FIRST TRUST SPECIAL SITUATIONS TRUST SERIES 97
485BPOS, 1997-10-31
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                                                File No. 33-54311

               SECURITIES AND EXCHANGE COMMISSION
                   WASHINGTON, D.C. 20549-1004
                                
                         POST-EFFECTIVE
                         AMENDMENT NO. 3
                                
                               TO
                            FORM S-6

For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2

       THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 97
       FIRST TRUST CORPORATE INCOME TRUST, LADDERED SERIES
                      (Exact Name of Trust)
                                
                      NIKE SECURITIES L.P.
                    (Exact Name of Depositor)
                                
                      1001 Warrenville Road
                     Lisle, Illinois  60532
                                
  (Complete address of Depositor's principal executive offices)
                                

          NIKE SECURITIES L.P.      CHAPMAN AND CUTLER
          Attn:  James A. Bowen     Attn:  Eric F. Fess
          1001 Warrenville Road     111 West Monroe Street
          Lisle, Illinois  60532    Chicago, Illinois  60603

        (Name and complete address of agents for service)
                                
It is proposed that this filing will become effective (check
appropriate box)

:    :  immediately upon filing pursuant to paragraph (b)
:  x :  October 31, 1997
:    :  60 days after filing pursuant to paragraph (a)
:    :  on (date) pursuant to paragraph (a) of rule (485 or 486)
     
     Pursuant to Rule 24f-2 under the Investment Company  Act  of
1940,   the  issuer  has  registered  an  indefinite  amount   of
securities.   A 24f-2 Notice for the offering was last  filed  on
August 15, 1997.



<PAGE>
             THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 97
          THE FIRST TRUST CORPORATE INCOME TRUST, LADDERED SERIES 1
                                 8,715 UNITS


PROSPECTUS
Part One
Dated October 28, 1997

Note: Part One of this Prospectus may not be distributed unless accompanied by
      Part Two.

The Trust

The First Trust Corporate Income Trust, Laddered Series 1 (the "Trust") is a
unit investment trust consisting of a portfolio of interest-bearing corporate
debt obligations of well-established companies (the "Bonds").  At September
16, 1997, each Unit represented a 1/8,715 undivided interest in the principal
and net income of the Trust (see "The Fund" in Part Two).

The Units being offered by this Prospectus are issued and outstanding Units
which have been purchased by the Sponsor in the secondary market or from the
Trustee after having been tendered for redemption.  The profit or loss
resulting from the sale of Units will accrue to the Sponsor.  No proceeds from
the sale of Units will be received by the Trust.

Public Offering Price

The Public Offering Price of the Units is equal to the aggregate value of the
Bonds in the Portfolio of the Trust divided by the number of Units
outstanding, plus a sales charge of 3.0% of the Public Offering Price (3.093%
of the amount invested).  At September 16, 1997, the Public Offering Price per
Unit was $929.77 plus net interest accrued to date of settlement (three
business days after such date) of $.18 and $17.14 for the monthly and semi-
annual distribution plans, respectively (see "Market for Units" in Part Two).

      Please retain both parts of this Prospectus for future reference.
_____________________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
_____________________________________________________________________________

                             NIKE SECURITIES L.P.
                                   Sponsor

<PAGE>
Estimated Current Return and Estimated Long-Term Return

Estimated Current Return to Unit holders under the semi-annual distribution
plan was 7.28% per annum on September 16, 1997, and 7.22% under the monthly
distribution plan.  Estimated Long-Term Return to Unit holders under the semi-
annual distribution plan was 6.04% per annum on September 16, 1997, and 5.98%
under the monthly distribution plan.  Estimated Current Return is calculated
by dividing the Estimated Net Annual Interest Income per Unit by the Public
Offering Price.  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 a
compounding factor and 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 Current Return and Estimated Long-Term Return indicated
above will be realized in the future.  Estimated Current Return and Estimated
Long-Term Return are expected to differ because the calculation of the
Estimated Long-Term Return reflects the estimated date and amount of principal
returned while the Estimated Current Return calculations include only Net
Annual Interest Income and Public Offering Price.  The above figures are based
on estimated per Unit cash flows.  Estimated cash flows will vary with changes
in fees and expenses, with changes in current interest rates, and with the
principal prepayment, redemption, maturity, call, exchange or sale of the
underlying Bonds.  See "What are Estimated Current Return and Estimated Long-
Term Return?" in Part Two.


<PAGE>
             THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 97
          THE FIRST TRUST CORPORATE INCOME TRUST, LADDERED SERIES 1
          SUMMARY OF ESSENTIAL INFORMATION AS OF SEPTEMBER 16, 1997
                        Sponsor: Nike Securities L.P.
               Evaluator:  Securities Evaluation Service, Inc.
                      Trustee:  The Chase Manhattan Bank


<TABLE>
<CAPTION>
GENERAL INFORMATION

<S>                                                               <C>
Principal Amount of Bonds in the Trust                            $7,560,000
Number of Units                                                        8,715
Fractional Undivided Interest in the Trust per Unit                  1/8,715
Public Offering Price:
  Aggregate Value of Bonds in the Portfolio                       $7,859,843
  Aggregate Value of Bonds per Unit                                  $901.88
  Sales Charge 3.093% (3.0% of Public Offering Price)                 $27.89
  Public Offering Price per Unit                                     $929.77*
Redemption Price and Sponsor's Repurchase Price per Unit
  ($27.89 less than the Public Offering Price per Unit)              $901.88*
Discretionary Liquidation Amount of the Trust (20% of the
  original principal amount of Bonds in the Trust)                  $500,000

</TABLE>
Date Trust Established                                         July 14, 1994
Mandatory Termination Date                                 November 30, 2004
Evaluator's Fee:  $5,925 annually.  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.
Supervisory fee payable to an affiliate                      Maximum of $.25
  of the Sponsor                                           per Unit annually

[FN]
*Plus net interest accrued to date of settlement (three business days after
purchase) (see "Public Offering Price" herein and "Redemption of Units" and
"Purchase of Units by Sponsor" in Part Two).


<PAGE>
             THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 97
          THE FIRST TRUST CORPORATE INCOME TRUST, LADDERED SERIES 1
          SUMMARY OF ESSENTIAL INFORMATION AS OF SEPTEMBER 16, 1997
                        Sponsor: Nike Securities L.P.
               Evaluator:  Securities Evaluation Service, Inc.
                      Trustee:  The Chase Manhattan Bank


<TABLE>
<CAPTION>
PER UNIT INFORMATION BASED ON VARIOUS DISTRIBUTION PLANS

                                                                      Semi-
                                                           Monthly    Annual

<S>                                                         <C>      <C>
Calculation of Estimated Net Annual Income:
  Estimated Annual Interest Income                          $69.37    $69.37
  Less: Estimated Annual Expense                             $2.27     $1.69
  Estimated Net Annual Interest Income                      $67.10    $67.68
Calculation of Interest Distribution:
  Estimated Net Annual Interest Income                      $67.10    $67.68
  Divided by 12 and 2, Respectively                          $5.59    $33.84
  Estimated Daily Rate of Net Interest Accrual                $.1864    $.1880
Estimated Current Return Based on Public
  Offering Price                                              7.22%     7.28%
Estimated Long-Term Return Based on Public
  Offering Price                                              5.98%     6.04%

</TABLE>
Trustee's Annual Fee:  $1.41 and $.96 per $1,000 principal amount of Bonds for
those portions of the Trust under the monthly and semi-annual distribution
plans, respectively.
Computation Dates:  Fifteenth day of the month as follows:  monthly--each
month; semi-annual--June and December.
Distribution Dates:  Last day of the month as follows:  monthly--each month;
semi-annual--June and December.


<PAGE>





                        REPORT OF INDEPENDENT AUDITORS


The Unit Holders of The First Trust Special
Situations Trust, Series 97, The First Trust
Corporate Income Trust, Laddered Series 1

We have audited the accompanying statement of assets and liabilities,
including the portfolio, of The First Trust Special Situations Trust, Series
97, The First Trust Corporate Income Trust, Laddered Series 1 as of June 30,
1997, and the related statements of operations and changes in net assets for
each of the two years in the period then ended and for the period from the
Initial Date of Deposit, July 14, 1994, to June 30, 1995.  These financial
statements are the responsibility of the Trust's Sponsor.  Our responsibility
is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  Our
procedures included confirmation of securities owned as of June 30, 1997, by
correspondence with the Trustee.  An audit also includes assessing the
accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The First Trust Special
Situations Trust, Series 97, The First Trust Corporate Income Trust, Laddered
Series 1 at June 30, 1997, and the results of its operations and changes in
its net assets for each of the two years in the period then ended and for the
period from the Initial Date of Deposit, July 14, 1994, to June 30, 1995, in
conformity with generally accepted accounting principles.



                                                             ERNST & YOUNG LLP
Chicago, Illinois
September 19, 1997

<PAGE>
             THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 97
          THE FIRST TRUST CORPORATE INCOME TRUST, LADDERED SERIES 1

                     STATEMENT OF ASSETS AND LIABILITIES

                                June 30, 1997


<TABLE>
<CAPTION>
                                    ASSETS

<S>                                                               <C>
Bonds, at market value (cost $7,778,441)
  (Note 1)                                                        $8,118,505
Accrued interest                                                     203,340
Prepaid expense                                                       10,916
                                                                  __________
                                                                   8,332,761

</TABLE>
<TABLE>
<CAPTION>
                          LIABILITIES AND NET ASSETS

<S>                                                  <C>          <C>
Liabilities:
  Cash overdraft                                                     169,305
                                                                  __________

Net assets, applicable to 9,051 outstanding units
    of fractional undivided interest:
  Cost of Trust assets (Note 1)                      $7,778,441
  Net unrealized appreciation (Note 2)                  340,064
  Distributable funds                                    44,951
                                                     __________

                                                                  $8,163,456
                                                                  ==========

Net asset value per unit                                             $901.94
                                                                  ==========

</TABLE>
[FN]

               See accompanying notes to financial statements.

<PAGE>
                 THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 97
              THE FIRST TRUST CORPORATE INCOME TRUST, LADDERED SERIES 1

                         PORTFOLIO - See notes to portfolio.

                                    June 30, 1997


<TABLE>
<CAPTION>
                                                            Coupon                       Standard
                                                           interest       Date of        & Poor's    Principal       Market
Name of issuer and title of bond(a)(c)                       rate         maturity      rating(b)      amount        value
                                                                                       (Unaudited)

<S>                                                         <C>         <C>               <C>        <C>           <C>
Tele-Communications, Inc.                                   7.375%       2/15/2000        BBB-         $435,000      436,223
McDonnell Douglas Corporation                               8.25         7/01/2000        A-            840,000      872,374
Public Service Electric & Gas Company                       7.875       11/01/2001        A-            655,000      679,380
Baxter International Inc.                                   8.125       11/15/2001        A           1,150,000    1,195,069
Texas Utilities Electric Company                            8.125        2/01/2002        BBB+          765,000      799,295
Lehman Brothers Holdings Inc.                               8.875        3/01/2002        A             550,000      585,547
Bankers Trust Company                                       7.125        7/31/2002        A-            555,000      556,471
Tele-Communications, Inc.                                   8.25         1/15/2003        BBB-          920,000      937,435
Hydro-Quebec                                                7.375        2/01/2003        A+            835,000      848,401
Bear Stearns Company                                        8.75         3/15/2004        A             575,000      621,235
Ford Motor Credit Company                                   7.50         6/15/2004        A+            575,000      587,075
                                                                                                    ________________________

                                                                                                     $7,855,000    8,118,505
                                                                                                    ========================

</TABLE>


<PAGE>
             THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 97
          THE FIRST TRUST CORPORATE INCOME TRUST, LADDERED SERIES 1

                              NOTES TO PORTFOLIO

                                June 30, 1997


(a)   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.  Approximately 56%
      of the aggregate principal amount of the Bonds in the Trust will mature
      within five years.

(b)   The ratings shown are those effective at June 30, 1997.

(c)   The Trust consists of 11 corporate bonds issued by domestic companies.
      Each of four Bond issues represents 10% or more of the aggregate
      principal amount of Bonds in the Trust or a total of approximately 48%.
      The largest such issue represents approximately 15%.

[FN]

               See accompanying notes to financial statements.

<PAGE>
             THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 97
          THE FIRST TRUST CORPORATE INCOME TRUST, LADDERED SERIES 1

                           STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                  Period from
                                                                  the Initial
                                                                    Date of
                                                                    Deposit,
                                                                    July 14,
                                           Year ended  Year ended   1994, to
                                            June 30,    June 30,    June 30,
                                              1997        1996        1995

<S>                                         <C>          <C>       <C>
Interest income                             $678,546     865,925     775,164

Expenses:
  Trustee's fees and related expenses       (16,296)    (17,211)    (13,755)
  Evaluator's fees                           (5,925)     (5,925)     (4,418)
  Supervisory fee                            (2,644)     (2,916)     (2,492)
                                            ________________________________
    Investment income - net                  653,681     839,873     754,499

Net gain (loss) on investments:
  Net realized gain (loss)                    60,593      44,530           -
  Change in net unrealized appreciation or
    depreciation                             (8,656)   (353,063)     701,783
                                            ________________________________
                                              51,937   (308,533)     701,783
                                            ________________________________
Net increase (decrease) in net assets
  resulting from operations                 $705,618     531,340   1,456,282
                                            ================================

</TABLE>
[FN]

               See accompanying notes to financial statements.


<PAGE>
             THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 97
          THE FIRST TRUST CORPORATE INCOME TRUST, LADDERED SERIES 1

                     STATEMENTS OF CHANGES IN NET ASSETS


<TABLE>
<CAPTION>
                                                                  Period from
                                                                  the Initial
                                                                    Date of
                                                                    Deposit,
                                                                    July 14,
                                           Year ended  Year ended   1994, to
                                            June 30,    June 30,    June 30,
                                              1997        1996        1995

<S>                                       <C>         <C>         <C>
Net increase (decrease) in net assets
    resulting from operations:
  Investment income - net                   $653,681     839,873     754,499
  Net realized gain (loss) on investments     60,593      44,530           -
  Change in net unrealized appreciation
    or depreciation on investments           (8,656)   (353,063)     701,783
                                         ___________________________________
                                             705,618     531,340   1,456,282

Distributions to unit holders:
  Investment income - net                  (655,909)   (835,520)   (702,840)
  Principal from investment transactions           - (1,092,151)           -
                                         ___________________________________
                                           (655,909) (1,927,671)   (702,840)

Units issued (9,272 units in 1995)                 -           -   8,923,251

Unit redemptions (1,605, 1,188 and
    5 units in 1997, 1996 and 1995,
    respectively):
  Principal portion                      (1,440,607) (1,185,425)     (4,974)
  Net interest accrued                       (4,500)     (7,581)        (36)
                                         ___________________________________
                                         (1,445,107) (1,193,006)     (5,010)
                                         ___________________________________
    Total increase (decrease)
      in net assets                      (1,395,398) (2,589,337)   9,671,683

Net assets:
  At the beginning of the period           9,558,854  12,148,191   2,476,508
                                          __________________________________
  At the end of the period (including
    distributable funds applicable to
    Trust units of $44,951, $40,543
    and $46,649 at June 30, 1997, 1996
    and 1995, respectively)               $8,163,456   9,558,854  12,148,191
                                          ==================================

Trust units outstanding at the end of
  the period                                   9,051      10,656      11,844

</TABLE>
[FN]

               See accompanying notes to financial statements.


<PAGE>
             THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 97
          THE FIRST TRUST CORPORATE INCOME TRUST, LADDERED SERIES 1

                        NOTES TO FINANCIAL STATEMENTS

1.  Significant accounting policies

Security valuation -

Bonds are stated at values as determined by Securities Evaluation Service,
Inc. (the Evaluator), certain shareholders of which are officers of the
Sponsor.  The bond values are based on (1) current bid prices for the bonds
obtained from dealers or brokers who customarily deal in bonds comparable to
those held by the Trust, (2) current bid prices for comparable bonds, (3)
appraisal or (4) any combination of the above.

Security cost -

The Trust's cost of its portfolio is based on the offering prices of the bonds
on the Initial Date of Deposit, July 14, 1994, and on the dates of each
supplemental Date of Deposit.  The premium or discount (including original
issue discount) existing at the respective Dates of Deposit is not being
amortized.  Realized gain (loss) from bond transactions is reported on an
identified cost basis.  Sales and redemptions of bonds are recorded on the
trade date.

Federal income taxes -

The Trust is not taxable for Federal income tax purposes.  Each unit holder is
considered to be the owner of a pro rata portion of the Trust and,
accordingly, no provision has been made for Federal income taxes.

Expenses of the Trust -

The Trust pays a fee for Trustee services which is based on $1.41 and $.96 per
$1,000 principal amount of Bonds for those portions of the Trust under the
monthly and semi-annual distribution plans, respectively.  Prior to September
1, 1995, the Trustee was United States Trust Company of New York; effective
September 1, 1995, The Chase Manhattan Bank succeeded United States Trust
Company of New York as Trustee.  Additionally, a fee of $5,925 annually is
payable to the Evaluator and the Trust pays all related expenses of the
Trustee, recurring financial reporting costs and an annual supervisory fee
payable to an affiliate of the Sponsor.

2.  Unrealized appreciation and depreciation

An analysis of net unrealized appreciation at June 30, 1997 follows:

<TABLE>
               <S>                                                <C>
               Unrealized appreciation                             $340,064
               Unrealized depreciation                                    -
                                                                   ________

                                                                   $340,064
                                                                   ========

</TABLE>


<PAGE>
3.  Other information

Cost to investors -

The cost to initial investors of units of the Trust was based on the aggregate
offering price of the bonds on the date of an investor's purchase, plus a
sales charge of 3.9% of the public offering price which is equivalent to
approximately 4.058% of the net amount invested.

Distributions of net interest income -

Distributions of net interest income to unit holders are made monthly or semi-
annually.  Such income distributions per unit, on an accrual basis, were as
follows:

<TABLE>
<CAPTION>
                                                                     Period from
                                                                     the Initial
                                                                       Date of
                                                                       Deposit,
                                                                       July 14,
              Type of                       Year ended    Year ended   1994, to
            distribution                     June 30,      June 30,    June 30,
                plan                           1997          1996        1995

             <S>                              <C>           <C>         <C>
             Monthly                          $66.98         73.72       67.28*
             Semi-annual                       67.68         74.24       67.75

</TABLE>
[FN]
*Excludes $1.45 per unit distributed to the Sponsor as discussed below.

Accrued interest to the Initial Date of Deposit and to each supplemental Date
of Deposit, totaling $199,117, plus interest accruing to the first settlement
date and to the settlement date of each supplemental date of deposit, totaling
$17,223, were distributed to the Sponsor as the unit holder of record.  The
initial subsequent distribution, $4.98 and $5.02 per unit for those portions
of the Trust under the monthly and semi-annual distribution plans,
respectively, was paid on August 31, 1994 to all unit holders of record on
August 15, 1994.


<PAGE>
Selected data for a unit of the Trust
  outstanding throughout each period -

<TABLE>
<CAPTION>
                                                                    Period from
                                                                    the Initial
                                                                      Date of
                                                                      Deposit,
                                                                      July 14,
                                           Year ended    Year ended   1994, to
                                            June 30,      June 30,    June 30,
                                              1997          1996        1995

<S>                                         <C>          <C>       <C>
Interest income                              $69.69         76.26     76.44
Expenses                                      (2.55)        (2.29)    (2.04)
                                            _______________________________
    Investment income - net                   67.14         73.97     74.40

Distributions to unit holders:
  Investment income - net                    (67.08)       (73.78)   (68.96)
  Principal from investment transactions          -        (99.84)        -

Net gain (loss) on investments                 4.84        (28.99)    59.24
                                            _______________________________
    Total increase (decrease) in
      net assets                               4.90       (128.64)    64.68

Net assets:
  Beginning of the period                    897.04      1,025.68    961.00
                                            _______________________________

  End of the period                         $901.94        897.04  1,025.68
                                            ===============================

</TABLE>
The net gain (loss) on investments per unit during the period ended June 30,
1995 reflects the effects of changes arising from the issuance of 9,272
additional units during the period at net asset values which differed from the
net asset value per unit of the original 2,577 units ($961.00 per unit) on
July 14, 1994.


<PAGE>
             THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 97
          THE FIRST TRUST CORPORATE INCOME TRUST, LADDERED SERIES 1

                                   PART ONE
                       Must be Accompanied by Part Two

                             ____________________
                             P R O S P E C T U S
                             ____________________

                  SPONSOR:          Nike Securities L.P.
                                    1001 Warrenville Road
                                    Lisle, Illinois  60532
                                    (800) 621-1675

                  TRUSTEE:          The Chase Manhattan Bank
                                    4 New York Plaza, 6th Floor
                                    New York, New York  10004-2413

                  LEGAL COUNSEL     Chapman and Cutler
                  TO SPONSOR:       111 West Monroe Street
                                    Chicago, Illinois  60603

                  LEGAL COUNSEL     Carter, Ledyard & Milburn
                  TO TRUSTEE:       2 Wall Street
                                    New York, New York  10005

                  INDEPENDENT       Ernst & Young LLP
                  AUDITORS:         Sears Tower
                                    233 South Wacker Drive
                                    Chicago, Illinois  60606

This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, securities in any jurisdiction to any person to whom it is not
lawful to make such offer in such jurisdiction.

This Prospectus does not contain all the information set forth in the
registration statement and exhibits relating thereto, which the Trust has
filed with the Securities and Exchange Commission, Washington, D.C., under the
Securities Act of 1933 and the Investment Company Act of 1940, and to which
reference is hereby made.


  THE FIRST TRUST (registered trademark) INSURED CORPORATE TRUST SERIES
           FIRST TRUST CORPORATE INCOME TRUST, LADDERED SERIES
           GLOBAL CORPORATE INCOME TRUST, INTERMEDIATE SERIES

                The First Trust Special Situations Trust

PROSPECTUS                           NOTE: THIS PART TWO PROSPECTUS MAY
Part Two                                     ONLY BE USED WITH PART ONE
Dated August 29, 1997

The First Trust Special Situations Trust, The First Trust Insured
Corporate Trust Series (the "Insured Series"), First Trust Corporate
Income Trust, Laddered Series (the "Laddered Series") and Global
Corporate Income Trust, Intermediate Series (the "Global Series") (a
Trust in a Series is a "Trust," collectively the "Trusts") are unit
investment trusts consisting of portfolios of interest-bearing corporate
debt obligations of domestic or foreign companies (the "Corporate
Bonds"), in certain Trusts, U.S. Treasury bonds (the "Treasury
Obligations"), in certain Trusts, taxable municipal debt obligations
(the "Municipal Bonds"), and in certain Trusts, zero coupon bonds of
foreign government issuers (the "zero coupon bonds") (collectively, the
"Bonds"). 

The Objectives of the Trusts are a high level of current income and
conservation of capital through investment in a portfolio of corporate
debt obligations of domestic or foreign companies and in certain Trusts,
taxable municipal debt obligations issued after July 18, 1984 if
interest thereon is U.S. source income. A portion of a Trust's portfolio
may consist of U.S. Treasury bonds or zero coupon bonds of foreign
government issuers. The Trusts in the Laddered Series consist of
laddered portfolios such that Bonds representing a certain percentage of
the principal amount of the Trust will mature and be distributed
annually to Unit holders. See Part One for the weighted average maturity
of the Bonds for each Trust in the Laddered Series. The payment of
interest and the conservation of capital are, of course, dependent upon
the continuing ability of the issuers, obligors and/or insurers to meet
their respective obligations.

Attention Foreign Investors: Your interest income from the Trusts 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?"

The following information regarding insurance applies only to the
Insured Series, not the Global Series or the Laddered Series.

THE SCHEDULED PAYMENTS OF PRINCIPAL AND INTEREST ON ALL CORPORATE BONDS
AND MUNICIPAL BONDS IN THE PORTFOLIOS OF THE TRUSTS IN THE INSURED
SERIES ARE INSURED EITHER UNDER (I) AN INSURANCE POLICY (THE "INSURANCE
POLICY") OBTAINED FROM FINANCIAL SECURITY ASSURANCE INC. ("FINANCIAL
SECURITY"), CAPITAL MARKETS ASSURANCE CORPORATION ("CAPMAC") OR AMBAC
INDEMNITY CORPORATION ("AMBAC") BY THE TRUST OR (II) INSURANCE POLICIES
DIRECTLY OBTAINED BY THE BOND ISSUER, THE UNDERWRITERS, THE SPONSOR OR
OTHERS PRIOR TO THE DATE OF DEPOSIT FROM FINANCIAL SECURITY OR OTHER
INSURERS (THE "PREINSURED BONDS"). THE INSURANCE POLICIES OBTAINED BY A
TRUST AND ISSUED BY EITHER FINANCIAL SECURITY, CAPMAC OR AMBAC INSURE
BONDS COVERED THEREBY ONLY WHILE BONDS ARE RETAINED IN SUCH TRUST, WHILE
INSURANCE ON PREINSURED BONDS IS EFFECTIVE SO LONG AS SUCH BONDS ARE
OUTSTANDING. PURSUANT TO IRREVOCABLE COMMITMENTS OF FINANCIAL SECURITY,
CAPMAC OR AMBAC, IN THE EVENT OF A SALE OF A BOND INSURED UNDER THE
INSURANCE POLICIES OBTAINED BY A TRUST, THE TRUSTEE HAS THE RIGHT TO 

 BOTH PARTS OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Page 1


OBTAIN PERMANENT INSURANCE FOR SUCH BOND UPON THE PAYMENT OF A SINGLE
PREDETERMINED INSURANCE PREMIUM FROM THE PROCEEDS OF THE SALE OF SUCH
BOND. THE INSURANCE, IN ANY CASE, RELATES ONLY TO THE CORPORATE BONDS
AND MUNICIPAL BONDS IN A TRUST AND NOT TO THE TREASURY OBLIGATIONS OR
THE UNITS OFFERED HEREBY. AS A RESULT OF SUCH INSURANCE, THE UNITS OF
THE TRUSTS HAVE RECEIVED A RATING OF "AAA" BY STANDARD & POOR'S RATINGS
SERVICES, A DIVISION OF THE MCGRAW-HILL COMPANIES, INC. ("STANDARD &
POOR'S"). SEE "WHY AND HOW ARE THE TRUSTS IN THE INSURED SERIES
INSURED?" NO REPRESENTATION IS MADE AS TO ANY INSURER'S ABILITY TO MEET
ITS COMMITMENTS.

Distributions to Unit holders may be reinvested as described herein. See
"How Can Distributions to Unit Holders be Reinvested?"

The Sponsor, although not obligated to do so, intends to maintain a
market for the Units at prices based upon the aggregate bid price of the
Bonds in the portfolios of the Trusts. 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?" Neither the bid nor offering prices of
the underlying Corporate or Municipal Bonds or of the Units of Trusts in
the Insured Series, absent situations in which Bonds are in default in
payment of principal or interest or in significant risk of such default,
include value attributable to the portfolio insurance obtained by the
Trusts. See "Why and How are the Trusts Insured?" 

The Secondary Market Public Offering Price of the Units will be equal to
the aggregate bid price of the Bonds in the portfolio divided by the
number of Units outstanding, plus a maximum sales charge set forth in
Part One for each Trust. For sales charges in the secondary market, see
"Public Offering." The minimum purchase is 1 unit.

Page 2


             THE FIRST TRUST INSURED CORPORATE TRUST SERIES
           FIRST TRUST CORPORATE INCOME TRUST, LADDERED SERIES
           GLOBAL CORPORATE INCOME TRUST, INTERMEDIATE SERIES

                The First Trust Special Situations Trust

What is The First Trust Special Situations Trust? 

The First Trust Special Situations Trust, The First Trust Insured
Corporate Trust Series; First Trust Corporate Income Trust, Laddered
Series and Global Corporate Income Trust, Intermediate Series are series
of investment companies created by the Sponsor under the name of The
First Trust Special Situations Trust, all of which are generally similar
but each of which is separate and is designated by a different series
number (the "Trust"). Each Trust in a Series consists of an underlying
separate unit investment trust created under the laws of the State of
New York pursuant to a Trust Agreement (the "Indenture"), dated the
initial date of deposit, with Nike Securities L.P., as Sponsor, The
Chase Manhattan Bank as Trustee, Securities Evaluation Service, Inc., as
Evaluator and First Trust Advisors L.P., as Portfolio Supervisor.

The objectives of each Trust are a high level of current income and
conservation of capital through investment in a portfolio of corporate
debt obligations of domestic or foreign companies and in certain Trusts,
taxable municipal debt obligations, issued after July 18, 1984 if
interest thereon is U.S. source income. A portion of each Trust's
portfolio may consist of U.S. Treasury bonds or zero coupon bonds of
foreign government issuers. The Trusts in the Laddered Series consist of
laddered portfolios such that Bonds representing a certain percentage of
the principal amount of the Trust will mature and be distributed
annually to Unit holders. See Part One for the weighted average maturity
of the Bonds for each Trust in the Laddered Series.

THE FOLLOWING INFORMATION REGARDING INSURANCE APPLIES ONLY TO THE
INSURED SERIES, NOT THE GLOBAL SERIES OR THE LADDERED SERIES. The
scheduled payment of all principal and interest on the Corporate and
Municipal Bonds in each Trust in the Insured Series is insured either
under (i) an insurance policy (the "Insurance Policy") obtained by such
Trust from Financial Security Assurance Inc. ("Financial Security"),
Capital Markets Assurance Corporation ("CapMAC") or AMBAC Assurance
Corporation ("AMBAC") or (ii) insurance policies obtained directly by
the Bond issuer, the underwriters, the Sponsor or others prior to the
Date of Deposit from Financial Security or other insurers (the
"Preinsured Bonds"). The Insurance Policies obtained by a Trust and
issued by Financial Security, CapMAC or AMBAC insure Corporate or
Municipal Bonds covered thereby only while the Bonds thus insured are
held in a Trust while insurance on Preinsured Bonds is effective so long
as such Bonds are outstanding. By the terms of the Insurance Policies,
Financial Security, CapMAC or AMBAC unconditionally and irrevocably
guarantees to a Trust in the Insured Series the full and complete
payment of scheduled payments on the Bonds listed in their respective
Insurance Policy in an amount equal to the principal of such Bonds,
which is payable on the stated maturity date thereof or on the date such
Bonds are called for mandatory sinking fund redemption, and interest on
such Bonds as the scheduled payments shall become due but are not paid
by the issuer of such Bonds. In the event of any acceleration of the due
date of principal by reason of call for redemption (other than a
mandatory sinking fund redemption), default or otherwise, the payments
guaranteed by Financial Security, CapMAC or AMBAC will be made in the
amounts and at the times as would have been due had there not been an
acceleration by reason of call for redemption (other than a mandatory
sinking fund redemption), default or otherwise unless Financial
Security, CapMAC or AMBAC elects, in their sole discretion, to pay
accelerated principal on the redemption date, plus interest accrued or
accreted, as appropriate, to the date of acceleration or redemption.
Payment of such accelerated amount or redemption price shall fully
discharge the obligations of Financial Security, CapMAC or AMBAC under
their Insurance Policy in respect of such Bonds. See "Why and How are
the Trusts Insured?" THERE IS, OF COURSE, NO GUARANTEE THAT A TRUST'S
OBJECTIVES WILL BE ACHIEVED. AN INVESTMENT IN A 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.

Neither the Public Offering Price of the Units of a Trust in the Insured
Series nor any evaluation of such Units for purposes of repurchases or

Page 3

redemptions reflects any element of value for the insurance obtained by
such Trust unless Bonds are in default in payment of principal or
interest or in significant risk of such default. See "Public Offering-
How is the Public Offering Price Determined?" On the other hand, the
value of insurance obtained by the Bond issuer, the underwriters, the
Sponsor or others is reflected and included in the market value of such
Bonds. 

Insurance obtained by a Trust in the Insured Series or by the Bond
issuer, the underwriters, the Sponsor or others is not a substitute for
the basic credit of an issuer, but supplements the existing credit and
provides additional security therefor. Monthly premiums are paid by each
Trust in the Insured Series for the Insurance Policies obtained by such
Trust from Financial Security, CapMAC or AMBAC, respectively. No
premiums for insurance are paid by the Trusts in the Insured Series for
Preinsured Bonds. Upon the sale of a Bond insured under an Insurance
Policy issued by Financial Security, CapMAC or AMBAC, respectively, and
obtained by the Trusts in the Insured Series, the Trustee has the right
to obtain an insurance policy guaranteeing the scheduled payment of
principal and interest to the maturity of such Bond ("Permanent
Insurance") from Financial Security, CapMAC or AMBAC, respectively, with
respect to such Bond upon the payment of a single predetermined
insurance premium. Such premium will be paid from the proceeds of the
sale of such Bond. Accordingly, any Bond in a Trust in the Insured
Series covered by the Insurance Policies is eligible to be sold on an
insured basis. Standard & Poor's and Moody's Investors Service, Inc.
("Moody's") have rated the claims-paying ability of Financial Security,
CapMAC and AMBAC "AAA" and "Aaa," respectively. See "Why and How are the
Trusts in the Insured Series Insured?" 

In selecting Corporate or Municipal Bonds, the following facts, among
others, were considered at the Date of Deposit: (i) the Standard &
Poor's rating of the Bonds was in no case less than "BBB," or the
Moody's rating of the Bonds was in no case less than "Baa," including
plus or minus signs or provisional or conditional ratings, respectively,
or, if not rated, the Bonds had, in the opinion of the Sponsor, credit
characteristics sufficiently similar to the credit characteristics of
interest-bearing corporate or municipal debt obligations, respectively,
that were so rated as to be acceptable for acquisition by the Trusts
(see "Description of Bond Ratings"); (ii) the prices of the Bonds
relative to other bonds of comparable quality and maturity; (iii) in the
case of a Trust in the Insured Series, the availability and cost of
insurance of the principal and interest on the Bonds; (iv) the
diversification of Bonds as to location of issuer and in the case of a
Trust in the Laddered Series, diversification as to maturity; (v)
whether the Bonds were issued after July 18, 1984 if interest thereon is
U.S. source income; (vi) the amount of foreign withholding taxes
applicable to the Bonds; and (vii) in the case of the Trusts in the
Laddered Series, whether the Bonds are non-callable. See Part One for
each Trust in the Laddered Series for additional information or
extraordinary call provisions. Subsequent to the Date of Deposit, a Bond
may cease to be rated or its rating may be reduced below the minimum
required as of the 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. Certain Trusts consist 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
Trusts?"

Certain of the Corporate or Municipal Bonds in the Trusts 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 Trusts 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

Page 4

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 Corporate or Municipal Bonds in the Trusts may be
original issue discount 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. 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. Certain Trusts consist 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. 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.

The Treasury Obligations in certain Trusts consist of U.S. Treasury
bonds which have been stripped of their unmatured interest coupons. The
Treasury Obligations evidence the right to receive a fixed payment at a
future date from the U.S. Government, and are backed by the full faith
and credit of the U.S. Government. Treasury Obligations are purchased at
a deep discount because the buyer obtains only the right to a fixed
payment at a fixed date in the future and does not receive any periodic
interest payments. The effect of owning deep discount bonds which do not
make current interest payments (such as the Treasury Obligations) 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 Treasury
Obligations 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 Corporate or Municipal Bonds in the Trusts 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 a Trust were higher than the current market interest rates
for newly issued bonds of comparable rating and type. 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 a 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

Page 5

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 a
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 Trusts?" and "Other Information: How May the Indenture be
Amended or Terminated?" See "Portfolio" appearing in Part One for each
Trust for the earliest scheduled call date and the initial redemption
price for each Bond.

All of the Corporate Bonds in the Trusts in the Insured Series are
obligations of public utility issuers. In view of this an investment in
a Trust should be made with an understanding of the characteristics of
such issuers and the risks which such an investment may entail. General
problems of the public utility industry include the difficulty in
obtaining an adequate return on invested capital despite frequent
increases in rates which have been granted by the public service
commissions having jurisdiction, the difficulty in financing large
construction programs during an inflationary period, the restrictions on
operations and increased cost and delays attributable to environmental
and other regulatory considerations, the difficulty to the capital
markets in absorbing utility debt, the difficulty in obtaining fuel for
electric generation at reasonable prices and the effects of energy
conservation. There is no assurance that such public service commissions
will in the future grant rate increases or that any such increases will
be adequate to cover operating and other expenses and debt service
requirements. All of the public utilities which are issuers of the
Corporate Bonds in the portfolios have been experiencing many of these
problems in varying degrees. In addition, Federal, state and municipal
governmental authorities may from time to time review existing, and
impose additional, regulations governing the licensing, construction and
operation of nuclear power plants, which may adversely affect the
ability of the issuers of certain of the Corporate Bonds in the Trust
portfolios to make payments of principal and/or interest on such Bonds.

Utilities are generally subject to extensive regulation by state utility
commissions which, for example, establish the rates which may be charged
and the appropriate rate of return on an approved asset base, which must
be approved by the state commissions. Certain utilities have had
difficulty from time to time in persuading regulators, who are subject
to political pressures, to grant rate increases necessary to maintain an
adequate return on investment and voters in many states have the ability
to impose limits on rate adjustments (for example, by initiative or
referendum). Any unexpected limitations could negatively affect the
profitability of utilities whose budgets are planned far in advance. In
addition, gas pipeline and distribution companies have had difficulties
in adjusting to short and surplus energy supplies, enforcing or being
required to comply with long-term contracts and avoiding litigation from
their customers, on the one hand, or suppliers, on the other.

Recently, the California Public Utility Commission ("CPUC") announced
its intention to deregulate the electric utility industry in California.
This change will eventually result in full competition between electric
utilities and independent power producers in the generation and sale of
power to all customers in California by the year 2002. In September of
1996, the California Legislature passed and the Governor signed into law
Assembly Bill 1890 (AB 1890) to restructure the California electrical
industry by promoting competition and allowing customers a right to
choose their electrical supplier. In February 1997, a bill was
introduced which creates a joint oversight committee on electricity and
reform to oversee implementation of AB 1890 as well as other bills
passed in conjunction with AB 1890. Preliminary assessments of the CPUC
plan and the new law suggest that the deregulation of the electric
utility industry in California could have a significant adverse effect
on electric utility bonds of California issuers. Furthermore, the move
toward full competition in California could indicate that similar
changes may be made in other states in the future which could negatively
impact the profitability of electric utilities. Further deregulation
could adversely affect the issuers of certain of the Corporate Bonds in
a portfolio. In view of the uncertainties regarding the CPUC
deregulation plan, it is unclear what effect, if any, that full
competition will have on electric utilities in California or whether
similar changes will be adopted in other states.

Certain of the issuers of the Corporate Bonds in the Trusts may own or
operate nuclear generating facilities. Governmental authorities may from
time to time review existing, and impose additional, requirements

Page 6

governing the licensing, construction and operation of nuclear power
plants. Nuclear generating projects in the electric utility industry
have experienced substantial cost increases, construction delays and
licensing difficulties. These have been caused by various factors,
including inflation, high financing costs, required design changes and
rework, allegedly faulty construction, objections by groups and
governmental officials, limits on the ability to finance, reduced
forecasts of energy requirements and economic conditions. This
experience indicates that the risk of significant cost increases, delays
and licensing difficulties remains present until completion and
achievement of commercial operation of any nuclear project. Also,
nuclear generating units in service have experienced unplanned outages
or extensions of scheduled outages due to equipment problems or new
regulatory requirements sometimes followed by a significant delay in
obtaining regulatory approval to return to service. A major accident at
a nuclear plant anywhere, such as the accident at a plant in Chernobyl,
could cause the imposition of limits or prohibitions on the operation,
construction or licensing of nuclear units in the United States.

In view of the uncertainties discussed above, there can be no assurance
that any company's share of the full cost of nuclear units under
construction ultimately will be recovered in rates or of the extent to
which a company could earn an adequate return on its investment in such
units. The likelihood of a significantly adverse event occurring in any
of the areas of concern described above varies, as does the potential
severity of any adverse impact. It should be recognized, however, that
one or more of such adverse events could occur and individually or
collectively could have a material adverse impact on a company's
financial condition, or the results of its operations or its ability to
make interest and principal payments on its outstanding debt.

Other general problems of the gas, water, telephone and electric utility
industries (including state and local joint action power agencies)
include difficulty in obtaining timely and adequate rate increases,
difficulty in financing large construction programs to provide new or
replacement facilities during an inflationary period, rising costs of
rail transportation to transport fossil fuels, the uncertainty of
transmission service costs for both interstate and intrastate
transactions, changes in tax laws which adversely affect a utility's
ability to operate profitably, increased competition in service costs,
recent reductions in estimates of future demand for electricity and gas
in certain areas of the country, restrictions on operations and
increased cost and delays attributable to environmental considerations,
uncertain availability and increased cost of capital, unavailability of
fuel for electric generation at reasonable prices, including the steady
rise in fuel costs and the costs associated with conversion to alternate
fuel sources such as coal, availability and cost of natural gas for
resale, technical and cost factors and other problems associated with
construction, licensing, regulation and operation of nuclear facilities
for electric generation, including among other considerations the
problems associated with the use of radioactive materials and the
disposal of radioactive wastes, and the effects of energy conservation.
Each of the problems referred to could adversely affect the ability of
the issuers of any Corporate Bonds in the Trusts to make payments of
principal and/or interest on such Bonds.

Certain of the obligations in certain of the Trusts in the Insured
Series are taxable obligations of municipal issuers. In view of this an
investment in such Trusts should be made with an understanding of the
characteristics of such issuers and the risks which such an investment
may entail. Obligations of municipal issuers can be either general
obligations of a government entity that are backed by the taxing power
of such entity or revenue bonds payable from the income of a specific
project or authority and are not supported by the issuer's power to levy
taxes.

General obligation bonds are secured by the issuer's pledge of its
faith, credit and taxing power for the payment of principal and
interest. However, the taxing power of any governmental entity may be
limited by provisions of state constitutions or laws and an entity's
credit will depend on many factors, including an erosion of the tax base
due to population declines, natural disasters, declines in the state's
industrial base or inability to attract new industries, economic limits
on the ability to tax without eroding the tax base and the extent to
which the entity relies on Federal or state aid, access to capital
markets or other factors beyond the entity's control.

As a result of the early 1990's recession's adverse impact upon both
their revenues and expenditures, as well as other factors, many state
and local governments are confronting deficits and potential deficits
which are the most severe in recent years. Many issuers are facing
highly difficult choices about significant tax increases or spending

Page 7

reductions in order to restore budgetary balance. Failure to implement
these actions on a timely basis could force the issuers to depend upon
market access to finance deficits or cash flow needs.

In addition, certain of the Municipal Obligations in certain Trusts in
the Insured Series may be obligations of issuers who rely in whole or in
part on ad valorem real property taxes as a source of revenue. Recently,
certain proposals, in the form of state legislative proposals or voter
initiatives, to limit ad valorem real property taxes have been
introduced in various states.

Revenue bonds, on the other hand, are payable only from revenues derived
from a particular facility or class of facilities, or, in some cases,
from the proceeds of a special excise tax or other special revenue
source. The ability of an issuer of revenue bonds to make payments of
principal and/or interest on such bonds is primarily dependent upon the
success or failure of the facility or class of facilities involved or
whether the revenues received from an excise tax or other special
revenue source are sufficient to meet obligations.

Typically, interest income received from municipal issues is exempt from
Federal income taxation under Section 103 of the Internal Revenue Code
of 1986, as amended (the "Code") and therefore is not includible in the
gross income of the owners thereof. However, interest income received
for taxable municipal obligations is not exempt from Federal income
taxation under Section 103 of the Code. Thus, owners of taxable
municipal obligations generally must include interest on such
obligations in gross income for Federal income tax purposes and treat
such interest as ordinary income.

Certain of the Municipal Obligations in certain Trusts in the Insured
Series may be obligations which are payable from and secured by revenues
derived from the ownership and operation of facilities such as airports,
bridges, turnpikes, port authorities, convention centers and arenas. In
view of this an investment in such Trusts should be made with an
understanding of the characteristics of such issuers and the risks which
such an investment may entail. The major portion of an airport's gross
operating income is generally derived from fees received from signatory
airlines pursuant to use agreements which consist of annual payments for
leases, occupancy of certain terminal space and service fees. Airport
operating income may therefore be affected by the ability of the
airlines to meet their obligations under the use agreements. The air
transport industry is experiencing significant variations in earnings
and traffic, due to increased competition, excess capacity, increased
costs, deregulation, traffic constraints and other factors, and several
airlines are experiencing severe financial difficulties. The Sponsor
cannot predict what effect these industry conditions may have on airport
revenues which are dependent for payment on the financial condition of
the airlines and their usage of the particular airport facility.
Similarly, payment on Bonds related to other facilities is dependent on
revenues from the projects, such as user fees from ports, tolls on
turnpikes and bridges and rents from buildings. Therefore, payment may
be adversely affected by reduction in revenues due to such factors as
increased cost of maintenance, decreased use of a facility, lower cost
of alternative modes of transportation, scarcity of fuel and reduction
or loss of rents.

Certain of the Municipal Obligations in certain Trusts in the Insured
Series may be health care revenue bonds. In view of this an investment
in such Trusts should be made with an understanding of the
characteristics of such issuers and the risks which such an investment
may entail. Ratings of bonds issued for health care facilities are often
based on feasibility studies that contain projections of occupancy
levels, revenues and expenses. A facility's gross receipts and net
income available for debt service may be affected by future events and
conditions including, among other things, demand for services and the
ability of the facility to provide the services required, physicians'
confidence in the facility, management capabilities, competition with
other health care facilities, efforts by insurers and governmental
agencies to limit rates, legislation establishing state rate-setting
agencies, expenses, the cost and possible unavailability of malpractice
insurance, the funding of Medicare, Medicaid and other similar third
party payor programs, government regulation and the termination or
restriction of governmental financial assistance, including that
associated with Medicare, Medicaid and other similar third party payor
programs. Pursuant to recent Federal legislation, Medicare
reimbursements are currently calculated on a prospective basis utilizing
a single nationwide schedule of rates. Prior to such legislation
Medicare reimbursements were based on the actual costs incurred by the
health facility. The current legislation may adversely affect
reimbursements to hospitals and other facilities for services provided
under the Medicare program. Such adverse changes also may adversely

Page 8

affect the ratings of Bonds held in the portfolio of the Trusts. Because
of the insurance obtained by the Trusts in the Insured Series, the "AAA"
rating of the Units in the Trusts in the Insured Series would not be
affected.

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 Trusts will retain for any length of time their
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 certain Trusts 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. See "Portfolio" appearing in Part One for each Trust. 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 Trusts.
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.

To the best knowledge of the Sponsor, there is no litigation pending as
of the date hereof in respect of any Bonds which might reasonably be
expected to have a material adverse effect upon the Trusts. At any time
after the date hereof, litigation may be initiated on a variety of
grounds with respect to Bonds in the Trusts. 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 the fractional undivided interest
in a Trust as set forth in Part One for each Trust. To the extent that
any Units of a Trust are redeemed by the Trustee, the fractional
undivided interest in such 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 Certain Risks of an Investment in Foreign Issuers?

Foreign Issuers. Certain Bonds in the Trusts in the Laddered Series and
the Global Series are invested in securities of foreign issuers. It is
appropriate for investors in the Trusts to consider certain investment
risks that distinguish investments in Bonds of foreign issuers from
those of domestic issuers. Those investment risks include future
political and economic developments, the possible imposition of
withholding taxes on interest income payable on the Bonds held in a
Portfolio, the possible seizure or nationalization of foreign deposits,
the possible establishment of exchange controls or the adoption of other
foreign governmental restrictions (including expropriation, burdensome
or confiscatory taxation and moratoriums) which might adversely affect
the payment or receipt of payment of amounts due on the Bonds. Investors
should realize that, although the Trusts invest in U.S. dollar
denominated investments, the foreign issuers which operate
internationally are subject to currency risks. The value of Bonds can be
adversely affected by political or social instability and unfavorable
diplomatic or other negative developments. In addition, because many
foreign issuers are not subject to the reporting requirements of the
Securities Exchange Act of 1934, there may be less publicly available
information about the foreign issuer than a U.S. domestic issuer.
Foreign issuers also are not necessarily subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. domestic issuers. However, the
Sponsor anticipates that adequate information will be available to allow
the Portfolio Supervisor to provide portfolio surveillance.

Page 9


Liquidity. The Bonds in the Trusts may not have been registered under
the Securities Act of 1933 and may not be exempt from the registration
requirements of the Act. Most of the Bonds will not be listed on a
securities exchange. Whether or not the Bonds are listed, the principal
trading market for the Bonds will generally be in the over-the-counter
market. As a result, the existence of a liquid trading market for the
Bonds may depend on whether dealers will make a market in the Bonds.
There can be no assurance that a market will be made for any of the
Bonds, that any market for the Bonds will be maintained or of the
liquidity of the Bonds in any markets made. The price at which the Bonds
may be sold to meet redemptions and the value of the Trusts will be
adversely affected if trading markets for the Bonds are limited or
absent. The Trusts may also contain non-exempt Bonds in registered form
which have been purchased on a private placement basis. Sales of these
Bonds may not be practicable outside the United States, but can
generally be made to U.S. institutions in the private placement market
which may not be as liquid as the general U.S. securities market. Since
the private placement market is less liquid, the prices received may be
less than would have been received had the markets been broader.

Exchange Controls. On the basis of the best information available to the
Sponsor at the present time none of the Bonds is subject to exchange
control restrictions under existing law which would materially interfere
with payment to the Trusts of amounts due on the Bonds. However, there
can be no assurance that exchange control regulations might not be
adopted in the future which might adversely affect payments to the
Trust. In addition, the adoption of exchange control regulations and
other legal restrictions could have an adverse impact on the
marketability of the Bonds in the Trusts and on the ability of the
Trusts to satisfy their obligation to redeem Units tendered to the
Trustee for redemption.

Jurisdiction Over, and U.S. Judgments Concerning, Foreign Obligors. Non-
U.S. issuers of the Bonds will generally not have submitted to the
jurisdiction of U.S. courts for purposes of lawsuits relating to those
Bonds. If a Trust contains Bonds of such an issuer, a Trust as a holder
of those obligations may not be able to assert its rights in U.S. courts
under the documents pursuant to which the Bonds are issued. Even if a
Trust obtains a U.S. judgment against a foreign obligor, there can be no
assurance that the judgment will be enforced by a court in the country
in which the foreign obligor is located. In addition, a judgment for
money damages by a court in the United States if obtained, will
ordinarily be rendered only in U.S. dollars. It is not clear, however,
whether, in granting a judgment, the rate of conversion of the
applicable foreign currency into U.S. dollars would be determined with
reference to the due date or the date the judgment is rendered. Courts
in other countries may have rules that are similar to, or different
from, the rules of U.S. courts.

What are Estimated Long-Term Return and Estimated Current Return?

At the date of this Prospectus, the Estimated Current Return and the
Estimated Long-Term Return, under the monthly and, if applicable, semi-
annual distribution plans, are as set forth in Part One attached hereto
for each Trust. 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. For each Trust, 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 refundings or as the
expenses of each Trust change. Therefore, there is no assurance that the
Estimated Current Return indicated in Part One for each Trust 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 each Trust; and (2) takes
into account the expenses and sales charge associated with each Unit of
each Trust. Since the market values and estimated retirements of the
Bonds and the expenses of each Trust will change, there is no assurance
that the Estimated Long-Term Return indicated in Part One for each Trust
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. Neither rate
reflects the true return to Unit holders, which is lower, because
neither includes the effect of the delay in the first payment to Unit
holders.

Page 10


Record Dates for the distribution of interest under the semi-annual
distribution plan, if applicable, are the fifteenth day of June and
December with the Distribution Dates as set forth in Part One for each
Trust. 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 Part One for each Trust.

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 as set forth in Part One for each Trust.
All Unit holders will receive such distributions, if any, from the
Principal Account as are made as of the Record Dates for monthly
distributions. See Part One for each Trust.

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 in a
Trust generally is paid semi-annually, although a Trust accrues such
interest daily. Because of this, a Trust always has an amount of
interest earned but not yet collected by the Trustee. For this reason,
the Public Offering Price of Units will have added to it the
proportionate share of accrued interest to the date of settlement.

Except through an advancement of its own funds, the Trustee has no cash
for distribution to Unit holders until it receives interest payments on
the Bonds in a Trust. The Trustee will recover its advancements without
interest or other costs to such Trust from interest received on the
Bonds in a Trust. When these advancements have been recovered, regular
distributions of interest to Unit holders will commence. 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 a 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 interest held in the
Interest Account for distributions to Unit holders and since such
Account is non-interest-bearing to Unit holders, the Trustee benefits
thereby.

Why and How are the Trusts in the Insured Series Insured?

THE FOLLOWING INFORMATION REGARDING INSURANCE APPLIES ONLY TO THE
INSURED SERIES, NOT THE GLOBAL SERIES OR THE LADDERED SERIES. All
Corporate and Municipal Bonds in the portfolios of the Trusts in the
Insured Series are insured as to the scheduled payment of interest and
principal by an insurance policy (individually, each an "Insurance
Policy" and collectively, the "Insurance Policies") obtained by such
Trusts from Financial Security Assurance Inc. ("Financial Security"),
Capital Markets Assurance Corporation ("CapMAC") or AMBAC Assurance
Corporation ("AMBAC") or by insurance policies obtained by the Bond
issuer, the underwriters, the Sponsor or others prior to the Initial
Date of Deposit directly from Financial Security or other insurers (the
"Preinsured Bonds"). The Insurance Policies are noncancellable and will
continue in force for the Trusts in the Insured Series so long as such
Trusts are in existence and the Bonds described in the Insurance
Policies continue to be held by such Trusts. Nonpayment of premiums on
an Insurance Policy will not result in the cancellation of insurance,
but will permit Financial Security, CapMAC or AMBAC, respectively, to
take action against the respective Trust to recover premium payments due
it. Premium rates for each issue of Bonds protected by an Insurance
Policy are fixed for the life of each Trust in the Insured Series. The
premium for any Preinsured Bonds has been paid in advance by the Bond
issuer, the underwriters, the Sponsor or others and any such policy or
policies are noncancellable and will continue in force so long as the
Bonds so insured are outstanding and the insurer and/or insurers thereof
remain in business. Financial Security, CapMAC or AMBAC have no
obligation to insure any Preinsured Bonds. Therefore, if the provider of
an original issuance insurance policy insuring Preinsured Bonds is
unable to meet its obligations under such policy, or if the rating
assigned to the claims-paying ability of such insurer deteriorates,
Financial Security, CapMAC or AMBAC have no obligation to insure any
issue adversely affected by either of the above described events.
Monthly premiums are paid by the Trusts in the Insured Series for the
Insurance Policies, which are payable from the interest income and

Page 11

principal received by such Trusts. In the case of Preinsured Bonds, no
premiums for insurance are paid by the Trusts.

By the terms of the Insurance Policies, Financial Security, CapMAC or
AMBAC unconditionally and irrevocably guarantees to the Trusts in the
Insured Series the full and complete payment of scheduled payments on
the Bonds listed in their respective Insurance Policies in an amount
equal to the principal of such Bonds which is payable on the stated
maturity date thereof or on the date such Bonds are called for mandatory
sinking fund redemption and interest on such Bonds as the scheduled
payments shall become due but are not paid by the issuers of such Bonds.
In the event of any acceleration of the due date of principal by reason
of call for redemption (other than a mandatory sinking fund redemption),
default or otherwise, the payments guaranteed by Financial Security,
CapMAC or AMBAC will be made in the amounts and at the times as would
have been due had there not been an acceleration by reason of call for
redemption (other than a mandatory sinking fund redemption), default or
otherwise unless Financial Security, CapMAC or AMBAC elects, in their
sole discretion, to pay accelerated principal on the redemption price,
plus interest accrued or accreted, as appropriate, to the date of
acceleration or redemption. Payment of such accelerated amount or
redemption price shall fully discharge the obligations of Financial
Security, CapMAC or AMBAC, respectively under their respective Insurance
Policy in respect of such Bonds. Financial Security, CapMAC or AMBAC
will be responsible for scheduled payments less any amounts received by
the Trusts in the Insured Series from any trustee for the bond issuers
or from any other source. In the event the due date of the principal of
any Bond covered by an Insurance Policy is accelerated, the payments
required by the acceleration are received by the Trusts in the Insured
Series, and the Bond is canceled, the respective Insurance Policy will
terminate with respect to that Bond. An Insurance Policy does not
guarantee payment on an accelerated basis, the payment of any redemption
premium or the value of the Units. An Insurance Policy also does not
insure against nonpayment of principal of or interest on the Bonds
covered by the respective Insurance Policy resulting from the
insolvency, negligence or any other act or omission of the trustee or
other paying agent for the Bonds.

Each Insurance Policy is non-cancellable and will continue in force so
long as the respective Trust in the Insured Series is in existence and
the Bonds listed in the respective Insurance Policy continue to be held
in and owned by such Trust. Each Insurance Policy shall terminate as to
any Bond which has been redeemed from a Trust in the Insured Series or
sold by the Trustee on the date of the redemption or on the settlement
date of the sale, and Financial Security, CapMAC or AMBAC, respectively,
shall not have any liability under their Insurance Policy as to that
Bond thereafter. If the date of the redemption or the settlement date of
the sale occurs between a record date and a date of payment of any Bond,
the Insurance Policy will terminate as to that Bond on the business day
next succeeding the date of payment. The termination of an Insurance
Policy as to any Bond shall not affect Financial Security's, CapMAC's or
AMBAC's obligations, respectively, regarding any other Bond in a Trust
covered by such Insurance Policy or any other fund which has obtained an
insurance policy from Financial Security, CapMAC or AMBAC, respectively.
Each Insurance Policy will terminate as to all Bonds on the date on
which the last of the Bonds matures, is redeemed or is sold by a Trust.
As Bonds covered by an Insurance Policy are redeemed by their respective
issuers or are sold by the Trustee, the amount of the premium payable
for an Insurance Policy will be correspondingly reduced. Nonpayment of
premiums on an Insurance Policy will not result in the cancellation of
insurance but will permit Financial Security, CapMAC or AMBAC,
respectively, to take action against the Trustee to recover premium
payments due them. The Trustee in turn will be entitled to recover the
payments from the affected Trust.

Upon the sale of a Bond covered by an Insurance Policy from a Trust in
the Insured Series, the Trustee has the right to obtain insurance to
maturity ("Permanent Insurance") on the Bond upon the payment of a
single predetermined insurance premium. Accordingly, any Corporate or
Municipal Bond in a Trust in the Insured Series is eligible to be sold
on an insured basis. It is expected that the Trustee will exercise the
right to obtain Permanent Insurance upon instructions from the Sponsor
only if such Trust would receive net proceeds from the sale of the Bond
(less sale and rating agency fees) in excess of the sale proceeds that
would be received if the Bond were sold on an uninsured basis. The
predetermined Permanent Insurance premium with respect to each Bond
covered by the Insurance Policy is based upon the insurability of each
Bond as of the Initial Date of Deposit and will not be increased for any
change in the creditworthiness of such Bond.

Page 12


Although all Corporate and Municipal Bonds in the Trusts in the Insured
Series are individually insured, neither the Treasury Obligations, the
Trusts, the Units nor the Portfolios is insured directly or indirectly
by Financial Security, CapMAC or AMBAC.

Financial Security Assurance. Financial Security Assurance Inc.
("Financial Security") is a monoline insurance company incorporated in
1984 under the laws of the State of New York. Financial Security is
licensed to engage in the financial guaranty insurance business in all
50 states, the District of Columbia and Puerto Rico.

Financial Security and its subsidiaries are engaged in the business of
writing financial guaranty insurance, principally in respect of
securities offered in domestic and foreign markets. In general,
financial guaranty insurance consists of the issuance of a guaranty of
scheduled payments of an issuer's securities, thereby enhancing the
credit rating of those securities, in consideration for payment of a
premium to the insurer. Financial Security and its subsidiaries
principally insure asset-backed, collateralized and municipal
securities. Asset-backed securities are generally supported by
residential mortgage loans, consumer or trade receivables, securities or
other assets having an ascertainable cash flow or market value.
Collateralized securities include public utility first mortgage bonds
and sale/leaseback obligation bonds. Municipal securities consist
largely of general obligation bonds, special revenue bonds and other
special obligations of state and local governments. Financial Security
insures both newly issued securities sold in the primary market and
outstanding securities sold in the secondary market that satisfy
Financial Security's underwriting criteria.

Financial Security is a wholly-owned subsidiary of Financial Security
Assurance Holdings Ltd. ("Holdings"), a New York Stock Exchange listed
company. Major shareholders of Holdings include Fund American
Enterprises Holdings, Inc., U S West Capital Corporation and The Tokio
Marine and Fire Insurance Co. Ltd. No shareholder of Financial Security
is obligated to pay any debt of Financial Security or its subsidiaries
or any claim under any insurance policy issued by Financial Security or
its subsidiaries or to make any additional contribution to the capital
of Financial Security or its subsidiaries. As of June 30, 1997, the
total policyholders' surplus and contingency reserves and the total
unearned premium reserve, respectively, of Financial Security and its
consolidated subsidiaries were, in accordance with statutory accounting
principles, approximately $711,154,000 (unaudited) and $461,203,000
(unaudited), and the total shareholders' equity and the unearned premium
reserve, respectively, of Financial Security and its consolidated
subsidiaries were, in accordance with generally accepted accounting
principles, approximately $861,209,000 (unaudited), and $401,251,000
(unaudited). Copies of Financial Security's financial statements may be
obtained by writing to Financial Security at 350 Park Avenue, New York,
New York, 10022, Attention Communications Department. Financial
Security's telephone number is (212) 826-0100.

Pursuant to an intercompany agreement, liabilities on financial guaranty
insurance written or reinsured from third parties by Financial Security
or any of its domestic operating insurance company subsidiaries
(including FSA Maryland) are reinsured among such companies on an agreed-
upon percentage substantially proportional to their respective capital,
surplus and reserves, subject to applicable statutory risk limitations.
In addition, Financial Security and FSA Maryland reinsure a portion of
their liabilities under certain of their financial guaranty insurance
policies with other reinsurers under various quota share treaties and on
a transaction-by-transaction basis. Such reinsurance is utilized as a
risk management device and to comply with certain statutory and rating
agency requirements; it does not alter or limit the obligations of
Financial Security or FSA Maryland under any financial guaranty
insurance policy.

The claims-paying ability of Financial Security and FSA Maryland is
rated "Aaa" by Moody's Investors Service, Inc., and "AAA" by Standard &
Poor's Rating Services, Nippon Investors Service Inc. and Standard &
Poor's (Australia) Pty. Ltd. Such ratings reflect only the views of the
respective rating agencies, are not recommendations to buy, sell or hold
securities and are subject to revision or withdrawal at any time by such
rating agencies.

CapMAC. CapMAC is a New York-domiciled monoline stock insurance company
which engages only in the business of financial guarantee and surety
insurance. CapMAC is licensed in 49 states in addition to the District
of Columbia, the Commonwealth of Puerto Rico and the territory of Guam.
CapMAC insures structured asset-backed, corporate and other financial
obligations in the domestic and foreign capital markets. CapMAC may also
provide financial guarantee reinsurance for structured asset-backed,
corporate and municipal obligations written by other major insurance
companies.

Page 13


CapMAC's claims-paying ability is rated "Aaa" by Moody's Investors
Service, Inc. ("Moody's"), "AAA" by Standard & Poor's, and "AAA" by Duff
& Phelps, Inc. ("Duff & Phelps"). Such ratings reflect only the views of
the respective rating agencies, are not recommendations to buy, sell or
hold securities and are subject to revision or withdrawal at any time by
such rating agencies.

CapMAC is wholly owned by CapMAC Holdings Inc. ("Holdings"), a company
that is owned by a group of institutional and other investors, including
CapMAC's management and employees. CapMAC commenced operations on
December 24, 1987 as an indirect, wholly-owned subsidiary of Citibank
(New York State), a wholly-owned subsidiary of Citicorp. On June 25,
1992, Citibank (New York State) sold CapMAC to Holdings (the "Sale").

Neither Holdings nor any of its stockholders is obligated to pay any
claims under any surety bond issued by CapMAC or any debts of CapMAC or
to make additional capital contributions.

CapMAC is regulated by the Superintendent of Insurance of the State of
New York. In addition, CapMAC is subject to regulation by the insurance
departments of the other jurisdictions in which it is licensed. CapMAC
is subject to periodic regulatory examinations by the same regulatory
authorities.

CapMAC is bound by insurance laws and regulations regarding capital
transfers, limitations upon dividends, investment of assets, changes in
control, transactions with affiliates and consolidations and
acquisitions. The amount of exposure per risk that CapMAC may retain,
after giving effect to reinsurance, collateral or other securities, is
also regulated. Statutory and regulatory accounting practices may
prescribe appropriate rates at which premiums are earned and the levels
of reserves required. In addition, various insurance laws restrict the
incurrence of debt, regulate permissible investments of reserves,
capital and surplus, and govern the form of surety bonds.

CapMAC's obligations under the Surety Bond(s) may be reinsured. Such
reinsurance does not relieve CapMAC of any of its obligations under the
Surety Bond(s).

THE SURETY BONDS ARE NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE
SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.

In connection with the Sale, Holdings and CapMAC entered into an
Ownership Policy Agreement (the "Ownership Policy Agreement"), which
sets forth Holdings' intent with respect to its ownership and control of
CapMAC and provides for certain policies and agreements with respect to
Holdings' exercise of its control of CapMAC. In the Ownership Policy
Agreement, Holdings has agreed that, during the term of the Ownership
Policy Agreement, it will not and will not permit any stockholder of
Holdings to enter into any transaction the result of which would be a
change of control (as defined in the Ownership Policy Agreement) of
CapMAC, unless the long-term debt obligations or claims-paying ability
of the person which would control CapMAC after such transaction or its
direct or indirect parent are rated in a high investment grade category,
unless Holdings or CapMAC has confirmed that CapMAC's claims-paying
ability rating by Moody's (the "Rating") in effect immediately prior to
any such change of control will not be downgraded by Moody's upon such
change of control or unless such change of control occurs as a result of
a public offering of Holdings' capital stock.

In addition, the Ownership Policy Agreement includes agreements (i) not
to change the "zero-loss" underwriting standards or policies and
procedures of CapMAC in a manner that would materially and adversely
affect the risk profile of CapMAC's book of business, (ii) that CapMAC
will adhere to the aggregate leverage limitations and maintain
capitalization levels considered by Moody's from time to time as
consistent with maintaining CapMAC's Rating and (iii) that until
CapMAC's statutory capital surplus and contingency reserve ("qualified
statutory capital") equal $250 million, CapMAC will maintain a specified
amount of qualified statutory capital in excess of the amount of
qualified statutory capital that CapMAC is required at such time to
maintain under the aggregate leverage limitations set forth in Article
69 of the New York Insurance Law.

The Ownership Policy Agreement will terminate on the earlier of the date
on which a change of control of CapMAC occurs and the date on which
CapMAC and Holdings agree in writing to terminate the Ownership Policy
Agreement; provided that, CapMAC or Holdings has confirmed that CapMAC's
Rating in effect immediately prior to any such termination will not be
downgraded upon such termination.

As of March 31, 1997, CapMAC had statutory capital and surplus of
approximately $266.2 million, up from $260.2 million at December 31,
1996. Article 69 of the New York State Insurance Law requires that
CapMAC establishes and maintains the contingency reserve.

Page 14


Copies of CapMAC's financial statements prepared in accordance with
statutory accounting standards, which differ from generally accepted
accounting principles, and filed with the Insurance Department of the
State of New York are available upon request. CapMAC is located at 885
Third Avenue, New York, New York 10022, and its telephone number is
(212) 755-1155.

AMBAC Assurance Corporation ("AMBAC Assurance"). Effective July 14,
1997, AMBAC Indemnity Corporation changed its name to AMBAC Assurance
Corporation. The Insurance Policy of AMBAC Assurance obtained by an
Insured Trust is noncancellable and will continue in force for so long
as the Bonds described in the Insurance Policy are held by an Insured
Trust. A monthly premium is paid by an Insured Trust for the Insurance
Policy obtained by it. The Trustee will pay, when due, successively, the
full amount of each installment of the insurance premium. Pursuant to a
binding agreement with AMBAC Assurance, in the event of a sale of a Bond
covered by the AMBAC Assurance Insurance Policy, the Trustee has the
right to obtain permanent insurance for such Bond upon payment of a
single predetermined premium from the proceeds of the sale of such Bond.

Under the terms of the Insurance Policy, AMBAC Assurance agrees to pay
to the Trustee that portion of the principal of and interest on the
Bonds insured by AMBAC Assurance which shall become due for payment but
shall be unpaid by reason of nonpayment by the issuer of the Bonds. The
term "due for payment" means, when referring to the principal of a Bond
so insured, its stated maturity date or the date on which it shall have
been called for mandatory sinking fund redemption and does not refer to
any earlier date on which payment is due by reason of call for
redemption (other than by mandatory sinking fund redemption),
acceleration or other advancement of maturity and means, when referring
to interest on a Bond, the stated date for payment of interest.

AMBAC Assurance will make payment to the Trustee not later than thirty
days after notice from the Trustee is received by AMBAC Assurance that a
nonpayment of principal or of interest on a Bond has occurred, but not
earlier than the date on which the Bonds are due for payment. AMBAC
Assurance will disburse to the Trustee the face amount of principal and
interest which is then due for payment but is unpaid by reason of
nonpayment by the issuer in exchange for delivery of Bonds, not less in
face amount than the amount of the payment in bearer form, free and
clear of all liens and encumbrances and uncancelled. In cases where
Bonds are issuable only in a form whereby principal is payable to
registered holders or their assigns, AMBAC Assurance shall pay principal
only upon presentation and surrender of the unpaid Bonds uncancelled and
free of any adverse claim, together with an instrument of assignment in
satisfactory form, so as to permit ownership of such Bonds to be
registered in the name of AMBAC Assurance or its nominee. In cases where
Bonds are issuable only in a form whereby interest is payable to
registered holders or their assigns, AMBAC Assurance shall pay interest
only upon presentation of proof that the claimant is the person entitled
to the payment of interest on the Bonds and delivery of an instrument of
assignment, in satisfactory form, transferring to AMBAC Assurance all
right under such Bonds to receive the interest in respect of which the
insurance payment was made.

AMBAC Assurance is a Wisconsin-domiciled stock insurance corporation
regulated by the Office of the Commissioner of Insurance of the State of
Wisconsin and licensed to do business in fifty states, the District of
Columbia and the Commonwealth of Puerto Rico, with admitted assets of
$2,735,772,668 (unaudited) and statutory capital of $1,547,693,950
(unaudited) as of June 30, 1997. Statutory capital consists of AMBAC
Assurance's policyholders' surplus and statutory contingency reserve.
AMBAC Assurance is a wholly-owned subsidiary of AMBAC Financial Group,
Inc., a 100% publicly-held company. Moody's Investors Service, Inc. and
Standard & Poor's have both assigned a triple-A claims-paying ability
rating to AMBAC Assurance.

Copies of AMBAC Assurance's financial statements prepared in accordance
with statutory accounting standards are available from AMBAC Assurance.
The address of AMBAC Assurance's administrative offices and its
telephone number are One State Street Plaza, 17th Floor, New York, New
York 10004 and (212) 668-0340.

The information relating to AMBAC Assurance contained above has been
furnished by AMBAC Assurance. No representation is made herein as to the
accuracy or adequacy of such information, or as to the existence of any
adverse changes in such information, subsequent to the date hereof.

In determining whether to insure bonds, Financial Guaranty and/or AMBAC
Assurance has applied its own standards which are not necessarily the

Page 15

same as the criteria used in regard to the selection of bonds by the
Sponsor. This decision is made prior to the Initial Date of Deposit, as
bonds not covered by such insurance are not deposited in an Insured
Trust, unless such bonds are Preinsured Bonds. The insurance obtained by
an Insured Trust covers Bonds deposited in such Trust and physically
delivered to the Trustee in the case of bearer bonds or registered in
the name of the Trustee or its nominee or delivered along with an
assignment in the case of registered bonds or registered in the name of
the Trustee or its nominee in the case of Bonds held in book-entry form.
Contracts to purchase Bonds are not covered by the insurance obtained by
an Insured Trust although Bonds underlying such contracts are covered by
insurance upon physical delivery to the Trustee.

Insurance obtained by each Insured Trust or by the Bond issuer, the
underwriters, the Sponsor or others does not guarantee the market value
of the Bonds or the value of the Units of such Trust. The insurance
obtained by an Insured Trust is effective only as to Bonds owned by and
held in such Trust. In the event of a sale of any such Bond by the
Trustee, the insurance terminates as to such Bond on the date of sale.
In the event of a sale of a Bond insured by an Insured Trust, the
Trustee has the right to obtain Permanent Insurance upon the payment of
an insurance premium from the proceeds of the sale of such Bond. Except
as indicated below, insurance obtained by an Insured Trust has no effect
on the price or redemption value of Units. It is the present intention
of the Evaluator to attribute a value to such insurance obtained by an
Insured Trust (including the right to obtain Permanent Insurance) for
the purpose of computing the price or redemption value of Units only if
the Bonds covered by such insurance are in default in payment of
principal or interest or, in the Sponsor's opinion, in significant risk
of such default. The value of the insurance will be equal to the
difference between (i) the market value of a Bond which is in default in
payment of principal or interest or in significant risk of such default
assuming the exercise of the right to obtain Permanent Insurance (less
the insurance premium attributable to the purchase of Permanent
Insurance) and (ii) the market value of such Bonds not covered by
Permanent Insurance. See "Public Offering-How is the Public Offering
Price Determined?" herein for a more complete description of the
Evaluator's method of valuing defaulted Bonds and Bonds which have a
significant risk of default. Insurance on a Preinsured Bond is effective
as long as such Bond is outstanding. Therefore, any such insurance may
be considered to represent an element of market value in regard to the
Bonds thus insured, but the exact effect, if any, of this insurance on
such market value cannot be predicted.

A contract of insurance obtained by an Insured Trust and the
negotiations in respect thereof represent the only relationship between
Financial Guaranty and/or AMBAC Assurance and the Fund. Otherwise
neither Financial Guaranty nor its parent, FGIC Corporation, or any
affiliate thereof, nor AMBAC Assurance nor its parent, AMBAC Financial
Group, Inc., or any affiliate thereof has any significant relationship,
direct or indirect, with the Fund or the Sponsor, except that the
Sponsor has in the past and may from time to time in the future, in the
normal course of its business, participate as sole underwriter or as
manager or as a member of underwriting syndicates in the distribution of
new issues of municipal bonds in which the investors or the affiliates
of FGIC Corporation and/or AMBAC Financial Group, Inc. have or will be
participants or for which a policy of insurance guaranteeing the
scheduled payment of interest and principal has been obtained from
Financial Guaranty and/or AMBAC Assurance. Neither the Fund nor the
Units of a Trust nor the portfolio of such Trust is insured directly or
indirectly by FGIC Corporation and/or AMBAC Financial Group, Inc.

The information relating to Financial Security, CapMAC and AMBAC
contained in the above paragraphs have been furnished by Financial
Security, CapMAC and AMBAC, respectively. No representation is made
herein as to the accuracy or adequacy of such information, or as to the
existence of any adverse changes in such information, subsequent to the
date hereof.

In determining whether to insure bonds, Financial Security, CapMAC and
AMBAC have applied their own standards which are not necessarily the
same as the criteria used in regard to the selection of bonds by the
Sponsor. This decision is made prior to the Initial Date of Deposit, as
bonds not covered by the Insurance Policy are not deposited in a Trust
in the Insured Series unless such bonds are Preinsured Bonds. The
Insurance Policy covers Bonds listed in the Insurance Policy deposited
in such Trust in the Insured Series and physically delivered to the
Trustee in the case of bearer bonds or registered in the name of the
Trustee or its nominee or delivered along with an assignment in the case
of registered bonds or registered in the name of the Trustee or its
nominee in the case of Bonds held in book-entry form.

Page 16


Insurance obtained by a Trust in the Insured Series or by the Bond
issuer, the underwriters, the Sponsor or others does not guarantee the
market value of the Bonds or the value of the Units of such Trust. Each
Insurance Policy is effective only as to Bonds listed in the respective
Insurance Policy owned by and held in such Trust. In the event of a sale
of any Bond listed in an Insurance Policy by the Trustee, an Insurance
Policy terminates as to such Bond on the date of sale. Except as
indicated below, insurance obtained by a Trust in the Insured Series has
no effect on the price or redemption value of Units. It is the present
intention of the Evaluator to attribute a value to such insurance
obtained by a Trust in the Insured Series (including the right to obtain
Permanent Insurance) for the purpose of computing the price or
redemption value of Units only if the Bonds covered by such insurance
are in default in payment of principal or interest or, in the Sponsor's
opinion, in significant risk of such default. The value of the insurance
will be equal to the difference between (i) the market value of a Bond
which is in default in payment of principal or interest or in
significant risk of such default assuming the exercise of the right to
obtain Permanent Insurance (less the insurance premium attributable to
the purchase of Permanent Insurance) and (ii) the market value of such
Bonds not covered by Permanent Insurance. See "Public Offering-How is
the Public Offering Price Determined?" herein for a more complete
description of the Evaluator's method of valuing defaulted Bonds and
Bonds which have a significant risk of default. Insurance on a
Preinsured Bond is effective as long as such Bond is outstanding.
Therefore, any such insurance may be considered to represent an element
of market value in regard to the Bonds thus insured, but the exact
effect, if any, of this insurance on such market value cannot be
predicted.

The Insurance Policies and the negotiations in respect thereof represent
the only relationship between Financial Security, CapMAC, AMBAC and the
Trusts in the Insured Series. Otherwise neither Financial Security,
CapMAC, AMBAC nor any affiliate thereof has any significant
relationship, direct or indirect, with the Trusts or the Sponsor, except
that the Sponsor has in the past and may from time to time in the
future, in the normal course of its business, participate as sole
underwriter or as manager or as a member of underwriting syndicates in
the distribution of new issues of municipal bonds in which the investors
or the affiliates of Financial Security, CapMAC or AMBAC have or will be
participants or for which a policy of insurance guaranteeing the
scheduled payment of interest and principal has been obtained from
Financial Security, CapMAC or AMBAC. Neither the Trusts nor the Units of
the Trusts nor the portfolio of any Trust is insured directly or
indirectly by Financial Security, CapMAC or AMBAC.

Because the Corporate and Municipal Bonds in each Trust in the Insured
Series are insured as to the scheduled payment of principal and interest
and on the basis of the financial condition of the insurance companies
referred to above, Standard & Poor's has assigned to units of the Trusts
in the Insured Series its "AAA" investment rating. This is the highest
rating assigned to securities by Standard & Poor's. See "Description of
Bond Ratings." The obtaining of this rating by the Trusts in the Insured
Series should not be construed as an approval of the offering of the
Units by Standard & Poor's or as a guarantee of the market value of such
Trusts or the Units of the Trusts. Standard & Poor's has indicated that
this rating is not a recommendation to buy, hold or sell Units nor does
it take into account the extent to which expenses of the Trusts in the
Insured Series or sales by such Trusts of Bonds for less than the
purchase price paid by such Trusts will reduce payment to Unit holders
of the interest and principal required to be paid on such Bonds. There
is no guarantee that the "AAA" investment rating with respect to the
Units of the respective Trusts in the Insured Series will be maintained.

An objective of portfolio insurance obtained by the Trusts in the
Insured Series is to obtain a higher yield on the Bonds in the
portfolios of such Trusts than would be available if all the Bonds in
such portfolio had the Standard & Poor's "AAA" and/or Moody's "Aaa"
rating(s) and at the same time to have the protection of insurance of
scheduled payment of interest and principal on the Bonds. There is, of
course, no certainty that this result will be achieved. Bonds in the
Trusts in the Insured Series may or may not have a higher yield than
uninsured bonds rated "AAA" by Standard & Poor's or "Aaa" by Moody's. In
selecting Bonds for the portfolios of the Trusts, the Sponsor has
applied the criteria herein before described.

Are Unit Holders Compensated for Foreign Withholding Tax Risks?

Certain of the Bonds are subject to non-U.S. ("foreign") withholding
taxes. Certain issuers of Bonds which are subject to foreign withholding
taxes have generally agreed, subject to certain exceptions, to make

Page 17

additional payments ("Additional Payments") which together with other
payments are intended to compensate the holder of the Bond for the
imposition of certain withholding taxes. However, both the calculation
of the Additional Payment and whether the Additional Payment compensates
the holder of the Bond for any related penalties, interest or other
charges imposed in connection with any applicable foreign withholding
taxes are likely to differ from Bond to Bond. Moreover, the Additional
Payment is itself treated as taxable income to Unit holders for U.S.
income tax purposes. The Additional Payment may not be based upon a
"gross-up" formula which would otherwise compensate an investor for the
tax liability triggered by the receipt of the Additional Payment. For
any of these reasons, an investor may not be adequately compensated for
the actual foreign withholding tax liabilities incurred. If the Trust
obtains a certificate from an issuer evidencing payment of foreign
withholding taxes with respect to a Bond, the Trust will so notify Unit
holders. A Unit holder is required to include in his gross income the
entire amount of interest paid on his pro rata portion of the Bond
including the amount of tax withheld therefrom and the amount of any
Additional Payment. However, if the foreign tax withheld constitutes an
income tax for which U.S. foreign tax credits may be taken, the Unit
holder may be able to obtain applicable foreign tax credits (subject to
statutory limitations) or deductions. (See "What is the Federal Tax
Status of Unit Holders?")

What is the Federal Tax Status of Unit Holders?

For purposes of the following discussions and opinions, it is assumed
that interest on the Bonds (including the taxable municipal bonds, if
any) is included in gross income for Federal income tax purposes.

In the opinion of Chapman and Cutler, Counsel for the Sponsor, under
existing law:

(1)  The Trusts are not associations taxable as corporations for Federal
income tax purposes.

(2)  Each Unit holder of a Trust is considered to be the owner of a pro
rata portion of each of the Trust assets 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 such 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 a 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 a Bond of the Trust
is disposed of (whether by sale, exchange, liquidation, redemption, or
payment at maturity) or when the Unit holder redeems or sells his Units.
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. Such basis is
determined (before the adjustments described below) by apportioning the
tax basis for the Units among each of the Trusts according to value as
of the valuation date nearest the date of acquisition of the 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 to the extent that such interest
accrued on such Bonds during the period from the Unit holder's
settlement date to the date such Bonds are delivered to the Trust and,
consequently, such Unit holders may have an increase in taxable gain or
reduction in capital loss upon the disposition of such Units. Gain or
loss upon the sale or redemption of Units is measured by comparing the
proceeds of such sale or redemption with the adjusted basis of the
Units. If the Trustee disposes of Bonds (whether by sale, exchange,
payment on maturity, redemption or otherwise), gain or loss is
recognized to the Unit holder (subject to various non-recognition
provisions of the Code). 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. The basis of each Unit and of each Bond which was issued
with original issue discount (including the Treasury Obligations or
which has market discount) must be increased by the amount of accrued
original issue discount (and market discount, if the Unit holder elects
to include market discount in income as it accrues) and the basis of
each Unit and of each Bond which was purchased by the Trusts 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 basis 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. The

Page 18

Treasury Obligations held by the Trusts are treated as bonds that were
originally issued at an original issue discount provided, pursuant to a
Treasury Regulation (the "Regulation") issued on December 28, 1992, that
the amount of original issue discount determined under Section 1286 of
the Code is not less than a "de minimis" amount as determined thereunder
as discussed below. Because the Treasury Obligations represent interests
in "stripped" U.S. Treasury bonds, a Unit holder's initial cost for his
pro rata portion of each Treasury Obligation held by the Trust
(determined at the time he acquires his Units, in the manner described
above) shall be treated as its "purchase price" by the Unit holder.
Original issue discount is effectively treated as interest for Federal
income tax purposes and the amount of original issue discount in this
case is generally the difference between the bond's purchase price and
its stated redemption price at maturity. A Unit holder will be required
to include in gross income for each taxable year the sum of his daily
portions of original issue discount attributable to the Treasury
Obligations held by the Trust as such original issue discount accrues
and will in general be subject to Federal income tax with respect to the
total amount of such original issue discount that accrues for such year
even though the income is not distributed to the Unit holders during
such year to the extent it is not less than a "de minimis" amount as
determined under the Regulation. To the extent the amount of such
discount is less than the respective "de minimis" amount, such discount
shall be treated as zero. In general, original issue discount accrues
daily under a constant interest rate method which takes into account the
semi-annual compounding of accrued interest. In the case of the Treasury
Obligations, this method will generally result in an increasing amount
of income to the Unit holders each year. Unit holders should consult
their tax advisers regarding the Federal income tax consequences and
accretion of original issue discount.

Each Unit holder's pro rata share of each expense paid by his respective
Trust is deductible by the Unit holder to the same extent as though the
expense had been paid directly by him. It should be noted that as a
result of the Tax Reform Act of 1986, certain miscellaneous itemized
deductions, such as investment expenses, tax return preparation fees and
employee business expenses will be deductible by an individual only to
the extent they exceed 2% of such individual's adjusted gross income.
Unit holders may be required to treat some or all of the expenses paid
by the Trusts 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 a 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 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 Trusts may have been acquired with "original
issue discount." In the case of any Bonds in the Trusts acquired with
"original issue discount" that exceeds a "de minimis" amount as
specified in the Code or in the case of the Treasury Obligations as
specified in the Regulation, 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 a 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 issue discount exceeds his pro
rata portion of its adjusted issue price. Unit holders should also
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

Page 19

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. The market discount rules
do not apply to Treasury Obligations because they are stripped debt
instruments subject to special original issue discount rules as
discussed above. 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 a 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 are 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 a 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 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 such 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.
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 a 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%. For taxpayers other than corporations, net capital gains
(which are defined as net long-term capital gain over net short-term
capital loss for the taxable year) are subject to a maximum marginal
stated tax rate of either 28% or 20%, depending upon the holding period
of the capital assets. In particular, net capital gain, excluding net
gain from property held more than one year but not more than 18 months
and gain on certain other assets, is subject to a maximum marginal
stated tax rate of 20% (10% in the case of certain taxpayers in the
lowest tax bracket). Net capital gain that is not taxed at the maximum
marginal stated tax rate of 20% (or 10%) as described in the preceding
sentence, is generally subject to a maximum marginal stated tax rate of
28%. The date on which a Unit is acquired (i.e., the "trade date") is
excluded for purposes of determining the holding period of the Unit. It
should be noted that legislative proposals are introduced from time to
time that affect tax rates and could affect relative differences at
which ordinary income and capital gains are taxed.

In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered
into after April 30, 1993. Unit holders and prospective investors should
consult with their tax advisers regarding the potential effect of this
provision on their investment in Units. The tax basis 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 to or less
than his original cost.

Page 20


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) if the interest is
United States source income (which is the case for most securities
issued by United States issuers), and the Bond is issued after July 18,
1984 (which is the case for each Bond held by the Trust) then 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 payments to a Trust of interest on the Bonds of
foreign companies may be subject to foreign withholding taxes and Unit
holders should consult their tax advisers regarding the potential tax
consequences relating to the payment of any such withholding taxes by
such Trust. Any interest withheld as a result thereof may nevertheless
be treated as income to the Unit holders. Because, under the grantor
trust rules, an investor is deemed to have paid directly his share of
foreign taxes that have been paid or accrued, if any, an investor may be
entitled to a foreign tax credit or deduction for United States tax
purposes with respect to such taxes. In addition, such Bonds may provide
for Additional Payments to investors intended to compensate them for any
foreign tax liability. (See "Are Unit Holders Compensated for Foreign
Withholding Tax Risks?") Any such Additional Payments received by the
Trust would constitute taxable income to Unit holders. Investors should
consult their tax advisers with respect to foreign withholding taxes and
foreign tax credits.

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 a Trust to such Unit holder
including amounts received upon the redemption of the Units will be
subject to back-up withholding.

In the opinion of Carter, Ledyard & Milburn, Special Counsel to the
Trusts for New York tax matters, the Trusts are not associations taxable
as corporations and the income of the Trusts 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.

Page 21


What are the Expenses and Charges?

At no cost to the Trusts, the Sponsor has borne all the expenses of
creating and establishing the Trusts, including the cost of the initial
preparation, printing and execution of the Indenture and the
certificates for the Units, legal and accounting expenses, 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
Trusts. However, First Trust Advisors L.P., an affiliate of the Sponsor,
will receive an annual supervisory fee, which is not to exceed the
amount set forth under "Summary of Essential Information," appearing in
Part One for each Trust for providing portfolio supervisory services for
the Trusts. Such fee is based on the number of Units of a 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 such Trust outstanding as of the
respective Dates of Deposit. The fee may exceed the actual costs of
providing such supervisory services for a 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 Trusts, the Evaluator will
receive a fee as indicated in Part One for each Trust. The Trustee pays
certain expenses of the Trust for which it is reimbursed by the Trust.
The Trustee will receive for its ordinary recurring services to a Trust
a fee as indicated in Part One for each Trust. For a discussion of the
services performed by the Trustee pursuant to its obligations under the
Indenture, reference is made to the material set forth under "Rights of
Unit Holders." The Trustee's and Evaluator's fees are payable monthly on
or before each Distribution Date from the Interest Account of each Trust
to the extent funds are available and then from the Principal Account of
such 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 Trusts 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 annualized cost of the portfolio insurance obtained by each Trust in
the Insured Series is indicated in Part One for each Trust. The
portfolio insurance continues so long as such Trust in the Insured
Series retains the Bonds thus insured. Premiums are payable monthly in
advance by the Trustee on behalf of such Trust. As Bonds in the
portfolio are redeemed by their respective issuers or are sold by the
Trustee, the amount of premium will be reduced in respect of those Bonds
no longer owned by and held in the Trusts in the Insured Series which
were insured by insurance obtained by such Trust. Preinsured Bonds in
the Trusts in the Insured Series and Treasury Obligations are not
insured by such Trusts. The premium payable for Permanent Insurance will
be paid solely from the proceeds of the sale of such Bond in the event
the Trustee exercises the right to obtain Permanent Insurance on a Bond.
The premiums for such Permanent Insurance with respect to each Bond will
decline over the life of the Bond.

The following additional charges are or may be incurred by a 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 a Trust and the rights and interests of the
Unit holders; fees of the Trustee for any extraordinary services
performed under the Indenture; indemnification of the Trustee for any
loss, liability or expense incurred by it without negligence, bad faith
or willful misconduct on its part, arising out of or in connection with
its acceptance or administration of a Trust; indemnification of the
Sponsor for any loss, liability or expense incurred without gross
negligence, bad faith or willful misconduct in acting as Depositor of a
Trust; all taxes and other government charges imposed upon the Bonds or
any part of a 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 a Trust. The
above expenses and the Trustee's annual fee, when paid or owing to the
Trustee, are secured by a lien on the Trusts. In addition, the Trustee
is empowered to sell Bonds of a Trust in order to make funds available
to pay all these amounts if funds are not otherwise available in the
Interest and Principal Accounts of the Trust.

Page 22


Unless the Sponsor determines that such an audit is not required, the
Indenture requires the accounts of each 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?

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 each Trust plus interest accrued
to the date of settlement. All expenses incurred in maintaining a
market, other than the fees of the Evaluator, the other expenses of a
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 a
Trust in secondary market transactions. The purchase price per unit of
such bond funds will depend primarily on the value of the securities in
the portfolio of the fund.

Units are offered at the Public Offering Price. The Public Offering
Price is determined by adding to the Evaluator's determination of the
aggregate bid price of the Bonds in a 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 a Trust, adjusting the total to reflect the amount of any
cash held in or advanced to the principal account of a Trust and
dividing the result by the number of Units of such 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.

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 Trusts in the Insured Series 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 but less than 9                      5.00%                   5.263% 
9 but less than 10                     5.50%                   5.820% 
10 or more                             5.80%                   6.157% 
</TABLE>

Page 23


The following schedule applies to all Bonds in the Laddered Series and
the Global Series:

<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>

An investor may aggregate purchases of Units of two consecutive Trusts
in the Insured Series for purposes of calculating the discount for
volume purchases listed below. Additionally, 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
secondary offering period.

The applicable sales charge is reduced by a discount as indicated below
for volume purchases of the Insured Series:

Dollar Amount of Transaction at                 Discount
Public Offering Price                           per Unit
_______________________________                 ________
$500,000 to $999,999                            $ 7.50 
$1,000,000 or more                              $15.00 

Any such reduced sales charge shall be the responsibility of the selling
broker/dealer, bank or other selling agent. This reduced sales charge
structure will apply on all purchases of Units in a Trust by the same
person on any one day from any broker/dealer, bank or other selling
agent. 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.

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.

From time to time the Sponsor may implement programs under which
brokers/dealers, banks or other selling agents of the Trusts may receive
nominal awards from the Sponsor for each of their registered
representatives who have sold a minimum number of UIT Units during a
specified time period. In addition, at various times the Sponsor may
implement other programs under which the sales force of a broker/dealer,
bank or other selling agent may be eligible to win other nominal awards
for certain sales efforts, or under which the Sponsor will reallow to
any such dealer that sponsors sales contests or recognition programs
conforming to criteria established by the Sponsor, or participates in
sales programs sponsored by Sponsor, an amount not exceeding the total
applicable sales charges on the sales generated by such person at the
public offering price during such programs. Also, the Sponsor in its
discretion may from time to time pursuant to objective criteria
established by the Sponsor pay fees to qualifying dealers for certain
services or activities which are primarily intended to result in sales
of Units of the Trusts. Such payments are made by the Sponsor out of its
own assets, and not out of the assets of the Trusts. These programs will
not change the price Unit holders pay for their Units or the amount that
the Trusts 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

Page 24

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 Trusts and returns over specified periods on
other similar Trusts sponsored by Nike Securities L.P. with returns on
investments such as corporate or U.S. Government bonds, bank CDs and
money market accounts or money market funds, each of which has
investment characteristics that may differ from those of the Trusts.
U.S. Government bonds, for example, are backed by the full faith and
credit of the U.S. Government and bank CDs and money market accounts are
insured by an agency of the Federal government. Money market accounts
and money market funds provide stability of principal, but pay interest
at rates that vary with the condition of the short-term debt market. The
investment characteristics of the Trusts are described more fully
elsewhere in this Prospectus.

The Public Offering Price of Units on the date of this Part Two
Prospectus may vary from the amount stated under "Summary of Essential
Information" appearing in Part One for each Trust in accordance with
fluctuations in the prices of the underlying Securities. The aggregate
price of the Bonds in each Trust is determined by whomever from time to
time is acting as evaluator (the "Evaluator"), on the basis of bid
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 Trusts; (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. Unless Bonds are in
default in payment of principal or interest or, in the Sponsor's
opinion, in significant risk of such default, the Evaluator will not
attribute any value to the insurance obtained by the Trusts in the
Insured Series. On the other hand, the value of insurance obtained by
the issuer of Bonds in a Trust in the Insured Series is reflected and
included in the market value of such Bonds.

The Evaluator will consider in its evaluation of Corporate or Municipal
Bonds in Trusts in the Insured Series which are in default in payment of
principal or interest or, in the Sponsor's opinion, in significant risk
of such default (the "Defaulted Bonds") and which are covered by
insurance obtained by each Trust, the value of the insurance
guaranteeing interest and principal payments. The value of the insurance
will be equal to the difference between (i) the market value of
Defaulted Bonds assuming the exercise of the right to obtain Permanent
Insurance (less the insurance premium attributable to the purchase of
Permanent Insurance) and (ii) the market value of such Defaulted Bonds
not covered by Permanent Insurance. In addition, the Evaluator will
consider the ability of Financial Security, CapMAC and/or AMBAC to meet
its commitments under the insurance policy of a Trust in the Insured
Series, including the commitments to issue Permanent Insurance. It is
the position of the Sponsor that this is a fair method of valuing the
Bonds and the insurance obtained by each Trust in the Insured Series and
reflects a proper valuation method in accordance with the provisions of
the Investment Company Act of 1940. For a description of the
circumstances under which a full or partial suspension of the right of
Unit holders to redeem their Units may occur, see "Rights of Unit
Holders-How May Units be Redeemed?"

The Evaluator may be attributing value to insurance for the purpose of
computing the price or redemption value of Units of the Trusts in the
Insured Series. The Evaluator is attributing value to insurance for the
purpose of computing the price or redemption value of Units for certain
series of The First Trust of Insured Municipal Bonds, an investment
company sponsored by Nike Securities L.P. See Part One for each Trust
for further information with respect to whether value is being
attributed to insurance in determining the value of Units for that Trust
in the Insured Series.

The Evaluator in the Insured Series will be requested to make a
determination of the aggregate price of the Bonds in each Trust, 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 secondary market Public Offering Price of the Units will be equal to
the bid price per Unit of the Bonds in a Trust, plus (less) any balance
(overdraft) in the principal cash account of such Trust, plus the
applicable sales charge.

Although payment is normally made three business days following the
order for purchase (the date of settlement), payment may be made prior
thereto. A person will become owner of Units on the date of settlement
provided payment has been received. Cash, if any, made available to the
Sponsor prior to the date of settlement for the purchase of Units may be

Page 25

used in the Sponsor's business and may be deemed to be a benefit to the
Sponsor, subject to the limitations of the Securities Exchange Act of
1934. Delivery of Certificates representing Units so ordered will be
made three business days following such order or shortly thereafter. See
"Rights of Unit Holders-How May Units Be Redeemed?" for information
regarding the ability to redeem Units ordered for purchase.

How are Units Distributed?

Units repurchased in the secondary market may be offered by this Part
Two Prospectus at the secondary market public offering price determined
in the manner described above.

The Sponsor reserves the right to change the amount of the concession or
agency commission from time to time.

Resales of Units of each Trust by dealers and others to the public will
be made at the Public Offering Price described in Part One of this
Prospectus. Certain commercial banks are making Units of the Trusts
available to their customers on an agency basis. A portion of the sales
charge paid by these customers is retained by or remitted to the banks
in the amounts indicated in the second preceding sentence. Under the
Glass-Steagall Act, banks are prohibited from underwriting Trust Units;
however, the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have not indicated that these particular
agency transactions are not permitted under such Act. In Texas and in
certain other states, any banks making Units available must be
registered as broker/dealers under state law.

What are the Sponsor's Profits?

The Underwriters of the Trusts, including the Sponsor, will receive a
maximum gross sales commission equal to that amount of the Public
Offering Price of the Units of the Trusts as specified in Part One, less
any reduced sales charge for quantity purchases as described under
"Public Offering-How is the Public Offering Price Determined?" 

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 each Trust) and the price at which Units are resold (which price is
also based on the bid prices of the Bonds in each Trust and includes a
maximum sales charge of 5.8% for the Insured Series or 4.7% for the
Laddered Series and the Global Series) or redeemed. The secondary market
public offering price of Units may be greater or less than the cost of
such Units to the Sponsor.

                         RIGHTS OF UNIT HOLDERS

How 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 three 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.

Page 26


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 for reasons other than to change the plan of distribution,
and to pay any governmental charge that may be imposed in connection
with each such transfer or exchange. For new certificates issued to
replace destroyed, stolen or lost certificates, the Unit holder may be
required to furnish indemnity satisfactory to the Trustee and pay such
expenses as the Trustee may incur. Mutilated certificates must be
surrendered to the Trustee for replacement.

How are Interest and Principal Distributed?

Interest from each Trust will be distributed on or shortly after the
Distribution Date appearing in Part One 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 a Trust will be net of applicable expenses for such
Trust.

The pro rata share of cash in the Principal Account of each Trust will
be computed as of the fifteenth day of each month, and distributions to
the Unit holders of such Trust as of such Record Date will be made on or
shortly after the Distribution Date appearing in Part One. Proceeds from
the disposition of any of the Bonds of such Trust (less any premiums due
with respect to Bonds in the Insured Series for which the Trustee has
exercised the right to obtain Permanent Insurance) received after such
Record Date and prior to the following Distribution Date will be held in
the Principal Account of such 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 a 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 a Trust unless
the amount available for distribution shall equal at least $1.00 per Unit.

The Trustee will credit to the Interest Account of each Trust all
interest received by such Trust, including that part of the proceeds
(including insurance proceeds if any, paid to a Trust in the Insured
Series) of any disposition of Bonds which represents accrued interest.
Other receipts will be credited to the Principal Account of such Trust.
The distribution to the Unit holders of a 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 such Trust
after deducting estimated expenses as is consistent with the
distribution plan chosen. Because interest payments are not received by
a 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 such Trust as of the Record Date. For the purpose of
minimizing fluctuations in the distributions from the Interest Account
of a Trust, the Trustee is authorized to advance such amounts as may be
necessary to provide interest distributions of approximately equal
amounts. The Trustee shall be reimbursed, without interest, for any such
advances from funds in the Interest Account of such Trust on the ensuing
Record Date. 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, under the applicable plan of
distribution. The Trustee is not required to pay interest on funds held
in the Principal or Interest Account of a 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 each Trust and, to the extent funds are not
sufficient therein, from the Principal Account of each Trust, amounts
necessary to pay the expenses of such 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 such
Trust. Amounts so withdrawn shall not be considered a part of such
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 a Trust such amounts as may be necessary to cover redemption of Units
of such Trust by the Trustee.

Record Dates for monthly distributions will be the fifteenth day of each
month and Record Dates for semi-annual distributions, if applicable,
will be the fifteenth day of June and December. Distributions will be
made on the Distribution Dates appearing in Part One for each Trust.

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

Page 27

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, if more than one distribution option is
offered, 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 each 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 a Trust of
record, a statement as to (1) the Interest Account: interest received by
such Trust (including amounts representing interest received upon any
disposition of Bonds of such Trust), the amount of such interest
representing insurance proceeds (if applicable), deductions for payment
of applicable taxes and for fees and expenses of such 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 such 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 such 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 such 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 or plans 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

Page 28

accompanied by proper instruments of transfer with signature guaranteed
as explained above (or by providing satisfactory indemnity, as in
connection with lost, stolen or destroyed certificates), and payment of
applicable governmental charges, if any. No redemption fee will be
charged. On the third business day following such tender, the Unit
holder will be entitled to receive in cash an amount for each Unit equal
to the Redemption Price per Unit next computed after receipt by the
Trustee of such tender of Units. The "date of tender" is deemed to be
the date on which Units are received by the Trustee (if such day is a
day on which the New York Stock Exchange is open for trading), except
that as regards Units received after 4:00 p.m. Eastern time (or as of
any earlier closing time on a day on which the New York Stock Exchange
is scheduled in advance to close at such earlier time), the date of
tender is the next day on which 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 a Trust or, if the balance
therein is insufficient, from the Principal Account of a Trust. All
other amounts paid on redemption shall be withdrawn from the Principal
Account of a Trust.

The Redemption Price per Unit (and the Secondary Market Public Offering
Price per Unit) will be determined on the basis of the bid price of the
Bonds in a Trust, as of the close of trading on the New York Stock
Exchange on the date any such determination is made. 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 a Trust or moneys in the
process of being collected, (2) the value of the Bonds in such 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)
interest accrued thereon, less (a) amounts representing taxes or other
governmental charges payable out of such Trust, (b) the accrued expenses
of such 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 such 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 such
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. In
determining the Redemption Price per Unit for a Trust in the Insured
Series, no value will be attributed to the portfolio insurance covering
the Bonds in such Trust unless such Bonds are in default in payment of
principal or interest or in significant risk of such default. On the
other hand, Bonds insured under a policy obtained by the Bond issuer,
the underwriters, the Sponsor or others are entitled to the benefits of
such insurance at all times and such benefits are reflected and included
in the market value of such Bonds. See "Why and How are the Trusts in
the Insured Series Insured?" For a description of the situations in
which the evaluator may value the insurance obtained by a Trust in the
Insured Series, see "Public Offering-How is the Public Offering Price
Determined?" 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.

The Trustee is empowered to sell underlying Bonds in a Trust in order to
make funds available for redemption. To the extent that Bonds are sold,
the size and diversity of such 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 Trustee may
obtain Permanent Insurance on the Bonds in a Trust in the Insured Series
covered by the Insurance Policy. Accordingly, any Bonds insured under
the Insurance Policy may be sold on an insured basis (as will Preinsured
Bonds).

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 29


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 Trusts?

The Trustee is empowered to sell, for the purpose of redeeming Units
tendered by any Unit holder and for the payment of expenses for which
funds may not be available, such of the Bonds in each Trust on a list
furnished by the Sponsor as the Trustee in its sole discretion may deem
necessary. As described in the following paragraph and in certain other
unusual circumstances for which it is determined by the Sponsor to be in
the best interests of the Unit holders or if there is no alternative,
the Trustee is empowered to sell Bonds in a Trust which are in default
in payment of principal or interest or in significant risk of such
default and for which value has been attributed to the insurance, if
any, obtained by the Trusts in the Insured Series. See "How May Units be
Redeemed?" The Sponsor is empowered, but not obligated, to direct the
Trustee to dispose of Bonds in a Trust in the event of advanced
refunding. The Sponsor may from time to time act as agent for a Trust
with respect to selling Bonds out of a 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, either pursuant to
the portfolio insurance, if any, or otherwise, 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, the
acquisition by a 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 $9 billion in First Trust
unit investment trusts have been deposited. The Sponsor's employees

Page 30

include a team of professionals with many years of experience in the
unit investment trust industry. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and Securities Investor
Protection Corporation and has its principal offices at 1001 Warrenville
Road, Lisle, Illinois 60532; telephone number (630) 241-4141. As of
December 31, 1996, the total partners' capital of Nike Securities L.P.
was $9,005,203 (audited). (This paragraph relates only to the Sponsor
and not to the 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 The Chase Manhattan Bank, with its principal executive
office located at 270 Park Avenue, New York, New York 10017 and its unit
investment trust office at 4 New York Plaza, 6th floor, New York, New
York 10004-2413. Unit holders who have questions regarding the Trusts
may call the Customer Service Help Line at 1-800-682-7520. The Trustee
is subject to supervision by the Superintendent of Banks of the State of
New York, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System.

The Trustee, whose duties are ministerial in nature, has not
participated in the selection of the portfolio or the Insurance Policies
of Trusts in the Insured Series. 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 a Trust which the Trustee may be required to pay under any present or
future law of the United States of America or of any other taxing
authority having jurisdiction. In addition, the Indenture contains other
customary provisions limiting the liability of the Trustee.

If the Sponsor shall fail to perform any of its duties under the
Indenture or become incapable of acting or become bankrupt or its
affairs are taken over by public authorities, then the Trustee may (a)
appoint a successor Sponsor at rates of compensation deemed by the
Trustee to be reasonable and not exceeding amounts prescribed by the
Securities and Exchange Commission, or (b) terminate the Indenture and
liquidate the Trust as provided herein, or (c) continue to act as
Trustee without terminating the Indenture.

Page 31


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 any
Trust issuable thereunder or to permit the deposit or acquisition of
securities either in addition to or in substitution for any of the Bonds
of any Trust initially deposited in a Trust, except for the substitution
of certain refunding securities for Bonds. In the event of any
amendment, the Trustee is obligated to notify promptly all Unit holders
of the substance of such amendment.

Each Trust may be liquidated at any time by consent of 100% of the Unit
holders of such Trust or by the Trustee when the value of such Trust, as
shown by any evaluation, is less than 20% of the aggregate principal
amount of the Bonds initially deposited in the Trust. 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 the
mandatory termination date specified in Part One of this Prospectus. In
the event of termination, written notice thereof will be sent by the
Trustee to all Unit holders of such Trust. Within a reasonable period
after termination, the Trustee will sell any Bonds remaining in such
Trust and, after paying all expenses and charges incurred by such Trust,
will distribute to each Unit holder of such 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 such 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, acts
as counsel for the Trustee and as special counsel for the Trusts for New
York tax matters.

Experts

The financial statements of each Trust appearing in Part One of this
Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon
appearing elsewhere herein and in the Registration Statement, and are
included in reliance upon such reports given upon the authority of such
firm as experts in accounting and auditing.

Page 32


                      DESCRIPTION OF BOND RATINGS*

Standard & Poor's. A brief description of the applicable Standard &
Poor's 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:

l.   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;

ll.  Nature of and provisions of the obligation;

lll. 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 to pay interest and repay
principal is extremely strong.**

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.

______________
*  As described by Standard & Poor's.

** Bonds insured by Financial Security Assurance, Inc., Capital Markets
   Assurance Corporation or AMBAC Assurance Corporation are automatically
   rated "AAA" by Standard & Poor's.

Page 33


Moody's. 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 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.

Duff & Phelps Credit Rating Company. A brief description of the
applicable Duff & Phelps Credit Rating Co. rating symbols and their
meanings follow:

These ratings represent a summary opinion of the issuer's long-term
fundamental quality. Rating determination is based on qualitative and
quantitative factors which may vary according to the basic economic and
financial characteristics of each industry and each issuer. Important
considerations are vulnerable to economic cycles as well as risks
related to such factors as competition, government action, regulation,
technological obsolescence, demand shifts, cost structure, and
management depth and expertise. The projected viability of the obligor
at the trough of the cycle is a critical determination.

AAA-Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA-High credit quality. Protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic conditions.

Page 34


A-Protection factors are average but adequate. However, risk factors are
more variable and greater in periods of economic stress.

BBB-Below average protection factors but still considered sufficient for
prudent investment. Considerable variability in risk during economic
cycles.

BB-Below investment grade but deemed likely to meet obligations when
due. Present or prospective financial protection factors fluctuate
according to industry conditions or company fortunes. Overall quality
may move up or down frequently within this category.

B-Below investment grade and possessing risk that obligations will not
be met when due. Financial protection factors will fluctuate widely
according to economic cycles, industry conditions and/or company
fortunes. Potential exists for frequent changes in the rating within
this category or into a higher or lower rating grade.

CCC-Well below investment grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred
dividends. Protection factors are narrow and risk can be substantial
with unfavorable economic/industry conditions, and/or with unfavorable
company developments.

DD-Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.

Page 35


CONTENTS:

The First Trust Special Situations Trust                     
The First Trust Insured Corporate Trust Series:              
First Trust Corporate Income Trust, Laddered Series:         
Global Corporate Income Trust, Intermediate Series:          
What is The First Trust Special Situations Trust?          3 
What are Certain Risks of an Investment                      
    in Foreign Issuers?                                    9 
What are Estimated Long-Term Return                          
    and Estimated Current Return?                         10 
How is Accrued Interest Treated?                          10 
Why and How are the Trusts in the                            
    Insured Series Insured?                               11 
Are Unit Holders Compensated for                             
    Foreign Withholding Tax Risks?                        11 
What is the Federal Tax Status of Unit Holders?           17 
What are the Expenses and Charges?                        18 
Public Offering:                                             
    How is the Public Offering Price Determined?          21 
    How are Units Distributed?                            23 
    What are the Sponsor's Profits?                       26 
Rights of Unit Holders:                                      
    How are Certificates Issued and Transferred?          26 
    How are Interest and Principal Distributed?           27 
    How Can Distributions to Unit Holders                    
        be Reinvested?                                    28 
    What Reports Will Unit Holders Receive?               28 
    How May Units be Redeemed?                            28 
    How May Units be Purchased by the Sponsor?            30 
    How May Bonds be Removed from the Trusts?             30 
Information as to Sponsor, Trustee and Evaluator:            
    Who is the Sponsor?                                   30 
    Who is the Trustee?                                   31 
    Limitations on Liabilities of Sponsor and Trustee     31 
    Who is the Evaluator?                                 32 
Other Information:                                           
    How May the Indenture be Amended or Terminated?       32 
    Legal Opinions                                        32 
    Experts                                               32 
Description of Bond Ratings                               33 

                                ___________

This Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, securities in any jurisdiction to any person to whom
it is not lawful to make such offer in such jurisdiction.

This Prospectus does not contain all the information set forth in the
registration statements and exhibits relating thereto, which the Fund
has filed with the Securities and Exchange Commission, Washington, D.C.
under the Securities Act of 1933 and the Investment Company Act of 1940,
and to which reference is hereby made.

                      PLEASE RETAIN THIS PROSPECTUS
                          FOR FUTURE REFERENCE

                   FIRST TRUST (registered trademark)

               THE FIRST TRUST INSURED CORPORATE TRUST SERIES
            FIRST TRUST CORPORATE INCOME TRUST, LADDERED SERIES
             GLOBAL CORPORATE INCOME TRUST, INTERMEDIATE SERIES

                             The First Trust
                        Special Situations Trust

                               Prospectus
                                Part Two
                             August 29, 1997

                 First Trust (registered trademark)
                    1001 Warrenville Road, Suite 300
                          Lisle, Illinois 60532
                             1-630-241-4141

                                Trustee:

                        The Chase Manhattan Bank
                       4 New York Plaza, 6th floor
                      New York, New York 10004-2413
                             1-800-682-7520

                          THIS PART TWO MUST BE
                        ACCOMPANIED BY PART ONE.

Page 36



              CONTENTS OF POST-EFFECTIVE AMENDMENT
                    OF REGISTRATION STATEMENT
                                
     
     This  Post-Effective  Amendment  of  Registration  Statement
comprises the following papers and documents:

                          The facing sheet

                          The prospectus

                          The signatures

                          The Consent of Independent Auditors

                          Financial Data Schedule














                               S-1
                           SIGNATURES
     
     Pursuant to the requirements of the Securities Act of  1933,
the  Registrant, THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES
97 FIRST TRUST CORPORATE INCOME TRUST, LADDERED SERIES, certifies
that  it meets all of the requirements for effectiveness of  this
Registration  Statement  pursuant  to  Rule  485(b)   under   the
Securities  Act  of 1933 and has duly caused this  Post-Effective
Amendment  of  its  Registration Statement to be  signed  on  its
behalf  by  the  undersigned thereunto  duly  authorized  in  the
Village of Lisle and State of Illinois on October 31, 1997.
                              
                     THE FIRST TRUST SPECIAL SITUATIONS TRUST,
                       SERIES 97
                     FIRST TRUST CORPORATE INCOME TRUST,
                       LADDERED SERIES
                                                            (Registrant)
                     By         NIKE SECURITIES L.P.
                                                             (Depositor)
                     
                     
                     By         Robert M. Porcellino
                                Vice President
     
     Pursuant to the requirements of the Securities Act of  1933,
this  Post-Effective Amendment of Registration Statement has been
signed  below by the following person in the capacity and on  the
date indicated:

Signature                  Title                      Date

Robert D. Van Kampen    Director of       )
                      Nike Securities     )
                        Corporation,      )    October 31, 1997
                    the General Partner   )
                  of Nike Securities L.P. )
                                          )
                                          )  Robert M. Porcellino
David J. Allen        Director of Nike    )    Attorney-in-Fact**
                  Securities Corporation,
                   the Genral Partner of
                    Nike Securities L.P.

*The  title of the person named herein represents his capacity in
   and relationship to Nike Securities L.P., Depositor.

**An  executed  copy of the related power of attorney  was  filed
   with  the  Securities  and Exchange Commission  in  connection
   with  the  Amendment  No. 1 to Form S-6  of  The  First  Trust
   Combined  Series  258  (File No. 33-63483)  and  the  same  is
   hereby incorporated herein by this reference.

                               S-2
                 CONSENT OF INDEPENDENT AUDITORS
                                

We  consent  to  the  reference to our  firm  under  the  caption
"Experts" and to the use of our report dated September  19,  1997
in  this  Post-Effective Amendment to the Registration  Statement
and  related  Prospectus  of The First Trust  Special  Situations
Trust dated October 28, 1997.



                                        ERNST & YOUNG LLP





Chicago, Illinois
October 27, 1997
                                

                                




<TABLE> <S> <C>

<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
Post Effective Amendment to form S-6 and is qualified in its entirety
by reference to such Post Effective Amendment to form S-6.
</LEGEND>
<SERIES>
   <NUMBER> 001
   <NAME> CORPORATE INCOME LADDERED TRUST SERIES
<MULTIPLIER> 1
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          JUN-30-1997
<PERIOD-START>                             JUL-01-1996
<PERIOD-END>                               JUN-30-1997
<INVESTMENTS-AT-COST>                        7,778,441
<INVESTMENTS-AT-VALUE>                       8,118,505
<RECEIVABLES>                                  203,340
<ASSETS-OTHER>                                  10,916
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                               8,332,761
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                      169,305
<TOTAL-LIABILITIES>                            169,305
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                     7,778,441
<SHARES-COMMON-STOCK>                            9,051
<SHARES-COMMON-PRIOR>                           10,656
<ACCUMULATED-NII-CURRENT>                       44,951
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                              0
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                       340,064
<NET-ASSETS>                                 8,163,456
<DIVIDEND-INCOME>                                    0
<INTEREST-INCOME>                              678,546
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                  24,865
<NET-INVESTMENT-INCOME>                        653,681
<REALIZED-GAINS-CURRENT>                        60,593
<APPREC-INCREASE-CURRENT>                      (8,656)
<NET-CHANGE-FROM-OPS>                          705,618
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                      655,909
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                              0
<NUMBER-OF-SHARES-REDEEMED>                      1,605
<SHARES-REINVESTED>                                  0
<NET-CHANGE-IN-ASSETS>                     (1,395,398)
<ACCUMULATED-NII-PRIOR>                         40,543
<ACCUMULATED-GAINS-PRIOR>                            0
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                                0
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                      0
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