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 292
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 17, 1998
Energy Growth Trust, Series 5
Financial Services Growth Trust, Series 6
Pharmaceutical Growth Trust, Series 6
REIT Growth & Income Trust, Series 3
Technology Growth Trust, Series 9
The Trusts. FT 292 consists of the underlying separate unit investment
trusts set forth above. The various trusts are sometimes collectively
referred to herein as the "Trusts" and each individually as a "Trust."
The objective of each Trust is to provide for potential capital
appreciation by investing the Trust's portfolio in common stocks (the
"Equity Securities") of companies represented by each Trust's specific
sector or investment focus. See "Schedule of Investments" for each
Trust. Each Trust has a mandatory termination date ("Mandatory
Termination Date" or "Trust Ending Date") as set forth under "Summary of
Essential Information" for each Trust. There is, of course, no guarantee
that the objective of the Trusts will be achieved.
Each Unit of a Trust represents an undivided fractional interest in all
the Equity Securities deposited in such Trust. The Equity Securities
deposited in each Trust's portfolio have no fixed maturity date and the
value of these underlying Equity Securities will fluctuate with changes
in the values of stocks in general. See "Portfolio."
The Sponsor may, from time to time during a period of up to
approximately 360 days after the Initial Date of Deposit, deposit
additional Equity Securities or cash (including a letter of credit) with
instructions to purchase additional Equity Securities in the Trusts.
Such deposits of additional Equity Securities will be done in such a
manner that the original proportionate relationship amongst the
individual issues of the Equity Securities in each Trust shall be
maintained. Any deposit by the Sponsor of additional Equity Securities,
or the purchase of additional Equity Securities pursuant to a cash
deposit, will duplicate, as nearly as is practicable, the original
proportionate relationship established on the Initial Date of Deposit,
and not the actual proportionate relationship on the subsequent date of
deposit, since the two may differ. Any such difference may be due to the
sale, redemption or liquidation of any Equity Securities deposited in
the Trusts on the Initial, or any subsequent, Date of Deposit. See "What
is the FT Series?" and "Rights of Unit Holders-How May Equity Securities
be Removed from a Trust?"
Public Offering Price. The Public Offering Price per Unit of each Trust
during the initial offering period is equal to the aggregate underlying
value of the Equity Securities in such Trust (generally determined by
the closing sale prices of listed Equity Securities and the ask prices
of over-the-counter traded Equity Securities) plus or minus a pro rata
share of cash, if any, in the Capital and Income Accounts of such
Trust, plus an initial sales charge equal to the difference between the
maximum sales charge of ___% of the Public Offering Price and the
maximum remaining deferred sales charge, initially $___ per Unit,
divided by the
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE
ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
First Trust (registered trademark)
1-800-621-9533
The date of this Prospectus is _____, 1999
Page 1
number of Units of a Trust outstanding. Commencing on _____, 1999, and
on the twentieth day of each month thereafter (or if such date is not a
business day, on the preceding business day) through _____, 1999, a
deferred sales charge of $___ will be assessed per Unit per month. Units
purchased subsequent to the initial deferred sales charge payment but
still during the initial offering period will be subject to the initial
sales charge and the remaining deferred sales charge payments not yet
collected. The deferred sales charge will be paid from funds in the
Capital Account, if sufficient, or from the periodic sale of Equity
Securities. The total maximum sales charge assessed to Unit holders on a
per Unit basis will be ___% of the Public Offering Price (equivalent to
___% of the net amount invested, exclusive of the deferred sales
charge). A pro rata share of accumulated dividends, if any, in the
Income Account of a Trust is included in the Public Offering Price. In
addition, a portion of the Public Offering Price on Units purchased
prior to the earlier of six months after the Initial Date of Deposit or
the end of the initial offering period also consists of Equity
Securities in an amount sufficient to pay for all or a portion of the
costs incurred in establishing the Trusts. The organizational and
offering costs will be deducted from the assets of each Trust as of the
earlier of six months after the Initial Date of Deposit or the end of
the initial offering period. Upon completion of the deferred sales
charge period, the secondary market Public Offering Price per Unit for a
Trust will not include deferred payments, but will instead include only
a one-time initial sales charge of ___% of the Public Offering Price
(equivalent to ___% of the net amount invested), which will be reduced
by 1/2 of 1% on each _____, commencing _____, 1999 to a minimum sales
charge of ___%. The minimum amount which an investor may purchase of a
Trust is $1,000 ($500 for Individual Retirement Accounts or other
retirement plans). The sales charge of a Trust is reduced on a graduated
scale for sales involving at least $50,000. See "Public Offering-How is
the Public Offering Price Determined?"
UNITS OF THE TRUSTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY BANK, AND UNITS ARE NOT FEDERALLY INSURED OR OTHERWISE PROTECTED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION AND INVOLVE INVESTMENT RISK
INCLUDING LOSS OF PRINCIPAL.
Dividend and Capital Distributions. Distributions of dividends and
capital, if any, received by a Trust will be paid on the Income
Distribution Dates to Unit holders of record on the preceding Income
Distribution Record Date as set forth in the "Summary of Essential
Information" for each Trust. Distributions of funds in the Capital
Account, if any, will be made at least annually in December of each
year. Any distribution of income and/or capital will be net of the
expenses of the respective Trust. See "What is the Federal Tax Status of
Unit Holders?" Unit holders may elect to have distributions of income or
capital, or both, reinvested into additional Units of their respective
Trust subject only to any remaining deferred sales charge. Additionally,
upon termination of the Trusts, the Trustee will distribute, upon
surrender of Units for redemption, to each Unit holder his or her pro
rata share of a Trust's assets, less expenses, in the manner set forth
under "Rights of Unit Holders-How are Income and Capital Distributed?"
Secondary Market for Units. After the initial offering period, while
under no obligation to do so, the Sponsor intends to maintain a market
for Units of the Trusts and offer to repurchase such Units at prices
which are based on the aggregate underlying value of Equity Securities
in such Trusts (generally determined by the closing sale prices of
listed Equity Securities and the bid prices of over-the-counter traded
Equity Securities) plus or minus cash, if any, in the Capital and Income
Accounts of such Trusts. If a secondary market is maintained during the
initial offering period, the prices at which Units will be repurchased
will also be based upon the aggregate underlying value of the Equity
Securities in the Trusts (generally determined by the closing sale
prices of listed Equity Securities and the ask prices of over-the-
counter traded Equity Securities) plus or minus cash, if any, in the
Capital and Income Accounts of such Trusts. If a secondary market is not
maintained, a Unit holder may redeem Units through redemption at prices
based upon the aggregate underlying value of the Equity Securities in a
Trust (generally determined by the closing sale prices of listed Equity
Securities and either the ask prices (during the initial offering
period) or the bid prices (subsequent to the initial offering period) of
over-the-counter traded Equity Securities) plus or minus a pro rata
share of cash, if any, in the Capital and Income Accounts of a Trust. A
Unit holder tendering 1,000 Units or more of a Trust for redemption may
request a distribution of shares of Equity Securities (reduced by
customary transfer and registration charges) (an "In-Kind Distribution")
in lieu of payment in cash. See "Rights of Unit Holders-How May Units be
Redeemed?" Any deferred sales charge remaining on Units at the time of
their sale or redemption will be collected at that time. See "Rights of
Unit Holders-How May Units be Redeemed?"
Page 2
Termination. Commencing no later than the Mandatory Termination Date,
Equity Securities will begin to be sold as prescribed by the Sponsor.
The Trustee will provide written notice of any termination of the Trusts
to Unit holders which will specify when Unit holders may surrender their
certificates for cancellation and will include with such notice a form
to enable Unit holders to elect an In-Kind Distribution if such Unit
holder owns at least 1,000 Units of a Trust, rather than to receive
payment in cash for such Unit holder's pro rata share of the amounts
realized upon the disposition by the Trustee of Equity Securities. To be
effective, the election form, together with surrendered certificates and
other documentation required by the Trustee, must be returned to the
Trustee at least ten business days prior to the Mandatory Termination
Date. Unit holders not electing a distribution of shares of Equity
Securities will receive a cash distribution within a reasonable time
after a Trust is terminated. See "Rights of Unit Holders-How are Income
and Capital Distributed?" and "Other Information-How May the Indenture
be Amended or Terminated?"
Risk Factors. An investment in a Trust should be made with an
understanding of the risks associated therewith, including, among other
factors, the possible deterioration of either the financial condition of
the issuers of the Equity Securities or the general condition of the
stock market, changes in interest rates and economic recession.
Volatility in the market price of the Equity Securities in a Trust also
changes the value of the Units of the Trusts. Unit holders tendering
Units for redemption during periods of market volatility may receive
redemption proceeds which are more or less than they paid for the Units.
The Trusts' portfolios are not managed and Equity Securities will not be
sold by the Trusts regardless of market fluctuations, although certain
Equity Securities may be sold under certain limited circumstances. For
further information concerning these risk factors as well as a
discussion of additional risks specific to each Trust, see "What are the
Equity Securities?-Risk Factors."
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-_____, 1999
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
Financial
Services Pharmaceutical
Energy Growth Growth Trust Growth Trust
General Information Trust, Series 5 Series 6 Series
_____________ ___________ ____________
Initial Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/ 1/ 1/
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities
in Portfolio (2) $ $ $
Aggregate Offering Price Evaluation of Equity Securities per Unit $ $ $
Maximum Sales Charge of ___% of the Public Offering Price
per Unit (___% of the net amount invested, exclusive
of the deferred sales charge) (3) $ $ $
Less Deferred Sales Charge per Unit $ (___) $ (___) $ (___)
Public Offering Price per Unit (3) $ $ $
Sponsor's Initial Repurchase Price per Unit (4) $ $ $
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less deferred sales charge) (4) $ $ $
Cash CUSIP Number
Reinvestment CUSIP Number
Security Code
Trustee's Annual Fee per Unit outstanding $ ___ $ ___ $ ___
Evaluator's Annual Fee per Unit outstanding (5) $ ___ $ ___ $ ___
Maximum Supervisory Fee per Unit outstanding (6) $ ___ $ ___ $ ___
Estimated Organizational and Offering Costs per Unit (7) $ .0225 $ _____ $ .0225
First Settlement Date ____, 1999
Mandatory Termination Date ______, 20__
Discretionary Liquidation Amount A Trust may be terminated if the value thereof is less than the lower of
$2,000,000 or 20% of the total value of Equity Securities deposited in such
Trust during the initial offering period.
Income Distribution Record Date Fifteenth day of each June and December commencing _____, 1999.
Income Distribution Date (8) Last day of each June and December commencing _____, 1999.
_____________
<FN>
(1) As of the close of business on the Initial Date of Deposit, the
number of Units of a Trust may be adjusted so that the Public Offering
Price per Unit will equal approximately $10.00. Therefore, to the extent
of any such adjustment, the fractional undivided interest per Unit will
increase or decrease accordingly, from the amounts indicated above.
(2) Each listed Equity Security is valued at the last closing sale price,
or if no such price exists or if the Equity Security is not so listed,
at the closing ask price thereof.
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Table" and "Public Offering" for
additional information regarding these charges. On the Initial Date of
Deposit there will be no accumulated dividends in the Income Account.
Anyone ordering Units after such date will pay a pro rata share of any
accumulated dividends in such Income Account. The Public Offering Price
as shown reflects the value of the Equity Securities at the opening of
business on the Initial Date of Deposit and establishes the original
proportionate relationship amongst the individual securities. No sales
to investors will be executed at this price. Additional Equity
Securities will be deposited during the day of the Initial Date of
Deposit which will be valued as of 4:00 p.m. Eastern time and sold to
investors at a Public Offering Price per Unit based on this valuation.
(4) The Sponsor's Initial Repurchase Price per Unit and the Redemption
Price per Unit set forth above, until the earlier of six months after
the Initial Date of Deposit or the end of the initial offering period,
include estimated organizational and offering costs per Unit. After such
date, the Sponsor's Repurchase Price and Redemption Price per Unit will
not include such estimated organizational and offering costs. See
"Rights of Unit Holders-How May Units be Redeemed?"
(5) The Evaluator's Fee is payable to an affiliate of the Sponsor.
Evaluations for purposes of sale, purchase or redemption of Units are
made as of the close of trading (generally 4:00 p.m. Eastern time) on
the New York Stock Exchange on each day on which it is open.
(6) The Supervisory Fee is payable to an affiliate of the Sponsor. In
addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $____ per
Unit per Trust.
(7) Investors will bear all or a portion of the costs incurred in
organizing a Trust (including costs of preparing the registration
statement, the Trust indenture and other closing documents, registering
Units with the Securities and Exchange Commission and states, the
initial audit of a Trust portfolio, legal fees and the initial fees and
expenses of the Trustee but not including the expenses incurred in the
printing of preliminary and final prospectuses, and expenses incurred in
the preparation and printing of brochures and other advertising
materials and any other selling expenses). Estimated organizational and
offering costs are included in the Public Offering Price per Unit and
will be deducted from the assets of a Trust at the earlier of six months
after the Initial Date of Deposit or the end of the initial offering
period. See "Public Offering" and "Statements of Net Assets."
(8) Distributions from the Capital Account will be made monthly payable
on the last day of the month to Unit holders of record on the fifteenth
day of such month if the amount available for distribution equals at
least $1.00 per 100 Units. Notwithstanding, distributions of funds in
the Capital Account, if any, will be made in December of each year.
</FN>
Page 4
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-_____, 1999
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
REIT Growth & Technology
Income Trust Growth Trust
General Information Series 3 Series 9
_____________ ____________
Initial Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/ 1/
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities
in Portfolio (2) $ $
Aggregate Offering Price Evaluation of Equity Securities per Unit $ $
Maximum Sales Charge of ___% of the Public Offering Price per
Unit (___% of the net amount invested, exclusive
of the deferred sales charge) (3) $ $
Less Deferred Sales Charge per Unit $ (___) $ (___)
Public Offering Price per Unit (3) $ $
Sponsor's Initial Repurchase Price per Unit (4) $ $
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less deferred sales charge) (4) $ $
Cash CUSIP Number
Reinvestment CUSIP Number
Security Code
Trustee's Annual Fee per Unit outstanding $ ___ $ ___
Evaluator's Annual Fee per Unit outstanding (5) $ ___ $ ___
Maximum Supervisory Fee per Unit outstanding (6) $ ___ $ ___
Estimated Organizational and Offering Costs per Unit (7) $ .0225 $ .0225
First Settlement Date ____, 1999
Mandatory Termination Date ______, 20__
Discretionary Liquidation Amount A Trust may be terminated if the value thereof is less than the lower of
$2,000,000 or 20% of the total value of Equity Securities deposited in such
Trust during the initial offering period.
Income Distribution Record Date Fifteenth day of each June and December commencing _____, 1999.
Income Distribution Date (8) Last day of each June and December commencing _____, 1999.
______________
<FN>
(1) As of the close of business on the Initial Date of Deposit, the
number of Units of a Trust may be adjusted so that the Public Offering
Price per Unit will equal approximately $10.00. Therefore, to the extent
of any such adjustment, the fractional undivided interest per Unit will
increase or decrease accordingly, from the amounts indicated above.
(2) Each listed Equity Security is valued at the last closing sale price,
or if no such price exists or if the Equity Security is not so listed,
at the closing ask price thereof.
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Table" and "Public Offering" for
additional information regarding these charges. On the Initial Date of
Deposit there will be no accumulated dividends in the Income Account.
Anyone ordering Units after such date will pay a pro rata share of any
accumulated dividends in such Income Account. The Public Offering Price
as shown reflects the value of the Equity Securities at the opening of
business on the Initial Date of Deposit and establishes the original
proportionate relationship amongst the individual securities. No sales
to investors will be executed at this price. Additional Equity
Securities will be deposited during the day of the Initial Date of
Deposit which will be valued as of 4:00 p.m. Eastern time and sold to
investors at a Public Offering Price per Unit based on this valuation.
(4) The Sponsor's Initial Repurchase Price per Unit and the Redemption
Price per Unit set forth above, until the earlier of six months after
the Initial Date of Deposit or the end of the initial offering period,
include estimated organizational and offering costs per Unit. After such
date, the Sponsor's Repurchase Price and Redemption Price per Unit will
not include such estimated organizational and offering costs. See
"Rights of Unit Holders-How May Units be Redeemed?"
(5) The Evaluator's Fee is payable to an affiliate of the Sponsor.
Evaluations for purposes of sale, purchase or redemption of Units are
made as of the close of trading (generally 4:00 p.m. Eastern time) on
the New York Stock Exchange on each day on which it is open.
(6) The Supervisory Fee is payable to an affiliate of the Sponsor. In
addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $____ per
Unit per Trust.
(7) Investors will bear all or a portion of the costs incurred in
organizing a Trust (including costs of preparing the registration
statement, the Trust indenture and other closing documents, registering
Units with the Securities and Exchange Commission and states, the
initial audit of a Trust portfolio, legal fees and the initial fees and
expenses of the Trustee but not including the expenses incurred in the
printing of preliminary and final prospectuses, and expenses incurred in
the preparation and printing of brochures and other advertising
materials and any other selling expenses). Estimated organizational and
offering costs are included in the Public Offering Price per Unit and
will be deducted from the assets of a Trust at the earlier of six months
after the Initial Date of Deposit or the end of the initial offering
period. See "Public Offering" and "Statements of Net Assets."
(8) Distributions from the Capital Account will be made monthly payable
on the last day of the month to Unit holders of record on the fifteenth
day of such month if the amount available for distribution equals at
least $1.00 per 100 Units. Notwithstanding, distributions of funds in
the Capital Account, if any, will be made in December of each year.
</FN>
Page 5
FEE TABLES
These Fee Tables are intended to help you to understand the costs and
expenses that you will bear directly or indirectly. See "Public
Offering" and "What are the Expenses and Charges?" Although the Trusts
have a term of approximately five years and are unit investment trusts
rather than mutual funds, this information is presented to permit a
comparison of fees.
Financial Services Pharmaceutical
Energy Growth Growth Trust Growth Trust
Trust, Series 5 Trust, Series 6 Series 6
_______________ __________________ __________________
Amount Amount Amount
per Unit per Unit per Unit
________ ________ ________
UNIT HOLDER TRANSACTION EXPENSES
Initial sales charge imposed on purchase
(as a percentage of public offering price) 1.00%(a) $ .100 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge
(as a percentage of public offering price) 3.50%(b) .350 3.50%(b) .350 3.50%(b) .350
______ ______ ______ ______ ______ ______
4.50% $ .450 4.50% $ .450 4.50% $ .450
====== ====== ====== ====== ====== ======
Maximum Sales Charge imposed on Reinvested Dividends 3.50%(c) $ .350 3.50%(c) $ .350 3.50%(c) $ .350
ORGANIZATIONAL AND OFFERING COSTS
Estimated Organizational and Offering Costs
(as a percentage of public offering price) .225%(d) $.0225 .225%(d) $.0225 .225%(d) $.0225
====== ====== ====== ====== ====== ======
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(as a percentage of average net assets)
Trustee's fee .098% $.0096 .098% $.0096 .098% $.0096
Portfolio supervision, bookkeeping, administrative
and evaluation fees .100% .0098 .100% .0098 .100% .0098
Other operating expenses .055% .0054 .055% .0054 .055% .0054
______ ______ ______ ______ ______ ______
Total .253% $.0248 %.253 $.0248 .253% $.0248
====== ====== ====== ====== ====== ======
REIT Growth Technology Growth
Trust, Series 3 Trust, Series 9
_____________________ ______________________
Amount Amount
per Unit per Unit
________ ________
UNIT HOLDER TRANSACTION EXPENSES
Initial sales charge imposed on purchase
(as a percentage of public offering price) 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge
(as a percentage of public offering price) 3.50%(b) .350 3.50%(b) .350
______ ______ ______ ______
4.50% $ .450 4.50% $ .450
====== ====== ====== ======
Maximum Sales Charge imposed on Reinvested Dividends 3.50%(c) $ .350 3.50%(c) $ .350
ORGANIZATIONAL AND OFFERING COSTS
Estimated Organizational and Offering Costs
(as a percentage of public offering price) .225%(d) $.0225 .225%(d) $.0225
====== ====== ====== ======
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(as a percentage of average net assets)
Trustee's fee .098% $.0096 .098% $.0096
Portfolio supervision, bookkeeping, administrative
and evaluation fees .100% .0098 .100% .0098
Other operating expenses .055% .0054 .055% .0054
______ ______ ______ ______
Total .253% $.0248 .253% $.0248
====== ====== ====== ======
Page 6
Examples
________
CUMULATIVE EXPENSES PAID
Energy Growth Financial Services Pharmaceutical
Trust, Series 5 Growth Trust, Series 6 Growth trust, Series 6
_________________________ _______________________ ______________________
1 Year 3 Years 5 Years 1 Year 3 Years 5 Years 1 Year 3 Years 5 Years
______ _______ _______ ______ _______ _______ ______ _______ _______
An investor would pay the following expenses
on a $1,000 investment, assuming the Trust
has an estimated operating expense ratio of
.253% and a 5% annual return on the
investment throughout the periods $50 $55 $61 $50 $55 $61 $50 $55 $61
REIT Growth Technology Growth
Trust, Series 3 Trust, Series 9
________________________ ________________________
1 Year 3 Years 5 Years 1 Year 3 Years 5 Years
______ _______ _______ ______ _______ _______
$50 $55 $61 $50 $55 $61
The examples assume reinvestment of all dividends and distributions and
utilize a 5% annual rate of return as mandated by Securities and
Exchange Commission regulations applicable to mutual funds. For purposes
of the examples, the deferred sales charge imposed on reinvestment of
dividends is not reflected until the year following payment of the
dividend; the cumulative expenses would be higher if sales charges on
reinvested dividends were reflected in the year of reinvestment. The
examples should not be considered a representation of past or future
expenses or annual rate of return; the actual expenses and annual rate
of return may be more or less than those assumed for purposes of the
examples.
______________
<FN>
(a) The Initial Sales Charge is actually the difference between the
maximum total sales charge of ___% and the maximum remaining deferred
sales charge (initially $___ per Unit) and would exceed 1.0% if the
Public Offering Price exceeds $10.00 per Unit.
(b) The actual fee is $___ per Unit per month, irrespective of purchase
or redemption price deducted monthly commencing _____, 1999 through
_____, 1999. If a Unit holder sells or redeems Units before all of these
deductions have been made, the balance of the deferred sales charge
payments remaining will be deducted from the sales or redemption
proceeds. If the Unit price exceeds $10.00 per Unit, the deferred sales
charge will be less than ___%. Units purchased subsequent to the initial
deferred sales charge payment will also be subject to the remaining
deferred sales charge payments not yet collected.
(c) Reinvested dividends will be subject only to the deferred sales
charge remaining at the time of reinvestment. See "Rights of Unit
Holders-How are Income and Capital Distributed?"
(d) Investors will bear all or a portion of the costs incurred in
organizing the Trusts (including costs of preparing the registration
statement, the Trust indenture, and other closing documents, registering
Units with the Securities and Exchange Commission and states, the
initial audit of the Trust portfolio, legal fees and the initial fees
and expenses of the Trustee). Estimated organizational and offering
costs are included in the Public Offering Price per Unit and will be
deducted from the assets of a Trust at the earlier of six months after
the Initial Date of Deposit or the end of the initial offering period.
</FN>
Page 7
ENERGY GROWTH TRUST, SERIES 5
FINANCIAL SERVICES GROWTH TRUST, SERIES 6
PHARMACEUTICAL GROWTH TRUST, SERIES 6
REIT GROWTH & INCOME TRUST, SERIES 3
TECHNOLOGY GROWTH TRUST, SERIES 9
FT 292
What is the FT Series?
FT 292 is one of a series of investment companies created by the Sponsor
under the name of the FT Series, all of which are generally similar, but
each of which is separate and is designated by a different series
number. The FT Series was previously known as The First Trust Special
Situations Trust Series. This Series consists of the underlying separate
unit investment trusts set forth above. The Trusts were created under
the laws of the State of New York pursuant to a Trust Agreement (the
"Indenture"), dated the Initial Date of Deposit, with Nike Securities
L.P. as Sponsor, The Chase Manhattan Bank as Trustee, and First Trust
Advisors L.P. as Portfolio Supervisor and Evaluator.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee
confirmations of contracts for the purchase of common stocks (the
"Equity Securities"), together with an irrevocable letter or letters of
credit of a financial institution in an amount at least equal to the
purchase price of such securities. In exchange for the deposit of
securities or contracts to purchase securities in the Trusts, the
Trustee delivered to the Sponsor documents evidencing the entire
ownership of the Trusts.
Energy Growth Trust, Series 5
The objective of the Energy Growth Trust, Series 6 (the "Energy Growth
Trust") is to provide investors with the potential for above-average
capital appreciation through an investment in a diversified portfolio of
common stocks of energy companies which the Sponsor believes are
positioned to take advantage of the world's increasing demand for
energy. The Energy Growth Trust's portfolio is diversified across many
energy sectors, including integrated oil, oilfield services and
equipment, oil and gas production, and natural gas. The companies
selected for the Energy Growth Trust have been researched and evaluated
using database screening techniques, fundamental analysis and the
judgment of the Sponsor's research analysts. To help reduce risk, the
Energy Growth Trust avoids small companies, newly-issued stocks and
stocks with little or no earnings. In general, the Sponsor believes the
companies selected for the Energy Growth Trust have above-average growth
prospects for both sales and earnings and lower-than-average levels of
debt.
Worldwide demand for energy continues to increase daily, driven
primarily by the rapid developments in newly-industrialized countries in
Asia, Eastern Europe and Latin America. Energy prices are expected to
rise by decade's end because current energy supplies are being drained
by the world's demands for energy. By the year 2020, it is projected
that the world will consume three times as much energy as it did 25
years ago. Most of the added consumption is attributed to the developing
countries of Asia, where it is estimated that their consumption will
exceed all of North America by 36% in the year 2020. Industry
overcapacity and declining energy prices in the 1980s forced energy
companies to become more competitive under difficult conditions. As a
result, energy companies have greatly improved their operating
efficiencies through cost cutting, consolidation and new technologies as
discussed below:
- - Consolidation and the divestiture of non-core assets has reduced
industry capacity and allowed companies to focus on their core operations.
- - New technologies are expected to lead to the discovery of
additional energy reserves and lower the cost of developing these
reserves. Given these measures, energy companies are positioned for
significantly improved profitability when energy prices increase, as
analysts expect.
See "Schedule of Investments" and "What are the Equity Securities?-Risk
Factors" for the Energy Growth Trust. There is, however, no assurance
that the objective of the Energy Growth Trust will be achieved.
Page 8
Financial Services Growth Trust, Series 6
The objective of the Financial Services Growth Trust, Series 6 (the
"Financial Services Growth Trust") is to provide for the potential for
above-average capital appreciation through an investment in a
diversified portfolio of common stocks of companies which are money
center banks, major regional banks, financial and investment service
providers and insurance companies. The companies selected for the
Financial Services Growth Trust have been researched and evaluated using
database screening techniques, fundamental analysis and the judgment of
the Sponsor's research analysts. To help reduce risk, the Financial
Services Growth Trust avoids small companies, newly-issued stocks and
stocks with little or no earnings.
The financial services industry continues to evolve as banks and
insurers expand their businesses through innovative products and
services. The Sponsor believes the companies in the Financial Services
Growth Trust are ideally positioned to benefit from the rapid changes in
this industry. The following factors support the positive outlook for
financial services companies:
- - The banking, financial services and insurance industries continue
to experience significant consolidation.
- - Given their high level of profitability and earnings growth, the
companies included in the portfolio trade at attractive valuation levels
relative to the S&P 500 and their historic trading range.
- - Baby boomers are becoming heirs and heiresses. Some studies
indicate that more than $1 trillion may transfer from one American
generation to another before the year 2000.
- - Liquid financial assets of U.S. households rose to over $10.9
billion in 1995.
It is important to note that the financial institutions industry is
subject to the adverse effect of volatile interest rates, economic
recession, increased competition from new entrants in the field and
potential increased regulation. See "Schedule of Investments" and "What
are the Equity Securities?-Risk Factors" for the Financial Services
Growth Trust. There is, however, no assurance that the objective of the
Financial Services Growth Trust will be achieved.
Pharmaceutical Growth Trust, Series 6
The objective of the Pharmaceutical Growth Trust, Series 6 (the
"Pharmaceutical Growth Trust") is to provide investors with the
potential for above-average capital appreciation through an investment
in a diversified portfolio of common stocks issued by pharmaceutical
companies. The companies selected for the Pharmaceutical Growth Trust
have been researched and evaluated using database screening techniques,
fundamental analysis, and the judgment of the Sponsor's research
analysts.
The pharmaceutical industry continues to evolve, and as a result,
pharmaceutical companies need to keep pace with this constant change, in
order to be successful. The Sponsor believes that the companies selected
for the Pharmaceutical Growth Trust are leaders within this dynamic
industry and are ideally positioned for growth.
Several factors support this belief. First, in 1998, pharmaceutical
companies are expected to spend 19.6% of their domestic revenues on the
research and development of new medications. Research-based
pharmaceutical companies continue to invest record-setting amounts on
research and development. Spending in this area is expected to increase
by 10.7% in 1998 to a new record level of $20.6 billion. Second, as in
many other industries, consolidation and cost cutting have resulted in
more stabilized profit margins. Finally, companies are improving unit
volume growth by working more closely with managed care providers who
frequently see pharmaceuticals as a cost-effective alternative to other
more expensive treatments.
It is important to note that companies engaged in the pharmaceutical
industry are subject to fierce competition, stringent government
regulation and the risk that their products and services are subject to
rapid obsolescence. The Sponsor believes this above-average level of
risk and volatility is more than offset by the potential for above-
average returns.
See "Schedule of Investments" and "What are the Equity Securities?-Risk
Factors" for the Pharmaceutical Growth Trust. There is, however, no
assurance that the objective of the Pharmaceutical Growth Trust will be
achieved.
REIT Growth & Income Trust, Series 3
The objective of the REIT Growth & Income Trust, Series 3 (the "REIT
Page 9
Growth & Income Trust") is to provide investors with the potential for
above-average capital appreciation through an investment in a
diversified portfolio of common stocks issued by real estate investment
trusts.
See "Schedule of Investments" and "What are the Equity Securities?-Risk
Factors" for the REIT Growth & Income Trust. There is, however, no
assurance that the objective of the REIT Growth & Income Trust will be
achieved.
Technology Growth Trust, Series 9
The objective of the Technology Growth Trust, Series 9 (the "Technology
Growth Trust") is to provide investors with the potential for above-
average capital appreciation through an investment in a professionally-
selected, diversified portfolio of common stocks issued by companies
involved in the manufacturing, sales or servicing of computers, computer
networking equipment, software, semiconductor equipment and
semiconductors. The Trust employs a "buy and hold" philosophy
encouraging investors to be disciplined and patient, while looking at
the future prospects of companies, rather than focusing on short-term
performance. To help reduce high risk, the Trust avoids small market
capitalization stocks, newly-issued stocks and stocks with little or no
earnings. The companies all have market capitalizations of at least $500
million and have been publicly traded for two years or more.
The technology industry is among the fastest growing and fastest
changing industries in the world. The Sponsor believes that the industry
will continue to grow and the companies selected for the Technology
Growth Trust have above-average growth prospects. The companies selected
for the Technology Growth Trust have been researched and evaluated using
database screening techniques, fundamental analysis, and the judgment of
the Sponsor's research analysts.
It is important to note that companies engaged in the technology
industry are subject to fierce competition and their products and
services may be subject to rapid obsolescence. The Sponsor believes the
above-average levels of risk and volatility in technology stocks are
more than offset by the potential for above-average returns.
See "Schedule of Investments" and "What are the Equity Securities?-Risk
Factors" for the Technology Growth Trust. There is, however, no
assurance that the objective of the Technology Growth Trust will be
achieved.
With the deposit of the Equity Securities on the Initial Date of
Deposit, the Sponsor established a percentage relationship between the
amounts of Equity Securities in each Trust's portfolio, as set forth
under "Schedule of Investments" for each Trust. From time to time
following the Initial Date of Deposit, the Sponsor, pursuant to the
Indenture, may create additional Units in a Trust by depositing
additional Equity Securities or cash (including a letter of credit) with
instructions to purchase additional Equity Securities in a Trust. Units
may be continuously offered for sale to the public by means of this
Prospectus, resulting in a potential increase in the outstanding number
of Units of a Trust. Any deposit by the Sponsor of additional Equity
Securities, or the purchase of additional Equity Securities pursuant to
a cash deposit, will duplicate, as nearly as is practicable, the
original proportionate relationship and not the actual proportionate
relationship on the subsequent date of deposit, since the two may
differ. Any such difference may be due to the sale, redemption or
liquidation of any of the Equity Securities deposited in a Trust on the
Initial, or any subsequent, Date of Deposit. See "Rights of Unit Holders-
How May Equity Securities be Removed from a Trust?" Since the prices of
the underlying Equity Securities will fluctuate daily, the ratio, on a
market value basis, will also change daily. The portion of Equity
Securities represented by each Unit will not change as a result of the
deposit of additional Equity Securities in a Trust. If the Sponsor
deposits cash, however, existing and new investors may experience a
dilution of their investment and a reduction in their anticipated income
because of fluctuations in the prices of the Equity Securities between
the time of the cash deposit and the purchase of the Equity Securities
and because such Trust will pay the associated brokerage fees. To
minimize this effect, the Trusts will try to purchase the Equity
Securities as close to the evaluation time as possible. The Trustee may,
from time to time, retain and pay compensation to the Sponsor (or an
affiliate of the Sponsor) to act as agent for a Trust with respect to
acquiring Equity Securities for a Trust. In acting in such capacity, the
Sponsor or its affiliate will be subject to the restrictions under the
Investment Company Act of 1940, as amended.
On the Initial Date of Deposit, each Unit of a Trust represented the
undivided fractional interest in the Equity Securities deposited in such
Page 10
Trust set forth under "Summary of Essential Information" for each Trust.
To the extent that Units of a Trust are redeemed, the aggregate value of
the Equity Securities in such Trust will be reduced and the undivided
fractional interest represented by each outstanding Unit of that Trust
will increase. However, if additional Units are issued by a Trust in
connection with the deposit of additional Equity Securities or cash by
the Sponsor, the aggregate value of the Equity Securities in that Trust
will be increased by amounts allocable to additional Units, and the
fractional undivided interest represented by each Unit of that Trust
will be decreased proportionately. See "Rights of Unit Holders-How May
Units be Redeemed?"
What are the Expenses and Charges?
With the exception of brokerage fees discussed above and bookkeeping and
other administrative services provided to each Trust, for which the
Sponsor will be reimbursed in amounts as set forth under "Summary of
Essential Information," the Sponsor will not receive any fees in
connection with its activities relating to a Trust.
First Trust Advisors L.P., an affiliate of the Sponsor, will receive an
annual supervisory fee, which is not to exceed the amount set forth
under "Summary of Essential Information," for providing portfolio
supervisory services for each Trust. Such fee is based on the number of
Units outstanding in a Trust on January 1 of each year except for the
year or years in which an initial offering period occurs in which case
the fee for a month is based on the number of Units outstanding at the
end of such month. In providing such supervisory services, the Portfolio
Supervisor may purchase research services from a variety of sources
which may include dealers of the Trusts.
Subsequent to the initial offering period, First Trust Advisors L.P., in
its capacity as the Evaluator for the Trusts, will receive a fee as
indicated in the "Summary of Essential Information."
The Trustee pays certain expenses of each Trust for which it is
reimbursed by such Trust. The Trustee will receive for its ordinary
recurring services to each Trust an annual fee set forth in each
"Summary of Essential Information." Such fee is based upon the largest
aggregate number of Units of each Trust outstanding during the calendar
year, except during the initial offering period, in which case the fee
is calculated based on the largest number of Units outstanding during
the period for which compensation is paid. For a discussion of the
services performed by the Trustee pursuant to its obligations under the
Indenture, reference is made to the material set forth under "Rights of
Unit Holders."
The Trustee's and the above described fees are payable from the Income
Account of a Trust to the extent funds are available and then from the
Capital Account of such Trust. Since the Trustee has the use of the
funds being held in the Capital and Income Accounts for payment of
expenses and redemptions and since such Accounts are noninterest-bearing
to Unit holders, the Trustee benefits thereby. Part of the Trustee's
compensation for its services to each Trust is expected to result from
the use of these funds.
Each of the above mentioned fees may be increased without approval of
the Unit holders by amounts not exceeding proportionate increases under
the category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor. In addition,
with respect to the fees payable to the Sponsor or an affiliate of the
Sponsor for providing bookkeeping and other administrative services,
supervisory services and evaluation services, such individual fees may
exceed the actual costs of providing such services for a Trust, but at
no time will the total amount received for such services rendered to all
unit investment trusts of which Nike Securities L.P. is the Sponsor in
any calendar year exceed the actual cost to the Sponsor or its affiliate
of supplying such services in such year.
The following additional charges are or may be incurred by a Trust: all
legal and annual auditing expenses of the Trustee incurred by or in
connection with its responsibilities under the Indenture; the expenses
and costs of any action undertaken by the Trustee to protect a Trust and
the rights and interests of the Unit holders; fees of the Trustee for
any extraordinary services performed under the Indenture;
indemnification of the Trustee for any loss, liability or expense
incurred by it without negligence, bad faith or willful misconduct on
its part, arising out of or in connection with its acceptance or
administration of a Trust; any offering costs incurred after the earlier
of six months after the Initial Date of Deposit or the end of the
initial offering period; indemnification of the Sponsor for any loss,
liability or expense incurred without gross negligence, bad faith or
willful misconduct in acting as Depositor of such Trust; all taxes and
Page 11
other government charges imposed upon the Securities or any part of a
Trust (no such taxes or charges are being levied or made or, to the
knowledge of the Sponsor, contemplated). The above expenses and the
Trustee's annual fee, when paid or owing to the Trustee, are secured by
a lien on each Trust. In addition, the Trustee is empowered to sell
Equity Securities in a Trust in order to make funds available to pay all
these amounts if funds are not otherwise available in the Income and
Capital Accounts of such Trust. Since the Equity Securities are all
common stocks and the income stream produced by dividend payments is
unpredictable, the Sponsor cannot provide any assurance that dividends
will be sufficient to meet any or all expenses of a Trust. As described
above, if dividends are insufficient to cover expenses, it is likely
that Equity Securities will have to be sold to meet such Trust expenses.
These sales may result in capital gains or losses to Unit holders. See
"What is the Federal Tax Status of Unit Holders?"
The Indenture requires each Trust to be audited on an annual basis at
the expense of such Trusts by independent auditors selected by the
Sponsor. So long as the Sponsor is making a secondary market for the
Units, the Sponsor is required to bear the cost of such annual audits to
the extent such cost exceeds $0.0050 per Unit. Unit holders of a Trust
covered by an audit may obtain a copy of the audited financial
statements upon request.
What is the Federal Tax Status of Unit Holders?
This is a general discussion of certain of the Federal income tax
consequences of the purchase, ownership and disposition of the Units.
The summary is limited to investors who hold the Units as "capital
assets" (generally, property held for investment) within the meaning of
Section 1221 of the Internal Revenue Code of 1986 (the "Code"). Unit
holders should consult their tax advisors in determining the Federal,
state, local and any other tax consequences of the purchase, ownership
and disposition of Units in the Trusts. For purposes of the following
discussion and opinion, it is assumed that each Equity Security is
equity for Federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor,
under existing law:
1. Each Trust is not an association taxable as a corporation for
Federal income tax purposes; each Unit holder will be treated as the
owner of a pro rata portion of each of the assets of a Trust under the
Code; and the income of each Trust will be treated as income of the Unit
holders thereof under the Code. Each Unit holder will be considered to
have received his or her pro rata share of the income derived from each
Equity Security when such income is considered to be received by a Trust.
2. Each Unit holder will be considered to have received all of the
dividends paid on his or her pro rata portion of each Equity Security
when such dividends are considered to be received by a Trust regardless
of whether such dividends are used to pay a portion of the deferred
sales charge. Unit holders will be taxed in this manner regardless of
whether distributions from such Trust are actually received by the Unit
holder.
3. Each Unit holder will have a taxable event when a Trust disposes of
an Equity Security (whether by sale, taxable exchange, liquidation,
redemption, or otherwise) or upon the sale or redemption of Units by
such Unit holder (except to the extent an In-Kind distribution of stocks
is received by such Unit holder as described below). The price a Unit
holder pays for his or her Units, generally including sales charges, is
allocated among his or her pro rata portion of each Equity Security held
by a Trust (in proportion to the fair market values thereof on the
valuation date closest to the date the Unit holder purchases his or her
Units) in order to determine the tax basis for his or her pro rata
portion of each Equity Security held by such Trust. Unit holders should
consult their own tax advisors with regard to calculation of basis. For
Federal income tax purposes, a Unit holder's pro rata portion of
dividends, as defined by Section 316 of the Code, paid by a corporation
with respect to an Equity Security held by a Trust is taxable as
ordinary income to the extent of such corporation's current and
accumulated "earnings and profits." A Unit holder's pro rata portion of
dividends paid on such Equity Security which exceed such current and
accumulated earnings and profits will first reduce a Unit holder's tax
basis in such Equity Security, and to the extent that such dividends
exceed a Unit holder's tax basis in such Equity Security shall generally
be treated as capital gain. In general, the holding period for such
capital gain will be determined by the period of time a Unit holder has
held his or her Units.
Page 12
4. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Equity Securities held by a
Trust will generally be considered a capital gain (except in the case of
a dealer or a financial institution). A Unit holder's portion of loss,
if any, upon the sale or redemption of Units or the disposition of
Equity Securities held by a Trust will generally be considered a capital
loss (except in the case of a dealer or a financial institution). Unit
holders should consult their tax advisors regarding the recognition of
such capital gains and losses for Federal income tax purposes.
Deferred Sales Charge. Generally, the tax basis of a Unit holder
includes sales charges, and such charges are not deductible. A portion
of the sales charge for the Trusts is deferred. It is possible that for
Federal income tax purposes a portion of the deferred sales charge may
be treated as interest which would be deductible by a Unit holder
subject to limitations on the deduction of investment interest. In such
a case, the non-interest portion of the deferred sales charge should be
added to the Unit holder's tax basis in his or her Units. The deferred
sales charge could cause the Unit holder's Units to be considered to be
debt-financed under Section 246A of the Code which would result in a
small reduction of the dividends-received deduction. In any case, the
income (or proceeds from redemption) a Unit holder must take into
account for federal income tax purposes is not reduced by amounts
deducted to pay the deferred sales charge. Unit holders should consult
their own tax advisors as to the income tax consequences of the deferred
sales charge.
Dividends Received Deduction. A corporation that owns Units will
generally be entitled to a 70% dividends received deduction with respect
to such Unit holder's pro rata portion of dividends received by a Trust
(to the extent such dividends are taxable as ordinary income, as
discussed above, and are attributable to domestic corporations) in the
same manner as if such corporation directly owned the Equity Securities
paying such dividends (other than corporate Unit holders, such as "S"
corporations, which are not eligible for the deduction because of their
special characteristics and other than for purposes of special taxes
such as the accumulated earnings tax and the personal holding
corporation tax). However, a corporation owning Units should be aware
that Sections 246 and 246A of the Code impose additional limitations on
the eligibility of dividends for the 70% dividends received deduction.
These limitations include a requirement that stock (and therefore Units)
must generally be held at least 46 days (as determined under Section
246(c) of the Code). Final regulations have been issued which address
special rules that must be considered in determining whether the 46-day
holding period requirement is met. Moreover, the allowable percentage of
the deduction will be reduced from 70% if a corporate Unit holder owns
certain stock (or Units) the financing of which is directly attributable
to indebtedness incurred by such corporation.
To the extent dividends received by a Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of
such dividends, since the dividends received deduction is generally
available only with respect to dividends paid by domestic corporations.
It should be noted that various legislative proposals that would affect
the dividends received deduction have been introduced. Unit holders
should consult with their tax advisors with respect to the limitations
on and possible modifications to the dividends received deduction.
Limitations on Deductibility of a Trust's Expenses by Unit Holders. Each
Unit holder's pro rata share of each expense paid by a Trust is
deductible by the Unit holder to the same extent as though the expense
had been paid directly by such Unit holder. It should be noted that as a
result of the Tax Reform Act of 1986, certain miscellaneous itemized
deductions, such as investment expenses, tax return preparation fees and
employee business expenses will be deductible by an individual only to
the extent they exceed 2% of such individual's adjusted gross income.
Unit holders may be required to treat some or all of the expenses of a
Trust as miscellaneous itemized deductions subject to this limitation.
Unit holders should consult with their tax advisors regarding the
limitations on the deductibility of Trust expenses.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by a
Trust or Disposition of Units. As discussed above, a Unit holder may
recognize taxable gain (or loss) when an Equity Security is disposed of
by a Trust or if the Unit holder disposes of a Unit. The Internal
Revenue Service Restructuring and Reform Act of 1998 (the "1998 Tax
Act") provides that for taxpayers other than corporations, net capital
gain (which is defined as net long-term capital gain over net short-term
Page 13
capital loss for the taxable year) realized from property (with certain
exclusions) is subject to a maximum marginal stated tax rate of 20% (10%
in the case of certain taxpayers in the lowest tax bracket). 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. The date on which a Unit is acquired (i.e., the "trade
date") is excluded for purposes of determining the holding period of the
Unit. The legislation is generally effective retroactively for amounts
properly taken into account on or after January 1, 1998. Capital gains
realized from assets held for one year or less are taxed at the same
rates as ordinary income.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered
into after April 30, 1993. Unit holders and prospective investors should
consult with their tax advisors regarding the potential effect of this
provision on their investment in Units.
If the Unit holder disposes of a Unit, he or she is deemed thereby to
have disposed of his or her entire pro rata interest in all assets of
the Trust involved, including his or her pro rata portion of all the
Equity Securities represented by the Unit.
The Taxpayer Relief Act of 1997 (the "1997 Act") includes provisions
that treat certain transactions designed to reduce or eliminate risk of
loss and opportunities for gain (e.g., short sales, offsetting notional
principal contracts, futures or forward contracts or similar
transactions) as constructive sales for purposes of recognition of gain
(but not loss) and for purposes of determining the holding period. Unit
holders should consult their own tax advisors with regard to any
constructive sale rules.
Special Tax Consequences of In-Kind Distributions Upon Redemption of
Units or Termination of a Trust. As discussed in "Rights of Unit Holders-
How are Income and Capital Distributed?", under certain circumstances a
Unit holder who owns at least 1,000 Units of a Trust may request an In-
Kind Distribution upon the redemption of Units or the termination of a
Trust. The Unit holder requesting an In-Kind Distribution will be liable
for expenses related thereto (the "Distribution Expenses") and the
amount of such In-Kind Distribution will be reduced by the amount of the
Distribution Expenses. See "Rights of Unit Holders-How are Income and
Capital Distributed?" As previously discussed, prior to the redemption
of Units or the termination of a Trust, a Unit holder is considered as
owning a pro rata portion of each of a Trust's assets for Federal income
tax purposes. The receipt of an In-Kind Distribution will result in a
Unit holder receiving an undivided interest in whole shares of stock
plus, possibly, cash.
The potential tax consequences that may occur under an In-Kind
Distribution with respect to each Equity Security owned by a Trust will
depend on whether or not a Unit holder receives cash in addition to
Equity Securities. An "Equity Security" for this purpose is a particular
class of stock issued by a particular corporation. A Unit holder will
not recognize gain or loss if a Unit holder only receives Equity
Securities in exchange for his or her pro rata portion in the Equity
Securities held by a Trust. However, if a Unit holder also receives cash
in exchange for a fractional share of an Equity Security held by a
Trust, such Unit holder will generally recognize gain or loss based upon
the difference between the amount of cash received by the Unit holder
and his or her tax basis in such fractional share of an Equity Security
held by such Trust.
Because a Trust will own many Equity Securities, a Unit holder who
requests an In-Kind Distribution will have to analyze the tax
consequences with respect to each Equity Security owned by a Trust. The
amount of taxable gain (or loss) recognized upon such exchange will
generally equal the sum of the gain (or loss) recognized under the rules
described above by such Unit holder with respect to each Equity Security
owned by a Trust. Unit holders who request an In-Kind Distribution are
advised to consult their tax advisors in this regard.
Computation of the Unit Holder's Tax Basis. Initially, a Unit holder's
tax basis in his or her Units will generally equal the price paid by
such Unit holder for his or her Units. The cost of the Units is
allocated among the Equity Securities held in a Trust in accordance with
the proportion of the fair market values of such Equity Securities as of
the valuation date nearest the date the Units are purchased in order to
determine such Unit holder's tax basis for his or her pro rata portion
of each Equity Security.
A Unit holder's tax basis in his or her Units and his or her pro rata
portion of an Equity Security held by a Trust will be reduced to the
extent dividends paid with respect to such Equity Security are received
by a Trust which are not taxable as ordinary income as described above.
Page 14
General. Each Unit holder will be requested to provide the Unit holder's
taxpayer identification number to the Trustee and to certify that the
Unit holder has not been notified that payments to the Unit holder are
subject to back-up withholding. If the proper taxpayer identification
number and appropriate certification are not provided when requested,
distributions by a Trust to such Unit holder (including amounts received
upon the redemption of Units) will be subject to back-up withholding.
Distributions by a Trust (other than those that are not treated as
United States source income, if any) will generally be subject to United
States income taxation and withholding in the case of Units held by non-
resident alien individuals, foreign corporations or other non-United
States persons. Such persons should consult their tax advisors.
In general, income that is not effectively connected to the conduct of a
trade or business within the United States that is earned by non-U.S.
Unit holders and derived from dividends of foreign corporations will not
be subject to U.S. withholding tax provided that less than 25 percent of
the gross income of the foreign corporation for a three-year period
ending with the close of its taxable year preceding payment was not
effectively connected to the conduct of a trade or business within the
United States. In addition, such earnings may be exempt from U.S.
withholding pursuant to a specific treaty between the United States and
a foreign country. Non-U.S. Unit holders should consult their own tax
advisors regarding the imposition of U.S. withholding on distributions
from the Trusts.
It should be noted that payments to the Trusts of dividends on Equity
Securities that are attributable to foreign corporations may be subject
to foreign withholding taxes and Unit holders should consult their tax
advisors regarding the potential tax consequences relating to the
payment of any such withholding taxes by the Trusts. Any dividends
withheld as a result thereof will nevertheless be treated as income to
the Unit holders. Because, under the grantor trust rules, an investor is
deemed to have paid directly his or her share of foreign taxes that have
been paid or accrued, if any, an investor may be entitled to a foreign
tax credit or deduction for United States purposes with respect to such
taxes. The 1997 Act imposes a required holding period for such credits.
Investors should consult their tax advisors with respect to foreign
withholding taxes and foreign tax credits.
At the termination of a Trust, the Trustee will furnish to each Unit
holder a statement containing information relating to the dividends
received by the particular Trust on the Equity Securities, the gross
proceeds received by such Trust from the disposition of any Equity
Security (resulting from redemption or the sale of any Equity Security)
and the fees and expenses paid by the Trust. The Trustee will also
furnish annual information returns to Unit holders and to the Internal
Revenue Service.
Unit holders desiring to purchase Units for tax-deferred plans and IRAs
should consult their broker for details on establishing such accounts.
Units may also be purchased by persons who already have self-directed
plans established. See "Are Investments in the Trusts Eligible for
Retirement Plans?"
In the opinion of Carter, Ledyard & Milburn, Special Counsel to the
Trusts for New York tax matters, under the existing income tax laws of
the State of New York, each Trust is not an association taxable as a
corporation and the income of such Trusts will be treated as the income
of the Unit holders thereof.
The foregoing discussion relates only to the tax treatment of U.S. Unit
holders ("U.S. Unit holders") with regard to United States Federal and
certain aspects of New York State and City income taxes. Unit holders
may be subject to taxation in New York or in other jurisdictions and
should consult their own tax advisors in this regard. As used herein,
the term "U.S. Unit holder" means an owner of a Unit in the Trusts that
(a) is (i) for United States federal income tax purposes a citizen or
resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (iii) an estate or trust the
income of which is subject to United States federal income taxation
regardless of its source or (b) does not qualify as a U.S. Unit holder
in paragraph (a) but whose income from a Unit is effectively connected
with such Unit holder's conduct of a United States trade or business.
The term also includes certain former citizens of the United States
whose income and gain on the Units will be taxable. Unit holders should
consult their tax advisors regarding potential foreign, state or local
taxation with respect to the Units.
Are Investments in the Trusts Eligible for Retirement Plans?
Units of the Trusts are eligible for purchase by Individual Retirement
Page 15
Accounts, Keogh Plans, pension funds and other tax-deferred retirement
plans. Generally, the Federal income tax relating to capital gains and
income received in each of the foregoing plans is deferred until
distributions are received. Distributions from such plans are generally
treated as ordinary income but may, in some cases, be eligible for
special averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax
laws related thereto and should consult their attorneys or tax advisors
with respect to the establishment and maintenance of any such plan. Such
plans are offered by brokerage firms and other financial institutions.
Fees and charges with respect to such plans may vary.
PORTFOLIO
What are the Equity Securities?
The Trusts consist of different issues of Equity Securities which are
listed on a national securities exchange or The Nasdaq Stock Market or
traded in the over-the-counter market. See "What are the Equity
Securities Selected for Energy Growth Trust, Series 5?," "What are the
Equity Securities Selected for Financial Services Growth Trust, Series
6?," "What are the Equity Securities Selected for Pharmaceutical Growth
Trust, Series 6?," "What are the Equity Securities Selected for REIT
Growth & Income Trust, Series 3?" and "What are the Equity Securities
Selected for Technology Growth Trust, Series 9?" for a general
description of the companies.
Risk Factors. An investment in Units of the Trusts should be made with
an understanding of the problems and risks such an investment may entail.
Energy Growth Trust, Series 5. An investment in Units of the Energy
Growth Trust should be made with an understanding of the problems and
risks such an investment may entail.
The Energy Growth Trust invests in Equity Securities of companies
involved in the energy industry. The business activities of companies
held in the Energy Growth Trust may include: production, generation,
transmission, marketing, control, or measurement of energy or energy
fuels; providing component parts or services to companies engaged in the
above activities; energy research or experimentation; and environmental
activities related to the solution of energy problems, such as energy
conservation and pollution control. Companies participating in new
activities resulting from technological advances or research discoveries
in the energy field were also considered for the Energy Growth Trust.
The securities of companies in the energy field are subject to changes
in value and dividend yield which depend, to a large extent, on the
price and supply of energy fuels. Swift price and supply fluctuations
may be caused by events relating to international politics, energy
conservation, the success of exploration projects, and tax and other
regulatory policies of various governments. As a result of the
foregoing, the Equity Securities in the Energy Growth Trust may be
subject to rapid price volatility. The Sponsor is unable to predict what
impact the foregoing factors will have on the Equity Securities during
the life of the Energy Growth Trust.
According to the U.S. Department of Commerce, the factors which will
most likely shape the energy industry include the price and availability
of oil from the Middle East, changes in United States environmental
policies and the continued decline in U.S. production of crude oil.
Possible effects of these factors may be increased U.S. and world
dependence on oil from the Organization of Petroleum Exporting Countries
("OPEC") and highly uncertain and potentially more volatile oil prices.
Factors which the Sponsor believes may increase the profitability of oil
and petroleum operations include increasing demand for oil and petroleum
products as a result of the continued increases in annual miles driven
and the improvement in refinery operating margins caused by increases in
average domestic refinery utilization rates. The existence of surplus
crude oil production capacity and the willingness to adjust production
levels are the two principal requirements for stable crude oil markets.
Without excess capacity, supply disruptions in some countries cannot be
compensated for by others. Surplus capacity in Saudi Arabia and a few
other countries and the utilization of that capacity prevented, during
the Persian Gulf crisis, and continues to prevent, severe market
disruption. Although unused capacity contributed to market stability in
1990 and 1991, it ordinarily creates pressure to overproduce and
contributes to market uncertainty. The restoration of a large portion of
Kuwait and Iraq's production and export capacity could lead to such a
development in the absence of substantial growth in world oil demand.
Page 16
Formerly, OPEC members attempted to exercise control over production
levels in each country through a system of mandatory production quotas.
Because of the 1990-1991 crisis in the Middle East, the mandatory system
has since been replaced with a voluntary system. Production under the
new system has had to be curtailed on at least one occasion as a result
of weak prices, even in the absence of supplies from Kuwait and Iraq.
The pressure to deviate from mandatory quotas, if they are reimposed, is
likely to be substantial and could lead to a weakening of prices. In the
longer term, additional capacity and production will be required to
accommodate the expected large increases in world oil demand and to
compensate for expected sharp drops in U.S. crude oil production and
exports from the Soviet Union. Only a few OPEC countries, particularly
Saudi Arabia, have the petroleum reserves that will allow the required
increase in production capacity to be attained. Given the large-scale
financing that is required, the prospect that such expansion will occur
soon enough to meet the increased demand is uncertain.
Declining U.S. crude oil production will likely lead to increased
dependence on OPEC oil, putting refiners at risk of continued and
unpredictable supply disruptions. Increasing sensitivity to
environmental concerns will also pose serious challenges to the industry
over the coming decade. Refiners are likely to be required to make heavy
capital investments and make major production adjustments in order to
comply with increasingly stringent environmental legislation, such as
the 1990 amendments to the Clean Air Act. If the cost of these changes
is substantial enough to cut deeply into profits, smaller refiners may
be forced out of the industry entirely. Moreover, lower consumer demand
due to increases in energy efficiency and conservation, gasoline
reformulations that call for less crude oil, warmer winters or a general
slowdown in economic growth in this country and abroad could negatively
affect the price of oil and the profitability of oil companies. No
assurance can be given that the demand for or prices of oil will
increase or that any increases will not be marked by great volatility.
Some oil companies may incur large cleanup and litigation costs relating
to oil spills and other environmental damage. Oil production and
refining operations are subject to extensive federal, state and local
environmental laws and regulations governing air emissions and the
disposal of hazardous materials. Increasingly stringent environmental
laws and regulations are expected to require companies with oil
production and refining operations to devote significant financial and
managerial resources to pollution control. General problems of the oil
and petroleum products industry include the ability of a few influential
producers to significantly affect production, the concomitant volatility
of crude oil prices, increasing public and governmental concern over air
emissions, waste product disposal, fuel quality and the environmental
effects of fossil-fuel use in general.
In addition, any future scientific advances concerning new sources of
energy and fuels or legislative changes relating to the energy industry
or the environment could have a negative impact on the petroleum
products industry. While legislation has been enacted to deregulate
certain aspects of the oil industry, no assurances can be given that new
or additional regulations will not be adopted. Each of the problems
referred to could adversely affect the financial stability of the
issuers of any petroleum industry stocks in the Energy Growth Trust.
Financial Services Growth Trust, Series 6. An investment in Units of the
Financial Services Growth Trust should be made with an understanding of
the problems and risks inherent in the bank and financial services
sector in general.
Banks, thrifts and their holding companies are especially subject to the
adverse effects of economic recession, volatile interest rates,
portfolio concentrations in geographic markets and in commercial and
residential real estate loans, and competition from new entrants in
their fields of business. Banks and thrifts are highly dependent on net
interest margin. Recently, bank profits have come under pressure as net
interest margins have contracted, but volume gains have been strong in
both commercial and consumer products. There is no certainty that such
conditions will continue. Bank and thrift institutions had received
significant consumer mortgage fee income as a result of activity in
mortgage and refinance markets. As initial home purchasing and
refinancing activity subsided, this income diminished. Economic
conditions in the real estate markets, which have been weak in the past,
can have a substantial effect upon banks and thrifts because they
generally have a portion of their assets invested in loans secured by
real estate. Banks, thrifts and their holding companies are subject to
extensive federal regulation and, when such institutions are state-
chartered, to state regulation as well. Such regulations impose strict
Page 17
capital requirements and limitations on the nature and extent of
business activities that banks and thrifts may pursue. Furthermore, bank
regulators have a wide range of discretion in connection with their
supervisory and enforcement authority and may substantially restrict the
permissible activities of a particular institution if deemed to pose
significant risks to the soundness of such institution or the safety of
the federal deposit insurance fund. Regulatory actions, such as
increases in the minimum capital requirements applicable to banks and
thrifts and increases in deposit insurance premiums required to be paid
by banks and thrifts to the Federal Deposit Insurance Corporation
("FDIC"), can negatively impact earnings and the ability of a company to
pay dividends. Neither federal insurance of deposits nor governmental
regulations, however, insures the solvency or profitability of banks or
their holding companies, or insures against any risk of investment in
the securities issued by such institutions.
The statutory requirements applicable to and regulatory supervision of
banks, thrifts and their holding companies have increased significantly
and have undergone substantial change in recent years. To a great
extent, these changes are embodied in the Financial Institutions Reform,
Recovery and Enforcement Act; enacted in August 1989, the Federal
Deposit Insurance Corporation Improvement Act of 1991, the Resolution
Trust Corporation Refinancing, Restructuring, and Improvement Act of
1991 and the regulations promulgated under these laws. Many of the
regulations promulgated pursuant to these laws have only recently been
finalized and their impact on the business, financial condition and
prospects of the Equity Securities in the Trust's portfolio cannot be
predicted with certainty. Periodic efforts by recent Administrations to
introduce legislation broadening the ability of banks to compete with
new products have not been successful, but if enacted could lead to more
failures as a result of increased competition and added risks. Failure
to enact such legislation, on the other hand, may lead to declining
earnings and an inability to compete with unregulated financial
institutions. Efforts to expand the ability of federal thrifts to branch
on an interstate basis have been initially successful through
promulgation of regulations, and legislation to liberalize interstate
banking has recently been signed into law. Under the legislation, banks
will be able to purchase or establish subsidiary banks in any state, one
year after the legislation's enactment. Since mid-1997, banks have been
allowed to turn existing banks into branches. Consolidation is likely to
continue. The Securities and Exchange Commission and the Financial
Accounting Standards Board require the expanded use of market value
accounting by banks and have imposed rules requiring market accounting
for investment securities held in trading accounts or available for
sale. Adoption of additional such rules may result in increased
volatility in the reported health of the industry, and mandated
regulatory intervention to correct such problems. Additional legislative
and regulatory changes may be forthcoming. For example, the bank
regulatory authorities have proposed substantial changes to the
Community Reinvestment Act and fair lending laws, rules and regulations,
and there can be no certainty as to the effect, if any, that such
changes would have on the Equity Securities in the Trust's portfolio. In
addition, from time to time the deposit insurance system is reviewed by
Congress and federal regulators, and proposed reforms of that system
could, among other things, further restrict the ways in which deposited
moneys can be used by banks or reduce the dollar amount or number of
deposits insured for any depositor. Such reforms could reduce
profitability as investment opportunities available to bank institutions
become more limited and as consumers look for savings vehicles other
than bank deposits. Banks and thrifts face significant competition from
other financial institutions such as mutual funds, credit unions,
mortgage banking companies and insurance companies, and increased
competition may result from legislative broadening of regional and
national interstate banking powers as has been recently enacted. Among
other benefits, the legislation allows banks and bank holding companies
to acquire across previously prohibited state lines and to consolidate
their various bank subsidiaries into one unit. The Sponsor makes no
prediction as to what, if any, manner of bank and thrift regulatory
actions might ultimately be adopted or what ultimate effect such actions
might have on the Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5%
of the outstanding shares of any class of voting securities of a bank or
bank holding company, (2) acquiring control of a bank or another bank
holding company, (3) acquiring all or substantially all the assets of a
bank, or (4) merging or consolidating with another bank holding company,
without first obtaining Federal Reserve Board ("FRB") approval. In
considering an application with respect to any such transaction, the FRB
is required to consider a variety of factors, including the potential
Page 18
anti-competitive effects of the transaction, the financial condition and
future prospects of the combining and resulting institutions, the
managerial resources of the resulting institution, the convenience and
needs of the communities the combined organization would serve, the
record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the
prospective availability to the FRB of information appropriate to
determine ongoing regulatory compliance with applicable banking laws. In
addition, the federal Change In Bank Control Act and various state laws
impose limitations on the ability of one or more individuals or other
entities to acquire control of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends
by bank holding companies. In the policy statement, the FRB expressed
its view that a bank holding company experiencing earnings weaknesses
should not pay cash dividends which exceed its net income or which could
only be funded in ways that would weaken its financial health, such as
by borrowing. The FRB also may impose limitations on the payment of
dividends as a condition to its approval of certain applications,
including applications for approval of mergers and acquisitions. The
Sponsor makes no prediction as to the effect, if any, such laws will
have on the Equity Securities or whether such approvals, if necessary,
will be obtained.
Some of the nation's largest banks, already working to upgrade their own
computer systems to meet the Year 2000 deadline, are concerned that some
borrowers may fail to upgrade their computers in time, creating problem
loans and increasing overall loan losses. Banks considered most
vulnerable by analysts include those lending primarily to small
businesses, which aren't as likely as large businesses to have a plan
for upgrading their computers. Also at risk are banks with significant
exposure overseas, where many foreign businesses are not moving as
quickly to resolve this problem. Analysts warn that it will be difficult
for banks to determine their potential loan losses related to Year 2000
credit risk.
Companies involved in the insurance industry are engaged in
underwriting, reinsuring, selling, distributing or placing of property
and casualty, life or health insurance. Other growth areas within the
insurance industry include brokerage, reciprocals, claims processors and
multiline insurance companies. Insurance company profits are affected by
interest rate levels, general economic conditions, and price and
marketing competition. Property and casualty insurance profits may also
be affected by weather catastrophes and other disasters. Life and health
insurance profits may be affected by mortality and morbidity rates.
Individual companies may be exposed to material risks including reserve
inadequacy and the inability to collect from reinsurance carriers.
Insurance companies are subject to extensive governmental regulation,
including the imposition of maximum rate levels, which may not be
adequate for some lines of business. Proposed or potential tax law
changes may also adversely affect insurance companies' policy sales, tax
obligations, and profitability. In addition to the foregoing, profit
margins of these companies continue to shrink due to the commoditization
of traditional businesses, new competitors, capital expenditures on new
technology and the pressures to compete globally.
In addition to the normal risks of business, companies involved in the
insurance industry are subject to significant risk factors, including
those applicable to regulated insurance companies, such as: (i) the
inherent uncertainty in the process of establishing property-liability
loss reserves, particularly reserves for the cost of environmental,
asbestos and mass tort claims, and the fact that ultimate losses could
materially exceed established loss reserves which could have a material
adverse effect on results of operations and financial condition; (ii)
the fact that insurance companies have experienced, and can be expected
in the future to experience, catastrophe losses which could have a
material adverse impact on their financial condition, results of
operations and cash flow; (iii) the inherent uncertainty in the process
of establishing property-liability loss reserves due to changes in loss
payment patterns caused by new claims settlement practices; (iv) the
need for insurance companies and their subsidiaries to maintain
appropriate levels of statutory capital and surplus, particularly in
light of continuing scrutiny by rating organizations and state insurance
regulatory authorities, and in order to maintain acceptable financial
strength or claims-paying ability rating; (v) the extensive regulation
and supervision to which insurance companies' subsidiaries are subject,
various regulatory initiatives that may affect insurance companies, and
regulatory and other legal actions; (vi) the adverse impact that
increases in interest rates could have on the value of an insurance
company's investment portfolio and on the attractiveness of certain of
Page 19
its products; (vii) the need to adjust the effective duration of the
assets and liabilities of life insurance operations in order to meet the
anticipated cash flow requirements of its policyholder obligations; and
(vii) the uncertainty involved in estimating the availability of
reinsurance and the collectibility of reinsurance recoverables.
The state insurance regulatory framework has, during recent years, come
under increased federal scrutiny, and certain state legislatures have
considered or enacted laws that alter and, in many cases, increase state
authority to regulate insurance companies and insurance holding company
systems. Further, the National Association of Insurance Commissioners
("NAIC") and state insurance regulators are re-examining existing laws
and regulations, specifically focusing on insurance companies,
interpretations of existing laws and the development of new laws. In
addition, Congress and certain federal agencies have investigated the
condition of the insurance industry in the United States to determine
whether to promulgate additional federal regulation. The Sponsor is
unable to predict whether any state or federal legislation will be
enacted to change the nature or scope of regulation of the insurance
industry, or what effect, if any, such legislation would have on the
industry.
All insurance companies are subject to state laws and regulations that
require diversification of their investment portfolios and limit the
amount of investments in certain investment categories. Failure to
comply with these laws and regulations would cause non-conforming
investments to be treated as non-admitted assets for purposes of
measuring statutory surplus and, in some instances, would require
divestiture.
Environmental pollution clean-up is the subject of both federal and
state regulation. By some estimates, there are thousands of potential
waste sites subject to clean up. The insurance industry is involved in
extensive litigation regarding coverage issues. The Comprehensive
Environmental Response Compensation and Liability Act of 1980
("Superfund") and comparable state statutes ("mini-Superfund") govern
the clean-up and restoration by "Potentially Responsible Parties"
("PRP's"). Superfund and the mini-Superfunds ("Environmental Clean-up
Laws or "ECLs") establish a mechanism to pay for clean-up of waste sites
if PRP's fail to do so, and to assign liability to PRP's. The extent of
liability to be allocated to a PRP is dependent on a variety of factors.
Further, the number of waste sites subject to clean-up is unknown. Very
few sites have been subject to clean-up to date. The extent of clean-up
necessary and the assignment of liability has not been established. The
insurance industry is disputing many such claims. Key coverage issues
include whether Superfund response costs are considered damages under
the policies, when and how coverage is triggered, applicability of
pollution exclusions, the potential for joint and several liability and
definition of an occurrence. Similar coverage issues exist for clean up
and waste sites not covered under Superfund. To date, courts have been
inconsistent in their rulings on these issues. An insurer's exposure to
liability with regard to its insureds which have been, or may be, named
as PRPs is uncertain. Superfund reform proposals have been introduced in
Congress, but none have been enacted. There can be no assurance that any
Superfund reform legislation will be enacted or that any such
legislation will provide for a fair, effective and cost-efficient system
for settlement of Superfund related claims.
Proposed federal legislation which would permit banks greater
participation in the insurance business could, if enacted, present an
increased level of competition for the sale of insurance products. In
addition, while current federal income tax law permits the tax-deferred
accumulation of earnings on the premiums paid by an annuity owner and
holders of certain savings-oriented life insurance products, no
assurance can be given that future tax law will continue to allow such
tax deferrals. If such deferrals were not allowed, consumer demand for
the affected products would be substantially reduced. In addition,
proposals to lower the federal income tax rates through a form of flat
tax or otherwise could have, if enacted, a negative impact on the demand
for such products.
Companies engaged in investment banking/brokerage and investment
management include brokerage firms, broker/dealers, investment banks,
finance companies and mutual fund companies. Earnings and share prices
of companies in this industry are quite volatile, and often exceed the
volatility levels of the market as a whole. Recently, ongoing
consolidation in the industry and the strong stock market has benefited
stocks which investors believe will benefit from greater investor and
issuer activity. Major determinants of future earnings of these
companies are the direction of the stock market, investor confidence,
equity transaction volume, the level and direction of long-term and
Page 20
short-term interest rates, and the outlook for emerging markets.
Negative trends in any of these earnings determinants could have a
serious adverse effect on the financial stability, as well as the stock
prices, of these companies. Furthermore, there can be no assurance that
the issuers of the Equity Securities included in the Financial Services
Growth Trust will be able to respond in a timely manner to compete in
the rapidly developing marketplace. In addition to the foregoing, profit
margins of these companies continue to shrink due to the commoditization
of traditional businesses, new competitors, capital expenditures on new
technology and the pressures to compete globally.
Pharmaceutical Growth Trust, Series 6. An investment in Units of the
Pharmaceutical Growth Trust should be made with an understanding of the
characteristics of the pharmaceutical and medical industries and the
risks which such investment may entail.
Pharmaceutical companies are companies involved in drug development and
production services. Such companies have potential risks unique to their
sector of the healthcare field. Such companies are subject to
governmental regulation of their products and services, a factor which
could have a significant and possibly unfavorable effect on the price
and availability of such products or services. Furthermore, such
companies face the risk of increasing competition from generic drug
sales, the termination of their patent protection for drug products and
the risk that technological advances will render their products or
services obsolete. The research and development costs of bringing a drug
to market are substantial and include lengthy governmental review
processes, with no guarantee that the product will ever come to market.
Many of these companies may have losses and 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.
The medical sector has historically provided investors with significant
growth opportunities. One of the industries included in the sector is
pharmaceutical companies. Such companies develop, manufacture and sell
prescription and over-the-counter drugs. In addition, they are well
known for the vast amounts of money they spend on world-class research
and development. In short, such companies work to improve the quality of
life for millions of people and are vital to the nation's health and
well-being.
As the population of the United States ages, the companies involved in
the pharmaceutical field will continue to search for and develop new
drugs through advanced technologies and diagnostics. On a worldwide
basis, such companies are involved in the development and distributions
of drugs and vaccines. These activities may make the pharmaceutical
sector very attractive for investors seeking the potential for growth in
their investment portfolio. However, there are no assurances that the
Trust's objectives will be met.
Legislative proposals concerning healthcare are considered 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 Equity Securities
in the Trust.
REIT Growth & Income Trust, Series 3. An investment in Units of the
REIT Growth & Income Trust should be made with an understanding of the
risks inherent in an investment in REITs specifically and in real estate
generally (in addition to securities market risks), and in the risks
such an investment may entail.
REITs are financial vehicles that have as their objective the pooling of
capital from a number of investors in order to participate directly in
real estate ownership or financing. REITs are generally fully integrated
operating companies that have interests in income-producing real estate.
REITs are differentiated by the types of real estate properties held and
the actual geographic location of properties and fall into two major
categories: equity REITs emphasize direct property investment, holding
their invested assets primarily in the ownership of real estate or other
equity interests, while mortgage REITs concentrate on real estate
financing, holding their assets primarily in mortgages secured by real
estate. As of the Initial Date of Deposit, the Trust contains only
equity REITs. REITs obtain capital funds for investment in underlying
real estate assets by selling debt or equity securities in the public or
institutional capital markets or by bank borrowing. Thus, the returns on
Page 21
common equities of the REITs in which the Trust invests will be
significantly affected by changes in costs of capital and, particularly
in the case of highly "leveraged" REITs (i.e., those with large amounts
of borrowings outstanding), by changes in the level of interest rates.
The objective of an equity REIT is to purchase income-producing real
estate properties in order to generate high levels of cash flow from
rental income and a gradual asset appreciation, and they typically
invest in properties such as office, retail, industrial, hotel and
apartment buildings and healthcare facilities.
REITs are a creation of the tax law. REITs essentially operate as a
corporation or business trust with the advantage of exemption from
corporate income taxes provided the REIT satisfies the requirements of
Sections 856 through 860 of the Internal Revenue Code. The major tests
for tax-qualified status are that the REIT (i) be managed by one or more
trustees or directors, (ii) issue shares of transferable interest to its
owners, (iii) have at least 100 shareholders, (iv) have no more than 50%
of the shares held by five or fewer individuals, (v) invest
substantially all of its capital in real estate related assets and
derive substantially all of its gross income from real estate related
assets and (vi) distribute at least 95% of its taxable income to its
shareholders each year. If any REIT in the Trust's portfolio should fail
to qualify for such tax status, the related shareholders (including the
Trust) could be adversely affected by the resulting tax consequences.
The underlying value of the Securities and the Trust's ability to make
distributions to Unit holders may be adversely affected by changes in
the national, state and local economic climate and real estate
conditions (such as oversupply of or reduced demand for space and
changes in market rental rates), increasing values and reduced supply of
desirable properties for acquisition, perceptions of prospective tenants
of the safety, convenience and attractiveness of the properties, the
ability of the owner to provide adequate management, maintenance and
insurance, the ability to collect on a timely basis all rents from
tenants, tenant defaults, the cost of complying with the Americans with
Disabilities Act, increased competition from other properties,
obsolescence of properties, changes in the availability, cost and terms
of mortgage funds, the impact of present or future environmental
legislation and compliance with environmental laws, the ongoing need for
capital improvements, particularly in older properties, changes in real
estate tax rates and other operating expenses, regulatory and economic
impediments to raising rents, adverse changes in governmental rules and
fiscal policies, dependency on management skills, civil unrest, acts of
God, including earthquakes and other natural disasters (which may result
in uninsured losses), acts of war, adverse changes in zoning laws, and
other factors which are beyond the control of the issuers of the REITs
in the Trust.
The value of the REITs may at times be particularly sensitive to
devaluation in the event of rising interest rates. Equity REITs are less
likely to be affected by interest rate fluctuations than mortgage REITs
and the nature of the underlying assets of an equity REIT may be
considered more tangible than that of a mortgage REIT. Equity REITs are
more likely to be adversely affected by changes in the value of the
underlying properties it owns, or is acquiring, than mortgage REITs.
REITs may concentrate investments in specific geographic areas or in
specific property types, i.e., hotels, shopping malls, residential
complexes and office buildings. The impact of economic conditions on
REITs can also be expected to vary with geographic location and property
type. Investors should be aware the REITs may not be diversified and are
subject to the risks of financing projects. REITs are also subject to
defaults by borrowers, self-liquidation, the market's perception of the
REIT industry generally, and the possibility of failing to qualify for
pass-through of income under the Internal Revenue Code, and to maintain
exemption from the Investment Company Act of 1940. A default by a
borrower or lessee may cause the REIT to experience delays in enforcing
its right as mortgagee or lessor and to incur significant costs related
to protecting its investments. In addition, because real estate
generally is subject to real property taxes, the REITs in the Trust may
be adversely affected by increases or decreases in property tax rates
and assessments or reassessments of the properties underlying the REITs
by taxing authorities. Furthermore, because real estate is relatively
illiquid, the ability of REITs to vary their portfolios in response to
changes in economic and other conditions may be limited and may
adversely affect the value of the Units. There can be no assurance that
any REIT will be able to dispose of its underlying real estate assets
when advantageous or necessary. In an effort to reduce the impact of the
risks discussed above, the Sponsor has selected REITs that are
diversified among various real estate sectors and geographic locations.
Page 22
REITs generally maintain comprehensive insurance on presently owned and
subsequently acquired real property assets, including liability, fire
and extended coverage. However, certain types of losses may be
uninsurable or not be economically insurable as to which the underlying
properties are at risk in their particular locales. There can be no
assurance that insurance coverage will be sufficient to pay the full
current market value or current replacement cost of any lost investment.
Various factors might make it impracticable to use insurance proceeds to
replace a facility after it has been damaged or destroyed. Under such
circumstances, the insurance proceeds received by a REIT might not be
adequate to restore its economic position with respect to such property.
Under various environmental laws, a current or previous owner or
operator of real property may be liable for the costs of removal or
remediation of hazardous or toxic substances on, under or in such
property. Such laws often impose liability whether or not the owner or
operator caused or knew of the presence of such hazardous or toxic
substances and whether or not the storage of such substances was in
violation of a tenant's lease. In addition, the presence of hazardous or
toxic substances, or the failure to remediate such property properly,
may adversely affect the owner's ability to borrow using such real
property as collateral. No assurance can be given that one or more of
the REITs in the Trust may not be presently liable or potentially liable
for any such costs in connection with real estate assets they presently
own or subsequently acquire while such REITs are held in the Trust.
Technology Growth Trust, Series 9. An investment in Units of the
Technology Growth Trust should be made with an understanding of the
characteristics of the technology industry and the risks which such an
investment may entail.
Technology companies generally include companies involved in the
development, design, manufacture and sale of computers, computer-related
equipment, computer networks, communications systems, telecommunications
products, electronic products and other related products, systems and
services. The market for these products, especially those specifically
related to the Internet, is characterized by rapidly changing
technology, rapid product obsolescence, cyclical market patterns,
evolving industry standards and frequent new product introductions. The
success of the issuers of the Equity Securities depends in substantial
part on the timely and successful introduction of new products. An
unexpected change in one or more of the technologies affecting an
issuer's products or in the market for products based on a particular
technology could have a material adverse affect on an issuer's operating
results. Furthermore, there can be no assurance that the issuers of the
Equity Securities will be able to respond in a timely manner to compete
in the rapidly developing marketplace.
Based on trading history of common stock, factors such as announcements
of new products or development of new technologies and general
conditions of the industry have caused and are likely to cause the
market price of high-technology common stocks to fluctuate
substantially. In addition, technology company stocks have experienced
extreme price and volume fluctuations that often have been unrelated to
the operating performance of such companies. This market volatility may
adversely affect the market price of the Equity Securities and therefore
the ability of a Unit holder to redeem Units at a price equal to or
greater than the original price paid for such Units.
Some key components of certain products of technology issuers are
currently available only from single sources. There can be no assurance
that in the future suppliers will be able to meet the demand for
components in a timely and cost effective manner. Accordingly, an
issuer's operating results and customer relationships could be adversely
affected by either an increase in price for, or an interruption or
reduction in supply of, any key components. Additionally, many
technology issuers are characterized by a highly concentrated customer
base consisting of a limited number of large customers who may require
product vendors to comply with rigorous industry standards. Any failure
to comply with such standards may result in a significant loss or
reduction of sales. Because many products and technologies of technology
companies are incorporated into other related products, such companies
are often highly dependent on the performance of the personal computer,
electronics and telecommunications industries. There can be no assurance
that these customers will place additional orders, or that an issuer of
Equity Securities will obtain orders of similar magnitude as past orders
from other customers. Similarly, the success of certain technology
companies is tied to a relatively small concentration of products or
technologies. Accordingly, a decline in demand of such products,
Page 23
technologies or from such customers could have a material adverse impact
on issuers of the Equity Securities.
Many technology companies rely on a combination of patents, copyrights,
trademarks and trade secret laws to establish and protect their
proprietary rights in their products and technologies. There can be no
assurance that the steps taken by the issuers of the Equity Securities
to protect their proprietary rights will be adequate to prevent
misappropriation of their technology or that competitors will not
independently develop technologies that are substantially equivalent or
superior to such issuers' technology. In addition, due to the increasing
public use of the Internet, it is possible that other laws and
regulations may be adopted to address issues such as privacy, pricing,
characteristics, and quality of Internet products and services. For
example, recent proposals would prohibit the distribution of obscene,
lascivious or indecent communications on the Internet. The adoption of
any such laws could have a material adverse impact on the Equity
Securities in the Trust.
General. Each Trust consists of such Equity Securities listed under the
"Schedule of Investments" for each Trust as may continue to be held from
time to time in a Trust and any additional Equity Securities acquired
and held by the Trusts pursuant to the provisions of the Indenture,
together with cash held in the Income and Capital Accounts. Neither the
Sponsor nor the Trustee shall be liable in any way for any failure in
any of the Equity Securities. However, should any contract for the
purchase of any of the Equity Securities initially deposited hereunder
fail, the Sponsor will, unless substantially all of the moneys held in a
Trust to cover such purchase are reinvested in substitute Equity
Securities in accordance with the Indenture, refund the cash and sales
charge attributable to such failed contract to all Unit holders on the
next distribution date.
Because certain of the Equity Securities from time to time may be sold
under certain circumstances described herein, and because the proceeds
from such events will be distributed to Unit holders and will not be
reinvested, no assurance can be given that a Trust will retain for any
length of time its present size and composition. Although the Portfolio
is not managed, the Sponsor may instruct the Trustee to sell Equity
Securities under certain limited circumstances. Pursuant to the
Indenture and with limited exceptions, the Trustee may sell any
securities or other property acquired in exchange for Equity Securities
such as those acquired in connection with a merger or other transaction.
If offered such new or exchanged securities or property, the Trustee
shall reject the offer. However, in the event such securities or
property are nonetheless acquired by a Trust, they may be accepted for
deposit in such Trust and either sold by the Trustee or held in the
Trust pursuant to the direction of the Sponsor (who may rely on the
advice of the Portfolio Supervisor). See "Rights of Unit Holders-How May
Equity Securities be Removed from a Trust?" Equity Securities, however,
will not be sold by a Trust to take advantage of market fluctuations or
changes in anticipated rates of appreciation or depreciation.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be
in the over-the-counter market. As a result, the existence of a liquid
trading market for the Equity Securities may depend on whether dealers
will make a market in the Equity Securities. There can be no assurance
that a market will be made for any of the Equity Securities, that any
market for the Equity Securities will be maintained or of the liquidity
of the Equity Securities in any markets made. In addition, a Trust may
be restricted under the Investment Company Act of 1940 from selling
Equity Securities to the Sponsor. The price at which the Equity
Securities may be sold to meet redemptions, and the value of a Trust,
will be adversely affected if trading markets for the Equity Securities
are limited or absent.
An investment in Units should be made with an understanding of the risks
which an investment in common stocks entails, including the risk that
the financial condition of the issuers of the Equity Securities or the
general condition of the common stock market may worsen and the value of
the Equity Securities and therefore the value of the Units may decline.
The past market and earnings performance of the Equity Securities
included in the Trusts is not predictive of their future performance.
Common stocks are especially susceptible to general stock market
movements and to volatile increases and decreases of value as market
confidence in and perceptions of the issuers change. These perceptions
are based on unpredictable factors including expectations regarding
government, economic, monetary and fiscal policies, inflation and
interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Shareholders of common
Page 24
stocks have rights to receive payments from the issuers of those common
stocks that are generally subordinate to those of creditors of, or
holders of debt obligations or preferred stocks of, such issuers.
Shareholders of common stocks of the type held by a Trust have a right
to receive dividends only when and if, and in the amounts, declared by
the issuer's board of directors and have a right to participate in
amounts available for distribution by the issuer only after all other
claims on the issuer have been paid or provided for. Common stocks do
not represent an obligation of the issuer and, therefore, do not offer
any assurance of income or provide the same degree of protection of
capital as do debt securities. The issuance of additional debt
securities or preferred stock will create prior claims for payment of
principal, interest and dividends which could adversely affect the
ability and inclination of the issuer to declare or pay dividends on its
common stock or the rights of holders of common stock with respect to
assets of the issuer upon liquidation or bankruptcy. The value of common
stocks is subject to market fluctuations for as long as the common
stocks remain outstanding, and thus the value of the Equity Securities
in the Portfolio may be expected to fluctuate over the life of a Trust
to values higher or lower than those prevailing on the Initial Date of
Deposit.
Holders of common stocks incur more risk than holders of preferred
stocks and debt obligations because common stockholders, as owners of
the entity, have generally inferior rights to receive payments from the
issuer in comparison with the rights of creditors of, or holders of debt
obligations or preferred stocks issued by, the issuer. Cumulative
preferred stock dividends must be paid before common stock dividends and
any cumulative preferred stock dividend omitted is added to future
dividends payable to the holders of cumulative preferred stock.
Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.
Certain of the Equity Securities in one or more of the Trusts are of
foreign issuers, and therefore, an investment in such a Trust involves
some investment risks that are different in some respects from an
investment in a trust that invests entirely in securities of domestic
issuers. Those investment risks include future political and
governmental restrictions which might adversely affect the payment or
receipt of payment of dividends on the relevant Equity Securities,
currency exchange rate fluctuations, exchange control policies, and the
limited liquidity and small market capitalization of such foreign
countries' securities markets. In addition, for foreign issuers that are
not subject to the reporting requirements of the Securities Exchange Act
of 1934, there may be less publicly available information than is
available from a domestic issuer. Also, foreign issuers are not
necessarily subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those
applicable to domestic issuers. However, due to the nature of the
issuers of the Equity Securities included in the Trust, the Sponsor
believes that adequate information will be available to allow the
Portfolio Supervisor to provide portfolio surveillance.
Certain of the Equity Securities in one or more of the Trusts are in ADR
or GDR form. ADRs, which evidence American Depositary Receipts and GDRs,
which evidence Global Depositary Receipts, represent common stock
deposited with a custodian in a depositary. American Depositary Shares
and Global Depositary Shares (collectively, the "Depositary Receipts")
are issued by a bank or trust company to evidence ownership of
underlying securities issued by a foreign corporation. These instruments
may not necessarily be denominated in the same currency as the
securities into which they may be converted. For purposes of the
discussion herein, the terms ADR and GDR generally include American
Depositary Shares and Global Depositary Shares, respectively.
Depositary Receipts may be sponsored or unsponsored. In an unsponsored
facility, the depositary initiates and arranges the facility at the
request of market makers and acts as agent for the Depositary Receipts
holder, while the company itself is not involved in the transaction. In
a sponsored facility, the issuing company initiates the facility and
agrees to pay certain administrative and shareholder-related expenses.
Sponsored facilities use a single depositary and entail a contractual
relationship between the issuer, the shareholder and the depositary;
unsponsored facilities involve several depositaries with no contractual
relationship to the company. The depositary bank that issues Depositary
Receipts generally charges a fee, based on the price of the Depositary
Receipts, upon issuance and cancellation of the Depositary Receipts.
This fee would be in addition to the brokerage commissions paid upon the
acquisition or surrender of the security. In addition, the depositary
bank incurs expenses in connection with the conversion of dividends or
other cash distributions paid in local currency into U.S. dollars and
Page 25
such expenses are deducted from the amount of the dividend or
distribution paid to holders, resulting in a lower payout per underlying
shares represented by the Depositary Receipts than would be the case if
the underlying share were held directly. Certain tax considerations,
including tax rate differentials and withholding requirements, arising
from applications of the tax laws of one nation to nationals of another
and from certain practices in the Depositary Receipts market may also
exist with respect to certain Depositary Receipts. In varying degrees,
any or all of these factors may affect the value of the Depositary
Receipts compared with the value of the underlying shares in the local
market. In addition, the rights of holders of Depositary Receipts may be
different than those of holders of the underlying shares, and the market
for Depositary Receipts may be less liquid than that for the underlying
shares. Depositary Receipts are registered securities pursuant to the
Securities Act of 1933 and may be subject to the reporting requirements
of the Securities Exchange Act of 1934.
For the Equity Securities that are Depositary Receipts, currency
fluctuations will affect the U.S. dollar equivalent of the local
currency price of the underlying domestic share and, as a result, are
likely to affect the value of the Depositary Receipts and consequently
the value of the Equity Securities. The foreign issuers of securities
that are Depositary Receipts may pay dividends in foreign currencies
which must be converted into dollars. Most foreign currencies have
fluctuated widely in value against the United States dollar for many
reasons, including supply and demand of the respective currency, the
soundness of the world economy and the strength of the respective
economy as compared to the economies of the United States and other
countries. Therefore, for any securities of issuers (whether or not they
are in Depositary Receipt form) whose earnings are stated in foreign
currencies, or which pay dividends in foreign currencies or which are
traded in foreign currencies, there is a risk that their United States
dollar value will vary with fluctuations in the United States dollar
foreign exchange rates for the relevant currencies.
Unit holders will be unable to dispose of any of the Equity Securities
in a Portfolio, as such, and will not be able to vote the Equity
Securities. As the holder of the Equity Securities, the Trustee will
have the right to vote all of the voting stocks in a Trust and will vote
such stocks in accordance with the instructions of the Sponsor.
What are the Equity Securities Selected for Energy Growth Trust, Series 5?
What are the Equity Securities Selected for Financial Services Growth
Trust, Series 6?
What are the Equity Securities Selected for Pharmaceutical Growth Trust,
Series 6?
What are the Equity Securities Selected for REIT Growth & Income Trust,
Series 3?
What are the Equity Securities Selected for Technology Growth Trust,
Series 9?
The Sponsor has obtained the foregoing company descriptions from sources
Page 26
it deems reliable. The Sponsor has not independently verified the
provided information either in terms of accuracy or completeness.
What are Some Additional Considerations for Investors?
Investors should be aware of certain other considerations before making
a decision to invest in the Trusts.
The value of the Equity Securities will fluctuate over the life of a
Trust and may be more or less than the price at which they were
deposited in such Trust. The Equity Securities may appreciate or
depreciate in value (or pay dividends) depending on the full range of
economic and market influences affecting these securities.
Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure or defect in any Security. In the event of a notice
that any Equity Security will not be delivered ("Failed Contract
Obligations") to a Trust, the Sponsor is authorized under the Indenture
to direct the Trustee to acquire other Equity Securities ("Replacement
Securities"). Any Replacement Security will be identical to those which
were the subject of the failed contract. The Replacement Securities must
be purchased within 20 days after delivery of the notice of a failed
contract and the purchase price may not exceed the amount of funds
reserved for the purchase of the Failed Contract Obligations.
If the right of limited substitution described in the preceding
paragraph is not utilized to acquire Replacement Securities in the event
of a failed contract, the Sponsor will refund the sales charge
attributable to such Failed Contract Obligations to all Unit holders of
a Trust and the Trustee will distribute the principal attributable to
such Failed Contract Obligations not more than 120 days after the date
on which the Trustee received a notice from the Sponsor that a
Replacement Security would not be deposited in a Trust. In addition,
Unit holders should be aware that, at the time of receipt of such
principal, they may not be able to reinvest such proceeds in other
securities at a yield equal to or in excess of the yield which such
proceeds would have earned for Unit holders of a Trust.
The Indenture also authorizes the Sponsor to increase the size of a
Trust and the number of Units thereof by the deposit of additional
Equity Securities, or cash (including a letter of credit) with
instructions to purchase additional Equity Securities, in such Trust and
the issuance of a corresponding number of additional Units. If the
Sponsor deposits cash, existing and new investors could experience a
dilution of their investments and a reduction in anticipated income
because of fluctuations in the prices of the Equity Securities between
the time of the cash deposit and the actual purchase of the Equity
Securities and because the Trusts will pay the brokerage fees associated
therewith.
Each Trust consists of the Equity Securities listed under "Schedule of
Investments" for each Trust (or contracts to purchase such Securities)
as may continue to be held from time to time in such Trust and any
additional Equity Securities acquired and held by such Trust pursuant to
the provisions of the Indenture (including provisions with respect to
deposits into such Trust of Equity Securities in connection with the
issuance of additional Units).
Once all of the Equity Securities in a Trust are acquired, the Trustee
will have no power to vary the investments of such Trust, i.e., the
Trustee will have no managerial power to take advantage of market
variations to improve a Unit holder's investment, and may dispose of
Equity Securities only under limited circumstances. See "Rights of Units
Holders-How May Equity Securities be Removed from a Trust?"
Like other investment companies, financial and business organizations
and individuals around the world, the Trusts could be adversely affected
if the computer systems used by the Sponsor, Evaluator, Portfolio
Supervisor or Trustee or other service providers to the Trusts do not
properly process and calculate date-related information and data
involving dates of January 1, 2000 and thereafter. This is commonly
known as the "Year 2000 Problem." The Sponsor, Evaluator, Portfolio
Supervisor and Trustee are taking steps that they believe are reasonably
designed to address the Year 2000 Problem with respect to computer
systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each Trust's other service
providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact to the Trusts.
The Year 2000 Problem is expected to impact corporations, which may
include issuers of the Equity Securities contained in the Trusts to
varying degrees based upon various factors, including, but not limited
to, their industry sector and degree of technological sophistication.
Page 27
The Sponsor is unable to predict what impact, if any, the Year 2000
Problem will have on issuers of the Equity Securities contained in the
Trusts.
To the best of the Sponsor's knowledge, there is no litigation pending
as of the Initial Date of Deposit in respect of any Equity Security
which might reasonably be expected to have a material adverse effect on
a Trust. At any time after the Initial Date of Deposit, litigation may
be instituted on a variety of grounds with respect to the Equity
Securities. The Sponsor is unable to predict whether any such litigation
will be instituted, or if instituted, whether such litigation might have
a material adverse effect on a Trust.
Legislation. From time to time Congress considers proposals to reduce
the rate of the dividends-received deductions. Enactment into law of a
proposal to reduce the rate would adversely affect the after-tax return
to investors who can take advantage of the deduction. Unit holders are
urged to consult their own tax advisors. Further, at any time after the
Initial Date of Deposit, legislation may be enacted that could
negatively affect the Equity Securities in a Trust or the issuers of the
Equity Securities. Changing approaches to regulation, particularly with
respect to any of the industry sectors represented in a Trust, may have
a negative impact on certain companies represented in a Trust. There can
be no assurance that future legislation, regulation or deregulation will
not have a material adverse effect on the Trusts or will not impair the
ability of the issuers of the Equity Securities to achieve their
business goals.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. During the initial
offering period, the Public Offering Price is based on the aggregate
underlying value of the Equity Securities in a Trust (generally
determined by the closing sale prices of listed Equity Securities and
the ask prices of over-the-counter traded Equity Securities), plus or
minus cash, if any, in the Income and Capital Accounts of a Trust, plus
an initial sales charge equal to the difference between the maximum
sales charge of ___% of the Public Offering Price and the maximum
remaining deferred sales charge, initially $___ per Unit, divided by the
number of Units of a Trust outstanding. Commencing on _____, 1999, and
on the twentieth day of each month thereafter (or if such date is not a
business day, on the preceding business day) through _____, 1999, a
deferred sales charge of $___ will be assessed per Unit per month. Units
purchased subsequent to the initial deferred sales charge payment but
still during the initial offering period will be subject to the initial
sales charge and the remaining deferred sales charge payments not yet
collected. The deferred sales charge will be paid from funds in the
Capital Account, if sufficient, or from the periodic sale of Equity
Securities. The total maximum sales charge assessed to Unit holders on a
per Unit basis will be ___% of the Public Offering Price (equivalent to
___% of the net amount invested, exclusive of the deferred sales
charge). In addition, a portion of the Public Offering Price on Units
purchased prior to the earlier of six months after the Initial Date of
Deposit or the end of the initial offering period also consists of
Equity Securities in an amount sufficient to pay for all or a portion of
the costs incurred in establishing the Trusts, including the costs of
preparing the registration statement, the Indenture and other closing
documents, registering Units with the Securities and Exchange Commission
and states, the initial audit of a Trust portfolio, legal fees and the
initial fees and expenses of the Trustee. The organizational and
offering costs will be deducted from the assets of each Trust as of the
earlier of six months after the Initial Date of Deposit or the end of
the initial offering period. Upon the completion of the deferred sales
charge period, the secondary market Public Offering Price will not
include deferred payments, but will instead include only a one-time
initial sales charge of ___% of the Public Offering Price (equivalent to
___% of the net amount invested), which will be reduced by 1/2 of 1% on
each subsequent _____, commencing _____, 1999 to a minimum sales charge
of ___%.
During the initial offering period, the Sponsor's Repurchase Price is
based on the aggregate underlying value of the Equity Securities in a
Trust (generally determined by the closing sale prices of listed Equity
Securities and the ask prices of over-the-counter traded Equity
Securities), plus or minus cash, if any, in the Income and Capital
Accounts of a Trust, plus, until the earlier of six months after the
Initial Date of Deposit or the end of the initial offering period,
estimated organizational and offering costs, divided by the number of
Units of a Trust outstanding and reduced by the deferred sales charge
not yet paid. During the secondary market, the Sponsor's Repurchase
Page 28
Price is also based on the aggregate underlying value of the Equity
Securities in a Trust (generally determined by the closing sale prices
of listed Equity Securities and the bid prices of over-the-counter
traded Equity Securities), plus or minus cash, if any, in the Income and
Capital Accounts of a Trust, divided by the number of outstanding Units
of a Trust.
The minimum amount which an investor may purchase of a Trust is $1,000
($500 for Individual Retirement Accounts or other retirement plans). The
applicable sales charge for the Trusts for both primary and secondary
market sales is reduced by a discount as indicated below for aggregate
volume purchases of the Trusts (except for sales made pursuant to a
"wrap fee account" or similar arrangements as set forth below):
Primary and Secondary
_____________________
Percent of Percent of
Dollar Amount of Transaction Offering Net Amount
at Public Offering Price* Price Invested
____________________________ __________ __________
$ 50,000 but less than $100,000 0.25% 0.2506%
$100,000 but less than $250,000 0.50% 0.5025%
$250,000 but less than $500,000 1.00% 1.0101%
$500,000 or more 2.00% 2.0408%
___________
<FN>
* The breakpoint 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.
</FN>
Any such reduced sales charge shall be the responsibility of the selling
broker/dealer, bank or other selling agent. An investor may aggregate
same day purchases of Units of Trusts contained in this Prospectus and
units of other unit investment trusts containing equity securities of
which the Sponsor acted as Principal Underwriter which are currently in
the initial offering period and which have substantially the same sales
load and years to maturity as the Trusts for purposes of qualifying for
volume purchase discounts listed above. Investors who have executed a
letter of intent indicating their intention to purchase a specified
dollar amount of Units of any unit investment trust containing equity
securities of which the Sponsor acts as Principal Underwriter from any
broker/dealer during the initial offering period are eligible to receive
a volume discount as set forth in the above table based on the amount of
intended aggregate purchases. The letter of intent will specify the
amount of intended aggregate purchases which must be purchased over a 13-
month period. The initial purchase made pursuant to a letter of intent
must equal at least 5% of the amount of intended aggregate purchases.
Units purchased with rollover proceeds, reinvested dividends, redemption
or termination proceeds from other unit investment trusts or other
similar transactions will not be counted to reach the amount of intended
aggregate purchases. In the event that total purchases by an investor
pursuant to a letter of intent over the 13-month period are less than
the amount specified in the letter of intent, the selling broker/dealer
shall take such action as is necessary to receive from the investor the
difference between the amounts the investor paid for units pursuant to
the letter of intent and the amounts which the investor would have paid
if the higher sales charge had been applied. It is the responsibility of
the selling broker/dealer to notify the Sponsor of each sale made
pursuant to a letter of intent. All Units of the Trusts will be subject
to the applicable deferred sales charge per Unit regardless of volume
purchase discounts. Investors who, as a result of volume purchase
discounts, are eligible to purchase Units subject to a Maximum Sales
Charge of less than the applicable maximum deferred sales charge amount
will be credited the difference between this Maximum Sales Charge and
the deferred sales charge at the time of purchase. The reduced sales
charge structure will apply on all purchases of Units in a Trust by the
same person on any one day from any one dealer. Additionally, Units
purchased in the name of the spouse of a purchaser or in the name of a
child of such purchaser under 21 years of age will be deemed, for the
purposes of calculating the applicable sales charge, to be additional
purchases by the purchaser. The reduced sales charges will also be
applicable to a trustee or other fiduciary purchasing securities for a
single trust estate or single fiduciary account. The purchaser must
inform the broker/dealer, bank or other selling agent of any such
combined purchase prior to the sale in order to obtain the indicated
discount. In addition, Unit holders may utilize their redemption or
Page 29
termination proceeds received from trusts sponsored by the Sponsor, or
their termination proceeds from other unit investment trusts having a
similar strategy as the Trusts, to purchase Units of the Trusts, subject
to a deferred sales charge of $.07 per Unit per month to be collected on
each of the remaining deferred sales charge payment dates as provided
herein. Unit holders who redeem units of trusts sponsored by the Sponsor
should note that they will be assessed the amount of any remaining
deferred sales charge on such units at the time of redemption. In
addition, with respect to the employees, officers and directors
(including their immediate family members, defined as spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-
in-law, sons-in-law and daughters-in-law, and trustees, custodians or
fiduciaries for the benefit of such persons) of the Sponsor and
broker/dealers, banks or other selling agents and their subsidiaries and
vendors providing services to the Sponsor, Units may be purchased at the
Public Offering Price less the concession the Sponsor typically allows
to dealers and other selling agents.
Units may be purchased in the primary or secondary market at the Public
Offering Price less the concession the Sponsor typically allows to
dealers and other selling agents (see "Public Offering-How are Units
Distributed?") for purchases by investors who purchase Units through
registered investment advisors, certified financial planners or
registered broker/dealers who in each case either charge periodic fees
for financial planning, investment advisory or asset management
services, or provide such services in connection with the establishment
of an investment account for which a comprehensive "wrap fee" charge is
imposed.
Had the Units of the Trusts been available for sale on the business day
prior to the Initial Date of Deposit, the Public Offering Price would
have been as indicated in "Summary of Essential Information." The Public
Offering Price of Units on the date of the prospectus or during the
initial offering period may vary from the amount stated under "Summary
of Essential Information" in accordance with fluctuations in the prices
of the underlying Equity Securities. During the initial offering period,
the aggregate value of the Units of a Trust shall be determined on the
basis of the aggregate underlying value of the Equity Securities therein
plus or minus cash, if any, in the Income and Capital Accounts of a
Trust. The aggregate underlying value of the Equity Securities during
the initial offering period will be determined in the following manner:
if the Equity Securities are listed, this evaluation is generally based
on the closing sale prices on that exchange (unless it is determined
that these prices are inappropriate as a basis for valuation) or, if
there is no closing sale price on that exchange, at the closing ask
prices. If the Equity Securities are not so listed or, if so listed and
the principal market therefor is other than on the exchange, the
evaluation shall generally be based on the current ask prices on the
over-the-counter market (unless it is determined that these prices are
inappropriate as a basis for evaluation). If current ask prices are
unavailable, the evaluation is generally determined (a) on the basis of
current ask prices for comparable securities, (b) by appraising the
value of the Equity Securities on the ask side of the market or (c) by
any combination of the above.
The Evaluator on each business day will appraise or cause to be
appraised the value of the underlying Equity Securities in each Trust as
of the Evaluation Time and will adjust the Public Offering Price of the
Units commensurate with such valuation. Such Public Offering Price will
be effective for all orders received prior to the Evaluation Time on
each such day. Orders received by the Trustee or Sponsor for purchases,
sales or redemptions after that time, or on a day which is not a
business day, will be held until the next determination of price. The
term "business day," as used herein and under "Rights of Unit Holders-
How May Units be Redeemed?", shall exclude Saturdays, Sundays and the
following holidays as observed by the New York Stock Exchange, Inc.: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the aggregate underlying
value of the Equity Securities therein, plus or minus cash, if any, in
the Income and Capital Accounts of a Trust plus the applicable sales
charge. The aggregate underlying value of the Equity Securities for
secondary market sales is calculated in the same manner as described
above for sales made during the initial offering period with the
exception that bid prices are used instead of ask prices.
Although payment is normally made three business days following the
Page 30
order for purchase (the "date of settlement"), payment may be made prior
thereto. A person will become owner of the Units on the date of
settlement provided payment has been received. Cash, if any, made
available to the Sponsor prior to the date of settlement for the
purchase of Units may be used in the Sponsor's business and may be
deemed to be a benefit to the Sponsor, subject to the limitations of the
Securities Exchange Act of 1934. Delivery of Certificates representing
Units so ordered will be made three business days following such order
or shortly thereafter. See "Rights of Unit Holders-How May Units be
Redeemed?" for information regarding the ability to redeem Units ordered
for purchase.
How are Units Distributed?
During the initial offering period (i) for Units issued on the Initial
Date of Deposit and (ii) for additional Units issued after such date as
additional Equity Securities or cash are deposited by the Sponsor, Units
will be distributed to the public at the then current Public Offering
Price. The initial offering period may be up to approximately 360 days.
During such period, the Sponsor may deposit additional Equity Securities
or cash in a Trust and create additional Units. Units reacquired by the
Sponsor during the initial offering period (at prices based upon the
aggregate underlying value of the Equity Securities in a Trust plus or
minus a pro rata share of cash, if any in the Income and Capital
Accounts of such Trust) may be resold at the then current Public
Offering Price.
Upon completion of the initial offering, Units repurchased in the
secondary market (see "Public Offering-Will There be a Secondary
Market?") may be offered by this prospectus at the secondary market
Public Offering Price determined in the manner described above.
It is the intention of the Sponsor to qualify Units of the Trusts for
sale in a number of states. Sales initially will be made to dealers and
other selling agents at prices which represent a concession or agency
commission of ___% of the Public Offering Price, and, for secondary
market sales, ___% of the Public Offering Price (or 65% of the then
current maximum sales charge after _____, 1999). Dealers and other
selling agents will be allowed a concession or agency commission on the
sale of Units purchased subject only to a deferred sales charge on such
Units equal to (i) $___ per Unit on Units sold subject to a deferred
sales charge of $___ per Unit or (ii) 63% of the then current maximum
remaining deferred sales charge on Units sold subject to a deferred
sales charge of less than $___ per Unit. Volume concessions or agency
commissions of an additional ___% of the Public Offering Price on all
purchases of Units of the Trusts will be given to any broker/dealer or
bank who has aggregate purchases of Trust Units from the Sponsor on the
Initial Date of Deposit of at least $100,000 of the Trusts or purchases
$250,000 of any one of such Trusts on any day thereafter. In addition,
dealers and other selling agents will receive an additional volume
concession or agency commission with respect to sales of Units of each
individual Trust in the amounts set forth below:
Additional
Total Sales per Trust Concession
_____________________ __________
$1,000,000 but less than $2,000,000 .10%
$2,000,000 but less than $3,000,000 .15%
$3,000,000 but less than $10,000,000 .20%
$10,000,000 or more .30%
The Sponsor reserves the right to change the amount of the concession or
agency commission from time to time. Certain commercial banks may be
making Units of a Trust available to their customers on an agency basis.
A portion of the sales charge paid by these customers is retained by or
remitted to the banks in the amounts indicated above. Under the Glass-
Steagall Act, banks are prohibited from underwriting Trust Units;
however, the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have not indicated that these particular
agency transactions are not permitted under such Act. In Texas and in
certain other states, any banks making Units available must be
registered as broker/dealers under state law.
From time to time the Sponsor may implement programs under which
broker/dealers, banks or other selling agents of a Trust may receive
nominal awards from the Sponsor for each of their registered
representatives who have sold a minimum number of UIT Units during a
specified time period. In addition, at various times the Sponsor may
Page 31
implement other programs under which the sales force of a broker/dealer,
bank or other selling agent may be eligible to win other nominal awards
for certain sales efforts, or under which the Sponsor will reallow to
any such dealer that sponsors sales contests or recognition programs
conforming to criteria established by the Sponsor, or participates in
sales programs sponsored by the Sponsor, an amount not exceeding the
total applicable sales charges on the sales generated by such person at
the public offering price during such programs. Also, the Sponsor in its
discretion may from time to time pursuant to objective criteria
established by the Sponsor pay fees to qualifying dealers for certain
services or activities which are primarily intended to result in sales
of Units of a Trust. Such payments are made by the Sponsor out of its
own assets, and not out of the assets of a Trust. These programs will
not change the price Unit holders pay for their Units or the amount that
the Trusts will receive from the Units sold.
The Sponsor may from time to time in its advertising and sales materials
compare the then current estimated returns on the Trusts and returns
over specified periods on other similar trusts sponsored by Nike
Securities L.P. with returns on other taxable investments such as
corporate or U.S. Government bonds, bank CDs and money market accounts
or money market funds, each of which has investment characteristics
that may differ from those of the Trusts. U.S. Government bonds,
for example, are backed by the full faith and credit of the U.S.
Government and bank CDs and money market accounts are insured by an
agency of the federal government. Money market accounts and money market
funds provide stability of principal, but pay interest at rates that
vary with the condition of the short-term debt market. The investment
characteristics of the Trusts are described more fully elsewhere in this
Prospectus.
Information on percentage changes in the dollar value of Units, on the
basis of changes in Unit price may be included from time to time in
advertisements, sales literature, reports and other information
furnished to current or prospective Unit holders. Total return figures
are not averaged, and may not reflect deduction of the sales charge,
which would decrease the return. Average annualized return figures
reflect deduction of the maximum sales charge. No provision is made for
any income taxes payable.
Past performance may not be indicative of future results. Each Trust's
portfolio is not managed. Unit price and return fluctuate with the value
of the common stocks in a Trust's portfolio, so there may be a gain or
loss when Units are sold.
Each Trust's performance may be compared to performance on a total
return basis with the Dow Jones Industrial Average, the S&P 500
Composite Stock Price Index, or performance data from Lipper Analytical
Services, Inc. and Morningstar Publications, Inc. or from publications
such as Money, The New York Times, U.S. News and World Report, Business
Week, Forbes or Fortune. As with other performance data, performance
comparisons should not be considered representative of a Trust's
relative performance for any future period.
What are the Sponsor's Profits?
The Sponsor of the Trusts will receive a gross sales commission equal to
___% of the Public Offering Price of the Units (equivalent to ___% of
the net amount invested, exclusive of the deferred sales charge), less
any reduced sales charge described under "Public Offering-How is the
Public Offering Price Determined?" See "Public Offering-How are Units
Distributed?" for information regarding the receipt of additional
concessions available to dealers and other selling agents. In addition,
the Sponsor may be considered to have realized a profit or to have
sustained a loss, as the case may be, in the amount of any difference
between the cost of the Equity Securities to the Trusts (which is based
on the Evaluator's determination of the aggregate offering price of the
underlying Equity Securities of such Trust on the Initial Date of
Deposit as well as subsequent deposits) and the cost of such Equity
Securities to the Sponsor. See Note (2) of "Schedule of Investments" for
each Trust. During the initial offering period, the dealers and other
selling agents also may realize profits or sustain losses as a result of
fluctuations after the Initial Date of Deposit in the Public Offering
Price received by the dealers and other selling agents upon the sale of
Units.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between the
price at which Units are purchased and the price at which Units are
resold (which price includes a sales charge of ___% subject to reduction
Page 32
beginning _____, 1999) or redeemed. The secondary market public offering
price of Units may be greater or less than the cost of such Units to the
Sponsor.
Will There be a Secondary Market?
After the initial offering period, although not obligated to do so, the
Sponsor intends to maintain a market for the Units and continuously
offer to purchase Units at prices, subject to change at any time, based
upon the aggregate underlying value of the Equity Securities in a Trust
plus or minus cash, if any, in the Income and Capital Accounts of such
Trust. All expenses incurred in maintaining a secondary market, other
than the fees of the Evaluator and the costs of the Trustee in
transferring and recording the ownership of Units, will be borne by the
Sponsor. If the supply of Units exceeds demand, or for some other
business reason, the Sponsor may discontinue purchases of Units at such
prices. IF A UNIT HOLDER WISHES TO DISPOSE OF HIS OR HER UNITS, HE OR
SHE SHOULD INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES PRIOR TO
MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE. Units subject to a
deferred sales charge which are sold or tendered for redemption prior to
such time as the entire deferred sales charge on such Units has been
collected will be assessed the amount of the remaining deferred sales
charge at the time of sale or redemption.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee.
Ownership of Units may be evidenced by registered certificates executed
by the Trustee and the Sponsor. Delivery of certificates representing
Units ordered for purchase is normally made three business days
following such order or shortly thereafter. Certificates are
transferable by presentation and surrender to the Trustee properly
endorsed or accompanied by a written instrument or instruments of
transfer. Certificates to be redeemed must be properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unit
holder must sign exactly as his or her name appears on the face of the
certificate with the signature guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other
signature guaranty program in addition to, or in substitution for,
STAMP, as may be accepted by the Trustee. In certain instances the
Trustee may require additional documents such as, but not limited to,
trust instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority.
Certificates will be issued in fully registered form, transferable only
on the books of the Trustee in denominations of one Unit or any multiple
thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form. The
Trustee will maintain an account for each such Unit holder and will
credit each such account with the number of Units purchased by that Unit
holder. Within two business days of the issuance or transfer of Units
held in uncertificated form, the Trustee will send to the registered
owner of Units a written initial transaction statement containing a
description of their respective Trust; the number of Units issued or
transferred; the name, address and taxpayer identification number, if
any, of the new registered owner; a notation of any liens and
restrictions of the issuer and any adverse claims to which such Units
are or may be subject or a statement that there are no such liens,
restrictions or adverse claims; and the date the transfer was
registered. Uncertificated Units are transferable through the same
procedures applicable to Units evidenced by certificates (described
above), except that no certificate need be presented to the Trustee and
no certificate will be issued upon the transfer unless requested by the
Unit holder. A Unit holder may at any time request the Trustee to issue
certificates for Units.
Although no such charge is now made or contemplated, a Unit holder may
be required to pay $2.00 to the Trustee per certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or exchange. For new certificates
issued to replace destroyed, stolen or lost certificates, the Unit
holder may be required to furnish indemnity satisfactory to the Trustee
and pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
Page 33
How are Income and Capital Distributed?
The Trustee will distribute any net income received with respect to any
of the securities in a Trust on or about the Income Distribution Dates
to Unit holders of record on the preceding Income Distribution Record
Date. See "Summary of Essential Information." Persons who purchase Units
will commence receiving distributions only after such person becomes a
record owner. Notification to the Trustee of the transfer of Units is
the responsibility of the purchaser, but in the normal course of
business such notice is provided by the selling broker-dealer. The pro
rata share of cash in the Capital Account of a Trust will be computed as
of the fifteenth day of each month. Proceeds received on the sale of any
Equity Securities in a Trust, to the extent not used to meet redemptions
of Units or pay expenses, will, however, be distributed on the last day
of each month to Unit holders of record on the fifteenth day of such
month if the amount available for distribution equals at least $1.00 per
100 Units. The Trustee is not required to pay interest on funds held in
the Capital Account of a Trust (but may itself earn interest thereon and
therefore benefit from the use of such funds). Notwithstanding,
distributions of funds in the Capital Account, if any, will be made on
the last day of each December to Unit holders of record as of December
15. See "What is the Federal Tax Status of Unit Holders?"
It is anticipated that the deferred sales charge will be collected from
the Capital Account and that amounts in the Capital Account will be
sufficient to cover the cost of the deferred sales charge. However, to
the extent that amounts in the Capital Account are insufficient to
satisfy the then current deferred sales charge obligation, Equity
Securities may be sold to meet such shortfall. Distributions of amounts
necessary to pay the deferred portion of the sales charge will be made
to an account designated by the Sponsor for purposes of satisfying Unit
holders' deferred sales charge obligations.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of any distribution made by
a Trust if the Trustee has not been furnished the Unit holder's tax
identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and
may be recovered by the Unit holder only when filing a tax return. Under
normal circumstances the Trustee obtains the Unit holder's tax
identification number from the selling broker. However, a Unit holder
should examine his or her statements from the Trustee to make sure that
the Trustee has been provided a certified tax identification number in
order to avoid this possible "back-up withholding." In the event the
Trustee has not been previously provided such number, one should be
provided as soon as possible.
Within a reasonable time after each Trust is terminated, each Unit
holder will, upon surrender of his or her Units for redemption, receive:
(i) the pro rata share of the amounts realized upon the disposition of
Equity Securities, unless he or she elects an In-Kind Distribution as
described under "Other Information-How May the Indenture be Amended or
Terminated?" and (ii) a pro rata share of any other assets of a Trust,
less expenses of such Trust.
The Trustee will credit to the Income Account of a Trust any dividends
received on the Equity Securities therein. All other receipts (e.g.
return of capital, etc.) are credited to the Capital Account of each
Trust.
The Trustee may establish reserves (the "Reserve Account") within each
Trust for state and local taxes, if any, and any governmental charges
payable out of a Trust.
Distribution Reinvestment Option. Any Unit holder may elect to have each
distribution of income or capital on his or her Units, other than the
final liquidating distribution in connection with the termination of a
Trust, automatically reinvested in additional Units of such Trust. Each
person who purchases Units of a Trust may elect to become a participant
in the Distribution Reinvestment Option by notifying the Trustee of
their election. The Distribution Reinvestment Option may not be
available in all states. In order to enable a Unit holder to participate
in the Distribution Reinvestment Option with respect to a particular
distribution on his or her Units, the card must be received by the
Trustee within 10 days prior to the Record Date for such distribution.
Each subsequent distribution of income or capital on the participant's
Units will be automatically applied by the Trustee to purchase
additional Units of such Trust. IT SHOULD BE REMEMBERED THAT EVEN IF
DISTRIBUTIONS ARE REINVESTED, THEY ARE STILL TREATED AS DISTRIBUTIONS
FOR INCOME TAX PURPOSES.
Page 34
What Reports will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and the amount
of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per Unit. Within a reasonable period of
time after the end of each calendar year, the Trustee shall furnish to
each person who at any time during the calendar year was a Unit holder
of a Trust the following information in reasonable detail: (1) a summary
of transactions in such Trust for such year; (2) any Equity Securities
sold during the year and the Equity Securities held at the end of such
year by such Trust; (3) the redemption price per Unit based upon a
computation thereof on the 31st day of December of such year (or the
last business day prior thereto); and (4) amounts of income and capital
distributed during such year.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Securities in the Trusts furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his or her Units by tender
to the Trustee at its unit investment trust office in the City of New
York of the certificates representing the Units to be redeemed, or in
the case of uncertificated Units, delivery of a request for redemption,
duly endorsed or accompanied by proper instruments of transfer with
signature guaranteed as explained above (or by providing satisfactory
indemnity, as in connection with lost, stolen or destroyed
certificates), and payment of applicable governmental charges, if any.
No redemption fee will be charged. On the third business day following
such tender, the Unit holder will be entitled to receive in cash an
amount for each Unit equal to the Redemption Price per Unit next
computed after receipt by the Trustee of such tender of Units. The "date
of tender" is deemed to be the date on which Units are received by the
Trustee (if such day is a day on which the New York Stock Exchange is
open for trading), except that as regards Units received after 4:00 p.m.
Eastern time (or as of any earlier closing time on a day on which the
New York Stock Exchange is scheduled in advance to close at such earlier
time), the date of tender is the next day on which the New York Stock
Exchange is open for trading and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the redemption
price computed on that day. Units so redeemed shall be cancelled. Units
tendered for redemption prior to such time as the entire deferred sales
charge on such Units has been collected will be assessed the amount of
the remaining deferred sales charge at the time of redemption.
Any Unit holder tendering 1,000 Units or more of a Trust for redemption
may request by written notice submitted at the time of tender from the
Trustee in lieu of a cash redemption a distribution of shares of Equity
Securities in an amount and value of Equity Securities per Unit equal to
the Redemption Price Per Unit as determined as of the evaluation next
following tender. However, no In-Kind Distribution requests submitted
during the nine business days prior to the Mandatory Termination Date
will be honored. To the extent possible, in-kind distributions ("In-Kind
Distributions") shall be made by the Trustee through the distribution of
each of the Equity Securities in book-entry form to the account of the
Unit holder's bank or broker-dealer at the Depository Trust Company. An
In-Kind Distribution will be reduced by customary transfer and
registration charges. The tendering Unit holder will receive his or her
pro rata number of whole shares of each of the Equity Securities
comprising the portfolio and cash from the Capital Account equal to the
fractional shares to which the tendering Unit holder is entitled. The
Trustee may adjust the number of shares of any issue of Equity
Securities included in a Unit holder's In-Kind Distribution to
facilitate the distribution of whole shares, such adjustment to be made
on the basis of the value of Equity Securities on the date of tender.
See "What is the Federal Tax Status of Unit Holders?" If funds in the
Capital Account are insufficient to cover the required cash distribution
to the tendering Unit holder, the Trustee may sell Equity Securities in
the manner described above.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of the principal amount of a
Unit redemption if the Trustee has not been furnished the redeeming Unit
holder's tax identification number in the manner required by such
regulations. For further information regarding this withholding, see
"Rights of Unit Holders-How are Income and Capital Distributed?" In the
event the Trustee has not been previously provided such number, one must
Page 35
be provided at the time redemption is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of a Trust to the extent that funds are
available for such purpose, or from the Capital Account. All other
amounts paid on redemption shall be withdrawn from the Capital Account
of each Trust.
The Trustee is empowered to sell Equity Securities of each Trust in
order to make funds available for redemption. To the extent that Equity
Securities are sold, the size and diversity of each Trust will be
reduced. Such sales may be required at a time when Equity Securities
would not otherwise be sold and might result in lower prices than might
otherwise be realized.
The Redemption Price per Unit will be determined on the basis of the
aggregate underlying value of the Equity Securities in a Trust plus or
minus cash, if any, in the Income and Capital Accounts of such Trust.
The Redemption Price per Unit is the pro rata share of each Unit
determined by the Trustee by adding: (1) the cash on hand in a Trust
other than cash deposited in a Trust to purchase Equity Securities not
applied to the purchase of such Equity Securities; (2) the aggregate
value of the Equity Securities held in a Trust, as determined by the
Evaluator on the basis of the aggregate underlying value of the Equity
Securities in such Trust next computed; and (3) dividends receivable on
the Equity Securities trading ex-dividend as of the date of computation;
and deducting therefrom: (1) amounts representing any applicable taxes
or governmental charges payable out of the Trust; (2) any amounts owing
to the Trustee for its advances; (3) an amount representing estimated
accrued expenses of a Trust, including but not limited to fees and
expenses of the Trustee (including legal and auditing fees), the
Evaluator and supervisory fees, if any; (4) cash held for distribution
to Unit holders of record of a Trust as of the business day prior to the
evaluation being made; and (5) other liabilities incurred by a Trust;
and finally dividing the results of such computation by the number of
Units of the Trust outstanding as of the date thereof. The redemption
price per Unit will be assessed the amount, if any, of the remaining
deferred sales charge at the time of redemption. 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
organizational and offering costs as set forth under "Summary of
Essential Information" for each Trust.
The aggregate value of the Equity Securities used to calculate the
Redemption Price per Unit will be determined in the following manner: if
the Equity Securities are listed, this evaluation is generally based on
the closing sale prices on that exchange (unless it is determined that
these prices are inappropriate as a basis for valuation) or, if there is
no closing sale price on that exchange, at the closing ask prices
(during the initial offering period) or the closing bid prices
(subsequent to the initial offering period). If the Equity Securities
are not so listed or, if so listed and the principal market therefor is
other than on the exchange, the evaluation shall generally be based on
the current ask or bid prices (as appropriate) on the over-the-counter
market (unless these prices are inappropriate as a basis for
evaluation). If current ask or bid prices (as appropriate) are
unavailable, the evaluation is generally determined (a) on the basis of
current ask or bid prices (as appropriate) for comparable securities,
(b) by appraising the value of the Equity Securities on the ask or bid
side of the market (as appropriate) or (c) by any combination of the
above.
The right of redemption may be suspended and payment postponed for any
period during which the New York Stock Exchange is closed, other than
for customary weekend and holiday closings, or during which the
Securities and Exchange Commission determines that trading on the New
York Stock Exchange is restricted or any emergency exists, as a result
of which disposal or evaluation of the Securities is not reasonably
practicable, or for such other periods as the Securities and Exchange
Commission may by order permit. Under certain extreme circumstances, the
Sponsor may apply to the Securities and Exchange Commission for an order
permitting a full or partial suspension of the right of Unit holders to
redeem their Units. The Trustee is not liable to any person in any way
for any loss or damage which may result from any such suspension or
postponement.
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that time
equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before 1:00 p.m. Eastern time on the same
Page 36
business day and by making payment therefor to the Unit holder not later
than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee
for redemption as any other Units. In the event the Sponsor does not
purchase Units, the Trustee may sell Units tendered for redemption in
the over-the-counter market, if any, as long as the amount to be
received by the Unit holder is equal to the amount he or she would have
received on redemption of the Units.
The offering price of any Units acquired by the Sponsor will be in
accord with the Public Offering Price described in the then effective
prospectus describing such Units. Any profit or loss resulting from the
resale or redemption of such Units will belong to the Sponsor.
How May Equity Securities be Removed from a Trust?
The Portfolios of the Trusts are not "managed" by the Sponsor or the
Trustee; their activities described herein are governed solely by the
provisions of the Indenture. The Indenture provides that the Sponsor may
(but need not) direct the Trustee to dispose of an Equity Security in
the event that an issuer defaults in the payment of a dividend that has
been declared, that any action or proceeding has been instituted
restraining the payment of dividends or there exists any legal question
or impediment affecting such Equity Security, that the issuer of the
Equity Security has breached a covenant which would affect the payments
of dividends, the credit standing of the issuer or otherwise impair the
sound investment character of the Equity Security, that the issuer has
defaulted on the payment on any other of its outstanding obligations,
that the price of the Equity Security has declined to such an extent or
other such credit factors exist so that in the opinion of the Sponsor,
the retention of such Equity Securities would be detrimental to a Trust.
Except as stated under "Portfolio-What are Some Additional
Considerations for Investors?" for Failed Contract Obligations, the
acquisition by a Trust of any securities or other property other than
the Equity Securities is prohibited. Pursuant to the Indenture and with
limited exceptions, the Trustee may sell any securities or other
property acquired in exchange for Equity Securities such as those
acquired in connection with a merger or other transaction. If offered
such new or exchanged securities or property, the Trustee shall reject
the offer. However, in the event such securities or property are
nonetheless acquired by a Trust, they may be accepted for deposit in a
Trust and either sold by the Trustee or held in a Trust pursuant to the
direction of the Sponsor (who may rely on the advice of the Portfolio
Supervisor). Proceeds from the sale of Equity Securities (or any
securities or other property received by a Trust in exchange for Equity
Securities) by the Trustee are credited to the Capital Account of a
Trust for distribution to Unit holders or to meet redemptions. The
Trustee may, from time to time, retain and pay compensation to the
Sponsor (or an affiliate of the Sponsor) to act as agent for the Trusts
with respect to selling Equity Securities from the Trusts. In acting in
such capacity, the Sponsor or its affiliate will be held subject to the
restrictions under the Investment Company Act of 1940, as amended.
The Trustee may also sell Equity Securities designated by the Sponsor,
or if not so directed, in its own discretion, for the purpose of
redeeming Units of a Trust tendered for redemption and the payment of
expenses.
The Sponsor, in designating Equity Securities to be sold by the Trustee,
will generally make selections in order to maintain, to the extent
practicable, the proportionate relationship among the number of shares
of individual issues of Equity Securities. To the extent this is not
practicable, the composition and diversity of the Equity Securities may
be altered. In order to obtain the best price for a Trust, it may be
necessary for the Sponsor to specify minimum amounts (generally 100
shares) in which blocks of Equity Securities are to be sold. The Sponsor
may consider sales of Units of unit investment trusts which it sponsors
in making recommendations to the Trustee as to the selection of
broker/dealers to execute the Trusts' portfolio transactions.
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in 1991,
acts as Sponsor for successive series of The First Trust Combined
Series, the FT Series (formerly known as The First Trust Special
Situations Trust), The First Trust Insured Corporate Trust, The First
Page 37
Trust of Insured Municipal Bonds and The First Trust GNMA. First Trust
introduced the first insured unit investment trust in 1974 and to date
more than $20 billion in First Trust unit investment trusts have been
deposited. The Sponsor's employees include a team of professionals with
many years of experience in the unit investment trust industry. The
Sponsor is a member of the National Association of Securities Dealers,
Inc. and Securities Investor Protection Corporation and has its
principal offices at 1001 Warrenville Road, Lisle, Illinois 60532;
telephone number (630) 241-4141. As of December 31, 1997, the total
partners' capital of Nike Securities L.P. was $11,724,071 (audited).
(This paragraph relates only to the Sponsor and not to the Trusts or to
any series thereof or to any other dealer. The information is included
herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its
contractual obligations. More detailed financial information will be
made available by the Sponsor upon request.)
Who is the Trustee?
The Trustee is The Chase Manhattan Bank, with its principal executive
office located at 270 Park Avenue, New York, New York 10017 and its unit
investment trust office at 4 New York Plaza, 6th floor, New York, New
York 10004-2413. Unit holders who have questions regarding the Trusts
may call the Customer Service Help Line at 1-800-682-7520. The Trustee
is subject to supervision by the Superintendent of Banks of the State of
New York, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not
participated in the selection of the Equity Securities. For information
relating to the responsibilities of the Trustee under the Indenture,
reference is made to the material set forth under "Rights of Unit Holders."
The Trustee and any successor trustee may resign by executing an
instrument in writing and filing the same with the Sponsor and mailing a
copy of a notice of resignation to all Unit holders. Upon receipt of
such notice, the Sponsor is obligated to appoint a successor trustee
promptly. If the Trustee becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, the Sponsor may
remove the Trustee and appoint a successor as provided in the Indenture.
If upon resignation of a trustee no successor has accepted the
appointment within 30 days after notification, the retiring trustee may
apply to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of a trustee becomes effective
only when the successor trustee accepts its appointment as such or when
a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or
consolidation to which a Trustee shall be a party, shall be the
successor Trustee. The Trustee must be a banking corporation organized
under the laws of the United States or any State and having at all times
an aggregate capital, surplus and undivided profits of not less than
$5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit holders
for taking any action or for refraining from taking any action in good
faith pursuant to the Indenture, or for errors in judgment, but shall be
liable only for their own willful misfeasance, bad faith, gross
negligence (ordinary negligence in the case of the Trustee) or reckless
disregard of their obligations and duties. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the
Trustee of any of the Equity Securities. In the event of the failure of
the Sponsor to act under the Indenture, the Trustee may act thereunder
and shall not be liable for any action taken by it in good faith under
the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or upon or in
respect of the Trust which the Trustee may be required to pay under any
present or future law of the United States of America or of any other
taxing authority having jurisdiction. In addition, the Indenture
contains other customary provisions limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or becomes incapable of acting or becomes bankrupt or its
Page 38
affairs are taken over by public authorities, then the Trustee may (a)
appoint a successor Sponsor at rates of compensation deemed by the
Trustee to be reasonable and not exceeding amounts prescribed by the
Securities and Exchange Commission, or (b) terminate the Indenture and
liquidate the Trust as provided herein, or (c) continue to act as
Trustee without terminating the Indenture.
Who is the Evaluator?
The Evaluator is 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
Evaluator may resign or may be removed by the Sponsor or the Trustee, in
which event the Sponsor and the Trustee are to use their best efforts to
appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor
Evaluator. If upon resignation of the Evaluator no successor has
accepted appointment within 30 days after notice of resignation, the
Evaluator may apply to a court of competent jurisdiction for the
appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Indenture
shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee, Sponsor or Unit holders for errors in
judgment. This provision shall not protect the Evaluator in any case of
willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties.
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment is
(1) to cure any ambiguity or to correct or supplement any provision of
the Indenture which may be defective or inconsistent with any other
provision contained therein, or (2) to make such other provisions as
shall not adversely affect the interest of the Unit holders (as
determined in good faith by the Sponsor and the Trustee).
The Indenture provides that a Trust shall terminate upon the Mandatory
Termination Date indicated herein under "Summary of Essential
Information." A Trust may be liquidated at any time by consent of 100%
of the Unit holders of a Trust or by the Trustee when the value of the
Equity Securities owned by a Trust as shown by any evaluation, is less
than the lower of $2,000,000 or 20% of the total value of Equity
Securities deposited in such Trust during the initial offering period,
or in the event that Units of a Trust not yet sold aggregating more than
60% of the Units of such Trust are tendered for redemption by
underwriters, including the Sponsor. If a Trust is liquidated because of
the redemption of unsold Units of such Trust by underwriters, the
Sponsor will refund to each purchaser of Units of such Trust the entire
sales charge paid by such purchaser. In the event of termination,
written notice thereof will be sent by the Trustee to all Unit holders
of such Trust. Within a reasonable period after termination, the Trustee
will follow the procedures set forth under "Rights of Unit Holders-How
are Income and Capital Distributed?"
Commencing during the period beginning nine business days prior to, and
no later than, the Mandatory Termination Date, Equity Securities will
begin to be sold in connection with the termination of a Trust. The
Sponsor will determine the manner, timing and execution of the sale of
the Equity Securities. Written notice of any termination of a Trust
specifying the time or times at which Unit holders may surrender their
certificates for cancellation shall be given by the Trustee to each Unit
holder at his or her address appearing on the registration books of the
Trust maintained by the Trustee. At least 60 days prior to the Mandatory
Termination Date of a Trust the Trustee will provide written notice
thereof to all Unit holders and will include with such notice a form to
enable Unit holders to elect a distribution of shares of Equity
Securities (reduced by customary transfer and registration charges), if
such Unit holder owns at least 1,000 Units of such Trust, rather than to
receive payment in cash for such Unit holder's pro rata share of the
amounts realized upon the disposition by the Trustee of Equity
Securities. To be effective, the election form, together with
surrendered certificates and other documentation required by the
Page 39
Trustee, must be returned to the Trustee at least ten business days
prior to the Mandatory Termination Date of a Trust. Unit holders not
electing or eligible to receive a distribution of shares of Equity
Securities will receive a cash distribution from the sale of the
remaining Equity Securities within a reasonable time after a Trust is
terminated. Regardless of the distribution involved, the Trustee will
deduct from the funds of such Trust any accrued costs, expenses,
advances or indemnities provided by the Indenture, including estimated
compensation of the Trustee and costs of liquidation and any amounts
required as a reserve to provide for payment of any applicable taxes or
other governmental charges. Any sale of Equity Securities in a Trust in
connection with termination may result in a lower amount than might
otherwise be realized if such sale were not required at such time. In
addition, to the extent that Equity Securities are sold prior to the
Mandatory Termination Date, Unit holders will not benefit from any stock
appreciation they would have received had the Equity Securities not been
sold at such time. The Trustee will then distribute to each Unit holder
his or her pro rata share of the balance of the Income and Capital
Accounts.
Legal Opinions
The legality of the Units offered hereby and certain matters relating to
Federal tax law have been passed upon by Chapman and Cutler, 111 West
Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
Carter, Ledyard & Milburn, will act as counsel for the Trustee and as
special New York tax counsel for the Trusts.
Experts
The statements of net assets, including the schedules of investments, of
the Trusts at the opening of business on the Initial Date of Deposit
appearing in this Prospectus and Registration Statement, have been
audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing elsewhere herein and in the Registration
Statement, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
Page 40
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
FT 292
We have audited the accompanying statements of net assets, including the
schedules of investments, of FT 292, comprised of Energy Growth Trust,
Series 5, Financial Services Growth Trust, Series 6, Pharmaceutical
Growth Trust, Series 6, REIT Growth & Income Trust, Series 3 and
Technology Growth Trust, Series 9, as of the opening of business on
_____, 1999. These statements of net assets are the responsibility of
the Trusts' Sponsor. Our responsibility is to express an opinion on
these statements of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of net assets
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
statements of net assets. Our procedures included confirmation of the
letter of credit allocated among the Trusts on _____, 1999. An audit
also includes assessing the accounting principles used and significant
estimates made by the Sponsor, as well as evaluating the overall
presentation of the statements of net assets. We believe that our audit
of the statements of net assets provides a reasonable basis for our
opinion.
In our opinion, the statements of net assets referred to above present
fairly, in all material respects, the financial position of FT 292,
comprised of Energy Growth Trust, Series 5, Financial Services Growth
Trust, Series 6, Pharmaceutical Growth Trust, Series 6, REIT Growth &
Income Trust, Series 3 and Technology Growth Trust, Series 9, at the
opening of business on _____, 1999 in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
_____, 1999
Page 41
Statements of Net Assets
FT 292
At the Opening of Business on the
Initial Date of Deposit-_____, 1999
Financial
Services Pharmaceutical
Energy Growth Growth Trust Growth Trust
Trust, Series 5 Series 6 Series 6
_______________ ____________ ______________
NET ASSETS
Investment in Equity Securities represented
by purchase contracts (1) (2) $ $ $
Less accrued organizational and offering costs (3) ( ) ( ) ( )
Less liability for deferred sales charge (4) ( ) ( ) ( )
________ ________ ________
Net assets $ $ $
======== ======== ========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (5) $ $ $
Less sales charge (5) ( ) ( ) ( )
Less estimated organizational and offering costs (3) ( ) ( ) ( )
________ ________ ________
Net assets $ $ $
======== ======== ========
<FN>
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule of
Investments" for each Trust is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $ issued by
The Chase Manhattan Bank, which will be allocated among each of the five
Trusts in FT 292, has been deposited with the Trustee as collateral,
which is sufficient to cover the monies necessary for the purchase of
the Equity Securities pursuant to contracts for the purchase of such
Equity Securities.
(3) A portion of the Public Offering Price on Units purchased prior to
the earlier of six months after the Initial Date of Deposit or the end
of the initial offering period consists of Equity Securities in an
amount sufficient to pay for all or a portion of the costs incurred in
establishing the Trusts. These costs have been estimated at $_____ per
Unit for each Trust, based upon the expected number of Units of each
Trust to be created. A distribution will be made at the earlier of six
months after the Initial Date of Deposit or the end of the initial
offering period to an account maintained by the Trustee from which the
organizational and offering cost obligation of the investors to the
Sponsor will be satisfied. To the extent the number of Units of a Trust
is larger or smaller than the estimate, the actual distribution per Unit
for such Trust may differ from that set forth above.
(4) Represents the amount of mandatory distributions from each Trust
($___ per Unit), payable to the Sponsor in five equal monthly
installments beginning on _____, 1999, and on the twentieth day of each
month thereafter (or if such date is not a business day, on the
preceding business day) through _____, 1999. If Units are redeemed prior
to _____, 1999, the remaining amount of the deferred sales charge
applicable to such Units will be payable at the time of redemption.
(5) The aggregate cost to investors includes a sales charge computed at
the rate of ___% of the Public Offering Price (equivalent to ___% of the
net amount invested, exclusive of the deferred sales charge), assuming
no reduction of sales charge as set forth under "Public Offering-How is
the Public Offering Price Determined?"
</FN>
Page 42
Statements of Net Assets (con't.)
FT 292
At the Opening of Business on the
Initial Date of Deposit-_____, 1999
REIT Growth & Technology
Income Trust Growth Trust
Series 3 Series 9
_____________ ____________
NET ASSETS
Investment in Equity Securities represented
by purchase contracts (1) (2) $ $
Less accrued organizational and offering costs (3) ( ) ( )
Less liability for deferred sales charge (4) ( ) ( )
________ ________
Net assets $ $
======== ========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (5) $ $
Less sales charge (5) ( ) ( )
Less estimated organizational and offering costs (3) ( ) ( )
________ ________
Net assets $ $
======== ========
<FN>
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule of
Investments" for each Trust is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $ issued by
The Chase Manhattan Bank, which will be allocated among each of the five
Trusts in FT 292, has been deposited with the Trustee as collateral,
which is sufficient to cover the monies necessary for the purchase of
the Equity Securities pursuant to contracts for the purchase of such
Equity Securities.
(3) A portion of the Public Offering Price on Units purchased prior to
the earlier of six months after the Initial Date of Deposit or the end
of the initial offering period consists of Equity Securities in an
amount sufficient to pay for all or a portion of the costs incurred in
establishing the Trusts. These costs have been estimated at $_____ per
Unit for each Trust, based upon the expected number of Units of each
Trust to be created. A distribution will be made at the earlier of six
months after the Initial Date of Deposit or the end of the initial
offering period to an account maintained by the Trustee from which the
organizational and offering cost obligation of the investors to the
Sponsor will be satisfied. To the extent the number of Units of a Trust
is larger or smaller than the estimate, the actual distribution per Unit
for such Trust may differ from that set forth above.
(4) Represents the amount of mandatory distributions from each Trust
($___ per Unit), payable to the Sponsor in five equal monthly
installments beginning on _____, 1999, and on the twentieth day of each
month thereafter (or if such date is not a business day, on the
preceding business day) through _____, 1999. If Units are redeemed prior
to _____, 1999, the remaining amount of the deferred sales charge
applicable to such Units will be payable at the time of redemption.
(5) The aggregate cost to investors includes a sales charge computed at
the rate of ___% of the Public Offering Price (equivalent to ___% of the
net amount invested, exclusive of the deferred sales charge), assuming
no reduction of sales charge as set forth under "Public Offering-How is
the Public Offering Price Determined?"
</FN>
Page 43
Schedule of Investments
ENERGY GROWTH TRUST, SERIES 5
FT 292
At the Opening of Business on the
Initial Date of Deposit-_____, 1999
Percentage Market Cost of
of Aggregate Value Equity
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Equity Securities (1) Price Share to Trust (2)
_________ _______________________________________ ____________ ______ __________
% $ $
%
%
%
%
%
%
%
%
%
______ _________
Total Investments 100% $
====== =========
____________
<FN>
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on _____, 1999.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was $ .
Cost and loss to Sponsor relating to the Equity Securities sold to the
Trust were $ and $ , respectively.
</FN>
Page 44
Schedule of Investments
FINANCIAL SERVICES GROWTH TRUST, SERIES 6
FT 292
At the Opening of Business on the Initial Date of Deposit-_____, 1999
Percentage Market Cost of
of Aggregate Value Equity
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Equity Securities (1) Price Share to Trust (2)
_________ _______________________________________ ____________ ______ __________
% $ $
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
______ _________
Total Investments 100% $
====== =========
____________
<FN>
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on _____, 1999.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was $ .
Cost and loss to Sponsor relating to the Equity Securities sold to the
Trust were $ and $ , respectively.
</FN>
Page 45
Schedule of Investments
PHARMACEUTICAL GROWTH TRUST, SERIES 6
FT 292
At the Opening of Business on the
Initial Date of Deposit-_____, 1999
Percentage Market Cost of
Number of Aggregate Value Equity
of Ticker Symbol and Offering per Securities
Shares Name of Issuer of Equity Securities (1) Price Share to Trust (2)
______ _______________________________________ __________ ______ _________
% $ $
%
%
%
%
%
%
%
%
%
%
%
______ _________
Total Investments 100% $
====== =========
__________________
<FN>
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on _____, 1999.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was $ .
Cost and loss to Sponsor relating to the Equity Securities sold to the
Trust were $ and $ , respectively.
</FN>
Page 46
Schedule of Investments
REIT GROWTH & INCOME TRUST
FT 292
At the Opening of Business on the Initial Date of Deposit-_____, 1999
Percentage Market Cost of
Number of Aggregate Value Equity
of Ticker Symbol and Offering per Securities
Shares Name of Issuer of Equity Securities (1) Price Share to Trust (2)
________ _______________________________________ ____________ ______ _________
% $ $
%
%
%
%
%
%
%
%
%
%
______ _________
Total Investments 100% $
====== =========
_______________
<FN>
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on _____, 1999.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was $ .
Cost and loss to Sponsor relating to the Equity Securities sold to the
Trust were $ and $ , respectively.
</FN>
Page 47
Schedule of Investments
TECHNOLOGY GROWTH TRUST, SERIES 9
FT 292
At the Opening of Business on the
Initial Date of Deposit-_____, 1999
Percentage Market Cost of
of Aggregate Value Equity
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Equity Securities (1) Price Share to Trust (2)
_________ _____________________________________ ____________ ______ _________
% $ $
%
%
%
%
%
%
%
%
%
%
%
______ _________
Total Investments 100% $
====== =========
____________
<FN>
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on _____, 1999.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was $ .
Cost and loss to Sponsor relating to the Equity Securities sold to the
Trust were $ and $ , respectively.
</FN>
Page 48
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Page 49
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Page 50
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Page 51
CONTENTS:
Summary of Essential Information:
Energy Growth Trust, Series 5 4
Financial Services Growth Trust, Series 6 4
Pharmaceutical Growth Trust, Series 6 4
REIT Growth & Income Trust 5
Technology Growth Trust, Series 9 5
FT 292:
What is the FT Series? 8
What are the Expenses and Charges? 11
What is the Federal Tax Status of Unit Holders? 12
Are Investments in the Trusts Eligible for
Retirement Plans? 15
Portfolio:
What are the Equity Securities? 16
Risk Factors 16
What are the Equity Securities Selected for:
Energy Growth Trust, Series 5? 26
Financial Services Growth Trust, Series 6? 26
Pharmaceutical Growth Trust, Series 6? 26
REIT Growth & Income Trust? 26
Technology Growth Trust, Series 9? 26
What are Some Additional Considerations for
Investors? 27
Public Offering:
How is the Public Offering Price Determined? 28
How are Units Distributed? 31
What are the Sponsor's Profits? 32
Will There be a Secondary Market? 33
Rights of Unit Holders:
How is Evidence of Ownership Issued and Transferred? 33
How are Income and Capital Distributed? 34
What Reports will Unit Holders Receive? 35
How May Units be Redeemed? 35
How May Units be Purchased by the Sponsor? 36
How May Equity Securities be Removed from a Trust? 37
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 37
Who is the Trustee? 38
Limitations on Liabilities of Sponsor and Trustee 38
Who is the Evaluator? 39
Other Information:
How May the Indenture be Amended or Terminated? 39
Legal Opinions 40
Experts 40
Report of Independent Auditors 41
Statements of Net Assets:
Energy Growth Trust, Series 5 42
Financial Services Growth Trust, Series 6 42
Pharmaceutical Growth Trust, Series 6 42
REIT Growth & Income Trust 43
Technology Growth Trust, Series 9 43
Schedules of Investments:
Energy Growth Trust, Series 5 44
Financial Services Growth Trust, Series 6 45
Pharmaceutical Growth Trust, Series 6 46
REIT Growth & Income Trust 47
Technology Growth Trust, Series 9 48
_____________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO, WHICH THE FUND
HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940,
AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
ENERGY GROWTH TRUST SERIES 5
FINANCIAL SERVICES GROWTH TRUST, SERIES 6
PHARMACEUTICAL GROWTH TRUST SERIES 6
TECHNOLOGY GROWTH TRUST, SERIES 9
REIT GROWTH & INCOME TRUST
Nike Securities L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
24-Hour Pricing Line:
1-800-446-0132
_____, 1999
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 52
MEMORANDUM
Re: FT 292
As indicated in our cover letter transmitting the
Registration Statement on Form S-6 and other related material
under the Securities Act of 1933 to the Commission, the only
difference of consequence (except as described below) between FT
259, which is the current fund, and FT 292, 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
Series 259 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 bonds 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 292 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 December 17, 1998.
FT 292
(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
Robert D. Van Kampen Director of
Nike Securities December 17, 1998
Corporation, the
General Partner of
Nike Securities L.P. Robert M. Porcellino
Attorney-in-Fact**
David J. Allen Director of
Nike Securiites
Corporation, the
General Partner of
Nike Securities L.P.
___________________________
* 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. 33-63483) and the same is hereby
incorporated by this reference.
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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.
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EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 24 and
certain subsequent Series, effective January 23, 1992
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and Nike
Financial Advisory Services L.P. as Portfolio Supervisor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-45093] filed on behalf of The First Trust
Special Situations Trust, Series 24).
1.1.1* Form of Trust Agreement for Series 292 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).
3.1* Opinion of counsel as to legality of Securities being
registered.
3.2* Opinion of counsel as to Federal income tax status of
Securities being registered.
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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.
33-63483] filed on behalf of The First Trust Combined
Series 258).
___________________________________
* To be filed by amendment.
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