Registration No. 33-53637
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to Form S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES
OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust:
The First Trust Special Situations Trust, Series 98
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
NIKE SECURITIES L.P.
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agent for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
E. Title and Amount of Securities Being Registered:
An indefinite number of Units pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended
F. Proposed Maximum Aggregate Offering Price to the Public of
the Securities Being Registered:
Indefinite
G. Amount of Filing Fee (as required by Rule 24f-2):
$500.00*
H. Approximate date of proposed sale to public:
|XXX|Check box if it is proposed that this filing will become
effective on May 25, 1994 at 2:00 p.m. pursuant to Rule 487.
*Previously paid
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 98
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust Prospectus front cover
(b) Title of securities issued Summary of Essential
Information
2. Name and address of each depositor Information as to
Sponsor, Trustee and
Evaluator
3. Name and address of trustee Information as to
Sponsor, Trustee and
Evaluator
4. Name and address of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
5. State of organization of trust The First Trust
Special Situations
Trust
6. Execution and termination of Other Information
trust agreement
7. Changes of name *
8. Fiscal year *
9. Litigation *
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer Public Offering
securities
(b) Cumulative or distributive The First Trust
securities Special Situations
Trust
(c) Redemption Rights of Unitholders
(d) Conversion, transfer, etc. Rights of Unitholders
(e) Periodic payment plan *
(f) Voting rights Rights of Unitholders
(g) Notice of certificateholders Other Information
(h) Consents required Rights of Unitholders;
Other Information
(i) Other provisions The First Trust
Special Situations
Trust
11. Types of securities comprising The First Trust
units Special
Situations Trust
Schedule of
Investments
12. Certain information regarding
periodic payment certificates *
13. (a) Load, fees, expenses, etc. Summary of Essential
Information; Public
Offering; The First
Trust Special
Situations Trust
(b) Certain information regarding
periodic payment certificates *
(c) Certain percentages Summary of Essential
Information; The
First Trust Special
Situations Trust;
Public Offering
(d) Certain other fees, etc.
payable by holders Rights of Units
Holders
(e) Certain profits receivable
by depositor, principal,
underwriters, trustee or The First Trust
affiliated persons Special
Situations Trust
(f) Ratio of annual charges *
to income
14. Issuance of trust's securities Rights of Unit Holders
15. Receipt and handling of payments
from purchasers *
16. Acquisition and disposition of
underlying securities The First Trust
Special Situations
Trust; Rights of Unit
Holders;
17. Withdrawal or redemption The First Trust
Special Situations
Trust; Public
Offering; Rights of
Unit Holders
18. (a) Receipt, custody and Rights of Unit Holders
disposition of income
(b) Reinvestment of distributions Rights of Unit Holders
(c) Reserves or special funds Information as to
Sponsor, Trustee and
Evaluator
(d) Schedule of distributions *
19. Records, accounts and reports Rights of Unit Holders
20. Certain miscellaneous provisions
of trust agreement
(a) Amendment Other Information
(b) Termination Other Information
(c) and (d) Trustee, removal Information as
and successor to Sponsor, Trustee
and Evaluator
(e) and (f) Depositor, removal Information as
and successor to Sponsor, Trustee
and Evaluator
21. Loans to security holders *
22. Limitations on liability The First Trust
Special Situations
Trust;
Information as to
Sponsor, Trustee
and Evaluator
23. Bonding arrangements Contents of
Registration
Statement
24. Other material provisions *
of trust agreement
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor Information as to
Sponsor, Trustee and
Evaluator
26. Fees received by depositor *
27. Business of depositor Information as to
Sponsor, Trustee and
Evaluator
28. Certain information as to
officials and affiliated *
persons of depositor
29. Voting securities of depositor *
30. Persons controlling depositor *
31. Payment by depositor for certain
services rendered to trust *
32. Payment by depositor for certain
other services rendered to trust *
33. Remuneration of employees of
depositor for certain services
rendered to trust *
34. Remuneration of other persons
for certain services rendered *
to trust
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's Public Offering
securities by states
36. Suspension of sales of trust's
securities *
37. Revocation of authority to *
distribute
38. (a) Method of distribution Public Offering
(b) Underwriting agreements Public Offering
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as
underwriters to Sponsor, Trustee
and Evaluator
(b) N.A.S.D. membership of
principal underwriters Information as to
Sponsor, Trustee and
Evaluator
40. Certain fees received by See Items 13(a) and
principal underwriters 13(e)
41. (a) Business of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) Branch offices of
principal underwriters *
(c) Salesmen of principal *
underwriters
42. Ownership of trust's securities
by certain persons *
43. Certain brokerage commissions
received by principal *
underwriters
44. (a) Method of valuation Summary of Essential
Information; The
First Trust Special
Situations Trust,
Public Offering
(b) Schedule as to offering *
price
(c) Variation in offering Public Offering
price to certain persons
45. Suspension of redemption rights *
46. (a) Redemption valuation Rights of Unit Holders
(b) Schedule as to redemption *
price
47. Maintenance of position in Public Offering;
underlying securities Rights
of Unit Holders
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of Information as
trustee to Sponsor, Trustee
and Evaluator
49. Fees and expenses of trustee The First Trust
Special Situations
Trust
50. Trustee's lien The First Trust
Special Situations
Trust
VI. INFORMATION CONCERNING THE INSURANCE OF HOLDERS OF
SECURITIES
51. Insurance of holders of
trust's ecurities *
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust The First Trust
agreement with respect to Special
selection or elimination of Situations Trust;
underlying securities Rights of Unit Holders
(b) Transactions involving
elimination of underlying *
securities
(c) Policy regarding substitution The First Trust
or elimination of underlying Special
securities Situations Trust;
Rights of Unit Holders
(d) Fundamental policy not
otherwise covered *
53. Tax status of Trust The First Trust
Special Situations
Trust
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during *
last ten years
55.
56.
57. Certain information regarding
period payment certificates *
58.
59. Financial statements Report of Independent
(Instruction 1(c) to Auditors
Form S-6) Statement of Net
Assets
* Inapplicable, answer negative or not required.
Pharmaceutical Growth & Treasury Securities Trust, Series 2
Growth & Value Trust, Pharmaceutical Series 2
The First Trust(registered trademark) Special Situations Trust,
Series 98 consists of the underlying separate unit investment
trusts set forth above. The various trusts are sometimes collectively
referred to herein as the "Trusts." The Pharmaceutical Growth
& Treasury Securities Trust, Series 2 is sometimes individually
referred to herein as the "Growth & Treasury Trust." The Growth
& Value Trust, Pharmaceutical Series 2 is sometimes individually
referred to herein as the "Growth Trust."
The Growth & Treasury Trust consists of "zero coupon" U.S. Treasury
bonds and common stocks (the Growth Trust consists only of common
stocks) of pharmaceutical companies, including common stocks of
foreign issuers in American Depositary Receipt ("ADR") form, which
are considered, in the view of the Sponsor, to be undervalued
at the Initial Date of Deposit. See "What are Equity Securities?"
The objective of the Growth & Treasury Trust is to protect Unit
holders' capital and provide income and potential capital appreciation
by investing a portion of its portfolio in "zero coupon" U.S.
Treasury bonds ("Treasury Obligations") and the remainder of the
Trust's portfolio in common stocks issued by pharmaceutical companies
which are considered, in the view of the Sponsor, to be undervalued
at the Initial Date of Deposit ("Equity Securities"). Collectively,
the Treasury Obligations and the Equity Securities are referred
to herein as the "Securities." See "Schedule of Investments" for
the Growth & Treasury Trust. The Growth & Treasury Trust has a
Mandatory Termination Date (the "Mandatory Termination Date" or
"Trust Ending Date") as set forth under "Summary of Essential
Information." 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.
The guarantee of the U.S. Government does not apply to the market
value of the Treasury Obligations or the Units of the Trust, whose
net asset value will fluctuate and, prior to maturity, may be
worth more or less than a purchaser's acquisition cost. There
is, of course, no guarantee that the objective of the Growth &
Treasury Trust will be achieved.
The objective of the Growth Trust is to provide income and potential
capital appreciation by investing the Trust's portfolio in common
stocks issued by pharmaceutical companies which are considered,
in the view of the Sponsor, to be undervalued at the Initial Date
of Deposit ("Equity Securities"). Such Equity Securities are sometimes
also referred to herein as the "Securities." Each Unit of the
Growth Trust represents an undivided fractional interest in all
the Equity Securities deposited in the Trust. See "Schedule of
Investments" for the Growth Trust. The Growth Trust has a Mandatory
Termination Date as set forth under "Summary of Essential Information."
There is, of course, no guarantee that the objective of the Growth
Trust will be achieved.
Each Unit of the Growth & Treasury Trust represents an undivided
fractional interest in all the Securities deposited in the Trust.
The Growth & Treasury Trust has been organized so that purchasers
of Units should receive, at the termination of the Trust, an amount
per Unit at least equal to $10.00 (which is equal to the per Unit
value upon maturity of the Treasury Obligations), even if such
Trust never paid a dividend and the value of the Equity Securities
were to decrease to zero, which the Sponsor considers highly unlikely.
This feature of the Growth & Treasury Trust provides Unit holders
who purchase Units at a price of $10.00 or less per Unit
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
First Trust(registered trademark)
The date of this Prospectus is May 25, 1994
Page 1
with total principal protection, including any sales charges paid,
although they might forego any earnings on the amount invested.
To the extent that Units are purchased at a price less than $10.00
per Unit, this feature may also provide a potential for capital
appreciation. UNIT HOLDERS DISPOSING OF THEIR UNITS PRIOR TO THE
MATURITY OF THE TRUST MAY RECEIVE MORE OR LESS THAN $10.00 PER
UNIT, DEPENDING ON MARKET CONDITIONS ON THE DATE UNITS ARE SOLD
OR REDEEMED.
The Treasury Obligations deposited in the Growth & Treasury Trust
on the Initial Date of Deposit will mature on November 15, 2004
(the "Treasury Obligations Maturity Date"). The Treasury Obligations
in the Growth & Treasury Trust have a maturity value equal to
or greater than the aggregate Public Offering Price (which includes
the sales charge) of the Units of the Trust on the Initial Date
of Deposit. The Equity Securities deposited in the Trust's portfolio
have no fixed maturity date and the value of these underlying
Equity Securities will fluctuate with changes in the values of
stocks in general and with changes in the conditions and performance
of the specific Securities owned by the Trust. See "Portfolio."
With respect to the Growth & Treasury Trust, the Sponsor may,
from time to time during a period of up to approximately 360 days
after the Initial Date of Deposit, deposit additional Securities
in the Trust, provided it maintains the original percentage relationship
between the Treasury Obligations and Equity Securities in the
Trust's portfolio. Such deposits of additional Securities will,
therefore, be done in such a manner that the maturity value of
each Unit should always be an amount at least equal to $10.00,
and that the original proportionate relationship amongst the individual
issues of the Equity Securities in the Trust shall be maintained.
Any deposit by the Sponsor of additional Securities will duplicate,
as nearly as is practicable, the original proportionate relationship
established on the Initial Date of Deposit, and not the actual
proportionate relationship on the subsequent date of deposit,
since the actual proportionate relationship may be different than
the original proportionate relationship. Any such difference may
be due to the sale, redemption or liquidation of any Securities
deposited in the Trust on the Initial, or any subsequent, Date
of Deposit. See "What is the First Trust Special Situations Trust?"
and "How May Securities be Removed from the Trusts?"
With respect to the Growth Trust, the Sponsor may, from time to
time during a period of up to approximately 360 days after the
Initial Date of Deposit, deposit additional Equity Securities
in the Trust. Such deposits of additional Equity Securities will,
therefore, be done in such a manner that the original proportionate
relationship amongst the individual issues of the Equity Securities
shall be maintained. Any deposit by the Sponsor of additional
Equity Securities will duplicate, as nearly as is practicable,
the original proportionate relationship established on the Initial
Date of Deposit, and not the actual proportionate relationship
on the subsequent date of deposit, since the actual proportionate
relationship may be different than the original proportionate
relationship. Any such difference may be due to the sale, redemption
or liquidation of any Equity Securities deposited in the Trust
on the Initial, or any subsequent, Date of Deposit. See "What
is The First Trust Special Situations Trust?" and "How May Securities
be Removed from the Trusts?"
Public Offering Price. With respect to the Growth & Treasury Trust,
the Public Offering Price per Unit of the Trust during the initial
offering period is equal to a pro rata share of the offering prices
of the Treasury Obligations and the aggregate underlying value
of the Equity Securities in the Trust (generally determined by
the closing sale prices of listed Equity Securities and the ask
prices of over-the-counter traded Equity Securities) plus or minus
a pro rata share of cash, if any, in the Capital and Income Accounts
of the Trust, plus a maximum sales charge of 5.5% (equivalent
to 5.820% of the net amount invested). A pro rata share of accumulated
dividends, if any, in the Income Account is included in the Public
Offering Price. The secondary market Public Offering Price per
Unit will be based upon a pro rata share of the bid prices of
the Treasury Obligations and the aggregate underlying value of
the Equity Securities in the Trust (generally determined by the
closing sale prices of listed Equity Securities and the bid prices
of over-the-counter traded Equity Securities) plus or minus a
pro rata share of cash, if any, in the Capital and Income Accounts
of the Trust plus a maximum sales charge of 5.5% (equivalent to
5.820% of the net amount invested) subject to a reduction beginning
June 1, 1995.
With respect to the Growth Trust, the Public Offering Price per
Unit of the Trust during the initial offering period is equal
to the aggregate underlying value of the Equity Securities in
the Trust (generally determined by the closing sale prices of
listed Equity Securities and the ask prices of over-the-counter
traded Equity Securities)
Page 2
plus or minus a pro rata share of cash, if any, in the Capital
and Income Accounts of the Trust, plus a maximum sales charge
of 4.9% (equivalent to 5.152% of the net amount invested). A pro
rata share of accumulated dividends, if any, in the Income Account
is included in the Public Offering Price. The secondary market
Public Offering Price per Unit will be based upon the aggregate
underlying value of the Equity Securities in the Trust (generally
determined by the closing sale prices of listed Equity Securities
and the bid prices of over-the-counter traded Equity Securities)
plus or minus a pro rata share of cash, if any, in the Capital
and Income Accounts of the Trust plus a maximum sales charge of
4.9% (equivalent to 5.152% of the net amount invested) subject
to a reduction beginning June 1, 1995.
The minimum purchase for each Trust is $1,000. The sales charge
is reduced on a graduated scale for sales involving at least 10,000
Units with respect to the Growth & Treasury Trust and 5,000 Units
with respect to the Growth Trust. See "How is the Public Offering
Price Determined?"
Dividend and Capital Gains Distributions. Distributions of dividends
received, and realized capital gains, if any, received by each
Trust will be paid in cash on the Distribution Date to Unit holders
of record on the Record Date as set forth in the "Summary of Essential
Information." Any distribution of income and/or capital gains
will be net of the expenses of such Trust. Distribution of funds
in the Capital Account, if any, will be made at least annually
in December of each year. Income with respect to the accrual of
original issue discount on the Treasury Obligations in the Growth
& Treasury Trust will not be distributed currently, although Unit
holders of the Growth & Treasury Trust will be subject to income
tax at ordinary income rates as if a distribution had occurred. INCOME
WITH RESPECT TO THE ACCRUAL OF ORIGINAL ISSUE DISCOUNT ON THE
TREASURY OBLIGATIONS IN THE GROWTH & TREASURY TRUST WILL NOT BE
DISTRIBUTED CURRENTLY, ALTHOUGH UNIT HOLDERS OF THE GROWTH & TREASURY
TRUST WILL BE SUBJECT TO INCOME TAX AT ORDINARY INCOME RATES AS
IF A DISTRIBUTION HAD OCCURRED. See "What is the Federal Tax Status
of Unit Holders?" Additionally, upon termination of each Trust,
the Trustee will distribute, upon surrender of Units for redemption,
to each Unit holder his pro rata share of such Trust's assets,
less expenses, in the manner set forth under "Rights of Unit Holders-How
are Income and Capital Distributed?"
Secondary Market for Units. After the initial offering period,
while under no obligation to do so, the Sponsor may maintain a
market for Units of each Trust and offer to repurchase such Units,
in the case of the Growth & Treasury Trust, at prices which are
based on the aggregate bid side evaluation of the Treasury Obligations
and the aggregate underlying value of Equity Securities in the
Trust (generally determined by the closing sale prices of listed
Equity Securities and the bid prices of over-the-counter traded
Equity Securities) plus or minus cash, if any, in the Capital
and Income Accounts of the Trust; in the case of the Growth Trust,
at prices which are based on the aggregate underlying value of
the Equity Securities in the Trust (generally determined by the
closing sale prices of listed Equity Securities and the bid prices
of over-the-counter traded Equity Securities) plus or minus cash,
if any, in the Capital and Income Accounts of the Trust. If a
secondary market is maintained during the initial offering period,
in the case of the Growth & Treasury Trust, the prices at which
Units will be repurchased will be based upon the aggregate offering
side evaluation of the Treasury Obligations and the aggregate
underlying value of the Equity Securities in the Trust (generally
determined by the closing sale prices of listed Equity Securities
and the ask prices of over-the-counter traded Equity Securities)
plus or minus cash, if any, in the Capital and Income Accounts
of the Trust. In the case of the Growth Trust, if a secondary
market is maintained during the initial offering period, the prices
at which Units will be repurchased will also be based on the aggregate
underlying value of the Equity Securities in the Trust (generally
determined by the closing sale prices of listed Equity Securities
and the ask prices of over-the-counter traded Equity Securities)
plus or minus cash, if any, in the Capital and Income Accounts
of the Trust. If a secondary market is not maintained, a Unit
holder may redeem Units of the Growth & Treasury Trust through
redemption at prices based upon the aggregate bid price of the
Treasury Obligations plus the aggregate underlying value of the
Equity Securities in the Trust (generally determined by the closing
sale prices of listed Equity Securities and the bid prices of
over-the-counter traded Equity Securities) plus or minus a pro
rata share of cash, if any, in the Capital and Income Accounts
of the Trust. In the case of the Growth Trust, if a secondary
market is not maintained, a Unit holder may redeem Units through
redemption at prices based on the aggregate underlying value of
the Equity Securities in the Trust (generally determined by the
closing sale prices of listed Equity Securities and the bid prices
of over-the-counter traded Equity Securities) plus or minus cash,
if any, in the Capital and Income Accounts of
Page 3
the Trust. With respect to the Growth Trust, a Unit holder tendering
2,500 Units or more for redemption may request a distribution
of shares of Equity Securities (reduced by customary transfer
and registration charges) in lieu of payment in cash. See "How
May Units be Redeemed?"
Termination. Commencing on the Treasury Obligations Maturity Date
for the Growth & Treasury Trust and on the Mandatory Termination
Date for the Growth Trust, Equity Securities will begin to be
sold in connection with the termination of each Trust. The Sponsor
will determine the manner, timing and execution of the sale of
the Equity Securities. Written notice of any termination of a
Trust specifying the time or times at which Unit holders may surrender
their certificates for cancellation shall be given by the Trustee
to each Unit holder at his address appearing on the registration
books of such Trust maintained by the Trustee. At least 60 days
prior to the Treasury Obligations Maturity Date for the Growth
& Treasury Trust and at least 60 days prior to the Mandatory Termination
Date for the Growth Trust, the Trustee will provide written notice
thereof to all Unit holders and will include with such notice
a form to enable Unit holders to elect a distribution of shares
of Equity Securities (reduced by customary transfer and registration
charges) if such Unit holder owns at least 2,500 Units of such
Trust, rather than to receive payment in cash for such Unit holder's
pro rata share of the amounts realized upon the disposition by
the Trustee of Equity Securities. All Unit holders of the Growth
& Treasury Trust will receive their pro rata portion of the Treasury
Obligations in cash upon the termination of the Trust. To be effective,
the election form, together with surrendered certificates and
other documentation required by the Trustee, must be returned
to the Trustee at least five business days prior to the Treasury
Obligations Maturity Date for the Growth & Treasury Trust, and
at least five business days prior to the Mandatory Termination
Date for the Growth Trust. Unit holders not electing a distribution
of shares of Equity Securities will receive a cash distribution
from the sale of the remaining Securities within a reasonable
time after each Trust is terminated. See "Rights of Unit Holders-How
are Income and Capital Distributed?"
Page 4
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities-May 25, 1994
Sponsor: Nike Securities L.P.
Trustee: United States Trust Company of New York
Evaluator: Securities Evaluation Service, Inc.
<TABLE>
<CAPTION>
Pharmaceutical
Growth & Treasury
Securities Trust,
Series 2
_________________
General Information
<S> <C>
Aggregate Maturity Value of Treasury Obligations Initially Deposited $ 500,000
Initial Number of Units 50,000
Fractional Undivided Interest in the Trust per Unit 1/50,000
Public Offering Price:
Aggregate Offering Price Evaluation of Securities in Portfolio (1) $ 463,106
Aggregate Offering Price Evaluation of Securities per Unit $ 9.2621
Sales Charge (2) $ .5391
Public Offering Price per Unit (3) $ 9.8012
Sponsor's Initial Repurchase Price per Unit $ 9.2621
Redemption Price per Unit (4) $ 9.2432
</TABLE>
CUSIP Number 33734W 517
First Settlement Date June 2, 1994
Treasury Obligations Maturity Date November 15, 2004
Mandatory Termination Date November 15, 2004
Trustee's Annual Fee $0.009 per Unit outstanding.
Evaluator's Annual Fee $0.003 per Unit outstanding.
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 each day on which
it is open.
Supervisory Fee Maximum of $0.0025 per Unit outstanding
annually payable to an affiliate of the
Sponsor.
Income Distribution Record Date Fifteenth day of each June
and December commencing December
15, 1994.
Income Distribution Date (5) Last day of each June and December
commencing December 31, 1994.
[FN]
________________
(1) Each Equity Security listed on a national securities exchange
or the NASDAQ National Market System is valued at the last closing
sale price, or if no such price exists or if the Equity Security
is not so listed, at the closing ask price thereof. The Treasury
Obligations are valued at their aggregate offering side evaluation.
(2) Sales charge of 5.5% of the Public Offering Price per Unit
(5.820% of the net amount invested).
(3) On the Initial Date of Deposit there will be no accumulated
dividends in the Income Account. Anyone ordering Units after such
date will pay a pro rata share of any accumulated dividends in
such Income Account. The Public Offering Price as shown reflects
the value of the Securities at the opening of business on the
Initial Date of Deposit and establishes the original proportionate
relationship amongst the individual securities. No sales to investors
will be executed at this price. Additional Securities will be
deposited during the day of the Initial Date of Deposit which
will be valued as of 4:00 p.m. Eastern time and sold to investors
at a Public Offering Price per Unit based on this valuation.
(4) Redemption price per Unit (based on bid price evaluation
of underlying Treasury Obligations and aggregate underlying value
of Equity Securities) is $.5580 less than the Public Offering
Price per Unit and $.0189 less than Sponsor's Initial Repurchase
Price per Unit. See "How May Units be Redeemed?"
(5) Distributions from the Capital Account will be made monthly
payable on the last day of the month to Unit holders of record
on the fifteenth day of such month if the amount available for
distribution equals at least $0.01 per Unit. Notwithstanding,
distributions of funds in the Capital Account, if any, will be
made in December of each year.
Page 5
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities-May 25, 1994
Sponsor: Nike Securities L.P.
Trustee: United States Trust Company of New York
Evaluator: Securities Evaluation Service, Inc.
<TABLE>
<CAPTION>
Growth
& Value Trust,
Pharmaceutical
Series 2
______________
General Information
<S> <C>
Initial Number of Units 50,000
Fractional Undivided Interest in the Trust per Unit 1/50,000
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities in Portfolio (1) $ 471,059
Aggregate Offering Price Evaluation per Unit $ 9.4212
Sales Charge (2) $ .4854
Public Offering Price per Unit (3) $ 9.9066
Sponsor's Initial Repurchase Price per Unit $ 9.4212
Redemption Price per Unit (4) $ 9.4212
</TABLE>
CUSIP Number 33734W 525
First Settlement Date June 2, 1994
Mandatory Termination Date June 1, 2001
Discretionary Liquidation Amount A Trust may be terminated if
the value thereof is less than
the lower of $2,000,000 or 20% of
the total value of Equity
Securities deposited in a
Trust during the primary
offering period.
Trustee's Annual Fee $0.009 per Unit outstanding.
Evaluator's Annual Fee $0.003 per Unit outstanding.
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 Maximum of $0.0025 per Unit outstanding
annually payable to an affiliate of the
Sponsor.
Income Distribution Record Date Fifteenth day of each March,
June, September and December commencing
September 15, 1994
Income Distribution Date (5) Last day of each March, June,
September and December commencing
September 30, 1994
[FN]
________________
(1) Each Equity Security listed on a national securities exchange
or the NASDAQ National Market System is valued at the last closing
sale price, or if no such price exists or if the Equity Security
is not so listed, at the closing ask price thereof.
(2) Sales charge of 4.9% of the Public Offering Price per Unit
(5.152% of the net amount invested).
(3) On the Initial Date of Deposit there will be no accumulated
dividends in the Income Account. Anyone ordering Units after such
date will pay a pro rata share of any accumulated dividends in
such Income Account. The Public Offering Price as shown reflects
the value of the Equity Securities at the opening of business
on the Initial Date of Deposit and establishes the original proportionate
relationship amongst the individual securities. No sales to investors
will be executed at this price. Additional Equity Securities will
be deposited during the day of the Initial Date of Deposit which
will be valued as of 4:00 p.m. Eastern time and sold to investors
at a Public Offering Price per Unit based on this valuation.
(4) Redemption price per Unit (based on the aggregate underlying
value of Equity Securities) is $.4854 less than Public Offering
Price per Unit. See "How May Units be Redeemed?"
(5) Distributions from the Capital Account will be made monthly
payable on the last day of the month to Unit holders of record
on the fifteenth day of such month if the amount available for
distribution equals at least $0.01 per Unit. Notwithstanding,
distributions of funds in the Capital Account, if any, will be
made in December of each year.
Page 6
PHARMACEUTICAL GROWTH & TREASURY SECURITIES TRUST, SERIES 2
GROWTH & VALUE TRUST, PHARMACEUTICAL SERIES 2
The First Trust Special Situations Trust, Series 98
What is The First Trust Special Situations Trust?
The First Trust Special Situations Trust, Series 98 is one of
a series of investment companies created by the Sponsor under
the name of The First Trust Special Situations Trust, all of which
are generally similar but each of which is separate and is designated
by a different series number. This Series consists of the underlying
separate unit investment trusts designated as: Pharmaceutical
Growth & Treasury Securities Trust, Series 2, and Growth & Value
Trust, Pharmaceutical Series 2 (collectively, the "Trusts" and
each, individually, a "Trust"). The Pharmaceutical Growth & Treasury
Securities Trust, Series 2 is sometimes individually referred
to herein as the "Growth & Treasury Trust." The Growth & Value
Trust, Pharmaceutical Series 2 is sometimes individually referred
to herein as the "Growth Trust." The Series was created under
the laws of the State of New York pursuant to a Trust Agreement
(the "Indenture"), dated the Initial Date of Deposit, with Nike
Securities L.P., as Sponsor, United States Trust Company of New
York, as Trustee, Securities Evaluation Service, Inc., as Evaluator,
and First Trust Advisors L.P., as Portfolio Supervisor.
The Pharmaceutical Growth & Treasury Securities Trust, Series
2 consists of a portfolio containing "zero coupon" bonds and common
stocks issued by pharmaceutical companies, including common stock
of foreign issuers in American Depositary Receipt ("ADR") form.
See "What are Equity Securities?" The Growth & Value Trust, Pharmaceutical
Series 2 consists of a portfolio containing only common stocks
issued by pharmaceutical companies, including common stock of
foreign issuers in American Depositary Receipt ("ADR") form. See
"What are Equity Securities?"
On the Initial Date of Deposit, the Sponsor deposited with the
Trustee confirmations of contracts for the purchase of "zero coupon"
U.S. Treasury bonds and common stocks (in the case of the Growth
Trust, only confirmations of contracts for the purchase of common
stocks), together with an irrevocable letter or letters of credit
of a financial institution in an amount at least equal to the
purchase price of such securities. In exchange for the deposit
of securities or contracts to purchase securities in each Trust,
the Trustee delivered to the Sponsor documents evidencing the
entire ownership of each Trust.
The objective of the Growth & Treasury Trust is to protect Unit
holders' capital and provide income and potential capital appreciation
by investing a portion of its portfolio in "zero coupon" U.S.
Treasury bonds ("Treasury Obligations") and the remainder of the
Trust's portfolio in common stocks issued by pharmaceutical companies
which are considered, in the view of the Sponsor, to be undervalued
at the Initial Date of Deposit ("Equity Securities"). Collectively,
the Treasury Obligations and the Equity Securities are referred
to herein as the "Securities." See "Schedule of Investments" for
the Growth & Treasury Trust. The Growth & Treasury Trust has a
Mandatory Termination Date as set forth under "Summary of Essential
Information." 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.
The guarantee of the U.S. Government does not apply to the market
value of the Treasury Obligations or the Units of the Trust, whose
net asset values will fluctuate and, prior to maturity, may be
worth more or less than a purchaser's acquisition cost. There
is, of course, no guarantee that the objective of the Growth &
Treasury Trust will be achieved.
The objective of the Growth Trust is to provide income and potential
capital appreciation by investing the Trust's portfolio in common
stocks issued by pharmaceutical companies which are considered,
in the view of the Sponsor, to be undervalued at the Initial Date
of Deposit ("Equity Securities"). Such Equity Securities are sometimes
also referred to herein as the "Securities." Each Unit of the
Growth Trust represents an undivided fractional interest in all
the Equity Securities deposited in the Trust. See "Schedule of
Investments" for the Growth Trust. The Growth Trust has a Mandatory
Termination Date as set forth under "Summary of Essential Information."
There is, of course, no guarantee that the objective of the Growth
Trust will be achieved.
With the deposit of the Securities in the Growth & Treasury Trust
on the Initial Date of Deposit, the Sponsor established a percentage
relationship between the principal amounts of Treasury Obligations
and Equity
Page 7
Securities in the Trust's portfolio. With respect to the Growth
Trust, with the deposit of Equity Securities on the Initial Date
of Deposit, the Sponsor established a percentage relationship
between the amounts of Equity Securities in the Trust's portfolio.
From time to time following the Initial Date of Deposit, the Sponsor,
pursuant to the Indenture, may deposit additional Securities in
a Trust and Units may be continuously offered for sale to the
public by means of this Prospectus, resulting in a potential increase
in the outstanding number of Units of a Trust. Any additional
Securities deposited in the Growth & Treasury Trust will maintain,
as nearly as is practicable, the original proportionate relationship
of the Treasury Obligations and Equity Securities in such Trust's
portfolio. Any additional Equity Securities deposited in the Growth
Trust will maintain, as nearly as is practicable, the original
proportionate relationship of the Equity Securities in the Trust's
portfolio. Such deposits of additional Securities in the Growth
& Treasury Trust will, therefore, be done in such a manner that
the maturity value of the Treasury Obligations represented by
each Unit should always be an amount at least equal to $10.00,
and that the original proportionate relationship amongst the individual
issues of the Equity Securities shall be maintained. Any deposit
by the Sponsor of additional Securities in a Trust will duplicate,
as nearly as is practicable, the original proportionate relationship
and not the actual proportionate relationship on the subsequent
date of deposit, since the actual proportionate relationship may
be different than the original proportionate relationship. Any
such difference may be due to the sale, redemption or liquidation
of any of the Securities deposited in a Trust on the Initial,
or any subsequent, Date of Deposit. See "How May Securities be
Removed from the Trusts?" On a cost basis to the Pharmaceutical
Growth & Treasury Securities Trust, Series 2, the original percentage
relationship on the Initial Date of Deposit was approximately
50.70% Treasury Obligations and approximately 49.30% Equity Securities.
The original percentage relationship of each Equity Security in
the Trusts is set forth herein under "Schedules of Investments."
Since the prices of the underlying Treasury Obligations and Equity
Securities in the Growth & Treasury Trust will fluctuate daily,
the ratio, on a market value basis, will also change daily. Likewise,
the prices of the underlying Equity Securities in the Growth Trust
will fluctuate daily and the ratio, on a market value basis,will
also change daily. The maturity value of the Treasury Obligations
and the portion of Equity Securities represented by each Unit
of the Growth & Treasury Trust will not change as a result of
the deposit of additional Securities in the Growth & Treasury
Trust. The portion of Equity Securities represented by each Unit
of the Growth Trust will not change as a result of the deposit
of additional Equity Securities in the Growth Trust.
On the Initial Date of Deposit, each Unit of a Trust represented
the undivided fractional interest in the Securities deposited
in such Trust set forth under "Summary of Essential Information."
The Growth & Treasury Trust has been organized so that purchasers
of Units should receive, at the termination of the Trust, an amount
per Unit at least equal to $10.00 per Unit (which is equal to
the per Unit value upon maturity of the Treasury Obligations),
even if the Equity Securities never paid a dividend and the value
of the Equity Securities in the Trust were to decrease to zero,
which the Sponsor considers highly unlikely. Furthermore, the
Sponsor will take such steps in connection with the deposit of
additional Securities in the Growth & Treasury Trust as are necessary
to maintain a maturity value of the Units of the Trust at least
equal to $10.00 per Unit. The receipt of only $10.00 per Unit
upon the termination of the Growth & Treasury Trust (an event
which the Sponsor believes is unlikely) represents a substantial
loss on a present value basis. At current interest rates, the
present value of receiving $10.00 per Unit as of the termination
of the Growth & Treasury Trust would be approximately $4.70 per
Unit (the present value is indicated by the amount per Unit which
is invested in Treasury Obligations). Furthermore, the $10.00
per Unit in no respect protects investors against diminution in
the purchasing power of their investment due to inflation (although
expectations concerning inflation are a component in determining
prevailing interest rates, which in turn determine present values).
If inflation were to occur at the rate of 5% per annum during
the period ending at the termination of the Growth & Treasury
Trust, the present dollar value of $10.00 per Unit at the termination
of the Trust would be approximately
$5.93 per Unit. To the extent that Units of a Trust are redeemed,
the aggregate value of the Securities in such Trust will be reduced
and the undivided fractional interest represented by each outstanding
Unit of the Trust will increase. However, if additional Units
are issued by a Trust in connection with the deposit of additional
Securities by the Sponsor, the aggregate value of the Securities
in such Trust will be increased by amounts allocable to additional
Units, and the fractional undivided interest represented by each
Unit of such Trust will be
Page 8
decreased proportionately. See "How May Units be Redeemed?" The
Trusts each have a Mandatory Termination Date as set forth herein
under "Summary of Essential Information."
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," for providing portfolio supervisory services
for each Trust. Such fee is based on the number of Units outstanding
in a Trust on January 1 of each year except for the year or years
in which an initial offering period occurs in which case the fee
for a month is based on the number of Units outstanding at the
end of such month. 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.
Subsequent to the initial offering period, the Evaluator will
receive a fee as indicated in the "Summary of Essential Information."
The Trustee pays certain expenses of the Trusts for which it is
reimbursed by each Trust. The Trustee will receive for its ordinary
recurring services to each Trust an annual fee computed at $0.009
per annum per Unit in each Trust outstanding based upon the largest
aggregate number of Units of the Trust outstanding at any time
during the year. For a discussion of the services performed by
the Trustee pursuant to its obligations under the Indenture, reference
is made to the material set forth under "Rights of Unit Holders."
The Trustee's and Evaluator's fees are payable from the Income
Account of each Trust to the extent funds are available and then
from the Capital Account of each Trust. Since the Trustee has
the use of the funds being held in the Capital and Income Accounts
for payment of expenses and redemptions and since such Accounts
are noninterest-bearing to Unit holders, the Trustee benefits
thereby. Part of the Trustee's compensation for its services to
each Trust is expected to result from the use of these funds.
Both fees may be increased without approval of the Unit holders
by amounts not exceeding proportionate increases under the category
"All Services Less Rent of Shelter" in the Consumer Price Index
published by the United States Department of Labor.
The following additional charges are or may be incurred by a Trust:
all legal and annual auditing expenses of the Trustee incurred
by or in connection with its responsibilities under the Indenture;
the expenses and costs of any action undertaken by the Trustee
to protect a Trust and the rights and interests of the Unit holders;
fees of the Trustee for any extraordinary services performed under
the Indenture; indemnification of the Trustee for any loss, liability
or expense incurred by it without negligence, bad faith or willful
misconduct on its part, arising out of or in connection with its
acceptance or administration of a Trust; indemnification of the
Sponsor for any loss, liability or expense incurred without gross
negligence, bad faith or willful misconduct in acting as Depositor
of a Trust; all taxes and other government charges imposed upon
the Securities or any part of a Trust (no such taxes or charges
are being levied or made or, to the knowledge of the Sponsor,
contemplated). The above expenses and the Trustee's annual fee,
when paid or owing to the Trustee, are secured by a lien on a
Trust. In addition, the Trustee is empowered to sell Securities
in a Trust in order to make funds available to pay all these amounts
if funds are not otherwise available in the Income and Capital
Accounts of a Trust except that the Trustee shall not sell Treasury
Obligations to pay Growth & Treasury Trust expenses. Since the
Equity Securities are all common stocks and the income stream
produced by dividend payments is unpredictable, the Sponsor cannot
provide any assurance that dividends will be sufficient to meet
any or all expenses of the Trusts. As described above, if dividends
are insufficient to cover expenses, it is likely that Equity Securities
will have to be sold to meet Trust expenses. These sales may result
in capital gains or losses to Unit holders. See "What is the Federal
Tax Status of Unit Holders?"
Page 9
The Indenture requires the Trusts to be audited on an annual basis
at the expense of each Trust by independent auditors selected
by the Sponsor. So long as the Sponsor is making a secondary market
for the Units, the Sponsor is required to bear the cost of such
annual audits to the extent such cost exceeds $0.005 per Unit.
Unit holders of a Trust covered by an audit may obtain a copy
of the audited financial statements upon request.
What is the Federal Tax Status of Unit Holders?
The following is a general discussion of certain of the Federal
income tax consequences of the purchase, ownership and disposition
of the Units of the Trusts. The summary is limited to investors
who hold the Units as "capital assets" (generally, property held
for investment) within the meaning of Section 1221 of the Internal
Revenue Code of 1986 (the "Code"). Unit holders should consult
their tax advisers in determining the Federal, state, local and
any other tax consequences of the purchase, ownership and disposition
of Units in the Trusts.
In the opinion of Chapman and Cutler, special counsel for the
Sponsor, under existing law:
1. Each Trust is not an association taxable as a corporation
for Federal income tax purposes; each Unit holder will be treated
as the owner of a pro rata portion of the assets of a Trust under
the Code; and the income of each Trust will be treated as income
of the Unit holders thereof under the Code. Each Unit holder will
be considered to have received his pro rata share of income derived
from each Trust asset when such income is received by a Trust.
2. Each Unit holder will have a taxable event when a Trust disposes
of a Security (whether by sale, exchange, redemption or otherwise)
or upon the sale or redemption of Units by such Unit holder. The
price a Unit holder pays for his Units, including sales charges,
is allocated among his pro rata portion of each Security held
by a Trust (in proportion to the fair market values thereof on
the date the Unit holder purchases his Units) in order to determine
his initial cost for his pro rata portion of each Security held
by a Trust. The Treasury Obligations held by the Growth & Treasury
Trust are treated as stripped bonds and may be treated as bonds
issued at an original issue discount as of the date a Unit holder
purchases his Units. 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 Growth & Treasury Trust 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 of the Growth & Treasury Trust 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
a Treasury Regulation issued on December 28, 1992 relating to
stripped bonds. 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 of the Growth
& Treasury Trust each year. Unit holders of the Growth & Treasury
Trust should consult their tax advisers regarding the Federal
income tax consequences and accretion of original issue discount
under the stripped bond rules. For Federal income tax purposes,
a Unit holder's pro rata portion of dividends as defined by Section
316 of the Code paid with respect to an Equity Security held by
each Trust are taxable as ordinary income to the extent of such
corporation's current and accumulated "earnings and profits."
A Unit holder's pro rata portion of dividends paid on such Equity
Security which exceed such current and accumulated earnings and
profits will first reduce a Unit holder's tax basis in such Equity
Security, and to the extent that such dividends exceed a
Page 10
Unit holder's tax basis in such Equity Security shall generally
be treated as capital gain. In general, any such capital gain
will be short term unless a Unit holder has held his Units for
more than one year.
3. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Securities held by a
Trust will generally be considered a capital gain except in the
case of a dealer or a financial institution and, in general, will
be long-term if the Unit holder has held his Units for more than
one year. A Unit holder's portion of loss, if any, upon the sale
or redemption of Units or the disposition of Securities held by
a Trust will generally be considered a capital loss except in
the case of a dealer or a financial institution and, in general,
will be long-term if the Unit holder has held his Units for more
than one year. Unit holders should consult their tax advisers
regarding the recognition of such capital gains and losses for
Federal income tax purposes.
4. The Code provides that "miscellaneous itemized deductions"
are allowable only to the extent that they exceed two percent
of an individual taxpayer's adjusted gross income. Miscellaneous
itemized deductions subject to this limitation under present law
include a Unit holder's pro rata share of expenses paid by a Trust,
including fees of the Trustee and the Evaluator.
Dividends Received Deduction. A corporation that owns Units will
generally be entitled to a 70% dividends received deduction with
respect to such Unit holder's pro rata portion of dividends received
by a Trust (to the extent such dividends are taxable as ordinary
income, as discussed above) in the same manner as if such corporation
directly owned the Equity Securities paying such dividends. However,
a corporation owning Units should be aware that Sections 246 and
246A of the Code impose additional limitations on the eligibility
of dividends for the 70% dividends received deduction. These limitations
include a requirement that stock (and therefore Units) must generally
be held at least 46 days (as determined under Section 246(c) of
the Code). Proposed regulations have been issued which address
special rules that must be considered in determining whether the
46-day holding requirement is met. Moreover, the allowable percentage
of the deduction will be reduced from 70% if a corporate Unit
holder owns certain stock (or Units) the financing of which is
directly attributable to indebtedness incurred by such corporation.
It should be noted that various legislative proposals that would
affect the dividends received deduction have been introduced.
Unit holders should consult with their tax advisers with respect
to the limitations on and possible modifications to the dividends
received deduction.
Recognition of Taxable Gain or Loss Upon Disposition of Securities
by a Trust or Disposition of Units. As discussed above, a Unit
holder may recognize taxable gain (or loss) when a Security is
disposed of by a Trust or if the Unit holder disposes of a Unit.
For taxpayers other than corporations, net capital gains are subject
to a maximum marginal tax rate of 28%. However, it should be noted
that legislative proposals are introduced from time to time that
affect tax rates and could affect relative differences at which
ordinary income and capital gains are taxed.
The Revenue Reconciliation Act of 1993 (the "Tax Act") raised
tax rates on ordinary income while capital gains remain subject
to a 28% maximum stated rate. Because some or all capital gains
are taxed at a comparatively lower rate under the Tax Act, the
Tax Act includes a provision that recharacterizes capital gains
as ordinary income in the case of certain financial transactions
that are "conversion transactions" effective for transactions
entered into after April 30, 1993. Unit holders and prospective
investors should consult with their tax advisers regarding the
potential effect of this provision on their investment in Units.
Special Tax Consequences of In-Kind Distributions Upon Redemption
of Units (for the Growth Trust) or Termination of a Trust. As
discussed in "Rights of Unit Holders-How are Income and Capital
Distributed?", under certain circumstances a Unit holder who owns
at least 2,500 Units of a Trust may request an In-Kind Distribution
upon the redemption of Units or the termination of the Growth
Trust and only upon the termination of the Growth & Treasury Trust.
The Unit holder requesting an In-Kind Distribution will be liable
for expenses related thereto (the "Distribution Expenses") and
the amount of such In-Kind Distribution will be reduced by the
amount of the Distribution Expenses. See "Rights of Unit Holders-How
are Income and Capital Distributed?" Treasury Obligations held
by the Growth & Treasury Trust will not be distributed to a Unit
holder as part of an In-Kind Distribution. The tax consequences
relating to the sale of Treasury Obligations are discussed above.
As previously discussed, prior to the redemption of Units or the
termination of a Trust, a Unit holder is considered as owning
a pro rata portion of each of the Trust assets for Federal income
tax
Page 11
purposes. The receipt of an In-Kind Distribution upon the redemption
of Units (for the Growth Trust) or the termination of a Trust
would be deemed an exchange of such Unit holder's pro rata portion
of each of the shares of stock and other assets held by such Trust
in exchange for an undivided interest in whole shares of stock
plus, possibly, cash.
There are generally three different potential tax consequences
which may occur under an In-Kind Distribution with respect to
each Security owned by a Trust. A "Security" for this purpose
is a particular class of stock issued by a particular corporation
(and does not include the Treasury Obligations in the Growth &
Treasury Trust). If the Unit holder receives only whole shares
of a Security in exchange for his or her pro rata portion in each
share of such Security held by a Trust, there is no taxable gain
or loss recognized upon such deemed exchange pursuant to Section
1036 of the Code. If the Unit holder receives whole shares of
a particular Security plus cash in lieu of a fractional share
of such Security, and if the fair market value of the Unit holder's
pro rata portion of the shares of such Security exceeds his tax
basis in his pro rata portion of such Security, taxable gain would
be recognized in an amount not to exceed the amount of such cash
received, pursuant to Section 1031(b) of the Code. No taxable
loss would be recognized upon such an exchange pursuant to Section
1031(c) of the Code, whether or not cash is received in lieu of
a fractional share. Under either of these circumstances, special
rules will be applied under Section 1031(d) of the Code to determine
the Unit holder's tax basis in the shares of such particular Security
which he receives as part of the In-Kind Distribution. Finally,
if a Unit holder's pro rata interest in a Security does not equal
a whole share, he may receive entirely cash in exchange for his
pro rata portion of a particular Security. In such case, taxable
gain or loss is measured by comparing the amount of cash received
by the Unit holder with his tax basis in such Security.
Because each Trust will own many Securities, a Unit holder who
requests an In-Kind Distribution will have to analyze the tax
consequences with respect to each Security owned by a Trust. In
analyzing the tax consequences with respect to each Security,
such Unit holder must allocate the Distribution Expenses among
the Securities (the "Allocable Expenses"). The Allocable Expenses
will reduce the amount realized with respect to each Security
so that the fair market value of the shares of such Security received
(if any) and cash received in lieu thereof (as a result of any
fractional shares) by such Unit holder should equal the amount
realized for purposes of determining the applicable tax consequences
in connection with an In-Kind Distribution. A Unit holder's tax
basis in shares of such Security received will be increased by
the Allocable Expenses relating to such Security. The amount of
taxable gain (or loss) recognized upon such exchange will generally
equal the sum of the gain (or loss) recognized under the rules
described above by such Unit holder with respect to each Security
owned by a Trust. Unit holders who request an In-Kind Distribution
are advised to consult their tax advisers in this regard.
General. Each Unit holder will be requested to provide the Unit
holder's taxpayer identification number to the Trustee and to
certify that the Unit holder has not been notified that payments
to the Unit holder are subject to back-up withholding. If the
proper taxpayer identification number and appropriate certification
are not provided when requested, distributions by a Trust to such
Unit holder (including amounts received upon the redemption of
Units) will be subject to back-up withholding. Distributions by
a Trust will generally be subject to United States income taxation
and withholding in the case of Units held by non-resident alien
individuals, foreign corporations or other non-United States persons
(accrual of original issue discount on the Treasury Obligations
in the Growth & Treasury Trust may not be subject to taxation
or withholding provided certain requirements are met). Such persons
should consult their tax advisers.
Unit holders will be notified annually of the amounts of original
issue discount (in the case of the Growth & Treasury Trust) and
income dividends includable in the Unit holder's gross income
and amounts of Trust expenses which may be claimed as itemized
deductions.
Dividend income, long-term capital gains and accrual of original
issue discount (in the case of the Growth & Treasury Trust) may
also be subject to state and local taxes. Investors should consult
their tax advisers for specific information on the tax consequences
of particular types of distributions.
Unit holders desiring to purchase Units for tax-deferred plans
and IRAs should consult their broker for details on establishing
such accounts. Units may also be purchased by persons who already
have self-directed plans established. See "Why are Investments
in the Trusts Suitable for Retirement Plans?"
Page 12
In the opinion of Carter, Ledyard & Milburn, Special Counsel to
the Trusts for New York tax matters, under the existing income
tax laws of the State of New York, each Trust is not an association
taxable as a corporation and the income of each Trust will be
treated as the income of the Unit holders thereof.
Why are Investments in the Trusts Suitable for Retirement Plans?
Units of a Trust may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other tax-deferred
retirement plans. Generally, the Federal income tax relating to
capital gains and income received in each of the foregoing plans
is deferred until distributions are received. Distributions from
such plans are generally treated as ordinary income but may, in
some cases, be eligible for special averaging or tax-deferred
rollover treatment. Investors considering participation in any
such plan should review specific tax laws related thereto and
should consult their attorneys or tax advisers with respect to
the establishment and maintenance of any such plan. Such plans
are offered by brokerage firms and other financial institutions.
Fees and charges with respect to such plans may vary.
PORTFOLIO
What are Treasury Obligations?
The Treasury Obligations deposited in the Growth & Treasury Trust
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. The effect of being able to acquire the Treasury Obligations
at a lower price is to permit more of the Growth & Treasury Trust's
portfolio to be invested in Equity Securities.
What are Equity Securities?
The Trusts include different issues of Equity Securities, all
of which are issued by pharmaceutical companies and are listed
on a national securities exchange or the NASDAQ National Market
System or are traded in the over-the-counter market. Each of the
companies whose Equity Securities are included in the portfolios
are actively traded, well established corporations.
An investment in Units of a Trust should be made with an understanding
of the characteristics of the pharmaceuticals industry and the
risks which such investment may entail. Pharmaceutical companies
are companies involved in drug development and production services.
Pharmaceutical companies have potential risks unique to their
sector of the health care field. Such companies are subject to
governmental regulation of their products and services, a factor
which could have a significant and possibly unfavorable effect
on the price and availability of such products or services. Furthermore,
pharmaceutical companies face the risk of increasing competition
from generic drug sales, the termination of their patent protection
for drug products and the risk that technological advances will
render their products or services obsolete. The research and development
costs of bringing a drug to market are substantial and include
lengthy governmental review processes, with no guarantee that
the product will ever come to market. Many of these pharmaceutical
companies may have losses and not offer certain products until
the late 1990s. Pharmaceutical companies may also have persistent
losses during a new product's transition from development to production,
and revenue patterns may be erratic.
The medical sector has historically provided investors with significant
growth opportunities. One of the industries included in the sector
is pharmaceutical companies. Pharmaceutical companies develop,
manufacture and sell prescription and over-the-counter drugs.
In addition, they are well known for the vast
Page 13
amounts of money they spend on world-class research and development.
In short, pharmaceutical companies work to improve the quality
of life for millions of people and are vital to the nation's health
and well-being.
As the population of the United States ages, the companies involved
in the pharmaceutical field will continue to search for and develop
new drugs through advanced technologies and diagnostics. On a
worldwide basis, pharmaceutical companies are involved in the
development and distributions of drugs and vaccines. These activities
may make the pharmaceutical sector very attractive for investors
seeking the potential for growth in their investment portfolio.
However, there are no assurances that the Trusts' objectives will
be met.
Legislative proposals concerning health care are under consideration
by the Clinton Administration. These proposals span a wide range
of topics, including cost and price controls (which might include
a freeze on the prices of prescription drugs), national health
insurance, incentives for competition in the provision of health
care services, tax incentives and penalties related to health
care insurance premiums and promotion of pre-paid health care
plans. The Sponsor is unable to predict the effect of any of these
proposals, if enacted, on the issuers of Equity Securities in
the Trust.
The Trusts consist of such of the Securities listed under "Schedule
of Investments" for each Trust as may continue to be held from
time to time in each Trust and any additional Securities acquired
and held by such Trust pursuant to the provisions of the Trust
Agreement together with cash held in the Income and Capital Accounts.
Neither the Sponsor nor the Trustee shall be liable in any way
for any failure in any of the Securities. However, should any
contract for the purchase of any of the Securities initially deposited
hereunder fail, the Sponsor will, unless substantially all of
the moneys held in such Trust to cover such purchase are reinvested
in substitute Securities in accordance with the Trust Agreement,
refund the cash and sales charge attributable to such failed contract
to all Unit holders on the next distribution date.
Because certain of the Equity Securities from time to time may
be sold under certain circumstances described herein, and because
the proceeds from such events will be distributed to Unit holders
and will not be reinvested, no assurance can be given that a Trust
will retain for any length of time its present size and composition.
Although the Portfolios are not managed, the Sponsor may instruct
the Trustee to sell Equity Securities under certain limited circumstances.
Pursuant to the Indenture and with limited exceptions, the Trustee
may sell any securities or other property acquired in exchange
for Equity Securities such as those acquired in connection with
a merger or other transaction. If offered such new or exchanged
securities or property, the Trustee shall reject the offer. However,
in the event such securities or property are nonetheless acquired
by a Trust, they may be accepted for deposit in such Trust and
either sold by the Trustee or held in the Trust pursuant to the
direction of the Sponsor (who may rely on the advice of the Portfolio
Supervisor). See "How May Securities be Removed from the Trusts?"
Equity Securities, however, will not be sold by a Trust to take
advantage of market fluctuations or changes in anticipated rates
of appreciation or depreciation.
Since certain of the Equity Securities in the Trusts consist
of securities of foreign issuers, an investment in the Trusts
involves some investment risks that are different in some respects
from an investment in a trust that invests entirely in securities
of domestic issuers. Those investment risks include future political
and governmental restrictions which might adversely affect the
payment or receipt of payment of dividends on the relevant Equity
Securities, currency exchange rate fluctuations, exchange control
policies, and the limited liquidity and small market capitalization
of such foreign countries' securities markets. In addition, for
the foreign issuers that are not subject to the reporting requirements
of the Securities Exchange Act of 1934, there may be less publicly
available information than is available from a domestic issuer.
Also, foreign issuers are not necessarily subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to domestic issuers. However, due
to the nature of the issuers of Equity Securities included in
the Trusts, the Sponsor believes that adequate information will
be available to allow the Portfolio Supervisor to provide portfolio
surveillance.
The securities of certain of the foreign issuers in the Trusts
are in ADR form. ADRs evidence American Depositary Receipts which
represent common stock deposited with a custodian in a depositary.
American Depositary Shares, and receipts therefor (ADRs), are
issued by an American bank or trust company to evidence
Page 14
ownership of underlying securities issued by a foreign corporation.
These instruments may not necessarily be denominated in the same
currency as the securities into which they may be converted. For
purposes of the discussion herein, the term ADR generally includes
American Depositary Shares.
ADRs may be sponsored or unsponsored. In an unsponsored facility,
the depositary initiates and arranges the facility at the request
of market makers and acts as agent for the ADR holder, while the
company itself is not involved in the transaction. In a sponsored
facility, the issuing company initiates the facility and agrees
to pay certain administrative and shareholder-related expenses.
Sponsored facilities use a single depositary and entail a contractual
relationship between the issuer, the shareholder and the depositary;
unsponsored facilities involve several depositaries with no contractual
relationship to the company. The depositary bank that issues an
ADR generally charges a fee, based on the price of the ADR, upon
issuance and cancellation of the ADR. This fee would be in addition
to the brokerage commissions paid upon the acquisition or surrender
of the security. In addition, the depositary bank incurs expenses
in connection with the conversion of dividends or other cash distributions
paid in local currency into U.S. dollars and such expenses are
deducted from the amount of the dividend or distribution paid
to holders, resulting in a lower payout per underlying shares
represented by the ADR than would be the case if the underlying
share were held directly. Certain tax considerations, including
tax rate differentials and withholding requirements, arising from
applications of the tax laws of one nation to nationals of another
and from certain practices in the ADR market may also exist with
respect to certain ADRs. In varying degrees, any or all of these
factors may affect the value of the ADR compared with the value
of the underlying shares in the local market. In addition, the
rights of holders of ADRs may be different than those of holders
of the underlying shares, and the market for ADRs may be less
liquid than that for the underlying shares. ADRs are registered
securities pursuant to the Securities Act of 1933 and may be subject
to the reporting requirements of the Securities Exchange Act of
1934.
For those Equity Securities that are ADRs, currency fluctuations
will affect the U.S. dollar equivalent of the local currency price
of the underlying domestic share and, as a result, are likely
to affect the value of the ADRs and consequently the value of
the Equity Securities. The foreign issuers of securities that
are ADRs may pay dividends in foreign currencies which must be
converted into dollars. Most foreign currencies have fluctuated
widely in value against the United States dollar for many reasons,
including supply and demand of the respective currency, the soundness
of the world economy and the strength of the respective economy
as compared to the economies of the United States and other countries.
Therefore, for any securities of issuers (whether or not they
are in ADR form) whose earnings are stated in foreign currencies,
or which pay dividends in foreign currencies or which are traded
in foreign currencies, there is a risk that their United States
dollar value will vary with fluctuations in the United States
dollar foreign exchange rates for the relevant currencies.
On the basis of the best information available to the Sponsor
at the present time, none of the Equity Securities are subject
to exchange control restrictions under existing law which would
materially interfere with payment to the Trusts of dividends due
on, or proceeds from the sale of, the Equity Securities. However,
there can be no assurance that exchange control regulations might
not be adopted in the future which might adversely affect payment
to the Trusts. In addition, the adoption of exchange control regulations
and other legal restrictions could have an adverse impact on the
marketability of international securities in the Trusts and on
the ability of the Trusts to satisfy its obligation to redeem
Units tendered to the Trustee for redemption.
An investment in Units should be made with an understanding of
the risks which an investment in common stocks entails, including
the risk that the financial condition of the issuers of the Equity
Securities or the general condition of the common stock market
may worsen and the value of the Equity Securities and therefore
the value of the Units may decline. Common stocks are especially
susceptible to general stock market movements and to volatile
increases and decreases of value as market confidence in and perceptions
Page 15
of the issuers change. These perceptions are based on unpredictable
factors including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic
expansion or contraction, and global or regional political, economic
or banking crises. Shareholders of common stocks have rights to
receive payments from the issuers of those common stocks that
are generally subordinate to those of creditors of, or holders
of debt obligations or preferred stocks of, such issuers. Shareholders
of common stocks of the type held by the Trusts have a right to
receive dividends only when and if, and in the amounts, declared
by the issuer's board of directors and have a right to participate
in amounts available for distribution by the issuer only after
all other claims on the issuer have been paid or provided for.
Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the
same degree of protection of capital as do debt securities. The
issuance of additional debt securities or preferred stock will
create prior claims for payment of principal, interest and dividends
which could adversely affect the ability and inclination of the
issuer to declare or pay dividends on its common stock or the
rights of holders of common stock with respect to assets of the
issuer upon liquidation or bankruptcy. The value of common stocks
is subject to market fluctuations for as long as the common stocks
remain outstanding, and thus the value of the Equity Securities
in each Portfolio may be expected to fluctuate over the life of
the Trusts to values higher or lower than those prevailing on
the Initial Date of Deposit.
Holders of common stocks incur more risk than holders of preferred
stocks and debt obligations because common stockholders, as owners
of the entity, have generally inferior rights to receive payments
from the issuer in comparison with the rights of creditors of,
or holders of debt obligations or preferred stocks issued by,
the issuer. Cumulative preferred stock dividends must be paid
before common stock dividends and any cumulative preferred stock
dividend omitted is added to future dividends payable to the holders
of cumulative preferred stock. Preferred stockholders are also
generally entitled to rights on liquidation which are senior to
those of common stockholders.
Whether or not the Equity Securities are listed on a national
securities exchange, the principal trading market for the Equity
Securities may be in the over-the-counter market. As a result,
the existence of a liquid trading market for the Equity Securities
may depend on whether dealers will make a market in the Equity
Securities. There can be no assurance that a market will be made
for any of the Equity Securities, that any market for the Equity
Securities will be maintained or of the liquidity of the Equity
Securities in any markets made. In addition, a Trust may be
restricted under the Investment Company Act of 1940 from selling
Equity Securities to the Sponsor. The price at which the Equity
Securities may be sold to meet redemptions, and the value of a Trust,
will be adversely affected if trading markets for the Equity
Securities are limited or absent.
Unit holders will be unable to dispose of any of the Equity Securities
in a Portfolio, as such, and will not be able to vote the Equity
Securities. As the holder of the Equity Securities, the Trustee
will have the right to vote all of the voting stocks in each Trust
and will vote such stocks in accordance with the instructions
of the Sponsor.
What are the Equity Securities Selected for Pharmaceutical Growth
& Treasury Securities Trust, Series 2 and Growth & Value Trust,
Pharmaceutical Series 2?
Issuers of Equity Securities selected for inclusion in these Portfolios
are as follows:
Abbott Laboratories, headquartered in Abbott Park, Illinois, discovers,
develops, manufactures and markets a broad and diversified line
of human health care products and services. The line includes
pharmaceutical and nutritional products and various hospital and
laboratory products, including intravenous and irrigating
Page 16
fluids and related equipment. Abbott Laboratories also markets
diagnostic tests, including tests for AIDS and drug abuse.
Alza Corporation, headquartered in Palo Alto, California, develops
and tests, primarily under joint arrangements, a variety of drug
products which provide programmed amounts of medication over extended
periods of time. In joint efforts, its clients pay development,
testing, registration and commercialization costs, and obtain
manufacturing and marketing rights to the products.
American Home Products Corporation, headquartered in New York,
New York, manufactures and markets health care products, including
pharmaceuticals, consumer health care products, medical supplies
and diagnostic products. The company also manufactures specialty
foods and candies.
Bristol-Myers Squibb Company, headquartered in New York, New York,
researches, develops, manufactures and markets prescription and
non-prescription drugs, medical devices, health and skin care
products and beauty aids. Bristol-Myers Squibb's line of prescription
drugs is comprised primarily of cardiovascular drugs and antibiotics.
Forest Laboratories, Inc. (Class A) and its subsidiaries manufacture
pharmaceuticals. The company produces prescription drugs used
to treat asthma, angina, stress headaches, coughs and diaper rash.
The company, headquartered in New York, New York, sells its products
in the United States, the United Kingdom, eastern and western
Europe and Puerto Rico.
Glaxo Holdings PLC (ADR) is a holding company for pharmaceutical
manufacturers. Headquartered in London, England, the company ranks
as one of the largest drug companies in Great Britain. In the
United States, Glaxo, Inc. (a subsidiary of Glaxo Holdings PLC)
researches, develops and manufactures prescription medicines that
treat gastrointestinal, respiratory, infectious and cardiovascular
diseases. The company markets its products worldwide.
Johnson & Johnson, headquartered in New Brunswick, New Jersey,
manufactures and sells a broad range of products in the health
care and other fields. The company's business is divided into
the consumer, professional and pharmaceutical segments. Products
include contraceptives, therapeutics, veterinary products, dental
products, surgical instruments, dressings and apparel and nonprescription
drugs.
Lilly (Eli) & Company develops, manufactures and markets pharmaceuticals,
medical instruments, diagnostic products and agricultural chemicals.
Headquartered in Indianapolis, Indiana, the company markets its
products in numerous countries.
Marion Merrell Dow, Inc. is a leading pharmaceutical company headquartered
in Kansas City, Missouri. The company researches, develops, manufactures
and sells prescription and over-the-counter pharmaceutical products.
Merck & Company, Inc., based in Whitehouse Station, New Jersey,
is a leading manufacturer of human and animal health care products
and specialty chemical products. The company's product line includes
anti-hypertensive, cardiovasculars, anti-inflammatories and glaucoma
treatments. Animal health care and specialty chemical products
include preventative medicine for poultry disease and water treatment
chemicals, respectively.
Mylan Laboratories, Inc., headquartered in Pittsburgh, Pennsylvania,
manufactures generic pharmaceutical products for resale by others
under their own labels. Products are made in tablet, capsule and
powder dosage forms and include anti-anxiety, antidepressant,
antihistamine and anti-inflammatory drugs. Mylan jointly owns
Somerset Pharmaceuticals (with Circa Pharmaceuticals) which markets
Eldepryl, a treatment for Parkinson's disease.
Pfizer, Inc., headquartered in New York, New York, produces ethical
drugs, hospital products, animal health items, specialty chemicals,
consumer products and mineral based material science products.
The company uses the consumer brand names "Ben-Gay," "Visine,"
"Desitin," "Coty" and "Plax."
Rhone-Poulenc Rorer, Inc., located in Collegeville, Pennsylvania,
develops, manufactures and markets prescription and over-the-counter
pharmaceuticals in the United States and abroad. The company's
operations involve the production and sale of pharmaceuticals,
primarily gastrointestinal, cardiovascular, bone metabolism, dermatological,
respiratory and plasma derivative products.
Page 17
Schering-Plough, headquartered in Madison, New Jersey, is a world-wide
manufacturer of prescription and over-the-counter drugs, animal
health products and a variety of consumer products including cosmetics,
sun care and foot care lines. Popular brand names include "Afrin,"
"Scholl's" and "Coppertone."
SmithKline Beecham PLC (ADR), located in Brentford, Middlesex,
UK, researches, develops, manufactures and markets a broad line
of pharmaceutical products for human and animal use. The company
also makes over-the-counter medicines and health-orientated consumer
products. These products include "Contact," "Massengill," "Tums"
and "Aquafresh."
Teva Pharmaceuticals Industries, Ltd. (ADR), headquartered in
Petach Tikva, Israel, is a worldwide producer and distributor
of various pharmaceuticals. In addition, the company manufactures
and sells fine chemicals for the pharmaceutical, hospital supply,
veterinary product, and fermentation product industries. A few
products include antibiotic, cardiovascular, analgesic, gastrointestinal,
anti-diabetic, fertility, and central nervous system drugs.
Upjohn Company, based in Kalamazoo, MIchigan, manufactures pharmaceuticals.
The company's products include prescription drugs such as steroids,
antibiotics, oral anti-diabetic drugs, topical treatments for
baldness and sex hormones.
Warner-Lambert Company, headquartered in Morris Plains, New Jersey,
manufactures pharmaceutical consumer healthcare and confectionery
products under such brand names as "Certs," "Listerine," "Rolaids,"
"Halls" and "Schick."
What are Some Additional Considerations for Investors?
Investors should be aware of certain other considerations before
making a decision to invest in the Trusts.
The value of the Equity Securities, like the value of the Treasury
Obligations, will fluctuate over the life of a Trust and may be
more or less than the price at which they were deposited in such
Trust. The Equity Securities may appreciate or depreciate in value
(or pay dividends) depending on the full range of economic and
market influences affecting these securities. However, the Sponsor
believes that, upon termination of the Growth & Treasury Trust,
even if the Equity Securities deposited in the Growth & Treasury
Trust are worthless, an event which the Sponsor considers highly
unlikely, the Treasury Obligations will provide sufficient principal
to at least equal $10.00 per Unit (which is equal to the per Unit
value upon maturity of the Treasury Obligations). This feature
of the Growth & Treasury Trust provides Unit holders with principal
protection, although they might forego any earnings on the amount
invested. To the extent that Units are purchased at a price less
than $10.00 per Unit, this feature may also provide a potential
for capital appreciation.
Unless a Unit holder purchases Units of the Growth & Treasury
Trust on the Initial Date of Deposit (or another date when the
value of the Units is $10.00 or less), total distributions, including
distributions made upon termination of the Growth & Treasury Trust,
may be less than the amount paid for a Unit.
The Sponsor and the Trustee shall not be liable in any way for
any default, failure or defect in any Security. In the event of
a notice that any Treasury Obligations or Equity Securities will
not be delivered ("Failed Contract Obligations") to a Trust, the
Sponsor is authorized under the Indenture to direct the Trustee
to acquire other Treasury Obligations (in the case of the Growth
& Treasury Trust) or Equity Securities ("Replacement Securities").
Any Replacement Security deposited in a Trust will, in the case
of Treasury Obligations in the Growth & Treasury Trust, have the
same maturity value and, as closely as can be reasonably acquired
by the Sponsor, the same maturity date or, in the case of Equity
Securities, be identical to those which were the subject of the
failed contract. The Replacement Securities must be purchased
within 20 days after delivery of the notice of a failed contract
and the purchase price may not exceed the amount of funds reserved
for the purchase of the Failed Contract Obligations.
If the right of limited substitution described in the preceding
paragraphs is not utilized to acquire Replacement Securities in
the event of a failed contract, the Sponsor will refund the sales
charge attributable to such Failed Contract Obligations to all
Unit holders of the affected Trust and the Trustee will distribute
the principal attributable to such Failed Contract Obligations
not more than 120 days after the date on which the Trustee received
a notice from the Sponsor that a Replacement Security would not
be deposited in the Trust. In addition, Unit holders should be
aware that, at the time of receipt of such principal, they may
not be able
Page 18
to reinvest such proceeds in other securities at a yield equal
to or in excess of the yield which such proceeds would have earned
for Unit holders of such Trust.
The Indenture also authorizes the Sponsor to increase the size
of the Trusts and the number of Units thereof by the deposit of
additional Securities in each Trust and the issuance of a corresponding
number of additional Units.
Each Trust consists of the Securities listed under "Schedule of
Investments" (or contracts to purchase such Securities) as may
continue to be held from time to time in such Trusts and any additional
Securities acquired and held by each Trust pursuant to the provisions
of the Indenture (including provisions with respect to deposits
into each Trust of Securities in connection with the issuance
of additional Units).
Once all of the Securities in each Trust are acquired, the Trustee
will have no power to vary the investments of the Trust, i.e.,
the Trustee will have no managerial power to take advantage of
market variations to improve a Unit holder's investment, but may
dispose of Securities only under limited circumstances. See "How
May Securities be Removed from the Trusts?"
To the best of the Sponsor's knowledge, there is no litigation
pending as of the Initial Date of Deposit in respect of any Security
which might reasonably be expected to have a material adverse
effect on the Trusts. At any time after the Initial Date of Deposit,
litigation may be instituted on a variety of grounds with respect
to the Securities. The Sponsor is unable to predict whether any
such litigation will be instituted, or if instituted, whether
such litigation might have a material adverse effect on the Trusts.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. During the initial
offering period, with respect to the Growth & Treasury Trust,
the Public Offering Price is based on the aggregate of the offering
side evaluation of the Treasury Obligations in each Trust and
the aggregate underlying value of the Equity Securities in the
Trust, plus or minus cash, if any, in the Income and Capital Accounts
of the Trust, plus a sales charge of 5.5% (equivalent to 5.820%
of the net amount invested) divided by the number of Units of
the Trust outstanding.
During the initial offering period, with respect to the Growth
Trust, the Public Offering Price is based on the aggregate underlying
value of the Equity Securities in the Trust, plus or minus cash,
if any, in the Income and Capital Accounts of the Trust, plus
a sales charge of 4.9% (equivalent to 5.152% of the net amount
invested) divided by the number of Units of the Trust outstanding.
During the initial offering period, with respect to the Growth
& Treasury Trust, the Sponsor's Repurchase Price is based on the
aggregate of the offering side evaluation of the Treasury Obligations
in the Trust and the aggregate underlying value of the Equity
Securities in the Trust, plus or minus cash, if any, in the Income
and Capital Accounts of the Trust divided by the number of Units
of the Trust outstanding. For secondary market sales after the
completion of the initial offering period, the Public Offering
Price is based on the aggregate bid side evaluation of the Treasury
Obligations in the Trust and the aggregate underlying value of
the Equity Securities in each Trust, plus or minus cash, if any,
in the Income and Capital Accounts of the Trust, plus a maximum
sales charge of 5.5% of the Public Offering Price (equivalent
to 5.820% of the net amount invested), subject to reduction beginning
June 1, 1995, divided by the number of outstanding Units of such
Trust.
During the initial offering period, with respect to the Growth
Trust, the Sponsor's Repurchase Price is based on the aggregate
underlying value of the Equity Securities in the Trust, plus or
minus cash, if any, in the Income and Capital Accounts of the
Trust divided by the number of Units of the Trust outstanding.
For secondary market sales after the completion of the initial
offering period, the Public Offering Price is also based on the
aggregate underlying value of the Equity Securities in the Trust,
plus or minus cash, if any, in the Income and Capital Accounts
of the Trust, plus a maximum sales charge of 4.9% of the Public
Offering Price (equivalent to 5.152% of the net amount invested),
subject to reduction beginning June 1, 1995, divided by the number
of outstanding Units of the Trust.
The minimum purchase of the Growth & Treasury Trust is $1,000.
The applicable sales charge is reduced by a discount as indicated
below for volume purchases with respect to the Growth & Treasury
Trust:
Page 19
<TABLE>
<CAPTION>
Primary and Secondary
_____________________
Percent of Percent of
Offering Net Amount
Number of Units Price Invested
_______________ __________ __________
<S> <C> <C>
10,000 but less than 50,000 0.60% 0.6036%
50,000 but less than 100,000 1.30% 1.3171%
100,000 or more 2.10% 2.1450%
</TABLE>
The minimum purchase of the Growth Trust is $1,000. The applicable
sales charge is reduced by a discount as indicated below for volume
purchases with respect to the Growth Trust:
<TABLE>
<CAPTION>
Primary and Secondary
_____________________
Percent of Percent of
Offering Net Amount
Number of Units Price Invested
_______________ __________ __________
<S> <C> <C>
5,000 but less than 10,000 0.25% 0.2506%
10,000 but less than 25,000 0.50% 0.5025%
25,000 but less than 50,000 1.00% 1.0101%
50,000 or more 2.00% 2.0408%
</TABLE>
Any such reduced sales charge shall be the responsibility of the
selling dealer. The reduced sales charge structure will apply
on all purchases of Units in the Trust by the same person on any
one day from any one dealer. Additionally, Units purchased in
the name of the spouse of a purchaser or in the name of a child
of such purchaser under 21 years of age will be deemed, for the
purposes of calculating the applicable sales charge, to be additional
purchases by the purchaser. The reduced sales charges will also
be applicable to a trustee or other fiduciary purchasing securities
for a single trust estate or single fiduciary account. The purchaser
must inform the dealer of any such combined purchase prior to
the sale in order to obtain the indicated discount. In addition,
with respect to the employees, officers and directors (including
their immediate family members, defined as spouses, children,
grandchildren, parents, grandparents, mothers-in-law, fathers-in-law,
sons-in-law and daughters-in-law, and trustees, custodians or
fiduciaries for the benefit of such persons) of the Sponsor, the
sales charge is reduced by 2.0% of the Public Offering Price for
purchases of Units during the primary and secondary public offering
periods.
Had the Units of the Trusts been available for sale on the business
day prior to the Initial Date of Deposit, the Public Offering
Price for each Trust would have been as indicated in "Summary
of Essential Information." The Public Offering Price of Units
on the date of the prospectus or during the initial offering period
may vary from the amount stated under "Summary of Essential Information"
in accordance with fluctuations in the prices of the underlying
Securities. During the initial offering period, the aggregate
value of the Units of each Trust shall be determined (a) on the
basis of the offering prices of the Treasury Obligations (if any)
and the aggregate underlying value of the Equity Securities therein
plus or minus cash, if any, in the Income and Capital Accounts
of such Trust, (b) if offering prices are not available for the
Treasury Obligations (if any), on the basis of offering prices
for comparable securities, (c) by determining the value of the
Treasury Obligations (if any) on the offer side of the market
by appraisal, or (d) by any combination of the above. The aggregate
underlying value of the Equity Securities will be determined in
the following manner: if the Equity Securities are listed on a
national securities exchange or the NASDAQ National Market System,
this evaluation is generally based on the closing sale prices
on that exchange or that system (unless it is determined that
these prices are inappropriate as a basis for valuation) or, if
there is no closing sale price on that exchange or system, at
the closing ask prices. If the Equity Securities are not so listed
or, if so listed and the principal market therefor is other than
on the exchange, the evaluation shall generally be based on the
current ask price on the over-the-counter market (unless it is
determined that these prices are inappropriate as a basis for
evaluation). If current ask prices are unavailable, the evaluation
is generally determined (a) on the basis of current ask prices
for comparable securities, (b) by appraising the value of the
Equity Securities on the ask side of the market or (c) by any
combination of the above.
Page 20
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the bid price per
Unit of the Treasury Obligations in each Trust (if any) and the
aggregate underlying value of the Equity Securities therein, plus
or minus cash, if any, in the Income and Capital Accounts of each
Trust plus the applicable sales charge. The offering price of
the Treasury Obligations in the Growth & Treasury Trust may be
expected to be greater than the bid price of the Treasury Obligations
by less than 2%.
Although payment is normally made five business days following
the order for purchase, payment may be made prior thereto. Cash,
if any, made available to the Sponsor prior to the date of settlement
for the purchase of Units may be used in the Sponsor's business
and may be deemed to be a benefit to the Sponsor, subject to the
limitations of the Securities Exchange Act of 1934. Delivery of
Certificates representing Units so ordered will be made five business
days following such order or shortly thereafter. See "Rights of
Unit Holders-How May Units be Redeemed?" for information regarding
the ability to redeem Units ordered for purchase.
How are Units Distributed?
During the initial offering period (i) for Units issued on the
Initial Date of Deposit and (ii) for additional Units issued after
such date as additional Securities are deposited by the Sponsor,
Units will be distributed to the public at the then current Public
Offering Price. The initial offering period may be up to approximately
360 days. During such period, the Sponsor may deposit additional
Securities in each Trust and create additional Units. Units reacquired
by the Sponsor during the initial offering period (at prices based
upon the aggregate offering price of the Treasury Obligations
(if any) and the aggregate underlying value of the Equity Securities
in each Trust plus or minus a pro rata share of cash, if any,
in the Income and Capital Accounts of such Trust) may be resold
at the then current Public Offering Price. Upon the termination
of the initial offering period, unsold Units created or reacquired
during the initial offering period will be sold or resold at the
then current Public Offering Price.
Upon completion of the initial offering, Units repurchased in
the secondary market (see "Will There be a Secondary Market?")
may be offered by this prospectus at the secondary market public
offering price determined in the manner described above.
It is the intention of the Sponsor to qualify Units of the Trusts
for sale in a number of states. With respect to the Growth & Treasury
Trust, sales initially will be made to dealers and others at prices
which represent a concession or agency commission of 3.6% of the
Public Offering Price, and, for secondary market sales, 3.6% of
the Public Offering Price (or 65% of the then current maximum
sales charge after June 1, 1995). With respect to the Growth Trust,
sales initially will be made to dealers and others at prices which
represent a concession or agency commission of 3.2% of the Public
Offering Price, and, for secondary market sales, 3.2% of the Public
Offering Price (or 65% of the then current maximum sales charge
after June 1, 1995). Volume concessions or agency commissions
of an additional 0.40% of the Public Offering Price will be given
to any broker/dealer or bank, who purchases from the Sponsor at
least $100,000 of a Trust on the Initial Date of Deposit. The
Sponsor reserves the right to change the amount of the concession
or agency commission from time to time. Effective on each June
1, commencing June 1, 1995, the sales charge of the Growth & Treasury
Trust and the Growth Trust will be reduced by 1/2 of 1% to a
minimum sales charge of 3.3% and 2.9%, respectively. However,
resales of Units of the Trusts by such dealers and others to the
public will be made at the Public Offering Price described in
the prospectus. Certain commercial banks may be 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 above.
Under the Glass-Steagall Act, banks are prohibited
from underwriting Trust Units; however, the Glass-Steagall Act
does permit certain agency transactions and the banking regulators
have not indicated that these particular agency transactions are
not permitted under such Act. In Texas and in certain other states,
any banks making Units available must be registered as broker/dealers
under state law.
Dealers and others who, in a single month, purchase from the Sponsor
Units of any Series of The First Trust GNMA, The First Trust of
Insured Municipal Bonds, The First Trust Combined Series, The
First Trust Special Situations Trust, Templeton Growth and Treasury
Trust, Templeton Foreign Fund & U.S. Treasury Securities Trust,
The Advantage Growth and Treasury Securities Trust or any other
unit investment trust of which
Page 21
Nike Securities L.P. is the Sponsor (the "UIT Units"), which sale
of UIT Units are in the following aggregate dollar amounts, will
receive additional concessions from the Sponsor as indicated in
the following table:
<TABLE>
<CAPTION>
Aggregate Monthly Amount Additional Concession
of UIT Units Sold (per $1,000 sold)
________________________ _____________________
<S> <C>
$ 1,000,000 - $2,499,999 $0.50
$ 2,500,000 - $4,999,999 $1.00
$ 5,000,000 - $7,499,999 $1.50
$ 7,500,000 - $9,999,999 $2.00
$10,000,000 or more $2.50
</TABLE>
Aggregate Monthly Dollar Amount of UIT Units Sold is based on
settled trades for a month (including sales of UIT Units to the
Sponsor in the secondary market which are resold), net of redemptions.
From time to time the Sponsor may implement programs under which
dealers of a Trust may receive nominal awards from the Sponsor
for each of their registered representatives who have sold a minimum
number of UIT Units during a specified time period. In addition,
at various times the Sponsor may implement other programs under
which the sales force of a dealer 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 the 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 a Trust. Such payments are made by the Sponsor out
of its own assets, and not out of the assets of the Trust. These
programs will not change the price Unit holders pay for their
Units or the amount that the Trust will receive from the Units
sold.
The Sponsor may from time to time in its advertising and sales
materials compare the then current estimated returns on a Trust
and returns over specified periods on other similar Trusts sponsored
by Nike Securities L.P. with returns on other taxable investments
such as corporate or U.S. Government bonds, bank CDs and money
market accounts or money market funds, each of which has investment
characteristics that may differ from those of the Trust. U.S.
Government bonds, for example, are backed by the full faith and
credit of the U.S. Government and bank CDs and money market accounts
are insured by an agency of the federal government. Money market
accounts and money market funds provide stability of principal,
but pay interest at rates that vary with the condition of the
short-term debt market. The investment characteristics of each
Trust are described more fully elsewhere in this Prospectus.
Trust performance may be compared to performance on the same basis
(with distributions reinvested) of the Dow Jones Industrial Average,
the S&P 500 Composite Price Stock Index, or performance data from
Lipper Analytical Services, Inc. and Morningstar Publications,
Inc. or from publications such as Money Magazine, The New York
Times, U.S. News and World Report, Business Week, Forbes Magazine
or Fortune Magazine. As with other performance data, performance
comparisons should not be considered representative of the Trust's
relative performance for any future period.
What are the Sponsor's Profits?
With respect to the Growth & Treasury Trust, the Sponsor of the
Trust will receive a gross sales commission equal to 5.5% of the
Public Offering Price of the Units (equivalent to 5.820% of the
net amount invested). With respect to the Growth Trust, the Sponsor
of the Trust will receive a gross sales commission equal to 4.9%
of the Public Offering Price of the Units (equivalent to 5.152%
of the net amount invested) as described under "Public Offering-How
is the Public Offering Price Determined?"See "Public Offering-How
are Units Distributed?" for information regarding the receipt
of additional concessions available to dealers and others. In
addition, the Sponsor may be considered to have realized a profit
or to have sustained a loss, as the case may be, in the amount
of any difference between the cost of the Securities to the Trust
(which is based on
Page 22
the Evaluator's determination of the aggregate offering price
of the underlying Securities of the Trust on the Initial Date
of Deposit as well as on subsequent deposits) and the cost of
such Securities to the Sponsor. See Note (2) of "Schedules of
Investments." During the initial offering period, the dealers
and others also may realize profits or sustain losses as a result
of fluctuations after the Date of Deposit in the Public Offering
Price received by such dealers and others upon the sale of Units.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between
the price at which Units are purchased and the price at which
Units are resold (which price includes a sales charge of 5.5%
and 4.9% with respect to the Growth & Treasury Trust and Growth
Trust, respectively, subject to reduction beginning June 1, 1995)
or redeemed. The secondary market public offering price of Units
may be greater or less than the cost of such Units to the Sponsor.
Will There be a Secondary Market?
After the initial offering period, although it is not obligated
to do so, the Sponsor intends to, and the Underwriters may, maintain
a market for the Units and continuously offer to purchase Units
at prices, subject to change at any time, based upon the aggregate
bid price of the Treasury Obligations in the Portfolio of a Trust
(if any) and the aggregate underlying value of the Equity Securities
in such Trust plus or minus cash, if any, in the Income and Capital
Accounts of such Trust. All expenses incurred in maintaining a
secondary market, other than the fees of the Evaluator and the
costs of the Trustee in transferring and recording the ownership
of Units, will be borne by the Sponsor. If the supply of Units
exceeds demand, or for some other business reason, the Sponsor
may discontinue purchases of Units at such prices. IF A UNIT HOLDER
WISHES TO DISPOSE OF HIS UNITS, HE SHOULD INQUIRE OF THE SPONSOR
AS TO CURRENT MARKET PRICES PRIOR TO MAKING A TENDER FOR REDEMPTION
TO THE TRUSTEE.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the
Trustee. Ownership of Units may be evidenced by registered certificates
executed by the Trustee and the Sponsor. Delivery of certificates
representing Units ordered for purchase is normally made five
business days following such order or shortly thereafter. Certificates
are transferable by presentation and surrender to the Trustee
properly endorsed or accompanied by a written instrument or instruments
of transfer. Certificates to be redeemed must be properly endorsed
or accompanied by a written instrument or instruments of transfer.
A Unit holder must sign exactly as his name appears on the face
of the certificate with the signature guaranteed by a participant
in the Securities Transfer Agents Medallion Program ("STAMP")
or such other signature guarantee program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee. In
certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of
death, appointments as executor or administrator or certificates
of corporate authority. Record ownership may occur before settlement.
Certificates will be issued in fully registered form, transferable
only on the books of the Trustee in denominations of one Unit
or any multiple thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form.
The Trustee will maintain an account for each such Unit holder
and will credit each such account with the number of Units purchased
by that Unit holder. Within two business days of the issuance
or transfer of Units held in uncertificated form, the Trustee
will send to the registered owner of Units a written initial transaction
statement containing a description of the Trust; the number of
Units issued or transferred; the name, address and taxpayer identification
number, if any, of the new registered owner; a notation of any
liens and restrictions of the issuer and any adverse claims to
which such Units are or may be subject or a statement that there
are no such liens, restrictions or adverse claims; and the date
the transfer was registered. Uncertificated Units are transferable
through the same procedures applicable to Units evidenced by certificates
(described above), except that no certificate need be presented
to the Trustee and no certificate will be issued upon the transfer
unless requested by the Unit holder. A Unit holder may at any
time request the Trustee to issue certificates for Units.
Although no such charge is now made or contemplated, a Unit holder
may be required to pay $2.00 to the Trustee per certificate reissued
or transferred and to pay any governmental charge that may be
imposed in
Page 23
connection with each such transfer or exchange. For new certificates
issued to replace destroyed, stolen or lost certificates, the
Unit holder may be required to furnish indemnity satisfactory
to the Trustee and pay such expenses as the Trustee may incur.
Mutilated certificates must be surrendered to the Trustee for
replacement.
How are Income and Capital Distributed?
The Trustee will distribute any net income (other than accreted
interest on the Treasury Obligations in the case of the Growth
& Treasury Trust) received with respect to any of the Securities
in the Trust on or about the Income Distribution Dates to Unit
holders of record on the preceding Income Record Date. See "Summary
of Essential Information." The pro rata share of cash in the Capital
Account of each Trust will be computed as of the fifteenth day
of each month. Proceeds received on the sale of any Securities
in a Trust, to the extent not used to meet redemptions of Units
or pay expenses, will, however, be distributed on the last day
of each month to Unit holders of record on the fifteenth day of
such month if the amount available for distribution equals at
least $0.01 per Unit. The Trustee is not required to pay interest
on funds held in the Capital Account of a Trust (but may itself
earn interest thereon and therefore benefit from the use of such
funds). Notwithstanding, distributions of funds in the Capital
Account of a Trust (if any) will be made on the last day of each
December to Unit holders of record as of December 15. Income with
respect to the original issue discount on the Treasury Obligations
in a Trust (if any) will not be distributed currently, although
Unit holders will be subject to Federal income tax as if a distribution
had occurred. See "What is the Federal Tax Status of Unit Holders?"
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a specified percentage of any
distribution made by a Trust if the Trustee has not been furnished
the Unit holder's tax identification number in the manner required
by such regulations. Any amount so withheld is transmitted to
the Internal Revenue Service and may be recovered by the Unit
holder under certain circumstances by contacting the Trustee,
otherwise the amount may be recoverable only when filing a tax
return. Under normal circumstances the Trustee obtains the Unit
holder's tax identification number from the selling broker. However,
a Unit holder should examine his or her statements from the Trustee
to make sure that the Trustee has been provided a certified tax
identification number in order to avoid this possible "back-up
withholding." In the event the Trustee has not been previously
provided such number, one should be provided as soon as possible.
Within a reasonable time after the Trusts are terminated, each
Unit holder of a Trust will, upon surrender of his Units for redemption,
receive: (i) the pro rata share of the amounts realized upon the
disposition of Equity Securities, unless he elects an In-Kind
Distribution as described below, (ii) a pro rata share of the
amounts realized upon the disposition of the Treasury Obligations
(if any) and (iii) a pro rata share of any other assets of the
Trusts, less expenses of the Trusts, subject to the limitation
that Treasury Obligations in a Growth & Treasury Trust may not
be sold to pay for Trust expenses. Not less than 60 days prior
to the Treasury Obligations Maturity Date for the Growth & Treasury
Trust and not less than 60 days prior to the Mandatory Termination
Date for the Growth Trust, the Trustee will provide written notice
thereof to all Unit holders and will include with such notice
a form to enable Unit holders to elect a distribution of shares
of Equity Securities (an "In-Kind Distribution"), if such Unit
holder owns at least 2,500 Units of a Trust, rather than to receive
payment in cash for such Unit holder's pro rata share of the amounts
realized upon the disposition by the Trustee of Equity Securities.
An In-Kind Distribution will be reduced by customary transfer
and registration charges. To be effective, the election form,
together with surrendered certificates and other documentation
required by the Trustee, must be returned to the Trustee at least
five business days prior to the Treasury Obligations Maturity
Date for the Growth & Treasury Trust and at least five business
days prior to the Mandatory Termination Date for the Growth Trust.
Not less than 60 days prior to the termination of a Trust, those
Unit holders owning at least 2,500 Units will be offered the option
of having the proceeds from the Equity Securities distributed
"In-Kind," or they will be paid in cash, as indicated above. A
Unit holder may, of course, at any time after the Equity Securities
are distributed, sell all or a portion of the shares.
Page 24
The Trustee will credit to the Income Account of a Trust any dividends
received on the Equity Securities therein. All other receipts
(e.g. return of principal, capital gains, etc.) are credited to
the Capital Account of such Trust.
The Trustee may establish reserves (the "Reserve Account") within
a Trust for state and local taxes, if any, and any governmental
charges payable out of the Trusts.
What Reports will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and
the amount of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per Unit. Within a reasonable
period of time after the end of each calendar year, the Trustee
shall furnish to each person who at any time during the calendar
year was a Unit holder of a Trust the following information in
reasonable detail: (1) a summary of transactions in a Trust for
such year; (2) any Securities sold during the year and the Securities
held at the end of such year by a Trust; (3) the redemption price
per Unit based upon a computation thereof on the 31st day of December
of such year (or the last business day prior thereto); and (4)
amounts of income and capital distributed during such year.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Securities in the Trusts furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his Units by tender
to the Trustee at its corporate trust office in the City of New
York of the certificates representing the Units to be redeemed,
or in the case of uncertificated Units, delivery of a request
for redemption, duly endorsed or accompanied by proper instruments
of transfer with signature guaranteed as explained above (or by
providing satisfactory indemnity, as in connection with lost,
stolen or destroyed certificates), and payment of applicable governmental
charges, if any. No redemption fee will be charged. On the seventh
calendar day following such tender, or if the seventh calendar
day is not a business day, on the first business day prior thereto,
the Unit holder will be entitled to receive in cash an amount
for each Unit equal to the Redemption Price per Unit next computed
after receipt by the Trustee of such tender of Units. The "date
of tender" is deemed to be the date on which Units are received
by the Trustee, except that as regards Units received after 4:00
p.m. Eastern time, the date of tender is the next day on which
the New York Stock Exchange is open for trading and such Units
will be deemed to have been tendered to the Trustee on such day
for redemption at the redemption price computed on that day. Units
so redeemed shall be cancelled.
With respect to the Growth Trust, any Unit holder tendering 2,500
Units or more for redemption may request by written notice submitted
at the time of tender from the Trustee in lieu of a cash redemption
a distribution of shares of Equity Securities in an amount and
value of Equity Securities per Unit equal to the Redemption Price
Per Unit as determined as of the evaluation next following tender.
To the extent possible, in-kind distributions ("In-Kind Distributions")
shall be made by the Trustee through the distribution of each
of the Equity Securities in book-entry form to the account of
the Unit holder's bank or broker-dealer at the Depository Trust
Company. An In-Kind Distribution will be reduced by customary
transfer and registration charges. The tendering Unit holder will
receive his pro rata number of whole shares of each of the Equity
Securities comprising the portfolio and cash from the Capital
Account equal to the fractional shares to which the tendering
Unit holder is entitled. The Trustee may adjust the number of
shares of any issue of Equity Securities included in a Unit holder's
In-Kind Distribution to facilitate the distribution of whole shares,
such adjustment to be made on the basis of the value of Equity
Securities on the date of tender. If funds in the Capital Account
are insufficient to cover the required cash distribution to the
tendering Unit holder, the Trustee may sell Equity Securities
in the manner described above.
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a specified percentage of the
principal amount of a Unit redemption if the Trustee has not been
furnished the redeeming Unit holder's tax identification number
in the manner required by such regulations. Any amount so withheld
is transmitted to the Internal Revenue Service and may be recovered
by the Unit holder only when filing a tax return. Under normal
circumstances, the Trustee obtains the Unit holder's tax identification
number from the selling broker. However, any time a Unit holder
elects to tender Units for redemption, such Unit
Page 25
holder should make sure that the Trustee has been provided a certified
tax identification number in order to avoid this possible "back-up
withholding." In the event the Trustee has not been previously
provided such number, one must be provided at the time redemption
is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of a Trust to the extent that funds are
available for such purpose. All other amounts paid on redemption
shall be withdrawn from the Capital Account of such Trust.
The Trustee is empowered to sell Securities of a Trust in order
to make funds available for redemption. To the extent that Securities
are sold, the size and diversity of such Trust will be reduced.
Such sales may be required at a time when Securities would not
otherwise be sold and might result in lower prices than might
otherwise be realized. With respect to the Growth & Treasury Trust,
Equity Securities will be sold to meet redemptions of Units before
Treasury Obligations, although Treasury Obligations may be sold
if the Growth & Treasury Trust is assured of retaining a sufficient
principal amount of Treasury Obligations to provide funds upon
maturity of such Trust at least equal to $10.00 per Unit.
The Redemption Price per Unit (as well as the secondary market
Public Offering Price) will be determined on the basis of the
bid price of the Treasury Obligations (if any) and the aggregate
underlying value of the Equity Securities in each Trust plus or
minus cash, if any, in the Income and Capital Accounts of such
Trust, while the Public Offering Price per Unit during the initial
offering period will be determined on the basis of the offering
price of such Treasury Obligations (if any), as of the close of
trading on the New York Stock Exchange on the date any such determination
is made and the aggregate underlying value of the Equity Securities
in each Trust, plus or minus cash, if any, in the Income and Capital
Accounts of each Trust. On the Initial Date of Deposit the Public
Offering Price per Unit (which is based on the OFFERINGprices
of the Treasury Obligations (if any) and the aggregate underlying
value of the Equity Securities in each Trust and includes the
sales charge) exceeded the Unit value at which Units could have
been redeemed (based upon the current BID prices of the Treasury
Obligations (if any) and the aggregate underlying value of the
Equity Securities in each Trust) by the amount shown under "Summary
of Essential Information." The Redemption Price per Unit of each
Trust is the pro rata share of each Unit determined by the Trustee
by adding: (1) the cash on hand in the Trust other than cash deposited
in the Trust to purchase Securities not applied to the purchase
of such Securities; (2) the aggregate value of the Securities
(including "when issued" contracts, if any) held in the Trust,
as determined by the Evaluator on the basis of bid prices of the
Treasury Obligations (if any) and the aggregate underlying value
of the Equity Securities in each Trust next computed; and (3)
dividends receivable on the Equity Securities trading ex-dividend
as of the date of computation; and deducting therefrom: (1) amounts
representing any applicable taxes or governmental charges payable
out of the Trust; (2) an amount representing estimated accrued
expenses of the Trust, including but not limited to fees and expenses
of the Trustee (including legal and auditing fees), the Evaluator
and supervisory fees, if any; (3) cash held for distribution to
Unit holders of record of the Trust as of the business day prior
to the evaluation being made; and (4) other liabilities incurred
by the Trust; and finally dividing the results of such computation
by the number of Units of the Trust outstanding as of the date
thereof.
The aggregate value of the Equity Securities will be determined
in the following manner: if the Equity Securities are listed on
a national securities exchange or the NASDAQ National Market System,
this evaluation is generally based on the closing sale prices
on that exchange or that system (unless it is determined that
these prices are inappropriate as a basis for valuation) or, if
there is no closing sale price on that exchange or system, at
the closing bid prices. If the Equity Securities are not so listed
or, if so listed and the principal market therefor is other than
on the exchange, the evaluation shall generally be based on the
current bid price on the over-the-counter market (unless these
prices are inappropriate as a basis for evaluation). If current
bid prices are unavailable, the evaluation is generally determined
(a) on the basis of current bid prices for comparable securities,
(b) by appraising the value of the Equity Securities on the bid
side of the market or (c) by any combination of the above.
The right of redemption may be suspended and payment postponed
for any period during which the New York Stock Exchange is closed,
other than for customary weekend and holiday closings, or during
which the Securities and Exchange Commission determines that trading
on the New York Stock Exchange is restricted or any emergency
exists, as a result of which disposal or evaluation of the Securities
is not reasonably
Page 26
practicable, or for such other periods as the Securities and Exchange
Commission may by order permit. Under certain extreme circumstances,
the Sponsor may apply to the Securities and Exchange Commission
for an order permitting a full or partial suspension of the right
of Unit holders to redeem their Units. The Trustee is not liable
to any person in any way for any loss or damage which may result
from any such suspension or postponement.
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase
such Units by notifying the Trustee before 1:00 p.m. Eastern time
on the same business day and by making payment therefor to the
Unit holder not later than the day on which the Units would otherwise
have been redeemed by the Trustee. Units held by the Sponsor may
be tendered to the Trustee for redemption as any other Units.
In the event the Sponsor does not purchase Units, the Trustee
may sell Units tendered for redemption in the over-the-counter
market, if any, as long as the amount to be received by the Unit
holder is equal to the amount he would have received on redemption
of the Units.
The offering price of any Units acquired by the Sponsor will be
in accord with the Public Offering Price described in the then
effective prospectus describing such Units. Any profit or loss
resulting from the resale or redemption of such Units will belong
to the Sponsor.
How May Securities be Removed from the Trusts?
The Portfolio of each Trust is not "managed" by the Sponsor or
the Trustee; their activities described herein are governed solely
by the provisions of the Indenture. The Indenture provides that
the Sponsor may (but need not) direct the Trustee to dispose of
an Equity Security in the event that an issuer defaults in the
payment of a dividend that has been declared, that any action
or proceeding has been instituted restraining the payment of dividends
or there exists any legal question or impediment affecting such
Equity Security, that the issuer of the Equity Security has breached
a covenant which would affect the payments of dividends, the credit
standing of the issuer or otherwise impair the sound investment
character of the Equity Security, that the issuer has defaulted
on the payment on any other of its outstanding obligations, that
the price of the Equity Security has declined to such an extent
or other such credit factors exist so that in the opinion of the
Sponsor, the retention of such Equity Securities would be detrimental
to a Trust. Treasury Obligations in the Growth & Treasury Trust
may be sold by the Trustee only pursuant to the liquidation of
such Trust or to meet redemption requests. Pursuant to the Indenture
and with limited exceptions, the Trustee may sell any securities
or other property acquired in exchange for Equity Securities of
either Trust such as those acquired in connection with a merger
or other transaction. If offered such new or exchanged securities
or property, the Trustee shall reject the offer. However, in the
event such securities or property are nonetheless acquired by
a Trust, they may be accepted for deposit in such Trust and either
sold by the Trustee or held in the Trust pursuant to the direction
of the Sponsor (who may rely on the advice of the Portfolio Supervisor).
Proceeds from the sale of Securities by the Trustee are credited
to the Capital Account of a Trust for distribution to Unit holders
or to meet redemptions.
The Trustee may also sell Securities designated by the Sponsor,
or if not so directed, in its own discretion, for the purpose
of redeeming Units of a Trust tendered for redemption and the
payment of expenses; provided however, for the Growth & Treasury
Trust, that in the case of Securities sold to meet redemption
requests, Treasury Obligations may only be sold if the Growth
& Treasury Trust is assured of retaining a sufficient principal
amount of Treasury Obligations to provide funds upon maturity
of the Trust at least equal to $10.00 per Unit. Treasury Obligations
may not be sold by the Trustee to meet Growth & Treasury Trust
expenses.
The Sponsor, in designating Equity Securities to be sold by the
Trustee, will generally make selections in order to maintain,
to the extent practicable, the proportionate relationship among
the number of shares of individual issues of Equity Securities.
To the extent this is not practicable, the composition and diversity
of the Equity Securities may be altered. In order to obtain the
best price for a Trust, it may be necessary for the Sponsor to
specify minimum amounts (generally 100 shares) in which blocks
of Equity Securities are to be sold.
Page 27
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in
1991, acts as Sponsor for successive series of The First Trust
Combined Series, The First Trust Special Situations Trust, The
First Trust Insured Corporate Trust, The First Trust of Insured
Municipal Bonds, The First Trust GNMA, Templeton Growth and Treasury
Trust, Templeton Foreign Fund & U.S. Treasury Securities Trust
and The Advantage Growth and Treasury Securities Trust. First
Trust introduced the first insured unit investment trust in 1974
and to date more than $8 billion in First Trust unit investment
trusts have been deposited. The Sponsor's employees include a
team of professionals with many years of experience in the unit
investment trust industry. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and Securities Investor
Protection Corporation and has its principal offices at 1001 Warrenville
Road, Lisle, Illinois 60532; telephone number (708) 241-4141.
As of December 31, 1993, the total partners' capital of Nike Securities
L.P. was $12,743,032 (audited). (This paragraph relates only to
the Sponsor and not to the Trusts or to any series thereof or
to any other Underwriters. The information is included herein
only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its
contractual obligations. More detailed financial information will
be made available by the Sponsor upon request.)
Who is the Trustee?
The Trustee is United States Trust Company of New York with its
principal place of business at 45 Wall Street, New York, New York
10005 and its unit investment trust offices at 770 Broadway, New
York, New York 10003. Unit holders who have questions regarding
the Trusts, may call the Customer Service Help Line at 1-800-682-7520.
The Trustee is a member of the New York Clearing House Association
and is subject to supervision and examination by the Comptroller
of the Currency, the Federal Deposit Insurance Corporation and
the Board of Governors of the Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not participated
in the selection of the Securities. For information relating to
the responsibilities of the Trustee under the Indenture, reference
is made to the material set forth under "Rights of Unit Holders."
The Trustee and any successor trustee may resign by executing
an instrument in writing and filing the same with the Sponsor
and mailing a copy of a notice of resignation to all Unit holders.
Upon receipt of such notice, the Sponsor is obligated to appoint
a successor trustee promptly. If the Trustee becomes incapable
of acting or becomes bankrupt or its affairs are taken over by
public authorities, the Sponsor may remove the Trustee and appoint
a successor as provided in the Indenture. If upon resignation
of a trustee no successor has accepted the appointment within
30 days after notification, the retiring trustee may apply to
a court of competent jurisdiction for the appointment of a successor.
The resignation or removal of a trustee becomes effective only
when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which a Trustee shall be a party, shall
be the successor Trustee. The Trustee must be a banking corporation
organized under the laws of the United States or any State and
having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and 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 Securities.
In the event of the failure of the Sponsor to act under the Indenture,
the Trustee may act thereunder and shall not be liable for any
action taken by it in good faith under the Indenture.
Page 28
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or
upon or in respect of a Trust which the Trustee may be required
to pay under any present or future law of the United States of
America or of any other taxing authority having jurisdiction.
In addition, the Indenture contains other customary provisions
limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or becomes incapable of acting or becomes bankrupt or
its affairs are taken over by public authorities, then the Trustee
may (a) appoint a successor Sponsor at rates of compensation deemed
by the Trustee to be reasonable and not exceeding amounts prescribed
by the Securities and Exchange Commission, or (b) terminate the
Indenture and liquidate the Trusts as provided herein, or (c)
continue to act as Trustee without terminating the Indenture.
Who is the Evaluator?
The Evaluator is Securities Evaluation Service, Inc., 531 East
Roosevelt Road, Suite 200, Wheaton, Illinois 60187. The Evaluator
may resign or may be removed by the Sponsor and the Trustee, in
which event the Sponsor and the Trustee are to use their best
efforts to appoint a satisfactory successor. Such resignation
or removal shall become effective upon the acceptance of appointment
by the successor Evaluator. If upon resignation of the Evaluator
no successor has accepted appointment within 30 days after notice
of resignation, the Evaluator may apply to a court of competent
jurisdiction for the appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for
the accuracy thereof. Determinations by the Evaluator under the
Indenture shall be made in good faith upon the basis of the best
information available to it, provided, however, that the Evaluator
shall be under no liability to the Trustee, Sponsor or Unit holders
for errors in judgment. This provision shall not protect the Evaluator
in any case of willful misfeasance, bad faith, gross negligence
or reckless disregard of its obligations and duties.
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment
is (1) to cure any ambiguity or to correct or supplement any provision
of the Indenture which may be defective or inconsistent with any
other provision contained therein, or (2) to make such other provisions
as shall not adversely affect the interest of the Unit holders
(as determined in good faith by the Sponsor and the Trustee).
The Indenture provides that the Growth & Treasury Trust shall
terminate upon the maturity, redemption or other disposition of
the last of the Treasury Obligations held in such Trust, but in
no event beyond the Mandatory Termination Date indicated herein
under "Summary of Essential Information." The Indenture for the
Growth Trust provides that it shall terminate upon the Mandatory
Termination Date indicated herein under "Summary of Essential
Information." A Trust may be liquidated at any time by consent
of 100% of the Unit holders of the Trust or, in the case of the
Growth Trust, by the Trustee when the value of the Equity Securities
owned by the Trust as shown by any evaluation, is less than the
lower of $2,000,000 or 20% of the total value of Equity Securities
deposited in such Trust during the primary offering period, or
by the Trustee in the event that Units of a Trust not yet sold
aggregating more than 60% of the Units of the Trust are tendered
for redemption by the Underwriter, including the Sponsor. If a
Trust is liquidated because of the redemption of unsold Units
of the Trust by the Underwriter, the Sponsor will refund to each
purchaser of Units of the Trust the entire sales charge paid by
such purchaser. In the event of termination, written notice thereof
will be sent by the Trustee to all Unit holders of the Trust.
Within a reasonable period after termination, the Trustee will
follow the procedures set forth under "How are Income and Capital
Distributed?"
Commencing on the Treasury Obligations Maturity Date for the
Growth & Treasury Trust and on the Mandatory Termination Date
for the Growth Trust, Equity Securities will begin to be sold
in connection with the termination of the Trusts. The Sponsor
will determine the manner, timing and execution of the sale of
the Equity Securities. Written notice of any termination of a
Trust specifying the time or times at which Unit holders may surrender
their certificates for cancellation shall be given by the Trustee
to each Unit holder at his address appearing on the registration
books of the Trust maintained by the Trustee. At least 60 days
prior to the
Page 29
Treasury Obligations Maturity Date for the Growth & Treasury Trust
and 60 days prior to the Mandatory Termination Date for the Growth
Trust, the Trustee will provide written notice thereof to all
Unit holders and will include with such notice a form to enable
Unit holders to elect a distribution of shares of Equity Securities
(reduced by customary transfer and registration charges), if such
Unit holder owns at least 2,500 Units of a Trust, rather than
to receive payment in cash for such Unit holder's pro rata share
of the amounts realized upon the disposition by the Trustee of
Equity Securities. All Unit holders of the Growth & Treasury Trust
will receive their pro rata portion of the Treasury Obligations
in cash upon the termination of the Growth & Treasury Trust. To
be effective, the election form, together with surrendered certificates
and other documentation required by the Trustee, must be returned
to the Trustee at least five business days prior to the Treasury
Obligations Maturity Date and at least five business days prior
to the Mandatory Termination Date for the Growth Trust. Unit holders
not electing a distribution of shares of Equity Securities will
receive a cash distribution from the sale of the remaining Securities
within a reasonable time after the Trusts are terminated. Regardless
of the distribution involved, the Trustee will deduct from the
funds of each Trust any accrued costs, expenses, advances or indemnities
provided by the Trust Agreement, including estimated compensation
of the Trustee and costs of liquidation and any amounts required
as a reserve to provide for payment of any applicable taxes or
other governmental charges. Any sale of Securities in a Trust
upon termination may result in a lower amount than might otherwise
be realized if such sale were not required at such time. The Trustee
will then distribute to each Unit holder his pro rata share of
the balance of the Income and Capital Accounts.
Legal Opinions
The legality of the Units offered hereby and certain matters relating
to Federal tax law have been passed upon by Chapman and Cutler,
111 West Monroe Street, Chicago, Illinois 60603, as counsel for
the Sponsor. Carter, Ledyard & Milburn, will act as counsel for
the Trustee and as special New York tax counsel for the Trusts.
Experts
The statements of net assets, including the schedules of investments,
of the Trusts at the opening of business on the Initial Date of
Deposit appearing in this Prospectus and Registration Statement
have been audited by Ernst & Young, independent auditors, as set
forth in their report thereon appearing elsewhere herein and in
the Registration Statement, and are included in reliance upon
such report given upon the authority of such firm as experts in
accounting and auditing.
Page 30
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 98
We have audited the accompanying statements of net assets, including
the schedules of investments, of Pharmaceutical Growth & Treasury
Securities Trust, Series 2 and Growth & Value Trust, Pharmaceutical
Series 2, comprising The First Trust Special Situations Trust,
Series 98 as of the opening of business on May 25, 1994. These
statements of net assets are the responsibility of the Trusts'
Sponsor. Our responsibility is to express an opinion on these
statements of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the statements
of net assets are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the statements of net assets. Our procedures included
confirmation of the letters of credit held by the Trustee and
deposited in the Trusts on May 25, 1994. An audit also includes
assessing the accounting principles used and significant estimates
made by the Sponsor, as well as evaluating the overall presentation
of the statements of net assets. We believe that our audit of
the statements of net assets provides a reasonable basis for our
opinion.
In our opinion, the statements of net assets referred to above
present fairly, in all material respects, the financial position
of Pharmaceutical Growth & Treasury Securities Trust, Series 2
and Growth & Value Trust, Pharmaceutical Series 2, comprising
The First Trust Special Situations Trust, Series 98 at the opening
of business on May 25, 1994 in conformity with generally accepted
accounting principles.
ERNST & YOUNG
Chicago, Illinois
May 25, 1994
Page 31
Statement of Net Assets
At the Opening of Business on the Initial Date of Deposit
of the Securities-May 25, 1994
<TABLE>
<CAPTION>
Pharmaceutical
Growth & Treasury
Securities Trust,
Series 2
_________________
NET ASSETS
<S> <C>
Investment in Securities represented
by purchase contracts (1)(2) $ 463,106
============
Units outstanding 50,000
============
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (3) $ 490,059
Less sales charge (3) (26,953)
____________
Net Assets $ 463,106
============
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Securities listed under "Schedule of
Investments" for Pharmaceutical Growth & Treasury Securities Trust,
Series 2 is based on offering side evaluations of the Treasury
Obligations and the aggregate underlying value of the Equity Securities.
(2) An irrevocable letter of credit totaling $600,000 issued by
Bankers Trust Company has been deposited with the Trustee covering the
monies necessary for the purchase of the Securities in the Pharmaceutical
Growth & Treasury Securities Trust, Series 2 pursuant to contracts
for the purchase of such Securities.
(3) The aggregate cost to investors includes a sales charge computed
at the rate of 5.5% of the Public Offering Price (equivalent to
5.820% of the net amount invested), assuming no reduction of sales
charge for quantity purchases.
Page 32
Statement of Net Assets
At the Opening of Business on the Initial Date of Deposit
of the Securities-May 25, 1994
<TABLE>
<CAPTION>
Growth
& Value Trust,
Pharmaceutical
Series 2
______________
NET ASSETS
<S> <C>
Investment in Equity Securities represented
by purchase contracts (1)(2) $ 471,059
============
Units outstanding 50,000
============
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (3) $ 495,330
Less sales charge (3) (24,271)
_____________
Net Assets $ 471,059
=============
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule
of Investments" for Growth & Value Trust, Pharmaceutical Series
2 is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $600,000 issued by
Bankers Trust Company has been deposited with the Trustee covering the
monies necessary for the purchase of the Equity Securities in
Growth & Value Trust, Pharmaceutical Series 2 pursuant to contracts
for the purchase of such Equity Securities.
(3) The aggregate cost to investors includes a sales charge computed
at the rate of 4.9% of the Public Offering Price (equivalent to
5.152% of the net amount invested), assuming no reduction of sales
charge for quantity purchases.
Page 33
Schedule of Investments
PHARMACEUTICAL GROWTH & TREASURY SECURITIES TRUST, SERIES 2
At the Opening of Business on the Initial Date of Deposit
of the Securities-May 25, 1994
<TABLE>
<CAPTION>
Percentage of Market Value
Aggregate per Share of Cost of
Maturity Offering Equity Securities
Value Name of Issuer and Title of Security (1) Price Securities to Trust (2)
________ ________________________________________ ________________ ________ ____________
<C> <S> <C> <C> <C>
$500,000 Zero coupon U.S. Treasury bonds 50.70% $ 234,783
maturing November 15, 2004
Number Ticker Symbol and
of Shares Name of Issuer of Equity Securities (1)
_________ _______________________________________
434 ATB Abbott Laboratories 2.74% $ 29.250 12,694
507 AZA Alza Corporation 2.74% 25.000 12,675
222 AHP American Home Products Corporation 2.74% 57.125 12,682
233 BMY Bristol-Myers Squibb Company 2.74% 54.500 12,699
292 FRX Forest Laboratories, Inc. (Class A) 2.73% 43.375 12,665
769 GLX Glaxo Holdings PLC* 2.74% 16.500 12,689
291 JNJ Johnson & Johnson 2.74% 43.625 12,695
228 LLY Lilly (Eli) & Company 2.74% 55.625 12,682
741 MKC Marion Merrell Dow, Inc. 2.74% 17.125 12,690
411 MRK Merck & Company, Inc. 2.74% 30.875 12,690
642 MYL Mylan Laboratories, Inc. 2.74% 19.750 12,679
199 PFE Pfizer, Inc. 2.73% 63.625 12,661
377 RPR Rhone-Poulenc Rorer, Inc. 2.74% 33.625 12,677
197 SGP Schering-Plough 2.74% 64.500 12,706
412 SBH SmithKline Beecham PLC* 2.74% 30.750 12,669
561 TEVIY Teva Pharmaceuticals Industries, Ltd.* 2.74% 22.625 12,693
445 UPJ Upjohn Company 2.74% 28.500 12,682
182 WLA Warner-Lambert Company 2.74% 69.750 12,695
______ __________
Total Equity Securities 49.30% 228,323
______ __________
Total Investments 100% $ 463,106
====== ==========
</TABLE>
[FN]
(1) The Treasury Obligations were purchased at a discount from
their par value because there is no stated interest income thereon
(such securities are often referred to as zero coupon U.S. Treasury
bonds). Over the life of the Treasury Obligations the value increases,
so that upon maturity the holders will receive 100% of the principal
amount thereof.
Page 34
All Securities are represented by regular way contracts to purchase
such Securities for the performance of which an irrevocable letter
of credit has been deposited with the Trustee. The contracts to
purchase Securities were entered into by the Sponsor on May 24
and May 25, 1994.
(2) The cost of the Securities to the Trust represents the offering
side evaluation as determined by the Evaluator (certain shareholders
of which are officers of the Sponsor) with respect to the Treasury
Obligations and the aggregate underlying value with respect to
the Equity Securities acquired (generally determined by the closing
sale prices of listed Equity Securities and the ask prices of
over-the-counter traded Equity Securities). The offering side
evaluation of the Treasury Obligations is greater than the bid
side evaluation of such Treasury Obligations which is the basis
on which the Redemption Price per Unit will be determined after
the initial offering period. The aggregate value, based on the
bid side evaluation of the Treasury Obligations and the aggregate
underlying value of the Equity Securities on the Initial Date
of Deposit, was $462,159. Cost and profit to the Sponsor relating
to the Treasury Obligations sold to the Trust were $231,415
and $3,368, respectively. Cost and profit to Sponsor relating
to the Equity Securities sold to the Trust were $228,246 and
$77, respectively.
* Indicates an American Depositary Receipt. See "What are Equity
Securities?"
Page 35
Schedule of Investments
GROWTH & VALUE TRUST, PHARMACEUTICAL SERIES 2
At the Opening of Business on the Initial Date of Deposit
of the Securities-May 25, 1994
<TABLE>
<CAPTION>
Percentage Cost of
of Aggregate Market Equity
Number Ticker Symbol and Offering Value Securities
of Shares Name of Issuer of Equity Securities (1) Price per Share to Trust (2)
_________ _______________________________________ ____________ _________ ____________
<C> <S> <C> <C> <C>
895 ABT Abbott Laboratories 5.56% $ 29.250 $ 26,179
1,051 AZA Alza Corporation 5.58% 25.000 26,275
459 AHP American Home Products Corporation 5.57% 57.125 26,220
478 BMY Bristol-Myers Squibb Company 5.53% 54.500 26,051
609 FRX Forest Laboratories, Inc. (Class A) 5.61% 43.375 26,415
1,589 GLX Glaxo Holdings PLC* 5.57% 16.500 26,219
600 JNJ Johnson & Johnson 5.55% 43.625 26,175
478 LLY Lilly (Eli) & Company 5.64% 55.625 26,589
1,531 MKC Marion Merrell Dow, Inc. 5.57% 17.125 26,218
829 MRK Merck & Company, Inc. 5.43% 30.875 25,595
1,305 MYL Mylan Laboratories, Inc. 5.47% 19.750 25,774
413 PFE Pfizer, Inc. 5.58% 63.625 26,277
780 RPR Rhone-Poulenc Rorer, Inc. 5.57% 33.625 26,228
406 SGP Schering-Plough 5.56% 64.500 26,187
852 SBH SmithKline Beecham PLC* 5.56% 30.750 26,199
1,149 TEVIY Teva Pharmaceuticals Industries, Ltd.* 5.52% 22.625 25,996
923 UPJ Upjohn Company 5.58% 28.500 26,306
375 WLA Warner-Lambert Company 5.55% 69.750 26,156
______ ___________
Total Investments 100% $ 471,059
====== ===========
</TABLE>
[FN]
(1) All Equity Securities are represented by regular way contracts
to purchase such Equity Securities for the performance of which
an irrevocable letter of credit has been deposited with the Trustee.
The contracts to purchase Equity Securities were entered into
by the Sponsor on May 24, 1994.
(2) The cost of the Equity Securities to the Trust represents
the aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the closing sale prices of the
listed Equity Securities and the ask prices of the over-the-counter
traded Equity Securities). The valuation of the Equity Securities
has been determined by the Evaluator, certain shareholders of
which are officers of the Sponsor. The aggregate underlying value
of the Equity Securities on the Initial Date of Deposit was $471,059.
Cost and profit to Sponsor relating to the Equity Securities sold
to the Trust were $470,815 and $244, respectively.
* Indicates an American Depositary Receipt. See "What are Equity
Securities?"
Page 36
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Page 37
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Page 38
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Page 39
<TABLE>
<CAPTION>
CONTENTS:
<S> <C>
Summary of Essential Information:
Pharmaceutical Growth & Treasury Securities Trust,
Series 2 5
Growth & Value Trust, Pharmaceutical Series 2 6
The First Trust Special Situations Trust, Series 98:
What is The First Trust Special Situations Trust? 7
What are the Expenses and Charges? 9
What is the Federal Tax Status of Unit Holders? 10
Why are Investments in the Trusts Suitable for
Retirement Plans? 13
Portfolio:
What are Treasury Obligations? 13
What are Equity Securities? 13
What are the Equity Securities Selected for
Pharmaceutical Growth & Treasury Securities
Trust, Series 2 and Growth & Value Trust,
Pharmaceutical Series 2? 16
What are Some Additional Considerations for
Investors? 18
Public Offering:
How is the Public Offering Price Determined? 19
How are Units Distributed? 21
What are the Sponsor's Profits? 22
Will There be a Secondary Market? 23
Rights of Unit Holders:
How is Evidence of Ownership Issued and
Transferred? 23
How are Income and Capital Distributed? 24
What Reports will Unit Holders Receive? 25
How May Units be Redeemed? 25
How May Units be Purchased by the Sponsor? 27
How May Securities be Removed from the Trusts? 27
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 28
Who is the Trustee? 28
Limitations on Liabilities of Sponsor and Trustee 28
Who is the Evaluator? 29
Other Information:
How May the Indenture be Amended or
Terminated? 29
Legal Opinions 30
Experts 30
Report of Independent Auditors 31
Statements of Net Assets:
Pharmaceutical Growth & Treasury Securities
Trust, Series 2 32
Growth & Value Trust, Pharmaceutical Series 2 33
Schedules of Investments:
Pharmaceutical Growth & Treasury Securities
Trust, Series 2 34
Growth & Value Trust, Pharmaceutical Series 2 36
_________________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION
TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET
FORTH IN THE REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO,
WHICH THE TRUST HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST
(registered trademark)
Pharmaceutical Growth & Treasury Securities Trust
Series 2
Growth & Value Trust, Pharmaceutical
Series 2
First Trust
(registered trademark)
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-708-241-4141
Trustee:
United States Trust Company
of New York
770 Broadway
New York, New York 10003
1-800-682-7520
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
May 25, 1994
CONTENTS OF REGISTRATION STATEMENT
A. BONDING ARRANGEMENTS OF DEPOSITOR:
Nike Securities L.P. is covered by a Brokers' Fidelity Bond,
in the total amount of $1,000,000, the insurer being
National Union Fire Insurance Company of Pittsburgh.
B. THIS REGISTRATION STATEMENT ON FORM S-6 COMPRISES
THE FOLLOWING PAPERS AND DOCUMENTS:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
S-1
SIGNATURES
The Registrant, The First Trust Special Situations Trust,
Series 98, hereby identifies The First Trust Special Situations
Trust, Series 4 Great Lakes Growth and Treasury Trust, Series 1
and The First Trust Special Situations Trust, Series 18 Wisconsin
Growth and Treasury Securities Trust, Series 1, for purposes of
the representations required by Rule 487 and represents the
following:
(1) that the portfolio securities deposited in the series
as to the securities of which this Registration Statement is
being filed do not differ materially in type or quality from
those deposited in such previous series;
(2) that, except to the extent necessary to identify the
specific portfolio securities deposited in, and to provide
essential financial information for, the series with respect to
the securities of which this Registration Statement is being
filed, this Registration Statement does not contain disclosures
that differ in any material respect from those contained in the
registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and
(3) that it has complied with Rule 460 under the Securities
Act of 1933.
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The First Trust Special Situations Trust, Series
98, has duly caused this Amendment to Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the Village of Lisle and State of Illinois on May
25, 1994.
THE FIRST TRUST SPECIAL SITUATIONS
TRUST, SERIES 98
By NIKE SECURITIES L.P.
Depositor
By Carlos E. Nardo
Senior Vice President
S-2
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below by the following person in the capacity and on the date
indicated:
NAME TITLE* DATE
Robert D. Van Kampen Sole Director )
of Nike Securities )
Corporation, the ) May 25, 1994
General Partner of )
Nike Securities L.P. )
)
)
) Carlos E. Nardo
) Attorney-in-Fact**
)
)
* The title of the person named herein represents his
capacity in and relationship to Nike Securities L.P.,
Depositor.
** An executed copy of the related power of attorney was
filed with the Securities and Exchange Commission in
connection with the Amendment No. 1 to Form S-6 of The
First Trust Special Situations Trust, Series 18 (File No.
33-42683) and the same is hereby incorporated herein by
this reference.
S-3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated May 25, 1994 in
Amendment No. 1 to the Registration Statement (Form S-6) (File
No. 33-53637) and related Prospectus of The First Trust Special
Situations Trust, Series 98.
ERNST & YOUNG
Chicago, Illinois
May 25, 1994
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF SECURITIES EVALUATION SERVICE, INC.
The consent of Securities Evaluation Service, Inc. to the
use of its name in the Prospectus included in the Registration
Statement will be filed as Exhibit 4.1 to the Registration
Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 18 and
subsequent Series effective October 15, 1991 among Nike
Securities L.P., as Depositor, United States Trust
Company of New York as Trustee, Securities Evaluation
Service, Inc., as Evaluator, and Nike Financial Advisory
Services L.P. as Portfolio Supervisor (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18) and Form of Standard Terms
and Conditions of Trust for The First Trust Special
Situations Trust, Series 22 and certain subsequent
Series, effective November 20, 1991 among Nike
Securities L.P., as Depositor, United States Trust
Company of New York as Trustee, Securities Evaluation
Service, Inc., as Evaluator, and Nike Financial Advisory
Services L.P. as Portfolio Supervisor (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
43693] filed on behalf of The First Trust Special
Situations Trust, Series 22).
1.1.1 Form of Trust Agreement for Series 98 among Nike
Securities L.P., as Depositor, United States Trust
Company of New York, as Trustee, Securities Evaluation
Service, Inc., as Evaluator, and First Trust Advisors
L.P., as Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities
L.P., Depositor (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-
6 [File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
S-5
1.6 Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42755] filed on
behalf of The First Trust Special Situations Trust,
Series 19).
2.1 Copy of Certificate of Ownership (included in Exhibit
1.1 filed herewith on page 2 and incorporated herein by
reference).
3.1 Opinion of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal income tax status of
securities being registered.
3.3 Opinion of counsel as to New York income tax status of
securities being registered.
3.4 Opinion of counsel as to advancement of funds by
Trustee.
4.1 Consent of Securities Evaluation Service, Inc.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on
page S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
S-6
</TABLE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 98
TRUST AGREEMENT
Dated: May 25, 1994
This Trust Agreement among Nike Securities L.P., as
Depositor, United States Trust Company of New York, as Trustee,
Securities Evaluation Service, Inc., as Evaluator, and First
Trust Advisors L.P., as Portfolio Supervisor, sets forth certain
provisions in full and incorporates other provisions by reference
to the document entitled "Standard Terms and Conditions of Trust
for The First Trust Special Situations Trust, Series 18 and
subsequent Series, Effective October 15, 1991" for the document
entitled Pharmaceutical Growth & Treasury Securities Trust,
Series 2 and "Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 22 and subsequent
Series, Effective November 20, 1991" for Growth & Value Trust,
Pharmaceutical Series 2 (herein collectively called the "Standard
Terms and Conditions of Trust"), and such provisions as are
incorporated by reference constitute a single instrument. All
references herein to Articles and Sections are to Articles and
Sections of the Standard Terms and Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II and Part III hereof,
all the provisions contained in the Standard Terms and Conditions
of Trust are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully and
to the same extent as tough said provisions had been set forth in
full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST FOR
PHARMACEUTICAL GROWTH & TREASURY SECURITIES TRUST, SERIES 2
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and
Conditions of Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for
the Trust on the Initial Date of Deposit is 50,000 Units.
(2) The initial fractional undivided interest in
and ownership of the Trust represented by each Unit thereof
shall be 1/50,000.
Documents representing this number of Units for the
Trust are being delivered by the Trustee to the Depositor
pursuant to Section 2.03 of the Standard Terms and
Conditions of Trust.
C. The Percentage Ratio is as follows on the Initial
Date of Deposit:
2.74% Abbott Laboratories, 2.74% Alza Corporation,
2.74% American Home Products Corporation, 2.74% Bristol-
Myers Squibb Company, 2.73% Forest Laboratories, Inc.
(Class A), 2.74% Glaxo Holdings PLC, 2.74% Johnson &
Johnson, 2.74% Lilly (Eli) & Company, 2.74% Marion
Merrell Dow, Inc., 2.74% Merck & Company, Inc., 2.74%
Mylan Laboratories, 2.73% Pfizer, Inc., 2.74% Rhone-
Poulenc Rorer, Inc., 2.74% Schering-Plough, 2.74%
SmithKline Beecham PLC, 2.74% Teva Pharmaceuticals
Industries Ltd., 2.74% Upjohn Company, 2.74% Warner-
Lambert Company.
D. The Record Dates shall be as set forth in the
Prospectus under "Summary of Essential Information."
E. The Distribution Dates shall be as set forth in
the Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall
be November 15, 2004.
G. The Treasury Obligations Maturity Date for the
Trust shall be November 15, 2004.
H. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust
shall be an annual fee of $0.003 per Unit calculated on the
largest number of Units outstanding during each period in
respect of which a payment is made pursuant to Section 3.05,
payable on a Distribution Date.
I. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust
shall be an annual fee of $0.009 per Unit, calculated on the
largest number of Units outstanding during each period in
respect of which a payment is made pursuant to Section 3.05.
However, in no event, except as may be otherwise be provided
in the Standard Terms and Conditions of Trust, shall the
Trustee receive compensation in any one year from any Trust
of less than $2,000 for such annual compensation.
J. The Initial Date of Deposit for the Trust is May
25, 1994.
K. The minimum amount of Equity Securities to be sold
by the Trustee pursuant to Section 5.02 of the Indenture for
the redemption of Units shall be 100 shares.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST FOR
GROWTH & VALUE TRUST, PHARMACEUTICAL SERIES 2
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and
Conditions of Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for
the Trust on the Initial Date of Deposit is
50,000 Units.
(2) The initial fractional undivided interest in
and ownership of the Trust represented by each Unit thereof
shall be 1/50,000.
Documents representing this number of Units for the
Trust are being delivered by the Trustee to the Depositor
pursuant to Section 2.03 of the Standard Terms and
Conditions of Trust.
C. The Percentage Ratio is as follows on the Initial
Date of Deposit:
5.56% Abbott Laboratories, 5.58% Alza Corporation,
5.57% American Home Products Corporation, 5.53% Bristol-
Meyers Squibb Company, 5.61% Forest Laboratories, Inc.
(Class A), 5.57% Glaxo Holdings PLC, 5.55% Johnson &
Johnson, 5.64% Lilly (Eli) & Company, 5.57% Marion
Merrell Dow, Inc., 5.43% Merck & Company, Inc., 5.47%
Mylan Laboratories, 5.58% Pfizer, Inc., 5.57% Rhone-
Poulenc Rorer, Inc., 5.56% Schering-Plough, 5.56%
SmithKline Beecham PLC, 5.52% Teva Pharmaceuticals
Industries Ltd., 5.58% Upjohn Company, 5.55% Warner-
Lambert Company.
D. The Record Dates shall be as set forth in the
Prospectus under "Summary of Essential Information."
E. The Distribution Dates shall be as set forth in
the Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall
be June 1, 2001.
H. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust
shall be an annual fee of $0.003 per Unit calculated on the
largest number of Units outstanding during each period in
respect of which a payment is made pursuant to Section 3.05,
payable on a Distribution Date.
I. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust
shall be an annual fee of $0.009 per Unit, calculated on the
largest number of Units outstanding during each period in
respect of which a payment is made pursuant to Section 3.05.
However, in no event, except as may be otherwise be provided
in the Standard Terms and Conditions of Trust, shall the
Trustee receive compensation in any one year from any Trust
of less than $2,000 for such annual compensation.
J. The Initial Date of Deposit for the Trust is May
25, 1994.
K. The minimum amount of Equity Securities to be sold
by the Trustee pursuant to Section 5.02 of the Indenture for
the redemption of Units shall be 100 shares.
PART III FOR PHARMACEUTICAL GROWTH & TREASURY
SECURITIES TRUST, SERIES 2
A. The term "Capital Account" as set forth in the
Prospectus shall be deemed to refer to the "Principal Account."
B. Paragraph (b) of Section 2.01 of the Standard Terms and
Conditions of Trust is amended by substituting the following
sentences for the third and fourth sentences of such paragraph:
"The Trustee shall not accept any deposit pursuant to
this Section 2.01(b) unless the Depositor and Trustee have
each determined that the maturity value of the Zero Coupon
Obligations included in the deposit, divided by the number
of Units created by reason of the deposit, shall equal
$1.00; written certifications of such determinations shall
be executed by the Depositor and Trustee and preserved in
the Trust records with a copy of each such written
certification to Standard & Poor's Corporation so long as
Units of the Trust are rated by them. The Depositor shall,
at its expense, cause independent public accountants to
review the Trust's holdings (i) at such time as the
Depositor determines no further deposits shall be made
pursuant to this paragraph and (ii), if earlier, as of the
90th day following the initial deposit, for the purpose of
certifying whether the face value of the Zero Coupon
Obligations then held by the Trust divided by the Units then
outstanding equals $1.00. A copy of each written report
from the independent public accountants based on their
review will be provided to Standard & Poor's Corporation so
long as Units of the Trust are rated by them."
C. The last sentence of the first paragraph of Section
5.02 of the Standard Terms and Conditions of Trust is amended by
substituting "4:00 p.m. Eastern time" for "12:00 p.m in the City
of New York."
D. The second paragraph of Section 5.02 of the Standard
Terms and Conditions of Trust is amended by substituting the
following sentence for the third sentence of the second paragraph
of such Section:
"If such available funds shall be insufficient, the
Trustee shall sell such Securities as have been designated
on the current list for such purpose by the Portfolio
Supervisor, as hereinafter in this Section 5.02 provided, in
amounts as the Trustee in its discretion shall deem
advisable or necessary in order to fund the Principal
Account for purposes of such redemption, provided however,
that Zero Coupon Obligations may not be sold unless the
Depositor and Trustee, which may rely on the advice of the
Portfolio Supervisor, have determined that the face value of
the Zero Coupon Obligations remaining after such proposed
sale, divided by the number of Units outstanding after the
tendered Units are redeemed, shall equal or exceed $1.00; a
written certification as to such determination shall be
executed by the Depositor and Trustee and preserved in the
Trust records with a copy of each such written certification
to Standard & Poor's Corporation so long as Units of the
Trust are rated by them. Within 90 days of the fiscal year
end of the Trust, the Depositor shall obtain, at its
expense, an annual written certification from the
independent public accountants as to such determination
which will also be provided to Standard & Poor's Corporation
so long as Units of the Trust are rated by them."
E. The third sentence of the seventh paragraph of Section
5.02 of the Standard Terms and Conditions of Trust is amended by
deleting "a certification from the independent public accountants
to the effect described in the second paragraph of this Section
5.02" and in its place inserting "a certification from the
Depositor and Trustee to the effect described in the second
paragraph of this Section 5.02."
F. Paragraph (a) of subsection II of Section 3.05 of the
Standard Terms and Conditions of Trust is hereby amended to
substitute the following sentence for the first sentence of such
paragraph:
"On each Distribution Date, the Trustee shall
distribute to each Unit holder of record at the close of
business on the Record Date immediately preceding such
Distribution Date an amount per Unit equal to such Unit
holder's Income Distribution (as defined below), plus such
Unit holder's pro rata share of the balance of the Principal
Account (except for monies on deposit therein required to
purchase Contract Obligations) computed as of the close of
business on such Record Date after deduction of any amounts
provided in Subsection I, provided, however, that with
respect to distributions other than the distribution
occurring in the month of December of each year, the Trustee
shall not be required to make a distribution from the
Principal Account unless the amount available for
distribution shall equal $1.00 per 1000 Units in the case of
Units initially offered at approximately $1.00 per Unit, or,
$1.00 per 100 Units in the case of Units initially offered
at approximately $10.00 per Unit."
G. For purposes of this Trust, all references in the
Standard Terms and Conditions of Trust including provisions
thereof amended hereby to "1.00 per Unit" shall be amended to
read "10.00 per Unit" and all references to "per 1,000 Units"
shall be amended to read "per 100 Units."
H. Section 3.12 of the Standard Terms and Conditions of
Trust is hereby deleted in its entirety and replaced with the
following language:
"Section 3.12. Notice to Depositor. In the event that
the Trustee shall have been notified at any time of any
action to be taken or proposed to be taken by at least a
legally required number of holders of any Zero Coupon
Obligation, if any, (including but not limited to the making
of any demand, direction, request, giving of any notice,
consent or waiver or the voting with respect to any
amendment or supplement to any indenture, resolution,
agreement or other instrument under or pursuant to which the
Zero Coupon Obligations, if any, have been issued) the
Trustee shall promptly notify the Depositor and shall
thereupon take such action or refrain from taking any action
as the Depositor shall in writing direct; provided, however,
that if the Depositor shall not within five Business Days of
the giving of such notice to the Depositor direct the
Trustee to take or refrain from taking any action, the
Trustee shall take such action as it, in its sole
discretion, shall deem advisable.
In the event that the Trustee shall have been notified
at any time of any action to be taken or proposed to be
taken by at least a legally required number of holders of
any Equity Securities deposited in a Trust, the Trustee
shall take such action or omit from taking any action, as
appropriate, so as to insure that the Equity Securities are
voted as closely as possible in the same manner and the same
general proportion as are the Equity Securities held by
owners other than the Trust.
In the event that an offer by the issuer of any of the
Securities or any other party shall be made to issue new
securities, or to exchange securities, for Trust Securities,
the Trustee shall reject such offer. However, should any
exchange or substitution be effected notwithstanding such
rejection or without an initial offer, any Securities, cash
and/or property received in exchange shall be deposited
hereunder and shall be promptly sold, if securities or
property, by the Trustee pursuant to the Depositor's
direction, unless the Depositor advises the Trustee to keep
such securities or property. The Depositor may rely on the
Portfolio Supervisor in so advising the Trustee. The cash
received in such exchange and cash proceeds of any such
sales shall be distributed to Unit holders on the next
distribution date in the manner set forth in Section 3.05
regarding distributions from the Principal Account. The
Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any such sale.
Neither the Depositor nor the Trustee shall be liable
to any person for any action or failure to take action
pursuant to the terms of this Section 3.12 other than
failure to notify the Depositor.
Whenever new securities or property is received and
retained by the Trust pursuant to this Section 3.12, the
Trustee shall, within 5 days thereafter, mail to all Unit
holders of the Trust notices of such acquisition unless
legal counsel for the Trust determines that such notice is
not required by The Investment Company Act of 1940, as
amended."
I. Section 1.01(4) shall be amended to read as follows:
"(4)"Portfolio Supervisor" shall mean First Trust
Advisors L.P. and its successors in interest, or any
successor portfolio supervisor appointed as hereinafter
provided."
PART III FOR GROWTH & VALUE TRUST, PHARMACEUTICAL SERIES 2
A. The term "Capital Account" as set forth in the
Prospectus shall be deemed to refer to the "Principal Account."
B. Paragraph (g) of Section 6.01 of the Standard Terms and
Conditions of Trust is hereby amended by inserting the following
after the first word thereof:
"(i) the value of any Trust as shown by an evaluation
by the Trustee pursuant to Section 5.01 hereof shall be less
than the lower of $2,000,000 or 20% of the total principal
amount of Securities deposited in such Trust, or (ii)"
C. Paragraph (c) of Subsection II of Section 3.05 of the
Standard Terms and Conditions of Trust is hereby amended to read
as follows:
"On each Distribution Date the Trustee shall distribute
to each Unit holder of record at the close of business on
the Record Date immediately preceding such Distribution Date
an amount per Unit equal to such Unit holder's pro rata
share of the balance of the Principal Account (except for
monies on deposit therein required to purchase Contract
Obligations) computed as of the close of business on such
Record Date after deduction of any amounts provided in
Subsection I, provided, however, that with respect to
distributions other than the distribution occurring in the
month of December of each year, the Trustee shall not be
required to make a distribution from the Principal Account
unless the amount available for distribution shall equal
$1.00 per 1000 Units in the case of Units initially offered
at approximately $1.00 per Unit, or, $1.00 per 100 Units in
the case of Units initially offered at approximately $10.00
per Unit."
D. For purposes of this Trust, all references in the
Standard Terms and Conditions of Trust including provisions
thereof amended hereby to "$1.00 per Unit" shall be amended to
read "$10.00 per Unit" and all references to "per 1,000 Units"
shall be amended to read "per 100 Units."
E. Section 5.02 of the Standard Terms and Conditions of
Trust is amended by adding the following new paragraph after the
second paragraph of such section:
"In lieu of a cash redemption, Unit holders tendering
2,500 Units or more for redemption may request from the
Trustee by written notice submitted at the time of tender an
in kind distribution of shares of Securities, to the extent
of whole shares. To the extent possible, in kind
distributions of Securities shall be made by the Trustee
through the distribution of each of the Securities in book-
entry form to the account of the Unit holder's bank or
broker-dealer at the Depository Trust Company. An in kind
distribution will be reduced by all expenses in connection
with customary transfer and registration charges. The
tendering Unit holder will receive his pro rata number of
whole shares of each of the Securities comprising the
portfolio and cash from the Principal Account equal to the
fractional shares to which the tendering Unit holder is
entitled. The Trustee may, but shall not be required to,
adjust the number of shares of any issue of Securities
included in a Unit holder's in kind distribution to
facilitate the distribution of whole shares, such adjustment
to be made on the basis of the value of Securities on the
date of tender. If funds in the Principal Account are
insufficient to cover the required cash distribution to the
tendering Unit holder, the Trustee may sell Securities in
the manner described in this Section 5.02."
F. Section 8.02 of the Standard Terms and Conditions of
Trust shall be amended to delete the reference to "100,000 Units"
and substitute "2,500 Units" in the third sentence of the second
paragraph thereof.
G The first paragraph of Section 3.05.II(a) of the
Standard Terms and Conditions of Trust is hereby amended to read
in its entirety as follows:
"II. (a) On each Distribution Date, the Trustee shall
distribute to each Unit holder of record at the close of
business on the Record Date immediately preceding such
Distribution Date an amount per Unit equal to such Unit
holder's Income Distribution (as defined below), plus such
Unit holder's pro rata share of the balance of the Principal
Account (except for monies on deposit therein required to
purchase Contract Obligations) computed as of the close of
business on such Record Date after deduction of any amounts
provided in Subsection I, provided, however, that with
respect to distributions other than the distribution
occurring in the month of December of each year, the Trustee
shall not be required to make a distribution from the
Principal Account unless the amount available for
distribution shall equal $1.00 per 100 Units."
H. Section 3.05.II(b) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"(b) For purposes of this Section 3.05, the Unit
holder's Income Distribution shall be equal to such Unit
holder's pro rata share of the cash balance in the Income
Account computed as of the close of business on the Record
Date immediately preceding such Income Distribution after
deduction of (i) the fees and expenses then deductible
pursuant to Section 3.05.I. and (ii) the Trustee's estimate
of other expenses properly chargeable to the Income Account
pursuant to the Indenture which have accrued, as of such
Record Date, or are otherwise properly attributable to the
period to which such Income Distribution relates."
I. Section 3.11 of the Standard Terms and Conditoins of
Trust is hereby deleted in its entirety and replaced with the
following language:
"Section 3.11 Notice to Depositor. In the event that
the Trustee shall have been notified at any time of any
action to be taken or proposed to be taken by at least a
legally required number of holders of the equity securities
(the "Equity Securities") (including but not limited to the
making of any demand, direction, request, giving of any
notice, consent or waiver or the voting with respect to any
amendment or supplement to any indenture, resolution,
agreement or other instrument under or pursuant to which the
Contract Obligations, if any, have been issued) the Trustee
shall promptly notify the Depositor and shall thereupon take
such action or refrain from taking any action as the
Depositor shall in writing direct; provided, however, that
if the Depositor shall not within five Business Days of the
giving of such notice to the Depositor direct the Trustee to
take or refrain from taking any action, the Trustee shall
take such action as it, in its sole discretion, shall deem
advisable.
In the event that the Trustee shall have been notified
at any time of any action to be taken or proposed to be
taken by at least a legally required number of holders of
any Equity Securities deposited in a Trust, the Trustee
shall take such action or omit from taking any action, as
appropriate, so as to insure that the Equity Securities are
voted as closely as possible in the same manner and the same
general proportion as are the Equity Securities held by
owners other than the Trust.
In the event that an offer by the issuer of any of the
Securities or any other party shall be made to issue new
securities, or to exchange securities, for Trust Securities,
the Trustee shall reject such offer. However, should any
exchange or substitution be effected notwithstanding such
rejection or without an initial offer, any Securities, cash
and/or property received in exchange shall be deposited
hereunder and shall be promptly sold, if securities or
property, by the Trustee pursuant to the Depositor's
direction, unless the Depositor advises the Trustee to keep
such securities or property. The Depositor may rely on the
Portfolio Supervisor in so advising the Trustee. The cash
received in such exchange and cash proceeds of any such
sales shall be distributed to Unit holders on the next
distribution date in the manner set forth in Section 3.05
regarding distributions from the Principal Account. The
Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any such sale.
Neither the Depositor nor the Trustee shall be liable
to any person for any action or failure to take action
pursuant to the terms of this Section 3.11 other than
failure to notify the Depositor.
Whenever new securities or property is received and
retained by the Trust pursuant to this Section 3.11, the
Trustee shall, within 5 days thereafter, mail to all Unit
holders of the Trust notices of such acquisition unless
legal counsel for the Trust determines that such notice is
not required by The Investment Company Act of 1940, as
amended."
J. Section 1.01(4) shall be amended to read as follows:
"(4) "Portfolio Supervisor" shall mean First Trust
Advisors L.P. and its successors in interest, or any
successor portfolio supervisor appointed as hereinafter
provided."
IN WITNESS WHEREOF, Nike Securities L.P., United States
Trust Company of New York, Securities Evaluation Service, Inc.
and First Trust Advisors L.P. have each caused this Trust
Agreement to be executed and the respective corporate seal to be
hereto affixed and attested (if applicable) by authorized
officers; all as of the day, month and year first above written.
NIKE SECURITIES L.P.,Depositor
By Carlos E. Nardo
Senior Vice President
UNITED STATES TRUST COMPANY OF NEW
YORK, Trustee
(SEAL) By Thomas Porrazzo
Vice President
Attest:
Rosalia A. Raviele
Assistant Vice President SECURITIES EVALUATION SERVICE,
INC., Evaluator
(SEAL) By James R. Couture
President
Attest:
James G. Prince
Vice President and
Assistant Secretary FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Carlos E. Nardo
Senior Vice President
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
The First Trust Special Situations Trust, Series 98
(Note: Incorporated herein and made a part hereof for
the Trust is the "Schedule of Investments" for the Trust as
set forth in the Prospectus.)
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
May 25, 1994
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: The First Trust Special Situations Trust, Series 98
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of The First Trust Special Situations
Trust, Series 98 in connection with the preparation, execution
and delivery of a Trust Agreement dated May 25, 1994 among Nike
Securities L.P., as Depositor, United States Trust Company of New
York, as Trustee, Securities Evaluation Service, Inc., as
Evaluator, and First Trust Advisors L.P., as Portfolio
Supervisor, pursuant to which the Depositor has delivered to and
deposited the Securities listed in Schedule A to the Trust
Agreement with the Trustee and pursuant to which the Trustee has
issued to or on the order of the Depositor a certificate or
certificates representing units of fractional undivided interest
in and ownership of the Fund created under said Trust Agreement.
In connection therewith, we have examined such pertinent
records and documents and matters of law as we have deemed
necessary in order to enable us to express the opinions
hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. the execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units
in the Fund have been duly authorized; and
2. the certificates evidencing the Units in the Fund when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will
constitute valid and binding obligations of the Fund and the
Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-53637)
relating to the Units referred to above, to the use of our name
and to the reference to our firm in said Registration Statement
and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EFF:jlg
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
May 25, 1994
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
United States Trust Company of New York
770 Broadway
New York, New York 10003
Re: The First Trust Special Situations Trust, Series 98
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of The First Trust Special Situations Trust, Series 98 (the
"Fund"), in connection with the issuance of units of fractional
undivided interests in the Trust of said Fund (the "Trust"),
under a Trust Agreement, dated May 25, 1994 (the "Indenture"),
between Nike Securities L.P., as Depositor, United States Trust
Company of New York, as Trustee, Securities Evaluation Service,
Inc., as Evaluator and First Trust Advisors L.P., as Portfolio
Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents we have deemed pertinent. The opinions
expressed herein assume that the Trust will be administered, and
investments by the Trust from proceeds of subsequent deposits, if
any, will be made, in accordance with the terms of the Indenture.
The Trust holds both Treasury Obligations and Equity Securities
(collectively, the "Securities") as such terms are defined in the
Prospectus.
Based upon the foregoing and upon an investigation of such
matters of law as we consider to be applicable, we are of the
opinion that, under existing federal income tax law:
I. Each Trust is not an association taxable as a
corporation for Federal income tax purposes; each Unit
holder will be treated as the owner of a pro rata portion of
the assets of a Trust under the Internal Revenue Code of
1986 (the "Code"); the income of a Trust will be treated as
income of the Unit holders thereof under the Code; and an
item of income each Trust will have the same character in
the hands of a Unit holder as it would have in the hands of
each Trustee. Each Unit holder will be considered to have
received his pro rata share of income derived from each
Trust asset when such income is received by the Trust.
II. Each Unit holder will have a taxable event when a
Trust disposes of a Security (whether by sale, exchange,
redemption, or payment at maturity) or upon the sale or
redemption of Units by such Unit holder. The price a Unit
holder pays for his Units, including sales charges, is
allocated among his pro rata portion of each Security held
by a Trust (in proportion to the fair market values thereof
on the date the Unit holder purchases his Units) in order to
determine his initial cost for his pro rata portion of each
Security held by a Trust. The Treasury Obligations are
treated as bonds that were originally issued at an original
issue discount. Because the Treasury Obligations represent
interest in "stripped" U.S. Treasury bonds, a Unit holder's
initial cost for his pro rata portion of each Treasury
Obligation held by the Growth and Treasury 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. Under the special rules relating to stripped bonds,
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 Growth and Treasury
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
greater than or equal to a "de minimis" amount determined
under a Treasury Regulation (the "Regulation") issued on
December 28, 1992 as described below. 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. For Federal income tax purposes, a Unit holder's pro
rata portion of dividends as defined by Section 316 of the
Code paid by a corporation are taxable as ordinary income to
the extent of such corporation's current and accumulated
"earnings and profits." A Unit holder's pro rata portion of
dividends which exceed such current and accumulated earnings
and profits will first reduce a Unit holder's tax basis in
such Security (and accordingly his basis in his Units), and
to the extent that such dividends exceed a Unit holder's tax
basis in such Security shall be treated as capital gain. In
general, any such capital gain will be short term unless a
Unit holder has held his units for more thatn one year.
III. A Unit holder's portion of gain, if any, upon the
sale or redemption of Units or the disposition of Securities
held by a Trust will generally be considered a capital gain
except in the case of a dealer or a financial institution
and will be generally long-term if the Unit holder has held
his Units for more than one year. A Unit holder's portion
of loss, if any, upon the sale or redemption of Units or the
disposition of Securities held by a Trust will generally be
considered a capital loss except in the case of a dealer or
a financial institution and will be generally long-term if
the Unit holder has held his Units for more than one year.
IV. The Code provides that "miscellaneous itemized
deductions" are allowable only to the extent that they
exceed two percent of an individual taxpayer's adjusted
gross income. Miscellaneous itemized deductions subject to
this limitation under present law include a Unit holder's
pro rata share of expenses paid by a Trust, including fees
of the Trustee and the Evaluator.
The Code provides a complex set of rules governing the
accrual of original issue discount, including special rules
relating to "stripped" debt instruments such as the Treasury
Obligations. These rules provide that original issue discount
generally accrues on the basis of a constant compound interest
rate. Special rules apply if the purchase price of a Treasury
Obligation 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 Treasury Obligation
issued with original issue discount exceeds his pro rata portion
of its adjusted issue price. The application of these rules will
also vary depending on the value of the Treasury Obligations on
the date a Unit holder acquires his Units, and the price a Unit
holder pays for his Units. In addition, as discussed above, the
Regulation provides that the amount of original issue discount on
a stripped bond is considered zero if the actual amount of
original issue discount on such stripped bond as determined under
Section 1286 of the Code is less than a "de minimis" amount,
which, the Regulation provides, is the product of (i) 0.25
percent of the stated redemption price at maturity and (ii) the
number of full years from the date the stripped bond is purchased
(determined separately for each new purchaser thereof) to the
final maturity date of the bond.
For taxable years beginning after December 31, 1986 and
before January 1, 1996, certain corporations may be subject to
the environmental tax (the "Superfund Tax") imposed by Section
59A of the Code. Income received from, and gains recognized from
the disposition of, a Security by the Trust will be included in
the computation of the Superfund Tax by such corporations holding
Units in the Trust.
"The Revenue Reconciliation Act of 1993" (the "Tax Act")
subjects tax-exempt bonds to the market discount rules of the
Code effective for bonds purchased after April 30, 1993. In
general, market discount is the amount (if any) by which the
stated redemption price at maturity exceeds an investor's
purchase price (except to the extent that such difference, if
any, is attributable to original issue discount not yet accrued).
Market discount can arise based on the price a Trust pays for
Bonds or the price a Certificateholder pays for his or her Units.
Under the Tax Act, accretion of market discount is taxable as
ordinary income; under prior law, the accretion had been treated
as capital gain. Market discount that accretes while a Trust
holds a Bond would be recognized as ordinary income by the
Certificateholders when principal payments are received on the
Bond, upon sale or at redemption (including early redemption), or
upon the sale or redemption of his or her Units, unless a
Certificateholder elects to include market discount in taxable
income as it accrues.
The scope of this opinion is expressly limited to the
matters set forth herein, and, except as expressly set forth
above, we express no opinion with respect to any other taxes,
including state or local taxes or collateral tax consequences
with respect to the purchase, ownership and disposition of Units.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-53637)
relating to the Units referred to above and to the use of our
name and to the reference to our firm in said Registration
Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
EFF/jlg
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
May 25, 1994
United States Trust Company
of New York, as Trustee of
The First Trust Special
Situations Trust, Series 98
Pharmaceutical Growth & Treasury
Securities Trust, Series 2
Growth & Value Trust,
Pharmaceutical Series 2
770 Broadway - 6th Floor
New York, New York 10003
Attention: Mr. C. William Steelman
Executive Vice President
Re: The First Trust Special Situations Trust, Series 98
Pharmaceutical Growth & Treasury Securities Trust,
Series 2
Growth & Value Trust, Pharmaceutical Series 2
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for The First Trust Special Situations Trust, Series
98, Pharmaceutical Growth & Treasury Securities Trust, Series 2
(the "Growth & Treasury Trust") and Growth & Value Trust,
Pharmaceutical Series 2 (the "Growth Trust"), (collectively, the
"Trusts"), which will be established under a Standard Terms and
Conditions of Trust dated October 15, 1991 and November 20, 1991,
respectively, and a related Trust Agreement dated as of today
(collectively, the "Indenture"), among Nike Securities L.P., as
Depositor (the "Depositor"); Securities Evaluation Service, Inc.,
as Evaluator; First Trust Advisors L.P., as Portfolio Supervisor
and United States Trust Company of New York, as Trustee (the
"Trustee"). Pursuant to the terms of the Indenture, units of
fractional undivided interest in the Trusts (the "Units") will be
issued in the aggregate number set forth in the Indenture.
We have examined and are familiar with originals or certified
copies, or copies otherwise identified to our satisfaction, of
such documents as we have deemed necessary or appropriate for the
purpose of this opinion. In giving this opinion, we have relied
upon the two opinions, each dated today and addressed to the
Trustee, of Chapman and Cutler, counsel for the Depositor, with
respect to the matters of law set forth therein.
Based upon the foregoing, we are of the opinion that:
1. The Trusts will not constitute associations taxable as
corporations under New York law, and accordingly will not be
subject to the New York State franchise tax or the New York City
general corporation tax.
2. Under the income tax laws of the State and City of New York,
the income of the Trusts will be considered the income of the
holders of the Units.
We consent to the filing of this opinion as an exhibit to the
Registration Statement (No. 33-53637) filed with the Securities
and Exchange Commission with respect to the registration of the
sale of the Units and to the references to our name under the
captions "What is the Federal Tax Status of Unit Holders?" and
"Legal Opinions" in such Registration Statement and the
preliminary prospectus included therein.
Very truly yours,
Carter, Ledyard & Milburn
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
May 25, 1994
United States Trust Company
of New York, as Trustee of
The First Trust Special Situations
Trust, Series 98
Pharmaceutical Growth & Treasury
Securities Trust, Series 2
Growth & Value Trust,
Pharmaceutical Series 2
770 Broadway - 6th Floor
New York, New York 10003
Attention: Mr. C. William Steelman
Executive Vice President
Re: The First Trust Special Situations Trust, Series 98
Pharmaceutical Growth & Treasury Securities Trust,
Series 2
Growth & Value Trust, Pharmaceutical Series 2
Dear Sirs:
We are acting as counsel for United States Trust Company of
New York (the "Trust Company") in connection with the execution
and delivery of a Standard Terms and Conditions of Trust dated
October 15, 1991 and November 20, 1991, respectively, and a
related Trust Agreement, dated today's date (collectively, the
"Indenture"), among Nike Securities L.P., as Depositor (the
"Depositor"); Securities Evaluation Service, Inc., as Evaluator;
First Trust Advisors L.P., as Portfolio Supervisor; and the Trust
Company, as Trustee (the "Trustee"), establishing The First Trust
Special Situations Trust, Series 98, Pharmaceutical Growth &
Treasury Securities Trust, Series 2 (the "Growth & Treasury
Trust") and Growth & Value Trust, Series 2 (the "Growth Trust"),
(collectively, the "Trusts"), and the execution by the Trust
Company, as Trustee under the Indenture, of a certificate or
certificates evidencing ownership of units of each Trust (such
certificate or certificates and such aggregate units being herein
called "Certificates" and "Units"), each of which represents an
undivided interest in such Trust, which, as to the Growth &
Treasury Trust consists of "zero coupon" U.S. Treasury bonds and
common stocks, and as to the Growth Trust consists of common
stock (including, in the case of each Trust, confirmations of
contracts for the purchase of certain Bonds and/or stock not
delivered and cash, cash equivalents or an irrevocable letter of
credit or a combination thereof, in the amount required for such
purchase upon the receipt of such B onds and/or stock), such
obligations being defined in the Indenture as Securities and
listed in the Schedule to the Indenture.
We have examined the Indenture, the Closing Memorandum dated
today's date, a specimen Certificate, and such other documents as
we have deemed necessary in order to render this opinion. Based
on the foregoing, we are of the opinion that:
1. The Trust Company is a duly organized and existing
corporation having the powers of a trust company under the laws
of the State of New York.
2. The Indenture has been duly executed and delivered by the
Trust Company and, assuming due execution and delivery by the
other parties thereto, constitutes the valid and legally binding
obligation of the Trust Company.
3. The Certificates are in proper form for execution and
delivery by the Trust Company, as Trustee.
4. The Trust Company, as Trustee, has duly executed and
delivered to or upon the order of the Depositor a Certificate or
Certificates evidencing ownership of the Units, registered in the
name of the Depositor. Upon receipt of confirmation of the
effectiveness of the registration statement for the sale of the
Units filed with the Securities and Exchange Commission under the
Securities Act of 1933, the Trustee may deliver such other
Certificates, in such names and denominations as the Depositor
may request, to or upon the order of the Depositor as provided in
the Closing Memorandum.
5. The Trust Company, as Trustee, may lawfully under the New
York Banking Law advance to the Growth Trust amounts as may be
necessary to provide monthly interest distributions of
approximately equal amounts, and be reimbursed, without interest,
for any such advances from funds in the income account on the
ensuing record date, as provided in the Indenture.
In rendering the foregoing opinion, we have not considered, among
other things, whether the Securities have been duly authorized
and delivered.
Very truly yours,
CARTER, LEDYARD & MILBURN
SES
Securities Evaluation Service, Inc.
Suite 200
531 E. Roosevelt Road
Wheaton, Illinois 60187
MAY 25, 1994
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 98
Gentlemen:
We have examined the Registration Statement File No. 33-
53637 for the above captioned fund. We hereby consent to the use
in the Registration Statement of the references to Securities
Evaluation Service, Inc. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
Securities Evaluation Service, Inc.
James R. Couture
President
