SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
A. Exact Name of Trust: THE FIRST TRUST GNMA
REINVESTMENT INCOME TRUST,
SERIES 72
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 NIKE SECURITIES L.P.
Agents for Service: Attention: James A. Bowen
1001 Warrenville Road
Lisle, Illinois 60532
CHAPMAN AND CUTLER
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
E. Title and Amount of Securities An indefinite number of Units
Being Registered: pursuant to Rule 24f-2
promulgated under the
Investment Company Act of
1940, as amended
F. Proposed Maximum Offering Price Indefinite
to the Public of the Securities
Being Registered:
G. Amount of Filing Fee: $0.00
H. Approximate Date of Proposed _____ Check if it is proposed
Sale to the Public: 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.
THE FIRST TRUST GNMA
SERIES 72
CROSS REFERENCE SHEET
Pursuant to Rule 404(c) of Regulation C Under the Securities Act
of 1933
(Form N-8B-2 Items Required by Instruction 1 as to Prospectus on
Form S-6)
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
I. Organization and General Information
1. (a) Name of trust
(b) Title of securities issued Prospectus Front Cover
Page
2. Name and address of Depositor Summary of Essential
Information
Information as to
Sponsor, Trustee
and Evaluator
3. Name and address of Trustee Summary of Essential
Information
Information as to
Sponsor, Trustee
and Evaluator
4. Name and address of principal Information as to
underwriter Sponsor, Trustee
and Evaluator
5. Organization of Trust The First Trust GNMA
6. Execution and termination of The First Trust GNMA
Trust Agreement Other Information
7. Changes of name *
8. Fiscal year *
9. Litigation *
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
II. General Description of the Trust and Securities of the Trust
10. General information regarding The First Trust GNMA
trust's securities Public Offering
Rights of Unit Holders
Information as to
Sponsor, Trustee
and Evaluator
Other Information
11. Type of securities comprising Prospectus Front Cover
units Page
The First Trust GNMA
Portfolio
12. Certain information regarding *
periodic payment certificates
13. (a) Load, fees, expenses, etc. Prospectus Front Cover
Page
Summary of Essential
Information
The First Trust GNMA
Rights of Unit Holders
(b) Certain information regarding *
periodic payment certificates
(c) Certain percentages Prospectus Front Cover
Page
Summary of Essential
Information
The First Trust GNMA
Public Offering
(d) Certain other fees, etc. Rights of Unit Holders
payable by holders
(e) Certain profits receivable Public Offering
by depositor, principal Portfolio
underwriter, trustee or
affiliated persons
(f) Ratio of annual charges to *
income
14. Issuance of trust's securities Rights of Unit Holders
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
15. Receipt and handling of payments *
from purchasers
16. Acquisition and disposition of The First Trust GNMA
underlying securities Information as to
Sponsor, Trustee
and Evaluator
17. Withdrawal or redemption Public Offering
Rights of Unit Holders
18. (a) Receipt and disposition Prospectus Front Cover
of income Page
Rights of Unit Holders
(b) Reinvestment of Rights of Unit Holders
distributions
(c) Reserves or special funds The First Trust GNMA
Rights of Unit Holders
(d) Schedule of distributions *
19. Records, accounts and reports Rights of Unit Holders
20. Certain miscellaneous provisions Information as to
of Trust Agreement Sponsor, Trustee
and Evaluator
Other Information
21. Loans to security holders *
22. Limitations on liability The First Trust GNMA
Information as to
Sponsor, Trustee
and Evaluator
23. Bonding arrangements Contents of Registration
Statement
24. Other material provisions of *
Trust Agreement
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of Depositor Information as to
Sponsor, Trustee
and Evaluator
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
26. Fees received by Depositor *
27. Business of Depositor Information as to
Sponsor, Trustee
and Evaluator
28. Certain information as to offi- *
cials and affiliated persons
of Depositor
29. Voting securities of Depositor *
30. Person controlling Depositor *
31. Payments by Depositor for *
certain services rendered to
trust
32. Payments by Depositor for *
certain services rendered
to trust
33. Remuneration of employees of *
Depositor for certain services
rendered to trust
34. Remuneration of other persons *
for certain services rendered
to trust
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities Public Offering
by states
36. Suspension of sales of trust's *
securities
37. Revocation of authority to distribute *
38. (a) Method of distribution Public Offering
(b) Underwriting agreements Public Offering
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as to
underwriter Sponsor, Trustee
and Evaluator
(b) NASD membership of principal Information as to
underwriter Sponsor, Trustee
and Evaluator
40. Certain fees received by *
principal underwriter
41. (a) Business of principal Information as to
underwriter Sponsor, Trustee
and Evaluator
(b) Branch offices of principal *
underwriter
(c) Salesmen of principal *
underwriter
42. Ownership of trust's securities *
by certain persons
43. Certain brokerage commissions *
received by principal underwriter
44. (a) Method of valuation Prospectus Front Cover
Page
Summary of Essential
Information
The First Trust GNMA
Public Offering
(b) Schedule as to offering price *
(c) Variation in offering price Public Offering
to certain persons
45. Suspension of redemption rights *
46. (a) Redemption valuation Rights of Unit Holders
(b) Schedule as to redemption *
price
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
47. Maintenance of position in Public Offering
underlying securities Rights of Unit Holders
V. Information Concerning the Trustee or Custodian
48. Organization and regulation Information as to
of Trustee Sponsor, Trustee
and Evaluator
49. Fees and expenses of Trustee The First Trust GNMA
50. Trustee's lien The First Trust GNMA
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's *
securities
VII. Policy of Registrant
52. (a) Provisions of trust agreement Rights of Unit Holders
with respect to selection or
elimination of underlying
securities
(b) Transactions involving *
elimination of underlying
securities
(c) Policy regarding substitution Rights of Unit Holders
or elimination of
underlying securities
(d) Fundamental policy not *
otherwise covered
53. Tax status of trust The First Trust GNMA
VIII. Financial and Statistical Information.
54. Trust's securities during *
last ten years
55.
56. Certain information regarding *
57. periodic payment certificates
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
58.
59. Financial statements (Instructions Opinion of Independent
1(c) to Form S-6) Public Accountants
Statement of Net Assets
of the Fund
* Inapplicable, omitted, answer negative or not required.
Preliminary Prospectus Dated January 8, 1997
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 72
_______ Units (A Unit Investment Trust)
The attached final Prospectus for a prior Series of the Fund
is hereby used as a preliminary Prospectus for the above stated
Series. The narrative information and structure of the attached
final Prospectus will be substantially the same as that of the
final Prospectus for this Series. Information with respect to
pricing, the number of Units, dates and summary information
regarding the characteristics of securities to be deposited in
this Series is not now available and will be different since each
Series has a unique Portfolio. Accordingly the information
contained herein with regard to the previous Series should be
considered as being included for informational purposes only.
Ratings of the securities in this Series are expected to be
comparable to those of the securities deposited in the previous
Series. However, the Estimated Current Return for this Series
will depend on the interest rates and offering prices of the
securities in this Series and may vary materially from that of
the previous Series.
A registration statement relating to the units of this
Series will be filed with the Securities and Exchange Commission
but has not yet become effective. Information contained herein
is subject to completion or amendment. Such Units may not be
sold nor may offer 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 the Units in any state in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any
such state.
The First Trust (registered trademark)
GNMA Reinvestment Income Trust "GRIT"
The Trust consists of the underlying separate unit investment trust
designated Series 71 (the "Trust"). The Trust consists of a
portfolio of taxable mortgage-backed securities of the fully modified
pass-through type, the payments of principal and interest on which are
fully guaranteed by the Government National Mortgage Association
("GNMA"), including so-called "Ginnie Mae IIs," delivery statements
relating to contracts for the purchase of certain such securities and an
irrevocable letter of credit (the "Securities" or "Ginnie Maes"). All of
the Securities in the Trust consist of pools of mortgages on 1- to 4-
family dwellings with terms of up to 30 years.
The Objectives of the Trust are monthly distributions of interest
through an investment in a portfolio of Ginnie Maes. With the deposit of
the Securities in the Trust on February 21, 1996, the Initial Date of
Deposit, the Sponsor established a percentage relationship between the
principal amount of Ginnie Maes of specified interest rates and ranges
of maturities in the Portfolio. From time to time, following the Initial
Date of Deposit the Sponsor may deposit additional Securities in the
Trust, and Units may be continuously offered for sale to the public by
means of this Prospectus, resulting in a potential increase in the
outstanding number of Units of the Trust. Any additional Securities
deposited in the Trust will maintain as far as practical the original
percentage relationship between the principal amounts of Ginnie Maes of
specified interest rates and ranges of maturities in the original
Portfolio of the Trust. Precise duplication of this original percentage
relationship may not be possible because fractions of Ginnie Maes may
not be purchased and identical securities may not be available, but
duplication will continue to be the goal in connection with any such
additional Securities.
The guaranteed payment of principal and interest afforded by Ginnie Maes
may make an investment in the Trust particularly well suited for
purchase by Individual Retirement Accounts, Keogh Plans, pension funds
and other tax-deferred retirement plans. In addition, the ability to buy
single Units (minimum purchase $1,000, $250 for tax-deferred retirement
plans such as IRA accounts) during the initial offering period at a
Public Offering Price per Unit of approximately $11.00 enables such
investors to tailor the dollar amount of their purchases of Units to
take the maximum possible advantage of the annual deductions available
for contributions to such plans. Investors should consult with their tax
advisers before investing. See "Why are Investments in the Trust
Suitable for Retirement Plans?"
Reinvestment of Principal by the Trust. In an effort to minimize the
effect of principal payments and prepayments during the period when, in
the Sponsor's opinion, such reinvestment is practical (the "Reinvestment
Period"), the Sponsor will direct the Trustee to reinvest all
distributions of principal into additional Ginnie Maes which are similar
as to maturity and interest rates as the Securities upon which the
principal was received. The Sponsor currently expects the Reinvestment
Period to last 8-10 years from the Initial Date of Deposit. There may be
times in which such reinvestment will not be feasible because additional
Ginnie Maes are not available or for other reasons described herein.
Semi-annually, amounts in the Principal Account which cannot be
reinvested during the Reinvestment Period will be distributed to Unit
holders unless the amount available for distribution is less than $1.00
per 100 Units.
UNITS OF THE TRUST 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is February 21, 1996
Page 1
For Information on Estimated Current Return (if applicable) and
Estimated Long-Term Return, see "Special Information." Estimated cash
flows for the Trust are available upon request at no charge from the
Sponsor.
The Public Offering Price per Unit during the initial offering period is
equal to the aggregate offering price of the Securities in the Trust
divided by the number of Units outstanding plus a sales charge of 4.25%
of the Public Offering Price (which is equivalent to 4.439% of the net
amount invested). In addition, on transactions entered into for settlement
after February 26, 1996, there will be added an amount equal to accrued
interest from such date to the date of settlement (normally three business
days after order) less distributions from the Interest Account subsequent
to the First Settlement Date. The secondary market Public Offering Price per
Unit will be equal to the aggregate bid price of the Securities in the
Trust divided by the number of Units outstanding, plus a sales charge of
4.50% (which is equivalent to 4.712% of the net amount invested). At the
opening of business on the Initial Date of Deposit, the Public Offering Price
per Unit would have been $11.1619 . See "How is the Public Offering
Price Determined?", particularly for the method of evaluation.
Each Unit represents an undivided interest in the principal and net
income of the Trust in the ratio of one Unit for each $10.00 principal
amount of Securities initially deposited in the Trust.
Monthly Distributions of interest received by the Trust will be paid in
cash unless the Unit holder elects to have them automatically reinvested
as described herein. See "How Can Distributions to Unit Holders be
Reinvested?" Monthly distributions will be made on the last day of each
month to all Unit holders of record on the first day of such month,
commencing with the First Distribution on March 31, 1996. During the
Reinvestment Period, it is the Trust's objective that distributions will
consist entirely of interest. Amounts of principal which the Trustee is
unable to reinvest during the Reinvestment Period will be distributed on
June 30 and December 31 to all Unit holders of record on June 1 and
December 1, respectively. After completion of the Reinvestment Period,
amounts of principal will be distributed in the same manner as
monthly distributions of interest income.
The Sponsor, although not obligated to do so, intends to maintain a
market for the Units of the Trust at prices based upon the aggregate
offering price of the Securities in the Trust during the initial
offering period and at prices based upon the aggregate bid price of the
Securities in the Trust after the initial offering period. In the
absence of such a market, a Unit holder will nonetheless be able to
dispose of the Units through redemption at prices based upon the bid
prices of the underlying Securities (see "How May Units be Redeemed?").
Risk Factors. An investment in the Trust should be made with an
understanding of the risks associated therewith, including, among other
factors, the volatility of interest rates and the early return of
principal if reinvestment is not practical. See "What is the First Trust
GNMA Reinvestment Income Trust?-Risk Factors."
Page 2
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities-February 21, 1996
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank (National Association)
Evaluator: Securities Evaluation Service, Inc.
<TABLE>
<CAPTION>
The First Trust
GNMA
Reinvestment
Income Trust,
Series 71
_____________
<S> <C>
General Information
Principal Amount of Securities in the Trust $1,570,192
Number of Units 157,019
Fractional Undivided Interest in the Trust per Unit 1/157,019
Public Offering Price:
Aggregate Offering Price Evaluation of Securities in the Portfolio $1,678,143
==========
Aggregate Offering Price Evaluation per Unit $ 10.6875
Sales Charge (1) $ .4744
__________
Public Offering Price per Unit (2) $ 11.1619
==========
Sponsor's Initial Repurchase Price per Unit (2) $ 10.6875
Redemption Price per Unit $ 10.6625
Excess of Public Offering Price per Unit Over
Redemption Price per Unit (3) $ .4994
Excess of Sponsor's Initial Repurchase Price per Unit
Over Redemption Price per Unit (3) $ .0250
</TABLE>
First Settlement Date February 26, 1996
Mandatory Termination Date December 31, 2045
Discretionary Liquidation Amount A Trust may be terminated if the
principal amount thereof is less
than the lower of $2,000,000 or
40% of the total principal
amount of Securities deposited
in a Trust during the primary
offering period.
Supervisory Fee (4) Maximum of $.0015 per Unit
outstanding annually. (5)
Evaluator's Fee $.0030 per Unit outstanding
annually plus $0.25 per
evaluation for each issue of
underlying securities in excess
of 50 issues (treating separate
maturities as separate issues).
Estimated Organizational and
Offering Costs (6) $.0020 per Unit.
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.
[FN]
____________
(1) Sales charges for the Trust, expressed as a percentage of the Public
Offering Price per Unit and in parenthesis as a percentage of the
Aggregate Offering Price Evaluation per Unit, are as follows: 4.25%
(4.439%).
(2) Anyone ordering Units for settlement after the First Settlement Date
will pay accrued interest from such date to the date of settlement
(normally three business days after order) less distributions from the
Interest Account subsequent to the First Settlement Date. For purchases
settling on the First Settlement Date, no accrued interest will be added
to the Public Offering Price. After the initial offering period, the
Sponsor's Repurchase Price per Unit will be determined as described
under the caption "Will There Be a Secondary Market?"
(3) See "How May Units be Redeemed?"
(4) In addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $0.0010
per Unit.
(5) Payable to an affiliate of the Sponsor.
(6) The Trust (and therefore Unit holders) will bear all or a portion of
its organizational and offering costs (including costs of preparing the
registration statement, the trust indenture and other closing documents,
registering Units with the Securities and Exchange Commission and
states, the initial audit of each Trust portfolio 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) as is common for
mutual funds. Total organizational and offering costs will be charged
off over a period not to exceed five years from the Initial Date of
Deposit. See "What are the Expenses and Charges?" and "Statement of Net
Assets." Historically, the sponsors of unit investment trusts have paid
all the costs of establishing such trusts.
Page 3
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST
What is the First Trust GNMA Reinvestment Income Trust?
The First Trust GNMA Reinvestment Income Trust consists of the
underlying separate unit investment trust designated as Series 71 (the
"Trust"). The Trust was created under the laws of the State of New York
pursuant to a Trust Agreement (the "Indenture"), dated the Initial Date of
Deposit, with Nike Securities L.P., as Sponsor, The Chase Manhattan Bank
(National Association), as Trustee, Securities Evaluation Service, Inc.,
as Evaluator and First Trust Advisors L.P., as Portfolio Supervisor. On
the Initial Date of Deposit, the Sponsor deposited with the Trustee
delivery statements relating to contracts for the purchase of taxable
mortgage-backed securities of the fully modified pass-through type, and an
irrevocable letter of credit issued by a financial institution in the
amount required for such purchases (the "Securities" or "Ginnie Maes")
including so-called Ginnie Mae IIs. The Trustee thereafter credited to
the account of the Sponsor documents evidencing the entire ownership of the
Trust. Units will remain outstanding until redeemed upon tender to the
Trustee by any Unit holder (which may include the Sponsor) or until the
termination of the Trust pursuant to the Indenture.
The objectives of the Trust are monthly distributions of interest
through an investment in a portfolio of Securities (the "Portfolio")
consisting of Ginnie Maes guaranteed by the Government National Mortgage
Association ("GNMA"). Although the Ginnie Maes are backed by the full
faith and credit of the United States, the Units of the Trust, as such,
are not backed by such full faith and credit. The Trust may be an
appropriate medium for investors who desire to participate in a
portfolio of taxable fixed income securities offering the safety of
capital provided by securities backed by the full faith and credit of
the United States, but who do not wish to invest the minimum $25,000
which is required for a direct investment in GNMA guaranteed securities.
Because additional Securities may be deposited in the Trust as described
herein, the Trust is not expected to retain its present size and
composition. Any additional Securities deposited in the Trust will
maintain as far as practical the original percentage relationship
between the principal amounts of Ginnie Maes of specified interest rates
and ranges of maturities in the original portfolio of the Trust. Precise
duplication of the original percentage relationship may not be possible
due to the fact that Ginnie Maes of a specific range of maturities and
interest rate may not be available and fractions of Ginnie Maes may not
be purchased.
Reinvestment. During the period when, in the opinion of the Sponsor, such
reinvestment is practical (the "Reinvestment Period"), the Sponsor will
direct the Trustee to reinvest all payments and prepayments of principal
from the underlying Ginnie Maes into additional Ginnie Mae securities
which have similar maturities and interest rates as the Securities upon
which the principal was received. The Sponsor currently expects the
Reinvestment Period to last 8-10 years from the Initial Date of Deposit.
Reinvestment of principal into additional Ginnie Maes during periods
when interest rates are different from those prevailing at the Initial
Date of Deposit will have the effect of increasing or decreasing monthly
distributions of interest income from the Trust. Reinvestment of
principal into the Ginnie Maes eligible for inclusion in the Trust will
also have the effect of increasing the par value of the Units for
reinvestment during periods of increasing interest rates from those
prevailing at the Initial Date of Deposit and during periods of
declining interest rates the par value of the Units will decrease. There
may be times when the Principal Account of the Trust contains cash which
cannot be reinvested because additional Ginnie Maes are not available or
the amount of cash in the Principal Account is insufficient to buy
additional Ginnie Maes without the Trust incurring disproportionate
expenses. During these periods the amounts in the Principal Account will
remain uninvested, thus reducing the return to Unit holders. Amounts, if
any, which cannot be reinvested during the Reinvestment Period into
additional Ginnie Maes will be distributed to Unit holders semiannually
unless the amount available for distribution is less than $1.00 per 100
Units. In such a circumstance, Unit holders should be aware that at the
Page 4
time of the receipt of such principal they may not be able to reinvest
such amounts in other securities at a yield equal to or in excess of the
yield which such principal would have earned to Unit holders had the
principal been reinvested in additional Ginnie Maes. In addition,
principal will not be reinvested and will be distributed to Unit holders
if required to maintain the status of the Trust as a "regulated
investment company." See "What is the Tax Status of Unit Holders?" The
costs of acquiring the additional Ginnie Maes will be borne by the Trust
and hence, the Unit holders. Although it is currently anticipated that
the Trustee will purchase Ginnie Maes directly from market makers, the
Trustee may retain the Sponsor to purchase the additional Ginnie Maes
and pay them usual and customary brokerage commissions. There will be no
attempt to time or delay the purchase of additional Ginnie Maes for
reinvestment to take advantage of market movements.
In selecting Ginnie Maes for deposit in the Trust, the following
factors, among others, were considered by the Sponsor: (i) the types of
such securities available; (ii) the prices and yields of such securities
relative to other comparable securities, including the extent to which
such securities are trading at a premium or at a discount from par; and
(iii) the maturities of such securities. See "Portfolio" for information
with respect to the Securities initially selected for deposit in the
Trust. The Ginnie Maes included in the Trust are backed by the
indebtedness secured by the mortgages contained in the underlying
mortgage pools.
Risk Factors. An investment in Units of the Trust should be made with an
understanding of the risks which an investment in fixed rate long-term
debt obligations may entail, including the risk that the value of the
Portfolio and hence of the Units will decline with increases in interest
rates. The value of the underlying Securities will fluctuate inversely
with changes in interest rates. In addition, the potential for
appreciation of the underlying Securities, which might otherwise be
expected to occur as a result of a decline in interest rates, may be
limited or negated by increased principal prepayments in respect of the
underlying mortgages. For example, the high inflation during certain periods,
together with the fiscal measures adopted to attempt to deal with it,
has resulted in wide fluctuations in interest rates and, thus, in the
value of fixed rate long-term debt obligations generally. The Sponsor
cannot predict whether such fluctuations will continue in the future or
whether the reinvestment of principal will mitigate the impact of these
fluctuations.
The Portfolio of the Trust consists of Ginnie Maes (or contracts to
purchase Ginnie Maes) fully guaranteed as to payments of principal and
interest by GNMA. Each group of Ginnie Maes described herein as having a
specified range of maturities includes individual mortgage-backed
securities which have varying ranges of maturities within each range set
forth in the Portfolio. Current market conditions accord little or no
difference in price among individual Ginnie Mae securities with the same
coupon within certain ranges of stated maturity dates on the basis of the
difference in the maturity dates of each Ginnie Mae. A purchase of Ginnie Maes
with the same coupon rate and maturity date within such range will be
considered an acquisition of the same security for both additional deposits
and for the reinvestment of principal. In the future, however, the difference
in maturity ranges could affect market value of the individual Ginnie Maes.
At such time, any additional purchases by the Trust will take into
account the maturities of the individual securities. The mortgages
underlying the Ginnie Maes in the Trust have an original stated maturity
of up to 30 years.
The reinvestment of principal by the Trustee in additional Ginnie Maes
may result in Securities being acquired at a market discount or market
premium.
The Portfolio of the Trust may contain Securities which were acquired at
a market discount. Such Securities trade at less than par value because
the interest coupons thereon are lower than interest coupons on
comparable debt securities being issued at currently prevailing interest
rates. If such interest rates for newly issued and otherwise comparable
securities increase, the market discount of previously issued securities
will become greater, and if such interest rates for newly issued
comparable securities decline, the market discount of previously issued
securities will be reduced, other things being equal. Investors should
also note that the value of Ginnie Maes purchased at a market discount
will increase in value faster than Ginnie Maes purchased at a market
premium if interest rates decrease. Conversely, if interest rates
increase, the value of Ginnie Maes purchased at a market discount will
decrease faster than Ginnie Maes purchased at a premium. In addition, if
interest rates rise, the prepayment risk of higher yielding, premium
Ginnie Maes and the prepayment benefit for lower yielding, discount
Ginnie Maes will be reduced. Market discount attributable to interest
changes does not indicate a lack of market confidence in the issue.
Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure or defect in any of the Securities.
Page 5
The Portfolio of the Trust may contain Securities which were acquired at
a market premium. Such Securities trade at more than par value because
the interest coupons thereon are higher than interest coupons on
comparable debt securities being issued at currently prevailing interest
rates. If such interest rates for newly issued and otherwise comparable
securities decrease, the market premium of previously issued securities
will be increased, and if such interest rates for newly issued
comparable securities increase, the market premium of previously issued
securities will be reduced, other things being equal. The current
returns of securities trading at a market premium are initially higher
than the current returns of comparably rated debt securities of a
similar type issued at currently prevailing interest rates because
premium securities tend to decrease in market value as they approach
maturity when the face amount becomes payable. Because part of the
purchase price is thus returned not at maturity but through current
income payments, early redemption of a premium security at par or early
prepayments of principal will result in a reduction in yield.
Prepayments of principal on securities purchased at a market premium are
more likely than prepayments on securities purchased at par or at a
market discount and the level of prepayments will generally increase if
interest rates decline. Market premium attributable to interest changes
does not indicate market confidence in the issue.
The contracts to purchase Securities delivered to the Trustee represent
an obligation by issuers or dealers to deliver Securities to the Sponsor
for deposit in the Trust. Contracts are typically settled and the
Securities delivered within a few business days subsequent to the
Initial Date of Deposit. The percentage of the aggregate principal
amount of the Securities, if any, relating to "when, as and if issued"
Securities or other Securities with delivery dates after the date of
settlement for a purchase made on the Initial Date of Deposit is
indicated in the Portfolio. Interest on "when, as and if issued" and
delayed delivery Securities begins accruing to the benefit of Unit
holders on their dates of delivery. Because "when, as and if issued"
Securities have not yet been issued, as of the Initial Date of Deposit
the Trust is subject to the risk that the issuers thereof might decide
not to proceed with the offering of such Securities or that the delivery
of such Securities or the delayed delivery Securities may be delayed. If
such Securities, or replacement securities described below, are not
acquired by the Trust or if their delivery is delayed, the Estimated
Returns shown in the "Special Information" may be reduced.
In the event of a failure to deliver any Securities that have been
purchased for a Series of the Trust under a contract ("Failed
Securities"), the Sponsor is authorized under the Indenture to direct
the Trustee to acquire other specified securities ("Replacement
Securities") to make up the original corpus of the Series of the Trust.
The Replacement Securities must be purchased within 20 days after
delivery of the notice of the failed contract and the purchase price
(exclusive of accrued interest) may not exceed the amount of funds
reserved for the purchase of the Failed Securities. The Replacement
Securities (i) must satisfy the criteria previously described for
Securities originally included in a Series of the Trust, (ii) must
maintain as far as practical the original percentage relationship
between the principal amounts of Ginnie Maes of specified interest rates
and years of maturities in the Portfolio, and (iii) shall not be "when,
as and if issued" securities. Precise duplication of Failed Securities
may not be possible because fractions of Ginnie Maes may not be
purchased, but duplication will be the goal of the Sponsor with respect
to Replacement Securities. Whenever Replacement Securities have been
acquired for the Trust, the Trustee shall, within five days thereafter,
notify all Unit holders of such Series of the Trust of the acquisition
of the Replacement Securities and shall, on the next monthly
distribution date which is more than 30 days thereafter, make a pro rata
distribution of the amount, if any, by which the cost to the Trust of
the Failed Securities exceeded the cost of the Replacement Securities
plus accrued interest. Except as provided below, once the original
corpus of the Trust is acquired, the Trustee will have no power to vary
the investment of the Trust, i.e., the Trustee will have no managerial
power to take advantage of market variations to improve a Unit holder's
investment.
If the right of limited substitution described in the preceding
paragraph shall not be utilized to acquire Replacement Securities in the
event of a failed contract, the Sponsor shall refund the principal and
accrued interest (at the coupon rate of the relevant Securities to the
date the Sponsor is notified of the failure) attributable to such failed
contract and the pro rata portion of the sales charge attributable to
such failed contract not more than thirty days after the determination
of such failure or at such earlier time as the Trustee in its sole
Page 6
discretion deems to be in the interest of the Unit holders. Unit holders
should be aware that at the time of the receipt of such refunded
principal they may not be able to reinvest such principal in other
securities at a yield equal to or in excess of the yield which such
principal would have earned to Unit holders had the Failed Securities
been delivered to the Trust.
The Sponsor may, from time to time, deposit additional Ginnie Maes in
the Trust (while additional Units are to be offered to the public)
maintaining, as closely as practical, the original percentage
relationship between the principal amounts of Ginnie Maes of specified
interest rates and years of maturities in the Trust.
During the Reinvestment Period, the Sponsor will direct the Trustee to
reinvest principal payments and prepayments into additional securities.
Precise duplication of the Ginnie Maes to be purchased with reinvested
principal may not be possible because fractions of Ginnie Maes may not
be purchased and substantially similar securities may not be available,
but duplication will be the goal of the Sponsor with respect to the
purchase of additional securities. Principal amounts which cannot be
reinvested will be distributed to Unit holders semiannually unless the
amount available for distribution is less than $1.00 per 100 Units.
After the Reinvestment Period, principal will not be reinvested and will
be distributed monthly to Unit holders. See "How are Interest and
Principal Distributed?"
THE MORTGAGES UNDERLYING A GINNIE MAE MAY BE PREPAID AT ANY TIME WITHOUT
PENALTY. A LOWER OR HIGHER CURRENT RETURN ON UNITS MAY OCCUR DEPENDING
ON (I) WHETHER THE PRICE AT WHICH THE RESPECTIVE GINNIE MAES WERE
ACQUIRED BY THE TRUST IS LOWER OR HIGHER THAN PAR, (II) WHETHER
PRINCIPAL IS REINVESTED OR DISTRIBUTED TO UNIT HOLDERS AND (III) IF
REINVESTMENT OCCURS, WHETHER THE GINNIE MAES PURCHASED BY THE TRUSTEE
WITH REINVESTED PRINCIPAL ARE PURCHASED AT A PREMIUM OR DISCOUNT FROM
PAR. DURING PERIODS OF DECLINING INTEREST RATES, PREPAYMENTS OF GINNIE
MAES MAY OCCUR WITH INCREASING FREQUENCY BECAUSE, AMONG OTHER REASONS,
MORTGAGORS MAY BE ABLE TO REFINANCE THEIR OUTSTANDING MORTGAGES AT LOWER
INTEREST RATES. IN SUCH A CASE, (I) THE REINVESTMENT OF PRINCIPAL MAY BE
AT PRICES WHICH RESULT IN A LOWER RETURN ON UNITS OR (II) PRINCIPAL WILL
BE DISTRIBUTED TO UNIT HOLDERS WHO CANNOT REINVEST SUCH PRINCIPAL
DISTRIBUTIONS IN OTHER SECURITIES AT AN ATTRACTIVE YIELD.
Each Unit initially offered represents the fractional undivided interest
in the Trust set forth in the "Summary of Essential Information." To the
extent that any Units are redeemed by the Trustee, the fractional
undivided interest in the Trust represented by each unredeemed Unit will
increase, although the actual interest represented by such fraction will
remain substantially unchanged. However, if additional Units are issued
(in connection with the deposit by the Sponsor of additional
Securities), the aggregate value of Securities in the Trust will be
increased by amounts allocable to additional Units, and the fractional
undivided interest represented by each Unit in the balance will be
decreased. Units will remain outstanding until redeemed upon tender to
the Trustee by any Unit holder, which may include the Sponsor, or until
the termination of the Indenture.
Description of Securities. The Ginnie Maes included in the Trust are
backed by the indebtedness secured by underlying mortgage pools of up to
30 year mortgages on 1- to 4-family dwellings. The pool of mortgages
which is to underlie a particular new issue of Ginnie Maes is assembled
by the proposed issuer of such Ginnie Maes. The issuer is typically a
mortgage banking firm, and in every instance must be a mortgagee
approved by and in good standing with the Federal Housing Administration
("FHA"). In addition, GNMA imposes its own criteria on the eligibility
of issuers, including a net worth requirement.
The mortgages which are to comprise a new Ginnie Mae pool may have been
originated by the issuer itself in its capacity as a mortgage lender or
may be acquired by the issuer from a third party, such as another
mortgage banker, a banking institution, the Veterans Administration
("VA")(which in certain instances acts as a direct lender and thus
originates its own mortgages) or one of several other governmental
agencies. All mortgages in any given pool will be insured under the
National Housing Act, as amended ("FHA-insured"), or Title V of the
Housing Act of 1949 ("FMHA Insured") or guaranteed under the
Servicemen's Readjustment Act of 1944, as amended, or Chapter 37 of
Title 38, U.S.C. ("VA-guaranteed"). Such mortgages will have a date for
the first scheduled monthly payment of principal that is not more than
one year prior to the date on which GNMA issues its guaranty commitment
as described below, will have comparable interest rates and maturity
dates, and will meet additional criteria of GNMA. All mortgages in the
Page 7
pools backing the Ginnie Maes contained in the Trust are mortgages on 1-
to 4-family dwellings (having a stated maturity of up to 30 years for
Securities in the Trust but an estimated average life of considerably
less as set forth in "Special Information"). In general, the mortgages
in these pools provide for equal monthly payments over the life of the
mortgage (aside from prepayments) designed to repay the principal of the
mortgage over such period, together with interest at the fixed rate on
the unpaid balance.
To obtain GNMA approval of a new pool of mortgages, the issuer will file
with GNMA an application containing information concerning itself,
describing generally the pooled mortgages, and requesting that GNMA
approve the issue and issue its commitment (subject to GNMA's
satisfaction with the mortgage documents and other relevant
documentation) to guarantee the timely payment of principal of and
interest on the Ginnie Maes to be issued by the issuer. If the
application is in order, GNMA will issue its commitment and will assign
a GNMA pool number to the pool. Upon completion of the required
documentation (including detailed information as to the underlying
mortgages, a custodial agreement with a Federal or state regulated
financial institution satisfactory to GNMA pursuant to which the
underlying mortgages will be held in safekeeping, and a detailed
guaranty agreement between GNMA and the issuer), the issuance of the
Ginnie Maes is permitted. When the Ginnie Maes are issued, GNMA will
endorse its guarantee thereon. The aggregate principal amount of Ginnie
Maes issued will be equal to the then aggregate unpaid principal
balances of the pooled mortgages. The interest rate borne by the Ginnie
Maes is currently fixed at 1/2 of 1% below the interest rate of the
pooled 1- to 4-family mortgages, the differential being applied to the
payment of servicing and custodial charges as well as GNMA's guaranty fee.
Ginnie Mae IIs consist of jumbo pools of mortgages from more than one
issuer. By allowing pools to consist of multiple issuers, it allows for
larger and more geographically diverse pools. Unlike Ginnie Mae Is,
which have a minimum pool size of $1 million, Ginnie Mae IIs have a
minimum pool size of $7 million. In addition, the interest rates on the
mortgages within the Ginnie Mae II pools will vary unlike the mortgages
within pools in Ginnie Mae Is which all have the same rate. The rates on
the mortgages will vary from 50 basis points to 150 basis points above
the coupon rate on the GNMA bond. This 50-150 basis point spread is
allowed for servicing and custodial fees as well as the GNMA's guaranty
fee. The major advantage of Ginnie Mae IIs lies in the fact that a
central paying agent sends one check to the holder on the required
payment date. This greatly simplifies the current procedure of
collecting distributions from each issuer of a Ginnie Mae, since such
distributions are often received late.
All of the Ginnie Maes in the Trust, including the Ginnie Mae IIs, are
of the "fully modified pass-through" type, i.e., they provide for timely
monthly payments to the registered holders thereof (including the Trust)
of their pro rata share of the scheduled principal payments on the
underlying mortgages, whether or not collected by the issuers,
including, on a pro rata basis, any prepayments of principal of such
mortgages received and interest (net of the servicing and other charges
described above) on the aggregate unpaid principal balance of such
Ginnie Maes, whether or not the interest on the underlying mortgages has
been collected by the issuers.
The Ginnie Maes in the Trust are guaranteed as to timely payment of
principal and interest by GNMA. Funds received by the issuers on account
of the mortgages backing the Ginnie Maes in the Trust are intended to be
sufficient to make the required payments of principal of and interest on
such Ginnie Maes but, if such funds are insufficient for that purpose,
the guaranty agreements between the issuers and GNMA require the issuers
to make advances sufficient for such payments. If the issuers fail to
make such payments, GNMA will do so.
GNMA is authorized by Section 306(g) of Title III of the National
Housing Act to guarantee the timely payment of and interest on
securities which are based on or backed by a trust or pool composed of
mortgages insured by FHA, the Farmers' Home Administration ("FMHA") or
guaranteed by the VA. Section 306(g) provides further that the full
faith and credit of the United States is pledged to the payment of all
amounts which may be required to be paid under any guaranty under such
subsection. An opinion of an Assistant Attorney General of the United
States, dated December 9, 1969, states that such guaranties "constitute
general obligations of the United States backed by its full faith and
credit."/Note1/ GNMA is empowered to borrow from the United States
Treasury to the extent necessary to make any payments of principal and
interest required under such guaranties.
Page 8
Ginnie Maes are backed by the aggregate indebtedness secured by the
underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages and,
except to the extent of funds received by the issuers on account of such
mortgages, Ginnie Maes do not constitute a liability of nor evidence any
recourse against such issuers, but recourse thereon is solely against
GNMA. Holders of Ginnie Maes (such as the Trust) have no security
interest in or lien on the underlying mortgages.
The GNMA guaranties referred to herein relate only to payment of
principal of and interest on the Ginnie Maes in the Trust and not to the
Units offered hereby.
Monthly payments of principal will be made, and additional prepayments
of principal may be made, to the Trust in respect of the mortgages
underlying the Ginnie Maes in the Trust. All of the mortgages in the
pools relating to the Ginnie Maes in the Portfolio of the Trust are
subject to prepayment without any significant premium or penalty at the
option of the mortgagors. While the mortgages on 1- to 4-family
dwellings underlying the Ginnie Maes have a stated maturity of up to 30
years for the Trust, it has been the experience of the mortgage industry
that the average life of comparable mortgages, owing to prepayments,
refinancings and payments from foreclosures, is considerably less. See
"Special Information."
In the mid 1970's published yield tables for Ginnie Maes utilized a 12
year average life assumption for Ginnie Mae pools of 26-30 year
mortgages on 1- to 4-family dwellings. This assumption was derived from
the FHA experience relating to prepayments on such mortgages during the
period from the mid 1950's to the mid 1970s. This 12 year average life
assumption was calculated in respect of a period during which mortgage
lending rates were fairly stable. THE ASSUMPTION IS NO LONGER AN
ACCURATE MEASURE OF THE AVERAGE LIFE OF GINNIE MAES OR THEIR UNDERLYING
SINGLE FAMILY MORTGAGE POOLS. RECENTLY IT HAS BEEN OBSERVED THAT
MORTGAGES ISSUED AT HIGH INTEREST RATES HAVE EXPERIENCED ACCELERATED
PREPAYMENT RATES WHICH WOULD INDICATE A SIGNIFICANTLY SHORTER AVERAGE
LIFE THAN 12 YEARS. TODAY, RESEARCH ANALYSTS USE COMPLEX FORMULAE TO
SCRUTINIZE THE PREPAYMENTS OF MORTGAGE POOLS IN AN ATTEMPT TO PREDICT
MORE ACCURATELY THE AVERAGE LIFE OF GINNIE MAES. THE BASES FOR THE
CALCULATION OF THE ESTIMATED AVERAGE LIFE OF THE SECURITIES IN THE TRUST
AND OTHER RELATED MATTERS IS SET FORTH IN "WHAT ARE ESTIMATED CURRENT
RETURN AND ESTIMATED LONG-TERM RETURN?"
A number of factors, including homeowner's mobility, change in family
size and mortgage market interest rates will affect the average life of
the Ginnie Maes in the Portfolio. For example, Ginnie Maes issued during
a period of high interest rates will be backed by a pool of mortgage
loans bearing similarly high rates. In general, during a period of
declining interest rates, new mortgage loans with interest rates lower
than those charged during periods of high rates will become available.
To the extent a homeowner has an outstanding mortgage with a high rate,
he may refinance his mortgage at a lower interest rate or he may rapidly
repay his old mortgage. Should this happen, a Ginnie Mae issued with a
high interest rate may experience a rapid prepayment of principal as the
underlying mortgage loans prepay in whole or in part. Accordingly, there
can be no assurance that the prepayment levels which will be actually
realized will conform to the estimates or experience of the FHA, other
mortgage lenders, dealers or market makers or other Ginnie Mae
investors. It is not possible to meaningfully predict prepayment levels
regarding the Ginnie Maes in the Trust. Even though the reinvestment of
principal may mitigate the effects of prepayments of principal, the
termination of the Trust might be accelerated as a result of prepayments
made as described herein.
In addition to prepayments which the Trustee is unable to reinvest,
sales of Securities of the Trust under certain permitted circumstances
may result in an accelerated termination of the Trust. Also, it is
possible that, in the absence of a secondary market for the Units or
otherwise, redemptions of Units may occur in sufficient numbers to
reduce a Series of the Trust to a size resulting in such termination.
Early termination of the Trust may have important consequences to the
Unit holder, e.g., to the extent that Units were purchased with a view
to an investment of longer duration, the overall investment program of
the investor may require readjustment; or the overall return on
* Any statement in this Prospectus that a particular security is
backed by the full faith and credit of the United States is based upon
the opinion of an Assistant Attorney General of the United States and
should be so construed.
Page 9
investment may be less or greater than anticipated, depending in part on
whether the purchase price paid for Units represented the payment of an
overall premium or a discount, respectively, above or below the stated
principal amounts of the underlying mortgages. In addition, a capital
gain or loss may result for tax purposes from termination of the Trust.
What is the Rating of the Units?
Standard & Poor's Ratings Group, a Division of The McGraw-Hill Companies
("Standard & Poor's") has rated Units of each Series of the Trust "AAA."
This is the highest rating assigned by Standard & Poor's. See
"Description of Standard & Poor's Rating." The obtaining of this rating
by the Trust should not be construed as an approval of the offering of
the Units by Standard & Poor's or as a guarantee of the market value of
the Trust or the Units. Standard & Poor's has indicated that this rating
is not a recommendation to buy, hold or sell Units nor does it take into
account the extent to which expenses of the Trust or sales by the Trust
of Securities for less than the purchase price paid by the Trust will
reduce payment to Unit holders of the interest and principal required to
be paid on such Securities. There is no guarantee that the "AAA"
investment rating with respect to the Units will be maintained. Standard
& Poor's will be compensated by the Sponsor for its services in rating
Units of the Trust.
What are Estimated Current Return and Estimated Long-Term Return?
Debt securities are customarily offered to investors on a "yield price"
basis (as contrasted to a "dollar price" basis) at the lesser of the
price as computed to maturity of such debt security or to an earlier
redemption date. Since Units of the Trust are offered on a dollar price
basis, the estimated rate of return on an investment in Units of the
Trust is stated in terms of "Estimated Current Return and Estimated Long-
Term Return."
At the opening of business on the Initial Date of Deposit, the Estimated
Current Return (if applicable) and the Estimated Long-Term Return for
the Trust is as set forth in the "Special Information" herein. Estimated
Current Return is computed by dividing the Estimated Net Annual Interest
Rate per Unit by the Public Offering Price per Unit. The Estimated Net
Annual Interest Rate per Unit will vary with changes in fees and
expenses of the Trustee and the Evaluator and with the principal
prepayment, reinvestment of principal, redemption, maturity, exchange or
sale of Securities while the Public Offering Price will vary with
changes in the offering price of the underlying Securities; therefore,
there is no assurance that the present Estimated Current Return will be
realized in the future. Estimated Current Return does not take into
account timing of distributions of income and other amounts (including
delays in distribution to Unit Holders), and it only partially reflects
the effects of premiums paid and discounts realized in the purchase
price of Units.
Unlike Estimated Current Return, Estimated Long-Term Return is a measure
of the estimated return to the investor earned over the estimated life
of the Trust. The Estimated Long-Term Return represents an average of
the yields to estimated average life of the Securities in the Trust and
adjusted to reflect expenses and sales charges. The estimated long-term
return figure is calculated using an estimated average life for the
Securities and adjusting this figure upward for the reinvestment of
principal and is set forth in "Special Information" herein. Estimated
average life is an essential factor in the calculation of Estimated Long-
Term Return. When a Trust has a shorter average life than is estimated,
Estimated Long-Term Return will be higher if the Trust contains
Securities priced at a discount and lower if the Securities are priced
at a premium. Conversely, when a Trust has a longer average life than is
estimated, Estimated Long-Term Return will be lower if the Securities
are priced at a discount and higher if the Securities are priced at a
premium. In order to calculate estimated average life, an estimated
prepayment rate for the remaining term of the mortgage pool must be
determined. Each of the primary market makers in GNMA securities has
sophisticated computer models which are used to determine the estimated
prepayment rate for GNMA securities. Each computer model takes into
account a number of factors and assumptions including: actual prepayment
data reported by GNMA for recent periods on a particular pool, the
impact of aging on the prepayment of mortgage pools, the current
interest rate environment, the coupon, the housing environment,
historical trends on GNMA securities as a group, geographical factors
and general economic trends. Because of differences in the weighting of
Page 10
such factors and assumptions such computer models maintained by the
market makers in GNMA securities produce estimated prepayment rates
which vary. In connection with the deposit of Securities in the Trust,
the Sponsor, in determining an estimated prepayment rate, has utilized
information provided by a market maker in GNMA securities which it
believes to be reliable. However, it is possible that another computer
model might provide an estimated prepayment rate which would prove over
the life of the Securities to be more accurate. Once an appropriate
estimated prepayment rate is ascertained, an estimated average life is
calculated and is adjusted upward for the reinvestment of principal. The
estimated average life for the Trust provided in "Special Information"
herein is subject to change with alterations in the data used in any of
the underlying assumptions and assumes that principal payments and
prepayments will be reinvested into similar securities. The actual
average lives of the Securities and the actual long term returns will be
different from the estimated average lives and the estimated long term
returns. In calculating Estimated Long-Term Return, the average yield
for the Portfolio is derived by weighting each Security's yield by the
market value of the Security and by the amount of time remaining to the
estimated average life. Once the average yield on the Securities in the
Trust is computed, this figure is then adjusted for estimated expenses
and the effect of the maximum sales charge paid by investors. The
Estimated Long-Term Return calculation does not take into account
certain delays in distributions of income and the timing of other
receipts and distributions on Units and may, depending on maturities,
over or understate the impact of sales charges. Both of these factors
may result in a lower return.
Both Estimated Current Return (if applicable) and Estimated Long-Term
Return are subject to fluctuation with changes in the compositions of
the Portfolio of the Trust, principal payments and prepayments and
changes in market value of the underlying Securities, reinvestment of
principal payments and prepayments into additional Securities and
changes in fees and expenses, including sales charges, and therefore can
be materially different than the figures set forth in "Special
Information" herein. In addition, return figures may not be directly
comparable to yield figures used to measure other investments, and since
return figures are based on certain assumptions and variables, the
actual returns received by a Unit holder may be higher or lower.
Estimated cash flows for the Trust are available without charge from the
Sponsor upon request.
Payments received in respect of the mortgages underlying the Ginnie Maes
in the Trust will consist of a portion representing interest and a
portion representing principal. Although the aggregate monthly payment
made by the obligor on each mortgage remains constant (aside from
optional prepayments of principal), in the early years most of each such
payment will represent interest, while in later years, the proportion
representing interest will decline and the proportion representing
principal will increase. However, by reason of optional prepayments,
principal payments in the earlier years on the mortgages underlying the
Ginnie Maes may be substantially in excess of those required by the
amortization schedules of such mortgages. Therefore, in the absence of
reinvestment, principal payments in later years would be substantially
less since the aggregate unpaid principal balances of such underlying
mortgages would have been greatly reduced. To the extent that the
underlying mortgages bearing higher interest rates in the Trust are
prepaid faster than the other underlying mortgages, the Net Annual
Interest Rate per Unit and the Estimated Returns on the Units with
respect to the Trust may decline whether or not the Trustee is able to
reinvest principal. Monthly payments to the Unit holders will reflect
all of the foregoing factors.
In order to acquire certain of the Securities contracted for by the
Sponsor for deposit in the Trust, it may be necessary to pay on the
settlement dates for delivery of such Securities amounts covering
accrued interest on such Securities which exceed the amounts furnished
by the Sponsor. The Trustee has agreed to pay for any amounts necessary
to cover any such excess and will be reimbursed therefor, without
interest, when funds become available from interest payments on the
particular Securities with respect to which such payments have been made.
Record Dates for monthly distributions of interest are the first day of
each month and the Distribution Dates for distributions will be on the
last day of such month.
How is Accrued Interest Treated?
Accrued interest is the accumulation of unpaid interest on a security
from the last day on which interest thereon was paid. Interest on
Page 11
Securities in the Trust is paid monthly to the Trust. However, interest
on the Securities in the Trust is accounted for daily on an accrual
basis. Because of this, the Trust always has an amount of interest
earned but not yet collected by the Trustee. For this reason, with
respect to sales settling subsequent to the First Settlement Date the
Public Offering Price of Units will have added to it the proportionate
share of accrued and undistributed interest to the date of settlement.
Unit holders will receive on the next distribution date of the Trust the
amount, if any, of accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest which would
otherwise have to be paid in addition to the Public Offering Price in
the sale of Units to the public, the Trustee will advance the amount of
accrued interest as of the First Settlement Date and the same will be
distributed to the Sponsor as the Unit holder of record as of the First
Settlement Date. Consequently, the amount of accrued interest to be
added to the Public Offering Price of Units will include only accrued
interest from the First Settlement Date to the date of settlement of
Units purchased, less any distributions from the Interest Account
subsequent to the First Settlement Date. See "Rights of Unit Holders-How
are Interest and Principal Distributed?"
Except through an advancement of its own funds, the Trustee has no cash
for distribution to Unit holders until it receives interest payments on
the Securities in the Trust. The Trustee will recover its advancements
without interest or other costs to the Trust from interest received on
the Securities in the Trust. When these advancements have been
recovered, regular distributions of interest to Unit holders will
commence (see "Rights of Unit Holders-How are Interest and Principal
Distributed?").
Because of the varying interest payment dates of the Securities, accrued
interest at any point in time will be greater than the amount of
interest actually received by the Trust and distributed to Unit holders.
If a Unit holder sells or redeems all or a portion of his Units, he will
be entitled to receive his proportionate share of the accrued interest
from the purchaser of his Units. Since the Trustee has the use of the
interest held in the Interest Account for distributions to Unit holders
and since such Account is non-interest bearing to Unit holders, the
Trustee benefits thereby. See "Public Offering-How Is the Public
Offering Price Determined?" for information with respect to the
uncertainty during certain periods of each month of the precise amount
of accrued interest of the Ginnie Maes.
What are the Expenses and Charges?
With the exception of bookkeeping and other administrative services
provided to the 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 the Trust except that it may receive brokerage commissions
in connection with the acquisition of Securities by the Trustee with
reinvested principal. It is currently contemplated that the Trustee will
acquire such Securities in principal transactions directly from dealers
and that no brokerage fees will be paid. Such bookkeeping and
administrative charges may be increased without approval of the Unit
holders by amounts not exceeding proportionate increases under the
category "All Services Less Rent of Shelter" in the Consumer Price Index
published by the United States Department of Labor. The fees payable to
the Sponsor for such bookkeeping and administrative services may exceed
the actual costs of providing such services for this 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 of supplying
such services in such year. 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 the Trust. The fee may
exceed the actual costs of providing such supervisory services for this
Trust, but at no time will the total amount received for portfolio
supervisory services rendered to all unit investment trusts of which
Nike Securities L.P. is the Sponsor in any calendar year exceed the
aggregate cost to First Trust Advisors L.P. of supplying such services
in such year. In providing such supervisory services, the Portfolio
Supervisor may purchase research services from a variety of sources which
may include underwriters or dealers of the Trust.
For purposes of evaluation of the Securities in the Trust, the Evaluator
will receive a fee as indicated in "Summary of Essential Information."
The Trustee pays certain expenses of the Trust for which it is
reimbursed by the Trust. The Trustee will receive for its ordinary
Page 12
recurring services to the Trust an annual fee as indicated in "Special
Information." For a discussion of the services performed by the Trustee
pursuant to its obligations under the Indenture, reference is made to
the material set forth under "Rights of Unit Holders." The Trustee's and
Evaluator's fees are payable monthly on or before each Distribution Date
from the Interest Account to the extent funds are available and then
from the Principal Account. Since the Trustee has the use of the funds
being held in the Principal and Interest Accounts for future
distributions, payment of expenses and redemptions and since such
Accounts are non-interest bearing to Unit holders, the Trustee benefits
thereby. Part of the Trustee's compensation for its services to the
Trust is expected to result from the use of these funds. Both fees may
be increased without approval of the Unit holders by amounts not
exceeding proportionate increases under the category "All Services Less
Rent of Shelter" in the Consumer Price Index published by the United
States Department of Labor.
Expenses incurred in establishing the 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 the Trust portfolio and the
initial fees and expenses of the Trustee and any other out-of-pocket
expenses, will be paid by the Trust and charged off over a period not to
exceed five years from the Initial Date of Deposit. The following
additional charges are or may be incurred by the Trust: all expenses
(including legal, annual auditing expenses and the costs of acquiring
Securities with reinvested principal) of the Trustee incurred in
connection with its responsibilities under the Indenture, except in the
event of negligence, bad faith or willful misconduct on its part; the
expenses and costs of any action undertaken by the Trustee to protect
the 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 the Trust; indemnification of the Sponsor for any
loss, liability or expense incurred without gross negligence, bad faith
or willful misconduct in acting as Depositor of the Trust; all taxes and
other government charges imposed upon the Securities or any part of the
Trust (no such taxes or charges are being levied or made or, to the
knowledge of the Sponsor contemplated); and expenditures incurred in
contacting Unit holders upon termination of the Trust. The above
expenses and the Trustee's annual fee, when paid or owing to the
Trustee, are secured by a lien on the Trust. In addition, the Trustee is
empowered to sell Securities in order to make funds available to pay all
these amounts if funds are not otherwise available in the Interest and
Principal Accounts. Due to the minimum principal amount in which
Securities may be required to be sold, the proceeds of such sales may
exceed the amount necessary for the payment of such fees and expenses.
Unless the Sponsor determines that such an audit is not required, the
Indenture requires the accounts of the Trust shall be audited on an
annual basis at the expense of the Trust by independent auditors
selected by the Sponsor. So long as the Sponsor is making a secondary
market for Units, the Sponsor shall bear the cost of such annual audits
to the extent such cost exceeds $0.005 per Unit. Unit holders of the
Trust covered by an audit may obtain a copy of the audited financial
statements from the Trustee upon request.
What is the Tax Status of Unit Holders?
The Trust, which is an association taxable as a corporation under the
Internal Revenue Code, intends to qualify on a continuing basis for
special federal income tax treatment as a regulated investment company
under the Internal Revenue Code of 1986, as amended (the "Code"). If the
Trust so qualifies and timely distributes to Unit holders 90% or more of
its taxable income (without regard to its net capital gain, i.e., the
excess of its long-term capital gain over its net short-term capital
loss), it will not be subject to Federal income tax on the portion of
its taxable income (including any net capital gain) that it distributes
to Unit holders. In addition, to the extent the Trust distributes to
Unit holders at least 98% of its taxable income (including any net
capital gain), it will not be subject to the 4% excise tax on certain
undistributed income of "regulated investment companies." The Trust
intends to timely distribute its taxable income (including any net
capital gains) to avoid the imposition of Federal income tax or the
excise tax.
The Trust intends to file its Federal income tax returns on a calendar
year basis. In any taxable year of the Trust, the distributions of the
Trust's income, other than distributions which are designated as capital
gain dividends, will be taxable as ordinary income to the Unit holders.
To the extent that distributions to a Unit holder in any year exceed the
Trust's current and accumulated earnings and profits, they will be
Page 13
treated as a return of capital and will reduce the Unit holder's basis
in his Units, and to the extent that they exceed his basis, will be
treated as a gain from the sale of his Units as discussed below.
Distributions from the Trust will not be eligible for the 70% dividends
received deduction for corporations. Although distributions generally
will be treated as distributed when paid, distributions declared in
October, November or December, payable to Unit holders of record on a
specified date in one of those months and paid during January of the
following year will be treated as having been distributed by the Trust
(and received by the Unit holders) on December 31 of the year such
distributions are declared. Under the Code, certain miscellaneous
itemized deductions, such as investment expenses, tax return preparation
fees and employee business expenses, will be deductible by individuals
only to the extent they exceed 2% of adjusted gross income.
Miscellaneous itemized deductions subject to this limitation under
present law do not include expenses incurred by the Trust as long as the
Units of the Trust are held by or for 500 or more persons at all times
during the taxable year or another exception is met. In the event the
Units of the Trust are held by fewer than 500 persons, additional
taxable income will be realized by the individual and Unit holders in
excess of the distributions received from the Trust.
Distributions of the Trust's net capital gain which the Trust designates
as capital gain dividends will be taxable to Unit holders as long-term
capital gains, regardless of the length of time the Units have been held
by a Unit holder. However, if a Unit holder receives a long-term capital
gain dividend (or is allocated a portion of the Trust's undistributed
long-term capital gain) and sells his Units at a loss prior to holding
them for 6 months, such loss will be recharacterized as long-term
capital loss to the extent of such long-term capital gain received as a
dividend or allocated to a Unit holder. Distributions in partial
liquidation reflecting the proceeds of prepayments, redemptions,
maturities (including monthly mortgage payments of principal) or sales
of Securities (exclusive of net capital gain) will not be taxable to
Unit holders of such Trust to the extent that they represent a return of
capital for tax purposes. The portion of distributions which represents
a return of capital will, however, reduce a Unit holder's basis in his
Units, and to the extent they exceed the basis of his Units will be
taxable as a capital gain. A Unit holder may recognize a taxable gain or
loss when his Units are sold or redeemed. Such gain or loss will
generally constitute either a long-term or short-term capital gain or
loss depending upon the length of time the Unit holder has held his
Units. Any loss of Units held six months or less will be treated as long-
term capital loss to the extent of any long-term capital gains dividends
received (or deemed to have been received) by the Unit holder with
respect to the Units. For taxpayers other than corporations, net capital
gains are presently subject to a maximum stated marginal tax rate of 28
percent. However, it should be noted that legislative proposals are
introduced from time to time that affect tax rates and could affect
relative differences at which ordinary income and capital gains are
taxed. A capital loss is long-term if the asset is held for more than
one year and short-term if held for one year or less.
The "Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax
rates on ordinary income while capital gains remain subject to a 28%
maximum stated rate for taxpayers other than corporations. Because some
or all capital gains are taxed at a comparatively lower rate under the
Tax Act, the Tax Act includes a provision that recharacterizes capital
gains as ordinary income in the case of certain financial transactions
that are "conversion transactions" effective for transactions entered
into after April 30, 1993. Unit holders and prospective investors should
consult with their tax advisers regarding the potential effect of this
provision on their investment in Units.
If a Ginnie Mae has been purchased by the Trust at a market discount
(i.e., for a purchase price less than its stated redemption price at
maturity (or, if issued with original issue discount, its "revised issue
price")), unless the amount of market discount is "de minimis" as
specified in the Code, each payment of principal on the Ginnie Mae will
generally constitute ordinary income to the Trust to the extent of any
accrued market discount unless the Trust elects to include the accrued
market discount in taxable income as it accrues. In the case of a Ginnie
Mae, the amount of market discount that is deemed to accrue each month
shall generally be the amount of discount that bears the same ratio to
the total amount of remaining market discount that the amount of
interest paid during the accrual period (each month) bears to the total
amount of interest remaining to be paid on the Ginnie Mae as of the
beginning of the accrual period.
Page 14
Each Unit holder of the Trust shall receive an annual statement
describing the tax status of the distributions paid by the Trust.
Investment in the Trust may be particularly well suited for purchase by
funds and accounts of individual investors that are exempt from Federal
income taxes such as Individual Retirement Accounts, Keogh Plans,
pension funds and other tax-deferred retirement plans. (See "Why are
Investments in the Trust Suitable for Retirement Plans?")
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 the Trust to such Unit holder (including amounts received upon the
redemption of Units) will be subject to back-up withholding.
The foregoing discussion relates only to the Federal income tax status
of the Trust and to the tax treatment of distributions by the Trust to
United States Unit holders.
A Unit holder who is a foreign investor (i.e., an investor other than a
United States citizen or resident or a United States corporation,
partnership, estate or trust) should be aware that, generally, subject
to applicable tax treaties, distributions from the Trust which
constitute dividends for Federal income tax purposes (other than
dividends which the Trust designates as capital gain dividends) will be
subject to United States income taxes, including withholding taxes.
However, distributions received by a foreign investor from the Trust
that are designated by the Trust as capital gain dividends should not be
subject to United States Federal income taxes, including withholding
taxes, if all of the following conditions are met: (i) the capital gain
dividend is not effectively connected with the conduct by the foreign
investor of a trade or business within the United States, (ii) the
foreign investor (if an individual) is not present in the United States
for 183 days or more during his or her taxable year, and (iii) the
foreign investor provides all certification which may be required of his
status (foreign investors may contact the Sponsor to obtain a Form W-8
which must be filed with the Trustee and refiled every three calendar
years thereafter). Foreign investors should consult their tax advisers
with respect to United States tax consequences of ownership of Units.
Units in the Trust and Trust distributions may also be subject to state
and local taxation and Unit holders should consult their tax advisers in
this regard.
Distributions reinvested into additional Units of the Trust will be
taxed to a Unit holder in the manner described above (i.e., as ordinary
income, long-term capital gain or as a return of capital).
Why are Investments in the Trust Suitable for Retirement Plans?
The Trust may be well suited for purchase by Individual Retirement
Accounts, Keogh Plans, pension funds and other tax-deferred retirement
plans. Generally, the Federal income tax relating to capital gains and
income received in each of the foregoing plans is deferred until
distributions are received. Distributions from such plans are generally
treated as ordinary income but may, in some cases, be eligible for
special averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax
laws related thereto and should consult their attorneys or tax advisers
with respect to the establishment and maintenance of any such plan. Such
plans are offered by brokerage firms and other financial institutions.
Fees and charges with respect to such plans may vary.
How Can Distributions to Unit Holders be Reinvested?
The Sponsor has entered into an arrangement with Oppenheimer Funds, Inc.
which permits Unit holders of the Trust to elect to have each
distribution of interest income or principal, or both, on their Units
automatically reinvested in shares of any open-end fund offered by
OppenheimerFunds. In addition, Unit holders of the Trust may elect to
have each distribution of interest income or principal, or both, on
their Units automatically reinvested into any other established account
designated by the Unit holder (collectively, the "Reinvestment Option").
Oppenheimer Funds, Inc. is the investment adviser of OppenheimerFunds,
which includes Oppenheimer Government Securities Fund, a fund with
similar objectives to the Trust. Oppenheimer Government Securities Fund
is an open-end, diversified management investment company. Oppenheimer
Government Securities Fund seeks a high current return and safety of
Page 15
principal by investing principally in obligations issued or guaranteed
by the U.S. Government or its agencies and instrumentalities, including
GNMA mortgage-backed securities, as is considered consistent with the
preservation of capital and maintenance of liquidity. The objectives and
policies of Oppenheimer Government Securities Fund are presented in more
detail in the prospectus pertaining to such Fund.
Each person who purchases Units of the Trust may elect to become a
participant in the Reinvestment Option with respect to any open-end fund
offered by OppenheimerFunds. After electing participation, each
distribution of interest income or principal, or both, on the
participant's Units will automatically be applied by the Trustee to
purchase shares (or fractions thereof) of any open-end fund offered by
OppenheimerFunds without a sales charge and with no minimum initial and
subsequent investment requirements.
The transfer agent for the selected open-end fund offered by
OppenheimerFunds will mail to each participant in the Reinvestment
Option confirmations of all transactions undertaken for such participant
in connection with the receipt of distributions from The First Trust
GNMA Reinvestment Income Trust and the purchase of shares (or fractions
thereof) of such open-end fund offered by OppenheimerFunds.
A participant may at any time, by so notifying the Trustee in writing,
elect to terminate his participation in the Reinvestment Option and
receive future distributions on his Units in cash. There will be no
charge or other penalty for such termination. The Sponsor and
Oppenheimer Funds, Inc. all have the right to terminate the Reinvestment
Option, in whole or in part.
It should be remembered that even if distributions are reinvested
through the Reinvestment Option they are still treated as distributions
for income tax purposes.
Unit holders of a Series of the Trust participating in IRAs, Keogh
Plans, pension funds and other tax-deferred retirement plans may find it
highly advantageous to participate in the Reinvestment Option in order
to keep the monies in the account fully invested at all times. Should
such option be selected, an account with an identical registration to
that established at the time the Units of the Trust are purchased will
be set up as selected by the investor. Investors should consult with
their plan custodian as to the appropriate disposition of distributions.
Unless participants in IRAs, Keogh Plans and other tax-deferred
retirement plans elect the Reinvestment Option, cash distributions will
be sent to the custodian of the retirement plan and will not be sent to
the investor. See "Why are Investments in the Trust Suitable for
Retirement Plans?"
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 determined by adding to
the Evaluator's determination of the aggregate offering price of the
Securities in the Trust, including any money in the Principal Account
other than money required to redeem tendered Units, a sales charge of
4.25% of the Public Offering Price (which is equivalent to 4.439% of the
net amount invested). During the initial offering period, the Sponsor's
Repurchase Price is equal to the Evaluator's determination of the
aggregate offering price of the Securities in the Trust. For secondary
market sales after the completion of the initial offering period, the
Public Offering Price is based on the Evaluator's determination of the
aggregate bid price of the Securities in the Trust, including any money
in the Principal Account other than money required to redeem tendered
Units, and includes a sales charge of 4.50% of the Public Offering
Price (which is equivalent to 4.712% of the net amount invested). Also
added to the Public Offering Price is a proportionate share of interest
accrued but unpaid on the Securities after the First Settlement Date to
the date of settlement of Units (see "The First Trust GNMA Reinvestment
Income Trust-How is Accrued Interest Treated?").
The sales charge during the initial offering period is reduced by a
discount as indicated below for volume purchases (except for sales made
pursuant to a "wrap fee account" or similar arrangements as set forth
below):
Page 16
<TABLE>
<CAPTION>
Discount
Dollar Amount of Expressed as a
Transaction at Public Percentage of
Offering Price Public Offering Price
_____________________ _____________________
<S> <C>
$100,000 - $249,999 0.25%
$250,000 - $499,999 0.50%
$500,000 - $999,999 0.75%
$1,000,000 or more 1.50%
</TABLE>
An investor may aggregate purchases of Units of two consecutive similar
series of a particular GNMA Trust for purposes of calculating the
discount for volume purchases listed above. Additionally, 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, dealers and their affiliates,
the sales charge is reduced by 2.0% of the Public Offering Price for
purchases of Units during the initial and secondary offering periods.
Units may be purchased in the primary or secondary market at the Public
Offering Price less the concession the Sponsor typically allows to
dealers and other selling agents for purchases (see "Public Offering-How
are Units Distributed?") by investors who purchase Units through
registered investment advisers, certified financial planners or
registered broker-dealers who in each case either charge periodic fees
for financial planning, investment advisory or asset management
services, or provide such services in connection with the establishment
of an investment account for which a comprehensive "wrap fee" charge is
imposed.
Any such reduced sales charge, including pursuant to a Letter of Intent
described below, shall be the responsibility of the selling
broker/dealers, banks or others. This reduced sales charge structure
will apply on all purchases of Units in the Trust by the same person on
any one day from any one broker/dealer, bank or other. For purposes of
calculating the applicable sales charge, except as noted in this
section, purchases of Units in the Trust will not be aggregated with any
other purchases by the same person of units in any series of tax-exempt
or other unit investment trusts sponsored by Nike Securities L.P.
Additionally, Units purchased in the name of the spouse of a purchaser
or in the name of a child of such purchaser under 21 years of age will
be deemed for the purposes of calculating the applicable sales charge to
be additional purchases by the purchaser. The reduced sales charges will
also be applicable to a trustee or other fiduciary purchasing securities
for a single trust or single fiduciary account.
A purchaser desiring to purchase during a 12 month period $1,000,000 or
more of a series of The First Trust GNMA may qualify for a reduced sales
charge by signing a nonbinding Letter of Intent. After signing a Letter
of Intent, at the date total purchases, less redemptions, of units of a
series of The First Trust GNMA by a purchaser (including 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) exceed $1,000,000, the selling
broker/dealer, bank or other will make a retroactive reduction of the
sales charge on such units in the amount of 1.5% (reduced by any
previous discount received on the units) of the Public Offering Price of
the units. If a purchaser does not complete the required purchases under
the Letter of Intent within the 12 month period, no such retroactive
sales charge reduction shall be made. To qualify as a purchase under a
Letter of Intent each purchase of units of The First Trust GNMA must
equal or exceed $100,000.
On the Initial Date of Deposit, the Public Offering Price per Unit with
respect to the Trust is as indicated in the "Summary of Essential
Information." In addition to fluctuations in the amount of interest
accrued but unpaid on Securities in the Trust, the Public Offering Price
at any time during the initial offering period will vary from the Public
Offering Price stated herein in accordance with fluctuations in the
prices of the underlying Securities.
The aggregate price of the Securities in the Trust is determined by
Securities Evaluation Service, Inc. acting as evaluator (the
"Evaluator") on the basis of bid prices or offering prices as is
appropriate, (1) on the basis of current market prices for the
Securities obtained from dealers or brokers who customarily deal in
Page 17
Securities comparable to those held by the Trust; (2) if such prices are
not available for any of the Securities, on the basis of current market
prices for comparable securities; (3) by determining the value of the
Securities by appraisal; or (4) by any combination of the above.
There is a period of a few days (usually about five business days),
beginning on the first day of each month, during which the total amount
of payments (including prepayments, if any) of principal for the
preceding month of the various mortgages underlying each of the Ginnie
Maes in the Trust will not yet have been reported by the issuer to GNMA
and made generally available to the public. During this period, the
precise principal amount of the underlying mortgages remaining
outstanding for each Ginnie Mae in the Trust, and therefore the precise
principal amount of such Security, will not be known, although the
precise principal amount outstanding for the preceding month will be
known. Therefore, the precise amount of principal to be acquired by the
Trustee as a holder of such Securities which will be reinvested into
comparable securities will not be known. The Sponsor does not expect
that the amounts of such prepayments and the differences in such
principal amounts from month to month will be material in relation to
the Trust due to the number of mortgages underlying each Ginnie Mae and
the number of such Securities in the Trust. However, there can be no
assurance that they will not be material. For purposes of the
determination by the Evaluator of the offering prices and bid prices of
the Ginnie Maes in the Trust and for purposes of calculations of accrued
interest on the Units, during the period in each month prior to the time
when the precise amounts of principal of the Ginnie Maes for the month
become publicly available, the Evaluator will base its evaluations and
calculations, which are the basis for calculations of the Public
Offering Price, the Sponsor's Repurchase Price in the secondary market
and the Redemption Price per Unit, upon the average monthly principal
distribution for the preceding twelve month period. The Sponsor expects
that the differences in such principal amounts from month to month will
not be material to the Trust. Nevertheless, the Sponsor will adopt
procedures as to pricing and evaluation for the Units of the Trust, with
such modifications, if any, deemed necessary by the Sponsor for the
protection of Unit holders, designed to minimize the impact of such
differences upon the calculation of the accrued interest on the Units,
the Public Offering Price per Unit, the Sponsor's Repurchase Price per
Unit in the secondary market and the Redemption Price per Unit.
During the initial public offering period, a determination of the
aggregate price of the Securities in the Trust is made by the Evaluator
on an offering price basis, as of the close of trading on the New York
Stock Exchange on each day on which it is open, effective for all sales
made subsequent to the last preceding determination. For secondary
market purposes, the Evaluator will be requested to make such a
determination, on a bid price basis, as of the close of trading on the
New York Stock Exchange (generally 4:00 p.m. Eastern time) on each day
on which it is open, effective for all sales, purchases or redemptions
made subsequent to the last preceding determination. No evaluation will
be made, however, on any day on which the Ginnie Mae securities markets
are not generally open for business.
The Public Offering Price of the Units during the initial offering
period is equal to the offering price per Unit of the Securities in the
Trust plus the applicable sales charge. After the completion of the
initial offering period, the secondary market Public Offering Price will
be equal to the bid price per Unit of the Securities in the Trust plus
the applicable sales charge. The offering price of Securities in the
Trust was greater than the bid price of such Securities on the Initial
Date of Deposit by the aggregate amount and the amount per Unit
indicated in the Portfolio.
Although payment is normally made three business days following the
order for purchase, 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. Initial
transaction statements for Units held in uncertificated form
representing Units so ordered will be issued to the registered owner of
such Units within two business days of the issuance of such Units. See
"Rights of Unit Holder-How May Units be Redeemed?" for information
regarding the ability to redeem Units ordered for purchase.
Page 18
How are Units Distributed?
During the initial offering period, Units issued on the Initial Date of
Deposit and additional Units issued after such date in respect of
additional Ginnie Maes deposited by the Sponsor, will be distributed to
the public at the Public Offering Price. Units reacquired by the Sponsor
during the initial offering period may be resold at the then current
Public Offering Price. Upon completion of the initial offering period,
Units repurchased in the secondary market (see "Will There be a
Secondary Market?") may be offered by this Prospectus at the secondary
market public offering price determined in the manner described above.
It is the intention of the Sponsor to qualify Units for sale in a number
of states. Sales initially will be made to broker/dealers, banks or
others at prices which represent a concession or agency commission of
2.6% per Unit. A concession of 3.0% of the Public Offering Price will be
given to any broker/dealer, bank or other who purchases from the Sponsor
at least 10,000 Units on the Initial Date of Deposit or on any other day
during the initial offering period. For secondary market sales,
broker/dealers, banks or others will receive a concession of 2.75% of
the Public Offering Price. In addition, broker/dealers, banks and others
who received a concession of 3.00% of the Public Offering Price in
connection with their purchase of Units of the First Trust GNMA
Reinvestment Income Trust, Series 68 on such trust's initial date of
deposit will receive the same concession or agency commission regardless
of the number of Series 71 Units purchased on the Initial Date of
Deposit. The Sponsor reserves the right to change the amount of the
concession to broker/dealers, banks or others from time to time. Certain
commercial banks are making Units of the 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 in the second preceding sentence. Under the Glass-Steagall
Act, banks are prohibited from underwriting Trust Units; however, the
Glass-Steagall Act does permit certain agency transactions and the
banking regulators have not indicated that these particular agency
transactions are not permitted under such Act.
From time to time the Sponsor may implement programs under which
broker/dealers, banks or others of the Trust may receive nominal awards
from the Sponsor for each of their registered representatives who have
sold a minimum number of UIT Units during a specified time period. In
addition, at various times the Sponsor may implement other programs
under which the sales force of broker/dealers, banks or others may be
eligible to win other nominal awards for certain sales efforts, or under
which the Sponsor will reallow to any such dealers or others that
sponsor 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 broker/dealers, banks or others for certain
services or activities which are primarily intended to result in sales
of Units of the Trust. Such payments are made by the Sponsor out of its
own assets, and not out of the assets of the Trust. These programs will
not change the price Unit holders pay for their Units or the amount that
the Trust will receive from the Units sold.
A comparison of estimated current returns and estimated long-term
returns with the returns on various investments is one element to
consider in making an investment decision. The Sponsor may from time to
time in its advertising and sales materials compare the then current
estimated returns on the Trust and returns over specified periods on
other similar trusts sponsored by Nike Securities L.P. with returns on
taxable investments such as corporate or U.S. Government bonds, bank CDs
and money market accounts or money market funds, each of which has
investment characteristics that may differ from those of the Trust. U.S.
Government bonds, for example, are backed by the full faith and credit
of the U.S. Government and bank CDs and money market accounts are
insured by an agency of the federal government. Money market accounts
and money market funds provide stability of principal, but pay interest
at rates that vary with the condition of the short-term debt market. The
investment characteristics of the Trust are described more fully
elsewhere in this Prospectus.
Trust performance may be compared to performance on a total return basis
to data obtained from publications such as Money, The New York Times,
U.S. News and World Report, Business Week, Forbes or Fortune. As with
Page 19
other performance data, performance comparisons should not be considered
representative of a Trust's relative performance for any future period.
What are the Profits of the Sponsor?
The Sponsor will receive a gross sales commission during the initial
offering period equal to 4.25% of the Public Offering Price (equivalent to
4.439% of the net amount invested) of the Trust. Any reduced sales charge shall
be the responsibility of the selling broker/dealers, banks or others, for
discounts made available to purchasers as described in "How is the Public
Offering Price Determined?" See "Public Offering-How are Units Distributed?"
for information regarding additional concessions available to
broker/dealers, banks or others. In addition, the Sponsor may be
considered to have realized a profit or the Sponsor may be considered to
have sustained a loss, as the case may be for the Trust, in the amount
of any difference between the cost of the Securities to the Trust and
the cost of such Securities to the Sponsor. See "Portfolio." During the
initial offering period, broker/dealers, banks or others also may
realize profits or sustain losses from the sale of Units or as a result
of fluctuations after the Initial Date of Deposit in the offering prices
of the Securities and hence in the Public Offering Price received by the
broker/dealers, banks or others.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between the
price at which Units are purchased (based on the bid prices of the
Securities in the Trust) and the price at which Units are resold (which
price is also based on the bid prices of the Securities in such Trust
and includes a sales charge of 4.50%) or redeemed (based on the bid
prices of the Securities in the Trust). The secondary market public
offering price of Units may be greater or less than the cost of such
Units to the Sponsor.
Will There be a Secondary Market?
After the initial offering period, although it is not obligated to do
so, the Sponsor intends to maintain a market for the Units and
continuously to offer to purchase Units at prices, subject to change at
any time, based upon the aggregate bid price of the Securities in the
Trust plus interest accrued to the date of settlement. To the extent
that a secondary market is maintained during the initial offering
period, the prices at which Units of the Trust will be repurchased will
be based upon the aggregate offering side evaluation of the Securities
in the portfolio of the Trust. The aggregate bid prices of the
underlying Securities in the Trust, upon which the Sponsor's Repurchase
Price and the Redemption Price are based, are expected to be less than
the related aggregate offering prices (which is the evaluation method
used during the initial public offering period). All expenses incurred
in maintaining a secondary market, other than the fees of the Evaluator
and the costs of the Trustee in transferring and recording the ownership
of Units, will be borne by the Sponsor. If the supply of Units exceeds
demand, or for some other business reason, the Sponsor may discontinue
purchases of Units at such prices. IF A UNIT HOLDER WISHES TO DISPOSE OF
HIS UNITS, HE SHOULD INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES
PRIOR TO MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee.
Ownership of Units may be evidenced by registered certificates executed
by the Trustee and the Sponsor. Delivery of certificates representing
Units ordered for purchase is normally made three business days
following such order or shortly thereafter. Certificates are
transferable by presentation and surrender to the Trustee properly
endorsed or accompanied by a written instrument or instruments of
transfer. Certificates to be redeemed must be properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unit
holder must sign exactly as his name appears on the face of the
certificate with the signature guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other
signature guarantee program in addition to, or in substitution for,
STAMP, as may be accepted by the Trustee. In certain instances the
Trustee may require additional documents such as, but not limited to,
trust instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority.
Page 20
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 a Series of the Trust; the number of Units issued or
transferred; the name, address and taxpayer identification number, if
any, of the new registered owner; a notation of any liens and
restrictions of the issues 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 transfer unless requested by the Unit
holder. A Unit holder may at any time request the Trustee to issue
certificates for Units.
Although no such charge is now made or contemplated, a Unit holder may
be required to pay $2.00 to the Trustee per certificate reissued or
transferred, and to pay any governmental charge that may be imposed in
connection with each such transfer or exchange. For new certificates
issued to replace destroyed, stolen or lost certificates, the Unit
holder may be required to furnish indemnity satisfactory to the Trustee
and pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
How are Interest and Principal Distributed?
The terms of the Ginnie Maes provide for payment to the holders thereof
(including the Trust) on the fifteenth day of each month of amounts
collected by or due to the issuers thereof with respect to the
underlying mortgages during the preceding month, except for the first
payment, which is not due until 45 days after the initial issue date of
each Ginnie Mae. Interest from the Trust, including moneys representing
penalties for the failure to make timely payments on Securities or
liquidated damages for default or breach of any condition or term of the
Securities will be distributed on or shortly after the last day of each
month on a pro rata basis to Unit holders of record as of the preceding
Record Date. All distributions will be net of applicable expenses.
During the Reinvestment Period, the pro rata share of cash in the
Principal Account which has not been reinvested or committed for
reinvestment will also be computed as of the first day of June and
December and distributions to the Unit holders as of such Record Date
will be made on June 30 and December 31. After the Reinvestment Period,
the pro rata share of cash in the Principal Account will also be
computed as of the first day of each month and distributions to the Unit
holders as of such Record Date will be made on the last day of such
month. Proceeds from the disposition of any of the Securities or amounts
representing principal on the Securities received after such Record Date
and prior to the following Distribution Date will be held in the
Principal Account and not distributed until the next Distribution Date.
The Trustee is not required to pay interest on funds held in the
Principal or Interest Account (but may itself earn interest thereon and
therefore benefits from the use of such funds) nor to make a
distribution from the Principal Account unless the amount available for
distribution shall equal at least $1.00 per 100 Units.
The Trustee will credit to the Interest Account all interest received by
the Trust, including moneys representing penalties for the failure to
make timely payments on Securities or liquidated damages for default or
breach of any condition or term of the Securities and that part of the
proceeds of any disposition of Securities which represents accrued
interest. Other receipts will be credited to the Principal Account.
Persons who purchase Units between a Record Date and a Distribution Date
will receive their first distribution on the second Distribution Date
after the purchase.
As of the first day of each month, the Trustee will deduct from the
Interest Account and, to the extent funds are not sufficient therein,
from the Principal Account, amounts necessary to pay the expenses of the
Trust. The Trustee also may withdraw from said accounts such amounts, if
any, as it deems necessary to establish a reserve for any governmental
Page 21
charges payable out of the Trust. Amounts so withdrawn shall not be
considered a part of the assets of the Trust until such time as the
Trustee shall return all or any part of such amounts to the appropriate
account. In addition, the Trustee may withdraw from the Interest Account
and the Principal Account such amounts as may be necessary to cover
redemption of Units by the Trustee.
Record Dates for monthly distributions will be the first day of each
month. Distributions will be made on the last day of such month.
Distributions for an IRA, Keogh, pension fund or other tax-deferred
retirement plan will not be sent to the individual Unit holder; these
distributions will go directly to the custodian of the plan to avoid the
penalties associated with premature withdrawals from such accounts.
What Reports Will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of interest, if any, and the
amount of other receipts, if any, which are being distributed, expressed
in each case as a dollar amount per Unit. Within a reasonable time after
the end of each calendar year, the Trustee will furnish to each person
who at any time during the calendar year was a Unit holder of record, a
statement as to (1) the Interest Account: interest received (including
amounts representing interest received upon any disposition of
Securities, penalties for the failure to make timely payments on
Securities or liquidated damages for default or breach of any condition
or term of the Securities), deductions for payment of applicable taxes
and for fees and expenses of the Trust, redemption of Units and the
balance remaining after such distributions and deductions, expressed
both as a total dollar amount and as a dollar amount representing the
pro rata share per Unit outstanding on the last business day of such
calendar year; (2) the Principal Account: the amount of principal on
Securities, and the net proceeds received therefrom (excluding any
portion representing interest), deduction for payment of applicable
taxes and for fees and expenses of the Trust, redemptions of Units, and
the balance remaining after such distributions and deductions expressed
both as a total dollar amount and as a dollar amount per Unit; (3) the
Securities held and the number of Units outstanding on the last business
day of such calendar year; (4) the Redemption Price per Unit based upon
the last computation thereof made during such calendar year; (5) the
dollar amounts actually distributed during such calendar year from the
Interest Account and from the Principal Account, separately stated; and
(6) such other information as the Trustee may deem appropriate. Unit
holders of Units in uncertificated form shall receive no less frequently
than once each year a dated written statement containing the name,
address and taxpayer identification number, if any, of the registered
owner, the number of Units registered in the name of the registered
owner on the date of the statement and certain other information, that
will be provided as required under applicable law.
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 furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his Units by tender to the
Trustee at its corporate trust office in the City of New York of the
certificates representing the Units to be redeemed, or, in the case of
uncertificated Units, delivery of a request for redemption, duly
endorsed or accompanied by proper instruments of transfer with signature
guaranteed as explained above (or by providing satisfactory indemnity,
as in connection with lost, stolen or destroyed certificates), and
payment of applicable governmental charges, if any. No redemption fee
will be charged. On the third business day following such tender the
Unit holder will be entitled to receive in cash an amount for each Unit
equal to the Redemption Price per Unit next computed after receipt by
the Trustee of such tender of Units. The "date of tender" is deemed to
be the date on which Units are received by the Trustee, except that as
regards Units received after the close of trading on the New York Stock
Exchange (generally 4:00 p.m. Eastern time), the date of tender is the
next day on which such Exchange is open for trading and such Units will
be deemed to have been tendered to the Trustee on such day for
redemption at the redemption price computed on that day. Units so
redeemed shall be canceled.
Accrued interest to the settlement date paid on redemption shall be
withdrawn from the Interest Account or, if the balance therein is
insufficient, from the Principal Account. All other amounts paid on
redemption shall be withdrawn from the Principal Account.
Page 22
The Redemption Price per Unit (as well as the secondary market Public
Offering Price) will be determined on the basis of the bid price of the
Securities in the Trust, while the Public Offering Price of Units during
the initial offering period will be determined on the basis of the
offering price of the Securities, as of the close of trading on the New
York Stock Exchange (generally 4:00 p.m. Eastern time) on the date any
such determination is made. At the opening of business on the Initial
Date of Deposit the Public Offering Price per Unit (which is based on
the offering prices of the Securities in the Trust and includes the
sales charge) exceeded the Unit value at which Units could have been
redeemed (based upon the current bid prices of the Securities in each
Series of the Trust) by the amount per Unit set forth in the "Summary of
Essential Information." The Redemption Price per Unit is the pro rata
share of each Unit determined by the Trustee on the basis of (1) the
cash on hand in the Trust or moneys in the process of being collected,
(2) the value of the Securities in the Trust based on the prices of the
Securities and (3) interest accrued thereon, less (a) amounts
representing taxes or other governmental charges payable out of the
Trust and (b) the accrued expenses of the Trust. The Evaluator may
determine the value of the Securities in the Trust (1) on the basis of
current bid prices of the Securities obtained from dealers or brokers
who customarily deal in securities comparable to those held by the
Trust, (2) on the basis of bid prices for securities comparable to any
securities for which bid prices are not available, (3) by determining
the value of the Securities by appraisal, or (4) by any combination of
the above. See "Public Offering-How is the Public Offering Price
Determined?" for information with respect to the uncertainty during
certain periods of each month of the precise amount of principal and
accrued interest of the Ginnie Maes.
The difference between the bid and offering prices of such Securities
may be expected to average 1/4 to 1/2 of 1% of the principal amount of
such Securities. Therefore, the price at which Units may be redeemed
could be less than the price paid by the Unit holder. At the opening of
business on the Initial Date of Deposit the aggregate current offering
price of such Securities exceeded the Redemption Price (based upon
current bid prices of such Securities) by the aggregate amount and the
amount per Unit indicated in the Portfolio.
The Trustee is empowered to sell underlying Securities in order to make
funds available for redemption. To the extent that Securities are sold,
the size and diversity of the Trust will be reduced. Such sales may be
required at a time when Securities would not otherwise be sold and might
result in lower prices than might otherwise be realized. Ginnie Maes are
sold in minimum face amounts which range from $25,000 to $100,000. Due
to the minimum principal amount in which Ginnie Maes may be required to
be sold, the proceeds of such sales may exceed the amount necessary for
payment of Units redeemed. Such excess proceeds will be placed in the
Principal Account and eligible for reinvestment or for distribution pro
rata to all remaining Unit holders of record.
The right of redemption may be suspended and payment postponed for any
period during which the New York Stock Exchange is closed, other than
for customary weekend and holiday closings, or during which the
Securities and Exchange Commission determines that trading on that
Exchange is restricted or an emergency exists, as a result of which
disposal or evaluation of the Securities is not reasonably practical, or
for such other periods as the Securities and Exchange Commission may by
order permit.
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 the close of business on the
second succeeding business day and by making payment therefor to the
Unit holder not later than the day on which the Units would otherwise
have been redeemed by the Trustee. Units held by the Sponsor may be
tendered to the Trustee for redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be in
accord with the Public Offering Price described in the then currently
effective prospectus describing such Units. Any profit or loss resulting
from the resale or redemption of such Units will belong to the Sponsor.
Page 23
How May Securities be Removed from the Trust?
The Sponsor is empowered, but not obligated, to direct the Trustee to
dispose of Securities in the event certain events occur that adversely
affect the value of Securities including default in payment of interest
or principal, default in payment of interest or principal of other
obligations guaranteed or backed by the full faith and credit of the
United States of America, institution of legal proceedings, default
under other documents adversely affecting debt service, decline in price
or the occurrence of other market or credit factors.
If any default in the payment of principal or interest on any Security
occurs and if the Sponsor fails to instruct the Trustee to sell or to
hold such Security within thirty days after notification by the Trustee
to the Sponsor of such default, the Trustee may, in its discretion, sell
the defaulted Security and not be liable for any depreciation or loss
thereby incurred.
The Trustee is also empowered to sell, for the purpose of redeeming
Units tendered by any Unit holder, and for the payment of expenses for
which funds may not be available, such of the Securities in a list
furnished by the Sponsor as the Trustee in its sole discretion may deem
necessary. Except as stated under "What is the First Trust GNMA
Reinvestment Income Trust?", the acquisition by the Trust of any
securities other than the Securities initially deposited is prohibited.
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in 1991,
acts as Sponsor for successive series of The First Trust Combined
Series, The First Trust Special Situations Trust, The First Trust
Insured Corporate Trust, The First Trust of Insured Municipal Bonds, The
First Trust GNMA Reinvestment Income Trust, Templeton Growth and
Treasury Trust, Templeton Foreign Fund & U.S. Treasury Securities Trust,
and The Advantage Growth and Treasury Securities Trust. First Trust
introduced the first insured unit investment trust in 1974 and to date
more than $9 billion in First Trust unit investment trusts have been
deposited. The Sponsor's employees include a team of professionals with
many years of experience in the unit investment trust industry. The
Sponsor is a member of the National Association of Securities Dealers,
Inc. and Securities Investor Protection Corporation and has its
principal offices at 1001 Warrenville Road, Lisle, Illinois 60532;
telephone number 708-241-4141. As of December 31, 1994, the total
partners' capital of Nike Securities L.P. was $10,863,058 (audited).
(This paragraph relates only to the Sponsor and not to the Trust or to
any series thereof or to any other dealers. The information is included
herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its
contractual obligations. More detailed financial information will be
made available by the Sponsor upon request.)
Who is the Trustee?
The Trustee is The Chase Manhattan Bank (National Association) a
national banking association with its principal executive office located
at 1 Chase Manhattan Plaza, New York, New York 10081 and its unit
investment trust offices at 770 Broadway, New York, New York 10003. Unit
holders who have questions regarding the Fund may call the Customer
Service Help Line at 1-800-682-7520. The Trustee is subject to
supervision by the Comptroller of the Currency, the Federal Deposit
Insurance Corporation and the Board of Governors of the Federal Reserve
System.
The Trustee, whose duties are ministerial in nature, has not
participated in the selection of the 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
Page 24
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 Trustee shall be under no liability to Unit holders for
taking any action or for refraining from taking any action in good faith
pursuant to the Indenture, or for errors in judgment, but shall be
liable only for their own willful misfeasance, bad faith, gross
negligence (ordinary negligence in the case of the Trustee) or reckless
disregard of their obligations and duties. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the
Trustee of any of the Securities. In the event of the failure of the
Sponsor to act under the Indenture, the Trustee may act thereunder and
shall not be liable for any action taken by it in good faith under the
Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or upon or in
respect of a Series 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 become incapable of acting or become bankrupt or its
affairs are taken over by public authorities, then the Trustee may (a)
appoint a successor Sponsor at rates of compensation deemed by the
Trustee to be reasonable and not exceeding amounts prescribed by the
Securities and Exchange Commission, or (b) terminate the Indenture and
liquidate the Trust as provided herein, or (c) continue to act as
Trustee without terminating the Indenture.
Who is the Evaluator?
The Evaluator is Securities Evaluation Service, Inc., 531 East Roosevelt
Road, Suite 200, Wheaton, Illinois 60187. The Evaluator may resign or
may be removed by the Sponsor and the Trustee, in which event the
Sponsor and the Trustee are to use their best efforts to appoint a
satisfactory successor. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor Evaluator.
If upon resignation of the Evaluator no successor has accepted
appointment within 30 days after notice of resignation, the Evaluator
may apply to a court of competent jurisdiction for the appointment of a
successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Indenture
shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee, Sponsor or Unit holders for errors in
judgment. This provision shall not protect the Evaluator in any case of
willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties.
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such amendment is
(1) to cure any ambiguity or to correct or supplement any provision of
the Indenture which may be defective or inconsistent with any other
provision contained therein, or (2) to make such other provisions as
shall not adversely affect the interest of the Unit holders (as
determined in good faith by the Sponsor and the Trustee), provided that
the Indenture is not amended to increase the number of Units issuable
Page 25
thereunder or to permit the deposit or acquisition of securities either
in addition to or in substitution for any of the Securities initially
deposited in the Trust, except for the substitution of Replacement
Securities for Failed Securities or the purchase of additional
Securities pursuant to the Indenture. In the event of any amendment, the
Trustee is obligated to notify promptly all Unit holders of the
substance of such amendment.
The Trust may be liquidated at any time by consent of 100% of the Unit
holders or by the Trustee when the principal amount of the Securities
owned by such Trust as shown by any evaluation, is less than the lower
of $2,000,000 or 40% of the total principal amount of the Securities
initially deposited in such Trust, or in the event that Units not yet
sold aggregating more than 60% of the Units initially deposited are
tendered for redemption by the dealers or others, including the Sponsor.
If the Trust is liquidated because of the redemption of unsold Units by
the dealers or others, the Sponsor will refund to each purchaser of
Units the entire sales charge paid by such purchaser. The Indenture will
terminate upon the redemption, sale or other disposition of the last
Security held thereunder, but in no event shall it continue beyond
December 31, 2045. In the event of termination, written notice thereof
will be sent by the Trustee to all Unit holders. Within a reasonable
period after termination, the Trustee will sell any Securities remaining
in the Trust, and, after paying all expenses and charges incurred by the
Trust, will distribute to each Unit holder (including the Sponsor if it
then holds any Units), upon surrender for cancellation of his Units, his
pro rata share of the balances remaining in the Interest and Principal
Accounts, all as provided in the Indenture.
Legal Opinions
The legality of the Units offered hereby will be passed upon by Chapman
and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as counsel
for the Sponsor. Carter, Ledyard & Milburn, 2 Wall Street, New York, New
York 10005, will act as counsel for the Trustee.
Experts
The statement of net assets, including the portfolio, of the Trust at
the opening of business on the Initial Date of Deposit, appearing in
this Prospectus and Registration Statement has been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein and in the Registration Statement, and is
included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
Page 26
The First Trust GNMA Reinvestment Income Trust,
Series 71
<TABLE>
<CAPTION>
Special Information
Monthly
_______
<S> <C>
Calculation of Estimated Net Annual Interest Income per Unit (1)
Estimated Annual Interest (excluding the effect of premiums) $ .9000
Less: Estimated Annual Expense $ .0254
Estimated Net Annual Interest Income per Unit $ .8746
Estimated Daily Rate of Net Interest Accrual per Unit $ .0024
Estimated Current Return Based on Public Offering Price (2) 7.84%
Estimated Long-Term Return Based on Public Offering Price (2) 7.06%
Estimated Average Life (3) 8.50 yrs.
CUSIP 337335 798
</TABLE>
Trustee's Annual Fee $.0092 per annum per Unit
outstanding annually, exclusive
of expenses of the Trust,
commencing February 21, 1996.
Income Distributions
Estimated first distribution of $.0122 per Unit will be paid on March
31, 1996 to Unit holders of record on March 1, 1996 (The First General
Record Date). The estimated first distribution will consist entirely of
interest.
Subsequent distributions will be paid on or shortly after the last day
of each month to holders of record of Units on the first day of such
month.
Principal Distributions
During the Reinvestment Period principal will be reinvested subject to
certain exceptions. Principal not reinvested will be distributed on June
30 and December 31 of each year to all Unit holders of record on June 1
and December 1, respectively. After the Reinvestment Period, principal
will be distributed with the income distributions described above.
No distributions need be made from the Principal Account if the balance
therein is less than $1.00 per 100 Units.
[FN]
________________
(1) Assumes delivery of all Securities; in the event that any contract
for the purchase of Securities shall be delayed or not be completed, the
Estimated Returns may be reduced.
(2) The Estimated Current Return is computed by dividing the Estimated
Net Annual Interest Income per Unit by the Public Offering Price per
Unit. The Estimated Net Annual Interest Income per Unit will vary with
changes in fees and expenses of the Trustee, Sponsor and Evaluator and
with the principal prepayment, redemption, maturity, exchange or sale of
Securities while the Public Offering Price will vary with changes in the
offering price of the underlying Securities; therefore, there is no
assurance that the present Estimated Current Return indicated above will
be realized in the future. The Estimated Long-Term Return is calculated
using a formula which (1) takes into consideration, and determines and
factors in the relative weightings of, the market values, yields (which
takes into account the amortization of premiums and the accretion of
discounts) and estimated average life of all of the Securities in the
Trust and (2) takes into account the expenses and sales charge
associated with each Unit of the Trust. Since the market values and
estimated average lives of the Securities and the expenses of the Trust
will change, there is no assurance that the present Estimated Long-Term
Return as indicated above will be realized in the future. The Estimated
Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the
date and estimated amount of principal returned while the Estimated
Current Return calculation includes only the Net Annual Interest Income
and Public Offering Price. Neither rate reflects the true return to Unit
holders which is lower because neither includes the effect of certain
delays in distributions to Unit holders and includes an internal
compounding rate that takes into account the premium coupon rate of the
Securities. These figures are based on per Unit cash flows. Cash flows
will vary with changes in fees and expenses, with the principal
prepayment, principal reinvestment, redemption, maturity, exchange or
sale of the underlying Securities and with changes in the average life
assumptions of the GNMA pools. Estimated Cash Flows for this Trust are
available upon request at no charge from the Sponsor.
(3) Estimated Average Life is calculated as described in "What are
Estimated Current Return and Estimated Long-Term Return?" and takes into
consideration the reinvestment of principal during the life of the
Reinvestment Period.
Page 27
Portfolio
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 71
At the Opening of Business on the Initial Date of Deposit-
February 21, 1996
Government National Mortgage Association, Modified Pass-Through Mortgage-
Backed Securities
<TABLE>
<CAPTION>
Cost of Cost of Profit
Principal Coupon Years of Stated Securities to Securities or (Loss) to
Amount Rate Maturity Sponsor (1) to Trust (2) Sponsor
__________ ______ _______________ ____________ ____________ _____________
<S> <C> <C> <C> <C> <C>
$1,570,192 9.00% 2016 - 2018 $ 1,670,292 $1,678,143 $7,851
========== ===== ============ =========== ========== ======
</TABLE>
[FN]
____________
(1) All Securities on the Initial Date of Deposit are represented by the
Sponsor's contracts to purchase such Securities. Such contracts were
acquired by the Sponsor on January 20, 1996. Interest will begin
accruing to the benefit of Unit holders from February 26, 1996, the
First Settlement Date of the Trust.
(2) The cost of the Securities to the Trust represents the offering side
evaluation of the Securities as determined by Securities Evaluation
Service, Inc. The offering side evaluation is greater than the current
bid side evaluation of the Securities which is the basis on which
Redemption Price per Unit is determined. The aggregate value based on
the bid side evaluation at the opening of business on the Initial Date
of Deposit was $1,674,217, which is $3,926 ($.025 per Unit; .250% of the
aggregate principal amount) lower than the aggregate cost of the
Securities to the Trust based on the offering side evaluation.
In addition to the information as to the GNMA fully modified pass-
through mortgage-backed Securities set forth under "Portfolio," the
Trustee will furnish Unit holders a statement listing the name of
issuer, pool number, interest rate, maturity date and principal amount
for each such Security in the Portfolio upon written request.
Page 28
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, Series 71
We have audited the accompanying statement of net assets, including the
portfolio, of The First Trust GNMA Reinvestment Income Trust, Series 71
(the "Trust") as of the opening of business on February 21, 1996. This
statement of net assets is the responsibility of the Trust's Sponsor.
Our responsibility is to express an opinion on this statement of net
assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of net assets is
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the statement
of net assets. Our procedures included confirmation of the letter of
credit held by the Trustee and deposited in the Trust at the opening of
business on February 21, 1996. An audit also includes assessing the
accounting principles used and significant estimates made by the
Sponsor, as well as evaluating the overall presentation of the statement
of net assets. We believe that our audit of the statement of net assets
provides a reasonable basis for our opinion.
In our opinion, the statement of net assets referred to above presents
fairly, in all material respects, the financial position of The First
Trust GNMA Reinvestment Income Trust, Series 71 at the opening of
business on February 21, 1996 in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
February 21, 1996
Page 29
Statement of Net Assets
At the Opening of Business
On the Initial Date of Deposit, February 21, 1996
<TABLE>
<CAPTION>
The First Trust
GNMA
Reinvestment
Income
Trust,
Series 71
_______________
NET ASSETS
<S> <C>
Delivery statements relating to Sponsor's contracts
to purchase Securities (1)(2) $1,678,143
Accrued interest on underlying Securities (2)(3) 7,851
Organizational and offering costs (4) 50,000
__________
1,735,994
Less accrued organizational and offering costs (4) (50,000)
Less distributions payable (3) ( 7,851)
___________
Net assets $1,678,143
===========
Outstanding Units of fractional undivided interest 157,019
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (5) $1,752,630
Less gross underwriting commissions (5) 74,487
___________
Net assets $1,678,143
===========
</TABLE>
________________
[FN]
Notes:
(1) The aggregate offering price of the Securities of the Trust listed
under "Portfolio" on the Initial Date of Deposit herein and their cost
to the Trust are the same. The offering price shown above has been
determined by Securities Evaluation Service, Inc., certain shareholders
of which are officers of the Sponsor.
(2) Pursuant to delivery statements relating to contracts to purchase
Securities, an irrevocable letter of credit held by the Trustee has been
deposited in the Trust as collateral. The amount of available letter of
credit and the amount expected to be utilized for the Trust is shown
below. The amount expected to be utilized is (a) the cost to the Trust
of the principal amount of the Securities to be purchased, (b) accrued
interest on those Securities to the Initial Date of Deposit and (c)
accrued interest on those Securities from the Initial Date of Deposit to
the expected dates of delivery of the Securities.
<TABLE>
<CAPTION>
Accrued Accrued
Aggregate Interest to Interest to
Letter of Credit Offering Initial Expected
To be Price of Date of Dates of
Series Available Utilized Securities Deposit Delivery
______ _________ ________ __________ ___________ ___________
<S> <C> <C> <C> <C> <C>
The First Trust GNMA
Reinvestment Income Trust,
Series 71 $1,700,000 $1,685,994 $1,678,143 $7,851 $0
</TABLE>
(3) The Trustee will advance to the Trust the amount of accrued interest
to February 26, 1996, the First Settlement Date of the Trust, for
distribution to the Sponsor as the Unit holder of record.
Page 30
(4) The Trust will bear all or a portion of its estimated organizational
and offering costs which will be deferred and charged off over a period
not to exceed five years from the Initial Date of Deposit. The estimated
organizational and offering costs are based on 5,000,000 Units of the
Trust expected to be issued. To the extent the number of Units issued is
larger or smaller, the estimate will vary.
(5) The aggregate cost to investors and the aggregate gross underwriting
commissions of 4.25% for the Trust are computed assuming no reduction of
sales charge for quantity purchases.
DESCRIPTION OF STANDARD & POOR'S RATING*
A Standard & Poor's rating on the units of an investment trust
(hereinafter referred to collectively as "units" and "trust") is a
current assessment of creditworthiness with respect to the investments
held by such trust. This assessment takes into consideration the
financial capacity of the issuers and of any guarantors, insurers,
lessees or mortgagors with respect to such investments. The assessment,
however, does not take into account the extent to which trust expenses
or portfolio asset sales for less than the trust's purchase price will
reduce payment to the Unit holder of the interest and principal required
to be paid on the portfolio assets. In addition, the rating is not a
recommendation to purchase, sell, or hold units, inasmuch as the rating
does not comment as to market price of the units or suitability for a
particular investor.
Trusts rated "AAA" are composed exclusively of assets that are rated
"AAA" by Standard & Poor's or, have, in the opinion of Standard &
Poor's, credit characteristics comparable to assets rated "AAA," or
certain short-term investments. Standard & Poor's defines its "AAA"
rating for such assets as the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is very strong.
____________
*As described by Standard & Poor's.
Page 31
<TABLE>
<CAPTION>
CONTENTS:
<S> <C>
Summary of Essential Information 3
The First Trust GNMA Reinvestment Income Trust:
What is the First Trust GNMA Reinvestment Income Trust? 4
Risk Factors 5
What is the Rating of the Units? 10
What are Estimated Current Return and
Estimated Long-Term Return? 10
How is Accrued Interest Treated? 11
What are the Expenses and Charges? 12
What is the Tax Status of Unit Holders? 13
Why are Investments in the Trust
Suitable for Retirement Plans? 15
How Can Distributions to Unit Holders be Reinvested? 15
Public Offering:
How is the Public Offering Price Determined? 16
How are Units Distributed? 19
What are the Profits of the Sponsor? 20
Will There be a Secondary Market? 20
Rights of Unit Holders:
How is Evidence of Ownership Issued and Transferred? 20
How are Interest and Principal Distributed? 21
What Reports Will Unit Holders Receive? 22
How May Units be Redeemed? 22
How May Units be Purchased by the Sponsor? 23
How May Securities be Removed from the Trust? 24
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 24
Who is the Trustee? 24
Limitations on Liabilities of Sponsor and Trustee 25
Who is the Evaluator? 25
Other Information:
How May the Indenture be Amended or Terminated? 25
Legal Opinions 26
Experts 26
The First Trust GNMA Reinvestment Income Trust, Series 71 27
Portfolio 28
Report of Independent Auditors 29
Statement of Net Assets 30
Description of Standard & Poor's Rating 31
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO, WHICH THE FUND
HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940,
AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
GNMA
REINVESTMENT INCOME TRUST
SERIES 71
First Trust (registered trademark)
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-708-241-4141
Trustee:
The Chase Manhattan Bank (National Association)
770 Broadway
New York, New York 10003
1-800-682-7520
February 21, 1996
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
MEMORANDUM
RE: THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 72
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 The
First Trust GNMA Reinvestment Income Trust, Series 68, which is
the current fund, and The First Trust GNMA Reinvestment Income
Trust, Series 72, 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 Trust and
the statement of condition of the new Trust, 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 The First Trust GNMA Fund, Series 1 (File No.
811-3969) related also to the subsequent series of the Trust.
1933 ACT
PROSPECTUS
The only significant changes in the Prospectus from the
Series 68 prospectus relate to the series number and size and the
date and various items of information which will be derived from
and apply specifically to the securities deposited in the Trust.
CONTENTS OF REGISTRATION STATEMENT
Item A. Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Brokers' Fidelity
Bond, in the total amount of $1,000,000, the insurer
being National Union Fire Insurance Company of
Pittsburgh.
Item B. This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
Financial Data Schedule
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The First Trust GNMA Reinvestment Income Trust,
Series 72, has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the Village of Lisle and State of Illinois on
January 8, 1997.
THE FIRST TRUST GNMA
REINVESTMENT INCOME TRUST,
SERIES 72
(Registrant)
By: NIKE SECURITIES L.P.
(Depositor)
By: Robert M. Porcellino
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 Sole Director of )
Nike Securities )
Corporation the General)
Partner of Nike ) January 8, 1997
Securities L.P. )
)
)
)Robert M. Porcellino
)Attorney-in-fact**
)
* The title of the person named herein represents his capacity
in and relationship to Nike Securities L.P., the depositor.
** An executed copy of the related power of attorney was filed
with the Securities and Exchange Commission in connection
with Amendment No. 1 to Form S-6 of The First Trust Combined
Series 258 (File No. 33-63483) and the same is hereby
incorporated herein by this reference.
S-2
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1 and 3.4 of the Registration Statement.
CONSENT OF SECURITIES EVALUATION SERVICE, INC.
The consent of Securities Evaluation Service, Inc. to the
use of its name in the Prospectus included in this Registration
Statement will be filed as Exhibit 4.1 to the Registration
Statement.
CONSENT OF STANDARD & POOR'S RATINGS GROUP, A DIVISION OF MCGRAW-
HILL, INC.
The consent of Standard & Poor's Ratings Group, A Division
of McGraw-Hill, Inc. to the use of its name in the Prospectus
included in this Registration Statement will be filed as Exhibit
4.2 to 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.
S-3
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust GNMA, Series 62 and subsequent Series
effective December 19, 1991 among Nike Securities L.P., as
Depositor, The Chase Manhattan Bank 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. 33-44532] filed on behalf of The First Trust
GNMA, Series 62).
1.1.1*Form of Trust Agreement for Series 72 among Nike Securities
L.P., as Depositor, The Chase Manhattan Bank (National
Association), as Trustee, Securities Evaluation Service,
Inc., as Evaluator, and First Trust Advisors L.P., as
Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership Agreement
of Nike Securities L.P. (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust, Series
18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities L.P.,
Depositor (incorporated by reference to Amendment No. 1 to
Form S-6 [File No. 33-42683] filed on behalf of The First
Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
1.6 Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-43289] filed on
behalf of The First Trust Combined Series 145).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by
reference).
S-4
3.1* Opinion of counsel as to legality of securities being
registered.
3.3* Opinion of counsel as to New York income tax status of
securities being registered.
3.4* Opinion of counsel as to advancement of funds by Trustee.
4.1* Consent of Securities Evaluation Service, Inc.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust, Series
18).
7.1 Power of Attorney executed by the Director listed on page
S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
________________________
* To be filed by amendment.
S-5
