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: FT 488
B. Name of Depositor: NIKE SECURITIES L.P.
C. Complete Address of Depositor's 1001 Warrenville Road
Principal Executive Offices: Lisle, Illinois 60532
D. Name and Complete Address of
Agents for Service: NIKE SECURITIES L.P.
Attention: James A. Bowen
Suite 300
1001 Warrenville Road
Lisle, Illinois 60532
CHAPMAN & CUTLER
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
E. Title 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. Approximate Date of Proposed
Sale to the Public: ____ Check if it is
proposed that this filing
will become effective on
_____ at ____ p.m.
pursuant to Rule 487.
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION, DATED DECEMBER 22, 2000
AS AMENDED JANUARY 17, 2001
Healthcare Innovations 2001 Portfolio
FT 488
FT 488 is a series of a unit investment trust, the FT Series. FT 488
consists of a single portfolio known as Healthcare Innovations 2001
Portfolio (the "Trust"). The Trust invests in a diversified portfolio of
common stocks ("Securities") of medical technology companies. The Trust
seeks to provide the potential for above-average total return through
capital appreciation.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
GRUNTAL & CO.
The date of this prospectus is January __, 2001
Page 1
Table of Contents
Summary of Essential Information 3
Fee Table 4
Report of Independent Auditors 5
Statement of Net Assets 6
Schedule of Investments 7
The FT Series 8
Portfolio 8
Risk Factors 10
Portfolio Securities Descriptions 11
Public Offering 14
Distribution of Units 16
The Sponsor's Profits 17
The Secondary Market 17
How We Purchase Units 17
Expenses and Charges 17
Tax Status 18
Retirement Plans 20
Rights of Unit Holders 20
Income and Capital Distributions 21
Redeeming Your Units 21
Removing Securities from the Trust 22
Amending or Terminating the Indenture 23
Information on Gruntal & Co., L.L.C.,
the Sponsor, Trustee and Evaluator 24
Other Information 25
Page 2
Summary of Essential Information
Healthcare Innovations 2001 Portfolio
FT 488
At the Opening of Business on the
Initial Date of Deposit-January __, 2001
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
Initial Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ 9.900
Maximum Transactional Sales Charge of 4.40% of the Public Offering Price per Unit
(4.444% of the net amount invested, exclusive of the deferred sales charge) (3) $ .440
Less Deferred Sales Charge per Unit $ (.340)
Public Offering Price per Unit (4) $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.560
Redemption Price per Unit (based on aggregate underlying
value of Securities less the deferred sales charge) (5) $ 9.560
Cash CUSIP Number 30266A 244
Reinvestment CUSIP Number 30266A 251
Security Code
Ticker Symbol TBA
First Settlement Date January __, 2001
Mandatory Termination Date (6) January 19, 2005
Income Distribution Record Date Fifteenth day of each June and December, commencing June 15, 2001.
Income Distribution Date (7) Last day of each June and December, commencing June 30, 2001.
______________
<FN>
(1) As of the close of business on the Initial Date of Deposit, we may
adjust the number of Units of the Trust so that the Public Offering
Price per Unit will equal approximately $10.00. If we make such an
adjustment, the fractional undivided interest per Unit will vary from
the amount indicated above.
(2) Each listed Security is valued at its last closing sale price. If a
Security is not listed, or if no closing sale price exists, it is valued
at its closing ask price. Evaluations for purposes of determining the
purchase, sale or redemption price of Units are made as of the close of
trading on the New York Stock Exchange ("NYSE") (generally 4:00 p.m.
Eastern time) on each day on which it is open (the "Evaluation Time").
(3) The maximum transactional sales charge consists of an initial sales
charge and a deferred sales charge, but does not include the creation
and development fee. See "Fee Table" and "Public Offering."
(4) The Public Offering Price shown above reflects the value of the
Securities on the business day prior to the Initial Date of Deposit. No
investor will purchase Units at this price. The price you pay for your
Units will be based on their valuation at the Evaluation Time on the
date you purchase your Units. On the Initial Date of Deposit, the Public
Offering Price per Unit will not include any accumulated dividends on
the Securities. After this date, a pro rata share of any accumulated
dividends on the Securities will be included.
(5) Until the earlier of six months after the Initial Date of Deposit or
the end of the initial offering period the Sponsor's Initial Repurchase
Price per Unit and the Redemption Price per Unit will include the
estimated organization costs per Unit set forth under "Fee Table." After
such date, the Sponsor's Repurchase Price and Redemption Price per Unit
will not include such estimated organization costs. See "Redeeming Your
Units."
(6) See "Amending or Terminating the Indenture."
(7) We will distribute money from the Capital Account monthly on the
last day of each month to Unit holders of record on the fifteenth day of
such month if the amount available for distribution equals at least
$1.00 per 100 Units. In any case, we will distribute any funds in the
Capital Account in December of each year.
</FN>
Page 3
Fee Table
This Fee Table describes the fees and expenses that you may, directly or
indirectly, pay if you buy and hold Units of the Trust. See "Public
Offering" and "Expenses and Charges." Although the Trust has a term of
approximately four years and is a unit investment trust rather than a
mutual fund, this information allows you to compare fees.
Amount
per Unit
________
Unit Holder Sales Fees (as a percentage of public offering price)
Maximum Sales Charge
Initial sales charge 1.00%(a) $.100
Deferred sales charge 3.40%(b) $.340
Creation and development fee cap over the life of the Trust 0.55%(c) $.055
_______ _______
(the annual creation and development fee is .35% of average daily net assets for
the Trust, and is only charged while a Unit holder remains invested)
Maximum Sales Charges (including creation and development fee cap
over the life of the Trust) (c) 4.95% $.495
======= =======
Organization Costs (as a percentage of public offering price)
Estimated organization costs .170%(d) $.0170
======= =======
Estimated Annual Trust Operating Expenses(e)
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative and evaluation fees .100% $.0098
Trustee's fee and other operating expenses .153%(f) $.0150
_______ _______
Total .253% $.0248
======= =======
Example
This example is intended to help you compare the cost of investing in
the Trust with the cost of investing in other investment products. The
example assumes that you invest $10,000 in the Trust for the periods
shown and then sell all your Units at the end of those periods. The
example also assumes a 5% return on your investment each year and that
the Trust's operating expenses stay the same. Although your actual costs
may vary, based on these assumptions your costs would be:
1 Year 3 Years 4 Years
__________ ___________ _______
$ 517 $ 589 $ 646
The example will not differ if you hold rather than sell your Units at
the end of each period.
________________
<FN>
(a) The combination of the initial and deferred sales charge comprises
what we refer to as the "transactional sales charge." The initial sales
charge is actually equal to the difference between the maximum
transactional sales charge of 4.40% and any remaining deferred sales
charge.
(b) The deferred sales charge is a fixed dollar amount equal to $.340
per Unit which, as a percentage of the Public Offering Price, will vary
over time. The deferred sales charge will be deducted in five monthly
installments commencing August 20, 2001.
(c) The creation and development fee compensates the Sponsor for
creating and developing the Trust. For as long as you own Units, this
fee will be accrued daily based on the Trust's net asset value at the
annual rate of .35%. You will only be charged the creation and
development fee while you own Units. The Trust pays the amount of any
accrued creation and development fee to the Sponsor monthly from the
Trust's assets. Because the creation and development fee is accrued
daily on the basis of the Trust's current net asset value, if the value
of your Units increases, the annual creation and development fee as a
percentage of your initial investment will be greater than .35%.
However, in no event will we collect over the life of the Trust more
than .55% of your initial investment.
(d) Estimated organization costs will be deducted from the assets of the
Trust at the earlier of six months after the Initial Date of Deposit or
the end of the initial offering period.
(e) Each of the fees listed herein is assessed on a fixed dollar amount
per Unit basis which, as a percentage of average net assets, will vary
over time.
(f) Other operating expenses include the costs incurred by the Trust for
annually updating the Trust's registration statement. Historically, we
paid these costs. Other operating expenses do not, however, include
brokerage costs and other portfolio transaction fees. In certain
circumstances the Trust may incur additional expenses not set forth
above. See "Expenses and Charges."
</FN>
Page 4
Report of Independent Auditors
The Sponsor, Nike Securities L.P., and Unit Holders
FT 488
We have audited the accompanying statement of net assets, including the
schedule of investments, of FT 488, comprised of the Healthcare
Innovations 2001 Portfolio, as of the opening of business on January __,
2001. This statement of net assets is the responsibility of the Trust's
Sponsor. Our responsibility is to express an opinion on this statement
of net assets based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
statement of net assets is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement of net assets. Our procedures included
confirmation of the letter of credit held by the Trustee and deposited
in the Trust on January __, 2001. An audit also includes assessing the
accounting principles used and significant estimates made by the
Sponsor, as well as evaluating the overall presentation of the statement
of net assets. We believe that our audit of the statement of net assets
provides a reasonable basis for our opinion.
In our opinion, the statement of net assets referred to above presents
fairly, in all material respects, the financial position of FT 488,
comprised of the Healthcare Innovations 2001 Portfolio, at the opening
of business on January __, 2001 in conformity with accounting principles
generally accepted in the United States.
ERNST & YOUNG LLP
Chicago, Illinois
January __, 2001
Page 5
Statement of Net Assets
Healthcare Innovations 2001 Portfolio
FT 488
At the Opening of Business on the
Initial Date of Deposit-January __, 2001
NET ASSETS
Investment in Securities represented by purchase contracts (1) (2) $
Less liability for reimbursement to Sponsor for organization costs (3) ( )
Less liability for deferred sales charge (4) ( )
________
Net assets $
========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (5) $
Less maximum transactional sales charge (5) ( )
Less estimated reimbursement to Sponsor for organization costs (3) ( )
________
Net assets $
========
_____________
<FN>
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Securities listed under "Schedule of
Investments" is based on their aggregate underlying value.
(2) An irrevocable letter of credit issued by The Chase Manhattan Bank,
of which $200,000 will be allocated to the Trust, has been deposited
with the Trustee as collateral, covering the monies necessary for the
purchase of the Securities according to their purchase contracts.
(3) A portion of the Public Offering Price consists of an amount
sufficient to reimburse the Sponsor for all or a portion of the costs of
establishing the Trust. These costs have been estimated at $.0170 per
Unit for the Trust. A payment will be made as of the earlier of six
months after the Initial Date of Deposit or the end of the initial
offering period to an account maintained by the Trustee from which the
obligation of the investors to the Sponsor will be satisfied. To the
extent that actual organization costs are greater than the estimated
amount, only the estimated organization costs added to the Public
Offering Price will be reimbursed to the Sponsor and deducted from the
assets of the Trust.
(4) Represents the amount of mandatory deferred sales charge
distributions from the Trust ($.340 per Unit), payable to us in five
equal monthly installments beginning on August 20, 2001 and on the
twentieth day of each month thereafter (or if such date is not a
business day, on the preceding business day) through December 20, 2001.
If you redeem Units before December 20, 2001 you will have to pay the
remaining amount of the deferred sales charge applicable to such Units
when you redeem them.
(5) The aggregate cost to investors in the Trust includes a maximum
transactional sales charge (comprised of an initial and a deferred sales
charge) computed at the rate of 4.40% of the Public Offering Price per
Unit (equivalent to 4.444% of the net amount invested, exclusive of the
deferred sales charge), assuming no reduction of the transactional sales
charge as set forth under "Public Offering."
</FN>
Schedule of Investments
Healthcare Innovations 2001 Portfolio
FT 488
At the Opening of Business on the Initial Date of Deposit-January __, 2001
Percentage Market Cost of
Number Ticker Symbol and of Aggregate Value per Securities to
of Shares Name of Issuer of Securities (1)(4) Offering Price Share the Trust (2)
_________ ________________________________ __________ ______ _____________
Antibody Development
_________________
ABGX Abgenix, Inc. % $ $
DYAX Dyax Corp. %
IMGN ImmunoGen, Inc. %
MEDX Medarex, Inc. %
Combinatorial Chemistry
____________________
ARQL ArQule, Inc. %
MAXY Maxygen Inc. %
PCOP Pharmacopeia, Inc. %
Drug Delivery/Generics
_________________
ALKS Alkermes, Inc. %
AZA ALZA Corporation %
ADRX Andrx Group %
ELN Elan Corporation Plc (ADR) %
ICN ICN Pharmaceuticals, Inc. %
INHL Inhale Therapeutic Systems, Inc. %
IVX IVAX Corporation %
WPI Watson Pharmaceuticals, Inc. %
Functional Genomics
_________________
ABI Applera Corporation-Applied Biosystems Group %
CGEN Compugen Ltd. (3) %
GNTA Genta Incorporated %
LYNX Lynx Therapeutics, Inc. %
WAT Waters Corporation %
High Throughput Screening
______________________
ABSC Aurora Biosciences Corporation %
CALP Caliper Technologies Corp. %
CPHD Cepheid, Inc. %
LMNX Luminex Corporation %
Larger Biotechnology
_________________
AMGN Amgen Inc. %
DNA Genentech, Inc. %
GENZ Genzyme Corporation (General Division) %
IMNX Immunex Corporation %
______ _________
Total Investments 100% $
====== =========
__________
<FN>
(1) All Securities are represented by regular way contracts to purchase
such Securities which are backed by an irrevocable letter of credit
deposited with the Trustee. We entered into purchase contracts for the
Securities on January __, 2001.
(2) The cost of the Securities to the Trust represents the aggregate
underlying value with respect to the Securities acquired (generally
determined by the closing sale prices of the listed Securities and the
ask prices of the over-the-counter traded Securities at the Evaluation
Time on the business day preceding the Initial Date of Deposit). The
valuation of the Securities has been determined by the Evaluator, an
affiliate of ours. The cost of the Securities to us and our profit or
loss (which is the difference between the cost of the Securities to us
and the cost of the Securities to the Trust) are $ and $ ,
respectively.
(3) This Security represents the common stock of a foreign company which
trades directly on a U.S. national securities exchange.
(4) The final portfolio may contain additional Securities to those set
forth above. In addition, although it is not the Sponsor's intention,
certain of the Securities listed above may not be included in the final
portfolio.
</FN>
Page 7
The FT Series
The FT Series Defined.
We, Nike Securities L.P. (the "Sponsor"), have created hundreds of
similar yet separate series of a unit investment trust which we have
named the FT Series. The series to which this prospectus relates, FT
488, consists of a single portfolio known as Healthcare Innovations 2001
Portfolio.
The Trust was created under the laws of the State of New York by a Trust
Agreement (the "Indenture") dated the Initial Date of Deposit. This
agreement, entered into among Nike Securities L.P., as Sponsor, The
Chase Manhattan Bank as Trustee and First Trust Advisors L.P. as
Portfolio Supervisor and Evaluator, governs the operation of the Trust.
YOU MAY GET MORE SPECIFIC DETAILS CONCERNING THE NATURE, STRUCTURE AND
RISKS OF THIS PRODUCT IN AN "INFORMATION SUPPLEMENT" BY CALLING THE
TRUSTEE AT 1-800-682-7520.
How We Created the Trust.
On the Initial Date of Deposit, we deposited a portfolio of common
stocks with the Trustee, and in turn the Trustee delivered documents to
us representing our ownership of the Trust in the form of units ("Units").
After the Initial Date of Deposit, we may deposit additional Securities
in the Trust, or cash (including a letter of credit) with instructions
to buy more Securities, to create new Units for sale. If we create
additional Units we will attempt, to the extent practicable, to maintain
the percentage relationship established among the Securities on the
Initial Date of Deposit (as set forth under "Schedule of Investments"),
and not the actual percentage relationship existing on the day we are
creating new Units, since the two may differ. This difference may be due
to the sale, redemption or liquidation of any of the Securities.
Since the prices of the Securities will fluctuate daily, the ratio of
Securities in the Trust, on a market value basis, will also change
daily. The portion of Securities represented by each Unit will not
change as a result of the deposit of additional Securities or cash in
the Trust. If we deposit cash, you and new investors may experience a
dilution of your investment. This is because prices of the Securities
will fluctuate between the time of the cash deposit and the purchase of
the Securities, and because the Trust pays fees to buy Securities. To
reduce this dilution, the Trust will try to buy the Securities as close
to the Evaluation Time and as close to the evaluation price as possible.
In addition, because the Trust pays the brokerage fees associated with
the creation of new Units and with the sale of Securities to meet
redemption and exchange requests, frequent redemption and exchange
activity will likely result in higher brokerage expenses.
An affiliate of the Trustee may receive these brokerage fees or the
Trustee may retain and pay us (or our affiliate) to act as agent for the
Trust to buy Securities. If we or an affiliate of ours act as agent to
the Trust, we will be subject to the restrictions under the Investment
Company Act of 1940, as amended.
We cannot guarantee that the Trust will keep its present size and
composition for any length of time. Securities may periodically be sold
under certain circumstances, and the proceeds from these sales will be
used to meet Trust obligations or distributed to Unit holders, but will
not be reinvested. However, Securities will not be sold to take
advantage of market fluctuations or changes in anticipated rates of
appreciation or depreciation, or if they no longer meet the criteria by
which they were selected. You will not be able to dispose of or vote any
of the Securities in the Trust. As the holder of the Securities, the
Trustee will vote all of the Securities and will do so based on our
instructions.
Neither we nor the Trustee will be liable for a failure in any of the
Securities. However, if a contract for the purchase of any of the
Securities initially deposited in the Trust fails, unless we can
purchase substitute Securities ("Replacement Securities"), we will
refund to you that portion of the purchase price and transactional sales
charge resulting from the failed contract on the next Income
Distribution Date. Any Replacement Security the Trust acquires will be
identical to those from the failed contract.
Portfolio
Objectives.
The Trust's objective is to provide investors with the potential for
above-average capital appreciation by investing the Trust's portfolio in
Page 8
common stocks issued by medical technology companies. A diversified
portfolio helps to offset the risks normally associated with investing
in individual equities, although it does not eliminate them entirely.
The stocks selected for the Trust are carefully evaluated by Jeffrey J.
Kraws-Gruntal & Co., L.L.C.'s ("Gruntal") Managing Director of the
Healthcare Research Group-to ensure that each stock meets the standards
of the Trust's investment objective.
As a leader in healthcare-related investing, Gruntal believes that
companies involved in both increasing the efficiency and productivity of
drug discovery, development, and delivery, as well as those capable of
significantly lowering long-term healthcare costs, are well positioned
for solid growth potential over the coming years.
In recent years, novel technologies have been developed to allow
researchers in the pharmaceutical and biotechnology industries to
discover and develop drugs at a more rapid pace and at lower costs than
were previously possible. These enabling technology companies work in
collaboration with large pharmaceutical and biotechnology companies to
speed development of novel therapies, while retaining financial upside
potential through licensing fees, milestone payments and royalties on
eventual product sales.
Accelerated Discoveries.
The Pharmaceutical Research and Manufacturers of America Foundation
(PhRMA) currently estimates that the pharmaceutical industry will have
spent approximately $26.4 billion on research and development (R&D) in
the year 2000 to meet the growing need for innovative healthcare
solutions. Approximately 33% of these expenditures, or roughly $9
billion, will be allocated for the early discovery process where these
enabling technologies are licensed to enhance drug development. Gruntal
estimates that the available market for enabling technologies will
increase as a result of the massive increases in novel drug targets
stemming from the Human Genome Project. In the history of the
pharmaceutical industry, researchers have developed therapies against
approximately 500 drug targets or sites involved in a disease state.
Over the coming years, Gruntal believes that researchers will be able to
exploit up to 10,000 novel targets for drug development. In order to
focus on the most lucrative targets and increase the capacity of early
discovery efforts, pharmaceutical and biotechnology companies are
expected to accelerate adoption of enabling technologies and novel
therapeutic strategies.
Faster Drug Development.
New technologies have been developed to allow for the more rapid
identification and validation of potential drug compounds, along with
novel therapeutic strategies to decrease the lead-time to market with
innovative treatments. In addition, drug delivery technologies are being
applied to both products in development as well as new formulations of
drugs already on the market in order to improve the performance of the
product by reducing side effects and/or improving absorption,
performance, or administration of the product.
Based on an estimate from the Boston Consulting Group, the average pre-
tax cost of developing a drug introduced in the past decade was $500
million, including the cost of research failures as well as interest
costs over the entire investment period. Several of these novel
technologies can be exploited by pharmaceutical companies to drastically
reduce the costs associated with developing drugs by decreasing the
likelihood of failures in expensive, late-stage clinical trials, and by
focusing earlier on higher value drug targets with the hope of
generating larger economic returns.
Gruntal believes the pharmaceutical industry's reliance on outside
technology both to develop novel drugs or to enhance existing drugs will
continue to grow in the coming years, translating into a potentially
lucrative investment opportunity. This is especially true for those
companies that show a sustainable technology base, strong management and
significant industry validation.
Drug Delivery.
Drug delivery entails the use of one or more technologies to create a
system or vehicle that will facilitate the entry of a drug into the body
in a manner that has better performance (lower side effect profile,
greater efficacy, less wasted product) than in the prior system. The old
method of drug delivery entailed simple pills, injections or liquids,
while the new delivery forms involve high-tech versions of traditional
systems and expanded technologies and systems with new dosage forms.
Drug delivery offers the pharmaceutical industry the technology to help
navigate profitably through this increasingly challenging time. It has
Page 9
the potential to differentiate products from the competition, enhance
performance, and increase compliance over standard delivery methods
(such as multi-dose daily product). Additionally, drug delivery can
lengthen a product's lifecycle in the face of competition if the
delivery system offers improved performance and/or reduced side effect
profile.
As pharmaceutical companies increasingly look for ways to differentiate
their products from the competition, drug delivery stands to benefit as
it not only adds value to an existing product by improving performance,
but also can reduce a drug's side effect profile, increase efficacy, and
sometimes make a new indication possible.
Insights Into The New World of Healthcare Novel Technologies/Therapies.
Antibody Therapies. These therapies are used to specifically target
disease-related cells and then signal the immune system to destroy them.
Several new technologies allow for the more rapid development of fully
humanized antibodies, which are more specific and of lower toxicity than
prior treatments, in addition to novel technologies allowing for cost-
effective manufacturing of commercial-scale quantities of drug.
High-throughput Screening. Used to select and optimize potential
compounds with activity against drug targets. New technologies have
emerged, resulting in more cost efficient and higher throughput
screening, along with novel proprietary types of tests that result in
more comprehensive and valuable information for drug development.
Target Validation. A process by which the potential utility of a drug
target is assessed. Historically, researchers would have to develop
models both externally and internally to living systems in order to
evaluate drug utility. New technologies have been developed over the
past few years to allow for more rapid analysis of disease-related genes
and assess their suitability as drug targets. The flood of data coming
from the Human Genome Project is expected to be the primary driver of
novel target validation technologies.
All of the aforementioned medical technology sectors provide the
possibility of creating new products to treat diseases in a manner that
results in reduced long-term healthcare costs. Gruntal also believes
that the best specialty/generic companies will benefit moving forward
with an increasing focus on reducing healthcare costs. Gruntal estimates
generic prescriptions will represent the majority of pharmaceuticals
dispensed in the near future and continue to grow as more blockbuster
products lose patent protection. This cycle, in turn, puts more pressure
on the pharmaceutical industry to utilize enabling technologies in an
attempt to introduce better products to the market sooner.
You should be aware that predictions stated herein for the healthcare
and medical technology industry may not be realized. In addition, the
Securities contained in the Trust are not intended to be representative
of this industry as a whole and the performance of the Trust is expected
to differ from that of its comparative industry. Of course, as with any
similar investment, there can be no guarantee that the objective of the
Trust will be achieved. See "Risk Factors" for a discussion of the risks
of investing in the Trust.
Risk Factors
Price Volatility. The Trust invests in common stocks of U.S. and foreign
companies. The value of the Trust's Units will fluctuate with changes in
the value of these common stocks. Common stock prices fluctuate for
several reasons including changes in investors perceptions of the
financial condition of an issuer or the general condition of the
relevant stock market, or when political or economic events affecting
the issuers occur. In addition, common stock prices may be particularly
sensitive to rising interest rates, as the cost of capital rises and
borrowing costs increase.
Because the Trust is not managed, the Trustee will not sell stocks in
response to or in anticipation of market fluctuations, as is common in
managed investments. As with any investment, we cannot guarantee that
the performance of the Trust will be positive over any period of time or
that you won't lose money. Units of the Trust are not deposits of any
bank and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Certain of the Securities in the Trust are issued by companies with
market capitalizations of less than $1 billion. The share prices of
these small-cap companies are often more volatile than those of larger
companies as a result of several factors common to many such issuers,
Page 10
including limited trading volumes, products or financial resources,
management inexperience and less publicly available information.
Dividends. There is no guarantee that the issuers of the Securities will
declare dividends in the future or that if declared they will either
remain at current levels or increase over time.
Healthcare Industry. Because more than 25% of the Trust is invested in
healthcare companies, the Trust is considered to be concentrated in the
healthcare industry. A portfolio concentrated in a single industry may
present more risk than a portfolio broadly diversified over several
industries. General risks of such companies involve extensive
competition, generic drug sales or the loss of patent protection,
product liability litigation and increased government regulation.
Research and development costs of bringing new drugs to market are
substantial, and there is no guarantee that the product will ever come
to market. Healthcare facility operators may be affected by the demand
for services, efforts by government or insurers to limit rates,
restriction of government financial assistance and competition from
other providers.
Legislation/Litigation. From time to time, various legislative
initiatives are proposed in the United States and abroad which may have
a negative impact on certain companies represented in the Trust. In
addition, litigation regarding any of the issuers of the Securities or
the healthcare industry may negatively impact the share prices of these
Securities. We cannot predict what impact any pending or proposed
legislation or pending or threatened litigation will have on the share
prices of the Securities.
Foreign Stocks. Certain of the Securities are issued by foreign
companies which makes the Trust riskier than if it invested solely in
domestic common stocks. These Securities are either directly listed on a
U.S. securities exchange or are in the form of American Depositary
Receipts ("ADRs") which are listed on a U.S. securities exchange. Risks
of foreign common stocks include higher brokerage costs; different
accounting standards; expropriation, nationalization or other adverse
political or economic developments; currency devaluations, blockages or
transfer restrictions; restrictions on foreign investments and exchange
of securities; inadequate financial information; and lack of liquidity
of certain foreign markets.
Securities Selection. While Gruntal has carefully evaluated and approved
the Securities in the Trust for this purpose, they may choose for any
reason not to recommend any or all of the Securities for another purpose
or at a later date. This may affect the value of your Units. Members of
Gruntal's research department, including Mr. Kraws, are compensated
based on brokerage commissions generated from their research. In
addition, Gruntal's research department will receive a fee as described
under "Expenses and Charges" for providing research services to the
Trust and Mr. Kraws may trade certain or all of the Securities in his
personal account.
You should note that Gruntal, acting in its independent capacity as an
investment advisor to individuals, mutual funds, employee benefit plans,
and other institutions and persons, may from time to time distribute
information concerning the Securities included in the Trust to various
individuals and entities in which they recommend or affect the purchase
or sale of one or more of the Securities. This may have an effect on the
prices of the Securities which is adverse to the interests of Unit
holders and may have an impact on the price paid by the Trust for
Securities as well as the price received upon redemption or termination.
You should also be aware that Securities will generally not be removed
from the Trust and additional Units of the Trust may be created even if
Gruntal no longer believes certain or all of the Securities have the
potential to achieve the Trust's objective over the life of the Trust or
issues a sell recommendation regarding any of the Securities. In
addition, Gruntal in its general securities business acts as agent or
principal in connection with buying and selling stocks, including the
Securities, and may have bought the Securities for the Trust, thereby
benefiting. Gruntal also acts as market maker, underwrites certain
issues, and provides investment banking services to companies in the
pharmaceutical industry, which may include the issuers of certain of the
Securities.
Portfolio Securities Descriptions
Antibody Development
____________________
Abgenix, Inc., headquartered in Fremont, California, develops and
intends to commercialize its XenoMouse technology to produce antibody
therapeutic products used in the prevention and treatment of various
conditions, such as transplant related diseases, inflammatory and
Page 11
autoimmune disorders, and cancer.
Dyax Corp., headquartered in Cambridge, Massachusetts, engages in the
discovery and development of pharmaceuticals, and in licensing its
technology to others. The company's Phage Display technology is used to
identify compounds with the potential to treat or diagnose disease. The
company also produces chromatography separations systems that are used
in the discovery, development and manufacture of biological and
pharmaceutical products.
ImmunoGen, Inc., headquartered in Cambridge, Massachusetts, develops
pharmaceuticals, primarily for the treatment of cancer. The company's
products are called tumor-activated prodrugs (TAPs) and are based on its
proprietary immunoconjugate technology platform.
Medarex, Inc., headquartered in Princeton, New Jersey, develops
therapeutic products for the treatment of cancer, AIDS and other life-
threatening diseases based on proprietary technology in the field of
immunology. The company uses innovative monoclonal antibody technology
to develop proprietary therapeutic pharmaceuticals to treat cancer, AIDS
and other infectious diseases, autoimmune diseases and cardiovascular
disease.
Combinatorial Chemistry
_______________________
ArQule, Inc., headquartered in Woburn, Massachusetts, specializes in the
use of high-throughput parallel combinatorial chemistry for drug
discovery and other life sciences applications. The company's
technologies allow its collaborative partners to accelerate the product
development process by several years. Products include the programs for
screening compounds against biological targets, for a focused and
streamlined approach to lead generation and qualification, and for lead
optimization.
Maxygen Inc., headquartered in Redwood City, California, is engaged in
directed molecular evolution, the process by which new, modified genes
are generated for specific commercial uses. The company's
MolecularBreeding technologies bring together advances in molecular
biology and classical breeding. The company develops multiple products
in a broad range of industries including agriculture, chemicals and
human therapeutics.
Pharmacopeia, Inc., headquartered in Princeton, New Jersey, is focused
on the screening of large libraries of chemicals for new drug discovery.
The company's drug discovery approach is based on a technology called
Encoded Combinational Library on Polymeric Support, which accelerates
the pace of drug discovery for pharmaceutical and biotechnology customers.
Drug Delivery/Generics
______________________
Alkermes, Inc., headquartered in Cambridge, Massachusetts, develops
innovative pharmaceutical products based on several proprietary drug
delivery systems: ProLease, Cereport (formerly known as RMP-7),
Medisorb, RingCap and Dose Sipping Technology. The company's areas of
focus are the controlled release of injectable drugs, delivery of drugs
into the brain, oral delivery of drugs and pulmonary delivery of small
proteins.
ALZA Corporation, headquartered in Mountain View, California, develops,
makes and markets a broad range of transdermal, oral and other
therapeutic systems, designed to provide controlled, predetermined rates
of medication release over extended time periods.
Andrx Group, headquartered in Fort Lauderdale, Florida, formulates and
commercializes controlled-release oral pharmaceuticals utilizing its
proprietary drug delivery technologies to improve drug therapy. The
company also develops generic versions of selected high sales volume
controlled-release brand name pharmaceuticals.
Elan Corporation Plc (ADR), headquartered in Dublin, Ireland, is a
specialty pharmaceutical company. The company develops and licenses drug
delivery systems formulated to increase the therapeutic value of certain
medications, with reduced side effects. The company also develops and
markets therapeutic agents to diagnose and treat central nervous systems
diseases and disorders.
ICN Pharmaceuticals, Inc., headquartered in Costa Mesa, California, is a
global, research-based pharmaceutical company that develops,
manufactures, distributes and sells pharmaceutical, research and
diagnostic products. The company distributes and sells a broad range of
prescription and non-prescription pharmaceutical and nutritional
products in North America, Europe, Latin America and the Pacific Rim.
Inhale Therapeutic Systems, Inc., headquartered in San Carlos,
California, researches and develops a non-invasive pulmonary drug
delivery system applicable to peptides, proteins and other
macromolecules currently delivered by injection.
IVAX Corporation, headquartered in Miami, Florida, researches, develops,
makes and sells generic and branded pharmaceuticals. The company's
Page 12
business is focused primarily in oncology products, respiratory products
and specialty generic pharmaceuticals.
Watson Pharmaceuticals, Inc., headquartered in Corona, California,
manufactures and sells off-patent (generic) pharmaceuticals and develops
advanced drug delivery systems designed primarily to enhance the
therapeutic benefits of pharmaceutical compounds. The company also
develops and markets branded pharmaceuticals targeting the dermatology,
women's health and neuropsychiatric markets.
Functional Genomics
___________________
Applera Corporation-Applied Biosystems Group, headquartered in Norwalk,
Connecticut, is engaged in research, development, manufacture, sale and
support of biochemical instrument systems, reagents and software and
related consulting and development services.
Compugen Ltd., headquartered in Tel Aviv, Israel, is engaged in the
fields of computational genomics and proteomics. The company combines
the disciplines of mathematics and computer science with molecular
biology to improve the understanding of genomics and proteomics, the
study of genes and proteins. Products and services are designed to
enable life scientists to enhance their research efforts in drug
discovery.
Genta Incorporated, headquartered in Lexington, Massachusetts, is a
biopharmaceutical company engaged in the development of a pipeline of
pharmaceutical products. The company's research efforts have been
focused on the development of proprietary oligonucleotide
pharmaceuticals, primarily in the area of cancer, intended to block or
regulate the production of disease-related proteins at the genetic level.
Lynx Therapeutics, Inc., headquartered in Hayward, California, holds and
continues to develop certain proprietary technologies that enables the
simultaneous identification and analysis of nearly all the DNA molecules
or fragments in a single biological sample.
Waters Corporation, headquartered in Milford, Massachusetts, makes,
distributes and provides high performance liquid chromatography ("HPLC")
instruments, chromatography columns and other consumables, and related
service.
High Throughput Screening
_________________________
Aurora Biosciences Corporation, headquartered in San Diego, California,
designs, develops and commercializes proprietary drug discovery systems
and technologies to accelerate and enhance discovery of new medicines by
the pharmaceutical and biopharmaceutical industries. The company has
developed a proprietary biology and high technology platform comprised
of a portfolio of proprietary functional genomics technologies, and a
highly automated ultra-high throughput screening system, known as its
UHTSS Platform.
Caliper Technologies Corp., headquartered in Mountain View, California,
develops, manufactures and sells lab-on-chip technologies which
miniaturize, integrate and automate many laboratory processes. The
company's proprietary systems perform laboratory experiments for use in
different industries.
Cepheid, Inc., headquartered in Sunnyvale, California, develops,
manufactures and markets microfluidic systems that integrate, automate
and accelerate biological testing. The company's systems are
miniaturized instruments that analyze complex biological samples in a
disposable cartridge that processes small quantities of liquid. The
company is focused on the detection and analysis of nucleic acids, such
as DNA, in samples such as blood, urine, cell cultures, food and
industrial water.
Luminex Corporation, headquartered in Austin, Texas, has developed a
proprietary technology, LabMAP, that combines a microscopic fluid stream
and digital signal processing to perform high-speed biological tests at
a low cost.
Larger Biotechnology
____________________
Amgen Inc., headquartered in Thousand Oaks, California, is a global
biotechnology concern which develops, makes and markets human
therapeutics based on advanced cellular and molecular biology, including
a protein that stimulates red blood cell production and a protein that
stimulates white blood cell production.
Genentech, Inc., headquartered in South San Francisco, California,
discovers, develops, makes and sells human pharmaceuticals based on
recombinant DNA technology (gene splicing). The company also makes and
markets certain products within the United States which are sold to F.
Page 13
Hoffmann-La Roche Ltd. (HLR) for distribution outside the United States.
Genzyme Corporation (General Division), headquartered in Cambridge,
Massachusetts, develops and markets specialty therapeutic, surgical and
diagnostic products, pharmaceuticals and genetic diagnostic services.
The company also develops, makes and markets biological products for the
treatment of cartilage damage, severe burns, chronic skin ulcers and
neurodegenerative diseases.
Immunex Corporation, headquartered in Seattle, Washington, discovers,
develops, makes and markets therapeutic products for the treatment of
cancer, infectious diseases and immunological disorders. The company's
products are sold worldwide.
We have obtained the foregoing descriptions from sources we deem
reliable. We have not independently verified the provided information
either in terms of accuracy or completeness.
Public Offering
The Public Offering Price.
You may buy Units at the Public Offering Price, the per Unit price of
which is comprised of the following:
- - The aggregate underlying value of the Securities;
- - The amount of any cash in the Income and Capital Accounts;
- - Dividends receivable on Securities; and
- - The maximum transactional sales charge (which combines an initial
upfront sales charge and a deferred sales charge).
The price you pay for your Units will differ from the amount stated
under "Summary of Essential Information" due to various factors,
including fluctuations in the prices of the Securities and changes in
the value of the Income and/or Capital Accounts.
Although you are not required to pay for your Units until three business
days following your order (the "date of settlement"), you may pay before
then. You will become the owner of Units ("Record Owner") on the date of
settlement if payment has been received. If you pay for your Units
before the date of settlement, we may use your payment during this time
and it may be considered a benefit to us, subject to the limitations of
the Securities Exchange Act of 1934.
Organization Costs. Securities purchased with the portion of the Public
Offering Price intended to be used to reimburse the Sponsor for the
Trust's organization costs (including costs of preparing the
registration statement, the Indenture and other closing documents,
registering Units with the Securities and Exchange Commission ("SEC")
and states, the initial audit of the Trust portfolio, legal fees and the
initial fees and expenses of the Trustee) will be purchased in the same
proportionate relationship as all the Securities contained in the Trust.
Securities will be sold to reimburse the Sponsor for the Trust's
organization costs at the earlier of six months after the Initial Date
of Deposit or the end of the initial offering period (a significantly
shorter time period than the life of the Trust). During the period
ending with the earlier of six months after the Initial Date of Deposit
or the end of the initial offering period, there may be a decrease in
the value of the Securities. To the extent the proceeds from the sale of
these Securities are insufficient to repay the Sponsor for the Trust
organization costs, the Trustee will sell additional Securities to allow
the Trust to fully reimburse the Sponsor. In that event, the net asset
value per Unit will be reduced by the amount of additional Securities
sold. Although the dollar amount of the reimbursement due to the Sponsor
will remain fixed and will never exceed the per Unit amount set forth
for the Trust in "Statement of Net Assets," this will result in a
greater effective cost per Unit to Unit holders for the reimbursement to
the Sponsor. To the extent actual organization costs are less than the
estimated amount, only the actual organization costs will be deducted
from the assets of the Trust. When Securities are sold to reimburse the
Sponsor for organization costs, the Trustee will sell such Securities,
to the extent practicable, which will maintain the same proportionate
relationship among the Securities contained in the Trust as existed
prior to such sale.
Minimum Purchase.
The minimum amount you can purchase of the Trust is $1,000 worth of
Units ($250 if you are purchasing Units for your Individual Retirement
Account or any other qualified retirement plan).
Transactional Sales Charge.
The transactional sales charge you will pay has both an initial and a
deferred component. The initial sales charge, which you will pay at the
time of purchase, is equal to the difference between the maximum
Page 14
transactional sales charge of 4.40% of the Public Offering Price and the
maximum remaining deferred sales charge (initially $.340 per Unit). This
initial sales charge is initially equal to approximately 1.00% of the
Public Offering Price of a Unit but will vary from 1.00% depending on
the purchase price of your Units and as deferred sales charge payments
are made. When the Public Offering price exceeds $10.00 per Unit, the
initial sales charge will exceed 1.00% of the Public Offering Price.
Monthly Deferred Sales Charge. In addition, five monthly deferred sales
charges of $.068 per Unit will be deducted from the Trust's assets on
approximately the twentieth day of each month from August 20, 2001
through December 20, 2001. If you buy Units at a price of less than
$10.00 per Unit, the dollar amount of the deferred sales charge will not
change, but the deferred sales charge on a percentage basis will be more
than 3.40% of the Public Offering Price.
If you purchase Units after the last deferred sales charge payment has
been assessed, your transactional sales charge will consist of a one-
time initial sales charge of 4.40% of the Public Offering Price per Unit
(equivalent to 4.603% of the net amount invested), which will be reduced
by 1/2 of 1% on each subsequent January 31, commencing January 31, 2002,
to a minimum sales charge of 3.00%.
Discounts for Certain Persons.
If you invest at least $50,000 (except if you are purchasing for a "wrap
fee account" as described below), the maximum transactional sales charge
is reduced, as follows:
Reduction to the
maximum
If you invest transactional sales
(in thousands):* charge will be:
_______________ ___________________
$50 but less than $100 .25%
$100 but less than $250 .50%
$250 but less than $500 1.00%
$500 or more 2.00%
* Breakpoint transactional sales charges are also applied on a Unit
basis utilizing a breakpoint equivalent in the above table of $10 per
Unit and will be applied on whichever basis is more favorable to the
investor. The breakpoints will be adjusted to take into consideration
purchase orders stated in dollars which cannot be completely fulfilled
due to the requirement that only whole Units be issued.
The reduced transactional sales charge for quantity purchases will apply
only to purchases made by the same person on any one day from any one
dealer or selling agent. We will consider Units you purchase in the name
of your spouse or your child under 21 years of age to be purchases by
you for determining the reduced sales charge. The reduced transactional
sales charges will also apply to a trustee or other fiduciary purchasing
Units for a single trust estate or single fiduciary account. You must
inform your dealer or selling agent of any combined purchases before the
sale in order to be eligible for the reduced transactional sales charge.
Any reduced transactional sales charge is the responsibility of the
party making the sale.
You may use redemption or termination proceeds from any unit investment
trust we sponsor to purchase Units of the Trust during the initial
offering period at the Public Offering Price less 1.00%. Please note
that any deferred sales charge remaining on units you redeem to buy
Units of this Trust will be deducted from those redemption proceeds.
For the following persons, the transactional sales charge is reduced by
3.00% of the Public Offering Price:
- - Employees, officers and directors of the Sponsor, our related
companies, dealers, selling agents and their affiliates, and vendors
providing services to us.
- - Immediate family members of the above (spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-
in-law, sons-in-law, daughters-in-law, brothers-in-law and sisters-in-
law, and trustees, custodians or fiduciaries for the benefit of such
persons).
If you purchase Units through registered broker/dealers who charge
periodic fees for financial planning, investment advisory or asset
management services, or provide these services as part of an investment
account where a comprehensive "wrap fee" charge is imposed, the
transactional sales charge on such Units is reduced by 2.4% of the
Public Offering Price.
You will be charged the deferred sales charge per Unit regardless of any
discounts. However, if you are eligible to receive a discount such that
the maximum transactional sales charge you must pay is less than the
applicable maximum deferred sales charge, you will be credited the
difference between your maximum transactional sales charge and the
Page 15
maximum deferred sales charge at the time you buy your Units. If you
elect to have distributions reinvested into additional Units of the
Trust, in addition to the reinvestment Units you receive you will also
be credited additional Units with a dollar value at the time of
reinvestment sufficient to cover the amount of any remaining deferred
sales charge to be collected on such reinvestment Units. The dollar
value of these additional credited Units (as with all Units) will
fluctuate over time, and may be less on the dates deferred sales charges
are collected than their value at the time they were issued.
As Sponsor, we will also receive a creation and development fee. See
"Expenses and Charges" for a description of the services provided for
this fee.
The Value of the Securities.
The Evaluator will determine the aggregate underlying value of the
Securities in the Trust as of the Evaluation Time on each business day
and will adjust the Public Offering Price of the Units according to this
valuation. This Public Offering Price will be effective for all orders
received before the Evaluation Time on each such day. If we or the
Trustee receive orders for purchases, sales or redemptions after that
time, or on a day which is not a business day, they will be held until
the next determination of price. The term "business day" as used in this
prospectus will exclude Saturdays, Sundays and certain national holidays
on which the NYSE is closed.
The aggregate underlying value of the Securities will be determined as
follows: if the Securities are listed on a securities exchange or The
Nasdaq Stock Market, their value is generally based on the closing sale
prices on that exchange or system (unless it is determined that these
prices are not appropriate as a basis for valuation). However, if there
is no closing sale price on that exchange or system, they are valued
based on the closing ask prices. If the Securities are not so listed,
or, if so listed and the principal market for them is other than on that
exchange or system, their value will generally be based on the current
ask prices on the over-the-counter market (unless it is determined that
these prices are not appropriate as a basis for valuation). If current
ask prices are unavailable, the valuation is generally determined:
a) On the basis of current ask prices for comparable securities;
b) By appraising the value of the Securities on the ask side of the
market; or
c) By any combination of the above.
After the initial offering period is over, the aggregate underlying
value of the Securities will be determined as set forth above, except
that bid prices are used instead of ask prices when necessary.
Distribution of Units
We intend to qualify Units of the Trust for sale in a number of states.
Units are not registered in any foreign country and neither we nor
Gruntal take responsibility with respect to sales or offers made to sell
Units where sales are not legal. Sales or offers to sell in such
countries may only be made in accordance with applicable laws. The Trust
is not registered with the Swiss Federal Banking Commission, which acts
as supervisory authority in mutual fund matters. Accordingly, investors
should note that the Units may not be offered or distributed in or from
Switzerland unless this offer or distribution is exclusively addressed
to Swiss institutional investors without any public offering. All Units
will be sold at the then current Public Offering Price.
Dealer Concessions.
Dealers and other selling agents can purchase Units at prices which
represent a concession or agency commission of 3.0% of the Public
Offering Price per Unit (or 65% of the maximum sales charge after
January 31, 2002). Eligible foreign dealers and selling agents can
purchase Units at prices which represent a concession or agency
commission of 2.0% of the Public Offering Price per Unit (or 45% of the
maximum sales charge after January 31, 2002). However, for Units
purchased using redemption and/or termination proceeds, this amount will
be reduced to 65% of the applicable transactional sales charge (45% in
the case of foreign dealers and agents).
We reserve the right to change the amount of concessions or agency
commissions from time to time. Certain commercial banks may be making
Units of the Trust available to their customers on an agency basis. A
portion of the transactional sales charge paid by these customers is
kept by or given to the banks in the amounts shown above.
Award Programs.
From time to time we may sponsor programs which provide awards to a
dealer's or selling agent's registered representatives who have sold a
Page 16
minimum number of Units during a specified time period. We may also pay
fees to qualifying dealers or selling agents for services or activities
which are meant to result in sales of Units of the Trust. In addition,
we will pay to dealers or selling agents who sponsor sales contests or
recognition programs that conform to our criteria, or participate in our
sales programs, amounts equal to no more than the total applicable
transactional sales charge on Units sold by such persons during such
programs. We make these payments out of our own assets and not out of
Trust assets. These programs will not change the price you pay for your
Units.
Investment Comparisons.
From time to time we may compare the estimated returns of the Trust
(which may show performance net of the expenses and charges the Trust
would have incurred) and returns over specified periods of other similar
trusts we sponsor in our advertising and sales materials, with (1)
returns on other taxable investments such as the common stocks
comprising various market indexes, corporate or U.S. Government bonds,
bank CDs and money market accounts or funds, (2) performance data from
Morningstar Publications, Inc. or (3) information from publications such
as Money, The New York Times, U.S. News and World Report, BusinessWeek,
Forbes or Fortune. The investment characteristics of the Trust differ
from other comparative investments. You should not assume that these
performance comparisons will be representative of the Trust's future
performance.
The Sponsor's Profits
We will receive a gross sales commission equal to the maximum
transactional sales charge per Unit of the Trust less any reduction as
stated in "Public Offering." We will also receive the amount of any
accrued and collected creation and development fee. We will pay Gruntal
3.30% of the Public Offering Price per Unit sold. Also, any difference
between our cost to purchase the Securities and the price at which we
sell them to the Trust is considered a profit or loss (see Note 2 of
"Schedule of Investments.") During the initial offering period, dealers
and others may also realize profits or sustain losses as a result of
fluctuations after the Date of Deposit in the Public Offering Price they
receive when they sell the Units. On sales of at least $20, $40 or $60
million, Gruntal will receive an additional .10%, .20% or .35%,
respectively, of the Public Offering Price per Unit sold.
In maintaining a market for the Units, any difference between the price
at which we purchase Units and the price at which we sell or redeem them
will be a profit or loss to us.
The Secondary Market
Although not obligated, we intend to maintain a market for the Units
after the initial offering period and continuously offer to purchase
Units at prices based on the Redemption Price per Unit.
We will pay all expenses to maintain a secondary market, except the
Evaluator fees, Trustee costs to transfer and record the ownership of
Units, and costs incurred in annually updating the Trust's registration
statement. We may discontinue purchases of Units at any time. IF YOU
WISH TO DISPOSE OF YOUR UNITS, YOU SHOULD ASK US FOR THE CURRENT MARKET
PRICES BEFORE MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE. If you sell
or redeem your Units before you have paid the total deferred sales
charge on your Units, you will have to pay the remainder at that time.
How We Purchase Units
The Trustee will notify us of any tender of Units for redemption. If our
bid at that time is equal to or greater than the Redemption Price per
Unit, we may purchase the Units. You will receive your proceeds from the
sale no later than if they were redeemed by the Trustee. We may tender
Units that we hold to the Trustee for redemption as any other Units. If
we elect not to purchase Units, the Trustee may sell tendered Units in
the over-the-counter market, if any. However, the amount you will
receive is the same as you would have received on redemption of the Units.
Expenses and Charges
The estimated annual expenses of the Trust are listed under "Fee Table."
If actual expenses exceed the estimate, the Trust will bear the excess.
The Trustee will pay operating expenses of the Trust from the Income
Account if funds are available, and then from the Capital Account. The
Income and Capital Accounts are noninterest-bearing to Unit holders, so
Page 17
the Trustee may earn interest on these funds, thus benefiting from their
use.
As Sponsor, we will be compensated for providing bookkeeping and other
administrative services to the Trust, and will receive brokerage fees
when the Trust uses us (or an affiliate of ours) as agent in buying or
selling Securities. Legal, typesetting, electronic filing and regulatory
filing fees and expenses associated with updating the Trust's
registration statement yearly are also now chargeable to the Trust.
Historically, we paid these fees and expenses. First Trust Advisors
L.P., an affiliate of ours, acts as both Portfolio Supervisor and
Evaluator to the Trust and will receive the fees set forth under "Fee
Table" for providing portfolio supervisory and evaluation services to
the Trust. In providing portfolio supervisory services, the Portfolio
Supervisor will purchase research services from Gruntal's research
department for a fee not to exceed .30% of the Public Offering Price per
Unit sold.
The fees payable to us, First Trust Advisors L.P. and the Trustee are
based on the largest aggregate number of Units of the Trust outstanding
at any time during the calendar year, except during the initial offering
period, in which case these fees are calculated based on the largest
number of Units outstanding during the period for which compensation is
paid. These fees may be adjusted for inflation without Unit holders'
approval, but in no case will the annual fees paid to us or our
affiliates for providing a given service to all unit investment trusts
for which we provide such services be more than the actual cost of
providing such services in such year.
As Sponsor, we will receive a fee from the Trust for creating and
developing the Trust, including determining the Trust objectives,
policies, composition and size, selecting service providers and
information services and for providing other similar administrative and
ministerial functions. The "creation and development fee" is accrued
(and becomes a liability of the Trust) on a daily basis. The dollar
amount of the creation and development fee accrued each day, which will
vary with fluctuations in the Trust's net asset value, is determined by
multiplying the net asset value of the Trust on that day by 1/365 of the
annual creation and development fee of .35%. The total amount of any
accrued but unpaid creation and development fee is paid to the Sponsor
on a monthly basis from the assets of the Trust. If you redeem your
Units, you will only be responsible for any accrued and unpaid creation
and development fee through the date of redemption. In connection with
the creation and development fee, in no event will the Sponsor collect
over the life of the Trust more than .55% of a Unit holder's initial
investment. We do not use this fee to pay distribution expenses or as
compensation for sales efforts.
In addition to the Trust's operating expenses and those fees described
above, the Trust may also incur the following charges:
- - All legal and annual auditing expenses of the Trustee according to its
responsibilities under the Indenture;
- - The expenses and costs incurred by the Trustee to protect the Trust
and your rights and interests;
- - Fees for any extraordinary services the Trustee performed under the
Indenture;
- - Payment for any loss, liability or expense the Trustee incurred
without negligence, bad faith or willful misconduct on its part, in
connection with its acceptance or administration of the Trust;
- - Payment for any loss, liability or expenses we incurred without
negligence, bad faith or willful misconduct in acting as Depositor of
the Trust; and/or
- - All taxes and other government charges imposed upon the Securities or
any part of the Trust.
The above expenses and the Trustee's annual fee are secured by a lien on
the Trust. Since the Securities are all common stocks and dividend
income is unpredictable, we cannot guarantee that dividends will be
sufficient to meet any or all expenses of the Trust. If there is not
enough cash in the Income or Capital Account, the Trustee has the power
to sell Securities to make cash available to pay these charges which may
result in capital gains or losses to you. See "Tax Status."
The Trust will be audited annually. So long as we are making a secondary
market for Units, we will bear the costs of these annual audits to the
extent the cost exceeds $0.0050 per Unit. Otherwise, the Trust will pay
for the audit. You can request a copy of the audited financial
statements from the Trustee.
Tax Status
This section summarizes some of the main U.S. federal income tax
consequences of owning Units of the Trust. This section is current as of
Page 18
the date of this prospectus. Tax laws and interpretations change
frequently, and these summaries do not describe all of the tax
consequences to all taxpayers. For example, these summaries generally do
not describe your situation if you are a non-U.S. person, a
broker/dealer, or other investor with special circumstances. In
addition, this section does not describe your state or foreign taxes. As
with any investment, you should consult your own tax professional about
your particular consequences.
Trust Status.
The Trust will not be taxed as a corporation for federal income tax
purposes. As a Unit owner, you will be treated as the owner of a pro
rata portion of the Securities and other assets held by the Trust, and
as such you will be considered to have received a pro rata share of
income (i.e., dividends and capital gains, if any) from each Security
when such income is considered to be received by the Trust. This is true
even if you elect to have your distributions automatically reinvested
into additional Units. In addition, the income from the Trust which you
must take into account for federal income tax purposes is not reduced by
amounts used to pay Trust expenses (including the deferred sales charge,
if any).
Your Tax Basis and Income or Loss upon Disposition.
If your Trust disposes of Securities, you will generally recognize gain
or loss. If you dispose of your Units or redeem your Units for cash, you
will also generally recognize gain or loss. To determine the amount of
this gain or loss, you must subtract your tax basis in the related
Securities from your share of the total amount received in the
transaction. You can generally determine your initial tax basis in each
Security or other Trust asset by apportioning the cost of your Units
among each Security or other Trust asset ratably according to their
value on the date you purchase your Units. In certain circumstances,
however, you may have to adjust your tax basis after you purchase your
Units (for example, in the case of certain dividends that exceed a
corporation's accumulated earnings and profits).
If you are an individual, the maximum marginal federal tax rate for net
capital gain is generally 20% (10% for certain taxpayers in the lowest
tax bracket). For tax years beginning after December 31, 2000, the 20%
rate is reduced to 18% and the 10% rate is reduced to 8% for long-term
gains from most property held for more than five years. Because the
Trust has a maturity of approximately four years, the reduction in the
capital gains rate for property held for more than five years could only
possibly apply to your interest in the Securities if you are eligible
and elect to receive an in-kind distribution at redemption or
termination. However, the reduction of the 20% rate to 18% applies only
if the holding period for the property begins after December 31, 2000.
Therefore, you will not be eligible for the 18% capital gain rate on
assets for which your holding period began before January 1, 2001.
However, if you are an individual, you may elect to treat certain assets
you hold on January 1, 2001 as having been sold for their fair market
value on the next business day after January 1, 2001 for purposes of
this holding period requirement. If you make this election for an asset,
the asset would be eligible for the 18% rate if it is held by you for
more than five years after this deemed sale. If you make this election,
you must recognize any gain from this deemed sale, but any loss is not
recognized. Net capital gain equals net long-term capital gain minus net
short-term capital loss for the taxable year. Capital gain or loss is
long-term if the holding period for the asset is more than one year and
is short-term if the holding period for the asset is one year or less.
You must exclude the date you purchase your Units to determine the
holding period of your Units. The tax rates for capital gains realized
from assets held for one year or less are generally the same as for
ordinary income. The tax code may, however, treat certain capital gains
as ordinary income in special situations.
In-Kind Distributions.
Under certain circumstances, you may request a distribution of
Securities (an "In-Kind Distribution") when you redeem your Units or at
the Trust's termination. If you request an In-Kind Distribution you will
be responsible for any expenses related to this distribution. By
electing to receive an In-Kind Distribution, you will receive whole
shares of stock plus, possibly, cash.
You will not recognize gain or loss if you only receive Securities in
exchange for your pro rata portion of the Securities held by the Trust.
However, if you also receive cash in exchange for a fractional share of
a Security held by the Trust, you will generally recognize gain or loss
based on the difference between the amount of cash you receive and your
tax basis in such fractional share of the Security.
Page 19
Limitations on the Deductibility of Trust Expenses.
Generally, for federal income tax purposes, you must take into account
your full pro rata share of the Trust's income, even if some of that
income is used to pay Trust expenses. You may deduct your pro rata share
of each expense paid by the Trust to the same extent as if you directly
paid the expense. You may, however, be required to treat some or all of
the expenses of the Trust as miscellaneous itemized deductions.
Individuals may only deduct certain miscellaneous itemized deductions to
the extent they exceed 2% of adjusted gross income.
Foreign, State and Local Taxes.
Some distributions by the Trust may be subject to foreign withholding
taxes. Any income withheld will nevertheless be treated as income to
you. However, because you are deemed to have paid directly your share of
foreign taxes that have been paid or accrued by the Trust, you may be
entitled to a foreign tax credit or deduction for U.S. tax purposes with
respect to such taxes.
Under the existing income tax laws of the State and City of New York,
the Trust will not be taxed as a corporation, and the income of the
Trust will be treated as the income of the Unit holders in the same
manner as for federal income tax purposes.
Retirement Plans
You may purchase Units of the Trust for:
- - Individual Retirement Accounts
- - Keogh Plans
- - pension funds, and
- - other tax-deferred retirement plans.
Generally, the federal income tax on capital gains and income received
in each of the above plans is deferred until you receive distributions.
These distributions are generally treated as ordinary income but may, in
some cases, be eligible for special averaging or tax-deferred rollover
treatment. Before participating in a plan like this, you should review
the tax laws regarding these plans and consult your attorney or tax
advisor. Brokerage firms and other financial institutions offer these
plans with varying fees and charges.
Rights of Unit Holders
Unit Ownership.
The Trustee will treat as Record Owner of Units persons registered as
such on its books. It is your responsibility to notify the Trustee when
you become Record Owner, but normally your broker/dealer provides this
notice. You may elect to hold your Units in either certificated or
uncertificated form.
Certificated Units. When you purchase your Units you can request that
they be evidenced by certificates, which will be delivered shortly after
your order. 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. You can transfer or redeem your
certificated Units by endorsing and surrendering the certificate to the
Trustee, along with a written instrument of transfer. You must sign your
name exactly as it appears on the face of the certificate with your
signature guaranteed by an eligible institution. In certain cases the
Trustee may require additional documentation before they will transfer
or redeem your Units.
You may be required to pay a nominal fee to the Trustee for each
certificate reissued or transferred, and to pay any government charge
that may be imposed for each transfer or exchange. If a certificate gets
lost, stolen or destroyed, you may be required to furnish indemnity to
the Trustee to receive replacement certificates. You must surrender
mutilated certificates to the Trustee for replacement.
Uncertificated Units. You may also choose to hold your Units in
uncertificated form. If you choose this option, the Trustee will
establish an account for you and credit your account with the number of
Units you purchase. Within two business days of the issuance or transfer
of Units held in uncertificated form, the Trustee will send you:
- - A written initial transaction statement containing a description of
your Trust;
- - A list of the number of Units issued or transferred;
- - Your name, address and Taxpayer Identification Number ("TIN");
- - A notation of any liens or restrictions of the issuer and any adverse
claims; and
- - The date the transfer was registered.
Uncertificated Units may be transferred the same way as certificated
Page 20
Units, except that no certificate needs to be presented to the Trustee.
Also, no certificate will be issued when the transfer takes place unless
you request it. You may at any time request that the Trustee issue
certificates for your Units.
Unit Holder Reports.
In connection with each distribution, the Trustee will provide you with
a statement detailing the per Unit amount of income (if any)
distributed. After the end of each calendar year, the Trustee will
provide you with the following information:
- - A summary of transactions in the Trust for the year;
- - A list of any Securities sold during the year and the Securities held
at the end of that year by the Trust;
- - The Redemption Price per Unit, computed on the 31st day of December of
such year (or the last business day before); and
- - Amounts of income and capital distributed during the year.
You may request from the Trustee copies of the evaluations of the
Securities as prepared by the Evaluator to enable you to comply with
federal and state tax reporting requirements.
Income and Capital Distributions
You will begin receiving distributions on your Units only after you
become a Record Owner. The Trustee will credit dividends received on the
Trust's Securities to the Income Account. All other receipts, such as
return of capital, are credited to the Capital Account.
The Trustee will distribute any net income in the Income Account on or
near the Income Distribution Dates to Unit holders of record on the
preceding Income Distribution Record Date. See "Summary of Essential
Information." No income distribution will be paid if accrued expenses of
the Trust exceed amounts in the Income Account on the Income
Distribution Dates. Distribution amounts will vary with changes in the
Trust's fees and expenses, in dividends received and with the sale of
Securities. The Trustee will distribute amounts in the Capital Account,
net of amounts designated to meet redemptions, pay the deferred sales
charge or pay expenses on the last day of each month to Unit holders of
record on the fifteenth day of each month provided the amount equals at
least $1.00 per 100 Units. If the Trustee does not have your TIN it is
required to withhold a certain percentage of your distribution and
deliver such amount to the Internal Revenue Service ("IRS"). You may
recover this amount by giving your TIN to the Trustee, or when you file
a tax return. However, you should check your statements to make sure the
Trustee has your TIN to avoid this "back-up withholding."
We anticipate that there will be enough money in the Capital Account to
pay the deferred sales charge. If not, the Trustee may sell Securities
to meet the shortfall.
Within a reasonable time after the Trust is terminated, you will receive
a pro rata share of the money from the sale of the Securities. However,
if you are eligible, you may elect to receive an In-Kind Distribution as
described under "Amending or Terminating the Indenture." You will
receive a pro rata share of any other assets remaining in the Trust,
after deducting any unpaid expenses.
The Trustee may establish reserves (the "Reserve Account") within the
Trust to cover anticipated state and local taxes and any governmental
charges to be paid out of the Trust.
Distribution Reinvestment Option. You may elect to have each
distribution of income and/or capital reinvested into additional Units
of the Trust by notifying the Trustee at least 10 days before any Record
Date. Each later distribution of income and/or capital on your Units
will be reinvested by the Trustee into additional Units of the Trust.
There is no transactional sales charge on Units acquired through the
Distribution Reinvestment Option, as discussed under "Public Offering."
This option may not be available in all states. PLEASE NOTE THAT EVEN
IF YOU REINVEST DISTRIBUTIONS, THEY ARE STILL CONSIDERED DISTRIBUTIONS
FOR INCOME TAX PURPOSES.
Redeeming Your Units
You may redeem all or a portion of your Units at any time by sending the
certificates representing the Units you want to redeem to the Trustee at
its unit investment trust office. If your Units are uncertificated, you
need only deliver a request for redemption to the Trustee. In either
case, the certificates or the redemption request must be properly
endorsed with proper instruments of transfer and signature guarantees as
explained in "Rights of Unit Holders-Unit Ownership" (or by providing
satisfactory indemnity if the certificates were lost, stolen, or
Page 21
destroyed). No redemption fee will be charged, but you are responsible
for any governmental charges that apply. Three business days after the
day you tender your Units (the "Date of Tender") you will receive cash
in an amount for each Unit equal to the Redemption Price per Unit
calculated at the Evaluation Time on the Date of Tender.
The Date of Tender is considered to be the date on which the Trustee
receives your certificates or redemption request (if such day is a day
the NYSE is open for trading). However, if your certificates or
redemption request are received after 4:00 p.m. Eastern time (or after
any earlier closing time on a day on which the NYSE is scheduled in
advance to close at such earlier time), the Date of Tender is the next
day the NYSE is open for trading.
Any amounts paid on redemption representing income will be withdrawn
from the Income Account if funds are available for that purpose, or from
the Capital Account. All other amounts paid on redemption will be taken
from the Capital Account. The IRS will require the Trustee to withhold a
portion of your redemption proceeds if it does not have your TIN, as
generally discussed under "Income and Capital Distributions."
If you tender 2,500 Units or more for redemption, rather than receiving
cash, you may elect to receive an In-Kind Distribution in an amount
equal to the Redemption Price per Unit by making this request in writing
to the Trustee at the time of tender. However, no In-Kind Distribution
requests submitted during the nine business days prior to the Trust's
Mandatory Termination Date will be honored. Where possible, the Trustee
will make an In-Kind Distribution by distributing each of the Securities
in book-entry form to your bank or broker/dealer account at the
Depository Trust Company. The Trustee will subtract any customary
transfer and registration charges from your In-Kind Distribution. As a
tendering Unit holder, you will receive your pro rata number of whole
shares of the Securities that make up the portfolio, and cash from the
Capital Account equal to the fractional shares to which you are entitled.
The Trustee may sell Securities to make funds available for redemption.
If Securities are sold, the size and diversification of the Trust will
be reduced. These sales may result in lower prices than if the
Securities were sold at a different time.
Your right to redeem Units (and therefore, your right to receive
payment) may be delayed:
- - If the NYSE is closed (other than customary weekend and holiday
closings);
- - If the SEC determines that trading on the NYSE is restricted or that
an emergency exists making sale or evaluation of the Securities not
reasonably practical; or
- - For any other period permitted by SEC order.
The Trustee is not liable to any person for any loss or damage which may
result from such a suspension or postponement.
The Redemption Price.
The Redemption Price per Unit is determined by the Trustee by:
adding
1. cash in the Income and Capital Accounts not designated to purchase
Securities;
2. the aggregate underlying value of the Securities held in the Trust; and
3. dividends receivable on the Securities trading ex-dividend as of the
date of computation; and
deducting
1. any applicable taxes or governmental charges that need to be paid out
of the Trust;
2. any amounts owed to the Trustee for its advances;
3. estimated accrued expenses of the Trust, if any;
4. cash held for distribution to Unit holders of record of the Trust as
of the business day before the evaluation being made;
5. liquidation costs for foreign Securities, if any; and
6. other liabilities incurred by the Trust; and
dividing
1. the result by the number of outstanding Units of the Trust.
Any remaining deferred sales charge on the Units when you redeem them
will be deducted from your redemption proceeds. In addition, until the
earlier of six months after the Initial Date of Deposit or the end of
the initial offering period, the Redemption Price per Unit will include
estimated organization costs as set forth under "Fee Table."
Removing Securities from the Trust
The portfolio of the Trust is not managed. However, we may, but are not
required to, direct the Trustee to dispose of a Security in certain
Page 22
limited circumstances, including situations in which:
- - The issuer of the Security defaults in the payment of a declared
dividend;
- - Any action or proceeding prevents the payment of dividends;
- - There is any legal question or impediment affecting the Security;
- - The issuer of the Security has breached a covenant which would affect
the payment of dividends, the issuer's credit standing, or otherwise
damage the sound investment character of the Security;
- - The issuer has defaulted on the payment of any other of its
outstanding obligations;
- - There has been a public tender offer made for a Security or a merger
or acquisition is announced affecting a Security, and that in our
opinion the sale or tender of the Security is in the best interest of
Unit holders; or
- - The price of the Security has declined to such an extent, or such
other credit factors exist, that in our opinion keeping the Security
would be harmful to the Trust.
Except in the limited instance in which the Trust acquires Replacement
Securities, as described in "The FT Series," the Trust may not acquire
any securities or other property other than the Securities. The Trustee,
on behalf of the Trust, will reject any offer for new or exchanged
securities or property in exchange for a Security, such as those
acquired in a merger or other transaction. If such exchanged securities
or property are nevertheless acquired by the Trust, at our instruction,
they will either be sold or held in the Trust. In making the
determination as to whether to sell or hold the exchanged securities or
property we may get advice from the Portfolio Supervisor. Any proceeds
received from the sale of Securities, exchanged securities or property
will be credited to the Capital Account for distribution to Unit holders
or to meet redemption requests. The Trustee may retain and pay us or an
affiliate of ours to act as agent for the Trust to facilitate selling
Securities, exchanged securities or property from the Trust. If we or
our affiliate act in this capacity, we will be held subject to the
restrictions under the Investment Company Act of 1940, as amended.
The Trustee may sell Securities designated by us, or, absent our
direction, at its own discretion, in order to meet redemption requests
or pay expenses. In designating Securities to be sold, we will try to
maintain the proportionate relationship among the Securities. If this is
not possible, the composition and diversification of the Trust may be
changed. To get the best price for the Trust we may specify minimum
amounts (generally 100 shares) in which blocks of Securities are to be
sold. We may consider sales of units of unit investment trusts we
sponsor when we make recommendations to the Trustee as to which
broker/dealers they select to execute the Trust's portfolio
transactions, or when acting as agent for the Trust in acquiring or
selling Securities on behalf of the Trust.
Amending or Terminating the Indenture
Amendments. The Indenture may be amended by us and the Trustee without
your consent:
- - To cure ambiguities;
- - To correct or supplement any defective or inconsistent provision;
- - To make any amendment required by any governmental agency; or
- - To make other changes determined not to be materially adverse to your
best interests (as determined by us and the Trustee).
Termination. As provided by the Indenture, the Trust will terminate on
the Mandatory Termination Date as stated in the "Summary of Essential
Information." The Trust may be terminated earlier:
- - Upon the consent of 100% of the Unit holders;
- - If the value of the Securities owned by the Trust as shown by any
evaluation is less than the lower of $2,000,000 or 20% of the total
value of Securities deposited in the Trust during the initial offering
period ("Discretionary Liquidation Amount"); or
- - In the event that Units of the Trust not yet sold aggregating more
than 60% of the Units of such Trust are tendered for redemption by
underwriters, including the Sponsor.
Prior to termination, the Trustee will send written notice to all Unit
holders which will specify how you should tender your certificates, if
any, to the Trustee. If the Trust is terminated due to this last reason,
we will refund your entire transactional sales charge; however,
termination of the Trust before the Mandatory Termination Date for any
other stated reason will result in all remaining unpaid deferred sales
charges on your Units being deducted from your termination proceeds. For
various reasons, the Trust may be reduced below the Discretionary
Page 23
Liquidation Amount and could therefore be terminated before the
Mandatory Termination Date.
Unless terminated earlier, the Trustee will begin to sell Securities in
connection with the termination of the Trust during the period beginning
nine business days prior to, and no later than, the Mandatory
Termination Date. We will determine the manner and timing of the sale of
Securities. Because the Trustee must sell the Securities within a
relatively short period of time, the sale of Securities as part of the
termination process may result in a lower sales price than might
otherwise be realized if such sale were not required at this time.
If you own at least 2,500 Units of the Trust the Trustee will send you a
form at least 30 days prior to the Mandatory Termination Date which will
enable you to receive an In-Kind Distribution (reduced by customary
transfer and registration charges) rather than the typical cash
distribution. See "Tax Status" for additional information. You must
notify the Trustee at least ten business days prior to the Mandatory
Termination Date if you elect this In-Kind Distribution option. If you
do not elect to participate in the In-Kind Distribution option, you will
receive a cash distribution from the sale of the remaining Securities,
along with your interest in the Income and Capital Accounts, within a
reasonable time after the Trust is terminated. Regardless of the
distribution involved, the Trustee will deduct from the Trust any
accrued costs, expenses, advances or indemnities provided for by the
Indenture, including estimated compensation of the Trustee and costs of
liquidation and any amounts required as a reserve to pay any taxes or
other governmental charges.
Information on Gruntal & Co., L.L.C.,
the Sponsor, Trustee and Evaluator
Gruntal & Co., L.L.C.
Gruntal & Co., L.L.C. is a full-service investment bank headquartered at
One Liberty Plaza in New York, New York. Established in 1880, Gruntal
has a proud history of client service, financial stability and growth.
Today, Gruntal has over 2,100 employees in 29 offices across the United
States. The scope of Gruntal's business spans a broad range of financial
services including investment banking, research, trading, asset
management and brokerage services to individuals, institutions and
corporations worldwide. The Trust's portfolio was carefully evaluated by
Jeffrey J. Kraws, Gruntal's Managing Director of the Healthcare Research
Group. Mr. Kraws provides research coverage on large-cap pharmaceutical,
drug delivery, emerging pharmaceutical and drug distribution/supply
companies, as well as nutraceuticals. He has been tracking these
industries for over a decade and possesses significant analytic and
hands-on experience.
The Sponsor.
We, Nike Securities L.P., specialize in the underwriting, trading and
wholesale distribution of unit investment trusts under the "First Trust"
brand name and other securities. An Illinois limited partnership formed
in 1991, we act as Sponsor for successive series of:
- - The First Trust Combined Series
- - FT Series (formerly known as The First Trust Special Situations Trust)
- - The First Trust Insured Corporate Trust
- - The First Trust of Insured Municipal Bonds
- - The First Trust GNMA
First Trust introduced the first insured unit investment trust in 1974.
To date we have deposited more than $27 billion in First Trust unit
investment trusts. Our employees include a team of professionals with
many years of experience in the unit investment trust industry.
We are a member of the National Association of Securities Dealers, Inc.
and Securities Investor Protection Corporation. Our principal offices
are at 1001 Warrenville Road, Lisle, Illinois 60532; telephone number
(630) 241-4141. As of December 31, 1999, the total partners' capital of
Nike Securities L.P. was $19,881,035 (audited).
This information refers only to us and not to the Trust or to any series
of the Trust or to any other dealer. We are including this information
only to inform you of our financial responsibility and our ability to
carry out our contractual obligations. We will provide more detailed
financial information on request.
Code of Ethics. The Sponsor and the Trust have adopted a code of ethics
requiring the Sponsor's employees who have access to information on
Trust transactions to report personal securities transactions. The
purpose of the code is to avoid potential conflicts of interest and to
prevent fraud, deception or misconduct with respect to the Trust.
Page 24
The Trustee.
The Trustee is The Chase Manhattan Bank, with its principal executive
office located at 270 Park Avenue, New York, New York 10017 and its unit
investment trust office at 4 New York Plaza, 6th Floor, New York, New
York, 10004-2413. If you have questions regarding the Trust, you may
call the Customer Service Help Line at 1-800-682-7520. The Trustee is
supervised by the Superintendent of Banks of the State of New York, the
Federal Deposit Insurance Corporation and the Board of Governors of the
Federal Reserve System.
The Trustee has not participated in selecting the Securities; it only
provides administrative services.
Limitations of Liabilities of Sponsor and Trustee.
Neither we nor the Trustee will be liable for taking any action or for
not taking any action in good faith according to the Indenture. We will
also not be accountable for errors in judgment. We will only be liable
for our own willful misfeasance, bad faith, gross negligence (ordinary
negligence in the Trustee's case) or reckless disregard of our
obligations and duties. The Trustee is not liable for any loss or
depreciation when the Securities are sold. If we fail to act under the
Indenture, the Trustee may do so, and the Trustee will not be liable for
any action it takes in good faith under the Indenture.
The Trustee will not be liable for any taxes or other governmental
charges or interest on the Securities which the Trustee may be required
to pay under any present or future law of the United States or of any
other taxing authority with jurisdiction. Also, the Indenture states
other provisions regarding the liability of the Trustee.
If we do not perform any of our duties under the Indenture or are not
able to act or become bankrupt, or if our affairs are taken over by
public authorities, then the Trustee may:
- - Appoint a successor sponsor, paying them a reasonable rate not more
than that stated by the SEC,
- - Terminate the Indenture and liquidate the Trust, or
- - Continue to act as Trustee without terminating the Indenture.
The Evaluator.
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532.
The Trustee, Sponsor and Unit holders may rely on the accuracy of any
evaluation prepared by the Evaluator. The Evaluator will make
determinations in good faith based upon the best available information,
but will not be liable to the Trustee, Sponsor or Unit holders for
errors in judgment.
Other Information
Legal Opinions.
Our counsel is Chapman and Cutler, 111 W. Monroe St., Chicago, Illinois,
60603. They have passed upon the legality of the Units offered hereby
and certain matters relating to federal tax law. Carter, Ledyard &
Milburn acts as the Trustee's counsel, as well as special New York tax
counsel for the Trust.
Experts.
Ernst & Young LLP, independent auditors, have audited the Trust's
statement of net assets, including the schedule of investments, at the
opening of business on the Initial Date of Deposit, as set forth in
their report. We've included the Trust's statement of net assets,
including the schedule of investments, in the prospectus and elsewhere
in the registration statement in reliance on Ernst & Young LLP's report,
given on their authority as experts in accounting and auditing.
Supplemental Information.
If you write or call the Trustee, you will receive free of charge
supplemental information about this Series, which has been filed with
the SEC and to which we have referred throughout. This information
states more specific details concerning the nature, structure and risks
of this product.
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Page 27
FIRST TRUST (R)
Healthcare Innovations 2001 Portfolio
FT 488
GRUNTAL & CO., L.L.C.
One Liberty Plaza, 16th Floor
New York, NY 10006-1487
(212) 820-8200
1-800-223-7634
Trustee:
THE CHASE MANHATTAN BANK
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
24-Hour Pricing Line:
1-800-446-0132
This prospectus contains information relating to Healthcare Innovations
2001 Portfolio, but does not contain all of the information about this
investment company as filed with the Securities and Exchange Commission
in Washington, D.C. under the:
- - Securities Act of 1933 (file no. 333-52692) and
- - Investment Company Act of 1940 (file no. 811-05903)
Information about the Trust, including its Code of Ethics, can be
reviewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington D.C. Information regarding the operation of
the Commission's Public Reference Room may be obtained by calling the
Commission at
1-202-942-8090.
Information about the Trust is available on the EDGAR Database on the
Commission's Internet site at
http://www.sec.gov.
To obtain copies at prescribed rates -
Write: Public Reference Section of the Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0102
e-mail address: publicinfo@sec.gov
January __, 2001
PLEASE RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE
Page 28
First Trust (R)
The FT Series
Information Supplement
This Information Supplement provides additional information concerning
the structure, operations and risks of the unit investment trust
contained in FT 488 not found in the prospectus for the Trust. This
Information Supplement is not a prospectus and does not include all of
the information you should consider before investing in the Trust. This
Information Supplement should be read in conjunction with the prospectus
for the Trust in which you are considering investing.
This Information Supplement is dated January __, 2001. Capitalized terms
have been defined in the prospectus.
Table of Contents
Risk Factors
Securities 1
Dividends 1
Foreign Issuers 1
Concentration
Healthcare 2
Risk Factors
Securities. 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 Securities or
the general condition of the relevant stock market may worsen, and the
value of the 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. Both U.S. and foreign
markets have experienced substantial volatility and significant declines
recently as a result of certain or all of these factors.
Dividends. 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. 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.
Foreign Issuers. Since certain of the Securities in the Trust consist of
securities of foreign issuers, an investment in the Trust involves
certain investment risks that are different in some respects from an
investment in a trust which invests entirely in the securities of
domestic issuers. These investment risks include future political or
governmental restrictions which might adversely affect the payment or
receipt of payment of dividends on the relevant Securities, the
possibility that the financial condition of the issuers of the
Securities may become impaired or that the general condition of the
relevant stock market may worsen (both of which would contribute
directly to a decrease in the value of the Securities and thus in the
value of the Units), the limited liquidity and relatively small market
capitalization of the relevant securities market, expropriation or
confiscatory taxation, economic uncertainties and foreign currency
devaluations and fluctuations. In addition, for foreign issuers that are
not subject to the reporting requirements of the Securities Exchange Act
of 1934, there may be less publicly available information than is
available from a domestic issuer. Also, foreign issuers are not
necessarily subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those
applicable to domestic issuers. The securities of many foreign issuers
are less liquid and their prices more volatile than securities of
comparable domestic issuers. In addition, fixed brokerage commissions
and other transaction costs on foreign securities exchanges are
generally higher than in the United States and there is generally less
government supervision and regulation of exchanges, brokers and issuers
in foreign countries than there is in the United States. However, due to
the nature of the issuers of the Securities selected for the Trust, the
Sponsor believes that adequate information will be available to allow
the Supervisor to provide portfolio surveillance for the Trust.
Page 1
Securities issued by non-U.S. issuers generally pay dividends in foreign
currencies and are principally traded in foreign currencies. Therefore,
there is a risk that the U.S. dollar value of these securities will vary
with fluctuations in the U.S. dollar foreign exchange rates for the
various Securities.
On the basis of the best information available to the Sponsor at the
present time, none of the Securities in the Trust are subject to
exchange control restrictions under existing law which would materially
interfere with payment to the Trust of dividends due on, or proceeds
from the sale of, the Securities. However, there can be no assurance
that exchange control regulations might not be adopted in the future
which might adversely affect payment to the Trust. The adoption of
exchange control regulations and other legal restrictions could have an
adverse impact on the marketability of international securities in the
Trust and on the ability of the Trust to satisfy its obligation to
redeem Units tendered to the Trustee for redemption. In addition,
restrictions on the settlement of transactions on either the purchase or
sale side, or both, could cause delays or increase the costs associated
with the purchase and sale of the foreign Securities and correspondingly
could affect the price of the Units.
Investors should be aware that it may not be possible to buy all
Securities at the same time because of the unavailability of any
Security, and restrictions applicable to the Trust relating to the
purchase of a Security by reason of the federal securities laws or
otherwise.
Foreign securities generally have not been registered under the
Securities Act of 1933 and may not be exempt from the registration
requirements of such Act. Sales of non-exempt Securities by the Trust in
the United States securities markets are subject to severe restrictions
and may not be practicable. Accordingly, sales of these Securities by
the Trust will generally be effected only in foreign securities markets.
Although the Sponsor does not believe that the Trust will encounter
obstacles in disposing of the Securities, investors should realize that
the Securities may be traded in foreign countries where the securities
markets are not as developed or efficient and may not be as liquid as
those in the United States. The value of the Securities will be
adversely affected if trading markets for the Securities are limited or
absent.
Concentration
Healthcare. An investment in Units of the Trust should be made with an
understanding of the problems and risks such an investment may entail.
The Trust is considered to be concentrated in common stocks of companies
involved in advanced medical devices and instruments, drugs and biotech,
healthcare/managed care, hospital management/health services and medical
supplies which have potential risks unique to their sector of the
healthcare field. These companies are subject to governmental regulation
of their products and services, a factor which could have a significant
and possibly unfavorable effect on the price and availability of such
products or services. Furthermore, such companies face the risk of
increasing competition from new products or services, generic drug
sales, the termination of patent protection for drug or medical supply
products and the risk that technological advances will render their
products obsolete. The research and development costs of bringing a drug
to market are substantial, and include lengthy governmental review
processes with no guarantee that the product will ever come to market.
Many of these companies may have losses and may not offer certain
products for several years. Such companies may also have persistent
losses during a new product's transition from development to production,
and revenue patterns may be erratic. In addition, healthcare facility
operators may be affected by events and conditions including among other
things, demand for services, the ability of the facility to provide the
services required, physicians' confidence in the facility, management
capabilities, competition with other hospitals, efforts by insurers and
governmental agencies to limit rates, legislation establishing state
rate-setting agencies, expenses, government regulation, the cost and
possible unavailability of malpractice insurance and the termination or
restriction of governmental financial assistance, including that
associated with Medicare, Medicaid and other similar third party payor
programs.
As the population of the United States ages, the companies involved in
the healthcare field will continue to search for and develop new drugs,
medical products and medical services through advanced technologies and
diagnostics. On a worldwide basis, such companies are involved in the
development and distributions of drugs, vaccines, medical products and
medical services. These activities may make the healthcare and medical
services sector very attractive for investors seeking the potential for
growth in their investment portfolio. However, there are no assurances
that the Trust's objectives will be met.
Legislative proposals concerning healthcare are proposed in Congress
from time to time. These proposals span a wide range of topics,
including cost and price controls (which might include a freeze on the
prices of prescription drugs), national health insurance, incentives for
competition in the provision of healthcare services, tax incentives and
penalties related to healthcare insurance premiums and promotion of pre-
paid healthcare plans. The Sponsor is unable to predict the effect of
any of these proposals, if enacted, on the issuers of Securities in the
Trust.
Page 2
MEMORANDUM
Re: FT 488
The only difference of consequence (except as described
below) between FT 486, which is the current fund, and FT 488, the
filing of which this memorandum accompanies, is the change in the
series number. The list of securities comprising the Fund, the
evaluation, record and distribution dates and other changes
pertaining specifically to the new series, such as size and
number of Units in the Fund and the statement of condition of the
new Fund, will be filed by amendment.
1940 ACT
FORMS N-8A AND N-8B-2
These forms were not filed, as the Form N-8A and Form N-8B-2
filed in respect of Templeton Growth and Treasury Trust, Series 1
and subsequent series (File No. 811-05903) related also to the
subsequent series of the Fund.
1933 ACT
PROSPECTUS
The only significant changes in the Prospectus from the FT
486 Prospectus relate to the series number and size and the date
and various items of information which will be derived from and
apply specifically to the securities deposited in the Fund.
CONTENTS OF REGISTRATION STATEMENT
ITEM A Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Broker's Fidelity
Bond, in the total amount of $1,000,000, the insurer
being National Union Fire Insurance Company of
Pittsburgh.
ITEM B This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Prospectus
The signatures
Exhibits
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, FT 488 has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Village of Lisle
and State of Illinois on January 17, 2001.
FT 488
(Registrant)
By: NIKE SECURITIES L.P.
(Depositor)
By Robert M. Porcellino
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE* DATE
David J. Allen Sole Director of
Nike Securities January 17, 2001
Corporation, the
General Partner of
Nike Securities L.P. Robert M. Porcellino
Attorney-in-Fact**
___________________________
* The title of the person named herein represents his capacity
in and relationship to Nike Securities L.P., the Depositor.
** An executed copy of the related power of attorney was filed
with the Securities and Exchange Commission in connection
with Amendment No. 1 to form S-6 of The First Trust Combined
Series 258 (File No. 33-63488) and the same is hereby
incorporated by this reference.
S-2
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 ERNST & YOUNG LLP
The consent of Ernst & Young LLP to the use of its name and
to the reference to such firm in the Prospectus included in this
Registration Statement will be filed by amendment.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement is
filed as Exhibit 4.1 to the Registration Statement.
S-3
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 Nike
Financial Advisory Services L.P. as Portfolio Supervisor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-43693] filed on behalf of The First Trust
Special Situations Trust, Series 22).
1.1.1* Form of Trust Agreement for FT 488 among Nike Securities
L.P., as Depositor, The Chase Manhattan Bank, as Trustee
and First Trust Advisors L.P., as Evaluator and 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).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by
reference).
2.2 Copy of Code of Ethics (incorporated by reference to
Amendment No. 1 to form S-6 [File No. 333-31176] filed on behalf
of FT 415).
3.1* Opinion of counsel as to legality of Securities being
registered.
S-4
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 First Trust Advisors 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.
33-63488] filed on behalf of The First Trust Combined
Series 258).
___________________________________
* To be filed by amendment.
S-5