File No. 333-19385
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
POST-EFFECTIVE
AMENDMENT NO. 2
TO
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST
SERIES 72 AND SERIES 73
(Exact Name of Trust)
NIKE SECURITIES L.P.
(Exact Name of Depositor)
1001 Warrenville Road
Lisle, Illinois 60532
(Complete address of Depositor's principal executive offices)
NIKE SECURITIES L.P. CHAPMAN AND CUTLER
Attn: James A. Bowen Attn: Eric F. Fess
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
(Name and complete address of agents for service)
It is proposed that this filing will become effective (check
appropriate box)
: : immediately upon filing pursuant to paragraph (b)
: x : April 28, 2000
: : 60 days after filing pursuant to paragraph (a)
: : on (date) pursuant to paragraph (a) of rule (485 or 486)
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 72
1,661,366 UNITS
PROSPECTUS
Part One
Dated April 26, 2000
Note: Part One of this Prospectus may not be distributed unless accompanied by
Part Two.
The Trust
The First Trust GNMA Reinvestment Income Trust, Series 72 (the "Trust") is a
fixed portfolio of taxable mortgage-backed securities of the fully modified
pass-through type (the "Securities") which involve large pools of mortgages
and are fully guaranteed as to principal and interest by the Government
National Mortgage Association ("GNMA"). 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. At March 16, 2000, each Unit represented a 1/1,661,366 undivided
interest in the principal and net income of the Trust (see "The Fund" in Part
Two).
The Units being offered by this Prospectus are issued and outstanding Units
which have been purchased by the Sponsor in the secondary market or from the
Trustee after having been tendered for redemption. The profit or loss
resulting from the sale of Units will accrue to the Sponsor. No proceeds from
the sale of Units will be received by the Trust.
Public Offering Price per Unit
The Public Offering Price per Unit is equal to the aggregate value of the
Securities in the Portfolio of the Trust divided by the number of Units
outstanding, plus a sales charge of 4.25% of the Public Offering Price (4.439%
of the net amount invested) excluding principal cash. At March 16, 2000, the
Public Offering Price per Unit was $9.9981 plus net interest accrued to date
of settlement (three business days after such date) of $.0422 (see "Market for
Units" in Part Two).
Please retain both parts of this Prospectus for future reference.
______________________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
______________________________________________________________________________
NIKE SECURITIES L.P.
Sponsor
<PAGE>
Estimated Current Return and Estimated Long-Term Return
Estimated Current Return to Unit holders was 7.59% per annum on March 16,
2000. Estimated Long-Term Return to Unit holders was 6.87% per annum on March
16, 2000. Estimated Current Return is calculated by dividing the Estimated
Net Annual Interest Income per Unit by the Public Offering Price per Unit.
Estimated Long-Term Return is calculated using a formula which (1) determines,
and factors in, the relative weightings of the market values, yields (which
take 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 Current Return and Estimated Long-Term Return indicated
above will be realized in the future. Estimated Current Return and Estimated
Long-Term Return are expected to differ because the calculation of the
Estimated Long-Term Return reflects the estimated date and amount of principal
returned while the Estimated Current Return calculations include only Net
Annual Interest Income and Public Offering Price. The above figures are based
on estimated per Unit cash flows. Estimated cash flows will vary with changes
in fees and expenses, with changes in current interest rates, and with the
principal prepayment, redemption, maturity, exchange or sale of the underlying
Securities and with changes in the average life assumptions of the GNMA pools.
See "What are Estimated Current Return and Estimated Long-Term Return?" in
Part Two.
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 72
SUMMARY OF ESSENTIAL INFORMATION AS OF MARCH 16, 2000
Sponsor: Nike Securities L.P.
Evaluator: Securities Evaluation Service, Inc.
Trustee: The Chase Manhattan Bank
<TABLE>
<CAPTION>
GENERAL INFORMATION
<S> <C>
Principal Amount of Securities in the Trust $16,199,061
Number of Units 1,661,366
Fractional Undivided Interest in the Trust per Unit 1/1,661,366
Public Offering Price:
Aggregate Value of Securities in the Portfolio $16,406,612
Aggregate Value of Securities per Unit $9.8754
Principal Cash, Estimated Principal Paydowns and
Expected Distribution, Net, per Unit $(.3156)
Sales Charge 4.25% (4.439% of Public Offering Price,
excluding Principal Cash, Estimated Principal Paydowns
and Expected Distribution, Net, per Unit $.4383
Public Offering Price per Unit $9.9981*
Redemption Price and Sponsor's Repurchase Price per
Unit ($.4383 less than the Public Offering
Price per Unit) $9.5598*
Liquidation Amount of the Trust $2,000,000
</TABLE>
Date Trust Established March 12, 1998
Mandatory Termination Date December 31, 2047
*Plus net interest accrued to date of settlement (three business days after
purchase) (see "Public Offering Price per Unit" herein and "Redemption of
Units" and "Purchase of Units by the Sponsor" in Part Two).
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 72
SUMMARY OF ESSENTIAL INFORMATION AS OF MARCH 16, 2000
Sponsor: Nike Securities L.P.
Evaluator: Securities Evaluation Service, Inc.
Trustee: The Chase Manhattan Bank
<TABLE>
<CAPTION>
SPECIAL INFORMATION
<S> <C>
Calculation of Estimated Net Annual Interest
Income per Unit:
Estimated Annual Interest Income $.7800
Less: Estimated Annual Expense (.0212)
______
Estimated Net Annual Interest Income $.7588
======
Estimated Daily Rate of Net Interest
Accrual per Unit $.0021
======
Estimated Current Return Based on Public Offering Price 7.59%
======
Estimated Long-Term Return Based on Public Offering Price 6.87%
======
</TABLE>
Trustee's Annual Fee: $.0092 per annum per Unit outstanding, exclusive of
expenses of the Trust.
Evaluator's Annual Fee: $.0030 per Unit outstanding plus $.25 per evaluation
for each issue of underlying securities in excess of 50 issues.
Evaluations are made at 4:00 p.m. Eastern time.
Supervisory Fee: Maximum of $.0015 per Unit outstanding annually.
Bookkeeping and administrative expenses payable to the Sponsor: Maximum of
$.0010 per Unit outstanding annually.
Annual amortization of organization and offering costs, $2,802 annually.
Distributions will generally be made on, or shortly after, the last day of
each month to Unit holders of record on the first day of the month.
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Unit Holders of The First Trust
GNMA Reinvestment Income Trust, Series 72
We have audited the accompanying statement of assets and liabilities,
including the portfolio, of The First Trust GNMA Reinvestment Income Trust,
Series 72 as of December 31, 1999, and the related statements of operations
and changes in net assets for the year then ended and for the period from the
Initial Date of Deposit, March 12, 1998, to December 31, 1998. These
financial statements are the responsibility of the Trust's Sponsor. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the Trustee. An audit also includes
assessing the accounting principles used and significant estimates made by the
Sponsor, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The First Trust GNMA
Reinvestment Income Trust, Series 72 at December 31, 1999, and the results of
its operations and changes in its net assets for the year then ended and for
the period from the Initial Date of Deposit, March 12, 1998, to December 31,
1998, in conformity with accounting principles generally accepted in the
United States.
ERNST & YOUNG LLP
Chicago, Illinois
April 7, 2000
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 72
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Securities, at market value (cost $17,162,194) (Note 1) $16,723,346
Receivable from investment transactions 293,755
Accrued interest 111,361
Cash 4,402
Unamortized deferred organization and offering costs 8,945
___________
17,141,809
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND NET ASSETS
<S> <C> <C>
Unit redemptions payable 47,849
Payable to Sponsor 95,485
Accrued liabilities 1,987
___________
145,321
___________
Net assets, applicable to 1,769,171 outstanding
units of fractional undivided interest:
Cost of Trust assets (Note 1) $17,162,194
Unrealized depreciation (438,848)
Distributable funds 1,005,990
Less: deferred sales charge paid (Note 2) (732,848)
___________
$16,996,488
===========
Net asset value per unit $9.6070
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 72
PORTFOLIO
December 31, 1999
The portfolio consists of the following Government National Mortgage
Association modified pass-through mortgage-backed securities.
<TABLE>
<CAPTION>
Principal Coupon Range of stated Market
amount rate maturities (a) value
<S> <C> <C> <C>
$16,410,521 8.0% 4/15/21 to 12/15/22 $16,723,346
=========== ===========
</TABLE>
Note to portfolio:
(a) The principal amount of securities listed by coupon rate and range of
stated maturities represents an aggregate of individual securities
having varying stated maturities within such range. Securities are
grouped by coupon rate with a range of stated maturities because current
market conditions accord no difference in price among the securities
grouped together. The market value of the securities could be affected
by a change in their assumed average maturity or by the actual
maturities of the individual securities.
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 72
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
the Initial
Date of Deposit,
Year ended Mar. 12, 1998,
Dec. 31, 1999 to Dec. 31, 1998
<S> <C> <C>
Interest income $1,241,311 406,445
Expenses:
Trustee's fees and related expenses (22,604) (6,501)
Evaluator's fees (7,301) (2,401)
Supervisory fees (3,382) (1,168)
Administrative fees (2,199) (516)
Amortization of organization and offering
costs (2,802) (1,803)
_________________________
Investment income - net 1,203,023 394,056
Net gain (loss) on investments:
Net realized gain (loss) (4,000) -
Change in unrealized depreciation (435,509) (3,339)
_________________________
(439,509) (3,339)
_________________________
Net increase (decrease) in net assets
resulting from operations $763,514 390,717
=========================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 72
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Period from
the Initial
Date of Deposit,
Year ended Mar. 12, 1998,
Dec. 31, 1999 to Dec. 31, 1998
<S> <C> <C>
Net increase (decrease) in net assets
resulting from operations:
Investment income - net $1,203,023 394,056
Net realized gain (loss) on investments (4,000) -
Change in unrealized appreciation/
depreciation on investments (435,509) (3,339)
___________________________
763,514 390,717
Units issued (185,306 and 1,959,214 units,
net of deferred sales charge of $60,225
and $636,744 in 1999 and 1998, respectively)
Securities purchased 1,855,668 19,734,589
Unit redemptions (485,745 in 1999):
Principal portion (4,818,144) -
Net interest accrued (16,800) -
___________________________
(4,834,944) -
Distributions to unit holders:
Investment income - net (1,527,136) (505,749)
Principal - -
___________________________
(1,527,136) (505,749)
___________________________
Total increase (decrease) in net assets (3,742,898) 19,619,557
Net assets:
At the beginning of the period 20,739,386 1,119,829
___________________________
At the end of the period (including
distributable funds applicable to
Trust units of $1,005,990 and $755,741
at December 31, 1999 and 1998,
respectively) $16,996,488 20,739,386
===========================
Trust units outstanding at the end of
the period 1,769,171 2,069,610
</TABLE>
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 72
NOTES TO FINANCIAL STATEMENTS
1. Significant accounting policies
Security valuation -
Securities are stated at values as determined by Securities Evaluation
Service, Inc. (the Evaluator), certain shareholders of which are officers of
the Sponsor. The values of the securities are based on (1) current bid prices
for the securities obtained from dealers or brokers who customarily deal in
securities comparable to those held by the Trust, (2) current bid prices for
comparable securities, (3) appraisal or (4) any combination of the above.
Security cost -
The cost of the portfolio of the Trust is based on the offering prices of the
securities on the Initial Date of Deposit, March 12, 1998, and each subsequent
Date of Deposit for additions to the Trust. The premium or discount is
recognized as interest income on a pro rata basis as principal paydowns are
received. Realized gain (loss) from security transactions is reported on an
identified cost basis. Sales and redemptions of securities are recorded on
the trade date.
Federal income taxes -
The Trust, which is an association taxable as a corporation under the Internal
Revenue Code, intends to qualify for and elect tax treatment as a "regulated
investment company" under the Internal Revenue Code of 1986. By qualifying
for and electing such treatment, the Fund will not be subject to Federal
income tax on net investment income or net capital gains distributed to its
unit holders. As the Trust distributes its entire net capital gains, if any,
and net investment income each year, no Federal income tax provision is
required.
Expenses of the Trust -
The Chase Manhattan Bank is the Trustee of the Trust. The Trustee's fees are
$.0092 per unit outstanding, exclusive of expenses of the Trust. An annual
fee of $.0030 per unit outstanding plus $.25 per evaluation for each issue of
underlying securities in excess of 50 issues is payable to the Evaluator.
Additionally, the Trust pays all related expenses of the Trustee, recurring
financial reporting costs, an annual supervisory fee payable to an affiliate
of the Sponsor and an annual administrative fee payable to the Sponsor.
Organization and offering costs -
The Trust has paid a portion of its organization 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 the Trust's portfolio,
legal fees and the initial fees and expenses of the Trustee. Such costs,
totaling $13,550, have been deferred and are being amortized at the rate of
$2,802 annually.
<PAGE>
Reinvestment of Principal by the Trust -
In an effort to minimize the effect of principal payments and prepayments
during the period when such reinvestment is practical, in the opinion of the
Sponsor (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. During the year ended December 31, 1999 and during the
period from the Initial Date of Deposit, March 12, 1998 to December 31, 1998,
such reinvestment of principal into additional Ginnie Maes amounted to
$2,624,726 and $2,796,570, respectively. The Sponsor currently expects the
Reinvestment Period to last 9-11 years from the Initial Date of Deposit.
There may be times in which such reinvestment will not be feasible because the
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.
Distributions to unit holders -
Distributions of investment income - net and principal to unit holders are
presented on a cash basis as reported by the Trustee. Accordingly, no
adjustments are made to reflect the amortization of premium or discount as
discussed above under "Security cost." Principal distributions represent a
tax return of capital to unit holders.
2. Other information
Cost to investors -
The cost of the Trust to initial investors was based on the aggregate offering
price of the securities on the date of an investor's purchase, plus a deferred
sales charge of $.3250 per unit was paid to the Sponsor over a five-month
period ending July 20, 1999, plus an initial sales charge equal to the
difference between the deferred sales charge and the total sales charge of
4.25% of the Public Offering Price, which is equivalent to 4.301% of the net
amount invested, exclusive of the deferred sales charge.
<PAGE>
Selected data per unit of the Trust
outstanding throughout each period -
<TABLE>
<CAPTION>
Period from
the Initial
Date of Deposit,
Year ended Mar. 12, 1998,
Dec. 31, 1999 to Dec. 31, 1998
<S> <C> <C>
Interest income $.5749 .6265
Expenses (.0177) (.0191)
_________________________
Investment income - net .5572 .6074
Distributions to unit holders:
Investment income - net (.7440) (.5354)
Principal - -
Net gain (loss) on investments (.2271) (.1948)
_________________________
Total increase (decrease) in net assets (.4139) (.1228)
Net assets:
Beginning of the period 10.0209 10.1437
_________________________
End of the period $9.6070 10.0209
=========================
</TABLE>
Accrued interest to the Initial Date of Deposit and each subsequent Date of
Deposit, totaling $102,263, plus net interest accruing to the first settlement
date, March 17, 1998, and each settlement date for subsequent additions to the
Trust, totaling $25,225, was or will be distributed to the Sponsor as the unit
holder of record. The Payable to Sponsor, as reported in the accompanying
Statement of Assets and Liabilities, represents a portion of such amounts
which have not yet been remitted to the Sponsor. The Sponsor has agreed to
this treatment in order to provide equal distributions to all unit holders.
The Sponsor will receive payments upon the termination of the Trust.
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 72
PART ONE
Must be Accompanied by Part Two
___________________
P R O S P E C T U S
___________________
SPONSOR: Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
(800) 621-1675
TRUSTEE: The Chase Manhattan Bank
4 New York Plaza, 6th Floor
New York, New York 10004-2413
LEGAL COUNSEL Chapman and Cutler
TO SPONSOR: 111 West Monroe Street
Chicago, Illinois 60603
LEGAL COUNSEL Carter, Ledyard & Milburn
TO TRUSTEE: 2 Wall Street
New York, New York 10005
INDEPENDENT Ernst & Young LLP
AUDITORS: Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
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 statement and exhibits relating thereto, which the Trust has
filed with the Securities and Exchange Commission, Washington, D.C., under the
Securities Act of 1933 and the Investment Company Act of 1940, and to which
reference is hereby made.
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 73
6,428,954 UNITS
PROSPECTUS
Part One
Dated April 26, 2000
Note: Part One of this Prospectus may not be distributed unless accompanied by
Part Two.
The Trust
The First Trust GNMA Reinvestment Income Trust, Series 73 (the "Trust") is a
fixed portfolio of taxable mortgage-backed securities of the fully modified
pass-through type (the "Securities") which involve large pools of mortgages
and are fully guaranteed as to principal and interest by the Government
National Mortgage Association ("GNMA"). 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. At March 16, 2000, each Unit represented a 1/6,428,954 undivided
interest in the principal and net income of the Trust (see "The Fund" in Part
Two).
The Units being offered by this Prospectus are issued and outstanding Units
which have been purchased by the Sponsor in the secondary market or from the
Trustee after having been tendered for redemption. The profit or loss
resulting from the sale of Units will accrue to the Sponsor. No proceeds from
the sale of Units will be received by the Trust.
Public Offering Price per Unit
The Public Offering Price per Unit is equal to the aggregate value of the
Securities in the Portfolio of the Trust divided by the number of Units
outstanding, plus a sales charge of 4.25% of the Public Offering Price (4.439%
of the net amount invested) excluding principal cash. At March 16, 2000, the
Public Offering Price per Unit was $10.1563 plus net interest accrued to date
of settlement (three business days after such date) of $.0466 (see "Market for
Units" in Part Two).
Please retain both parts of this Prospectus for future reference.
______________________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
______________________________________________________________________________
NIKE SECURITIES L.P.
Sponsor
<PAGE>
Estimated Current Return and Estimated Long-Term Return
Estimated Current Return to Unit holders was 8.26% per annum on March 16,
2000. Estimated Long-Term Return to Unit holders was 6.86% per annum on March
16, 2000. Estimated Current Return is calculated by dividing the Estimated
Net Annual Interest Income per Unit by the Public Offering Price per Unit.
Estimated Long-Term Return is calculated using a formula which (1) determines,
and factors, in the relative weightings of the market values, yields (which
take 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 Current Return and Estimated Long-Term Return indicated
above will be realized in the future. Estimated Current Return and Estimated
Long-Term Return are expected to differ because the calculation of the
Estimated Long-Term Return reflects the estimated date and amount of principal
returned while the Estimated Current Return calculations include only Net
Annual Interest Income and Public Offering Price. The above figures are based
on estimated per Unit cash flows. Estimated cash flows will vary with changes
in fees and expenses, with changes in current interest rates, and with the
principal prepayment, redemption, maturity, exchange or sale of the underlying
Securities and with changes in the average life assumptions of the GNMA pools.
See "What are Estimated Current Return and Estimated Long-Term Return?" in
Part Two.
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 73
SUMMARY OF ESSENTIAL INFORMATION AS OF MARCH 16, 2000
Sponsor: Nike Securities L.P.
Evaluator: Securities Evaluation Service, Inc.
Trustee: The Chase Manhattan Bank
<TABLE>
<CAPTION>
GENERAL INFORMATION
<S> <C>
Principal Amount of Securities in the Trust $61,202,823
Number of Units 6,428,954
Fractional Undivided Interest in the Trust per Unit 1/6,428,954
Public Offering Price:
Aggregate Value of Securities in the Portfolio $64,148,208
Aggregate Value of Securities per Unit $9.9780
Principal Cash, Estimated Principal Paydowns and
Expected Distribution, Net, per Unit $(.2646)
Sales Charge 4.25% (4.439% of Public Offering Price,
excluding Principal Cash, Estimated Principal Paydowns
and Expected Distribution, Net, per Unit $.4429
Public Offering Price Per Unit $10.1563*
Redemption Price and Sponsor's Repurchase Price per
Unit ($.4429 less than the Public Offering
Price per Unit) $9.7134*
Liquidation Amount of the Trust $2,000,000
</TABLE>
Date Trust Established March 12, 1998
Mandatory Termination Date December 31, 2047
*Plus net interest accrued to date of settlement (three business days after
purchase) (see "Public Offering Price per Unit" herein and "Redemption of
Units" and "Purchase of Units by the Sponsor" in Part Two).
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 73
SUMMARY OF ESSENTIAL INFORMATION AS OF MARCH 16, 2000
Sponsor: Nike Securities L.P.
Evaluator: Securities Evaluation Service, Inc.
Trustee: The Chase Manhattan Bank
<TABLE>
<CAPTION>
SPECIAL INFORMATION
<S> <C>
Calculation of Estimated Net Annual Interest
Income per Unit:
Estimated Annual Interest Income $.8568
Less: Estimated Annual Expense (.0182)
______
Estimated Net Annual Interest Income $.8386
======
Estimated Daily Rate of Net Interest
Accrual per Unit $.0023
======
Estimated Current Return Based on Public Offering Price 8.26%
======
Estimated Long-Term Return Based on Public Offering Price 6.86%
======
</TABLE>
Trustee's Annual Fee: $.0092 per annum per Unit outstanding, exclusive of
expenses of the Trust.
Evaluator's Annual Fee: $.0030 per Unit outstanding plus $.25 per evaluation
for each issue of underlying securities in excess of 50 issues.
Evaluations are made at 4:00 p.m. Eastern time.
Supervisory Fee: Maximum of $.0015 per Unit outstanding annually.
Bookkeeping and administrative expenses payable to the Sponsor: Maximum of
$.0010 per Unit outstanding annually.
Annual amortization of organization and offering costs, $8,418 annually.
Distributions will generally be made on, or shortly after, the last day of
each month to Unit holders of record on the first day of the month.
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Unit Holders of The First Trust
GNMA Reinvestment Income Trust, Series 73
We have audited the accompanying statement of assets and liabilities,
including the portfolio, of The First Trust GNMA Reinvestment Income Trust,
Series 73 as of December 31, 1999, and the related statements of operations
and changes in net assets for the year then ended and for the period from the
Initial Date of Deposit, March 12, 1998 to December 31, 1998. These financial
statements are the responsibility of the Trust's Sponsor. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the Trustee. An audit also includes
assessing the accounting principles used and significant estimates made by the
Sponsor, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The First Trust GNMA
Reinvestment Income Trust, Series 73 at December 31, 1999, and the results of
its operations and changes in its net assets for the year then ended and for
the period from the Initial Date of Deposit, March 12, 1998 to December 31,
1998, in conformity with accounting principles generally accepted in the
United States.
ERNST & YOUNG LLP
Chicago, Illinois
April 7, 2000
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 73
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Securities, at market value (cost $67,603,867) (Note 1) $66,093,652
Receivable from investment transactions 1,464,305
Accrued interest 480,703
Cash 161,209
Unamortized deferred organization and offering costs 26,870
___________
68,226,739
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND NET ASSETS
<S> <C> <C>
Unit redemption payable 223,912
Payable to Sponsor 158,927
Accrued liabilities 8,915
___________
391,754
___________
Net assets, applicable to 6,899,923 outstanding
units of fractional undivided interest:
Cost of Trust assets (Note 1) $67,603,867
Unrealized depreciation (1,510,215)
Distributable funds 4,478,504
Less deferred sales charge paid (Note 2) (2,737,171)
___________
$67,834,985
===========
Net asset value per unit $9.8313
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 73
PORTFOLIO
December 31, 1999
The portfolio consists of the following Government National Mortgage
Association modified pass-through mortgage-backed securities.
<TABLE>
<CAPTION>
Principal Coupon Range of stated Market
amount rate maturities (a) value
<S> <C> <C> <C>
$62,629,461 9.0% 3/15/16 to 12/15/18 $66,093,652
=========== ===========
</TABLE>
Note to portfolio:
(a) The principal amount of securities listed by coupon rate and range of
stated maturities represents an aggregate of individual securities
having varying stated maturities within such range. Securities are
grouped by coupon rate with a range of stated maturities because current
market conditions accord no difference in price among the securities
grouped together. The market value of the securities could be affected
by a change in their assumed average maturity or by the actual
maturities of the individual securities.
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 73
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
the Initial
Date of Deposit,
Year ended Mar. 12, 1998,
Dec. 31, 1999 to Dec. 31, 1998
<S> <C> <C>
Interest income $4,581,760 1,879,090
Expenses:
Trustee's fees and related expenses (77,414) (27,417)
Evaluator's fees (41,379) (13,735)
Supervisory fees (12,635) (5,263)
Administrative fees (8,314) (2,212)
Amortization of organization and offering
costs (8,418) (4,893)
___________________________
Investment income - net 4,433,600 1,825,570
Net gain (loss) on investments:
Net realized gain (loss) (43,071) -
Change in unrealized depreciation (1,390,585) (119,630)
___________________________
(1,433,656) (119,630)
___________________________
Net increase (decrease) in net assets
resulting from operations $2,999,944 1,705,940
===========================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 73
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Period from
the Initial
Date of Deposit,
Year ended Mar. 12, 1998,
Dec. 31, 1999 to Dec. 31, 1998
<S> <C> <C>
Net increase (decrease) in net assets
resulting from operations:
Investment income - net $4,433,600 1,825,570
Net realized gain (loss) on investments (43,071) -
Change in unrealized appreciation/
depreciation on investments (1,390,585) (119,630)
_____________________________
2,999,944 1,705,940
Units issued (513,956 and 7,813,533 units,
net of deferred sales charge of
$163,206 and $2,539,398 in 1999
and 1998, respectively)
Securities purchased 5,268,599 81,180,902
Unit redemptions (1,533,925 in 1999):
Principal portion (15,380,696) -
Net interest accrued (54,245) -
_____________________________
(15,434,941) -
Distributions to unit holders:
Investment income - net (6,595,138) (2,413,077)
Principal - -
_____________________________
(6,595,138) (2,413,077)
_____________________________
Total increase (decrease) in net assets (13,761,536) 80,473,765
Net assets:
At the beginning of the period 81,596,521 1,122,756
_____________________________
At the end of the period (including
distributable funds applicable to
Trust units of $4,478,504 and $3,243,246
at December 31, 1999 and 1998,
respectively) $67,834,985 81,596,521
=============================
Trust units outstanding at the end of
the period 6,899,923 7,919,892
</TABLE>
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 73
NOTES TO FINANCIAL STATEMENTS
1. Significant accounting policies
Security valuation -
Securities are stated at values as determined by Securities Evaluation
Service, Inc. (the Evaluator), certain shareholders of which are officers of
the Sponsor. The values of the securities are based on (1) current bid prices
for the securities obtained from dealers or brokers who customarily deal in
securities comparable to those held by the Trust, (2) current bid prices for
comparable securities, (3) appraisal or (4) any combination of the above.
Security cost -
The cost of the portfolio of the Trust is based on the offering prices of the
securities on the Initial Date of Deposit, March 12, 1998, and each subsequent
Date of Deposit for additions to the Trust. The premium or discount is
recognized as interest income on a pro rata basis as principal paydowns are
received. Realized gain (loss) from security transactions is reported on an
identified cost basis. Sales and redemptions of securities are recorded on
the trade date.
Federal income taxes -
The Trust, which is an association taxable as a corporation under the Internal
Revenue Code, intends to qualify for and elect tax treatment as a "regulated
investment company" under the Internal Revenue Code of 1986. By qualifying
for and electing such treatment, the Fund will not be subject to Federal
income tax on net investment income or net capital gains distributed to its
unit holders. As the Trust distributes its entire net capital gains, if any,
and net investment income each year, no Federal income tax provision is
required.
Expenses of the Trust -
The Chase Manhattan Bank is the Trustee of the Trust. The Trustee's fees are
$.0092 per unit outstanding, exclusive of expenses of the Trust. An annual
fee of $.0030 per unit outstanding plus $.25 per evaluation for each issue of
underlying securities in excess of 50 issues is payable to the Evaluator.
Additionally, the Trust pays all related expenses of the Trustee, recurring
financial reporting costs, an annual supervisory fee payable to an affiliate
of the Sponsor and an annual administrative fee payable to the Sponsor.
Organization and offering costs -
The Trust has paid a portion of its organization 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 the Trust's portfolio,
legal fees and the initial fees and expenses of the Trustee. Such costs,
totaling $40,181, have been deferred and are being amortized at the rate of
$8,418 annually.
<PAGE>
Reinvestment of Principal by the Trust -
In an effort to minimize the effect of principal payments and prepayments
during the period when such reinvestment is practical, in the opinion of the
Sponsor (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. During the year ended December 31, 1999 and during the
period from the Initial Date of Deposit, March 12, 1998 to December 31, 1998,
such reinvestment of principal into additional Ginnie Maes amounted to
$11,023,307 and $10,940,402, respectively. The Sponsor currently expects the
Reinvestment Period to last 9-11 years from the Initial Date of Deposit.
There may be times in which such reinvestment will not be feasible because the
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.
Distributions to unit holders -
Distributions of investment income - net and principal to unit holders are
presented on a cash basis as reported by the Trustee. Accordingly, no
adjustments are made to reflect the amortization of premium or discount as
discussed above under "Security cost." Principal distributions represent a
tax return of capital to unit holders.
2. Other information
Cost to investors -
The cost of the Trust to initial investors was based on the aggregate offering
price of the securities on the date of an investor's purchase, plus a deferred
sales charge of $.3250 per unit which was paid to the Sponsor over a five-
month period ending July 20, 1999, plus an initial sales charge equal to the
difference between the deferred sales charge and the total sales charge of
4.25% of the Public Offering Price, which is equivalent to 4.306% of the net
amount invested, exclusive of the deferred sales charge.
<PAGE>
Selected data per unit of the Trust
outstanding throughout each period -
<TABLE>
<CAPTION>
Period from
the Initial
Date of Deposit,
Year ended Mar. 12, 1998,
Dec. 31, 1999 to Dec. 31, 1998
<S> <C> <C>
Interest income $.5782 .7078
Expenses (.0187) (.0202)
__________________________
Investment income - net .5595 .6876
Distributions to unit holders:
Investment income - net (.8266) (.6049)
Principal - -
Net gain (loss) on investments (.2043) (.3363)
__________________________
Total increase (decrease) in net assets (.4714) (.2536)
Net assets:
Beginning of the period 10.3027 10.5563
__________________________
End of the period $9.8313 10.3027
==========================
</TABLE>
Accrued interest to the Initial Date of Deposit and each subsequent Date of
Deposit, totaling $181,101, plus net interest accruing to the first settlement
date, March 17, 1998, and each settlement date for subsequent additions to the
Trust, totaling $34,465, was or will be distributed to the Sponsor as the unit
holder of record. The Payable to Sponsor, as reported in the accompanying
Statement of Assets and Liabilities, represents a portion of such amounts
which have not yet been remitted to the Sponsor. The Sponsor has agreed to
this treatment in order to provide equal distributions to all unit holders.
The Sponsor will receive payments upon the termination of the Trust.
<PAGE>
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 73
PART ONE
Must be Accompanied by Part Two
___________________
P R O S P E C T U S
___________________
SPONSOR: Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
(800) 621-1675
TRUSTEE: The Chase Manhattan Bank
4 New York Plaza, 6th Floor
New York, New York 10004-2413
LEGAL COUNSEL Chapman and Cutler
TO SPONSOR: 111 West Monroe Street
Chicago, Illinois 60603
LEGAL COUNSEL Carter, Ledyard & Milburn
TO TRUSTEE: 2 Wall Street
New York, New York 10005
INDEPENDENT Ernst & Young LLP
AUDITORS: Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
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 statement and exhibits relating thereto, which the Trust has
filed with the Securities and Exchange Commission, Washington, D.C., under the
Securities Act of 1933 and the Investment Company Act of 1940, and to which
reference is hereby made.
The First Trust(registered trademark)
GNMA Reinvestment Income Trust "GRIT"
PROSPECTUS
Part Two NOTE: THIS PART TWO PROSPECTUS MAY
Dated April 28, 2000 ONLY BE USED WITH PART ONE
The Trusts consist of the underlying separate unit investment trusts set
forth in Part One of this Prospectus (the "Trusts"). Each 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" (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 Objective of each Trust is monthly distributions of interest through
an investment in a portfolio of Ginnie Maes. With the deposit of the
Securities in the Trusts on each Trust's 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 for each Trust.
The guaranteed payment of principal and interest afforded by Ginnie Maes
may make an investment in the Trusts 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) 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 Trusts Suitable for
Retirement Plans?"
Reinvestment of Principal by the Trusts. 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 Trust's Initial Date of Deposit for
Series 71, 10-12 years from the Trust's Initial Date of Deposit for
Series 68, and 9-11 years from the Trust's Initial Date of Deposit for
Series 72, 73, 74 and 75. 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 TRUSTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY BANK, AND UNITS ARE NOT FEDERALLY INSURED OR OTHERWISE PROTECTED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION AND INVOLVE INVESTMENT RISK
INCLUDING LOSS OF PRINCIPAL.
For Information on Estimated Current Return and Estimated Long-Term
Return, see "Special Information" in Part One of this Prospectus.
Estimated cash flows for the Trusts are available upon request at no
charge from the Sponsor.
BOTH PARTS OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Page 1
The Public Offering Price per Unit is equal to the aggregate bid price
of the Securities in a 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). For Series 74 and 75, the sales charge is 4.25% (which
is equivalent to 4.301% and 4.305% of the net amount invested, exclusive
of the deferred sales charge for Series 74 and 75, respectively). See
"Public Offering-How is the Public Offering Price Determined?",
particularly for the method of evaluation.
Monthly Distributions of interest received by the Trusts 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.
During the Reinvestment Period, it is each 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 Trusts at prices based upon the aggregate
bid price of the Securities in each Trust. 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 "Rights of Unit Holders-How May Units be Redeemed?").
Risk Factors. An investment in the Trusts 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
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 trusts set forth in Part One of this
Prospectus (the "Trusts"). Each Trust was created under the laws of the
State of New York pursuant to a Trust Agreement (the "Indenture"), dated
each Trust's Initial Date of Deposit, with Nike Securities L.P., as
Sponsor, The Chase Manhattan Bank, as Trustee, Securities Evaluation
Service, Inc., as Evaluator and First Trust Advisors L.P., as Portfolio
Supervisor. On the Initial Date of Deposit for each Trust, 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 each 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 a Trust
pursuant to the Indenture.
The objective of each Trust is monthly distribution 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 Trusts, as such,
are not backed by such full faith and credit. The Trusts 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.
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 Trust's
Initial Date of Deposit for Series 71, 10-12 years from the Trust's
Initial Date of Deposit for Series 68 and 9-11 years from the Trusts'
Initial Date of Deposit for Series 72, 73, 74 and 75. Reinvestment of
principal into additional Ginnie Maes during periods when interest rates
are different from those prevailing at a Trust's Initial Date of Deposit
will have the effect of increasing or decreasing monthly distributions
of interest income from such Trust. Reinvestment of principal into the
Ginnie Maes eligible for inclusion in the Trusts 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 a 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 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 a 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 Trusts 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 Trusts, the following
factors, among others, were considered by the Sponsor: (i) the types of
Page 3
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" in Part One of
this Prospectus for information with respect to the Securities initially
selected for deposit in the Trusts. The Ginnie Maes included in the
Trusts are backed by the indebtedness secured by the mortgages contained
in the underlying mortgage pools.
Risk Factors. An investment in Units of each 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 each 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 the
market value of the individual Ginnie Maes. At such time, any additional
purchases by the Trusts will take into account the maturities of the
individual securities. The mortgages underlying the Ginnie Maes in the
Trusts 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 each 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.
The Portfolio of each 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
Page 4
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.
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 "Rights of Unit Holders-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 A 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 represents the fractional undivided interest in a Trust set
forth in the "Summary of Essential Information" in Part One of this
Prospectus. To the extent that any Units are redeemed by the Trustee,
the fractional undivided interest in a Trust represented by each
unredeemed Unit will increase, although the actual interest represented
by such fraction will remain substantially unchanged. 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 Trusts 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
pools backing the Ginnie Maes contained in the Trusts are mortgages on 1-
to 4-family dwellings (having a stated maturity of up to 30 years for
Securities in the Trusts. 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,
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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 Trusts, 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
Trusts) 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 Trusts 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 Trusts 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."(1) 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.
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 Trusts) have no security
interest in or lien on the underlying mortgages.
___________________
(1) 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.
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The GNMA guaranties referred to herein relate only to payment of
principal of and interest on the Ginnie Maes in the Trusts and not to
the Units offered hereby.
Monthly payments of principal will be made, and additional prepayments
of principal may be made, to the Trusts in respect of the mortgages
underlying the Ginnie Maes in the Trusts. All of the mortgages in the
pools relating to the Ginnie Maes in the Portfolios of the Trusts 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 Trusts, 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.
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
TRUSTS AND OTHER RELATED MATTERS IS SET FORTH IN "THE FIRST TRUST GNMA
REINVESTMENT INCOME TRUST-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 a 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 Trusts. Even though the reinvestment of
principal may mitigate the effects of prepayments of principal, the
termination of the Trusts 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 Trusts under certain permitted circumstances
may result in an accelerated termination of a 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 Trust to a size resulting in such termination. Early
termination of a 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 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 a Trust.
What is the Rating of the Units?
Standard & Poor's Managed Funds Ratings Group, a Division of The McGraw-
Hill Companies ("Standard & Poor's") rated Units of each Trust "AAA" on
the Initial Date of Deposit. Such rating, as issued by Standard &
Poor's, will be in effect for a period of 13 months from the Initial
Date of Deposit and will, unless renewed, terminate at the end of the
period. This is the highest rating assigned by Standard & Poor's. See
"Description of Standard & Poor's Rating." The obtaining of this rating
by the Trusts 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
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the Trusts 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 Trusts or sales by
the Trusts of Securities for less than the purchase price paid by the
Trusts 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 Trusts.
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 Trusts 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.
As of the date of Part One of this Prospectus, the Estimated Current
Return and the Estimated Long-Term Return for a Trust is as set forth in
the "Summary of Essential Information" in Part One of this Prospectus.
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 a 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. 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 such 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 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 a Trust, the Sponsor, in determining an estimated
prepayment rate, utilized information provided by a market maker in GNMA
securities which it believed 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 each Trust 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
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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 a
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 and Estimated Long-Term Return are subject
to fluctuation with changes in the compositions of the Portfolio of a
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 "Summary of Essential Information" in Part One
of this Prospectus. 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 Trusts are available without charge from
the Sponsor upon request.
Payments received in respect of the mortgages underlying the Ginnie Maes
in the Trusts 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 Trusts 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 Trusts 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.
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
Securities in the Trusts is paid monthly to the Trusts. However,
interest on the Securities in the Trusts is accounted for daily on an
accrual basis. Because of this, the Trusts always have an amount of
interest earned but not yet collected by the Trustee. For this reason,
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
their respective Trust the amount, if any, of accrued interest paid on
their Units.
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 a 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 Trusts, for which the Sponsor will be reimbursed in
amounts as set forth under "Summary of Essential Information" in Part
One of this Prospectus, the Sponsor will not receive any fees in
connection with its activities relating to the Trusts except that it may
receive brokerage commissions in connection with the acquisition of
Page 9
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. Legal and regulatory filing fees and expenses associated with
annually updating the Trusts' registration statements are also now
chargeable to each Trust. Historically, the Sponsor paid these fees and
expenses.
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" in Part One of this Prospectus,
for providing portfolio supervisory services for the Trusts. 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 Trusts.
For purposes of evaluation of the Securities in the Trusts, the
Evaluator will receive a fee as indicated in "Summary of Essential
Information" in Part One of this Prospectus.
The Trustee pays certain expenses of the Trusts for which it is
reimbursed by each respective Trust. The Trustee will receive for its
ordinary recurring services to the Trusts an annual fee as indicated in
"Summary of Essential Information" in Part One of this Prospectus. 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 above-described 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
Trusts is expected to result from the use of these funds.
Each of the above-mentioned fees may be increased without approval of
the Unit holders by amounts not exceeding proportionate increases under
the category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor. In addition,
with respect to the fees payable to the Sponsor or an affiliate of the
Sponsor for providing bookkeeping and other administrative services,
supervisory services and evaluation services, such individual fees may
exceed the actual costs of providing such services for the Trusts, but
at no time will the total amount received for such services rendered to
all unit investment trusts of which Nike Securities L.P. is the Sponsor
in any calendar year exceed the actual cost to the Sponsor or its
affiliate of supplying such services in such year.
Certain or all of the expenses incurred in establishing certain of the
Trusts, including costs of preparing the registration statement, the
trust indenture and other closing documents, registering Units with the
Securities and Exchange Commission and states, the initial audit of the
Trust portfolio and the initial fees and expenses of the Trustee and any
other out-of-pocket expenses, will be paid by such Trusts 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
Trusts: 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 Trusts 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 Trusts; 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 Trusts; all taxes and other government charges imposed upon the
Securities or any part of the Trusts (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
Trusts. The above expenses and the Trustee's annual fee, when paid or
owing to the Trustee, are secured by a lien on the Trusts. 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 each Trust shall be audited on an
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annual basis at the expense of the Trusts 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 a 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?
Each 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 a
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 a 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." Each 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.
Each Trust intends to file its Federal income tax returns on a calendar
year basis. In any taxable year of a Trust, the distributions of a
Trust's income, other than distributions which are designated as capital
gain dividends, will, to the extent of the earnings and profits of such
series, constitute dividends for Federal income tax purposes which are
taxable as ordinary income to the Unit holders. To the extent that
distributions to a Unit holder in any year exceed a Trust's current and
accumulated earnings and profits, they will be 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 a 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 a 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 a 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 a 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
such Trust.
Distributions of a 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 their 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 a 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. The Internal Revenue Service Restructuring and
Reform Act of 1998 (the "1998 Tax Act") provides that for taxpayers
Page 11
other than corporations, net capital gain (which is defined as net long-
term capital gain over net short-term capital loss for the taxable year)
realized from property (with certain exclusions) is subject to a maximum
marginal stated tax rate of 20% (10% in the case of certain taxpayers in
the lowest tax bracket). Capital gain or loss is long-term if the
holding period for the asset is more than one year, and is short-term if
the holding period for the asset is one year or less. The date on which
a Unit is acquired (i.e., the "trade date") is excluded for purposes of
determining the holding period of the Unit. Capital gains realized from
assets held for one year or less are taxed at the same rates as ordinary
income.
The Taxpayer Relief Act of 1997 includes other provisions that treat
certain other transactions designed to reduce or eliminate risk of loss
and opportunities for gain (e.g., short sales, offsetting notional
principal contracts, futures or forward contracts or similar
transactions) as constructive sales for purposes of recognition of gain
(but not loss) and for purposes of determining the holding period. Unit
holders should consult their own tax advisers with regard to any such
constructive sales rules.
In addition, it should be noted that capital gains may be
recharacterized 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 a 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.
Each Unit holder of the Trusts shall receive an annual statement
describing the tax status of the distributions paid by the Trusts.
Investment in the Trusts 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 "Are
Investments in the Trusts Eligible 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 Trusts 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 Trusts and to the tax treatment of distributions by the Trusts 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 Trusts which
constitute dividends for Federal income tax purposes (other than
dividends which the Trusts designate as capital gain dividends) will be
subject to United States income taxes, including withholding taxes.
However, distributions received by a foreign investor from the Trusts
that are designated by the Trusts 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 Trusts and Trust distributions may also be subject to state
and local taxation and Unit holders should consult their tax advisers in
this regard.
Page 12
Distributions reinvested into additional Units of the Trusts 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).
Are Investments in the Trusts Eligible for Retirement Plans?
The Trusts are eligible 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 Trusts to elect to have each
distribution of interest income or principal (to the extent not
reinvested in additional securities), or both, on their Units
automatically reinvested in shares of any open-end fund offered by
OppenheimerFunds. In addition, Unit holders of the Trusts 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 Trusts. Oppenheimer Government Securities Fund
is an open-end, diversified management investment company. Oppenheimer
Government Securities Fund seeks a high current return and safety of
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 a 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 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 a 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 "Are Investments in the Trusts Eligible for Retirement
Plans?"
Page 13
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. The Public Offering
Price is based on the Evaluator's determination of the aggregate bid
price of the Securities in a Trust, including any money in the Principal
Account other than money required to redeem tendered Units, and includes
a sales charge as indicated in Part One for each Trust. Also added to
the Public Offering Price is a proportionate share of interest accrued
but unpaid on the Securities to the date of settlement of Units (see
"The First Trust GNMA Reinvestment Income Trust-How is Accrued Interest
Treated?").
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
providing services to the Sponsor can purchase Units of the Trusts at
the Public Offering Price less the concession the Sponsor typically
allows to dealers and other selling agents.
Units may be purchased 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 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 a 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, purchases of Units in a 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.
The aggregate price of the Securities in a Trust is determined by
Securities Evaluation Service, Inc. acting as evaluator (the
"Evaluator") on the basis of bid prices (1) on the basis of current
market prices for the Securities obtained from dealers or brokers who
customarily deal in Securities comparable to those held by a 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 a 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 a 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 a
Trust due to the number of mortgages underlying each Ginnie Mae and the
number of such Securities in a Trust. However, there can be no assurance
that they will not be material. For purposes of the determination by the
Evaluator of the bid prices of the Ginnie Maes in a 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 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
Page 14
month to month will not be material to a Trust. Nevertheless, the
Sponsor will adopt procedures as to pricing and evaluation for the Units
of a 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.
The Evaluator will be requested to make a determination of the aggregate
price of the Securities in each Trust 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 will be equal to the bid price per Unit of the
Securities in a Trust plus the applicable sales charge.
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.
How are Units Distributed?
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. For secondary market sales, the party making the sale will
receive a concession of 2.75% of the Public Offering Price for Series 68
and 71 and 3.0% of the Public Offering Price for Series 72, 73, 74 and
75. 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 Trusts available to their
customers on an agency basis. A portion of the sales charge paid by
these customers is retained by or remitted to the banks in the amounts
indicated in the second preceding sentence.
From time to time the Sponsor may implement programs under which
broker/dealers, banks or others of a Trust may receive nominal awards
from the Sponsor for each of their registered representatives who have
sold a minimum number of UIT Units during a specified time period. In
addition, at various times the Sponsor may implement other programs
under which the sales force of 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 Trusts. Such payments are made by the Sponsor out of its
own assets, and not out of the assets of the Trusts. These programs will
not change the price Unit holders pay for their Units or the amount that
the Trusts will receive from the Units sold.
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 Trusts 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
Page 15
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 Trusts 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
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?
In maintaining a market for the Units, the Sponsor will 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 as indicated in Part One for each Trust) or redeemed (based
on the bid prices of the Securities in the Trust). The 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?
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 Trusts plus interest accrued to the date
of settlement. 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.
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 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;
Page 16
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 Trusts) 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 Trusts, 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
a 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 a
Trust. The Trustee also may withdraw from said accounts such amounts, if
any, as it deems necessary to establish a reserve for any governmental
charges payable out of a Trust. Amounts so withdrawn shall not be
considered a part of the assets of a 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
Page 17
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 a 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 a 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 unit investment trust office in the City of New York of
the certificates representing the Units to be redeemed, or, in the case
of uncertificated Units, delivery of a request for redemption, duly
endorsed or accompanied by proper instruments of transfer with signature
guaranteed as explained above (or by providing satisfactory indemnity,
as in connection with lost, stolen or destroyed certificates), and
payment of applicable governmental charges, if any. No redemption fee
will be charged. On the third business day following such tender the
Unit holder will be entitled to receive in cash an amount for each Unit
equal to the Redemption Price per Unit next computed after receipt by
the Trustee of such tender of Units. The "date of tender" is deemed to
be the date on which Units are received by the Trustee (if such day is a
day on which the New York Stock Exchange is open for trading), except
that as regards Units received after 4:00 p.m. Eastern time (or as of
any earlier closing time on a day on which the New York Stock Exchange
is scheduled in advance to close at such earlier time), the date of
tender is the next day on which the New York Stock Exchange is open for
trading and such Units will be deemed to have been tendered to the
Trustee on such day for redemption at the redemption price computed on
that day. Units so redeemed shall be 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.
The Redemption Price per Unit (as well as the Public Offering Price)
will be determined on the basis of the bid price of the Securities in a
Trust, 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. 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 a
Trust or moneys in the process of being collected, (2) the value of the
Securities in a Trust based on the bid prices of the Securities and (3)
interest accrued thereon, less (a) amounts representing taxes or other
governmental charges payable out of a Trust and (b) the accrued expenses
of a Trust. The Evaluator may determine the value of the Securities in a
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
Page 18
uncertainty during certain periods of each month of the precise amount
of principal and accrued interest of the Ginnie Maes.
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 a 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.
How May Securities be Removed from a 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 a 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 FT Series (formerly known as The First Trust Special
Situations Trust), The First Trust Insured Corporate Trust, The First
Trust of Insured Municipal Bonds, The First Trust GNMA Reinvestment
Income Trust, Templeton Growth and Treasury Trust, Templeton Foreign
Fund & U.S. Treasury Securities Trust, and The Advantage Growth and
Page 19
Treasury Securities Trust. First Trust introduced the first insured unit
investment trust in 1974 and to date more than $27 billion in First
Trust unit investment trusts have been deposited. The Sponsor's
employees include a team of professionals with many years of experience
in the unit investment trust industry. The Sponsor is a member of the
National Association of Securities Dealers, Inc. and Securities Investor
Protection Corporation and has its principal offices at 1001 Warrenville
Road, Lisle, Illinois 60532; telephone number 630-241-4141. As of
December 31, 1999, the total partners' capital of Nike Securities L.P.
was $19,881,035 (audited). This paragraph relates only to the Sponsor
and not to the Trusts 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.
Code of Ethics. The Sponsor and each Trust have adopted a code of ethics
requiring the Sponsor's employees who have access to information on
Trust transactions to report personal securities transactions. The
purpose of the code is to avoid potential conflicts of interest and to
prevent fraud, deception or misconduct with respect to a Trust.
Who is the Trustee?
The Trustee is The Chase Manhattan Bank, with its principal executive
office located at 270 Park Avenue, New York, New York 10017 and its unit
investment trust offices at 4 New York Plaza, 6th floor, New York, New
York 10004-2413. 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 Superintendent of Banks of the State of
New York, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not
participated in the selection of the Securities. For information
relating to the responsibilities of the Trustee under the Indenture,
reference is made to the material set forth under "Rights of Unit
Holders."
The Trustee and any successor trustee may resign by executing an
instrument in writing and filing the same with the Sponsor and mailing a
copy of a notice of resignation to all Unit holders. Upon receipt of
such notice, the Sponsor is obligated to appoint a successor trustee
promptly. If the Trustee becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, the Sponsor may
remove the Trustee and appoint a successor as provided in the Indenture.
If upon resignation of a trustee no successor has accepted the
appointment within 30 days after notification, the retiring trustee may
apply to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of a trustee becomes effective
only when the successor trustee accepts its appointment as such or when
a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or
consolidation to which a Trustee shall be a party, shall be the
successor Trustee. The Trustee must be a banking corporation organized
under the laws of the United States or any State and having at all times
an aggregate capital, surplus and undivided profits of not less than
$5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and 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
Page 20
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
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 a 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.
Each 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 the respective 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 a 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 the date specified in "Summary of Essential Information" in Part
One of this Prospectus. 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 a Trust, and, after paying all expenses and
charges incurred by such 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.
Page 21
Experts
The financial statements, including the Portfolio, of each Trust
appearing in Part One of this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon appearing elsewhere therein and in the
Registration Statement, and are included in reliance upon such reports
given upon the authority of such firm as experts in accounting and
auditing.
Page 22
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 23
CONTENTS:
The First Trust GNMA Reinvestment Income Trust:
What is the First Trust GNMA Reinvestment
Income Trust? 3
Risk Factors 4
What is the Rating of the Units? 7
What are Estimated Current Return and
Estimated Long-Term Return? 8
How is Accrued Interest Treated? 9
What are the Expenses and Charges? 9
What is the Tax Status of Unit Holders? 11
Are Investments in the Trusts
Eligible for Retirement Plans? 13
How Can Distributions to Unit Holders be
Reinvested? 13
Public Offering:
How is the Public Offering Price Determined? 14
How are Units Distributed? 15
What are the Profits of the Sponsor? 16
Will There be a Secondary Market? 16
Rights of Unit Holders:
How is Evidence of Ownership Issued and
Transferred? 16
How are Interest and Principal Distributed? 17
What Reports Will Unit Holders Receive? 17
How May Units be Redeemed? 18
How May Units be Purchased by the Sponsor? 19
How May Securities be Removed from a Trust? 19
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 19
Who is the Trustee? 20
Limitations on Liabilities of Sponsor and Trustee 20
Who is the Evaluator? 21
Other Information:
How May the Indenture be Amended or
Terminated? 21
Legal Opinions 21
Experts 22
Description of Standard & Poor's Rating 23
_______________
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
PROSPECTUS
PART TWO
APRIL 28, 2000
First Trust (registered trademark)
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 24
CONTENTS OF POST-EFFECTIVE AMENDMENT
OF REGISTRATION STATEMENT
This Post-Effective Amendment of Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Auditors
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST,
SERIES 72 AND SERIES 73, certifies that it meets all of the
requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment of its
Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized in the Village of Lisle
and State of Illinois on April 28, 2000.
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST
SERIES 72 AND SERIES 73
(Registrant)
By NIKE SECURITIES L.P.
(Depositor)
By Robert M. Porcellino
Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment of Registration Statement has been
signed below by the following person in the capacity and on the
date indicated:
Signature Title Date
David J. Allen Sole Director of )
Nike Securities )
Corporation, )
the General Partner ) April 28, 2000
of Nike Securities L.P. )
)
) Robert M. Porcellino
) Attorney-in-Fact
* The title of the person named herein represents his capacity
in and relationship to Nike Securities L.P., Depositor.
** An executed copy of the related power of attorney was filed
with the Securities and Exchange Commission in connection
with the Amendment No. 1 to Form S-6 of The First Trust
Combined Series 258 (File No. 33-63483) and the same is
hereby incorporated herein by this reference.
S-2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated April 7, 2000 in
this Post-Effective Amendment to the Registration Statement and
related Prospectus of The First Trust GNMA Reinvestment Income
Trust "GRIT" dated April 26, 2000.
ERNST & YOUNG LLP
Chicago, Illinois
April 25, 2000
