Registration No. 33-61631
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 124
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agents for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
E. Title and Amount of Securities Being Registered:
An indefinite number of Units pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as
amended
F. Proposed Maximum Aggregate Offering Price to the Public of
the Securities Being Registered: Indefinite
G. Amount of Filing Fee (as required by Rule 24f-2): $500.00*
H. Approximate date of proposed sale to public:
As soon as practicable after the effective date of the
Registration Statement.
|XXX|Check box if it is proposed that this filing will become
effective on September 26, 1995 at 2:00 p.m. pursuant to
Rule 487.
________________________________
*Previously paid
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 124
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
periodic payment certificates *
58.
59. Financial statements Report of Independent
(Instruction 1(c) to Form S-6) Auditors
Statement of Net
Assets
* Inapplicable, answer negative or not required.
Target 5 Trust, Series 4
Target 10 Trust, Series 10
The Trusts. The First Trust (registered trademark) Special Situations
Trust, Series 124 consists of the underlying separate unit investment
trusts set forth above. The various trusts are sometimes collectively
referred to herein as the "Trusts" and each as a "Trust." Each
Trust consists of a portfolio containing common stocks issued
by companies which provide income and are considered to have the
potential for capital appreciation (the "Equity Securities").
Target 5 Trust, Series 4 consists of common stock of the five
companies with the lowest per share stock price of the ten companies
in the Dow Jones Industrial Average having the highest dividend
yield as of the close of business on the date prior to this Prospectus.
Target 10 Trust, Series 10 consists of common stock of the ten
companies in the Dow Jones Industrial Average having the highest
dividend yield as of the close of business on the date prior to
this Prospectus. Dow Jones Industrial Average is not affiliated
with the Sponsor and is the property of Dow Jones & Company, Inc.
Dow Jones & Company, Inc. has not granted to the Trusts or the
Sponsor a license to use the Dow Jones Industrial Average. Dow
Jones & Company, Inc. has not participated in any way in the creation
of the Trusts or in the selection of stocks included in the Trusts
and has not approved any information herein relating thereto.
The objective of each Trust is to provide an above-average total
return through a combination of dividend income and capital appreciation
by investing such Trust's portfolio in selected common stocks
of companies which meet the criteria stated above. See "Schedule
of Investments" for each Trust. Units are not designed so that
their prices will parallel or correlate with movements in the
Dow Jones Industrial Average, and it is expected that their prices
will not parallel or correlate with such movements. Each Trust
has a mandatory termination date (the "Mandatory Termination Date"
or "Trust Ending Date") of approximately one year from the date
of this Prospectus as set forth under "Summary of Essential Information."
There is, of course, no guarantee that the objective of either
Trust will be achieved.
Each Unit of a Trust represents an undivided fractional interest
in all the Equity Securities deposited in such Trust. The Equity
Securities deposited in a Trust's portfolio have no fixed maturity
date and the value of these underlying Equity Securities will
fluctuate with changes in the values of stocks in general. See "Portfolio."
The Sponsor may, from time to time after the Initial Date of Deposit,
deposit additional Equity Securities in a 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 such Trust on the Initial, or any subsequent,
Date of Deposit. See "What is the First Trust Special Situations
Trust?" and "How May Equity Securities be Removed from a Trust?"
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 September 26, 1995
Page 1
Public Offering Price. The Public Offering Price per Unit of the
Target 5 Trust, Series 4 and the Target 10 Trust, Series 10, respectively,
is equal to the aggregate underlying value of the Equity Securities
in such Trust (generally determined by the closing sale prices
of the Equity Securities) plus or minus a pro rata share of cash,
if any, in the Capital and Income Accounts of such Trust, plus
an initial sales charge for each Trust equal to the difference
between the maximum sales charge for each Trust (2.75% and 2.90%
of the Public Offering Price, respectively) and the maximum remaining
deferred sales charge (initially $0.195 per Unit for each Trust).
For Unit holders of the Target 5 Trust, Series 4 and the Target
10 Trust, Series 10, commencing January 1, 1996, and on the first
day of each month thereafter, through October 1, 1996, a deferred
sales charge of $.0195 will be assessed per Unit. Units purchased
subsequent to the initial deferred sales charge payment will be
subject to the initial sales charge and the remaining deferred
sales charge payments. For each Trust, the deferred sales charge
will be paid from funds in the Capital Account, if sufficient,
or from the periodic sale of Equity Securities. The total maximum
sales charge assessed to Unit holders on a per Unit basis will
be 2.75% and 2.90% of the Public Offering Price (equivalent to
2.772% and 2.929% of the net amount invested, exclusive of the
deferred sales charge) for the Target 5 Trust, Series 4 and the
Target 10 Trust, Series 10, respectively. A pro rata share of
accumulated dividends, if any, in the Income Account is included
in the Public Offering Price. The minimum purchase for each Trust
is $1,000. The sales charge for each Trust is reduced on a graduated
scale for sales involving at least 5,000 Units. See "How is the
Public Offering Price Determined?"
Estimated Net Annual Distributions. The estimated net annual dividend
distributions to Unit holders (based on the most recent quarterly
or semi-annual ordinary dividend declared with respect to the
Equity Securities in each Trust) at the opening of business on
the Initial Date of Deposit for Target 5 Trust, Series 4 was $.2634
per Unit, and for Target 10 Trust, Series 10 was $.3188 per Unit.
The estimated net annual dividend distributions per Unit will
vary with changes in fees and expenses of each Trust, with changes
in dividends received and with the sale or liquidation of Equity
Securities; therefore, there is no assurance that the estimated
net annual dividend distributions will be realized in the future.
Dividend and Capital Distributions. Distributions of dividends
received by a 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" for each Trust. The first such
distribution for each Trust will be made on December 31, 1995
to Unit holders of record on December 15, 1995. The last distribution
will be made as part of the final liquidation distribution. Distributions
of funds in the Capital Account, if any, will be made as part
of the final liquidation distribution, and in certain circumstances,
earlier. Any distribution of income and/or capital will be net
of the expenses of a Trust. See "What is the Federal Tax Status
of Unit Holders?" Additionally, upon termination of a Trust, the
Trustee will distribute, upon surrender of Units for redemption,
to each remaining 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?" The Sponsor
intends to create a separate 1996 Trust for both the Target 5
Trust Series and the Target 10 Trust Series (the "1996 Trusts")
in conjunction with the termination of this series of the Target
5 Trust Series and Target 10 Trust Series. Unit holders who elect
to become Rollover Unit holders will not receive the final liquidation
distribution, but will receive units in either 1996 Trust as selected
by the Unit holder. See "Special Redemption, Liquidation and Investment
in New Trusts." Any Unit holder may elect to have each distribution
of income or capital on his Unit, other than the final liquidating
distribution in connection with the termination of a Trust, automatically
reinvested in additional Units of such Trust subject only to the
remaining deferred sales charge payments as set forth below. See
"Rights of Unit Holders-How are the Income and Capital Distributed?"
Secondary Market for Units. While under no obligation to do so,
the Sponsor may maintain a market for Units of a Trust and offer
to repurchase such Units at prices which are based on the aggregate
underlying value of Equity Securities in such Trust (generally
determined by the closing sale prices of the Equity Securities)
plus or minus cash, if any, in the Capital and Income Accounts
of such Trust. If a secondary market is not maintained, a Unit
holder may redeem Units through redemption at prices based upon
the aggregate underlying value of the Equity Securities in such
Trust (generally determined by the closing sale prices of the
Equity Securities) plus or minus a pro rata share of cash, if
any, in the Capital and Income Accounts of such Trust. A Unit
holder tendering 2,500 or more of a Trust for redemption may request
a distribution of shares of Equity
Page 2
Securities (reduced by customary transfer and registration charges)
in lieu of payment in cash. See "How May Units be Redeemed?" Units
sold or tendered for redemption prior to such time as the entire
deferred sales charge on such Units has been collected will be
assessed the amount of the remaining deferred sales charge at
the time of sale or redemption.
Special Redemption, Liquidation and Investment in New Trusts.
Unit holders who hold their Units in book entry form will have
the option of specifying by September 13, 1996 (the "Rollover
Notification Date") to have all of their Units redeemed in-kind
on the Rollover Notification Date and the distributed Equity Securities
sold by the Trustee, in its capacity as Distribution Agent, during
the Special Redemption and Liquidation Period. (Unit holders so
electing are referred to herein as "Rollover Unit holders.") The
Distribution Agent will appoint the Sponsor as its agent to determine
the manner, timing and execution of sales of underlying Equity
Securities. The proceeds of the redemption will then be invested
in Units of a 1996 Trust, if one or more such Trusts are offered.
The Sponsor may, however, stop creating new Units of a 1996 Trust
at any time in its sole discretion without regard to whether all
the proceeds to be invested have been invested. Cash which has
not been invested on behalf of the Rollover Unit holders in a
1996 Trust will be distributed at the end of the Special Redemption
and Liquidation Period. However, the Sponsor anticipates that
sufficient Units can be created, although moneys in either Trust
may not be fully invested on the next business day. Rollover Unit
holders may purchase Units of a 1996 Trust at a reduced sales
charge. The portfolio for the 1996 Trust of the Target 5 Trust,
Series will contain common stock of the five companies with the
lowest per share stock price of the ten companies in the Dow Jones
Industrial Average having the highest dividend yield as of the
business day prior to the Initial Date of Deposit of the 1996
Trust. The portfolio of the 1996 Trust of the Target 10 Trust,
Series will contain the ten common stocks in the Dow Jones Industrial
Average having the highest dividend yield as of the business day
prior to the Initial Date of Deposit of the 1996 Trust. Rollover
Unit holders will receive credit for the amount of dividends in
the Income Account of a Trust which will be included in the reinvestment
in Units of such 1996 Trust. The exchange option described above
is subject to modification, termination or suspension.
Termination. Each Trust will terminate approximately one year
after the Initial Date of Deposit regardless of market conditions
at that time. Commencing on the Mandatory Termination Date, Equity
Securities will begin to be sold in connection with the termination
of a 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 or her
address appearing on the registration books of such Trust maintained
by the Trustee. At least 30 days prior to the Mandatory Termination
Date of a 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 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. To be effective, the election form, together
with surrendered certificates and other documentation required
by the Trustee, must be returned to the Trustee at least five
business days prior to the Mandatory Termination Date of a Trust.
Unit holders not electing the "Rollover Option" or a distribution
of shares of the Equity Securities will receive a cash distribution
within a reasonable time after a Trust is terminated. See "Rights
of Unit Holders-How are Income and Capital Distributed?"
Risk Factors. An investment in a Trust should be made with an
understanding of the risks associated therewith, including, among
other factors, the possible deterioration of either the financial
condition of the issuers or the general condition of the stock
market, volatile interest rates or an economic recession. An investment
in Target 5 Trust, Series 4 may subject a Unit holder to additional
risk due to the relative lack of diversity in its portfolio since
the portfolio contains only five stocks. Therefore, Units of Target
5 Trust, Series 4 may be subject to greater market risk than other
Trusts which contain a more diversified portfolio of securities.
The Trusts are not actively managed and Equity Securities will
not be sold by a Trust to take advantage of market fluctuations
or changes in anticipated rates of appreciation. See "What are
Equity Securities?-Risk Factors."
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-September 26, 1995
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank (National Association)
Evaluator: FT Evaluators L.P.
<TABLE>
<CAPTION>
Target 5 Trust
Series 4
______________
General Information
<S> <C>
Initial Number of Units 15,000
Fractional Undivided Interest in the Trust per Unit 1/15,000
Public Offering Price:
Aggregate Offering Price Evaluation of Equity
Securities in Portfolio (1) $ 148,787
Aggregate Offering Price Evaluation of Equity
Securities per Unit $ 9.9191
Maximum Sales Charge 2.75% of the Public Offering Price
per Unit (2.772% of the net amount invested, exclusive of
the deferred sales charge) (2) $ .2750
Less Deferred Sales Charge per Unit $ (.1950)
Public Offering Price per Unit (2) $ 9.9991
Sponsor's Initial Repurchase Price per Unit $ 9.7241
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less the deferred sales charge) (3) $ 9.7241
</TABLE>
CUSIP Number 33718R 104
First Settlement Date September 29, 1995
Rollover Notification Date September 13, 1996
Special Redemption and Liquidation
Period During the period from October 7, 1996
to October 14, 1996.
Mandatory Termination Date October 15, 1996
Discretionary Liquidation Amount A Trust may be terminated if the
value of the Equity Securities is
less than the lower of $2,000,000 or
20% of the total value of Equity
Securities deposited in a Trust during
the primary offering period.
Trustee's Annual Fee $.0116 per Unit outstanding.
Evaluator's Annual Fee $.0030 per Unit outstanding. Evalua-
tions for purposes of sale, purchase or
redemption of Units are made as of the
close of trading (4:00 p.m. eastern
standard time) on the New York Stock
Exchange on each day on which it is
open.
Supervisory Fee (4) Maximum of $.0035 per Unit outstand-
ing annually payable to an affiliate
of the Sponsor.
Estimated Organizational Expenses (5) $.0150 per Unit.
Income Distribution Record Date December 15, 1995
Income Distribution Date (6) December 31, 1995
[FN]
______________________
(1) Each Equity Security listed on a national securities exchange
is valued at the last closing sale price on the New York Stock
Exchange, or if no such price exists at the closing ask price thereof.
(2) The maximum sales charge consists of an initial sales charge
and a deferred sales charge. The initial sales charge applies
to all Units and represents an amount equal to the difference
between the maximum sales charge for the Trust of 2.75% of the
Public Offering Price and the amount of the maximum remaining
deferred sales charge (initially $.1950 per Unit). Subsequent
to the initial date of deposit, the amount of the initial sales
charge will vary with changes in the aggregate underlying value
of the Equity Securities underlying the Trust. In addition to
the initial sales charge, Unit holders of Target 5 Trust, Series
4 will pay a deferred sales charge of $.0195 per Unit per month
commencing January 1, 1996 and on the first day of each month
thereafter through October 1, 1996. Units purchased subsequent
to the initial deferred sales charge payment will be subject to
the initial sales charge and the remaining deferred sales charge
payments. These deferred sales charge payments will be paid from
funds in the Capital Account, if sufficient, or from the periodic
sale of Equity Securities. See "Fee Table" and "Public Offering"
for additional information. 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 standard time and sold to investors at a Public Offering
Price per Unit based on this valuation.
(3) See "How May Units be Redeemed?"
(4) In addition, the Sponsor will be reimbursed for bookkeeping
and other administrative expenses currently at a maximum annual
rate of $0.0010 per Unit.
(5) The Trust (and therefore Unit holders) will bear all or
a portion of its organizational costs (including costs of preparing
the registration statement, the trust indenture and other closing
documents, registering Units with the Securities and Exchange
Commission and states, the initial audit of the Trust portfolio
and the initial fees and expenses of the Trustee but not including
the expenses incurred in the printing of preliminary prospectuses,
and expenses incurred in the preparation and printing of brochures
and other advertising materials and any other selling expenses)
as is common for mutual funds. Total organizational expenses will
be amortized over a one-year period. See "What are the Expenses
and Charges?" and "Statement of Net Assets." Historically, the
sponsors of unit investment trusts have paid all the costs of
establishing such trusts.
(6) At the Rollover Notification Date for Rollover Unit holders
or upon termination of the Trust for other Unit holders, amounts
in the Income Account (which consist of dividends on the Equity
Securities) will be included in amounts distributed to or on behalf
of Unit holders. 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 as part of the final liquidation distribution.
Page 4
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-September 26, 1995
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank (National Association)
Evaluator: FT Evaluators L.P.
<TABLE>
<CAPTION>
Target 10 Trust
Series 10
_______________
General Information
<S> <C>
Initial Number of Units 15,000
Fractional Undivided Interest in the Trust per Unit 1/15,000
Public Offering Price:
Aggregate Offering Price Evaluation of Equity
Securities in Portfolio (1) $ 148,516
Aggregate Offering Price Evaluation of Equity
Securities per Unit $ 9.9011
Maximum Sales Charge 2.90% of the Public Offering Price
per Unit (2.929% of the net amount invested, exclusive of
the deferred sales charge) (2) $ .2900
Less Deferred Sales Charge per Unit $ (.1950)
Public Offering Price per Unit (2) $ 9.9961
Sponsor's Initial Repurchase Price per Unit $ 9.7061
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less the deferred sales charge) (3) $ 9.7061
</TABLE>
CUSIP Number 33718R 112
First Settlement Date September 29, 1995
Rollover Notification Date September 13, 1996
Special Redemption and Liquidation
Period During the period from October 7, 1996
to October 14, 1996.
Mandatory Termination Date October 15, 1996
Discretionary Liquidation Amount A Trust may be terminated if
the value of the Equity Securities is
less than the lower of $2,000,000 or
20% of the total value of Equity
Securities deposited in a Trust during
the primary offering period.
Trustee's Annual Fee $.0116 per Unit outstanding.
Evaluator's Annual Fee $.0030 per Unit outstanding. Evalua-
tions for purposes of sale, purchase or
redemption of Units are made as of the
close of trading (4:00 p.m. eastern
standard time) on the New York Stock
Exchange on each day on which it is
open.
Supervisory Fee (4) Maximum of $.0035 per Unit outstand-
ing annually payable to an affiliate
of the Sponsor.
Estimated Organizational Expenses (5) $.0150 per Unit.
Income Distribution Record Date December 15, 1995
Income Distribution Date (6) December 31, 1995
[FN]
______________________
(1) Each Equity Security listed on a national securities exchange
is valued at the last closing sale price on the New York Stock
Exchange, or if no such price exists at the closing ask price thereof.
(2) The maximum sales charge consists of an initial sales charge
and a deferred sales charge. The initial sales charge applies
to all Units and represents an amount equal to the difference
between the maximum sales charge for the Trust of 2.90% of the
Public Offering Price and the amount of the maximum remaining
deferred sales charge (initially $.1950 per Unit). Subsequent
to the Initial Date of Deposit, the amount of the initial sales
charge will vary with changes in the aggregate underlying value
of the Equity Securities underlying the Trust. In addition to
the initial sales charge, Unit holders of Target 10 Trust, Series
10 will pay a deferred sales charge of $.0195 per Unit per month
commencing January 1, 1996 and on the first day of each month
thereafter through October 1, 1996. Units purchased subsequent
to the initial deferred sales charge payment will be subject to
the initial sales charge and the remaining deferred sales charge
payments. These deferred sales charge payments will be paid from
funds in the Capital Account, if sufficient, or from the periodic
sale of Equity Securities. See "Fee Table" and "Public Offering"
for additional information. 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 standard time and sold to investors at a Public Offering
Price per Unit based on this valuation.
(3) See "How May Units be Redeemed?"
(4) In addition, the Sponsor will be reimbursed for bookkeeping
and other administrative expenses currently at a maximum annual
rate of $0.0010 per Unit.
(5) The Trust (and therefore Unit holders) will bear all or
a portion of its organizational costs (including costs of preparing
the registration statement, the trust indenture and other closing
documents, registering Units with the Securities and Exchange
Commission and states, the initial audit of the Trust portfolio
and the initial fees and expenses of the Trustee but not including
the expenses incurred in the printing of preliminary prospectuses,
and expenses incurred in the preparation and printing of brochures
and other advertising materials and any other selling expenses)
as is common for mutual funds. Total organizational expenses will
be amortized over a one-year period. See "What are the Expenses
and Charges?" and "Statement of Net Assets." Historically, the
sponsors of unit investment trusts have paid all the costs of
establishing such trusts.
(6) At the Rollover Notification Date for Rollover Unit holders
or upon termination of the Trust for other Unit holders, amounts
in the Income Account (which consist of dividends on the Equity
Securities) will be included in amounts distributed to or on behalf
of Unit holders. 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 as part of the final liquidation distribution.
Page 5
FEE TABLE-Target 5 Trust, Series 4
This Fee Table is intended to help you to understand the costs
and expenses that you will bear directly or indirectly. See "Public
Offering" and "What are the Expenses and Charges?" Although the
Trust has a term of only one year and is a unit investment trust
rather than a mutual fund, this information is presented to permit
a comparison of fees, assuming the principal amount and distributions
are rolled over each year into a new Trust subject only to the
deferred sales charge.
<TABLE>
<CAPTION>
Amount
per Unit
__________
<S> <C> <C>
Unit holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of offering price) 0.80%(a) $ 0.080
Deferred sales charge per year
(as a percentage of original purchase price) 1.95%(b) .195
2.75% $ 0.275
======== ========
Maximum Sales Charge per year imposed on
Reinvested Dividends 1.95%(c) 0.195
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee 0.116% $ 0.0116
Portfolio supervision, bookkeeping, administrative
and evaluation fees and organizational expenses 0.225% 0.0224
Other operating expenses 0.022% 0.0022
________ ________
Total 0.363% $ 0.0362
======== ========
</TABLE>
<TABLE>
<CAPTION>
Example
Cumulative Expenses Paid for Period:
1 Year 3 Years(d) 5 Years(d) 10 Years(d)
______ __________ __________ __________
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a
$1,000 investment, assuming the Target 5 Trust,
Series 4 estimated operating expense ratio of
0.363% and a 5% annual return on the
investment throughout the periods $31 $79 $129 $268
</TABLE>
The example assumes reinvestment of all dividends and distributions
and utilizes a 5% annual rate of return as mandated by Securities
and Exchange Commission regulations applicable to mutual funds.
For purposes of the example, the deferred sales charge imposed
on reinvestment of dividends is not reflected until the year following
payment of the dividend; the cumulative expenses would be higher
if sales charges on reinvested dividends were reflected in the
year of reinvestment. The example should not be considered a representation
of past or future expenses or annual rate of return; the actual
expenses and annual rate of return may be more or less than those
assumed for purposes of the example.
[FN]
_____________________
(a) The Initial Sales Charge is actually the difference between
the maximum total sales charge of 2.75% and the maximum remaining
deferred sales charge (initially $.1950 per Unit for the Target
5 Trust, Series 4) and would exceed 0.8% if the Public Offering
Price exceeds $10.00 per Unit.
(b) The actual fee is $.0195 per month for the Target 5 Trust,
Series 4, per Unit, irrespective of purchase or redemption price
deducted in each of the last ten months of each one-year Trust.
If the Unit price exceeds $10.00 per Unit, the deferred sales
charge will be less than 1.95% for the Target 5 Trust, Series
4. If the Unit price is less than $10.00 per Unit, the deferred
sales charge will exceed 1.95% for the Target 5 Trust, Series
4. Units purchased subsequent to the initial deferred sales charge
payment will also be subject to the remaining deferred sales charge
payments.
(c) Reinvested Dividends will be subject only to the deferred
sales charge remaining at the time of reinvestment. See "How are
Income and Capital Distributed."
(d) Although the Trust has a term of only one year and is a unit
investment trust rather than a mutual fund, this information is
presented to permit a comparison of fees, assuming the principal
amount and distributions are rolled over each year into a new
Trust subject only to the deferred sales charge.
Page 6
FEE TABLE-Target 10 Trust Series 10
This Fee Table is intended to help you to understand the costs
and expenses that you will bear directly or indirectly. See "Public
Offering" and "What are the Expenses and Charges?" Although the
Trust has a term of only one year and is a unit investment trust
rather than a mutual fund, this information is presented to permit
a comparison of fees, assuming the principal amount and distributions
are rolled over each year into a new Trust subject only to the
deferred sales charge.
<TABLE>
<CAPTION>
Amount
per Unit
__________
<S> <C> <C>
Unit holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of offering price) 0.95%(a) $ 0.095
Deferred sales charge per year
(as a percentage of original purchase price) 1.95%(b) .195
________ ________
2.90% $ 0.290
======== ========
Maximum Sales Charge per year imposed on
Reinvested Dividends 1.95%(c) 0.195
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee 0.116% $ 0.0116
Portfolio supervision, bookkeeping, administrative
and evaluation fees and organizational expenses 0.225% 0.0224
Other operating expenses 0.022% 0.0022
________ ________
Total 0.363% $ 0.0362
======== ========
</TABLE>
<TABLE>
<CAPTION>
Example
Cumulative Expenses Paid for Period:
1 Year 3 Years(d) 5 Years(d) 10 Years(d)
______ __________ __________ __________
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a
$1,000 investment, assuming the Target 10 Trust,
Series 10 estimated operating expense ratio of
0.363% and a 5% annual return on the
investment throughout the periods $33 $80 $131 $269
</TABLE>
The example assume reinvestment of all dividends and distributions
and utilizes a 5% annual rate of return as mandated by Securities
and Exchange Commission regulations applicable to mutual funds.
For purposes of the example, the deferred sales charge imposed
on reinvestment of dividends is not reflected until the year following
payment of the dividend; the cumulative expenses would be higher
if sales charges on reinvested dividends were reflected in the
year of reinvestment. The example should not be considered a representation
of past or future expenses or annual rate of return; the actual
expenses and annual rate of return may be more or less than those
assumed for purposes of the example.
[FN]
_____________________
(a) The Initial Sales Charge is actually the difference between
the maximum total sales charge of 2.90% and the maximum remaining
deferred sales charge (initially $.1950 per Unit for the Target
10 Trust, Series 10) and would exceed 0.95% if the Public Offering
Price exceeds $10.00 per Unit.
(b) The actual fee is $.0195 per month for the Target 10 Trust,
Series 10 per Unit, irrespective of purchase or redemption price
deducted in each of the last ten months of each one-year Trust.
If the Unit price exceeds $10.00 per Unit, the deferred sales
charge will be less than 1.95% for the Target 10 Trust, Series
10. If the Unit price is less than $10.00 per Unit, the deferred
sales charge will exceed 1.95% for the Target 10 Trust, Series
10. Units purchased subsequent to the initial deferred sales charge
payment will also be subject to the remaining deferred sales charge
payments.
(c) Reinvested Dividends will be subject only to the deferred
sales charge remaining at the time of reinvestment. See "How are
Income and Capital Distributed."
(d) Although the Trust has a term of only one year and is a unit
investment trust rather than a mutual fund, this information is
presented to permit a comparison of fees, assuming the principal
amount and distributions are rolled over each year into a new
Trust subject only to the deferred sales charge.
Page 7
Target 5 Trust, Series 4
Target 10 Trust, Series 10
The First Trust Special Situations Trust, Series 124
What is The First Trust Special Situations Trust?
The First Trust Special Situations Trust, Series 124 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 underlying
separate unit investment trusts designated as: Target 5 Trust,
Series 4 and Target 10 Trust, Series 10 (collectively the "Trusts,"
and each individually a "Trust"). Each Trust was created under
the laws of the State of New York pursuant to a Trust Agreement
(the "Indenture"), dated the Initial Date of Deposit, with Nike
Securities L.P., as Sponsor, The Chase Manhattan Bank (National
Association), as Trustee, First Trust Advisors L.P., as Portfolio
Supervisor and FT Evaluators L.P., as Evaluator.
On the Initial Date of Deposit, the Sponsor deposited with the
Trustee confirmations of contracts for the purchase of common
stocks issued by companies which provide income and are considered
to have the potential for capital appreciation (the "Equity Securities"),
together with an irrevocable letter or letters of credit of a
financial institution in an amount at least equal to the purchase
price of such Equity Securities. In exchange for the deposit of
securities or contracts to purchase securities in a Trust, the
Trustee delivered to the Sponsor documents evidencing the entire
ownership of such Trust.
The objective of the Target 5 Trust, Series 4 is to provide an
above-average total return through a combination of dividend income
and capital appreciation by investing in Equity Securities of
the five companies with the lowest per share stock price of the
ten companies in the Dow Jones Industrial Average having the highest
dividend yield as of the close of business on the date prior to
this Prospectus.
The objective of the Target 10 Trust, Series 10 is to provide
an above-average total return through a combination of dividend
income and capital appreciation by investing in Equity Securities
of the ten companies which are in the Dow Jones Industrial Average
having the highest dividend yield as of the close of business
on the date prior to this Prospectus. Dow Jones Industrial Average
is not affiliated with the Sponsor and is the property of Dow
Jones & Company, Inc. There is, of course, no guarantee that the
objective of either Trust will be achieved.
With the deposit of the Equity Securities on the Initial Date
of Deposit, the Sponsor established a percentage relationship
between the amounts of Equity Securities in a Trust's portfolio.
See "What are the Equity Securities Selected for Target 5 Trust,
Series 4?" and "What are the Equity Securities Selected for Target
10 Trust, Series 10?" From time to time following the Initial
Date of Deposit, the Sponsor, pursuant to the Indenture, may deposit
additional Equity 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
such Trust. Any deposit by the Sponsor of additional Equity Securities
will duplicate, as nearly as is practicable, the original proportionate
relationship and not the actual proportionate relationship on
the subsequent date of deposit, since the actual proportionate
relationship may be different than the original proportionate
relationship. Any such difference may be due to the sale, redemption
or liquidation of any of the Equity Securities deposited in a
Trust on the Initial, or any subsequent, Date of Deposit. See
"How May Equity Securities be Removed from a Trust?" The original
percentage relationship of each Equity Security to a Trust is
set forth herein under "Schedule of Investments" for such Trust.
Since the prices of the underlying Equity Securities will fluctuate
daily, the ratio, on a market value basis, will also change daily.
The portion of Equity Securities represented by each Unit will
not change as a result of the deposit of additional Equity Securities
in a Trust.
On the Initial Date of Deposit, each Unit of a Trust represented
the undivided fractional interest in the Equity Securities deposited
in such Trust set forth under "Summary of Essential Information"
for such Trust. To the extent that Units of a Trust are redeemed,
the aggregate value of the Equity Securities in such Trust will
Page 8
be reduced and the undivided fractional interest represented by
each outstanding Unit of such Trust will increase. However, if
additional Units are issued by a Trust in connection with the
deposit of additional Equity Securities by the Sponsor, the aggregate
value of the Equity 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 decreased
proportionately. See "How May Units be Redeemed?" Each Trust has
a Mandatory Termination Date as set forth herein under "Summary
of Essential Information" for such Trust.
What are the Expenses and Charges?
With the exception of bookkeeping and other administrative services
provided to the Trusts, for which the Sponsor will be reimbursed
in amounts as set forth under "Summary of Essential Information,"
the Sponsor will not receive any fees in connection with its activities
relating to the Trusts. Such bookkeeping and administrative charges
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 fees payable to
the Sponsor for such services may exceed the actual costs of providing
such services for these Trusts, but at no time will the total
amount received for such services rendered to unit investment
trusts of which Nike Securities L.P. is the Sponsor in any calendar
year exceed the actual cost to the Sponsor of supplying such services
in such year. First Trust Advisors L.P. will receive an annual
supervisory fee, which is not to exceed the amount set forth under
"Summary of Essential Information," for providing portfolio supervisory
services for the Trusts. 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. This fee may exceed the actual costs
of providing such supervisory services for these Trusts, 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, an affiliate
of the Sponsor, will receive a fee as indicated in the "Summary
of Essential Information." The fee may exceed the actual costs
of providing such evaluation services for these Trusts, but at
no time will the total amount received for evaluation services
rendered to unit investment trusts of which Nike Securities L.P.
is the Sponsor in any calendar year exceed the aggregate cost
to FT Evaluators L.P. of supplying such services in such year.
The Trustee pays certain expenses of a Trust for which it is reimbursed
by such Trust. The Trustee will receive for its ordinary recurring
services to a Trust an annual fee computed at $.0116 per annum
per Unit in such Trust outstanding based upon the largest aggregate
number of Units of such Trust outstanding at any time during the
calendar year. For a discussion of the services performed by the
Trustee pursuant to its obligations under the Indenture, reference
is made to the material set forth under "Rights of Unit Holders."
The Trustee's and Evaluator's fees are payable from the Income
Account of a Trust to the extent funds are available and then
from the Capital Account of such 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
a Trust is expected to result from the use of these funds. Both
fees may be increased without approval of the Unit holders by
amounts not exceeding proportionate increases under the category
"All Services Less Rent of Shelter" in the Consumer Price Index
published by the United States Department of Labor.
Expenses incurred in establishing the Trusts, including costs
of preparing the registration statement, the trust indenture and
other closing documents, registering Units with the Securities
and Exchange Commission and states, the initial audit of each
Trust portfolio and the initial fees and expenses of the Trustee
and any other out-of-pocket expenses, will be paid by the Trusts
and amortized over a one-year period. The following additional
charges are or may be incurred by a Trust: all legal expenses
of the Trustee incurred by or in connection with its responsibilities
under the Indenture; the expenses and costs of any action undertaken
by the Trustee to protect such Trust and the rights and interests
of the Unit holders; fees of the Trustee for
Page 9
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 such 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 such Trust; all taxes and
other government charges imposed upon the Securities or any part
of such 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 Equity 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 such
Trust. Since the Equity Securities are all common stocks and the
income stream produced by dividend payments is unpredictable,
the Sponsor cannot provide any assurance that dividends will be
sufficient to meet any or all expenses of a Trust. As described
above, if dividends are insufficient to cover expenses, it is
likely that Equity Securities will have to be sold to meet Trust
expenses. These sales may result in capital gains or losses to
Unit holders. See "What is the Federal Tax Status of Unit Holders?"
What is the Federal Tax Status of Unit Holders?
The following is a general discussion of certain of the Federal
income tax consequences of the purchase, ownership and disposition
of the Units. The summary is limited to investors who hold the
Units as "capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Internal Revenue 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 a Trust.
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 such Trust will be treated as income
of the Unit holders thereof under the Code. Each Unit holder will
be considered to have received his pro rata share of the income
derived from each Equity Security when such income is received
by a Trust.
2. A Unit holder will be considered to have received all of the
dividends paid on his pro rata portion of each Equity Security
when such dividends are received by a Trust regardless of whether
such dividends are used to pay a portion of the deferred sales
charge. Unit holders will be taxed in this manner regardless of
whether distributions from a Trust are actually received by the
Unit holder or are automatically reinvested (see "How are Income
and Capital Distributed?-Distribution Reinvestment Option").
3. Each Unit holder will have a taxable event when a Trust disposes
of an Equity Security (whether by sale, exchange, redemption,
or otherwise) or upon the sale or redemption of Units by such
Unit holder. The price a Unit holder pays for his Units, including
sales charges, is allocated among his pro rata portion of each
Equity Security held by 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 Equity Security held by such Trust. For Federal income
tax purposes, a Unit holder's pro rata portion of dividends, as
defined by Section 316 of the Code, paid by a corporation with
respect to an Equity Security held by a Trust is taxable as ordinary
income to the extent of such corporation's current and accumulated
"earnings and profits." A Unit holder's pro rata portion of dividends
paid on such Equity Security which exceeds such current and accumulated
earnings and profits will first reduce a Unit holder's tax basis
in such Equity Security, and to the extent that such dividends
exceed a Unit holder's tax basis in such Equity Security shall
generally be treated as capital gain. In general, any such capital
gain will be short-term unless a Unit holder has held his Units
for more than one year.
Page 10
4. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Equity 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
long-term if the Unit holder has held his Units for more than
one year (the date on which the Units are acquired (i.e., the
"trade date") is excluded for purposes of determining whether
the Units have been held for more than one year). A Unit holder's
portion of loss, if any, upon the sale or redemption of Units
or the disposition of Equity Securities held by 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. However,
a Rollover Unit holder's loss, if any, incurred in connection
with the exchange of Units for Units in the next new series of
the Target 5 Trust Series or Target 10 Trust Series (the "1996
Trusts"), (the Sponsor intends to create a separate 1996 Trust
in conjunction with the termination of both the Target 5 Trust
Series and Target 10 Trust Series) will generally be disallowed
with respect to the disposition of any Equity Securities pursuant
to such exchange to the extent that such Unit holder is considered
the owner of substantially identical securities under the wash
sale provisions of the Code taking into account such Unit holder's
deemed ownership of the securities underlying the Units in a 1996
Trust in the manner described above, if such substantially identical
securities were acquired within a period beginning 30 days before
and ending 30 days after such disposition. However, any gains
incurred in connection with such an exchange by a Rollover Unit
holder would be recognized. Unit holders should consult their
tax advisers regarding the recognition of gains and losses for
Federal income tax purposes.
5. The Code provides that "miscellaneous itemized deductions"
are allowable only to the extent that they exceed two percent
of an individual taxpayer's adjusted gross income. Miscellaneous
itemized deductions subject to this limitation under present law
include a Unit holder's pro rata share of expenses paid by a Trust,
including fees of the Trustee and the Evaluator.
6. The Unit holder's basis in his Units will be equal to the
total cost of his Units, including the sales charges. A portion
of the sales charge is deferred until the termination of the Trusts
or the redemption of the Units. The proceeds received by a Unit
holder upon such event will reflect deduction of the deferred
amount (the "Deferred Sales Charge"). The annual statement and
the relevant tax reporting forms received by Unit holders will
reflect the actual amounts paid to them, net of the Deferred Sales
Charge. Accordingly, Unit holders should not increase their basis
in their Units by the Deferred Sales Charge.
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 (other
than corporate Unit holders, such as "S" corporations which are
not eligible for the deduction because of their special characteristics
and other than for purposes of special taxes such as the accumulated
earnings tax and the personal holding corporation tax). 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). Final regulations have recently been issued which address
special rules that must be considered in determining whether the
46-day holding period 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.
A portion of the deferred sales charge may be treated as interest
which would be deductible by a Unit holder subject to limitations
on the deduction of investment interest. The non-interest portion
of the deferred sales charge should be added to the Unit holder's
tax basis in his Units. The deferred sales charge could cause
the Unit holder's Units to be considered to be debt-financed under
Section 246A of the Code which
Page 11
would result in a small reduction of the dividends-received deduction.
Unit holders should consult their own tax advisers as to the income
tax consequences of the deferred sales charge.
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 an Equity Security
is disposed of by a Trust or if the Unit holder disposes of a
Unit (although losses incurred by Rollover Unit holders may be
subject to disallowance, as discussed above). For taxpayers other
than corporations, net capital gains are subject to a maximum
stated marginal tax rate of 28%. However, it should be noted that
legislative proposals are introduced from time to time that affect
tax rates and could affect relative differences at which ordinary
income and capital gains are taxed.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised
tax rates on ordinary income while capital gains remain subject
to a 28% maximum stated rate for taxpayers other than corporations.
Because some or all capital gains are taxed at a comparatively
lower rate under the Tax Act, the Tax Act includes a provision
that recharacterizes capital gains as ordinary income in the case
of certain financial transactions that are "conversion transactions"
effective for transactions entered into after April 30, 1993.
Unit holders and prospective investors should consult with their
tax advisers regarding the potential effect of this provision
on their investment in Units.
Special Tax Consequences of In-Kind Distributions Upon Redemption
of Units, Termination of a Trust and Investment in a New Trust.
As discussed in "Rights of Unit Holders-How are Income and Capital
Distributed?", under certain circumstances a Unit holder who owns
at least 2,500 of a Trust may request an In-Kind Distribution
upon the redemption of Units or the termination of such Trust.
The Unit holder requesting an In-Kind Distribution will be liable
for expenses related thereto (the "Distribution Expenses") and
the amount of such In-Kind Distribution will be reduced by the
amount of the Distribution Expenses. See "Rights of Unit Holders-How
are Income and Capital Distributed?" As previously discussed,
prior to the redemption of Units or the termination of a Trust,
a Unit holder is considered as owning a pro rata portion of each
of such Trust's assets for Federal income tax purposes. The receipt
of an In-Kind Distribution upon the redemption of Units 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 Equity Security owned by a Trust. An "Equity Security" for
this purpose is a particular class of stock issued by a particular
corporation. If the Unit holder receives only whole shares of
an Equity Security in exchange for his or her pro rata portion
in each share of such security held by 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 Equity Security plus cash in lieu of a fractional
share of such Equity Security, and if the fair market value of
the Unit holder's pro rata portion of the shares of such Equity
Security exceeds his tax basis in his pro rata portion of such
Equity Security, taxable gain would be recognized in an amount
not to exceed the amount of such cash received, pursuant to Section
1031(b) of the Code. No taxable loss would be recognized upon
such an exchange pursuant to Section 1031(c) of the Code, whether
or not cash is received in lieu of a fractional share. Under either
of these circumstances, special rules will be applied under Section
1031(d) of the Code to determine the Unit holder's tax basis in
the shares of such particular Equity Security which he receives
as part of the In-Kind Distribution. Finally, if a Unit holder's
pro rata interest in an Equity Security does not equal a whole
share, he may receive entirely cash in exchange for his pro rata
portion of a particular Equity Security. In such case, taxable
gain or loss is measured by comparing the amount of cash received
by the Unit holder with his tax basis in such Equity Security.
Page 12
Because a Trust will own many Equity Securities, a Unit holder
who requests an In-Kind Distribution will have to analyze the
tax consequences with respect to each Equity Security owned by
such Trust. In analyzing the tax consequences with respect to
each Equity Security, such Unit holder must allocate the Distribution
Expenses among the Equity Securities (the "Allocable Expenses").
The Allocable Expenses will reduce the amount realized with respect
to each Equity Security so that the fair market value of the shares
of such Equity Security received (if any) and cash received in
lieu thereof (as a result of any fractional shares) by such Unit
holder should equal the amount realized for purposes of determining
the applicable tax consequences in connection with an In-Kind
Distribution. A Unit holder's tax basis in shares of such Equity
Security received will be increased by the Allocable Expenses
relating to such Equity Security. The amount of taxable gain (or
loss) recognized upon such exchange will generally equal the sum
of the gain (or loss) recognized under the rules described above
by such Unit holder with respect to each Equity Security owned
by a Trust. Unit holders who request an In-Kind Distribution are
advised to consult their tax advisers in this regard.
As discussed in "Rights of Unit Holders-Special Redemption, Liquidation
and Investment in a New Trust," a Unit holder may elect to become
a Rollover Unit holder. To the extent a Rollover Unit holder exchanges
his Units for Units of either 1996 Trust in a taxable transaction,
such Unit holder will recognize gains, if any, but generally will
not be entitled to a deduction for any losses recognized upon
the disposition of any Equity Securities pursuant to such exchange
to the extent that such Unit holder is considered the owner of
substantially identical securities under the wash sale provisions
of the Code taking into account such Unit holder's deemed ownership
of the securities underlying the Units in such 1996 Trust in the
manner described above, if such substantially identical securities
were acquired within a period beginning 30 days before and ending
30 days after such disposition under the wash sale provisions
contained in Section 1091 of the Code. In the event a loss is
disallowed under the wash sale provisions, special rules contained
in Section 1091(d) of the Code apply to determine the Unit holder's
tax basis in the securities acquired. Rollover Unit holders are
advised to consult their tax advisers.
General. Each Unit holder will be requested to provide the Unit
holder's taxpayer identification number to the Trustee and to
certify that the Unit holder has not been notified that payments
to the Unit holder are subject to back-up withholding. If the
proper taxpayer identification number and appropriate certification
are not provided when requested, distributions by 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.
Such persons should consult their tax advisers.
Unit holders will be notified annually of the amounts of income
dividends includable in the Unit holder's gross income and amounts
of Trust expenses which may be claimed as itemized deductions.
Dividend income and long-term capital gains may also be subject
to state and local taxes. Investors should consult their tax advisers
for specific information on the tax consequences of particular
types of distributions.
Unit holders desiring to purchase Units for tax-deferred plans
and IRAs should consult their broker for details on establishing
such accounts. Units may also be purchased by persons who already
have self-directed plans established. See "Why are Investments
in the Trusts Suitable for Retirement Plans?"
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 the Trusts 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
Page 13
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 Equity Securities?
Target 5 Trust, Series 4 consists of the five companies with the
lowest per share stock price of the ten companies in the Dow Jones
Industrial Average ("DJIA") (which is unaffiliated with the Sponsor)
having the highest dividend yield as of the close of business
on the date prior to this Prospectus. Target 10 Trust, Series
10 consists of ten common stocks in the DJIA having the highest
dividend yield as of the close of business on the date prior to
this Prospectus. The yield for each Equity Security was calculated
by annualizing the last quarterly or semi-annual ordinary dividend
declared and dividing the result by the market value of the Equity
Security as of the opening of business on the date of this Prospectus.
An investment in a Trust involves the purchase of a quality portfolio
of attractive equities with high dividend yields in one convenient
purchase. Investing in DJIA stocks with the highest dividend yields
may be effective in achieving the Trusts' investment objectives
because regular dividends are common for established companies
and dividends have accounted for a substantial portion of the
total return on DJIA stocks as a group.
The Dow Jones Industrial Average comprises 30 common stocks chosen
by the editors of The Wall Street Journal as representative of
the broad market and of American industry. The companies are major
factors in their industries and their stocks are widely held by
individuals and institutional investors. Changes in the components
of the DJIA are made entirely by the editors of The Wall Street
Journal without consultation with the companies, the stock exchange
or any official agency. For the sake of continuity, changes are
made rarely. Most substitutions have been the result of mergers,
but from time to time, changes may be made to achieve a better
representation. The components of the Dow Jones Industrial Average
may be changed at any time for any reason. Any changes in the
components of the Dow Jones Industrial Average after the date
of this Prospectus will not cause a change in the identity of
the common stocks included in the Trust Portfolios, including
any additional Equity Securities deposited in a Trust.
Investors should note that the above criteria were applied to
the Equity Securities selected for inclusion in the Trust Portfolios
as of the opening of business on the date of this Prospectus.
Since the Sponsor may deposit additional Equity Securities which
were originally selected through this process, the Sponsor may
continue to sell Units of the Trusts even though the yields on
these Equity Securities may have changed subsequent to the Initial
Date of Deposit, the Equity Securities may no longer be included
in the Dow Jones Industrial Average or in the case of Target 5
Trust, Series 4 the common stocks may no longer be the five lowest
priced per share, and therefore the Equity Securities would no
longer be chosen for deposit into the Trusts if the selection
process were to be made again at a later time.
The Dow Jones Industrial Average, Historical Perspective
The Dow Jones Industrial Average was first published in The Wall
Street Journal in 1896. Initially consisting of just 12 stocks,
the DJIA expanded to 20 stocks in 1916 and its present size of
30 stocks on October 1, 1928. The companies which make up the
DJIA have remained relatively constant over the life of the DJIA.
Taking into account name changes, 9 of the original DJIA companies
are still in the DJIA today. For two periods of 17 consecutive
years, March 14, 1939-July 1956 and June 1, 1959-August 6, 1976,
there were no changes to the list. The following is a comparison
of the list as it appeared on October 1, 1928 and the current DJIA.
Page 14
The Dow Jones Industrial Average
List as of October 1, 1928 Current List
__________________________ ________________________________
Allied Chemical AT&T Corporation
American Can AlliedSignal
American Smelting Aluminum Company of America
American Sugar American Express Company
American Tobacco Bethlehem Steel Corporation
Atlantic Refining Boeing Company
Bethlehem Steel Corporation Caterpillar Inc.
Chrysler Corporation Chevron Corporation
General Electric Company Coca-Cola Company
General Motors Corporation Walt Disney Company
General Railway Signal E.I. du Pont de Nemours & Company
Goodrich Eastman Kodak Company
International Harvester Exxon Corporation
International Nickel General Electric Company
Mack Trucks General Motors Corporation
Nash Motors Goodyear Tire & Rubber Company
North American International Business Machines
Corporation
Paramount Publix International Paper Company
Postum, Inc. McDonald's Corporation
Radio Corporation of America (RCA) Merck & Company, Inc.
Sears, Roebuck & Company Minnesota Mining & Manufacturing
Company
Standard Oil of New Jersey J.P. Morgan & Company, Inc.
Texas Corporation Philip Morris Companies, Inc.
Texas Gulf Sulphur Procter & Gamble Company
Union Carbide Corporation Sears, Roebuck & Company
United States Steel Company Texaco, Inc.
Victor Talking Machine Union Carbide Corporation
Westinghouse Electric Corporation United Technologies Corporation
Woolworth Corporation Westinghouse Electric Corporation
Wright Aeronautical Woolworth Corporation
What are the Equity Securities Selected for Target 5 Trust, Series 4?
The Trust consists of common stocks of the five companies with
the lowest per share stock price of the ten companies in the Dow
Jones Industrial Average having the highest dividend yield as
of the close of business on the business day prior to the date
of this Prospectus.
Chevron Corporation, headquartered in San Francisco, California,
is an international oil company with activities in the United
States and abroad. The company is involved in worldwide, integrated
petroleum operations which explore for, develop and produce petroleum
liquids and natural gas as well as transporting the products.
The company is also involved in the mineral and chemical industry.
Eastman Kodak Company is divided into business activities which
include imaging, information, chemicals and health segments. With
its headquarters in Rochester, New York, Eastman Kodak Company
produces products and provides services which include cameras,
photofinishing services, film, audiovisual equipment, chemicals,
plastics and pharmaceutical and healthcare products.
General Motors Corporation, which is headquartered in Detroit,
Michigan, manufactures and sells cars and trucks worldwide under
the trademarks "Chevrolet," "Oldsmobile," "Pontiac," "Buick,"
"Cadillac" and "GMC Trucks."
Goodyear Tire & Rubber Company, headquartered in Akron, Ohio,
manufactures tires and other automotive rubber parts. The company
produces new and retread tires, inner tubes, automotive belts
and hoses, molded parts and foam cushioning. Goodyear Tire & Rubber
Company markets its tires to both automobile manufacturers and
retail stores. The company also owns a pipeline which carries
oil from California wells to Texas refineries.
Page 15
Minnesota Mining & Manufacturing Company, headquartered in St.
Paul, Minnesota, and manufactures industrial, electronic, health,
consumer and information-imaging products for distribution worldwide.
The company's products include adhesives, abrasives, laser imagers
and "Scotch" brand products.
What are the Equity Securities Selected for Target 10 Trust, Series 10?
The Trust consists of common stocks of the ten companies which
are in the Dow Jones Industrial Average, having the highest dividend
yield as of the close of business on the business day prior to
the date of this Prospectus.
Chevron Corporation, headquartered in San Francisco, California,
is an international oil company with activities in the United
States and abroad. The company is involved in worldwide, integrated
petroleum operations which explore for, develop and produce petroleum
liquids and natural gas as well as transporting the products.
The company is also involved in the mineral and chemical industry.
E.I. du Pont de Nemours & Company, headquartered in Wilmington,
Delaware, is a diversified international company primarily involved
in petroleum, coal and other energy sources. The company is also
a large chemical manufacturer with interests in chemicals, fibers,
transportation, construction, electronics, health care and agriculture.
Eastman Kodak Company is divided into business activities which
include imaging, information, chemicals and health segments. With
its headquarters in Rochester, New York, Eastman Kodak Company
produces products and provides services which include cameras,
photofinishing services, film, audiovisual equipment, chemicals,
plastics and pharmaceutical and healthcare products.
Exxon Corporation, headquartered in Irving, Texas, is principally
involved in the energy industry. The company explores for and
produces crude oil and natural gas, manufactures petroleum products,
explores for and mines coal and minerals and transports and sells
crude oil, natural gas and petroleum products.
General Motors Corporation, which is headquartered in Detroit,
Michigan, manufactures and sells cars and trucks worldwide under
the trademarks "Chevrolet," "Oldsmobile," "Pontiac," "Buick,"
"Cadillac" and "GMC Trucks."
Goodyear Tire & Rubber Company, headquartered in Akron, Ohio,
manufactures tires and other automotive rubber parts. The company
produces new and retread tires, inner tubes, automotive belts
and hoses, molded parts and foam cushioning. Goodyear Tire & Rubber
Company markets its tires to both automobile manufacturers and
retail stores. The company also owns a pipeline which carries
oil from California wells to Texas refineries.
J.P. Morgan & Company, Inc., headquartered in New York, New York,
is a holding company for Morgan Guaranty Trust. The company places
emphasis on its wholesale banking services and offers corporate
finance and capital markets services. The company provides bond,
precious metals and currency trading and Eurobond underwriting
and deals in government securities. Operations are both domestic
and international.
Philip Morris Companies, Inc., headquartered in New York, New
York, operates a large international consumer goods company through
its tobacco, food and beer segments. The company's major subsidiaries
include Phillip Morris U.S.A., Phillip Morris International, Inc.,
Kraft General Foods Group and The Miller Brewing Company.
Minnesota Mining & Manufacturing Company, headquartered in St.
Paul, Minnesota, and manufactures industrial, electronic, health,
consumer and information-imaging products for distribution worldwide.
The company's products include adhesives, abrasives, laser imagers
and "Scotch" brand products.
Texaco, Inc., headquartered in White Plains, New York, is engaged
in the worldwide exploration, production, transportation, refining
and marketing of crude oil, natural gas and petroleum products,
including petrochemicals. Texaco owns, leases or has interests
in extensive production, manufacturing, marketing, transportation
and other facilities throughout the world.
Page 16
Dow Jones & Company, Inc., owner of the Dow Jones Industrial Average,
has not granted to the Trusts or the Sponsor a license to use
the Dow Jones Industrial Average. Units are not designed so that
their prices will parallel or correlate with movements in the
Dow Jones Industrial Average, and it is expected that their prices
will not parallel or correlate with such movements. Dow Jones
& Company, Inc. has not participated in any way in the creation
of the Trusts or in the selection of stocks included in the Trusts
and has not approved any information herein relating thereto.
The following table compares the actual performance of the Dow
Jones Industrial Average and approximately equal values of the
five companies with the lowest per share stock price of the ten
companies in the DJIA having the highest dividend yield in each
of the past 20.5 years (the "Five Lowest Priced Stocks of the
Ten Highest Yielding DJIA Stocks"), as of December 31 in each
of these years and from January 1, 1975 through June 30, 1995.
Page 17
<TABLE>
<CAPTION>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
Five Lowest Priced Stocks of the
Ten Highest Yielding DJIA Stocks (1) Dow Jones Industrial Average (DJIA)
Actual Actual
Dividend Total Dividend Total
Year Appreciation (2) Yield (3) Return (4) Appreciation (2) Yield (3) Return (4)
_____ ________________ _________ __________ ________________ _________ __________
<S> <C> <C> <C> <C> <C> <C>
1975 61.40% 8.70% 70.10% 38.32% 6.08% 44.40%
1976 32.60 8.20 40.80 17.86 4.86 22.72
1977 1.10 3.40 4.50 -17.27 4.56 -12.71
1978 -5.90 7.60 1.70 -3.15 5.84 2.69
1979 1.80 8.10 9.90 4.19 6.33 10.52
1980 31.80 8.70 40.50 14.93 6.48 21.41
1981 -8.50 8.50 0.00 -9.23 5.83 -3.40
1982 30.40 7.00 37.40 19.60 6.19 25.79
1983 27.30 8.80 36.10 20.30 5.38 25.68
1984 5.70 6.90 12.60 -3.76 4.82 1.06
1985 30.20 7.60 37.80 27.66 5.12 32.78
1986 21.60 6.30 27.90 22.58 4.33 26.91
1987 6.20 4.90 11.10 2.26 3.76 6.02
1988 16.80 4.60 21.40 11.85 4.10 15.95
1989 5.50 5.00 10.50 26.96 4.75 31.71
1990 -20.50 5.30 -15.20 -4.34 3.77 -0.57
1991 56.40 5.50 61.90 20.32 3.61 23.93
1992 18.30 4.90 23.20 4.17 3.17 7.34
1993 30.10 4.20 34.30 13.73 2.99 16.72
1994 5.10 3.50 8.60 2.14 2.79 4.93
12/31/94- 13.71 1.67 15.38 18.70 1.45 20.15
6/30/95
</TABLE>
[FN]
Source: BEATING THE DOW, Editor John Downes.
(1) The Five Lowest Priced Stocks of the Ten Highest Yielding
DJIA Stocks for any given period were selected by ranking the
dividend yields for each of the stocks in the DJIA as of the beginning
of the period, based upon an annualization of the last quarterly
or semi-annual ordinary dividend distribution (which would have
been declared in the preceding year) divided by that stock's market
value on the first trading day on the New York Stock Exchange
in the given period.
(2) Appreciation for the Five Lowest Priced Stocks of the Ten
Highest Yielding DJIA Stocks ("Stocks") is calculated by subtracting
the market value of the Stocks as of the first trading day on
the New York Stock Exchange in a given period from the market
value of the Stocks as of the last trading day in that period,
and dividing the result by the market value of the Stocks as of
the first trading day in that period. Appreciation for the DJIA
is calculated by subtracting the opening value of the DJIA as
of the first trading day in a given period from the closing value
of the DJIA as of the last trading day in that period, and dividing
the result by the opening value of the DJIA as of the first trading
day in that period.
(3) Actual Dividend Yield for the Stocks is calculated by adding
the total dividends received on the Stocks in a given period and
dividing the result by the market value of the Stocks as of the
first trading day in that period. Actual Dividend Yield for the
DJIA is calculated by taking the total dividends credited to the
DJIA and dividing the result by the opening value of the DJIA
as of the first trading day of the period.
(4) Total Return represents the sum of Appreciation and Actual
Dividend Yield. Total Return does not take into consideration
any sales charges, commissions, expenses or taxes. Total Return
does not take into consideration any reinvestment of dividend
income. Based on the year-by-year returns contained in the table,
over the last 20.5 years, the Five Lowest Priced Stocks of the
Ten Highest Yielding DJIA Stocks achieved an average annual total
return of 22.29%, as compared to the average annual total return
of all of the stocks in the DJIA, which was 14.97%. These stocks
also had a higher average dividend yield in each of the last 20.5
years and outperformed the DJIA in 16 of these years. Although
the Trust seeks to achieve a better performance than the DJIA,
there can be no assurance that the Trust will outperform the DJIA
over its one-year life or over consecutive rollover periods, if available.
Page 18
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the DJIA and the
Five Lowest Priced Stocks of the Ten Highest Yielding DJIA Stocks
(but not the Trust) and should not be considered indicative of
future results. Further, results are hypothetical. The chart assumes
that all dividends during a year are reinvested at the end of
that year and does not reflect sales charges, commissions, expenses
or taxes. There can be no assurance that the Trust will outperform
the DJIA over its one-year life or over consecutive rollover periods,
if available.
Page 19
The following table compares the actual performance of the Dow
Jones Industrial Average and approximately equal values of the
ten stocks in the DJIA having the highest dividend yield in each
of the past 20 years (the "Ten Highest Yielding DJIA Stocks"),
as of December 31 in each of these years and from January 1, 1975
through June 30, 1995.
<TABLE>
<CAPTION>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
Ten Highest Yielding DJIA Stocks (1) Dow Jones Industrial Average (DJIA)
Actual Actual
Dividend Total Dividend Total
Year Appreciation (2) Yield (3) Return (4) Appreciation (2) Yield (3) Return (4)
_____ ________________ _________ __________ ________________ _________ __________
<S> <C> <C> <C> <C> <C> <C>
1975 48.78% 7.95% 56.73% 38.32% 6.08% 44.40%
1976 27.70 7.10 34.80 17.86 4.86 22.72
1977 -6.75 5.92 -0.83 -17.27 4.56 -12.71
1978 -6.92 7.11 0.19 -3.15 5.84 2.69
1979 3.97 8.41 12.38 4.19 6.33 10.52
1980 17.83 8.54 26.37 14.93 6.48 21.41
1981 -0.94 8.29 7.35 -9.23 5.83 -3.40
1982 17.24 8.22 25.46 19.60 6.19 25.79
1983 30.20 8.25 38.45 20.30 5.38 25.68
1984 0.24 6.65 6.89 -3.76 4.82 1.06
1985 21.45 6.97 28.42 27.66 5.12 32.78
1986 23.74 6.13 29.87 22.58 4.33 26.91
1987 1.87 5.10 6.97 2.26 3.76 6.02
1988 15.80 5.80 21.60 11.85 4.10 15.95
1989 20.28 6.94 27.22 26.96 4.75 31.71
1990 -13.00 5.06 -7.94 -4.34 3.77 -0.57
1991 28.32 5.22 33.54 20.32 3.61 23.93
1992 3.44 4.82 8.26 4.17 3.17 7.34
1993 23.06 4.20 27.26 13.73 2.99 16.72
1994 -0.06 4.08 4.02 2.14 2.79 4.93
12/31/94- 17.12 2.08 19.20 18.70 1.45 20.15
6/30/95
</TABLE>
[FN]
(1) The Ten Highest Yielding DJIA Stocks for any given period
were selected by ranking the dividend yields for each of the stocks
in the DJIA as of the beginning of the period, based upon an annualization
of the last quarterly or semi-annual ordinary dividend distribution
(which would have been declared in the preceding year) divided
by that stock's market value on the first trading day on the New
York Stock Exchange in the given period.
(2) Appreciation for the Ten Highest Yielding DJIA Stocks ("Stocks")
is calculated by subtracting the market value of the Stocks as
of the first trading day on the New York Stock Exchange in a given
period from the market value of the Stocks as of the last trading
day in that period, and dividing the result by the market value
of the Stocks as of the first trading day in that period. Appreciation
for the DJIA is calculated by subtracting the opening value of
the DJIA as of the first trading day in a given period from the
closing value of the DJIA as of the last trading day in that period,
and dividing the result by the opening value of the DJIA as of
the first trading day in that period.
(3) Actual Dividend Yield for the Stocks is calculated by adding
the total dividends received on the Stocks in a given period and
dividing the result by the market value of the Stocks as of the
first trading day in that period. Actual Dividend Yield for the
DJIA is calculated by taking the total dividends credited to the
DJIA and dividing the result by the opening value of the DJIA
as of the first trading day of the period.
(4) Total Return represents the sum of Appreciation and Actual
Dividend Yield. Total Return does not take into consideration
any sales charges, commissions, expenses or taxes. Total Return
does not take into consideration any reinvestment of dividend
income. Based on the year-by-year returns contained in the table,
over the last 20.5 years, the Ten Highest Yielding DJIA Stocks
achieved an average annual total return of 18.84%, as compared
to the average annual total return of all of the stocks in the
DJIA, which was 14.97%. These stocks also had a higher average
dividend yield in each of the last 20.5 years and outperformed
the DJIA in 14 of these years. Although the Trust seeks to achieve
a better performance than the DJIA, there can be no assurance
that the Trust will outperform the DJIA over its one-year life
or over consecutive rollover periods, if available.
Page 20
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the DJIA and the
Ten Highest Yielding DJIA Stocks (but not the Trust) and should
not be considered indicative of future results. Further, results
are hypothetical. The chart assumes that all dividends during
a year are reinvested at the end of that year and does not reflect
sales charges, commissions, expenses or taxes. There can be no
assurance that the Trust will outperform the DJIA over its one-year
life or over consecutive rollover periods, if available.
The returns shown above are not guarantees of future performance
and should not be used as a predictor of returns to be expected
in connection with a Trust Portfolio. Both stock prices (which
may appreciate or depreciate) and dividends (which may be increased,
reduced or eliminated) will affect the returns. As indicated in
the previous tables, the Ten Highest Yielding DJIA Stocks, including
the Five Lowest Priced Stocks of the Ten Highest Yielding DJIA
Stocks, underperformed the DJIA in certain years and there can
be no assurance that a Trust's Portfolio will outperform the DJIA
over the life of a Trust or over consecutive rollover periods,
if available. A Holder of Units in a Trust would not necessarily
realize as high a Total Return on an investment in the stocks
upon which the returns shown above are based. The Total Return
figures shown above do not reflect sales charges, commissions,
Trust expenses or taxes, and a Trust may not be able to invest
equally in the Ten Highest Yielding DJIA Stocks or the Five Lowest
Priced Stocks of the Ten Highest Yielding DJIA Stocks and may
not be fully invested at all times. See "What are the Equity Securities
Selected for Target 5 Trust, Series 4?" and "What are the Equity
Securities Selected for Target 10 Trust, Series 10?"
Page 21
What are Some Additional Considerations for Investors?
The Trusts consist of different issues of Equity Securities, all
of which are listed on a national securities exchange. In addition,
each of the companies whose Equity Securities are included in
a portfolio are actively traded, well established corporations.
A Trust consists of such of the Equity Securities listed under
"Schedule of Investments" as may continue to be held from time
to time in such Trust and any additional Equity 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 Equity Securities. However, should
any contract for the purchase of any of the Equity Securities
initially deposited hereunder fail, the Sponsor will, unless substantially
all of the moneys held in a Trust to cover such purchase are reinvested
in substitute Equity Securities in accordance with the Trust Agreement,
refund the cash and sales charge attributable to such failed contract
to all Unit holders on the next distribution date.
Risk Factors. 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 such Trust pursuant to the direction of the Sponsor (who may
rely on the advice of the Portfolio Supervisor). See "How May
Equity Securities be Removed from a Trust?" 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 or if the Equity Securities are no longer among the
ten common stocks in the Dow Jones Industrial Average with the
highest dividend yield, including the five lowest priced of the
ten common stocks in the Dow Jones Industrial Average with the
highest dividend yield.
Whether or not the Equity Securities are listed on a national
securities exchange, the principal trading market for the Equity
Securities may be in the over-the-counter market. As a result,
the existence of a liquid trading market for the Equity Securities
may depend on whether dealers will make a market in the Equity
Securities. There can be no assurance that a market will be made
for any of the Equity Securities, that any market for the Equity
Securities will be maintained or of the liquidity of the Equity
Securities in any markets made. 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.
An investment in Units should be made with an understanding of
the risks which an investment in common stocks entails, including
the risk that the financial condition of the issuers of the Equity
Securities or the general condition of the common stock market
may worsen and the value of the Equity Securities and therefore
the value of the Units may decline. Common stocks are especially
susceptible to general stock market movements and to volatile
increases and decreases of value as market confidence in and perceptions
of the issuers change. These perceptions are based on unpredictable
factors including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic
expansion or contraction, and global or regional political, economic
or banking crises. Shareholders of common stocks have rights to
receive payments from the issuers of those common stocks that
are generally subordinate to those of creditors of, or holders
of debt obligations or preferred stocks of, such issuers. Shareholders
of common stocks of the type held by the 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
Page 22
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 a Portfolio may be expected to fluctuate over the life of a
Trust to values higher or lower than those prevailing on the Initial
Date of Deposit.
Holders of common stocks incur more risk than holders of preferred
stocks and debt obligations because common stockholders, as owners
of the entity, have generally inferior rights to receive payments
from the issuer in comparison with the rights of creditors of,
or holders of debt obligations or preferred stocks issued by,
the issuer. Cumulative preferred stock dividends must be paid
before common stock dividends and any cumulative preferred stock
dividend omitted is added to future dividends payable to the holders
of cumulative preferred stock. Preferred stockholders are also
generally entitled to rights on liquidation which are senior to
those of common stockholders.
Unit holders will be unable to dispose of any of the Equity Securities
in 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 a Trust
and will vote such stocks in accordance with the instructions
of the Sponsor.
Investors should be aware of certain other considerations before
making a decision to invest in a Trust.
The value of the Equity Securities 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,
including the impact of the Sponsor's purchase and sale of the
Equity Securities (especially during the primary offering period
of Units of a Trust and during the Special Redemption and Liquidation
Period) and other factors.
The Sponsor and the Trustee shall not be liable in any way for
any default, failure or defect in any Equity Security. In the
event of a notice that any Equity Security will not be delivered
("Failed Contract Obligations") to a Trust, the Sponsor is authorized
under the Indenture to direct the Trustee to acquire other Equity
Securities ("Replacement Securities"). Any Replacement Security
will be identical to those which were the subject of the failed
contract. The Replacement Securities must be purchased within
20 days after delivery of the notice of a failed contract and
the purchase price may not exceed the amount of funds reserved
for the purchase of the Failed Contract Obligations.
If the right of limited substitution described in the preceding
paragraphs is not utilized to acquire Replacement Securities in
the event of a failed contract, the Sponsor will refund the sales
charge attributable to such Failed Contract Obligations to all
Unit holders of a 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 such Trust. In addition, Unit holders should be aware that,
at the time of receipt of such principal, they may not be able
to reinvest such proceeds in other securities at a yield equal
to or in excess of the yield which such proceeds would have earned
for Unit holders of a Trust.
The Indenture also authorizes the Sponsor to increase the size
of a Trust and the number of Units thereof by the deposit of additional
Equity Securities in such Trust and the issuance of a corresponding
number of additional Units.
Each Trust consists of the Equity Securities listed under "Schedule
of Investments" (or contracts to purchase such Securities) as
may continue to be held from time to time in such Trust and any
additional Equity Securities acquired and held by such Trust pursuant
to the provisions of the Indenture (including provisions with
Page 23
respect to deposits into such Trust of Equity Securities in connection
with the issuance of additional Units).
Once all of the Equity Securities in a Trust are acquired, the
Trustee will have no power to vary the investments of such Trust,
i.e., the Trustee will have no managerial power to take advantage
of market variations to improve a Unit holder's investment, but
may dispose of Equity Securities only under limited circumstances.
See "How May Equity Securities be Removed from a Trust?"
To the best of the Sponsor's knowledge, there is no litigation
pending as of the Initial Date of Deposit in respect of any Equity
Security which might reasonably be expected to have a material
adverse effect on the Trusts. At any time after the Initial Date
of Deposit, litigation may be instituted on a variety of grounds
with respect to the Equity Securities. The Sponsor is unable to
predict whether any such litigation will be instituted, or if
instituted, whether such litigation might have a material adverse
effect on the Trusts.
Petroleum Refining Companies. Target 10 Trust, Series 10 may be
considered to be concentrated in common stocks of companies engaged
in refining and marketing oil and related products. According
to the U.S. Department of Commerce, the factors which will most
likely shape the industry to 1996 and beyond include the price
and availability of oil from the Middle East, changes in United
States environmental policies and the continued decline in U.S.
production of crude oil. Possible effects of these factors may
be increased U.S. and world dependence on oil from the Organization
of Petroleum Exporting Countries ("OPEC") and highly uncertain
and potentially more volatile oil prices. Factors which the Sponsor
believes may increase the profitability of oil and petroleum operations
include increasing demand for oil and petroleum products as a
result of the continued increases in annual miles driven and the
improvement in refinery operating margins caused by increases
in average domestic refinery utilization rates. The existence
of surplus crude oil production capacity and the willingness to
adjust production levels are the two principal requirements for
stable crude oil markets. Without excess capacity, supply disruptions
in some countries cannot be compensated for by others. Surplus
capacity in Saudi Arabia and a few other countries and the utilization
of that capacity prevented during the Persian Gulf crisis, and
continue to prevent, severe market disruption. Although unused
capacity contributed to market stability in 1990 and 1991, it
ordinarily creates pressure to overproduce and contributes to
market uncertainty. The likely restoration of a large portion
of Kuwait and Iraq's production and export capacity over the next
few years could lead to such a development in the absence of substantial
growth in world oil demand. Formerly, OPEC members attempted to
exercise control over production levels in each country through
a system of mandatory production quotas. Because of the crisis
in the Middle East, the mandatory system has since been replaced
with a voluntary system. Production under the new system has had
to be curtailed on at least one occasion as a result of weak prices,
even in the absence of supplies from Kuwait and Iraq. The pressure
to deviate from mandatory quotas, if they are reimposed, is likely
to be substantial and could lead to a weakening of prices. In
the longer term, additional capacity and production will be required
to accommodate the expected large increases in world oil demand
and to compensate for expected sharp drops in U.S. crude oil production
and exports from the Soviet Union. Only a few OPEC countries,
particularly Saudi Arabia, have the petroleum reserves that will
allow the required increase in production capacity to be attained.
Given the large-scale financing that is required, the prospect
that such expansion will occur soon enough to meet the increased
demand is uncertain.
Declining U.S. crude oil production will likely lead to increased
dependence on OPEC oil, putting refiners at risk of continued
and unpredictable supply disruptions. Increasing sensitivity to
environmental concerns will also pose serious challenges to the
industry over the coming decade. Refiners are likely to be required
to make heavy capital investments and make major production adjustments
in order to comply with increasingly stringent environmental legislation,
such as the 1990 amendments to the Clean Air Act. If the cost
of these changes is substantial enough to cut deeply into profits,
smaller refiners may be forced out of the industry entirely. Moreover,
lower consumer demand due to increases in energy efficiency and
conservation, due to gasoline reformulations that call for less
crude oil, due to warmer winters or due to a general slowdown
in economic growth in this country and abroad, could negatively
affect the price of oil and the profitability
Page 24
of oil companies. No assurance can be given that the demand for
or prices of oil will increase or that any increases will not
be marked by great volatility. Some oil companies may incur large
cleanup and litigation costs relating to oil spills and other
environmental damage. Oil production and refining operations are
subject to extensive federal, state and local environmental laws
and regulations governing air emissions and the disposal of hazardous
materials. Increasingly stringent environmental laws and regulations
are expected to require companies with oil production and refining
operations to devote significant financial and managerial resources
to pollution control. General problems of the oil and petroleum
products industry include the ability of a few influential producers
significantly to affect production, the concomitant volatility
of crude oil prices and increasing public and governmental concern
over air emissions, waste product disposal, fuel quality and the
environmental effects of fossil-fuel use in general.
In addition, any future scientific advances concerning new sources
of energy and fuels or legislative changes relating to the energy
industry or the environment could have a negative impact on the
petroleum products industry. While legislation has been enacted
to deregulate certain aspects of the oil industry, no assurances
can be given that new or additional regulations will not be adopted.
Each of the problems referred to could adversely affect the financial
stability of the issuers of any petroleum industry stocks in the Trust.
Legislation. From time to time Congress considers proposals to
reduce the rate of the dividends-received deductions. Enactment
into law of a proposal to reduce the rate would adversely affect
the after-tax return to investors who can take advantage of the
deduction. Unit holders are urged to consult their own tax advisers.
Further, at any time after the Initial Date of Deposit, legislation
may be enacted, with respect to the Equity Securities in the Trusts
or the issuers of the Equity Securities. Changing approaches to
regulation, particularly with respect to the environment or with
respect to the petroleum industry, may have a negative impact
on certain companies represented in the Trusts. There can be no
assurance that future legislation, regulation or deregulation
will not have a material adverse effect on the Trusts or will
not impair the ability of the issuers of the Equity Securities
to achieve their business goals.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price, which is based
on the aggregate underlying value of the Equity Securities in
the Target 5 Trust, Series 4 and the Target 10 Trust, Series 10,
respectively, plus or minus cash, if any, in the Income and Capital
Accounts of such Trust, plus an initial sales charge with respect
to each Trust equal to the difference between the maximum sales
charge for each Trust (2.75% and 2.90% of the Public Offering
Price, respectively) and the maximum remaining deferred sales
charge (initially $.1950 per Unit for each Trust) divided by the
amount of Units of such Trust outstanding. For Unit holders of
the Target 5 Trust, Series 4 and the Target 10 Trust, Series 10,
commencing January 1, 1996, and on the first day of each month
thereafter, through October 1, 1996, a deferred sales charge of
$.0195 will be assessed per Unit per month. Units purchased subsequent
to the initial deferred sales charge payment will also be subject
to the initial sales charge and the remaining deferred sales charge
payments. For each Trust, the deferred sales charge will be paid
from funds in the Capital Account, if sufficient, or from the
periodic sale of Equity Securities. The total maximum sales charge
assessed to Unit holders on a per Unit basis will be 2.75% and
2.90% of the Public Offering Price (equivalent to 2.772% and 2.929%
of the net amount invested, exclusive of the deferred sales charge)
for the Target 5 Trust, Series 4 and the Target 10 Trust, Series 10,
respectively.
During the initial offering period, the Sponsor's Repurchase Price
is based on the aggregate underlying value of the Equity Securities
in a Trust, plus or minus cash, if any, in the Income and Capital
Accounts of such Trust divided by the number of Units of such
Trust outstanding.
Page 25
The minimum purchase of each Trust is $1,000, except for Rollover
Unit holders who are not subject to a minimum purchase amount.
The applicable sales charge of the Target 5 Trust, Series 4 for
primary market sales is reduced by a discount as indicated below
for volume purchases as a percentage of the Public Offering Price
(except for sales made pursuant to a "wrap fee account" or similar
arrangements as set forth below):
<TABLE>
<CAPTION>
Maximum
Sales Net Dealer
Number of Units Discount Charge Concession
_______________ _________ _________ ________
<S> <C> <C> <C>
5,000 but less than 10,000 0.25% 2.50% 1.65%
10,000 but less than 15,000 0.60% 2.15% 1.30%
15,000 or more 0.80% 1.95% 1.10%
</TABLE>
The applicable sales charge of the Target 10 Trust, Series 10
for primary market sales is reduced by a discount as indicated
below for volume purchases as a percentage of the Public Offering
Price (except for sales made pursuant to a "wrap fee account"
or similar arrangements as set forth below):
<TABLE>
<CAPTION>
Maximum
Sales Net Dealer
Number of Units Discount Charge Concession
_______________ _________ _________ _________
<S> <C> <C> <C>
5,000 but less than 10,000 0.30% 2.60% 1.75%
10,000 but less than 15,000 0.65% 2.25% 1.50%
15,000 or more 0.95% 1.95% 1.20%
</TABLE>
Any such reduced sales charge shall be the responsibility of the
selling dealer. An investor may aggregate purchases of Units of
both the Target 5 Trust, Series 4 and Target 10 Trust, Series
10 for purposes of qualifying for volume purchase discounts listed
above. The aggregate amount of Units of both Trusts purchased
will be used to determine the applicable sales charge to be imposed
on the purchase of Units of each Trust. The sales charge reduction
for quantity purchases will not apply to Rollover Unit holders.
The reduced sales charge structure will apply on all purchases
of Units in a 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, Unit holders
of other unit investment trusts having a similar strategy as Target
5 Trust, Series 4 and Target 10 Trust, Series 10 may utilize their
redemption or termination proceeds to purchase Units of Target
5 Trust, Series 4 and Target 10 Trust, Series 10 subject to a
deferred sales charge of $.0195 per Unit per month to be collected
on each of the remaining deferred sales charge payment dates as
provided herein. 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, dealers and their affiliates, will be subject only
to the deferred portion of the sales charge as described above
for each Trust for purchases of Units during the primary and secondary
public offering periods.
Units may be purchased in the primary or secondary market at the
Public Offering Price less the concession the Sponsor typically
allows to dealers and other selling agents for purchases (see
"Public Offering-How are Units Distributed?") by investors who
purchase Units through registered investment advisers, certified
financial planners or registered broker-dealers who in each case
either charge periodic fees for financial planning, investment
advisory or asset management services, or provide such services
in connection with the establishment of an investment account
for which a comprehensive "wrap fee" charge is imposed.
Page 26
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 would have been as indicated in "Summary of Essential Information."
The Public Offering Price of Units on the date of the prospectus
or during the initial offering period may vary from the amount
stated under "Summary of Essential Information" in accordance
with fluctuations in the prices of the underlying Equity Securities.
During the initial offering period, the aggregate value of the
Units of a Trust shall be determined on the basis of the aggregate
underlying value of the Equity Securities therein plus or minus
cash, if any, in the Income and Capital Accounts of such Trust.
The aggregate underlying value of the Equity Securities will be
determined in the following manner: if the Equity Securities are
listed on a national securities exchange or the NASDAQ National
Market System, this evaluation is generally based on the closing
sale prices on that exchange or that system (unless it is determined
that these prices are inappropriate as a basis for valuation)
or, if there is no closing sale price on that exchange or system,
at the closing ask prices. If the Equity Securities are not so
listed or, if so listed and the principal market therefor is other
than on the exchange, the evaluation shall generally be based
on the current ask prices on the over-the-counter market (unless
it is determined that these prices are inappropriate as a basis
for evaluation). If current ask prices are unavailable, the evaluation
is generally determined (a) on the basis of current ask prices
for comparable securities, (b) by appraising the value of the
Equity Securities on the ask side of the market or (c) by any
combination of the above.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the aggregate underlying
value of the Equity Securities therein, plus or minus cash, if
any, in the Income and Capital Accounts of a Trust plus the applicable
sales charge.
Although payment is normally made three business days following
the order for purchase (the "date of settlement"), payment may
be made prior thereto. A person will become owner of Units on
the date of settlement provided payment has been received. Cash,
if any, made available to the Sponsor prior to the date of settlement
for the purchase of Units may be used in the Sponsor's business
and may be deemed to be a benefit to the Sponsor, subject to the
limitations of the Securities Exchange Act of 1934. Delivery of
Certificates representing Units so ordered will be made three
business days following such order or shortly thereafter. See
"Rights of Unit Holders-How May Units be Redeemed?" for information
regarding the ability to redeem Units ordered for purchase.
How are Units Distributed?
During the initial offering period (i) for Units issued on the
Initial Date of Deposit and (ii) for additional Units issued after
such date as additional Equity Securities are deposited by the
Sponsor, Units will be distributed to the public at the then current
Public Offering Price. During such period, the Sponsor may deposit
additional Equity Securities in a Trust and create additional
Units. Units reacquired by the Sponsor during the initial offering
period (at prices based upon the aggregate underlying value of
the Equity Securities in a 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 Target 5 Trust,
Series 4, sales will be made to dealers and others at prices which
represent a concession or agency commission of 1.80% of the Public
Offering Price for primary and secondary market sales. With respect
to the Target 10 Trust, Series 10, sales will be made to dealers
and others at prices which represent a concession or agency commission
of 2.00% of the Public Offering Price for primary and secondary
market sales. Dealers and others will receive a concession or
agency commission of 1.0% of the Public Offering Price on purchases
by Rollover Unit holders. 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. The Sponsor reserves
Page 27
the right to change the amount of the concession or agency commission
from time to time. In the event the Sponsor reacquires, or the
Trustee redeems, Units from brokers, dealers and others while
a market is being maintained for such Units, such entities agree
to repay immediately to the Sponsor any such concession or agency
commission relating to such reacquired Units. 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. The Sponsor expects to recoup the foregoing payments
from the deferred sales charge payments related to such Trusts.
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 the Trusts. Such payments are made by the Sponsor
out of its own assets, and not out of the assets of a Trust. These
programs will not change the price Unit holders pay for their
Units or the amount that a 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 the common stocks comprising the Dow Jones Industrial
Average, corporate or U.S. Government bonds, bank CDs and money
market accounts or money market funds, each of which has investment
characteristics that may differ from those of the Trusts. U.S.
Government bonds, for example, are backed by the full faith and
credit of the U.S. Government and bank CDs and money market accounts
are insured by an agency of the federal government. Money market
accounts and money market funds provide stability of principal,
but pay interest at rates that vary with the condition of the
short-term debt market. The investment characteristics of each
Trust are described more fully elsewhere in this Prospectus.
Advertisements and other sales material for the Trusts may also
show the total returns (price changes plus dividends received,
divided by the maximum public offering price) of each completed
prior series and the total and average annualized return of all
series in the same quarterly cycle, assuming the holder rolled
over at the termination of each prior series. These returns will
reflect all applicable sales charges and expenses.
Trust performance may be compared to performance on a total return
basis 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, The New York Times, U.S. News and World Report,
Business Week, Forbes or Fortune. As with other performance data,
performance comparisons should not be considered representative
of a Trust's relative performance for any future period.
What are the Sponsor's Profits?
The Sponsor of the Trusts will receive a gross sales commission
equal to a maximum of 2.75% of the Public Offering Price of the
Units (equivalent to 2.772% of the net amount invested, exclusive
of the deferred sales charge) with respect to the Target 5 Trust,
Series 4 and and a maximum of 2.90% of the Public Offering Price
of the Units (equivalent to 2.929% of the net amount invested,
exclusive of the deferred sales charge) with
Page 28
respect to the Target 10 Trust, Series 10, less any reduced sales
charge for quantity purchases as described under "Public Offering-How
is the Public Offering Price Determined?" In addition, the Sponsor
may be considered to have realized a profit or to have sustained
a loss, as the case may be, in the amount of any difference between
the cost of the Equity Securities to a Trust (which is based on
the Evaluator's determination of the aggregate offering price
of the underlying Equity Securities of such Trust on the Initial
Date of Deposit as well as on subsequent deposits) and the cost
of such Equity Securities to the Sponsor. See Note (2) of "Schedule
of Investments" for each Trust. 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 maximum sales charge
of 2.75% with respect to the Target 5 Trust, Series 4 and 2.90%
with respect to the Target 10 Trust, Series 10) or redeemed. The
secondary market public offering price of Units may be greater
or less than the cost of such Units to the Sponsor. The Sponsor
may also realize profits or sustain losses in connection with
the creation of additional Units for the Distribution Reinvestment
Option.
Will There be a Secondary Market?
After the initial offering period, although it is not obligated
to do so, the Sponsor intends to maintain a market for the Units
and continuously offer to purchase Units at prices, subject to
change at any time, based upon the aggregate underlying value
of the Equity Securities in a 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 three
business days following such order or shortly thereafter. Certificates
are transferable by presentation and surrender to the Trustee
properly endorsed or accompanied by a written instrument or instruments
of transfer. Certificates to be redeemed must be properly endorsed
or accompanied by a written instrument or instruments of transfer.
A Unit holder must sign exactly as his name appears on the face
of the certificate with signature guaranteed by a participant
in the Securities Transfer Agents Medallion Program ("STAMP")
or such other signature guaranty program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee. In
certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of
death, appointments as executor or administrator or certificates
of corporate authority. Record ownership may occur before settlement.
Certificates will be issued in fully registered form, transferable
only on the books of the Trustee in denominations of one Unit
or any multiple thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form.
Only Unit holders who elect to hold Units in uncertificated form
are eligible to participate as a Rollover Unit holder. The Trustee
will maintain an account for each such Unit holder and will credit
each such account with the number of Units purchased by that Unit
holder. Within two business days of the issuance or transfer of
Units held in uncertificated form, the Trustee will send to the
registered owner of Units a written initial transaction statement
containing a description
Page 29
of a Trust; the number of Units issued or transferred; the name,
address and taxpayer identification number, if any, of the new
registered owner; a notation of any liens and restrictions of
the issuer and any adverse claims to which such Units are or may
be subject or a statement that there are no such liens, restrictions
or adverse claims; and the date the transfer was registered. Uncertificated
Units are transferable through the same procedures applicable
to Units evidenced by certificates (described above), except that
no certificate need be presented to the Trustee and no certificate
will be issued upon the transfer unless requested by the Unit
holder. A Unit holder may at any time request the Trustee to issue
certificates for Units.
Although no such charge is now made or contemplated, a Unit holder
may be required to pay $2.00 to the Trustee per certificate reissued
or transferred and to pay any governmental charge that may be
imposed in connection with each such transfer or exchange. For
new certificates issued to replace destroyed, stolen or lost certificates,
the Unit holder may be required to furnish indemnity satisfactory
to the Trustee and pay such expenses as the Trustee may incur.
Mutilated certificates must be surrendered to the Trustee for replacement.
How are Income and Capital Distributed?
The Trustee will distribute any net income received with respect
to any of the securities in a Trust on or about the Income Distribution
Dates to Unit holders of record on the preceding Income Record
Date. See "Summary of Essential Information." Persons who purchase
Units will commence receiving distributions only after such person
becomes a Record Owner. Notification to the Trustee of the transfer
of Units is the responsibility of the purchaser, but in the normal
course of business such notice is provided by the selling broker-dealer.
Proceeds received on the sale of any Equity Securities in a Trust,
to the extent not used to meet redemptions of Units, pay the deferred
sales charge or pay expenses, will, however, be distributed on
the last day of each month to Unit holders of record on the fifteenth
day of each 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, if any, will be made as part of the final liquidation
distribution, and in certain circumstances, earlier. See "What
is the Federal Tax Status of Unit Holders?"
It is anticipated that the deferred sales charge will be collected
from the Capital Account and that amounts in the Capital Account
will be sufficient to cover the cost of the deferred sales charge.
To the extent that amounts in the Capital Account are insufficient
to satisfy the then current deferred sales charge obligation,
Equity Securities may be sold to meet such shortfall. Distributions
of amounts necessary to pay the deferred portion of the sales
charge will be made to an account designated by the Sponsor for
purposes of satisfying Unit holders' deferred sales charge obligations.
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 a Trust is terminated, each Unit
holder who is not a Rollover Unit holder will, upon surrender
of his Units for redemption, receive (i) the pro rata share of
the amounts realized upon the disposition of Equity Securities,
unless he elects an In-Kind Distribution as described below and
(ii) a pro rata share of any other assets of such Trust, less
expenses of such Trust. Not less than 30 days prior to the Mandatory
Termination Date of a 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
Page 30
(an "In-Kind Distribution"), if such Unit holder owns at least
2,500 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. An In-Kind
Distribution will be reduced by customary transfer and registration
charges. To be effective, the election form, together with surrendered
certificates and other documentation required by the Trustee,
must be returned to the Trustee at least five business days prior
to the Mandatory Termination Date of a Trust. A Unit holder may,
of course, at any time after the Equity Securities are distributed,
sell all or a portion of the shares.
The Trustee will credit to the Income Account of a Trust any dividends
received on the Equity Securities therein. All other receipts
(e.g., return of capital, etc.) are credited to the Capital Account
of a 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 such Trust.
Distribution Reinvestment Option. Any Unit holder may elect to
have each distribution of income or capital on his Units, other
than the final liquidating distribution in connection with the
termination of a Trust, automatically reinvested in additional
Units of such Trust. Each person who purchases Units of a Trust
may elect to become a participant in the Distribution Reinvestment
Option by notifying the Trustee of their election. The Distribution
Reinvestment Option may not be available in all states. In order
to enable a Unit holder to participate in the Distribution Reinvestment
Option with respect to a particular distribution on his Units,
the card must be received by the Trustee within 10 days prior
to the Record Date for such distribution. Each subsequent distribution
of income or capital on the participant's Units will be automatically
applied by the Trustee to purchase additional Units of a Trust.
The remaining deferred sales charge payments will be assessed
on Units acquired pursuant to the Distributions Reinvestment Option.
IT SHOULD BE REMEMBERED THAT EVEN IF DISTRIBUTIONS ARE REINVESTED,
THEY ARE STILL TREATED AS DISTRIBUTIONS FOR INCOME TAX PURPOSES.
What Reports will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and
the amount of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per Unit. Within a reasonable
period of time after the end of each calendar year, the Trustee
shall furnish to each person who at any time during the calendar
year was a Unit holder of a Trust the following information in
reasonable detail: (1) a summary of transactions in such Trust
for such year; (2) any Equity Securities sold during the year
and the Equity Securities held at the end of such year by such
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 a Trust furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his Units by tender
to the Trustee at its corporate trust office in the City of New
York of the certificates representing the Units to be redeemed,
or in the case of uncertificated Units, delivery of a request
for redemption, duly endorsed or accompanied by proper instruments
of transfer with signature guaranteed as explained above (or by
providing satisfactory indemnity, as in connection with lost,
stolen or destroyed certificates), and payment of applicable governmental
charges, if any. No redemption fee will be charged. On the third
business day following such tender, the Unit holder will be entitled
to receive in cash an amount for each Unit equal to the Redemption
Price per Unit next computed after receipt by the Trustee of such
tender of Units. The "date of tender" is deemed to be the date
on which Units are received by the Trustee, except that as regards
Units received after 4:00 p.m. eastern standard 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.
Units tendered for redemption prior to such
Page 31
time as the entire deferred sales charge on such Units has been
collected will be assessed the amount of the remaining deferred
sales charge at the time of redemption.
Any Unit holder tendering 2,500 Units or more of a Trust 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 a
portfolio and cash from the Capital Account equal to the fractional
shares to which the tendering Unit holder is entitled. The Trustee
may adjust the number of shares of any issue of Equity Securities
included in a Unit holder's In-Kind Distribution to facilitate
the distribution of whole shares, such adjustment to be made on
the basis of the value of Equity Securities on the date of tender.
If funds in the Capital Account are insufficient to cover the
required cash distribution to the tendering Unit holder, the Trustee
may sell Equity Securities in the manner described above.
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a specified percentage of the
principal amount of a Unit redemption if the Trustee has not been
furnished the redeeming Unit holder's tax identification number
in the manner required by such regulations. Any amount so withheld
is transmitted to the Internal Revenue Service and may be recovered
by the Unit holder only when filing a tax return. Under normal
circumstances the Trustee obtains the Unit holder's tax identification
number from the selling broker. However, any time a Unit holder
elects to tender Units for redemption, such Unit holder should
make sure that the Trustee has been provided a certified tax identification
number in order to avoid this possible "back-up withholding."
In the event the Trustee has not been previously provided such
number, one must be provided at the time redemption is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of 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 a Trust.
The Trustee is empowered to sell Equity Securities of a Trust
in order to make funds available for redemption. To the extent
that Equity Securities are sold, the size and diversity of a Trust
will be reduced. Such sales may be required at a time when Equity
Securities would not otherwise be sold and might result in lower
prices than might otherwise be realized.
The Redemption Price per Unit and the Public Offering Price per
Unit (which includes the sales charge) during the initial offering
period (as well as the secondary market Public Offering Price)
will be determined on the basis of the aggregate underlying value
of the Equity Securities in a Trust plus or minus cash, if any,
in the Income and Capital Accounts of such Trust. The Redemption
Price per Unit is the pro rata share of each Unit determined by
the Trustee by adding: (1) the cash on hand in a Trust other than
cash deposited in the Trust to purchase Equity Securities not
applied to the purchase of such Equity Securities; (2) the aggregate
value of the Equity Securities (including "when issued" contracts,
if any) held in such Trust, as determined by the Evaluator on
the basis of the aggregate underlying value of the Equity Securities
in such 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 such Trust; (2) any
amounts owing to the Trustee for its advances; (3) an amount representing
estimated accrued expenses of such Trust, including but not limited
to fees and expenses of the Trustee (including legal fees), the
Evaluator and supervisory fees, if any; (4) cash held for distribution
to Unit holders of record of such Trust as of the business day
prior to the evaluation being made; and (5) other liabilities
incurred by such Trust; and finally dividing the results of such
computation by the number of Units of such Trust outstanding as
of the date thereof.
Page 32
The aggregate value of the Equity Securities will be determined
in the following manner: if the Equity Securities are listed on
a national securities exchange or the NASDAQ National Market System,
this evaluation is generally based on the closing sale prices
on that exchange or that system (unless it is determined that
these prices are inappropriate as a basis for valuation) or, if
there is no closing sale price on that exchange or system, at
the closing bid prices. If the Equity Securities are not so listed
or, if so listed and the principal market therefore is other than
on the exchange, the evaluation shall generally be based on the
current bid prices on the over-the-counter market (unless these
prices are inappropriate as a basis for evaluation). If current
bid prices are unavailable, the evaluation is generally determined
(a) on the basis of current bid prices for comparable securities,
(b) by appraising the value of the Equity Securities on the bid
side of the market or (c) by any combination of the above.
The right of redemption may be suspended and payment postponed
for any period during which the New York Stock Exchange is closed,
other than for customary weekend and holiday closings, or during
which the Securities and Exchange Commission determines that trading
on the New York Stock Exchange is restricted or any emergency
exists, as a result of which disposal or evaluation of the Securities
is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit. Under
certain extreme circumstances, the Sponsor may apply to the Securities
and Exchange Commission for an order permitting a full or partial
suspension of the right of Unit holders to redeem their Units.
The Trustee is not liable to any person in any way for any loss
or damage which may result from any such suspension or postponement.
Special Redemption, Liquidation and Investment in a New Trust
It is expected that a special redemption and liquidation will
be made of all Units of the Trusts held by any Unit holder (a
"Rollover Unit holder") who affirmatively notifies the Trustee
in writing that he so desires by the Rollover Notification Date
specified in the "Summary of Essential Information."
All Units of Rollover Unit holders will be redeemed In-Kind during
the Special Redemption and Liquidation Period and the underlying
Equity Securities will be distributed to the Distribution Agent
on behalf of the Rollover Unit holders. During the Special Redemption
and Liquidation Period (as set forth in "Summary of Essential
Information"), the Distribution Agent will be required to sell
all of the underlying Equity Securities on behalf of Rollover
Unit holders. The sales proceeds will be net of brokerage fees,
governmental charges or any expenses involved in the sales.
The Distribution Agent will engage the Sponsor as its agent to
sell the distributed Equity Securities. The Sponsor will attempt
to sell the Equity Securities as quickly as is practicable during
the Special Redemption and Liquidation Period. The Sponsor does
not anticipate that the period will be longer than one day, given
that the Equity Securities are usually highly liquid. The liquidity
of any Equity Security depends on the daily trading volume of
the Equity Security and the amount that the Sponsor has available
for sale on any particular day.
Pursuant to a recent exemptive order, each terminating Target
10 Trust and Target 5 Trust (and the Distribution Agent on behalf
of Rollover Unit holders) can now sell Equity Securities to the
1996 Trusts if those Equity Securities continue to meet the Target
10 and Target 5 Strategy by remaining among the ten highest dividend-yielding
or five lowest priced of the ten highest dividend-yielding securities
in the respective Trust. The exemption will enable each Trust
to eliminate commission costs on these transactions. The price
for those Equity Securities will be the closing sale price on
the sale date on the exchange where the Equity Securities are
principally traded, as certified by the Sponsor and confirmed
by the Trustee of each Trust.
The Sponsor intends to create a separate 1996 Trust for both the
Target 5 Trust Series and the Target 10 Trust Series. The Rollover
Unit holders' proceeds will be invested in either 1996 Trust (as
selected by the Unit holder), if then registered in such state
and being offered, the portfolio of which will contain, in the
case of the Target 5 Trust Series, common stock of the five companies
with the lowest per share stock price of the ten highest dividend
yielding stocks in the Dow Jones Industrial Average as of the
business day prior to the Initial Date of Deposit, and in the
case of the Target 10 Trust Series, common stock of the ten highest
dividend yielding stocks in the Dow Jones Industrial Average as
of the business day prior to the Initial Date of Deposit.
Page 33
The proceeds of redemption will be used to buy 1996 Trust Units
as the proceeds become available.
The Sponsor intends to create 1996 Trust Units as quickly as possible,
dependent upon the availability and reasonably favorable prices
of the Equity Securities included in a 1996 Trust portfolio, and
it is intended that Rollover Unit holders will be given first
priority to purchase the 1996 Trust Units. There can be no assurance,
however, as to the exact timing of the creation of the 1996 Trust
Units or the aggregate number of 1996 Trust Units which the Sponsor
will create. The Sponsor may, in its sole discretion, stop creating
new Units (whether permanently or temporarily) at any time it
chooses, regardless of whether all proceeds of the Special Redemption
and Liquidation have been invested on behalf of Rollover Unit
holders. Cash which has not been invested on behalf of the Rollover
Unit holders in 1996 Trust Units will be distributed within a
reasonable time after such occurrence. However, since the Sponsor
can create Units, the Sponsor anticipates that sufficient Units
can be created, although moneys in a 1996 Trust may not be fully
invested on the next business day.
Any Rollover Unit holder may thus be redeemed out of a Trust and
become a holder of an entirely different Trust, a 1996 Trust,
with a different portfolio of Equity Securities. The Rollover
Unit holders' Units will be redeemed In-Kind and the distributed
Equity Securities shall be sold during the Special Redemption
and Liquidation Period. In accordance with the Rollover Unit holders'
offer to purchase the 1996 Trust Units, the proceeds of the sales
(and any other cash distributed upon redemption) will be invested
in a 1996 Trust, at the public offering price, including the applicable
maximum sales charge per Unit (which for Rollover Unit holders
is currently expected to be $.1950 per Unit for the 1996 Series
of the Target 5 Trust Series and the Target 10 Trust Series, all
of which will be deferred as provided herein).
This process of redemption, liquidation, and investment in a new
Trust is intended to allow for the fact that the portfolios selected
by the Sponsor are chosen on the basis of growth and income potential
only for a year, at which point a new portfolio is chosen. It
is contemplated that a similar process of redemption, liquidation
and investment in a new trust will be available for the 1996 Trusts
and each subsequent series of the Trusts, approximately a year
after that Series' creation.
The Sponsor believes that the gradual redemption, liquidation
and investment in the Target 5 Trust Series and Target 10 Trust
Series will help mitigate any negative market price consequences
stemming from the trading of large volumes of securities and of
the underlying Equity Securities in Target 5 Trust Series and
Target 10 Trust Series in a short, publicized period of time.
The above procedures may, however, be insufficient or unsuccessful
in avoiding such price consequences. In fact, market price trends
may make it advantageous to sell or buy more quickly or more slowly
than permitted by these procedures. Rollover Unit holders could
then receive a less favorable average Unit price than if they
bought all their Units of the Target 5 Trust Series and Target
10 Trust, Series on any given day of the period.
It should also be noted that Rollover Unit holders may realize
taxable capital gains on the Special Redemption and Liquidation
but, in certain unlikely circumstances, will not be entitled to
a deduction for certain capital losses and, due to the procedures
for investing in a 1996 Trust, no cash would be distributed at
that time to pay any taxes. Included in the cash for the Special
Redemption and Liquidation will be an amount of cash attributable
to the second semi-annual distribution of dividend income; accordingly,
Rollover Unit holders also will not have cash distributed to pay
any taxes. See "What is the Federal Tax Status of Unit holders?"
In addition, during this period a Unit holder will be at risk
to the extent that Equity Securities are not sold and will not
have the benefit of any stock appreciation to the extent that
moneys have not been invested; for this reason, the Sponsor will
be inclined to sell and purchase the Equity Securities in as short
a period as they can without materially adversely affecting the
price of the Equity Securities.
Unit holders who do not inform the Distribution Agent that they
wish to have their Units so redeemed and liquidated ("Remaining
Unit holders") will continue to hold Units of a Trust as described
in this Prospectus until such Trust is terminated or until the
Mandatory Termination Date listed in the Summary of Essential
Information, whichever occurs first. These Remaining Unit holders
will not realize capital gains or losses due to
Page 34
the Special Redemption and Liquidation, and will not be charged
any additional sales charge. If a large percentage of Unit holders
become Rollover Unit holders, the aggregate size of a Trust will
be sharply reduced. As a consequence, expenses, if any, in excess
of the amount to be borne by the Trustee would constitute a higher
percentage amount per Unit than prior to the Special Redemption,
Liquidation and Investment in a 1996 Trust. The Trust might also
be reduced below the Discretionary Liquidation Amount listed in
the Summary of Essential Information because of the lesser number
of Units in a Trust, and possibly also due to a value reduction,
however temporary, in Units caused by the Sponsor's sales of Equity
Securities; if so, the Sponsor could then choose to liquidate
such Trust without the consent of the remaining Unit holders.
See "How May the Indenture be Amended or Terminated?" The Equity
Securities remaining in a Trust after the Special Redemption and
Liquidation Period will be sold by the Sponsor as quickly as possible
without, in its judgment, materially adversely affecting the market
price of the Equity Securities.
The Sponsor may for any reason, in its sole discretion, decide
not to sponsor the 1996 Trusts or any subsequent series of the
Trusts, without penalty or incurring liability to any Unit holder.
If the Sponsor so decides, the Sponsor shall notify the Unit holders
before the Special Redemption and Liquidation Period would have
commenced. All Unit holders will then be remaining Unit holders,
with rights to ordinary redemption as before. See "How May Units
be Redeemed?" The Sponsor may modify the terms of the 1996 Trusts
or any subsequent series of the Trusts. The Sponsor may also modify,
suspend or terminate the Rollover Option upon notice to the Unit
holders of such amendment at least 60 days prior to the effective
date of such amendment.
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 standard
time on the same business day and by making payment therefor to
the Unit holder not later than the day on which the Units would
otherwise have been redeemed by the Trustee. Units held by the
Sponsor may be tendered to the Trustee for redemption as any other
Units. In the event the Sponsor does not purchase Units, the Trustee
may sell Units tendered for redemption in the over-the-counter
market, if any, as long as the amount to be received by the Unit
holder is equal to the amount he would have received on redemption
of the Units.
The offering price of any Units acquired by the Sponsor will be
in accord with the Public Offering Price described in the then
effective prospectus describing such Units. Any profit or loss
resulting from the resale or redemption of such Units will belong
to the Sponsor.
How May Equity Securities be Removed from a Trust?
The Portfolios of the Trusts are 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. Except as stated under "Portfolio-What are Some Additional
Considerations for Investors?" for Failed Obligations, the acquisition
by a Trust of any securities or other property other than the
Equity Securities is prohibited. Pursuant to the Indenture and
with limited exceptions, the Trustee may sell any securities or
other property acquired in exchange for Equity Securities such
as those acquired in connection with a merger or other transaction.
If offered such new or exchanged securities or property, the Trustee
shall reject the offer. However, in the event such securities
or property are nonetheless acquired by a Trust, they may be accepted
for deposit
Page 35
in a Trust and either sold by the Trustee or held in a Trust pursuant
to the direction of the Sponsor (who may rely on the advice of
the Portfolio Supervisor). Proceeds from the sale of Equity Securities
by the Trustee are credited to the Capital Account of a Trust
for distribution to Unit holders or to meet redemptions.
The Trustee may also sell Equity Securities designated by the
Sponsor, or if not so directed, in its own discretion, for the
purpose of redeeming Units of a Trust tendered for redemption
and the payment of expenses.
The Sponsor, in designating Equity Securities to be sold by the
Trustee, will generally make selections in order to maintain,
to the extent practicable, the proportionate relationship among
the number of shares of individual issues of Equity Securities.
To the extent this is not practicable, the composition and diversity
of the Equity Securities may be altered. In order to obtain the
best price for 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.
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in
1991, acts as Sponsor for successive series of The First Trust
Combined Series, The First Trust Special Situations Trust, The
First Trust Insured Corporate Trust, The First Trust of Insured
Municipal Bonds, The First Trust GNMA, Templeton Growth and Treasury
Trust, Templeton Foreign Fund & U.S. Treasury Securities Trust
and The Advantage Growth and Treasury Securities Trust. First
Trust introduced the first insured unit investment trust in 1974
and to date more than $9 billion in First Trust unit investment
trusts have been deposited. The Sponsor's employees 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, 1994, the total partners' capital of Nike Securities
L.P. was $10,863,058 (audited). (This paragraph relates only to
the Sponsor and not to the Trusts or to any series thereof or
to any other Underwriter. The information is included herein only
for the purpose of informing investors as to the financial responsibility
of the Sponsor and its ability to carry out its contractual obligations.
More detailed financial information will be made available by
the Sponsor upon request.)
Who is the Trustee?
The Trustee is The Chase Manhattan Bank (National Association),
a national banking association with its principal executive office
located at 1 Chase Manhattan Plaza, New York, New York 10081 and
its unit investment trust office 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 subject to supervision by the Comptroller of the Currency,
the Federal Deposit Insurance Corporation and the Board of Governors
of the Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not participated
in the selection of the Equity Securities. For information relating
to the responsibilities of the Trustee under the Indenture, reference
is made to the material set forth under "Rights of Unit Holders."
The Trustee and any successor trustee may resign by executing
an instrument in writing and filing the same with the Sponsor
and mailing a copy of a notice of resignation to all Unit holders.
Upon receipt of such notice, the Sponsor is obligated to appoint
a successor trustee promptly. If the Trustee becomes incapable
of acting or becomes bankrupt or its affairs are taken over by
public authorities, the Sponsor may remove the Trustee and appoint
a successor as provided in the Indenture. If upon resignation
of a trustee no successor has accepted the appointment within
30 days after notification, the retiring trustee may apply to
a court of competent jurisdiction for the appointment of a successor.
The resignation or removal of a trustee becomes effective only
when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Page 36
Any corporation into which a Trustee may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which a Trustee shall be a party, shall
be the successor Trustee. The Trustee must be a banking corporation
organized under the laws of the United States or any State and
having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit
holders for taking any action or for refraining from taking any
action in good faith pursuant to the Indenture, or for errors
in judgment, but shall be liable only for their own willful misfeasance,
bad faith, gross negligence (ordinary negligence in the case of
the Trustee) or reckless disregard of their obligations and duties.
The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Equity Securities.
In the event of the failure of the Sponsor to act under the Indenture,
the Trustee may act thereunder and shall not be liable for any
action taken by it in good faith under the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Equity Securities or
upon the interest thereon or upon it as Trustee under the Indenture
or upon or in respect of 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 Trust as provided herein, or (c) continue
to act as Trustee without terminating the Indenture.
Who is the Evaluator?
The Evaluator is FT Evaluators L.P., an Illinois limited partnership
formed in 1994 and an affiliate of the Sponsor. The Evaluator's
address is 1001 Warrenville Road, Lisle, Illinois 60532. 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 a Trust shall terminate upon the Mandatory
Termination Date indicated herein under "Summary of Essential
Information." The Trust may be liquidated at any time by consent
of 100% of the Unit holders of a Trust or by the Trustee when
the value of the Equity Securities owned by such Trust
Page 37
as shown by any evaluation, is less than the lower of $2,000,000
or 20% of the total value of Equity Securities deposited in such
Trust during the primary offering period, or in the event that
Units of such Trust not yet sold aggregating more than 60% of
the Units of such Trust are tendered for redemption by the Underwriter,
including the Sponsor. If a Trust is liquidated because of the
redemption of unsold Units of such Trust by the Underwriter, the
Sponsor will refund to each purchaser of Units of such 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 a Trust. Within a reasonable period after termination,
the Trustee will follow the procedures set forth under "How are
Income and Capital Distributed?" Also, because of the Special
Redemption and Liquidation in a New Trust, there is a possibility
that a Trust may be reduced below the Discretionary Liquidation
Amount and that a Trust could therefore be terminated at that
time before the Mandatory Termination Date of the Fund.
Commencing on the Mandatory Termination Date, Equity Securities
will begin to be sold in connection with the termination of a
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 Mandatory Termination Date of the
Trust the Trustee will provide written notice thereof to all Unit
holders and will include with such notice a form to enable Unit
holders to elect a distribution of shares of Equity Securities
(reduced by customary transfer and registration charges), if such
Unit holder owns at least 2,500 Units of 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. To be effective, the election form, together
with surrendered certificates and other documentation required
by the Trustee, must be returned to the Trustee at least five
business days prior to the Mandatory Termination Date of a Trust.
Unit holders not electing a distribution of shares of Equity Securities
and who do not elect the Rollover Option will receive a cash distribution
from the sale of the remaining Equity Securities within a reasonable
time after a Trust is terminated. Regardless of the distribution
involved, the Trustee will deduct from the funds of a Trust any
accrued costs, expenses, advances or indemnities provided by the
Trust Agreement, including estimated compensation of the Trustee
and costs of liquidation and any amounts required as a reserve
to provide for payment of any applicable taxes or other governmental
charges. Any sale of Equity Securities in 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 Trust.
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 LLP, 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 38
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 124
We have audited the accompanying statements of net assets, including
the schedules of investments, of The First Trust Special Situations
Trust, Series 124, comprised of Target 5 Trust, Series 4 and Target
10 Trust, Series 10, as of the opening of business on September
26, 1995. 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 September 26, 1995. 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 The First Trust Special Situations Trust, Series 124, comprised
of Target 5 Trust, Series 4 and Target 10 Trust, Series 10, at
the opening of business on September 26, 1995 in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
September 26, 1995
Page 39
Statement of Net Assets
Target 5 Trust, Series 4
The First Trust Special Situations Trust, Series 124
At the Opening of Business on the Initial Date of Deposit
September 26, 1995
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by purchase
contracts (1) (2) $ 148,787
Organizational costs (3) 30,000
__________
178,787
Less accrued organizational costs (3) (30,000)
Less liability for deferred sales charge (4) (2,925)
__________
Net assets 145,862
==========
Units outstanding 15,000
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (5) $ 149,987
Less sales charge (5) (4,125)
__________
Net assets $ 145,862
==========
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule
of Investments" is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $200,000 issued
by Bankers Trust Company has been deposited with the Trustee as
collateral, covering the monies necessary for the purchase of
the Equity Securities pursuant to purchase contracts for such
Equity Securities.
(3) The Trust will bear all or a portion of its estimated organizational
costs which will be deferred and amortized over a one-year period
from the Initial Date of Deposit. The estimated organizational
costs are based on 2,000,000 Units of the Trust expected to be
issued. To the extent the number of Units issued is larger or
smaller, the estimate will vary.
(4) Represents the amount of mandatory distributions from the
Trust ($.1950 per Unit), payable to the Sponsor in ten equal monthly
installments beginning on January 1, 1996, and on the first day
of each month thereafter through October 1, 1996. If Units are
sold or redeemed prior to October 1, 1996, the remaining amount
of the deferred sales charge applicable to such Units will be
payable at the time of sale or redemption.
(5) The aggregate cost to investors includes a maximum total
sales charge computed at the rate of 2.75% of the Public Offering
Price (equivalent to 2.772% of the net amount invested, exclusive
of the deferred sales charge), assuming no reduction of sales
charge for quantity purchases.
Page 40
Statement of Net Assets
Target 10 Trust, Series 10
The First Trust Special Situations Trust, Series 124
At the Opening of Business on the Initial Date of Deposit
September 26, 1995
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by purchase
contracts (1) (2) $ 148,516
Organizational costs (3) 30,000
__________
178,516
Less accrued organizational costs (3) (30,000)
Less liability for deferred sales charge (4) (2,925)
__________
Net assets 145,591
==========
Units outstanding 15,000
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (5) $ 149,939
Less sales charge (5) (4,348)
__________
Net assets $ 145,591
==========
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule
of Investments" is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $200,000 issued
by Bankers Trust Company has been deposited with the Trustee as
collateral, covering the monies necessary for the purchase of
the Equity Securities pursuant to purchase contracts for such
Equity Securities.
(3) The Trust will bear all or a portion of its estimated organizational
costs which will be deferred and amortized over a one-year period
from the Initial Date of Deposit. The estimated organizational
costs are based on 2,000,000 Units of the Trust expected to be
issued. To the extent the number of Units issued is larger or
smaller, the estimate will vary.
(4) Represents the amount of mandatory distributions from the
Trust ($.1950 per Unit), payable to the Sponsor in ten equal monthly
installments beginning on January 1, 1996, and on the first day
of each month thereafter through October 1, 1996. If Units are
sold or redeemed prior to October 1, 1996, the remaining amount
of the deferred sales charge applicable to such Units will be
payable at the time of sale or redemption.
(5) The aggregate cost to investors includes a maximum total
sales charge computed at the rate of 2.90% of the Public Offering
Price (equivalent to 2.929% of the net amount invested, exclusive
of the deferred sales charge), assuming no reduction of sales
charge for quantity purchases.
Page 41
Schedule of Investments
Target 5 Trust, Series 4
The First Trust Special Situations Trust, Series 124
At the Opening of Business on the Initial Date of Deposit
September 26, 1995
<TABLE>
<CAPTION>
Market Cost of
Number Percentage Value Equity Current
of Ticker Symbol and of Aggregate per Securities Dividend
Shares Name of Issuer of Equity Securities (1) Offering Price Share to Trust (2) Yield (3)
______ _______________________________________ ______________ ______ _____________ _________
<C> <S> <C> <C> <C> <C>
603 CHV Chevron Corporation 20% $49.375 $ 29,773 4.05%
505 EK Eastman Kodak Company 20% 58.875 29,732 2.72%
633 GM General Motors Corporation 20% 47.000 29,751 2.55%
768 GT Goodyear Tire & Rubber
Company 20% 38.750 29,760 2.58%
545 MMM Minnesota Mining &
Manufacturing Company 20% 54.625 29,771 3.44%
_______ _________
Total Investments 100% $ 148,787
======= =========
</TABLE>
[FN]
__________________
(1) All Equity Securities are represented by regular way contracts
to purchase such Equity Securities for the performance of which
an irrevocable letter of credit has been deposited with the Trustee.
The purchase contracts for the Equity Securities were entered
into by the Sponsor on September 25, 1995. The Trust has a mandatory
termination date of October 15, 1996.
(2) The cost of the Equity Securities to the Trust represents
the aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the closing sale prices of the
Equity Securities on the business day preceding the Initial Date
of Deposit). The valuation of the Equity Securities has been determined
by the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit
was $148,787. Cost and loss to Sponsor relating to the Equity
Securities sold to the Trust were $148,860 and $73, respectively.
(3) Current Dividend Yield for each Equity Security was calculated
by annualizing the last quarterly or semi-annual ordinary dividend
declared on that Equity Security and dividing the result by that
Equity Security's closing sale price on September 25, 1995.
Page 42
Schedule of Investments
Target 10 Trust, Series 10
The First Trust Special Situations Trust, Series 124
At the Opening of Business on the Initial Date of Deposit
September 26, 1995
<TABLE>
<CAPTION>
Market Cost of
Number Percentage Value Equity Current
of Ticker Symbol and of Aggregate per Securities Dividend
Shares Name of Issuer of Equity Securities (1) Offering Price Share to Trust (2) Yield (3)
______ _______________________________________ ______________ ______ _____________ _________
<C> <S> <C> <C> <C> <C>
301 CHV Chevron Corporation 10% $49.375 $ 14,862 4.05%
219 DD E.I. du Pont de Nemours
& Company 10% 67.875 14,865 3.06%
252 EK Eastman Kodak Company 10% 58.875 14,836 2.72%
204 XON Exxon Corporation 10% 72.750 14,841 4.12%
316 GM General Motors Corporation 10% 47.000 14,852 2.55%
383 GT Goodyear Tire & Rubber
Company 10% 38.750 14,841 2.58%
272 MMM Minnesota Mining & Manufacturing
Company 10% 54.625 14,858 3.44%
194 JPM J.P. Morgan & Company, Inc. 10% 76.500 14,841 3.92%
184 MO Philip Morris Companies, Inc. 10% 80.625 14,835 4.96%
229 TX Texaco, Inc. 10% 65.000 14,885 4.92%
_______ _________
Total Investments 100% $ 148,516
======= =========
</TABLE>
[FN]
___________________
(1) All Equity Securities are represented by regular way contracts
to purchase such Equity Securities for the performance of which
an irrevocable letter of credit has been deposited with the Trustee.
The purchase contracts for the Equity Securities were entered
into by the Sponsor on September 25, 1995. The Trust has a mandatory
termination date of October 15, 1996.
(2) The cost of the Equity Securities to the Trust represents
the aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the closing sale prices of the
Equity Securities on the business day preceding the Initial Date
of Deposit). The valuation of the Equity Securities has been determined
by the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit
was $148,516. Cost and loss to Sponsor relating to the Equity
Securities sold to the Trust were $148,592 and $76, respectively.
(3) Current Dividend Yield for each Equity Security was calculated
by annualizing the last quarterly or semi-annual ordinary dividend
declared on that Equity Security and dividing the result by that
Equity Security's closing sale price on September 25, 1995.
Page 43
<TABLE>
<CAPTION>
CONTENTS:
<S> <C>
Summary of Essential Information:
Target 5 Trust, Series 4 4
Target 10 Trust, Series 10 5
The First Trust Special Situations Trust, Series 124:
What is The First Trust Special Situations Trust? 8
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 Equity Securities? 14
The Dow Jones Industrial Average, Historical
Perspective 14
The Dow Jones Industrial Average 15
What are the Equity Securities Selected for
Target 5 Trust, Series 4? 15
What are the Equity Securities Selected for
Target 10 Trust, Series 10? 16
What are Some Additional Considerations for
Investors? 22
Risk Factors 22
Public Offering:
How is the Public Offering Price Determined? 25
How are Units Distributed? 27
What are the Sponsor's Profits? 28
Will There be a Secondary Market? 29
Rights of Unit Holders:
How is Evidence of Ownership Issued and Transferred? 29
How are Income and Capital Distributed? 30
What Reports will Unit Holders Receive? 31
How May Units be Redeemed? 31
Special Redemption, Liquidation and Investment in
a New Trust 33
How May Units be Purchased by the Sponsor? 35
How May Equity Securities be Removed from a
Trust? 35
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 36
Who is the Trustee? 36
Limitations on Liabilities of Sponsor and Trustee 37
Who is the Evaluator? 37
Other Information:
How May the Indenture be Amended or Terminated? 37
Legal Opinions 38
Experts 38
Report of Independent Auditors 39
Statements of Net Assets:
Target 5 Trust, Series 4 40
Target 10 Trust, Series 10 41
Schedules of Investments:
Target 5 Trust, Series 4 42
Target 10 Trust, Series 10 43
</TABLE>
___________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION
TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET
FORTH IN THE REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO,
WHICH THE FUND HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
Target 5 Trust
Series 4
Target 10 Trust
Series 10
First Trust (registered trademark)
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-708-241-4141
Trustee:
The Chase Manhattan Bank
(National Association)
770 Broadway
New York, New York 10003
1-800-682-7520
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
September 26, 1995
Page 44
-APPENDIX-
The graph which appears on page 19 of the prospectus represents
a comparison between a $10,000 investment made on January 1, 1975
in those stocks which comprise the Dow Jones Industrial Average
and an identical investment in the five lowest priced stocks of
the ten common stocks in the Dow Jones Industrial Average having
the highest dividend yield as of December 31 of each respective
year. The chart indicates that $10,000 invested on January 1,
1975 in the stocks which comprise the Dow Jones Industrial Average
would on June 30, 1995 be worth $174,680 as opposed to $618,737
had the $10,000 been invested in the five lowest priced stocks
of the ten common stocks in the Dow Jones Industrial Average having
the highest dividend yield as of December 31 of each respective
year. Both figures assume that dividends received during each
year will be reinvested at year end and sales charges, commissions,
expenses and taxes were not considered in determining total returns.
The graph which appears on page 21 of the prospectus represents
a comparison between a $10,000 investment made on January 1, 1975
in those stocks which comprise the Dow Jones Industrial Average
and an identical investment in the ten common stocks in the Dow
Jones Industrial Average having the highest dividend yield as
of December 31 of each respective year. The chart indicates that
$10,000 invested on January 1, 1975 in the stocks which comprise
the Dow Jones Industrial Average would on June 30, 1995 be
worth $174,680 as opposed to $344,384 had the $10,000 been invested
in the ten common stocks in the Dow Jones Industrial Average having
the highest dividend yield as of December 31 of each respective
year. Both figures assume that dividends received during each
year will be reinvested at year end and sales charges, commissions,
expenses and taxes were not considered in determining total returns.
Page 45
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
Financial Data Schedule
S-1
SIGNATURES
The Registrant, The First Trust Special Situations Trust,
Series 124, hereby identifies The First Trust Special Situations
Trust, Series 4 Great Lakes Growth and Treasury Trust, Series 1,
The First Trust Special Situations Trust, Series 18 Wisconsin
Growth and Treasury Securities Trust, Series 1 and The First
Trust Combined Series 248, 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
124, 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
September 26, 1995.
THE FIRST TRUST SPECIAL SITUATIONS
TRUST, SERIES 124
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 ) September 26, 1995
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 September 26, 1995
in Amendment No. 1 to the Registration Statement (Form S-6) (File
No. 33-61631) and related Prospectus of The First Trust Special
Situations Trust, Series 124.
ERNST & YOUNG LLP
Chicago, Illinois
September 26, 1995
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 FT EVALUATORS L.P.
The consent of FT Evaluators L.P. to the use of its name in
the Prospectus included in the Registration Statement will be
filed as Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 22 and
certain subsequent Series, effective November 20, 1991
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and First Trust
Advisors L.P. as Portfolio Supervisor (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
43693] filed on behalf of The First Trust Special
Situations Trust, Series 22).
1.1.1 Form of Trust Agreement for Series 124 among Nike
Securities L.P., as Depositor, The Chase Manhattan Bank
(National Association), as Trustee, FT Evaluators L.P.,
as Evaluator, and First Trust Advisors L.P., as
Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities
L.P., Depositor (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-
6 [File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
1.6 Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42755] filed on
behalf of The First Trust Special Situations Trust,
Series 19).
2.1 Copy of Certificate of Ownership (included in Exhibit
1.1 filed herewith on page 2 and incorporated herein by
reference).
S-5
3.1 Opinion of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal income tax status of
securities being registered.
3.3 Opinion of counsel as to New York income tax status of
securities being registered.
3.4 Opinion of counsel as to advancement of funds by
Trustee.
4.1 Consent of FT Evaluators L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on
page S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
S-6
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 124
TRUST AGREEMENT
Dated: September 26, 1995
The Trust Agreement among Nike Securities L.P., as
Depositor, The Chase Manhattan Bank (National Association), as
Trustee, FT Evaluators L.P., as Evaluator, and First Trust
Advisors L.P., as Portfolio Supervisor, sets forth certain
provisions in full and incorporates other provisions by reference
to the document entitled "Standard Terms and Conditions of Trust
for The First Trust Special Situations Trust, Series 22 and
certain subsequent Series, Effective November 20, 1991" (herein
called the "Standard Terms and Conditions of Trust"), and such
provisions as are incorporated by reference constitute a single
instrument. All references herein to Articles and Sections are
to Articles and Sections of the Standard Terms and Conditions of
Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II and Part III hereof,
all the provisions contained in the Standard Terms and Conditions
of Trust are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully and
to the same extent as though said provisions had been set forth
in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR TARGET 5 TRUST, SERIES 4
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 15,000Units.
(2) The initial fractional undivided interest in and
ownership of the Trust represented by each Unit thereof shall be
1/15,000.
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:
20% Chevron Corporation, 20% Eastman Kodak
Company, 20% General Motors Corporation, 20%
Goodyear Tire & Rubber Company, 20% Minnesota
Mining & Manufacturing Company.
D. The Record Date shall be as set forth in the prospectus
for the sale of Units dated the date hereof (the "Prospectus")
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee of $0.003 per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee of $.0116 per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05. However, in
no event, except as may otherwise be provided in the Standard
Terms and Conditions of Trust, shall the Trustee receive
compensation in any one year from any Trust of less than $2,000
for such annual compensation.
I. The Initial Date of Deposit for the Trust is
September 26, 1995.
J. The minimum amount of Equity Securities to be sold by
the Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR TARGET 10 TRUST, SERIES 10
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 15,000 Units.
(2) The initial fractional undivided interest in and
ownership of the Trust represented by each Unit thereof shall be
1/15,000.
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio is as follows on the Initial Date
of Deposit:
10 % Chevron Corporation, 10% E.I. du Pont
de Nemours & Company, 10% Eastman Kodak
Company, 10% Exxon Corporation, 10%
General Motors Corporation, 10% Goodyear Tire
& Rubber Company, 10% Minnesota Mining &
Manufacturing Company, 10% J.P. Morgan &
Company, Inc., 10% Philip Morris
Companies, Inc., Texaco, Inc., 10%
D. The Record Date shall be as set forth in the prospectus
for the sale of Units dated the date hereof (the "Prospectus")
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee of $0.003 per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee of $.0116 per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05. However, in
no event, except as may otherwise be provided in the Standard
Terms and Conditions of Trust, shall the Trustee receive
compensation in any one year from any Trust of less than $2,000
for such annual compensation.
I. The Initial Date of Deposit for the Trust is
September 26, 1995.
J. The minimum amount of Equity Securities to be sold by
the Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
PART III
A. Section 1.01(2) shall be amended to read as follows:
"(2) "Trustee" shall mean The Chase Manhattan Bank
(National Association), or any successor trustee appointed as
hereinafter provided."
All references to United States Trust Company of new York in
the Standard Terms and Conditions of Trust shall be amended to
refer to The Chase Manhattan Bank (National Association).
B. Section 1.01(26) shall be added to read as follows:
"(26) The term "Rollover Unit holder" shall be defined
as set forth in Section 5.05, herein."
C. Section 1.01(27) shall be added to read as follows:
"(27) The "Rollover Notification Date" shall be
defined as set forth in the Prospectus under "Summary of
Essential Information."
D. Section 1.01(28) shall be added to read as follows:
"(28) The term "Rollover Distribution" shall be
defined as set forth in Section 5.05, herein."
E. Section 1.01(29) shall be added to read as follows:
"(29) The term "Distribution Agent" shall refer to the
Trustee acting in its capacity as distribution agent
pursuant to Section 5.02 herein."
F. Section 1.01(30) shall be added to read as follows:
"(30) The term "Special Redemption and Liquidation
Period" shall be as set forth in the Prospectus under
"Summary of Essential Information."
G. The term "Capital Account" as set forth in the
Prospectus shall be deemed to refer to the "Principal Account."
H. The following sentence shall be substituted for the
second sentence of paragraph (b) of Section 2.01:
The Depositor, in each case, shall ensure that each
deposit of additional Securities pursuant to this Section
shall be, as nearly as is practicable, in the identical
ratio as the Percentage Ratio for such Securities as is
specified in the Trust Agreement for each Trust (provided,
however, that any deposit of additional securities made
subsequent to the 90-day period following the first deposit
of securities in a Trust shall exactly replicate such
Percentage Ratio), and the Depositor shall ensure that such
Securities are identical to those deposited on the Initial
Date of Deposit.
I. The second paragraph of Section 3.02 of the Standard
Terms and Conditions is hereby deleted and replaced with the
following sentence:
"Any non-cash distributions (other than a non-taxable
distribution of the shares of the distributing corporation
which shall be retained by a Trust) received by a Trust
shall be dealt with in the manner described at Section 3.11,
herein, and shall be retained or disposed of by such Trust
according to those provisions. The proceeds of any
disposition shall be credited to the Income Account of a
Trust. Neither the Trustee nor the Depositor shall be
liable or responsible in any way for depreciation or loss
incurred by reason of any such sale."
J. 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."
K. Section 3.05.II(a) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (a) On each Distribution Date, the Trustee shall
distribute to each Unit holder of record at the close of
business on the Record Date immediately preceding such
Distribution Date an amount per Unit equal to such Unit
holder's Income Distribution (as defined below), plus such
Unit holder's pro rata share of the balance of the Principal
Account (except for monies on deposit therein required to
purchase Contract Obligations) computed as of the close of
business on such Record Date after deduction of any amounts
provided in Subsection I, provided, however, that the
Trustee shall not be required to make a distribution from
the Principal Account unless the amount available for
distribution shall equal $1.00 per 100 Units.
Each Trust shall provide the following distribution
elections: (1) distributions to be made by check mailed to
the post office address of the Unit holder as it appears on
the registration books of the Trustee, or (2) the following
reinvestment option:
The Trustee will, for any Unit holder who provides
the Trustee written instruction, properly executed and
in form satisfactory to the Trustee, received by the
Trustee no later than its close of business 10 business
days prior to a Record Date (the "Reinvestment Notice
Date"), reinvest such Unit holder's distribution from
the Income and Capital Accounts in Units of the Trust,
purchased from the Depositor, to the extent the
Depositor shall make Units available for such purchase,
at the Depositor's offering price as of the fifth
business day prior to the following Distribution Date,
and at such reduced sales charge as may be described in
the prospectus for the Trusts. If, for any reason, the
Depositor does not have Units of the Trust available
for purchase, the Trustee shall distribute such Unit
holder's distribution from the Income and Capital
Accounts in the manner provided in clause (1) of the
preceding paragraph. The Trustee shall be entitled to
rely on a written instruction received as of the
Reinvestment Notice Date and shall not be affected by
any subsequent notice to the contrary. The Trustee
shall have no responsibility for any loss or
depreciation resulting from any reinvestment made in
accordance with this paragraph, or for any failure to
make such reinvestment in the event the Depositor does
not make Units available for purchase.
Any Unit holder who does not effectively elect
reinvestment in Units of their respective Trust pursuant to
the preceding paragraph shall receive a cash distribution in
the manner provided in clause (1) of the second preceding
paragraph."
L. Section 3.05.II(b) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (b) For purposes of this Section 3.05, the Unit
holder's Income Distribution shall be equal to such Unit
holder's pro rata share of the cash balance in the Income
Account computed as of the close of business on the Record
Date immediately preceding such Income Distribution after
deduction of (i) the fees and expenses then deductible
pursuant to Section 3.05.I. and (ii) the Trustee's estimate
of other expenses properly chargeable to the Income Account
pursuant to the Indenture which have accrued, as of such
Record Date, or are otherwise properly attributable to the
period to which such Income Distribution relates."
M. Section 3.11 of the Standard Terms and Conditions of
Trust is hereby deleted in its entirety and replaced with the
following language:
"Section 3.11. Notice to Depositor.
In the event that the Trustee shall have been notified
at any time of any action to be taken or proposed to be
taken by at least a legally required number of holders of
any Securities deposited in a Trust, the Trustee shall take
such action or omit from taking any action, as appropriate,
so as to insure that the Securities are voted as closely as
possible in the same manner and the same general proportion
as are the Securities held by owners other than such Trust.
In the event that an offer by the issuer of any of the
Securities or any other party shall be made to issue new
securities, or to exchange securities, for Trust Securities,
the Trustee shall reject such offer. However, should any
issuance, exchange or substitution be effected
notwithstanding such rejection or without an initial offer,
any securities, cash and/or property received shall be
deposited hereunder and shall be promptly sold, if
securities or property, by the Trustee pursuant to the
Depositor's direction, unless the Depositor advises the
Trustee to keep such securities or property. The Depositor
may rely on the Portfolio Supervisor in so advising the
Trustee. The cash received in such exchange and cash
proceeds of any such sales shall be distributed to Unit
holders on the next distribution date in the manner set
forth in Section 3.05 regarding distributions from the
Principal Account. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by
reason of any such sale.
Neither the Depositor nor the Trustee shall be liable
to any person for any action or failure to take action
pursuant to the terms of this Section 3.11.
Whenever new securities or property is received and
retained by a Trust pursuant to this Section 3.11, the
Trustee shall, within five days thereafter, mail to all Unit
holders of such Trust notices of such acquisition unless
legal counsel for such Trust determines that such notice is
not required by The Investment Company Act of 1940, as
amended."
N. Section 3.05 of Article III of the Standard Terms and
Conditions of Trust is hereby amended to include the following
subsection:
"Section 3.05.I.(e) deduct from the Interest Account
or, to the extent funds are not available in such Account,
from the Principal Account and pay to the Depositor the
amount that it is entitled to receive pursuant to Section
3.14.
O. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraphs
which shall be entitled Section 3.14.:
"Section 3.14. Bookkeeping and Administrative Expenses.
As compensation for providing bookkeeping and other
administrative services of a character described in
Section 26(a)(2)(C) of the Investment Company Act of 1940 to
the extent such services are in addition to, and do not
duplicate, the services to be provided hereunder by the
Trustee or the Portfolio Supervisor, the Depositor shall
receive against a statement or statements therefor submitted
to the Trustee monthly or annually an aggregate annual fee
in an amount which shall not exceed $0.0010 times the number
of Units outstanding as of January 1 of such year except for
a year or years in which an initial offering period as
determined by Section 4.01 of this Indenture occurs, in
which case the fee for a month is based on the number of
Units outstanding at the end of such month (such annual fee
to be pro rated for any calendar year in which the Depositor
provides service during less than the whole of such year),
but in no event shall such compensation when combined with
all compensation received from other unit investment trusts
for which the Depositor hereunder is acting as Depositor for
providing such bookkeeping and administrative services in
any calendar year exceed the aggregate cost to the Depositor
providing services to such unit investment trusts. Such
compensation may, from time to time, be adjusted provided
that the total adjustment upward does not, at the time of
such adjustment, exceed the percentage of the total
increase, after the date hereof, in consumer prices for
services as measured by the United States Department of
Labor Consumer Price Index entitled "All Services Less Rent
of Shelter" or similar index, if such index should no longer
be published. The consent or concurrence of any Unit holder
hereunder shall not be required for any such adjustment or
increase. Such compensation shall be paid by the Trustee,
upon receipt of invoice therefor from the Depositor, upon
which, as to the cost incurred by the Depositor of providing
services hereunder the Trustee may rely, and shall be
charged against the Interest and Principal Accounts on or
before the Distribution Date following the Monthly Record
Date on which such period terminates. The Trustee shall
have no liability to any Certificateholder or other person
for any payment made in good faith pursuant to this Section.
If the cash balance in the Interest and Principal
Accounts shall be insufficient to provide for amounts
payable pursuant to this Section 3.14, the Trustee shall
have the power to sell (i) Bonds from the current list of
Bonds designated to be sold pursuant to Section 5.02 hereof,
or (ii) if no such Bonds have been so designated, such Bonds
as the Trustee may see fit to sell in its own discretion,
and to apply the proceeds of any such sale in payment of the
amounts payable pursuant to this Section 3.14.
Any moneys payable to the Depositor pursuant to this
Section 3.14 shall be secured by a prior lien on the Trust
Fund except that no such lien shall be prior to any lien in
favor of the Trustee under the provisions of Section 6.04
herein.
P. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraph
which shall be entitled Section 3.15:
"Section 3.15. Deferred Sales Charge. If the
prospectus related to the Trust specifies a deferred sales
charge, the Trustee shall, on the dates specified in and as
permitted by such Prospectus, withdraw from the Capital
Account, an amount per Unit specified in such Prospectus and
credit such amount to a special non-Trust account designated
by the Depositor out of which the deferred sales charge will
be distributed to the Depositor (the "Deferred Sales Charge
Account"). If the balance in the Capital Account is
insufficient to make such withdrawal, the Trustee shall, as
directed by the Depositor, advance funds in an amount
required to fund the proposed withdrawal and be entitled to
reimbursement of such advance upon the deposit of additional
monies in the Capital Account, and/or sell Securities and
credit the proceeds thereof to the Deferred Sales Charge
Account, provided, however, that the aggregate amount
advanced by the Trustee at any time for payment of the
deferred sales charge shall not exceed $15,000. Such
direction shall, if the Trustee is directed to sell a
Security, identify the Security to be sold and include
instructions as to the execution of such sale. If a Unit
holder redeems Units prior to full payment of the deferred
sales charge, the Trustee shall, if so provided in the
related Prospectus, on the Redemption Date, withhold from
the Redemption Price payable to such Unit holder an amount
equal to the unpaid portion of the deferred sales charge and
distribute such amount to the Deferred Sales Charge Account.
If pursuant to Section 5.02 hereof, the Depositor shall
purchase a Unit tendered for redemption prior to the payment
in full of the deferred sales charge due on the tendered
Unit, the Depositor shall pay to the Unit holder the amount
specified under Section 5.02 less the unpaid portion of the
deferred sales charge. All advances made by the Trustee
pursuant to this Section shall be secured by a lien on the
Trust prior to the interest of the Unit holders."
Q. Section 5.02 of the Standard Terms and Conditions of
Trust is amended by adding the following after the second
paragraph of such section:
"Notwithstanding anything herein to the contrary, in
the event that any tender of Units pursuant to this Section
5.02 would result in the disposition by the Trustee of less
than a whole Security, the Trustee shall distribute cash in
lieu thereof and sell such Securities as directed by the
Sponsors as required to make such cash available.
Unit holders may redeem 2,500 Units or more of a Trust
and request a distribution in kind of (i) such Unit holder's
pro rata portion of each of the Securities in such Trust, in
whole shares, and (ii) cash equal to such Unit holder's
pro rata portion of the Income and Principal Accounts as
follows: (x) a pro rata portion of the net proceeds of sale
of the Securities representing any fractional shares
included in such Unit holder's pro rata share of the
Securities and (y) such other cash as may properly be
included in such Unit holder's pro rata share of the sum of
the cash balances of the Income and Principal Accounts in an
amount equal to the Unit Value determined on the basis of a
Trust Fund Evaluation made in accordance with Section 5.01
determined by the Trustee on the date of tender less amounts
determined in clauses (i) and (ii)(x) of this Section.
Subject to Section 5.05 with respect to Rollover Unit
holders, to the extent possible, distributions of Securities
pursuant to an in kind redemption of Units shall be made by
the Trustee through the distribution of each of the
Securities in book-entry form to the account of the Unit
holder's bank or broker-dealer at the Depository Trust
Company. Any distribution in kind will be reduced by
customary transfer and registration charges."
R. The following Section 5.05 shall be added:
"Section 5.05. Rollover of Units. (a) If the
Depositor shall offer a subsequent series of Target Equity
Trust, Value Ten, Series 9 or Target Equity Trust, Value
Five Series 3 (individually, each a "New Series" and
collectively, the "New Series"), the Trustee shall, at the
Depositor's sole cost and expense, include in the notice
sent to Unit holders specified in Section 8.02 a form of
election whereby Unit holders, whose redemption distribution
would be in an amount sufficient to purchase at least one
Unit of the New Series, may elect to have their Units(s)
redeemed in kind in the manner provided in Section 5.02, the
Securities included in the redemption distribution sold, and
the cash proceeds applied by the Distribution Agent to
purchase Units of a New Series, all as hereinafter provided.
The Trustee shall honor properly completed election forms
returned to the Trustee, accompanied by any Certificate
evidencing Units tendered for redemption or a properly
completed redemption request with respect to uncertificated
Units, by its close of business on the Rollover Notification
Date.
All Units so tendered by a Unit holder (a "Rollover
Unit holder") shall be redeemed and cancelled on the
Rollover Notification Date. Subject to payment by such
Rollover Unit holder of any tax or other governmental
charges which may be imposed thereon, such redemption is to
be made in kind pursuant to Section 5.02 by distribution of
cash and/or Securities to the Distribution Agent on the
Rollover Notification Date of the net asset value
(determined on the basis of the Trust Fund Evaluation as of
the Rollover Notification Date in accordance with
Section 4.01) multiplied by the number of Units being
redeemed (herein called the "Rollover Distribution"). Any
Securities that are made part of the Rollover Distribution
shall be valued for purposes of the redemption distribution
as of the Rollover Notification Date.
All Securities included in a Unit holder's Rollover
Distribution shall be sold by the Distribution Agent during
the Special Redemption and Liquidation Period specified in
the Prospectus pursuant to the Depositor's direction, and
the Distribution Agent shall employ the Depositor as broker
in connection with such sales. For such brokerage services,
the Depositor shall be entitled to compensation at its
customary rates, provided however, that its compensation
shall not exceed the amount authorized by applicable
Securities laws and regulations. The Depositor shall direct
that sales be made in accordance with the guidelines set
forth in the Prospectus under the heading "Special
Redemption, Liquidation and Investment in New Trust."
Should the Depositor fail to provide direction, the
Distribution Agent shall sell the Securities in the manner
provided in the prospectus for " less liquid Equity
Securities." The Distribution Agent shall have no
responsibility for any loss or depreciation incurred by
reason of any sale made pursuant to this Section.
Upon each trade date for sales of Securities included
in the Rollover Unit holder's Rollover Distribution, the
Distribution Agent shall, as agent for such Rollover Unit
holder, enter into a contract with the Depositor to purchase
from the Depositor Units of a New Series (if any), at the
Depositor's public offering price for such Units on such
day, and at such reduced sales charge as shall be described
in the prospectus for such Trust. Such contract shall
provide for purchase of the maximum number of Units of a New
Series whose purchase price is equal to or less than the
cash proceeds held by the Distribution Agent for the Unit
holder on such day (including therein the proceeds
anticipated to be received in respect of Securities traded
on such day net of all brokerage fees, governmental charges
and any other expenses incurred in connection with such
sale), to the extent Units are available for purchase from
the Depositor. In the event a sale of Securities included
in the Rollover Unit holder's redemption distribution shall
not be consummated in accordance with its terms, the
Distribution Agent shall apply the cash proceeds held for
such Unit holder as of the settlement date for the purchase
of Units of a New Series to purchase the maximum number of
units which such cash balance will permit, and the Depositor
agrees that the settlement date for Units whose purchase was
not consummated as a result of insufficient funds will be
extended until cash proceeds from the Rollover Distribution
are available in a sufficient amount to settle such
purchase. If the Unit holder's Rollover Distribution will
produce insufficient cash proceeds to purchase all of the
Units of a New Series contracted for, the Depositor agrees
that the contract shall be rescinded with respect to the
Units as to which there was a cash shortfall without any
liability to the Rollover Unit holder or the Distribution
Agent. Any cash balance remaining after such purchase shall
be distributed within a reasonable time to the Rollover Unit
holder by check mailed to the address of such Unit holder on
the registration books of the Trustee. Units of a New Series
will be uncertificated unless and until the Rollover Unit
holder requests a certificate. Any cash held by the
Distribution Agent shall be held in a non-interest bearing
account which will be of benefit to the Distribution Agent
in accordance with normal banking procedures. Neither the
Trustee nor the Distribution Agent shall have any
responsibility or liability for loss or depreciation
resulting from any reinvestment made in accordance with this
paragraph, or for any failure to make such reinvestment in
the event the Depositor does not make Units available for
purchase.
(b) Notwithstanding the foregoing, the Depositor may,
in their discretion at any time, decide not to offer Trust
Series in the future, and if so, this Section 5.05
concerning the Rollover of Units shall be inoperative.
(c) The Distribution Agent shall receive no fees for
performing its duties hereunder. The Distribution Agent
shall, however, be entitled to receive reimbursement from
the Trust for any and all expenses and disbursements to the
same extent as the Trustee is permitted reimbursement
hereunder."
S. 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)"
T. 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."
U. Section 1.01(3) shall be amended to read as follows:
"(3) "Evaluator" shall mean FT Evaluators L.P. and its
successors in interest, or any successor evaluator appointed
as hereinafter provided."
V. The first sentence of Section 3.13. shall be amended to
read as follows:
"As compensation for providing supervisory portfolio
services under this Indenture, the Portfolio Supervisor
shall receive, in arrears, against a statement or statements
therefor submitted to the Trustee monthly or annually an
aggregate annual fee in an amount which shall not exceed
$0.0035 per Unit outstanding as of January 1 of such year
except for a Trust during the year or years in which an
initial offering period as determined in Section 4.01 of
this Indenture occurs, in which case the fee for a month is
based on the number of Units outstanding at the end of such
month (such annual fee to be pro rated for any calendar year
in which the Portfolio Supervisor provides services during
less than the whole of such year), but in no event shall
such compensation when combined with all compensation
received from other series of the Trust for providing such
supervisory services in any calendar year exceed the
aggregate cost to the Portfolio Supervisor for the cost of
providing such services."
W. Section 3.01 of the Standard Terms and Conditions of
Trust shall be replaced in its entirety with the following:
"Section 3.01. Initial Cost. The expenses incurred in
establishing a Trust, including the cost of the preparation
and typesetting of the registration statement, prospectuses
(including preliminary prospectuses), the indenture and
other documents relating to the Trust, printing of
Certificates, Securities and Exchange Commission and state
blue sky registration fees, the costs of the initial
valuation of the portfolio and audit of the Trust, the
initial fees and expenses of the Trustee, and legal and
other out-of-pocket expenses related thereto, but not
including the expenses incurred in the printing of
preliminary prospectuses and prospectuses, expenses incurred
in the preparation and printing of brochures and other
advertising materials and any other selling expenses, to the
extent not borne by the Depositor, shall be borne by the
Trust. To the extent the funds in the Income and Principal
Accounts of the Trust shall be insufficient to pay the
expenses borne by the Trust specified in this Section 3.01,
the Trustee shall advance out of its own funds and cause to
be deposited and credited to the Income Account such amount
as may be required to permit payment of such expenses. The
Trustee shall be reimbursed for such advance on each Record
Date from funds on hand in the Income Account or, to the
extent funds are not available in such Account, from the
Principal Account, in the amount deemed to have accrued as
of such Record Date as provided in the following sentence
(less prior payments on account of such advances, if any),
and the provisions of Section 6.04 with respect to the
reimbursement of disbursements for Trust expenses,
including, without limitation, the lien in favor of the
Trustee therefor and the authority to sell Securities as
needed to fund such reimbursement, shall apply to the
payment of expenses and the amounts advanced pursuant to
this Section. For the purposes of the preceding sentence
and the addition provided in clause (4) of the first
sentence of Section 5.01, the expenses borne by the Trust
pursuant to this Section shall be deemed to have been paid
on the date of the Trust Agreement and to accrue at a daily
rate over the time period specified for their amortization
provided in the Prospectus; provided, however, that nothing
herein shall be deemed to prevent, and the Trustee shall be
entitled to, full reimbursement for any advances made
pursuant to this Section no later than the termination of
the Trust. For purposes of calculating the accrual of
organizational expenses under this Section 3.01, the Trustee
shall rely on the written estimates of such expenses
provided by the Depositor pursuant to Section 5.01."
X. Section 5.01 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The second sentence of the first paragraph of
Section 5.01 shall be amended by adding the following at the
conclusion thereof: ", plus (4) amounts representing
organizational expenses paid from the Trust less amounts
representing accrued organizational expenses of the Trust,
plus (5) all other assets of the Trust"
(ii) The following shall be added at the end of the
first paragraph of Section 5.01:
Until the Depositor has informed the Trustee that
there will be no further deposits of Additional
Securities pursuant to section 2.01(b), the Depositor
shall provide the Trustee with written estimates of (i)
the total organizational expenses to be borne by the
Trust pursuant to Section 3.01 and (ii) the total
number of Units to be issued in connection with the
initial deposit and all anticipated deposits of
additional Securities. For purposes of calculating the
Trust Fund Evaluation and Unit Value, the Trustee shall
treat all such anticipated expenses as having been paid
and all liabilities therefor as having been incurred,
and all Units as having been issued, in each case on
the date of the Trust Agreement, and, in connection
with each such calculation, shall take into account a
pro rata portion of such expense and liability based on
the actual number of Units issued as of the date of
such calculation. In the event the Trustee is informed
by the Depositor of a revision in its estimate of total
expenses or total Units and upon the conclusion of the
deposit of additional Securities, the Trustee shall
base calculations made thereafter on such revised
estimates or actual expenses, respectively, but such
adjustment shall not affect calculations made prior
thereto and no adjustment shall be made in respect
thereof.
IN WITNESS WHEREOF, Nike Securities L.P., The Chase
Manhattan Bank (National Association) 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
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
Trustee
By Thomas Porrazzo
Vice President
[SEAL]
ATTEST:
Rosalia A. Raviele
Second Vice President
FT EVALUATORS L.P.,
Evaluator
By Carlos E. Nardo
Senior Vice President
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 124
(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
September 26, 1995
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: The First Trust Special Situations Trust, Series 124
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of The First Trust Special Situations
Trust, Series 124 in connection with the preparation, execution
and delivery of a Trust Agreement dated September 26, 1995 among
Nike Securities L.P., as Depositor, The Chase Manhattan Bank
(National Association), FT Evaluators L.P., 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. 33-61631)
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:jln
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
September 26, 1995
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
The Chase Manhattan Bank
(National Association)
770 Broadway
New York, New York 10003
Re: The First Trust Special Situations Trust, Series 124
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of The First Trust Special Situations Trust, Series 124 (the
"Fund"), in connection with the issuance of units of fractional
undivided interests in the Trusts of said Fund (the "Trusts" and
each a "Trust"), under a Trust Agreement, dated September 26,
1995 (the "Indenture"), among Nike Securities L.P., as Depositor,
The Chase Manhattan Bank (National Association), as Trustee, FT
Evaluators L.P. 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 Trusts will be administered, and
investments by the Trusts from proceeds of subsequent deposits,
if any, will be made, in accordance with the terms of the
Indenture. The Trusts holds Equity Securities as such term is
defined in the Prospectus.
Based upon the foregoing and upon an investigation of such
matters of law as we consider to be applicable, we are of the
opinion that, under existing federal income tax law:
I. 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 such Trust will be treated as income of the Unit
holders thereof under the Code; and an item of Trust income will
have the same character in the hands of a Unit holder as it would
have in the hands of the Trustee. Each Unit holder will be
considered to have received his pro rata share of income derived
from each Trust asset when such income is received by the Trust.
II. Each Unit holder will have a taxable event when a Trust
disposes of an Equity Security (whether by sale, exchange,
redemption, or otherwise) or upon the sale or redemption of Units
by such Unit holder. The price a Unit holder pays for his Units,
including sales charges, is allocated among his pro rata portion
of each Equity Security held by such Trust (in proportion to the
fair market values thereof on the date the Unit holder purchases
his Units) in order to determine his initial cost for his pro
rata portion of each Equity Security held by such Trust. For
Federal income tax purposes, a Unit holder's pro rata portion of
dividends as defined by Section 316 of the Code paid by a
corporation are taxable as ordinary income to the extent of such
corporation's current and accumulated "earnings and profits." A
Unit holder's pro rata portion of dividends which exceed such
current and accumulated earnings and profits will first reduce a
Unit holder's tax basis in such Equity Security (and accordingly
his basis in his Units), and to the extent that such dividends
exceed a Unit holder's tax basis in such Equity Security shall be
treated as capital gain from the sale or exchange of property.
In general, any such capital gain will be short term unless a
Unit holder has held his Units for more than one year.
III. A Unit holder's portion of gain, if any, upon the sale
or redemption of Units or the disposition of Equity Securities
held by 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 Equity
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. However, a Rollover Unit holder's
loss, if any, incurred in connection with the exchange of Units
for Units in the next new series of the Target Equity Trust,
Value Ten Series or Target Equity Trust, Value Five Series (the
"1996 Trusts") will generally be disallowed with respect to the
disposition of any Equity Securities pursuant to such exchange to
the extent that such Unit holder is considered the owner of
substantially identical securities under the wash sale provisions
of the Code taking into account such Unit holder's deemed
ownership of securities underlying the Units in a 1996 Trust in
the manner described above, if such substantially identical
securities were acquired within a period beginning 30 days before
and ending 30 days after such disposition. However, any gains
incurred in connection with such exchange by a Rollover Unit
holder would be recognized.
IV. The Code provides that "miscellaneous itemized
deductions" are allowable only to the extent that they exceed two
percent of an individual taxpayer's adjusted gross income.
Miscellaneous itemized deductions subject to this limitation
under present law include a Unit holder's pro rata share of
expenses paid by a Trust, including fees of the Trustee and the
Evaluator.
For taxable years beginning after December 31, 1986 and
before January 1, 1996, certain corporations may be subject to
the environmental tax (the "Superfund Tax") imposed by Section
59A of the Code. Income received from, and gains recognized from
the disposition of, an Equity Security by a Trust will be
included in the computation of the Superfund Tax by such
corporations holding Units in such Trust.
The scope of this opinion is expressly limited to the
matters set forth herein, and, except as expressly set forth
above, we express no opinion with respect to any other taxes,
including state or local taxes or collateral tax consequences
with respect to the purchase, ownership and disposition of Units.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-61631)
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/jln
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
September 26, 1995
The Chase Manhattan Bank
(National Association), as Trustee of
The First Trust Special Situations
Trust, Series 124
Target 5 Trust, Series 4
Target 10 Trust, Series 10
770 Broadway - 6th Floor
New York, New York 10003
Attention: Mr. Paul J. Holland
Vice President
Re: The First Trust Special Situations Trust, Series 124
Target 5 Trust, Series 4
Target 10 Trust, Series 10
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for The First Trust Special Situations Trust, Series
124 consisting of Target 5 Trust, Series 4, Target 10 Trust,
Series 10 (the "Trust"), which will be established under a
Standard Terms and Conditions of Trust dated November 20, 1991,
and a related Trust Agreement dated as of today (collectively,
the "Indenture"), among Nike Securities L.P., as Depositor (the
"Depositor"); FT Evaluators L.P., as Evaluator; First Trust
Advisors L.P., as Portfolio Supervisor and The Chase Manhattan
Bank (National Association), as Trustee (the "Trustee").
Pursuant to the terms of the Indenture, units of fractional
undivided interest in the Trust (the "Units") will be issued in
the aggregate number set forth in the Indenture.
We have examined and are familiar with originals or
certified copies, or copies otherwise identified to our
satisfaction, of such documents as we have deemed necessary or
appropriate for the purpose of this opinion. In giving this
opinion, we have relied upon the two opinions, each dated today
and addressed to the Trustee, of Chapman and Cutler, counsel for
the Depositor, with respect to the matters of law set forth
therein.
Based upon the foregoing, we are of the opinion that:
1. The Trust will not constitute an association taxable as
a corporation under New York law, and accordingly will not be
subject to the New York State franchise tax or the New York City
general corporation tax.
2. Under the income tax laws of the State and City of New
York, the income of the Trust will be considered the income of
the holders of the Units.
We consent to the filing of this opinion as an exhibit to
the Registration Statement (No. 33-61631) 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
September 26, 1995
The Chase Manhattan Bank
(National Association), as Trustee of
The First Trust Special Situations
Trust, Series 124
Target 5 Trust, Series 4
Target 10 Trust, Series 10
770 Broadway - 6th Floor
New York, New York 10003
Attention: Mr. Paul J. Holland
Vice President
Re: The First Trust Special Situations Trust, Series 124
Target 5 Trust, Series 4
Target 10 Trust, Series 10
Dear Sirs:
We are acting as counsel for The Chase Manhattan Bank
(National Association) ("Chase") in connection with the execution
and delivery of a Trust Agreement ("the Trust Agreement") dated
today's date (which Trust Agreement incorporateds by reference
certain Standard Terms and Conditions of Trust dated November 20,
1991, and the same are collectively referred to herein as the
"Indenture") among Nike Securities L.P., as Depositor (the
"Depositor"); FT Evaluators L.P., as Evaluator; First Trust
Advisors L.P., as Portfolio Supervisor; and Chase, as Trustee
(the "Trustee"), establishing The First Trust Special Situations
Trust, Series 124, consisting of Target 5 Trust, Series 4 Target
10 Trust, Series 10 (the "Trusts"), and the execution by Chase,
as Trustee under the Indenture, of a certificate or certificates
evidencing ownership of units (such certificate or certificates
and such aggregate units being herein called "Certificates" and
"Units"), each of which represents an undivided interest in the
respective Trust, which consists of common stocks (including
confirmations of contracts for the purchase of certain stocks and
bonds 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 stocks and bonds),
such stocks and bonds 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. Chase is a duly organized and existing national banking
association authorized to exercise trust powers.
2. The Trust Agreement has been duly executed and
delivered by Chase and, assuming due execution and delivery by
the other parties thereto, constitutes the valid and legally
binding obligation of Chase.
3. The Certificates are in proper form for execution and
delivery by Chase, as Trustee.
4. Chase, 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. Chase, as Trustee, may lawfully advance to the Trust
amounts as may be necessary to provide periodic interest
distributions of approximately equal amounts, and be reimbursed,
without interest, for any such advances from funds in the
interest account, 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
FT Evaluators L.P.
1001 Warrenville Road
Lisle, Illinois 60532
September 26, 1995
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 124
Gentlemen:
We have examined the Registration Statement File No. 33-
61631 for the above captioned fund. We hereby consent to the use
in the Registration Statement of the references to FT Evaluators
L.P. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
FT Evaluators L.P.
Carlos E. Nardo
Senior Vice President
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