effect of this provision
on their investment in Units.
If the Unit holder disposes of a Unit, he is deemed thereby to
have disposed of his entire pro rata interest in all Trust assets
including his pro rata portion of all of the Bonds represented
by the Unit. This may result in a portion of the gain, if any,
on such sale being taxable as ordinary income under the market
discount rules (assuming no election was made by the Unit holder
to include market discount in income as it accrues) as previously
discussed.
A Unit holder who is a foreign investor (i.e., an investor other
than a U.S. citizen or resident or a U.S. corporation, partnership,
estate or trust) will not be subject to United States Federal
income taxes, including withholding taxes, on interest income
(including any original issue discount) on, or any gain from the
sale or other disposition of, his pro rata interest in any Bond
or the sale of his Units provided that all of the following conditions
are met: (i) the interest income or gain is not effectively connected
with the conduct by the foreign investor of a trade or business
within the United States, (ii) either (a) the interest income
is not from sources within the United States or (b) the interest
is United States source income (which is the case for most securities
issued by United States issuers), the Bond is issued after July
18, 1984 (which is the case for each Bond held by the Trust),
the foreign investor does not own, directly or indirectly, 10%
or more of the total combined voting power of all classes of voting
stock of the issuer of the Bond and the foreign investor is not
a controlled foreign corporation related (within the meaning of
Section 864(d)(4) of the Code) to the issuer of the Bond, (iii)
with respect to any gain, the foreign investor (if an individual)
is not present in the United States for 183 days or more during
his or her taxable year and (iv) the foreign investor provides
all certification which may be required of his status (foreign
investors may contact the Sponsor to obtain a Form W-8 which must
be filed with the Trustee and refiled every three calendar years
thereafter). Foreign investors should consult their tax advisers
with respect to United States tax consequences of ownership of
Units.
It should be noted that the Tax Act includes a provision which
eliminates the exemption from United States taxation, including
withholding taxes, for certain "contingent interest." The provision
applies to interest received after December 31, 1993. No opinion
is expressed herein regarding the potential applicability of this
provision and whether United States taxation or withholding taxes
could be imposed with respect to income derived from the Units
as a result thereof. Unit holders and prospective investors should
consult with their tax advisers regarding the potential effect
of this provision on their investment in Units.
Each Unit holder (other than a foreign investor who has properly
provided the certifications described above) 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 will be subject to back-up withholding.
In the opinion of Carter, Ledyard & Milburn, Special Counsel to
the Trust for New York tax matters, 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 under the existing income tax
laws of the State and City of New York.
The foregoing discussion relates only to United States Federal
and New York State and City income taxes; Unit holders may be
subject to state and local taxation in other jurisdictions (including
a foreign investor's country of residence). Unit holders should
consult their tax advisers regarding potential state, local, or
foreign taxation with respect to the Units.
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. Generally, the Federal income tax relating to
capital gains and income received in each of the foregoing plans
is deferred until distributions are received. Distributions from
such plans are generally treated as ordinary income but may, in
some cases, be eligible for special averaging or tax-deferred
rollover treatment. Investors considering participation in any
such plan should
Page 10
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.
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 of the
Trust outstanding on January 1 of each year except for Trusts
which were established subsequent to the last January 1, in which
case the fee will be based on the number of Units of the Trust
outstanding as of the respective Dates of Deposit. 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.
For each valuation of the Bonds in the Trust, the Evaluator will
receive a fee of $.50 per Unit. The Trustee pays certain expenses
of the Trust for which it is reimbursed by the Trust. After the
first year the Trustee will receive for its ordinary recurring
services to the Trust a fee as indicated in "Special Trust Information"
for each Trust. During the first year the Trustee has agreed to
lower its fee and, to the extent necessary, pay expenses of the
Trust in the amount, if any, stated under "Special Trust Information"
for the Trust. 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."
Bankers Trust Company issued the irrevocable letter of credit
for the Trust and also provides securities clearing services for
the Sponsor and provides a line of credit which the Sponsor may
utilize to acquire securities (which may include certain of the
Bonds deposited in the Trust). The Trustee's and Evaluator's fees
are payable monthly on or before each Distribution Date from the
Interest Account of the Trust to the extent funds are available
and then from the Principal Account of the Trust. Since the Trustee
has the use of the funds being held in the Principal and Interest
Accounts for future distributions, payment of expenses and redemptions
and since such Accounts are non-interest-bearing to Unit holders,
the Trustee benefits thereby. Part of the Trustee's compensation
for its services to 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 expenses (including legal and annual auditing expenses)
of the Trustee incurred by or in connection with its responsibilities
under the Indenture, except in the event of negligence, bad faith
or willful misconduct on its part; the expenses and costs of any
action undertaken by the Trustee to protect 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
Bonds or any part of the Trust (no such taxes or charges are being
levied or made or, to the knowledge of the Sponsor, contemplated);
and expenditures incurred in contacting Unit holders upon termination
of the Trust. The above expenses and the Trustee's annual fee,
when paid or owing to the Trustee, are secured by a lien on the
Trust. In addition, the Trustee is empowered to sell Bonds in
the Trust in order to make funds available
Page 11
to pay all these amounts if funds are not otherwise available
in the Interest and Principal Accounts of the Trust.
Unless the Sponsor determines that such an audit is not required,
the Indenture requires that the accounts of the Trust shall be
audited on an annual basis at the expense of the Trust by independent
auditors selected by the Sponsor. So long as the Sponsor is making
a secondary market for Units, the Sponsor shall bear the cost
of such annual audits to the extent such cost exceeds $.50 per
Unit. Unit holders of a Trust covered by an audit may obtain a
copy of the audited financial statements from the Trustee upon
request.
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 determined by adding
to the Evaluator's determination of the aggregate offering price
of the Bonds in the Trust a pro rata share of cash, if any, in
the Principal and Interest Accounts of the Trust and a sales charge
of 3.9% of the Public Offering Price (equivalent to 4.058% of
the net amount invested). Also added to the Public Offering Price
is a proportionate share of interest accrued but unpaid on the
Bonds after the First Settlement Date to the date of settlement.
See "How Is Accrued Interest Treated?" During the initial offering
period, the Sponsor's Repurchase Price is equal to the Evaluator's
determination of the aggregate offering price of the Bonds in
the Trust.
For purchases made during the Initial Public Offering, the applicable
sales charge is reduced by a discount as indicated below for volume
purchases:
<TABLE>
<CAPTION>
Dollar Amount of Discount of Public
Transaction at Offering Price
Public Offering Price per Unit
_____________________ __________________
<S> <C>
$ 250,000 to $499,999 $ 2.50
$ 500,000 to $999,999 $ 5.00
$1,000,000 or more $10.00
</TABLE>
Any such reduced sales charge shall be the responsibility of the
selling Underwriter or dealer, except that the Sponsor will reimburse
the selling Underwriter or dealer an additional concession of
$2.50 per Unit for purchases of $500,000 or more. This 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. For purposes of calculating the applicable sales charge,
purchases of Units of the Trust will not be aggregated with any
other purchases by the same person of units in any series of tax-exempt
or other unit investment trusts sponsored by Nike Securities L.P.
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 or single
fiduciary account.
The Public Offering Price of Units of the Trust for secondary
market purchases will be determined by adding to the Evaluator's
determination of the aggregate bid price of the Bonds in the Trust
the appropriate sales charge determined in accordance with the
schedule set forth below, based upon the number of years remaining
to the maturity of each Bond in the portfolio of the Trust, adjusting
the total to reflect the amount of any cash held in or advanced
to the Principal and Interest Accounts of the Trust and dividing
the result by the number of Units of the Trust then outstanding.
The minimum sales charge on Units will be 3.0% of the Public Offering
Price (equivalent to 3.093% of the net amount invested). For purposes
of computation, Bonds will be deemed to mature on their expressed
maturity dates unless the Bonds have been called for redemption
or funds or securities have been placed in escrow to redeem them
on an earlier call date, in which case such call date will be
deemed to be the date upon which they mature.
Page 12
The effect of this method of sales charge computation will be
that different sales charge rates will be applied to each of the
various Bonds in the Trust based upon the maturities of such bonds,
in accordance with the following schedule:
<TABLE>
<CAPTION>
Secondary Offering Period
Sales Charge
_________________________
Percentage Percentage
of Public of Net
Offering Amount
Years to Maturity Price Invested
_________________ __________ __________
<S> <C> <C>
Less than 1 1.00% 1.010%
1 but less than 2 1.50 1.523
2 but less than 3 2.00 2.041
3 but less than 4 2.50 2.564
4 but less than 5 3.00 3.093
5 but less than 6 3.50 3.627
6 but less than 7 4.00 4.167
7 but less than 8 4.50 4.712
8 or more 4.70 4.932
</TABLE>
There will be no reduction of the sales charges for volume purchases
for secondary market transactions. A dealer will receive from
the Sponsor a dealer concession of 65% of the total sales charges
for Units sold by such dealer and dealers will not be eligible
for additional concessions for Units sold pursuant to the above
schedule.
With respect to the employees, officers and directors (including
their immediate families and trustees, custodians or a fiduciary
for the benefit of such person) of Nike Securities L.P. and its
subsidiaries the sales charge is reduced by 2% of the Public Offering
Price for purchases of Units during the initial and secondary
offering periods.
On the Initial Date of Deposit, the Public Offering Price is as
indicated in the "Summary of Essential Information." In addition
to fluctuations in the amount of interest accrued but unpaid on
Bonds in the Trust, the Public Offering Price at any time during
the initial offering period will vary from the Public Offering
Price stated herein in accordance with fluctuations in the prices
of the underlying Bonds.
The aggregate price of the Bonds in the Trust is determined by
whomever from time to time is acting as evaluator (the "Evaluator"),
on the basis of bid prices or offering prices as is appropriate,
(1) on the basis of current market prices for the Bonds obtained
from dealers or brokers who customarily deal in bonds comparable
to those held by the Trust; (2) if such prices are not available
for any of the Bonds, on the basis of current market prices for
comparable bonds; (3) by determining the value of the Bonds by
appraisal; or (4) by any combination of the above.
During the initial public offering period, a determination of
the aggregate price of the Bonds in the Trust is made by the Evaluator
on an offering price basis, as of the close of trading on the
New York Stock Exchange on each day on which it is open, effective
for all sales made subsequent to the last preceding determination.
For secondary market purposes, the Evaluator will be requested
to make such a determination, on a bid price basis, as of the
close of trading on the New York Stock Exchange on each day on
which it is open, effective for all sales, purchases or redemptions
made subsequent to the last preceding determination.
The Public Offering Price of the Units during the initial offering
period is equal to the offering price per Unit of the Bonds in
the Trust plus the applicable sales charge. After the completion
of the initial offering period, the secondary market Public Offering
Price will be equal to the bid price per Unit of the Bonds in
the Trust plus the applicable sales charge. The offering price
of Bonds in the Trust may be expected to be greater than the bid
price of such Bonds by approximately 1-2% of the aggregate principal
amount of such Bonds.
Page 13
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?
Until the primary distribution of the Units offered by this Prospectus
is completed, (i) for Units issued on the Initial Date of Deposit
and (ii) for additional Units issued after such date as additional
Bonds are deposited by the Sponsor, Units will be offered to the
public at the Public Offering Price, computed as described above,
by the Underwriters, including the Sponsor (see "Underwriting")
and through dealers and others. The initial offering period may
be up to approximately 360 days. During this period, the Sponsor
may deposit additional Bonds in the Trust and create additional
Units. 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 $25 per Unit. Any broker/dealer or bank will receive
additional concessions or agency commissions for volume purchases
only on the Initial Date of Deposit resulting in total concessions
as contained in the following table:
250-499 500
Units or more Units
Purchased Purchased
_________ _____________
Total Concessions $26.00 $28.00
However, resales of Units of the Trust by such dealers and 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 are making Units of the Trust available
to their customers on an agency basis. A portion of the sales
charge paid by these customers is retained by or remitted to the
banks in the amounts indicated above. Under the Glass-Steagall
Act, banks are prohibited from underwriting Trust Units; however,
the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have not indicated that these particular
agency transactions are not permitted under such Act. In Texas
and in certain other states, any banks making Units available
must be registered as broker/dealers under state law.
What are the Sponsor's Profits?
The Underwriters of the Trust, including the Sponsor, will receive
a gross sales commission equal to 3.9% of the Public Offering
Price of the Units of the Trust (equivalent to 4.058% 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
and the other Underwriters may be considered to have realized
a profit or the Sponsor may be considered to have sustained a
loss, as the case may be for the Trust, in the amount of any difference
between the cost of the Bonds to the Trust (which is based on
the Evaluator's determination of the aggregate offering price
of the underlying Bonds of the Trust on the Initial Date of Deposit
as well as subsequent dates of deposit) and the cost of such Bonds
to the Sponsor. See "Underwriting" and Note 1 of "Notes to Portfolio."
Such profits or losses may be realized or sustained by the Sponsor
and the other Underwriters with respect to Bonds which were acquired
by the Sponsor from underwriting syndicates of which it and the
other Underwriters were members. During the initial offering period,
the Underwriters also may realize profits or sustain losses from
the sale of Units to other Underwriters or as a result
Page 14
of fluctuations after the Initial Date of Deposit or subsequent
dates of deposit in the offering prices of the Bonds and hence
in the Public Offering Price received by the Underwriters.
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 (based on the bid prices
of the Bonds in the Trust) and the price at which Units are resold
(which price is also based on the bid prices of the Bonds in the
Trust and includes a maximum sales charge of 4.7%) or redeemed.
The secondary market public offering price of Units may be greater
or less than the cost of such Units to the Sponsor.
Will There be a Secondary Market?
After the initial offering period, although it is not obligated
to do so, the Sponsor intends to maintain a market for the Units
and continuously to offer to purchase Units at prices, subject
to change at any time, based upon the aggregate bid price of the
Bonds in the portfolio of the Trust plus interest accrued to the
date of settlement. All expenses incurred in maintaining a secondary
market, other than the fees of the Evaluator, the other expenses
of the Trust 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. Prospectuses relating
to certain other bond funds indicate an intention, subject to
change, on the part of the respective sponsors of such funds to
repurchase units of those funds on the basis of a price higher
than the bid prices of the securities in the funds. Consequently,
depending upon the prices actually paid, the repurchase price
of other sponsors for units of their funds may be computed on
a somewhat more favorable basis than the repurchase price offered
by the Sponsor for Units of the Trust in secondary market transactions.
As in this Trust, the purchase price per unit of such bond funds
will depend primarily on the value of the securities in the portfolio
of the fund.
RIGHTS OF UNIT HOLDERS
How are Certificates 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 is evidenced by registered certificates
executed by the Trustee and the Sponsor. Delivery of certificates
representing Units ordered for purchase is normally made five
business days following such order or shortly thereafter. Certificates
are transferable by presentation and surrender to the Trustee
properly endorsed or accompanied by a written instrument or instruments
of transfer. Certificates to be redeemed must be properly endorsed
or accompanied by a written instrument or instruments of transfer.
A Unit holder must sign exactly as his name appears on the face
of the certificate with the signature guaranteed by a participant
in the Securities Transfer Agents Medallion Program ("STAMP")
or such other signature guaranty program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee. In
certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of
death, appointments as executor or administrator or certificates
of corporate authority. Record ownership may occur before settlement.
Certificates will be issued in fully registered form, transferable
only on the books of the Trustee in denominations of one Unit
or any multiple thereof, numbered serially for purposes of identification.
Certificates for Units will bear an appropriate notation on their
face indicating which plan of distribution has been selected in
respect thereof. When a change is made, the existing certificate
must be surrendered to the Trustee and a new certificate issued
to reflect the then currently effective plan of distribution.
There is no charge for this service.
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
Page 15
expenses as the Trustee may incur. Mutilated certificates must
be surrendered to the Trustee for replacement.
How are Interest and Principal Distributed?
Interest from the Trust after deduction of amounts sufficient
to reimburse the Trustee, without interest, for any amounts advanced
and paid to the Sponsor as the Unit holder of record as of the
First Settlement Date (see "How is Accrued Interest Treated?")
will be distributed on the appropriate Distribution Date on a
pro rata basis to Unit holders of record as of the preceding Record
Date who are entitled to distributions at that time under the
plan of distribution chosen. All distributions for the Trust will
be net of applicable expenses for the Trust.
The pro rata share of cash in the Principal Account of the Trust
will be computed as of the fifteenth day of each month, and distributions
to the Unit holders of the Trust as of such Record Date will be
made on or shortly after the last day of each month. Proceeds
from the disposition of any of the Bonds of the Trust received
after such Record Date and prior to the following Distribution
Date will be held in the Principal Account of the Trust and not
distributed until the next Distribution Date. The Trustee is not
required to pay interest on funds held in the Principal or Interest
Account of the Trust (but may itself earn interest thereon and
therefore benefit from the use of such funds) nor to make a distribution
from the Principal Account of the Trust unless the amount available
for distribution shall equal at least $1.00 per Unit. Notwithstanding,
distributions of funds in the Principal Account, if any, will
be made on the last day of each December to Unit holders of record
as of December 15.
The Trustee will credit to the Interest Account of the Trust all
interest received by the Trust, including that part of the proceeds
of any disposition of Bonds which represents accrued interest.
Other receipts will be credited to the Principal Account of the
Trust. The distribution to the Unit holders of the Trust as of
each Record Date will be made on the following Distribution Date
or shortly thereafter and shall consist of an amount substantially
equal to such portion of the holder's pro rata share of the estimated
annual income of the Trust after deducting estimated expenses.
Because interest payments are not received by the Trust at a constant
rate throughout the year, such interest distribution may be more
or less than the amount credited to the Interest Account of the
Trust as of the Record Date. For the purpose of minimizing fluctuations
in the distributions from the Interest Account of the Trust, the
Trustee is authorized to advance such amounts as may be necessary
to provide interest distributions of approximately equal amounts.
Persons who purchase Units between a Record Date and a Distribution
Date will receive their first distribution on the second Distribution
Date after the purchase. The Trustee is not required to pay interest
on funds held in the Principal or Interest Account of the Trust
(but may itself earn interest thereon and therefore benefit from
the use of such funds).
As of the fifteenth day of each month, the Trustee will deduct
from the Interest Account of the Trust and, to the extent funds
are not sufficient therein, from the Principal Account of the
Trust, amounts necessary to pay the expenses of the Trust. The
Trustee also may withdraw from said accounts such amounts, if
any, as it deems necessary to establish a reserve for any governmental
charges payable out of the Trust. Amounts so withdrawn shall not
be considered a part of the Trust's assets until such time as
the Trustee shall return all or any part of such amounts to the
appropriate account. In addition, the Trustee may withdraw from
the Interest Account and the Principal Account of the Trust such
amounts as may be necessary to cover redemption of Units of the
Trust by the Trustee.
PURCHASERS OF UNITS WHO DESIRE TO RECEIVE DISTRIBUTIONS ON A SEMI-ANNUAL
BASIS MAY ELECT TO DO SO AT THE TIME OF PURCHASE DURING THE INITIAL
PUBLIC OFFERING PERIOD. THOSE NOT SO INDICATING WILL BE DEEMED
TO HAVE CHOSEN THE MONTHLY DISTRIBUTION PLAN. However, all Unit
holders purchasing Units during the initial public offering period
and prior to the first Record Date will receive the first distribution
of interest. Thereafter, Record Dates for monthly distributions
will be the fifteenth day of each month and Record Dates for semi-annual
distributions will be the fifteenth day of June and December.
Distributions will be made on the last day of the month of the
respective Record Dates.
Page 16
The plan of distribution selected by a Unit holder will remain
in effect until changed. Unit holders purchasing Units in the
secondary market will initially receive distributions in accordance
with the election of the prior owner. Each year, approximately
six weeks prior to the end of May, the Trustee will furnish each
Unit holder a card to be returned to the Trustee not more than
thirty nor less than ten days before the end of such month. Unit
holders desiring to change the plan of distribution in which they
are participating may so indicate on the card and return same,
together with their certificate, to the Trustee. If the card and
certificate are returned to the Trustee, the change will become
effective as of June 16 of that year. If the card and certificate
are not returned to the Trustee, the Unit holder will be deemed
to have elected to continue with the same plan for the following
twelve months.
How Can Distributions to Unit Holders be Reinvested?
Universal Distribution Option. Unit holders may elect participation
in a Universal Distribution Option which permits a Unit holder
to direct the Trustee to distribute principal and interest payments
to any other investment vehicle of which the Unit holder has an
existing account. For example, at a Unit holder's direction, the
Trustee would distribute automatically on the applicable distribution
date interest income or principal on the participant's Units to,
among other investment vehicles, a Unit holder's checking,
bank savings, money market, insurance, reinvestment or any other
account. All such distributions, of course, are subject to the
minimum investment and sales charges, if any, of the particular
investment vehicle to which distributions are directed. The Trustee
will notify the participant of each distribution pursuant to the
Universal Distribution Option. The Trustee will distribute directly
to the Unit holder any distributions which are not accepted by
the specified investment vehicle. A participant may at any time,
by so notifying the Trustee in writing, elect to terminate his
participation in the Universal Distribution Option and receive
directly future distributions on his Units.
What Reports Will Unit Holders Receive?
The Trustee shall furnish Unit holders of the Trust in connection
with each distribution a statement of the amount of interest,
if any, and the amount of other receipts, if any, which are being
distributed, expressed in each case as a dollar amount per Unit.
Within a reasonable time after the end of each calendar year,
the Trustee will furnish to each person who at any time during
the calendar year was a Unit holder of the Trust of record, a
statement as to (1) the Interest Account: interest received by
the Trust (including amounts representing interest received upon
any disposition of Bonds of the Trust), deductions for payment
of applicable taxes and for fees and expenses of the Trust, redemption
of Units and the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a dollar
amount representing the pro rata share of each Unit outstanding
on the last business day of such calendar year; (2) the Principal
Account: the dates of disposition of any Bonds of the Trust and
the net proceeds received therefrom (excluding any portion representing
interest and the premium attributable to the exercise of the right,
if applicable, to obtain Permanent Insurance), deduction for payment
of applicable taxes and for fees and expenses of the Trust, redemptions
of Units, and the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a dollar
amount representing the pro rata share of each Unit outstanding
on the last business day of such calendar year; (3) the Bonds
held and the number of Units of the Trust outstanding on the last
business day of such calendar year; (4) the Redemption Price per
Unit based upon the last computation thereof made during such
calendar year; and (5) the amounts actually distributed during
such calendar year from the Interest Account and from the Principal
Account of the Trust, separately stated, expressed both as total
dollar amounts and as dollar amounts representing the pro rata
share of each Unit outstanding.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Bonds in their Trust furnished to it by the Evaluator.
Each distribution statement will reflect pertinent information
in respect of each plan of distribution so that Unit holders may
be informed regarding the results of the other plan of distribution.
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,
duly endorsed or accompanied by proper instruments of transfer
with signature guaranteed as explained above (or by providing satis-
Page 17
factory indemnity, as in connection with lost, stolen or destroyed
certificates), and payment of applicable governmental charges,
if any. No redemption fee will be charged. On the seventh calendar
day following such tender, or if the seventh calendar day is not
a business day, on the first business day prior thereto, the Unit
holder will be entitled to receive in cash an amount for each
Unit equal to the Redemption Price per Unit next computed after
receipt by the Trustee of such tender of Units. The "date of tender"
is deemed to be the date on which Units are received by the Trustee,
except that as regards Units received after the close of trading
(4:00 p.m. Eastern time) on the New York Stock Exchange, the date
of tender is the next day on which such Exchange is open for trading
and such Units will be deemed to have been tendered to the Trustee
on such day for redemption at the redemption price computed on
that day. Units so redeemed shall be cancelled.
Accrued interest to the settlement date paid on redemption shall
be withdrawn from the Interest Account of the Trust or, if the
balance therein is insufficient, from the Principal Account of
the Trust. All other amounts paid on redemption shall be withdrawn
from the Principal Account of the Trust.
The Redemption Price per Unit (as well as the secondary market
Public Offering Price) will be determined on the basis of the
bid price of the Bonds in the Trust while the Public Offering
Price of Units during the initial offering period will be determined
on the basis of the offering price of the Bonds of the Trust as
of the close of trading on the New York Stock Exchange on the
date any such determination is made. On the Initial Date of Deposit
the Public Offering Price per Unit (which is based on the offering
prices of the Bonds in the Trust and includes the sales charge)
exceeded the Unit value at which Units could have been redeemed
(based upon the current bid prices of the Bonds in the Trust)
by the amount shown under "Summary of Essential Information."
The Redemption Price per Unit is the pro rata share of each Unit
determined by the Trustee on the basis of (1) the cash on hand
in the Trust or moneys in the process of being collected, (2)
the value of the Bonds in the Trust based on the bid prices of
the Bonds, except for those cases in which the value of the insurance,
if applicable, has been added, and (3) any interest accrued thereon,
less (a) amounts representing taxes or other governmental charges
payable out of the Trust, (b) the accrued expenses of the Trust
and (c) cash held for distribution to Unit holders of record as
of a date prior to the evaluation then being made. The Evaluator
may determine the value of the Bonds in the Trust (1) on the basis
of current bid prices of the Bonds obtained from dealers or brokers
who customarily deal in bonds comparable to those held by the
Trust, (2) on the basis of bid prices for bonds comparable to
any Bonds for which bid prices are not available, (3) by determining
the value of the Bonds by appraisal, or (4) by any combination
of the above.
The difference between the bid and offering prices of such Bonds
may be expected to average 1-2% of the principal amount. In the
case of actively traded bonds, the difference may be as little
as 1/2 of 1% and, in the case of inactively traded bonds, such
difference usually will not exceed 3%. Therefore, the price at
which Units may be redeemed could be less than the price paid
by the Unit holder. At the opening of business on the Initial
Date of Deposit, the aggregate current offering price of such
Bonds per Unit exceeded the Redemption Price per Unit (based upon
current bid prices of such Bonds) by the amount indicated in the
"Summary of Essential Information."
The Trustee is empowered to sell underlying Bonds in the Trust
in order to make funds available for redemption. To the extent
that Bonds are sold, the size and diversity of the Trust will
be reduced. Such sales may be required at a time when Bonds would
not otherwise be sold and might result in lower prices than might
otherwise be realized.
The right of redemption may be suspended and payment postponed
for any period during which the New York Stock Exchange is closed,
other than for customary weekend and holiday closings, or during
which the Securities and Exchange Commission determines that trading
on that Exchange is restricted or an emergency exists, as a result
of which disposal or evaluation of the Bonds 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.
Page 18
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 12:00 p.m. Eastern
time on the next succeeding business day and by making payment
therefor to the Unit holder not later than the day on which the
Units would otherwise have been redeemed by the Trustee. Units
held by the Sponsor may be tendered to the Trustee for redemption
as any other Units.
The offering price of any Units acquired by the Sponsor will be
in accord with the Public Offering Price described in the then
currently effective prospectus describing such Units. Any profit
or loss resulting from the resale or redemption of such Units
will belong to the Sponsor.
How May Bonds be Removed from the Trust?
The Trustee, in its sole discretion, is empowered to sell underlying
Bonds of the Trust in order to make funds available for the redemption
of Units or to provide for the payment of expenses of the Trust
for which funds are not available. The Depositor shall maintain
with the Trustee a current list of Bonds held in each Trust designated
to be sold for such purposes. As described in the following paragraph,
the Trustee may also sell Bonds in the Trust which are in default
in the payment of principal or interest or in significant risk
of such default where, in the Sponsor's opinion, such sale is
in the best interests of Unit holders or no other alternative
exists. In addition, at the Sponsor's request, the Trustee shall
sell Bonds of the Trust if factors arise which, in the Sponsor's
opinion, adversely affect the tax or exchange control status of
the Bonds. See "How May Units be Redeemed?" The Sponsor may from
time to time act as agent for the Trust with respect to selling
Bonds out of the Trust. From time to time, the Trustee may retain
and pay compensation to the Sponsor subject to the restrictions
under the Investment Company Act of 1940, as amended.
If any default in the payment of principal or interest on any
Bond occurs and no provision for payment is made therefor, within
thirty days, the Trustee is required to notify the Sponsor thereof.
If the Sponsor fails to instruct the Trustee to sell or to hold
such Bond within thirty days after notification by the Trustee
to the Sponsor of such default, the Trustee may, in its discretion,
sell the defaulted Bond and not be liable for any depreciation
or loss thereby incurred.
The Sponsor shall instruct the Trustee to reject any offer made
by an issuer of any of the Bonds to issue new obligations in exchange
and substitution for any Bonds pursuant to a refunding or refinancing
plan, except that the Sponsor may instruct the Trustee to accept
such an offer or to take any other action with respect thereto
as the Sponsor may deem proper if the issuer is in default with
respect to such Bonds or in the written opinion of the Sponsor
the issuer will probably default in respect to such Bonds in the
foreseeable future. Any obligations so received in exchange or
substitution will be held by the Trustee subject to the terms
and conditions in the Indenture to the same extent as Bonds originally
deposited thereunder. Within five days after the deposit of obligations
in exchange or substitution for underlying Bonds, the Trustee
is required to give notice thereof to each Unit holder of the
affected Trust, identifying the Bonds eliminated and the Bonds
substituted therefor. Except as stated in this paragraph and under
"What is the First Trust Special Situations Trust?" for Failed
Bonds, the acquisition by the Trust of any securities other than
the Bonds initially deposited is prohibited.
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in
1991, acts as Sponsor for successive series of The First Trust
Combined Series, The First Trust Special Situations Trust, The
First Trust Insured Corporate Trust, The First Trust of Insured
Municipal Bonds, The First Trust GNMA, Templeton Growth and Treasury
Trust, Templeton Foreign Fund & U.S. Treasury Securities Trust,
and The Advantage Growth and Treasury Securities Trust. First
Trust introduced the first insured unit investment trust in 1974
and to date more than $8 billion in First Trust unit investment
trusts have been deposited. The Sponsor's
Page 19
employees include a team of professionals with many years of experience
in the unit investment trust industry. The Sponsor is a member
of the National Association of Securities Dealers, Inc. and Securities
Investor Protection Corporation and has its principal offices
at 1001 Warrenville Road, Lisle, Illinois 60532; telephone number
(708) 241-4141. As of December 31, 1993, the total partners' capital
of Nike Securities L.P. was $12,743,032 (audited). (This paragraph
relates only to the Sponsor and not to the Trust or to any series
thereof or to any other Underwriters. 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 Trusts 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 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 portfolio or the Insurance Policy. 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
thirty days after notification, the retiring trustee may apply
to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of a trustee becomes effective
only when the successor trustee accepts its appointment as such
or when a court of competent jurisdiction appoints a successor
trustee.
Any corporation into which the Trustee may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which the 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 Bonds. 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 Bonds 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 become incapable of acting or become bankrupt or
its affairs are taken over by public authorities, then the Trustee
may (a) appoint a successor Sponsor at rates of compensation deemed
by the Trustee to be reasonable and not exceeding amounts
Page 20
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 thirty 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),
provided that the Indenture is not amended to increase the number
of Units of the Trust issuable thereunder or to permit the deposit
or acquisition of securities either in addition to or in substitution
for any of the Bonds initially deposited in the Trust, except
for the substitution of certain refunding securities for Bonds
or New Bonds for Failed Bonds. In the event of any amendment,
the Trustee is obligated to notify promptly all Unit holders of
the substance of such amendment.
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 Trust, as shown by any evaluation, is less than 20% of
the aggregate principal amount of the Bonds initially deposited
in the Trust during the primary offering period or by the Trustee
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 Underwriters, including the Sponsor. If the Trust is liquidated
because of the redemption of unsold Units of the Trust by the
Underwriters, the Sponsor will refund to each purchaser of Units
of the Trust the entire sales charge paid by such purchaser. The
Indenture will terminate upon the redemption, sale or other disposition
of the last Bond held thereunder, but in no event shall it continue
beyond November 30, 2004. 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 sell any Bonds remaining in the Trust and, after
paying all expenses and charges incurred by the Trust, will distribute
to each Unit holder of the Trust (including the Sponsor if it
then holds any Units), upon surrender for cancellation of his
Certificate for Units, his pro rata share of the balances remaining
in the Interest and Principal Accounts of the Trust, all as provided
in the Indenture.
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, 2 Wall Street, New York,
New York 10005, will act as counsel for the Trustee and as special
counsel for the Trust for New York tax matters.
Experts
The statement of net assets, including the portfolio, of the Trust
on the Initial Date of Deposit appearing in this Prospectus and
Registration Statement has been audited by Ernst & Young, independent
auditors, as
Page 21
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.
UNDERWRITING
The Underwriters named below, including the Sponsor, have severally
purchased Units in the following respective amounts:
<TABLE>
<CAPTION>
Number of
Name Address Units
____ _______ _________
<S> <C> <C>
Sponsor
Nike Securities L.P. 1001 Warrenville Road, Lisle, IL 60532 1,377
Underwriters
Robert W. Baird & Co. Incorporated Firstar Center, 777 East Wisconsin Avenue, 250
Milwaukee, WI 53202
Raymond James & Associates, Inc. 880 Carillon Parkway, St. Petersburg, FL 33710 250
Advest, Inc. One Commercial Plaza, 280 Trumbull Street, 18th Floor, 100
Hartford, CT 06103
Dain Bosworth Incorporated Dain Bosworth Plaza, 60 S. 6th Street, 14th Floor, 100
Minneapolis, MN 55402-4422
Fidelity Capital Markets, A division 161 Devonshire Street D5, Boston, MA 02110 100
of National Financial Services
Corporation
Gruntal & Co., Incorporated 14 Wall Street, 20th Floor, New York, NY 10005 100
J.J.B. Hilliard, W.L. Lyons, Inc. 501 South Fourth, P.O. Box 32760, Louisville, KY 40232 100
John G. Kinnard 920 Second Ave. South, Minneapolis, MN 55402 100
& Co., Incorporated
Oppenheimer & Co., Inc. Oppenheimer Tower, One World Financial Center, 100
8th Floor, New York, NY 10281
________
2,577
========
</TABLE>
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 Agreement Among Underwriters 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?" on page 14.
The Sponsor will receive from the Underwriters the excess over
the gross sales commission contained in the following table:
Underwriting Concession (per Unit)
100-249 250-999 1,000 or More
Units Units Units
Underwritten Underwritten Underwritten
____________ ____________ _____________
$26.00 $28.00 $29.00
Underwriters, dealers, and others who, in a single month, purchase
from the Sponsor Units of any Series of The First Trust GNMA,
The First Trust of Insured Municipal Bonds, The First Trust Combined
Series, The First Trust Special Situations Trust or any other
unit investment trust of which Nike Securities L.P. is the Sponsor
(the "UIT Units"), which sales of UIT Units are in the following
aggregate dollar amounts, will receive additional concessions
as indicated in the following table:
Page 22
<TABLE>
<CAPTION>
Aggregate Monthly
Dollar Amount of
UIT Units Sold at Additional Concession
Public Offering Price (per $1,000 sold)
_____________________ _____________________
<S> <C>
$ 1,000,000 - $2,499,999 $0.50
$ 2,500,000 - $4,999,999 $1.00
$ 5,000,000 - $7,499,999 $1.50
$ 7,500,000 - $9,999,999 $2.00
$10,000,000 or more $2.50
</TABLE>
Aggregate Monthly Dollar Amount of UIT Units Sold at Public Offering
Price is based on settled trades for a month (including sales
of Units to the Sponsor in the secondary market which are resold),
net of redemptions.
In addition to any other benefits that the Underwriters may realize
from the sale of the Units of the Trust, the Agreement Among Underwriters
provides that the Sponsor will share with the other Underwriters
50% of the net gain, if any, represented by the difference between
the Sponsor's cost of the Bonds in connection with their acquisition
and the Aggregate Offering Price thereof on the Date of Deposit,
less a charge for acquiring the Bonds in the portfolio and for
the Sponsor maintaining a secondary market for the Units. See
"What are the Sponsor's Profits?" and Note 1 of "Notes to Portfolio."
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.
A comparison of estimated current returns and estimated long-term
returns with the returns on various investments is one element
to consider in making an investment decision. The Sponsor may
from time to time in its advertising and sales materials compare
the then current estimated 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 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.
Page 23
First Trust Corporate Income Trust, Laddered Series
<TABLE>
<CAPTION>
Special Trust Information
Semi-
Monthly Annual
_______ ______
<S> <C> <C>
Calculation of Estimated Net Annual Unit Income
Estimated Annual Interest Income per Unit $ 77.46 $ 77.46
Less: Estimated Annual Expense per Unit $ 2.71 $ 2.21
Estimated Net Annual Interest Income per Unit $ 74.75 $ 75.25
Calculation of Interest Distribution per Unit
Estimated Net Annual Interest Income per Unit $ 74.75 $ 75.25
Divided by 12 and 2, respectively $ 6.23 $ 37.63
Estimated Daily Rate of Net Interest Accrual per Unit $.207650 $.209039
Initial Distribution -August 31, 1994 (1) $ 4.98 $ 5.02
Partial Distribution - December 31, 1994 $ - $ 25.08
Regular Distribution $ 6.23 $ 37.63
(Commencing) 9/30/94 6/30/95
Estimated Current Return Based on Public Offering Price (2) 7.48% 7.53%
Estimated Long-Term Return Based on Public Offering Price (2) 7.58% 7.63%
CUSIP 33734W 541 558
</TABLE>
Trustee's Annual Fee $1.41 and $.96 per $1,000 principal amount
of Bonds, exclusive of expenses of the Trust, for those portions
of the Trust under the monthly and semi-annual plans, respectively,
commencing July 14, 1994.
____________
[FN]
(1) The Trust's initial distribution per Unit will be made on
August 31, 1994 to monthly and semi-annual Unit holders of record
on August 15, 1994.The Trust will make a partial distribution
on December 31, 1994 to semi-annual Unit holders of record on
December 15, 1994. Regular distributions to monthly Unit holders
will be paid the last day of each month commencing on September
30, 1994 to Unit holders of record on the fifteenth day of each
month commencing September 15, 1994. Regular distributions to
semi-annual Unit holders will be paid the last day of June and
December commencing June 30, 1995 to Unit holders of record on
the fifteenth day of June and December commencing June 15, 1995.
(2) The Estimated Current Return is calculated by dividing the
Estimated Net Annual Interest Income per Unit by the Public Offering
Price. The Estimated Net Annual Interest Income per Unit will
vary with changes in fees and expenses of the Trustee, the Portfolio
Supervisor and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Bonds while the Public
Offering Price will vary with changes in the offering price of
the underlying Bonds; therefore, there is no assurance that the
present Estimated Current Return indicated above will be realized
in the future. The Estimated Long-Term Return is calculated using
a formula which (1) takes into consideration, and determines and
factors in the relative weightings of the market values, yields
(which take into account the amortization of premiums and the
accretion of discounts) and estimated retirements of all of the
Bonds in the Trust; and (2) takes into account the expenses and
sales charge associated with each Unit of the Trust. Since the
market values and estimated retirements of the Bonds and the expenses
of the Trust will change, there is no assurance that the present
Estimated Long-Term Return indicated above will be realized in
the future. Estimated Current Return and Estimated Long-Term Return
are expected to differ because the calculation of the Estimated
Long-Term Return reflects the estimated date and amount of principal
returned while the Estimated Current Return calculations include
only Net Annual Interest Income and Public Offering Price. Neither
rate reflects the true return to Unit holders, which is lower,
because neither includes the effect of certain delays in distributions
to Unit holders. The above figures are based on estimated per
Unit cash flows. Estimated cash flows will vary with changes in
fees and expenses, with changes in current interest rates, and
with the principal prepayment, redemption, maturity, call, exchange
or sale of the underlying Bonds. The estimated cash flows for
this Trust are set forth under "Estimated Cash Flows to Unit Holders."
Page 24
First Trust Corporate Income Trust, Laddered Series
Portfolio
At the Opening of Business
On the Initial Date of Deposit of the Bonds-July 14, 1994
<TABLE>
<CAPTION>
Aggregate Issue Represented by Sponsor's Cost to
Principal Contracts to Purchase Bonds (1)(2) Rating (3) the Trust
_________ __________________________________ __________ _________
<C> <S> <C> <C>
$ 250,000 Tele-Communications, Inc., BBB- $ 243,675
7.375%, Due 2/15/2000
250,000 McDonnell Douglas Corporation, BBB 254,200
8.25%, Due 7/01/2000
250,000 Public Service Electric & Gas Company, A- 249,148
7.875%, Due 11/01/2001
250,000 Baxter International Inc., A- 253,923
8.125%, Due 11/15/2001
250,000 Texas Utilities Electric Company, BBB 250,625
8.125%, Due 2/01/2002
125,000 Lehman Brothers Holdings Inc., A 127,838
8.875%, Due 3/01/2002
125,000 Bankers Trust Company, A+ 118,500
7.125%, Due 7/31/2002
250,000 Tele-Communications, Inc. BBB- 240,175
8.25%, Due 1/15/2003
250,000 Hydro-Quebec, A+ 237,800
7.375%, Due 2/01/2003
125,000 Bear Stearns Company, A 127,462
8.75%, Due 3/15/2004
125,000 Ford Motor Credit Company, A 120,350
7.50%, Due 6/15/2004
250,000 ITT Financial Corporation, A- 252,812
8.35%, Due 11/01/2004
__________ __________
$2,500,000 $2,476,508
========== ==========
</TABLE>
[FN]
____________
See "Notes to Portfolio" on page 28.
Page 25
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
First Trust Corporate Income Trust, Laddered Series
We have audited the accompanying statement of net assets, including
the portfolio, of The First Trust Special Situations Trust, Series
97, comprised of First Trust Corporate Income Trust, Laddered
Series, as of the opening of business on July 14, 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 July 14, 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 The First Trust Special Situations Trust, Series 97, comprised
of First Trust Corporate Income Trust, Laddered Series, at the
opening of business on July 14, 1994 in conformity with generally
accepted accounting principles.
ERNST & YOUNG
Chicago, Illinois
July 14, 1994
Page 26
Statement of Net Assets
First Trust Corporate Income Trust, Laddered Series
The First Trust Special Situations Trust, Series 97
At the Opening of Business on the Initial Date of Deposit
July 14, 1994
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Delivery statements relating to Sponsor's contracts to purchase
bonds (1)(2) $2,476,508
Accrued interest on underlying bonds (2)(4) 49,612
__________
2,526,120
Less distributions payable (4) 49,612
__________
Net assets
$2,476,508
==========
Outstanding Units 2,577
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (3) $2,577,011
Less gross underwriting commissions (3) 100,503
__________
Net assets
$2,476,508
==========
</TABLE>
NOTES TO STATEMENT OF NET ASSETS
[FN]
(1) The aggregate offering price of the bonds in the Trust at
the opening of business on the Initial Date of Deposit and the
cost to the Trust are the same. The offering price is determined
by the Evaluator.
(2) Pursuant to delivery statements relating to contracts to purchase
bonds, an irrevocable letter of credit has been deposited in the
Trust as collateral. The amount of available letter of credit
and the amount expected to be utilized as collateral for the Trust
is shown below. The amount expected to be utilized is (a) the
cost to the Trust of the principal amount of the bonds to be purchased,
(b) accrued interest on those bonds to the Initial Date of Deposit,
and (c) accrued interest on those bonds from the Initial Date
of Deposit to the expected dates of delivery of the bonds.
<TABLE>
<CAPTION>
Accrued
Aggregate Accrued Interest to
Letter of Credit Offering Interest to Expected
To be Price of Date of Dates of
Trust Available Utilized Bonds Deposit Delivery
_____ _________ ________ _________ ___________ ___________
<S> <C> <C> <C> <C> <C>
First Trust Corporate Income
Trust, Laddered Series $3,000,000 $2,529,225 $2,476,508 $49,612 $3,105
</TABLE>
[FN]
(3) The aggregate cost to investors (exclusive of accrued interest)
and the aggregate gross underwriting commissions of 3.9% are computed
assuming no reduction of sales charge for quantity purchases.
(4) The Trustee will advance to the Trust the amount of net interest
accrued to July 21, 1994, the First Settlement Date, for distribution
to the Sponsor as the Unit holder of record.
Page 27
NOTES TO PORTFOLIO
The following Notes to Portfolio pertain to the information contained
in the Trust Portfolio on page 25.
(1) Sponsor's contracts to purchase Bonds were entered into during
the period from July 12, 1994 to July 13, 1994. All contracts
to purchase Bonds are expected to be settled on or prior to July
21, 1994 unless otherwise indicated.
Other information regarding the Bonds in the Trust on the Initial
Date of Deposit is as follows:
<TABLE>
<CAPTION>
Aggregate Annual
Offering Cost of Profit Or Interest
Price of Bonds To (Loss) To Bid Price Income
Trust Bonds Sponsor Sponsor of Bonds to Trust
_____ _________ ________ _________ _________ ________
<S> <C> <C> <C> <C> <C>
First Trust Corporate Income Trust,
Laddered Series $2,476,508 $2,492,701 $(16,193) $2,464,008 $199,625
</TABLE>
Neither Cost of Bonds to Sponsor nor Profit or (Loss) to Sponsor
reflects underwriting profits or losses received or incurred by
the Sponsor through its participation in underwriting syndicates
but such amounts reflect portfolio hedging transaction costs and
hedging gains and losses. The Offering and Bid Prices of Bonds
were determined by Securities Evaluation Service, Inc., certain
shareholders of which are officers of the Sponsor.
(2) The Bonds are not subject to optional call or redemption provisions.
For certain issues, in the event of change of control resulting
in a credit rating downgrade, the noteholders will have the option
of requiring such issuer to redeem the notes at 100% of the principal
amount thereof, plus any accrued and unpaid interest.
(3) All ratings are by Standard & Poor's Corporation unless otherwise
indicated.
DESCRIPTION OF BOND RATINGS*
* As published by the rating companies.
Standard & Poor's Corporation. A brief description of the applicable
Standard & Poor's Corporation rating symbols and their meanings
follow:
A Standard & Poor's corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect
to a specific debt obligation. This assessment may take into consideration
obligors such as guarantors, insurers, or lessees.
The bond rating is not a recommendation to purchase, sell or hold
a security, inasmuch as it does not comment as to market price
or suitability for a particular investor.
The ratings are based on current information furnished by the
issuer or obtained by Standard & Poor's from other sources it
considers reliable. Standard & Poor's does not perform an audit
in connection with any rating and may, on occasion, rely on unaudited
financial information. The ratings may be changed, suspended or
withdrawn as a result of changes in, or unavailability of, such
information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default-capacity and willingness of the obligor
as to the timely payment of interest and repayment of principal
in accordance with the terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization or other arrangements
under the laws of bankruptcy and other laws affecting creditors'
rights.
AAA - Bonds rated AAA have the highest rating assigned by Standard
& Poor's to a debt obligation. Capacity
Page 28
to pay interest and repay principal is extremely strong.**
** Bonds insured by Financial Security Assurance, Inc., Capital
Markets Assurance Corporation or AMBAC Indemnity Corporation are
automatically rated "AAA" by Standard & Poor's Corporation.
AA - Bonds rated AA have a very strong capacity to pay interest
and repay principal and differ from the highest rated issues only
in small degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity
to pay interest and repay principal. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity
to pay interest and repay principal for bonds in this category
than for bonds in higher rated categories.
Plus (+) or Minus (-): The ratings from "AA" to "BBB" may be modified
by the addition of a plus or minus sign to show relative standing
within the major rating categories.
Provisional Ratings: The letter "p" indicates that the rating
is provisional. A provisional rating assumes the successful completion
of the project being financed by the bonds being rated and indicates
that payment of debt service requirements is largely or entirely
dependent upon the successful and timely completion of the project.
This rating, however, while addressing credit quality subsequent
to completion of the project, makes no comment on the likelihood
of, or the risk of default upon failure of, such completion. The
investor should exercise his/her own judgment with respect to
such likelihood and risk.
Credit Watch: Credit Watch highlights potential changes in ratings
of bonds and other fixed income securities. It focuses on events
and trends which place companies and government units under special
surveillance by S&P's 180-member analytical staff. These may include
mergers, voter referendums, actions by regulatory authorities,
or developments gleaned from analytical reviews. Unless otherwise
noted, a rating decision will be made within 90 days. Issues appear
on Credit Watch where an event, situation, or deviation from trends
occurred and needs to be evaluated as to its impact on credit
ratings. A listing, however, does not mean a rating change is
inevitable. Since S&P continuously monitors all of its ratings,
Credit Watch is not intended to include all issues under review.
Thus, rating changes will occur without issues appearing on Credit
Watch.
Moody's Investors Service, Inc. A brief description of the applicable
Moody's Investors Service, Inc. rating symbols and their meanings
follow:
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by
a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change,
such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues. Their safety
is so absolute that with the occasional exception of oversupply
in a few specific instances, characteristically, their market
value is affected solely by money market fluctuations.
Aa - Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what
are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat large than in Aaa
securities. Their market value is virtually immune to all but
money market influences, with the occasional exception of oversupply
in a few specific instances.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future. The market value of A-rated
bonds may be influenced to some degree by economic performance
during a sustained
Page 29
period of depressed business conditions, but, during periods of
normalcy, A-rated bonds frequently move in parallel with Aaa and
Aa obligations, with the occasional exception of oversupply in
a few specific instances.
A 1 and Baa 1 - Bonds which are rated A 1 and Baa 1 offer the
maximum in security within their quality group, can be bought
for possible upgrading in quality, and additionally, afford the
investor an opportunity to gauge more precisely the relative attractiveness
of offerings in the market place.
Baa - Bonds which are rated Baa are considered as medium grade
obligations; i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length
of time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well. The market
value of Baa-rated bonds is more sensitive to changes in economic
circumstances, and aside from occasional speculative factors applying
to some bonds of this class, Baa market valuations will move in
parallel with Aaa, Aa, and A obligations during periods of economic
normalcy, except in instances of oversupply.
Moody's bond rating symbols may contain numerical modifiers of
a generic rating classification. The modifier 1 indicates that
the bond ranks at the high end of its category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of its generic rating category.
Con.(---) - Bonds for which the security depends upon the completion
of some act or the fulfillment of some condition are rated conditionally.
These are bonds secured by (a) earnings of projects under construction,
(b) earnings of projects unseasoned in operation experience, (c)
rentals which begin when facilities are completed, or (d) payments
to which some other limiting condition attaches. Parenthetical
rating denotes probable credit stature upon completion of construction
or elimination of basis of condition.
Page 30
Estimated Cash Flows to Unit Holders
The tables below set forth the per Unit estimated monthly and
semi-annual distributions of interest and principal to Unit holders.
The tables assume the receipt of principal of the underlying Bonds
upon their maturity or expected retirement date, no changes in
expenses, no changes in the current interest rates and no exchanges,
redemptions, sales or prepayments of the underlying Bonds prior
to their maturity or expected retirement date. To the extent the
foregoing assumptions change, actual distributions will vary.
<TABLE>
<CAPTION>
First Trust Corporate Income Trust, Laddered Series
Monthly
Estimated Estimated Estimated
Interest Principal Total
Date (Each Month) Distribution Distribution Distribution
_________________ ____________ ____________ ____________
<S> <C> <C> <C>
August 1994 4.98 4.98
September 1994-January 2000 6.23 6.23
February 2000 6.23 108.13 114.36
March 2000-October 2001 5.57 5.57
November 2001 5.23 216.26 221.49
December 2001-January 2002 4.16 4.16
February 2002 3.80 108.13 111.93
March 2002 3.24 54.07 57.31
April 2002-June 2002 3.04 3.04
July 2002 3.04 54.07 57.11
August 2002-December 2002 2.73 2.73
January 2003 2.73 108.13 110.86
February 2003 1.67 108.13 109.80
March 2003-February 2004 1.35 1.35
March 2004 1.35 54.07 55.42
April 2004-May 2004 0.96 0.96
June 2004 0.96 54.07 55.03
July 2004-October 2004 0.63 0.63
November 2004 0.26 108.13 108.39
</TABLE>
<TABLE>
<CAPTION>
Semi-Annual
Date Estimated Estimated Estimated
(Each June and December Interest Principal Total
Unless Otherwise Indicated) Distribution Distribution Distribution
___________________________ ____________ ____________ ____________
<S> <C> <C> <C>
August 1994 5.02 5.02
December 1994 25.08 25.08
June 1995-December 1999 37.62 37.62
February 2000 108.13 108.13
June 2000 34.99 34.99
December 2000-June 2001 33.68 33.68
November 2001 216.26 216.26
December 2001 31.91 31.91
February 2002 108.13 108.13
March 2002 54.07 54.07
June 2002 20.50 20.50
July 2002 54.07 54.07
December 2002 16.84 16.84
January 2003 108.13 108.13
February 2003 108.13 108.13
June 2003 9.90 9.90
December 2003 8.18 8.18
March 2004 54.07 54.07
June 2004 7.01 54.07 61.08
November 2004 2.83 108.13 110.96
</TABLE>
Page 31
<TABLE>
<CAPTION>
CONTENTS:
<S> <C>
Summary of Essential Information 2
First Trust Corporate Income Trust, Laddered Series
The First Trust Special Situations Trust, Series 97:
What is The First Trust Special Situations Trust? 3
What are Estimated Long-Term Return and
Estimated Current Return? 6
How is Accrued Interest Treated? 7
What is the Federal Tax Status of Unit Holders? 7
Why are Investments in the Trust Suitable for
Retirement Plans? 10
What are the Expenses and Charges? 11
Public Offering:
How is the Public Offering Price Determined? 12
How are Units Distributed? 14
What are the Sponsor's Profits? 14
Will There be a Secondary Market? 15
Rights of Unit Holders:
How are Certificates Issued and Transferred? 15
How are Interest and Principal Distributed? 16
How Can Distributions to Unit Holders be
Reinvested? 17
What Reports Will Unit Holders Receive? 17
How May Units be Redeemed? 17
How May Units be Purchased by the Sponsor? 19
How May Bonds be Removed from the Trust? 19
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 19
Who is the Trustee? 20
Limitations on Liabilities of Sponsor and Trustee 20
Who is the Evaluator? 21
Other Information:
How May the Indenture be Amended or
Terminated? 21
Legal Opinions 21
Experts 21
Underwriting 22
First Trust Corporate Income Trust, Laddered Series 24
Portfolio 25
Report of Independent Auditors 26
Statement of Net Assets 27
Notes to Statement of Net Assets 27
Notes to Portfolio 28
Description of Bond Ratings 28
Estimated Cash Flows to Unit Holders 31
______________
</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 (registered trademark)
First Trust Corporate Income Trust
Laddered Series
First Trust (registered trademark)
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-708-241-4141
Trustee:
United States Trust Company
of New York
770 Broadway
New York, New York 10003
1-800-682-7520
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
July 14, 1994
Page 32
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 97, 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
97, 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
July 14, 1994.
THE FIRST TRUST SPECIAL SITUATIONS
TRUST, SERIES 97
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 ) July 14, 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 July 14, 1994 in
Amendment No. 1 to the Registration Statement (Form S-6) (File
No. 33-54311) and related Prospectus of The First Trust Special
Situations Trust, Series 97.
ERNST & YOUNG
Chicago, Illinois
July 14, 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 24 and
certain subsequent Series effective January 23, 1992
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and Nike
Financial Advisory Services L.P. as Portfolio
Supervisor (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-45903] filed on behalf
of The First Trust Special Situations Trust,
Series 24).
1.1.1 Form of Trust Agreement for Series 97 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 97
TRUST AGREEMENT
Dated: July 14, 1994
This 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 24"
effective January 23, 1992 (herein called the "Standard Terms and
Conditions of Trust"), and such provisions as are set forth in
full 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 Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the Provisions of Part II 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 Bonds defined in Section 1.01(5) listed in
Schedule A hereto have been deposited in trust under this
Trust Agreement.
(b) The fractional undivided interest in and ownership
of the Trust Fund represented by each Unit for a Trust is the
amount set forth under the captions "Summary of Essential
Information - Fractional Undivided Interest in the Trust per
Unit" in the Prospectus.
(c) The number of units in a Trust referred to in
Section 2.03 is set forth under the caption "Summary of
Essential Information - Number of Units" in the Prospectus.
(d) For the Trust, the First General Record Date and
the amount of the second distribution of funds from the
Interest Account shall be the record date for the Interest
Account and the amount set forth under "Special Trust
Information" for such Trust in the Prospectus.
(e) For the Trust, the "First Settlement Date" is the
date set forth under "Summary of Essential Information-First
Settlement Date" for such Trust in the Prospectus.
(f) The definition of "Bonds" contained in Section
1.01(5) of the Standard Terms and Conditions of Trust shall
be amended by deleting any reference to "U.S. Treasury Bonds"
or "zero coupon Treasury obligations."
(g) Notwithstanding anything to the contrary in the
first three sentences of Section 6.04 of Article VI of the
Standard Terms and Conditions of trust the Trustee's fee,
shall be calculated on the largest number of Units
outstanding during each period in respect of which a payment
is made pursuant to Section 3.05, and the initial rate at
which such compensation is computed shall be the amount set
forth in "Special Trust Information" for such Trust in the
Prospectus.
(h) Notwithstanding anything to the contrary contained
in the Standard Terms and Conditions of Trust, "Portfolio
Supervisor" shall mean First Trust Advisors L.P. and its
successors in interest, or any successor portfolio supervisor
appointed as hereinafter provided.
PART III
A. Notwithstanding any provision to the contrary contained
in the Standard Terms and Conditions of Trust and in lieu of the
receipt of Certificates evidencing ownership of Units of the
Fund, the Sponsor or any Underwriter of the Fund listed under the
caption "Underwriting" in the Prospectus, at its option, may
elect that Units of the Fund owned by it be reflected by book
entry on the books and records of the Trustee. For all purposes
such Sponsor or Underwriter shall be deemed the owner of such
Units as if a Certificate evidencing ownership of Units of the
Fund had actually been issued by the Trustee. The Units
reflected by book entry on the books and records of the Trustee
may be transferable by the registered owner of such Units by
written instrument in form satisfactory to the Trustee. The
registered owner of Units reflected by book entry on the books
and records of the Trustee shall have the right at any time to
obtain Certificates evidencing ownership of such Units.
B. Section 2.01. of Article II of the Standard Terms and
Conditions of Trust is hereby amended by inserting "(a)" prior to
the beginning of the text of the paragraph and adding the
following additional paragraphs:
(b) From time to time following the Initial Date of
Deposit, the Depositor is hereby authorized, in its discretion,
to assign, convey to and deposit with the Trustee additional
Bonds, in bearer form or duly endorsed in blank or accompanied by
all necessary instruments of assignment and transfer in proper
form (or Contract Obligations relating to such Bonds), to be
held, managed and applied by the Trustee as herein provided.
Such deposit of additional Bonds shall be made, in each case,
pursuant to a Notice of Deposit of Additional Bonds from the
Depositor to the Trustee. The Depositor, in each case, shall
ensure that each deposit of additional Bonds pursuant to this
Section shall be, as nearly as is practicable, in the identical
ratio as the Percentage Ratio for such Bonds as is specified in
the Prospectus for the Trust and the Depositor shall ensure that
such Bonds are identical to those deposited on the Initial Date
of Deposit. The Depositor shall deliver the additional Bonds
which were not delivered concurrently with the deposit of
additional Bonds and which were represented by Contract
Obligations within 10 calendar days after such deposit of
additional Bonds (the "Additional Bonds Delivery Period"). If a
contract to buy such Bonds between the Depositor and seller is
terminated by the seller thereof for any reason beyond the
control of the Depositor or if for any other reason the Bonds are
not delivered to the Trust by the end of the Additional Bonds
Delivery Period for such deposit, the Trustee shall immediately
draw on the Letter of Credit, if any, in its entirety, apply the
monies in accordance with Section 2.01(d), and the Depositor
shall forthwith take the remedial action specified in
Section 3.14. If the Depositor does not take the action
specified in Section 3.14 within 10 calendar days of the end of
the Additional Bonds Delivery Period, the Trustee shall forthwith
take the action specified in Section 3.14.
(c) In connection with the deposits described in
Section 2.01 (a) and (b), the Depositor has, in the case of
Section 2.01(a) deposits, and, prior to the Trustee accepting a
Section 2.01(b) deposit, will, deposit cash and/or Letter(s) of
Credit in an amount sufficient to purchase the Contract
Obligations (the "Purchase Amount") relating to Bonds which are
not actually delivered to the Trustee at the time of such
deposit, the terms of which unconditionally allow the Trustee to
draw on the full amount of the available Letter of Credit. The
Trustee may deposit such cash or cash drawn on the Letter of
Credit in a non-interest bearing account for the Trust.
(d) In the event that the purchase of Contract Obligations
pursuant to any contract shall not be consummated in accordance
with said contract or if the Bonds represented by Contract
Obligations are not delivered to the Trust in accordance with
Section 2.01(a) or 2.01(b) and the monies, or, if applicable, the
monies drawn on the Letter of Credit, deposited by the Depositor
are not utilized for Section 3.14 purchases of New Bonds, such
funds, to the extent of the purchase price of Failed Contract
Obligations for which no Replacement Bond was acquired pursuant
to Section 3.14, plus all amounts described in the next
succeeding two sentences, shall be credited to the Principal
Account and distributed pursuant to Section 3.05 to Unit holders
of record as of the Record Date next following the failure of
consummation of such purchase. The Depositor shall cause to be
refunded to each Unit holder his pro rata portion of the sales
charge levied on the sale of Units to such Unit holder
attributable to such Failed Contract Obligation. The Depositor
shall also pay to the Trustee, for distribution to the Unit
holders, interest on the amount of the purchase price to the
Trust of the Failed Contract Obligation, at the rate of 5% per
annum to the date the Depositor notifies the Trustee that no
Replacement Bond will be purchased or, in the absence of such
notification, to the expiration date for purchase of a
Replacement Security specified in Section 3.14. Any amounts
remaining from monies drawn on the Letter of Credit which are not
used to purchase New Bonds or are not used to provide refunds to
Unit holders shall be paid to the Depositor.
(e) The Trustee is hereby irrevocably authorized to effect
registration or transfer of the Bonds in fully registered form to
the name of the Trustee or to the name of its nominee.
(f) In connection with and at the time of any deposit of
additional bonds pursuant to Section 2.01(b), the Depositor shall
exactly replicate Cash (as defined below) received or receivable
by the Trust as of the date of such deposit. For purposes of
this paragraph, "Cash" means, as to the Principal Account, cash
or other property (other than Bonds) on hand in the Principal
Account or receivable and to be credited to the Principal Account
as of the date of the deposit (other than amounts to be
distributed solely to persons other than holders of Units created
by the deposit) and, as to the Income Account, cash or other
property (other than Bonds) received by the Trust as of the date
of the deposit or receivable by the Trust in respect of
distributions declared but not received as of the date of the
deposit, reduced by the amount of any cash or other property
received or receivable on any Bond allocable (in accordance with
the Trustee's calculation of the monthly distribution from the
Income Account pursuant to Section 3.05) to a distribution made
or to be made in respect of a Record Date occurring prior to the
deposit. Such replication will be made on the basis of a
fraction, the numerator of which is the number of Units created
by the deposit and the denominator of which is the number of
Units which are outstanding immediately prior to the deposit.
(g) Section 3.14 (a) (i) of Article III of the Standard
Terms and Conditions of Trust is hereby amended by deleting "and
not less than ten years after the date of purchase."
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 be
hereto affixed and attested (if applicable) by authorized
officers; all as of the day, month and year first above written.
NIKE SECURITIES L.P.,
Depositor
By Carlos E. Nardo
Senior Vice President
UNITED STATES TRUST COMPANY OF NEW
YORK, Trustee
(SEAL) By Thomas Porrazzo
Vice President
Attest:
Rosalia A. Raviele
Assistant Secretary
SECURITIES EVALUATION SERVICE,
INC., Evaluator
(SEAL) By Jerome G. Klaas
Vice President
Attest:
James G. Prince
Vice President and
Assistant Secretary
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Carlos E. Nardo
Senior Vice President
SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED
IN
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 97
(Note: Incorporated herein and made a part hereof is the
"Portfolio" as set forth for each Trust in the
Prospectus.)
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
July 14, 1994
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: The First Trust Special Situations Trust, Series 97
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of The First Trust Special Situations Trust,
Series 97 in connection with the preparation, execution and
delivery of a Trust Agreement dated July 14, 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. 33-54311) 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 yours,
CHAPMAN AND CUTLER
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
July 14, 1994
Nike Securities L.P.
Suite 300
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 97
Gentlemen:
We have acted as counsel for Nike Securities L.P.,
Depositor of The First Trust Special Situations Trust,
Series 97 (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 July 14,
1994 (the "Indenture") 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.
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 as 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 Corporate Bonds as set forth 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 but will be governed by the provisions of
subchapter J (relating to trusts) of chapter 1, of the
Internal Revenue Code of 1986 (the "Code").
(ii) Each Unit holder will be considered as owning
a pro rata share of each asset of the Trust in the
proportion that the number of Units held by him bears
to the total number of Units outstanding. Under
subpart E, subchapter J of chapter 1 of the Code,
income of the Trust will be treated as income of each
Unit holder in the proportion described, 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.
Each Unit holder will also be required to include in
taxable income for Federal income tax purposes,
original issue discount with respect to his interest in
any asset held by the Trust which was issued with
original issue discount at the same time and in the
same manner as though the Unit holder were the direct
owner of such interest. Original issue discount will
be treated as zero with respect to Corporate Bonds if
it is "de minimis" within the meaning of Section 1273
of the Code. If a Corporate Bond is a "high-yield
discount obligation" within the meaning of Section
163(e)(5) of the Code, certain special rules may apply.
A Unit holder may elect to include in taxable income
for Federal income tax purposes, market discount as it
accrues with respect to his interest in any Corporate
Bond held by the Trust which he is considered as having
acquired with market discount at the same time and in
the same manner as though the Unit holder were the
direct owner of such interest.
(iii) The price a Unit holder pays for his Units,
including sales charges, is allocated among his pro
rata portion of each asset 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 asset held by the Trust. In general, original
issue discount accrues daily under a constant interest
rate method which takes into account the semi-annual
compounding of accrued interest.
(iv) Gain or loss will be recognized to a Unit
holder upon redemption or sale of his Units. Such gain
or loss is measured by comparing the proceeds of such
redemption or sale with the adjusted basis of the Units
represented by his Certificate. Before adjustment,
such basis would normally be cost if the Unit holder
had acquired his Units by purchase. In addition, such
basis will be increased by the Unit holder's aliquot
share of the accrued original issue discount with
respect to each asset held by the Trust with respect to
which there was original issue discount at the time
such asset was issued and by accrued market discount
which the Unit holder has elected to annually include
in income with respect to each Corporate Bond and
reduced by the Unit holder's aliquot share of the
amortized acquisition premium, if any, which the Unit
holder has properly elected to amortize under
Section 171 of the Code on each asset held by the
Trust. The tax cost reduction requirements of the Code
relating to amortization of bond premium may, under
some circumstances, result in the Unit holder realizing
a taxable gain when his Units are sold or redeemed for
an amount equal to or less than his original cost.
(v) If the Trustee disposes of an asset (whether
by sale, exchange, redemption, payment on maturity or
otherwise) gain or loss will be recognized to the Unit
holder and the amount thereof will be measured by
comparing the Unit holder's aliquot share of the total
proceeds from the transaction with his basis for his
fractional interest in the asset disposed of. Such
basis is ascertained by apportioning the tax basis for
his Units (as of the date on which his Units were
acquired) among each of the assets ratably according to
their values as of the valuation date nearest the date
on which he purchased such Units. A Unit holder's
basis in his Units and of his fractional interest in
each asset must be reduced by the Unit holder's share
of the amortized acquisition premium, if any, on assets
held by the Trust which the Unit holder has properly
elected to amortize under Section 171 of the Code and
must be increased by the Unit holder's share of the
accrued original issue discount and with respect to
each asset which, at the time the asset was issued, had
original issue discount and, in the case of a Corporate
Bond, by accrued market discount which the Unit holder
has elected to annually include in income.
The Tax Reform Act of 1986, among other things,
provides that certain itemized deductions, such as
investment expenses, tax return preparation fees and
employee business expenses will be deductible by individuals
only to the extent they exceed 2% of such individual's
adjusted gross income. Temporary regulations have been
issued which require Unit holders to treat certain expenses
of the Trust as miscellaneous itemized deductions subject to
this limitation.
The Code provides a complex set of rules governing the
accrual of original issue discount. These rules provide
that original issue discount generally accrues on the basis
of a constant compound interest rate. Special rules apply
if the purchase price of a Corporate Bond exceeds its
original issue price plus the amount of original issue
discount which would have previously accrued, based upon its
issue price (its "adjusted issue price"). Similarly, these
special rules would apply to a Unit holder if the tax basis
of his pro rata portion of a Corporate Bond issued with
original issue discount exceeds his pro rata portion of its
adjusted issue price. The application of these rules will
also vary depending on the value of the Corporate Bond on
the date a Unit holder acquires his Units, and the price the
Unit holder pays for his Units. It is possible that a
Corporate Bond that has been issued at an original issue
discount may be characterized as a "high-yield discount
obligation" within the meaning of Section 163(e)(5) of the
Code. To the extent that such an obligation is issued at a
yield in excess of six percentage points over the applicable
Federal rate, a portion of the original issue discount on
such obligation will be characterized as a distribution on
stock (e.g., dividends) for purposes of dividends received
deduction which is available to certain corporation with
respect to certain dividends received by such corporation.
If a Unit holder's tax basis in his interest in any
Corporate Bond held by the Trust is less than his allocable
portion of such Corporate Bond's stated redemption price at
maturity (or, if issued with original issue discount, his
allocable portion of its revised issue price on the date he
buys his Units), such difference will constitute market
discount unless the amount of market discount is "de
minimis" as specified in the Code. Market discount accrues
daily computed on a straight line basis, unless the Unit
holder elects to calculate accrued market discount under a
constant yield method.
Accrued market discount is generally includible in
taxable income of the Unit holders as ordinary income for
Federal tax purposes upon the receipt of serial principal
payments on Corporate Bonds held by the Trust, on the sale,
maturity or disposition of such Corporate Bonds by the Trust
and on the sale of a Unit holder's Units unless a Unit
holder elects to include the accrued market discount in
taxable income as such discount accrues. If a Unit holder
does not elect to annually include accrued market discount
in taxable income as it accrues, deductions of any interest
expense incurred by the Unit holder to purchase or carry his
Units will be reduced by such accrued market discount. In
general, the portion of any interest which is not currently
deductible is deductible when the accrued market discount is
included in income upon the sale or redemption of the
Corporate Bonds or the sale of Units.
A Unit holder will recognize taxable gain (or loss)
when all or part of his pro rata interest in an asset is
either sold by the Trust or redeemed or when a Unit holder
disposes of his Units in a taxable transaction, in each case
for an amount greater (or less) than his tax basis therefor.
Any gain recognized on a sale or exchange and not
constituting a realization of accrued "market discount" and
any loss will, under current law, generally be capital gain
or loss except in the case of a dealer or financial
institution. As previously discussed, gain realized on the
disposition of the interest of a Unit holder on any
Corporate Bond deemed to have been acquired by the Unit
holder with market discount will be treated as ordinary
income to the extent the gain does not exceed the amount of
accrued market discount not previously taken into income.
The tax cost reduction requirements of the Code relating to
amortization of bond premium may, under certain
circumstances, result in the Unit holder realizing a taxable
gain when his Units are sold or redeemed for an amount equal
to or less than his original cost.
If a Unit holder disposes of a Unit, he is deemed
thereby to have disposed of his entire pro rata interest in
all Trust assets including his pro rata portion of all of
the Corporate Bonds represented by the Unit. This may
result in a portion of the gain, if any, on such sale being
taxable as ordinary income under the market discount rules
(assuming no election was made by the Unit holder to include
market discount in income as it accrues) as previously
discussed.
A Unit holder who is a foreign investor (i.e., an
investor other than a United States citizen or resident or
United States corporation, partnership, estate or trust)
will not be subject to United States Federal income taxes,
including withholding taxes on interest income (including
any original issue discount) on, or any gain from the sale
or other disposition or redemption of any asset held by the
Trust or the sale of his Units provided that all of the
following conditions are met:
(i) the interest income or gain is not effectively
connected with the conduct by the foreign investor of a
trade or business within the United States;
(ii) either
(a) the interest is United States source income
(which is the case for most securities issued by
United States issuers), the debt instrument is
issued after July 18, 1984, the foreign investor
does not own, directly or indirectly, 10% or more
of the total combined voting power of all classes
of voting stock of the issuer of the debt
instrument and the Unit holder is not a controlled
foreign corporation related (within the meaning of
Section 864(d)(4) of the Code) to the issuer of
the debt instrument; or
(b) the interest income is not from sources
within the United States;
(iii) with respect to any gain, the foreign investor
(if an individual) is not present in the United States
for 183 days or more during his or her taxable year;
and
(iv) the foreign investor provides all certification
which may be required of his status.
It should be noted that the "Revenue Reconciliation Act
of 1993" includes a provision which eliminates the exemption
from United States taxation, including withholding taxes,
for certain "contingent interest." This provision applies
to interest received after December 31, 1993. No opinion is
expressed herein regarding the potential applicability of
this provision and whether United States taxation or
withholding taxes could be imposed with respect to income
derived from the Units as a result thereof.
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. 33-54311)
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
July 14, 1994
United States Trust Company
of New York, as Trustee of
The First Trust Special
Situations Trust, Series 97
First Trust Corporate Income
Trust, Laddered Series
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 97
First Trust Corporate Income Trust, Laddered
Series
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for The First Trust Special Situations Trust, Series
97, First Trust Corporate Income Trust, Laddered Series (the
"Trust"), which will be established under a Standard Terms and
Conditions of Trust dated January 23, 1992, 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. 33-54311) 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
July 14, 1994
United States Trust Company
of New York, as Trustee of
The First Trust Special Situations
Trust, Series 97
First Trust Corporate Income Trust,
Laddered Series
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
97
First Trust Corporate Income Trust, Laddered Series
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 Standard Terms and Conditions of Trust dated
January 23, 1992, and a related Trust Agreement, dated today's
date (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 the Trust Company, as Trustee (the "Trustee"),
establishing The First Trust Special Situations Trust, Series 97,
First Trust Corporate Income Trust, Laddered Series (the
"Trust"), and the execution by the Trust Company, as Trustee
under the Indenture, of a certificate or certificates evidencing
ownership of units (such certificate or certificates and such
aggregate units being herein called "Certificates" and "Units"),
each of which represents an undivided interest in the Trust,
which consists of interest-bearing corporate debt obligations
(including confirmations of contracts for the purchase of certain
obligations not delivered and cash, cash equivalents or an
irrevocable letter of credit or a combination thereof, in the
amount required for such purchase upon the receipt of such
obligations), such obligations being defined in the Indenture as
Bonds and listed in the Schedule to the Indenture.
We have examined the Indenture, the Closing Memorandum dated
today's date, a specimen Certificate, and such other documents as
we have deemed necessary in order to render this opinion. Based
on the foregoing, we are of the opinion that:
1. The Trust Company is a duly organized and existing
corporation having the powers of a trust company under the laws
of the State of New York.
2. The Indenture has been duly executed and delivered by the
Trust Company and, assuming due execution and delivery by the
other parties thereto, constitutes the valid and legally binding
obligation of the Trust Company.
3. The Certificates are in proper form for execution and
delivery by the Trust Company, as Trustee.
4. The Trust Company, as Trustee, has duly executed and
delivered to or upon the order of the Depositor a Certificate or
Certificates evidencing ownership of the Units, registered in the
name of the Depositor. Upon receipt of confirmation of the
effectiveness of the registration statement for the sale of the
Units filed with the Securities and Exchange Commission under the
Securities Act of 1933, the Trustee may deliver such other
Certificates, in such names and denominations as the Depositor
may request, to or upon the order of the Depositor as provided in
the Closing Memorandum.
5. The Trust Company, as Trustee, may lawfully under the New
York Banking Law advance to the Trust amounts as may be necessary
to provide monthly interest distributions of approximately equal
amounts, and be reimbursed, without interest, for any such
advances from funds in the interest account on the ensuing record
date, as provided in the Indenture.
In rendering the foregoing opinion, we have not considered,
among other things, whether the Bonds 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
July 14, 1994
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 97
Gentlemen:
We have examined the Registration Statement File No. 33-
54311 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
