Registration No. 333-63947
1940 Act No. 811-3969
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to Form S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES
OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust:
First Trust GNMA Series 74 & 75
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agents for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
E. Title of Securities Being Registered:
An indefinite number of Units pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as
amended
F. Approximate date of proposed sale to public:
As soon as practicable after the effective date of the
Registration Statement.
|XXX|Check box if it is proposed that this filing will become
effective on March 16, 1999 at 2:00 p.m. pursuant to Rule
487.
________________________________
The First Trust (registered trademark)
GNMA Reinvestment Income Trust "GRIT"
Series 74 Series 75
The First Trust GNMA Reinvestment Income Trust consists of the
underlying separate unit investment trusts designated as The First Trust
GNMA Reinvestment Income Trust, Series 74 ("Series 74") and The First
Trust GNMA Reinvestment Income Trust, Series 75 ("Series 75"). Series 74
and Series 75 may individually be referred to herein as a "Trust" or
collectively as 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," delivery statements relating to
contracts for the purchase of certain such securities and an irrevocable
letter of credit (the "Securities" or "Ginnie Maes"). All of the
Securities in the Trust consist of pools of mortgages on 1- to 4-family
dwellings with terms of up to 30 years with the Securities contained in
Series 74 having a stated coupon rate of 8% and the Securities contained
in Series 75 having a stated coupon rate of 9%.
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 March 16, 1999, the Initial Date of Deposit,
the Sponsor established a percentage relationship between the principal
amount of Ginnie Maes of specified interest rates and ranges of
maturities in each Trust. From time to time, following the Initial Date
of Deposit, the Sponsor may create additional Units in a Trust by
depositing in such Trust additional Securities or cash (including a
letter of credit) with instructions to purchase additional Securities.
Units may be continuously offered for sale to the public by means of
this Prospectus, resulting in a potential increase in the outstanding
number of Units of such Trust. Any deposit by the Sponsor of additional
Securities, or the purchase of additional Securities pursuant to a cash
deposit, will maintain, as nearly as is practical, the original
percentage relationship between the principal amounts of Ginnie Maes of
specified interest rates and ranges of maturities in the original
Portfolio of the Trust. Precise duplication of this original percentage
relationship may not be possible because fractions of Ginnie Maes may
not be purchased and identical securities may not be available, but
duplication will continue to be the goal in connection with the deposit
of any such additional Securities.
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, $500 for tax-deferred retirement
plans such as IRA accounts) during the initial offering period 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 "The First Trust GNMA
Reinvestment Income Trust-Are Investments in the Trusts Eligible 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 (except for principal distributions used to
meet expenses or deferred sales charge payments, if any) 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
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.
The date of this Prospectus is March 16, 1999
Page 1
Period for each Trust to last 9-11 years from the Initial Date of
Deposit. There may be times in which such reinvestment will not be
feasible because additional Ginnie Maes are not available or for other
reasons described herein. Semi-annually, amounts in the Principal
Account which cannot be reinvested during the Reinvestment Period will
be distributed to Unit holders unless the amount available for
distribution is less than $1.00 per 100 Units.
UNITS OF THE 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 (if applicable) and
Estimated Long-Term Return, see "Special Information" for each Trust.
Estimated cash flows for the Trusts are available upon request at no
charge from the Sponsor.
The Public Offering Price per Unit during the initial offering period is
equal to the aggregate offering price of the Securities in a Trust
divided by the number of Units outstanding plus an initial sales charge
equal to the difference between the maximum sales charge of 4.25% of the
Public Offering Price and the maximum remaining deferred sales charge,
initially $.325 per Unit. Commencing on March 20, 2000, and on the
twentieth business day of each month thereafter (or if such day is not a
business day, on the preceding business day) through July 20, 2000, a
deferred sales charge of $.065 will be assessed per Unit per month.
Units purchased subsequent to the initial deferred sales charge payment
but still during the initial offering period will be subject to the
initial sales charge and the remaining deferred sales charge payments
not yet collected. The deferred sales charge will be paid from proceeds
received on principal distributions, if sufficient, or from the periodic
sale of Securities. The total maximum sales charge assessed to Unit
holders on a per Unit basis will be 4.25% of the Public Offering Price
(equivalent to 4.301% and 4.305% of the net amount invested, exclusive
of the deferred sales charge for Series 74 and Series 75, respectively).
On transactions entered into for settlement after March 19, 1999, there
will also be added an amount equal to accrued interest from such date to
the date of settlement (normally three business days after order) less
distributions from the Interest Account subsequent to the First
Settlement Date. In addition, a portion of the Public Offering Price on
Units purchased prior to the earlier of six months after the Initial
Date of Deposit or the end of the initial offering period consists of
Securities in an amount sufficient to pay for all or a portion of the
costs incurred in establishing the Trusts. The organization costs will
be deducted from the assets of each Trust as of the earlier of six
months after the Initial Date of Deposit or the end of the initial
offering period. Upon completion of the deferred sales charge period,
the secondary market Public Offering Price per Unit for a Trust will not
include deferred payments, but will instead include only a one-time
initial sales charge of 4.25% of the Public Offering Price (equivalent
to 4.439% of the net amount invested). See "Public Offering-How is the
Public Offering Price Determined?", particularly for the method of
evaluation.
Each Unit represents an undivided interest in the principal and net
income of a Trust in the ratio of one Unit for each $10.00 principal
amount of Securities initially deposited in such Trust.
Monthly Distributions of interest received by a Trust will be paid in
cash unless the Unit holder elects to have them automatically reinvested
as described under "The First Trust GNMA Reinvestment Income Trust-How
Can Distributions to Unit Holders be Reinvested?" Monthly distributions
will be made on the last day of each month to all Unit holders of record
on the first day of such month, commencing with the First Distribution
on April 30, 1999. 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
offering price of the Securities in the respective Trust during the
initial offering period and at prices based upon the aggregate bid price
of the Securities in the respective Trust after the initial offering
period. In the absence of such a market, a Unit holder will nonetheless
be able to dispose of the Units through redemption at prices based upon
the bid prices of the underlying Securities (see "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
Summary of Essential Information
At the Opening of Business on the
Initial Date of Deposit of the Securities-March 16, 1999
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: Securities Evaluation Service, Inc.
<TABLE>
<CAPTION>
The First Trust The First Trust
GNMA GNMA
Reinvestment Reinvestment
Income Trust Income Trust
Series 74 Series 75
_______________ _______________
<S> <C> <C>
General Information
Principal Amount of Securities in the Trust $ 224,801 $ 338,897
Initial Number of Units 22,480 33,890
Fractional Undivided Interest in the Trust per Unit 1/22,480 1/33,890
Public Offering Price:
Aggregate Offering Price Evaluation of Securities in the Portfolio (1) $ 235,760 $ 365,267
Aggregate Offering Price Evaluation per Unit $ 10.4875 $ 10.7780
Maximum Sales Charge of 4.25% of the Public Offering Price per Unit
(4.301% and 4.305% of the net amount invested, exclusive of the
deferred sales charge for Series 74 and Series 75, respectively) (2) $ .4511 $ .4640
Less Deferred Sales Charge per Unit $ (.3250) $ (.3250)
Public Offering Price per Unit (2) $ 10.6136 $ 10.9170
Sponsor's Initial Repurchase Price per Unit (3) $ 10.1625 $ 10.4530
Redemption Price per Unit (3) $ 10.1438 $ 10.4343
Excess of Public Offering Price per Unit Over Redemption Price per Unit (3) $ .4698 $ .4827
Excess of Sponsor's Initial Repurchase Price per
Unit Over Redemption Price per Unit (3) $ .0187 $ .0187
Portfolio Supervisor's Annual Fee per Unit Outstanding (4) $ .0015 $ .0015
Evaluator's Annual Fee per Unit Outstanding (5) $ .0030 $ .0030
Estimated Organization Costs per Unit (6) $ .0125 $ .0110
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date March 19, 1999
Mandatory Termination Date December 31, 2048
Discretionary Liquidation Amount A Trust may be terminated if the principal amount
thereof is less than the lower of $2,000,000 or 40% of
the total principal amount of Securities deposited in
such Trust during the initial offering period.
Evaluations for purposes of sale, purchase or redemption of Units are
made as of the close of trading
(generally 4:00 p.m. Eastern time) on the New York Stock Exchange on
each day on which it is open.
___________
<FN>
(1) Each Security is valued at the aggregate offering price thereof.
(2) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Table" and "Public Offering" for
additional information regarding these charges. During the initial
offering period, Units purchased subsequent to the initial deferred
sales charge payment will be subject to the initial sales charge and the
remaining deferred sales charge payments not yet collected. These
deferred sales charge payments will be paid from proceeds received on
principal distributions, if sufficient, or from the periodic sale of
Securities. Commencing on July 21, 2000, the secondary market sales
charge will not include deferred sales charge payments but will instead
include only a one-time initial sales charge of 4.25% of the Public
Offering Price. On the Initial Date of Deposit there will be no accrued
interest in the Interest Account. Anyone ordering Units after such date
will pay accrued interest from such date to the date of settlement
(normally three business days after order) less distributions from the
Interest Account subsequent to the First Settlement Date.
(3) During the period ending with the earlier of six months after the
Initial Date of Deposit or the end of the initial offering period the
Sponsor's Initial Repurchase Price per Unit and Redemption Price per
Unit will include the Estimated Organization Costs per Unit. After such
date, the Sponsor's Initial Repurchase Price per Unit and Redemption
Price per Unit will not include such estimated organization costs. See
"Rights of Unit Holders-How May Units be Redeemed?"
(4) The Supervisory Fee is payable to an affiliate of the Sponsor. In
addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $.0015 per
Unit.
(5) In addition, the Evaluator will receive $0.25 per evaluation for
each issue of underlying Securities in a Trust in excess of 50 issues
(treating separate maturities as separate issues).
(6) You will bear all or a portion of the costs incurred in organizing
your respective Trust. These estimated organization costs are included
in the price you pay for your Units and will be deducted from the assets
of a Trust as of the earlier of six months after the Initial Date of
Deposit or the end of the initial offering period.
</FN>
</TABLE>
Page 3
FEE TABLES
These Fee Tables are intended to help you to understand the costs and
expenses that you will bear directly or indirectly. See "Public
Offering" and "What are the Expenses and Charges?" Although each Trust
is a unit investment trust rather than a mutual fund, this information
is presented to permit a comparison of fees.
<TABLE>
<CAPTION>
SERIES 74
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.19%(a) $.1261
Deferred sales charge 3.06%(b) .3250
________ ________
4.25% $.4511
======== ========
Organization Costs
(as a percentage of public offering price)
Estimated Organization Costs .118%(c) $.0125
======== =======
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Trustee's fee .088% $.0092
Portfolio supervision, bookkeeping, administrative and evaluation fees .058% .0060
Other operating expenses .084% .0087
________ ________
Total .230% $.0239
======== ========
</TABLE>
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years 10 Years
______ _______ _______ ________
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming the Series 74 has an estimated operating
expense ratio of .230% and a 5% annual return on the investment
throughout the periods $ 49 $ 54 $ 59 $ 75
</TABLE>
<TABLE>
<CAPTION>
SERIES 75
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.27%(a) $.1390
Deferred sales charge 2.98%(b) .3250
________ ________
4.25% $.4640
======== ========
Organization Costs
(as a percentage of public offering price)
Estimated Organization Costs .101%(c) $.0110
======== ========
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Trustee's fee .086% $.0092
Portfolio supervision, bookkeeping, administrative and evaluation fees .056% .0060
Other operating expenses .081% .0087
________ ________
Total .223% $.0239
======== ========
</TABLE>
Page 4
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years 10 Years
______ _______ _______ ________
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming the Series 75 has an estimated operating
expense ratio of .223% and a 5% annual return on the investment
throughout the periods $ 50 $ 55 $ 60 $ 76
These examples assume reinvestment of all dividends and distributions
and utilize a 5% annual rate of return as mandated by Securities and
Exchange Commission regulations applicable to mutual funds. For purposes
of the examples, the deferred sales charge imposed on reinvestment of
dividends is not reflected until the year following payment of the
dividend; the cumulative expenses would be higher if sales charges on
reinvested dividends were reflected in the year of reinvestment. The
examples should not be considered a representation of past or future
expenses or annual rate of return; the actual expenses and annual rate
of return may be more or less than those assumed for purposes of the
example.
_____________
<FN>
(a) The initial sales charge is actually the difference between the
maximum total sales charge of 4.25% and the maximum remaining deferred
sales charge (initially $.325 per Unit).
(b) The actual fee is $.065 per Unit per month, irrespective of purchase
or redemption price deducted monthly commencing March 20, 2000 through
July 20, 2000. If a Unit holder sells or redeems Units before all of
these deductions have been made, the balance of the deferred sales
charge payments remaining will be deducted from the sales or redemption
proceeds. Units purchased subsequent to the initial deferred sales
charge payment will be subject to the initial sales charge at the time
of purchase and any remaining deferred sales charge payments not yet
collected.
(c) You will bear all or a portion of the costs incurred in organizing
your respective Trust. These estimated organization costs are included
in the price you pay for your Units and will be deducted from the assets
of a Trust as of the earlier of six months after the Initial Date of
Deposit or the end of the initial offering period.
</FN>
</TABLE>
Page 5
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST
SERIES 74 SERIES 75
What is the First Trust GNMA Reinvestment Income Trust?
The First Trust GNMA Reinvestment Income Trust consists of the
underlying separate unit investment trusts designated as The First Trust
GNMA Reinvestment Income Trust, Series 74 and The First Trust GNMA
Reinvestment Income Trust, Series 75. The Trusts were created under the
laws of the State of New York pursuant to a Trust Agreement (the
"Indenture"), dated the Initial Date of Deposit, with Nike Securities
L.P. as Sponsor, The Chase Manhattan Bank as Trustee, Securities
Evaluation Service, Inc. as Evaluator and First Trust Advisors L.P. as
Portfolio Supervisor. On the Initial Date of Deposit, the Sponsor
deposited with the Trustee delivery statements relating to contracts for
the purchase of taxable mortgage-backed securities of the fully modified
pass-through type, and an irrevocable letter of credit issued by a
financial institution in the amount required for such purchases (the
"Securities" or "Ginnie Maes") including so-called Ginnie Mae IIs. The
Trustee thereafter credited to the account of the Sponsor documents
evidencing the entire ownership of 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 the Trusts
pursuant to the Indenture.
The objective of each Trust is monthly distributions of interest through
an investment in a portfolio of Securities 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. Because additional Securities
or cash may be deposited in the Trusts as described herein, the Trusts
are not expected to retain their present size and composition. Any
additional Securities, or cash with instructions to purchase additional
Securities, deposited in a Trust will maintain as nearly as is practical
the original percentage relationship between the principal amounts of
Ginnie Maes of specified interest rates and ranges of maturities in the
original portfolio of such Trust. Precise duplication of the original
percentage relationship may not be possible due to the fact that Ginnie
Maes of a specific range of maturities and interest rate may not be
available and fractions of Ginnie Maes may not be purchased. If the
Sponsor deposits cash, however, existing and new investors may
experience a dilution of their investment and a reduction in their
anticipated income because of fluctuations in the price of the
Securities and because a Trust will pay the associated brokerage fees.
To minimize this effect, each Trust will try to purchase the Securities
as close to the evaluation time or as close to the evaluation price as
possible. The Trustee may from time to time retain and pay compensation
to the Sponsor (or an affiliate of the Sponsor) to act as agent for the
Trusts with respect to acquiring Securities for the Trusts. In acting in
such capacity, the Sponsor or its affiliate will be held subject to the
restrictions under the Investment Company Act of 1940, as amended.
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 (except for principal distributions used to meet expenses or
deferred sales charge payments, if any) 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 for each Trust to
last 9-11 years from the Initial Date of Deposit. Reinvestment of
principal into additional Ginnie Maes during periods when interest rates
are different from those prevailing at the Initial Date of Deposit will
have the effect of increasing or decreasing monthly distributions of
interest income from a Trust. Reinvestment of principal into the Ginnie
Maes eligible for inclusion in a Trust will also have the effect of
increasing the par value of the Units for reinvestment during periods of
increasing interest rates from those prevailing at the Initial Date of
Deposit and during periods of declining interest rates the par value of
the Units will decrease. There may be times when the Principal Account
of 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 a Trust
Page 6
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 "The First Trust GNMA
Reinvestment Income Trust-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
such securities available; (ii) the prices and yields of such securities
relative to other comparable securities, including the extent to which
such securities are trading at a premium or at a discount from par; and
(iii) the maturities of such securities. See "Portfolio" for each Trust
for information with respect to the Securities initially selected for
deposit in such Trust. 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 the Trusts 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 underlying Securities 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 portfolios of the Trusts consist 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 "Portfolio" for each Trust. Current market conditions accord
little or no difference in price among individual Ginnie Mae securities
with the same coupon within certain ranges of stated maturity dates on
the basis of the difference in the maturity dates of each Ginnie Mae. A
purchase of Ginnie Maes with the same coupon rate and maturity date
within such range will be considered an acquisition of the same security
for both additional deposits and for the reinvestment of principal. In
the future, however, the difference in maturity ranges could affect
market value of the individual Ginnie Maes. At such time, any additional
purchases by the 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 Trusts may contain Securities which were acquired at a market
discount. Such Securities trade at less than par value because the
interest coupons thereon are lower than interest coupons on comparable
debt securities being issued at currently prevailing interest rates. If
such interest rates for newly issued and otherwise comparable securities
increase, the market discount of previously issued securities will
become greater, and if such interest rates for newly issued comparable
securities decline, the market discount of previously issued securities
will be reduced, other things being equal. Investors should also note
that the value of Ginnie Maes purchased at a market discount will
increase in value faster than Ginnie Maes purchased at a market premium
if interest rates decrease. Conversely, if interest rates increase, the
value of Ginnie Maes purchased at a market discount will decrease faster
than Ginnie Maes purchased at a premium. In addition, if interest rates
rise, the prepayment risk of higher yielding, premium Ginnie Maes and
the prepayment benefit for lower yielding, discount Ginnie Maes will be
reduced. Market discount attributable to interest changes does not
indicate a lack of market confidence in the issue. Neither the Sponsor
nor the Trustee shall be liable in any way for any default, failure or
defect in any of the Securities.
Page 7
The Trusts may contain Securities which were acquired at a market
premium. Such Securities trade at more than par value because the
interest coupons thereon are higher than interest coupons on comparable
debt securities being issued at currently prevailing interest rates. If
such interest rates for newly issued and otherwise comparable securities
decrease, the market premium of previously issued securities will be
increased, and if such interest rates for newly issued comparable
securities increase, the market premium of previously issued securities
will be reduced, other things being equal. The current returns of
securities trading at a market premium are initially higher than the
current returns of comparably rated debt securities of a similar type
issued at currently prevailing interest rates because premium securities
tend to decrease in market value as they approach maturity when the face
amount becomes payable. Because part of the purchase price is thus
returned not at maturity but through current income payments, early
redemption of a premium security at par or early prepayments of
principal will result in a reduction in yield. Prepayments of principal
on securities purchased at a market premium are more likely than
prepayments on securities purchased at par or at a market discount and
the level of prepayments will generally increase if interest rates
decline. Market premium attributable to interest changes does not
indicate market confidence in the issue.
The contracts to purchase Securities delivered to the Trustee represent
an obligation by issuers or dealers to deliver Securities to the Sponsor
for deposit in the Trusts. Contracts are typically settled and the
Securities delivered within a few business days subsequent to the
Initial Date of Deposit. The percentage of the aggregate principal
amount of the Securities, if any, relating to "when, as and if issued"
Securities or other Securities with delivery dates after the date of
settlement for a purchase made on the Initial Date of Deposit is
indicated in "Portfolio" for each Trust. Interest on "when, as and if
issued" and delayed delivery Securities begins accruing to the benefit
of Unit holders on their dates of delivery. Because "when, as and if
issued" Securities have not yet been issued, as of the Initial Date of
Deposit each Trust is subject to the risk that the issuers thereof might
decide not to proceed with the offering of such Securities or that the
delivery of such Securities or the delayed delivery Securities may be
delayed. If such Securities, or replacement securities described below,
are not acquired by a Trust or if their delivery is delayed, the
Estimated Returns shown in the "Special Information" for each Trust may
be reduced.
In the event of a failure to deliver any Securities that have been
purchased for a Trust under a contract ("Failed Securities"), the
Sponsor is authorized under the Indenture to direct the Trustee to
acquire other specified securities ("Replacement Securities") to make up
the original corpus of such Trust. The Replacement Securities must be
purchased within 20 days after delivery of the notice of the failed
contract and the purchase price (exclusive of accrued interest) may not
exceed the amount of funds reserved for the purchase of the Failed
Securities. The Replacement Securities (i) must satisfy the criteria
previously described for Securities originally included in a Trust, (ii)
must maintain as far as practical the original percentage relationship
between the principal amounts of Ginnie Maes of specified interest rates
and years of maturities in a Trust, and (iii) shall not be "when, as and
if issued" securities. Precise duplication of Failed Securities may not
be possible because fractions of Ginnie Maes may not be purchased, but
duplication will be the goal of the Sponsor with respect to Replacement
Securities. Whenever Replacement Securities have been acquired for a
Trust, the Trustee shall, within five days thereafter, notify all Unit
holders of such Trust of the acquisition of the Replacement Securities
and shall, on the next monthly distribution date which is more than 30
days thereafter, make a pro rata distribution of the amount, if any, by
which the cost to such Trust of the Failed Securities exceeded the cost
of the Replacement Securities plus accrued interest. Except as provided
herein, once the original corpus of a Trust is acquired, the Trustee
will have no power to vary the investment of such Trust, i.e., the
Trustee will have no managerial power to take advantage of market
variations to improve a Unit holder's investment.
If the right of limited substitution described in the preceding
paragraph shall not be utilized to acquire Replacement Securities in the
event of a failed contract, the Sponsor shall refund the principal and
accrued interest (at the coupon rate of the relevant Securities to the
date the Sponsor is notified of the failure) attributable to such failed
contract and the pro rata portion of the sales charge attributable to
such failed contract not more than thirty days after the determination
of such failure or at such earlier time as the Trustee in its sole
discretion deems to be in the interest of the Unit holders. Unit holders
should be aware that at the time of the receipt of such refunded
principal they may not be able to reinvest such principal in other
securities at a yield equal to or in excess of the yield which such
principal would have earned to Unit holders had the Failed Securities
been delivered to a Trust.
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
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PERIODS OF DECLINING INTEREST RATES, PREPAYMENTS OF GINNIE MAES MAY
OCCUR WITH INCREASING FREQUENCY BECAUSE, AMONG OTHER REASONS, MORTGAGORS
MAY BE ABLE TO REFINANCE THEIR OUTSTANDING MORTGAGES AT LOWER INTEREST
RATES. IN SUCH A CASE, (I) THE REINVESTMENT OF PRINCIPAL MAY BE AT
PRICES WHICH RESULT IN A LOWER RETURN ON UNITS OR (II) PRINCIPAL WILL BE
DISTRIBUTED TO UNIT HOLDERS WHO CANNOT REINVEST SUCH PRINCIPAL
DISTRIBUTIONS IN OTHER SECURITIES AT AN ATTRACTIVE YIELD.
Each Unit initially offered represents the fractional undivided interest
in a Trust set forth in the "Summary of Essential Information." To the
extent that any Units are redeemed by the Trustee, the fractional
undivided interest in a Trust represented by each unredeemed Unit will
increase, although the actual interest represented by such fraction will
remain substantially unchanged. However, if additional Units are issued
(in connection with the deposit by the Sponsor of additional Securities
or cash), the aggregate value of Securities in such Trust will be
increased by amounts allocable to additional Units, and the fractional
undivided interest represented by each Unit in the balance will be
decreased. Units will remain outstanding until redeemed upon tender to
the Trustee by any Unit holder, which may include the Sponsor, or until
the termination of the Indenture.
Description of Securities. The Ginnie Maes included in the 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 but an estimated average life of considerably
less as set forth in "Special Information" for each Trust). In general,
the mortgages in these pools provide for equal monthly payments over the
life of the mortgage (aside from prepayments) designed to repay the
principal of the mortgage over such period, together with interest at
the fixed rate on the unpaid balance.
To obtain GNMA approval of a new pool of mortgages, the issuer will file
with GNMA an application containing information concerning itself,
describing generally the pooled mortgages, and requesting that GNMA
approve the issue and issue its commitment (subject to GNMA's
satisfaction with the mortgage documents and other relevant
documentation) to guarantee the timely payment of principal of and
interest on the Ginnie Maes to be issued by the issuer. If the
application is in order, GNMA will issue its commitment and will assign
a GNMA pool number to the pool. Upon completion of the required
documentation (including detailed information as to the underlying
mortgages, a custodial agreement with a Federal or state regulated
financial institution satisfactory to GNMA pursuant to which the
underlying mortgages will be held in safekeeping, and a detailed
guaranty agreement between GNMA and the issuer), the issuance of the
Ginnie Maes is permitted. When the Ginnie Maes are issued, GNMA will
endorse its guarantee thereon. The aggregate principal amount of Ginnie
Maes issued will be equal to the then aggregate unpaid principal
balances of the pooled mortgages. The interest rate borne by the Ginnie
Maes is currently fixed at 1/2 of 1% below the interest rate of the
pooled 1- to 4-family mortgages, the differential being applied to the
payment of servicing and custodial charges as well as GNMA's guaranty fee.
Ginnie Mae IIs consist of jumbo pools of mortgages from more than one
issuer. By allowing pools to consist of multiple issuers, it allows for
larger and more geographically diverse pools. Unlike Ginnie Mae Is,
which have a minimum pool size of $1 million, Ginnie Mae IIs have a
minimum pool size of $7 million. In addition, the interest rates on the
mortgages within the Ginnie Mae II pools will vary unlike the mortgages
within pools in Ginnie Mae Is which all have the same rate. The rates on
Page 9
the mortgages will vary from 1/2 of 1% to 1.50% above the coupon rate on
the GNMA bond, which 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."
*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.
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 each Trust 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 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. See "Special
Information" for each Trust.
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 each Trust. For example, Ginnie Maes issued during a
period of high interest rates will be backed by a pool of mortgage loans
*Any statement in this Prospectus that a particular security is
backed by the full faith and credit of the United States is based upon
the opinion of an Assistant Attorney General of the United States and
should be so construed.
Page 10
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 a Trust might be accelerated as a result of prepayments
made as described herein.
In addition to prepayments which the Trustee is unable to reinvest,
sales of Securities of a Trust under certain permitted circumstances may
result in an accelerated termination of such 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.
Like other investment companies, financial and business organizations
and individuals around the world, the Trust could be adversely affected
if the computer systems used by the Sponsor, Evaluator, Portfolio
Supervisor or Trustee or other service providers to the Trust do not
properly process and calculate date-related information and data
involving dates of January 1, 2000 and thereafter. This is commonly
known as the "Year 2000 Problem." The Sponsor, Evaluator, Portfolio
Supervisor and Trustee are taking steps that they believe are reasonably
designed to address the Year 2000 Problem with respect to computer
systems that they use and to obtain reasonable assurances that
comparable steps are being taken by the Trust's other service providers.
At this time, however, there can be no assurance that these steps will
be sufficient to avoid any adverse impact to the Trust.
What is the Rating of the Units?
Standard & Poor's Managed Fund Ratings Group, a Division of The McGraw-
Hill Companies ("Standard & Poor's") has rated Units of each Trust
"AAA." This is the highest rating assigned by Standard & Poor's. See
"Description of Standard & Poor's Rating." Such rating, as issued by
Standard & Poor's, will be in effect for a period of thirteen months
from the Initial Date of Deposit and will, unless renewed, terminate at
the end of the period. 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 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 Trust 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 Trust.
What are Estimated Current Return and Estimated Long-Term Return?
Debt securities are customarily offered to investors on a "yield price"
basis (as contrasted to a "dollar price" basis) at the lesser of the
price as computed to maturity of such debt security or to an earlier
redemption date. Since Units of the Trusts are offered on a dollar price
basis, the estimated rate of return on an investment in Units of the
Trusts is stated in terms of Estimated Current Return and Estimated Long-
Term Return.
At the opening of business on the Initial Date of Deposit, the Estimated
Current Return and the Estimated Long-Term Return for the Trusts is as
set forth in "Special Information" for each Trust. 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
Page 11
the future. Estimated Current Return does not take into account the
liability for deferred sales charge payments or 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 a Trust and
adjusted to reflect expenses and sales charges. The estimated long-term
return figure is calculated using an estimated average life for the
Securities and adjusting this figure upward for the reinvestment of
principal and is set forth in "Special Information" for each Trust.
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 a 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, has utilized
information provided by a market maker in GNMA securities which it
believes to be reliable. However, it is possible that another computer
model might provide an estimated prepayment rate which would prove over
the life of the Securities to be more accurate. Once an appropriate
estimated prepayment rate is ascertained, an estimated average life is
calculated and is adjusted upward for the reinvestment of principal. The
estimated average life for the Trusts provided in "Special Information"
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 each Trust is derived by weighting each Security's yield by the
market value of the Security and by the amount of time remaining to the
estimated average life. Once the average yield on the Securities in 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 composition 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 "Special Information" for each Trust. 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 a Trust will consist of a portion representing interest and a portion
representing principal. Although the aggregate monthly payment made by
the obligor on each mortgage remains constant (aside from optional
prepayments of principal), in the early years most of each such payment
will represent interest, while in later years, the proportion
representing interest will decline and the proportion representing
principal will increase. However, by reason of optional prepayments,
principal payments in the earlier years on the mortgages underlying the
Ginnie Maes may be substantially in excess of those required by the
amortization schedules of such mortgages. Therefore, in the absence of
reinvestment, principal payments in later years would be substantially
less since the aggregate unpaid principal balances of such underlying
mortgages would have been greatly reduced. To the extent that the
underlying mortgages bearing higher interest rates in a Trust are
Page 12
prepaid faster than the other underlying mortgages, the Net Annual
Interest Rate per Unit and the Estimated Returns on the Units with
respect to such Trust may decline whether or not the Trustee is able to
reinvest principal. Monthly payments to the Unit holders will reflect
all of the foregoing factors.
In order to acquire certain of the Securities contracted for by the
Sponsor for deposit in the Trusts, it may be necessary to pay on the
settlement dates for delivery of such Securities amounts covering
accrued interest on such Securities which exceed the amounts furnished
by the Sponsor. The Trustee has agreed to pay for any amounts necessary
to cover any such excess and will be reimbursed therefor, without
interest, when funds become available from interest payments on the
particular Securities with respect to which such payments have been made.
Record Dates for monthly distributions of interest are the first day of
each month and the Distribution Dates for distributions will be on the
last day of such month.
How is Accrued Interest Treated?
Accrued interest is the accumulation of unpaid interest on a security
from the last day on which interest thereon was paid. Interest on
Securities in a Trust is paid monthly to such Trust. However, interest
on the Securities in a Trust is accounted for daily on an accrual basis.
Because of this, a Trust always has an amount of interest earned but not
yet collected by the Trustee. For this reason, with respect to sales
settling subsequent to the First Settlement Date the Public Offering
Price of Units will have added to it the proportionate share of accrued
and undistributed interest to the date of settlement. Unit holders will
receive on the next distribution date of a Trust the amount, if any, of
accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest which would
otherwise have to be paid in addition to the Public Offering Price in
the sale of Units to the public, the Trustee will advance the amount of
accrued interest as of the First Settlement Date and the same will be
distributed to the Sponsor as the Unit holder of record as of the First
Settlement Date. Consequently, the amount of accrued interest to be
added to the Public Offering Price of Units will include only accrued
interest from the First Settlement Date to the date of settlement of
Units purchased, less any distributions from the Interest Account
subsequent to the First Settlement Date. See "Rights of Unit Holders-How
are Interest and Principal Distributed?"
Except through an advancement of its own funds, the Trustee has no cash
for distribution to Unit holders until it receives interest payments on
the Securities in a Trust. The Trustee will recover its advancements
without interest or other costs to a Trust from interest received on the
Securities in such Trust. When these advancements have been recovered,
regular distributions of interest to Unit holders will commence (see
"Rights of Unit Holders-How are Interest and Principal Distributed?").
Because of the varying interest payment dates of the Securities, accrued
interest at any point in time will be greater than the amount of
interest actually received by 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 the brokerage fees described above and bookkeeping
and other administrative services provided to the Trusts, for which the
Sponsor will be reimbursed in amounts as set forth under "Summary of
Essential Information," the Sponsor will not receive any fees in
connection with its activities relating to the Trusts.
First Trust Advisors L.P., an affiliate of the Sponsor, will receive an
annual supervisory fee, which is not to exceed the amount set forth
under "Summary of Essential Information," for providing portfolio
supervisory services for each Trust. 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."
The Trustee pays certain expenses of the Trusts for which it is
reimbursed by such Trusts. The Trustee will receive for its ordinary
recurring services to a Trust an annual fee as indicated in "Special
Information" for each Trust. For a discussion of the services performed
Page 13
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
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 and
supervisory 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.
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
Trust. The above expenses and the Trustee's annual fee, when paid or
owing to the Trustee, are secured by a lien on the Trust. In addition,
the Trustee is empowered to sell Securities in order to make funds
available to pay all these amounts if funds are not otherwise available
in the Interest and Principal Accounts. Due to the minimum principal
amount in which Securities may be required to be sold, the proceeds of
such sales may exceed the amount necessary for the payment of such fees
and expenses.
Unless the Sponsor determines that such an audit is not required, the
Indenture requires the accounts of the Trusts shall be audited on an
annual basis at the expense of the respective Trust by independent
auditors selected by the Sponsor. So long as the Sponsor is making a
secondary market for Units, the Sponsor shall bear the cost of such
annual audits to the extent such cost exceeds $0.005 per Unit. Unit
holders of the Trusts 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
each 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 such
Trust's income, other than distributions which are designated as capital
gain dividends, will, to the extent of the earnings and profits of such
Trust, 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.
Page 14
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 such 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 may be realized by the
individual Unit holders in excess of the distributions received from
such Trust.
Distributions of a Trust's net capital gain which such 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 a Trust's undistributed long-
term capital gain) and sells his Units at a loss prior to holding them
for 6 months, such loss will be recharacterized as long-term capital
loss to the extent of such long-term capital gain received as a dividend
or allocated to a Unit holder. Distributions in partial liquidation
reflecting the proceeds of prepayments, redemptions, maturities
(including monthly mortgage payments of principal) or sales of
Securities (exclusive of net capital gain) will not be taxable to Unit
holders of such Trust to the extent that they represent a return of
capital for tax purposes. The portion of distributions which represents
a return of capital will, however, reduce a Unit holder's basis in his
Units, and to the extent they exceed the basis of his Units will be
taxable as a capital gain. A Unit holder may recognize a taxable gain or
loss when his Units are sold or redeemed. Such gain or loss will
generally constitute either a long-term or short-term capital gain or
loss depending upon the length of time the Unit holder has held his
Units. Any loss of Units held six months or less will be treated as long-
term capital loss to the extent of any long-term capital gains dividends
received (or deemed to have been received) by the Unit holder with
respect to the Units. The Internal Revenue Service Restructuring and
Reform Act of 1998 (the "1998 Tax Act") provides that for taxpayers
other than corporations, net capital gain (which is defined as net long-
term capital gain over net short-term 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 1997 Act 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.
Generally, the tax basis of a Unit holder includes sales charges, and
such charges are not deductible. A portion of the sales charge of each
Trust is deferred. It is possible that for federal income tax purposes a
portion of the deferred sales charge may be treated as interest which
would be deductible by a Unit holder subject to limitations on the
deduction of investment interest. In such case, the non-interest portion
of the deferred sales charge would be added to the Unit holder's tax
basis in his Units. In any case, the income (or proceeds from
redemption) a Unit holder must take into account for federal income tax
purposes is not reduced by amounts deducted to pay the deferred sales
charge.
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 such Trust to the extent of any
Page 15
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 a Trust shall receive an annual statement describing
the tax status of the distributions paid by such Trust.
Investment in a Trust may be eligible 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 "The First Trust GNMA Reinvestment
Income Trust-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 a Trust which constitute
dividends for Federal income tax purposes (other than dividends which a
Trust designates as capital gain dividends) will be subject to United
States income taxes, including withholding taxes. However, distributions
received by a foreign investor from a Trust that are designated by such
Trust as capital gain dividends should not be subject to United States
Federal income taxes, including withholding taxes, if all of the
following conditions are met: (i) the capital gain dividend is not
effectively connected with the conduct by the foreign investor of a
trade or business within the United States, (ii) the foreign investor
(if an individual) is not present in the United States for 183 days or
more during his or her taxable year, and (iii) the foreign investor
provides all certification which may be required of his status (foreign
investors may contact the Sponsor to obtain a Form W-8 which must be
filed with the Trustee and refiled every three calendar years
thereafter). Foreign investors should consult their tax advisers with
respect to United States tax consequences of ownership of Units. Units
in the Trusts and Trust distributions may also be subject to state and
local taxation and Unit holders should consult their tax advisers in
this regard.
Distributions reinvested into additional Units of the 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?
Each Trust is 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, 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
Page 16
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 the Trusts 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 their respective
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 participating in IRAs, Keogh Plans, pension funds and other
tax-deferred retirement plans may find it highly advantageous to
participate in the Reinvestment Option in order to keep the monies in
the account fully invested at all times. Should such option be selected,
an account with an identical registration to that established at the
time the Units of the Trusts 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 "The First
Trust GNMA Reinvestment Income Trust-Are Investments in the Trusts
Eligible for Retirement Plans?"
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. During the initial
offering period, the Public Offering Price is determined by adding to
the Evaluator's determination of the aggregate offering price of the
Securities in a Trust, including any money in the Principal Account
other than money required to redeem tendered Units, an initial sales
charge equal to the difference between the maximum sales charge of 4.25%
of the Public Offering Price and the maximum remaining deferred sales
charge, initially $.325 per Unit. Commencing on March 20, 2000, and on
the twentieth business day of each month thereafter (or if such date is
not a business day, on the preceding business day) through July 20,
2000, a deferred sales charge of $.065 will be assessed per Unit per
month. Units purchased subsequent to the initial deferred sales charge
payment but still during the initial offering period will be subject to
the initial sales charge and the remaining deferred sales charge
payments not yet collected. The deferred sales charge will be paid from
proceeds received on principal distributions, if sufficient, or from the
periodic sale of Securities. The total maximum sales charge assessed to
Unit holders on a per Unit basis will be 4.25% of the Public Offering
Price (equivalent to 4.301% and 4.305% of the net amount invested,
exclusive of the deferred sales charge for Series 74 and Series 75,
respectively). Upon completion of the deferred sales charge period, the
secondary market Public Offering Price per Unit for the Trust will not
include deferred payments, but will instead include only a one-time
initial sales charge of 4.25% of the Public Offering Price (equivalent
to 4.439% of the net amount invested). Also added to the Public Offering
Price is a proportionate share of interest accrued but unpaid on the
Securities after the First Settlement Date to the date of settlement of
Units (see "The First Trust GNMA Reinvestment Income Trust-How is
Accrued Interest Treated?").
The Securities purchased with the portion of the Public Offering Price
intended to be used to reimburse the Sponsor for a Trust's organization
costs (including costs of preparing the registration statement, the
Indenture and other closing documents, registering Units with the
Securities and Exchange Commission and states, the initial audit of each
Page 17
Trust portfolio, legal fees and the initial fees and expenses of the
Trustee) will be purchased in the same proportionate relationship as all
the Securities contained in a Trust. Securities will be sold to reimburse
the Sponsor for a Trust's organization costs as of the earlier of six
months after the Initial Date of Deposit or the end of the initial
offering period (a significantly shorter time period than the life of the
Trusts). During the period ending with the earlier of six months after the
Initial Date of Deposit or the end of the initial offering period, there may
be a decrease in the value of the Securities. To the extent the proceeds from
the sale of these Securities are insufficient to repay the Sponsor for
Trust organization costs, the Trustee will sell additional Securities to
allow a trust to fully reimburse the Sponsor. In that event, the net
asset value per Unit of a Trust will be reduced by the amount of
additional Securities sold. Although the dollar amount of the
reimbursement due to the Sponsor will remain fixed and will never exceed
the per Unit amount set forth for a trust in "Statement of Net Assets,"
this will result in a greater effective cost per Unit to Unit holders
for the reimbursement to the Sponsor. To the extent actual organization
costs are less than the estimated amount, only the actual organization
costs will be deducted from the assets of a Trust. When Securities are
sold to reimburse the Sponsor for organization costs, the Trustee will
sell Securities, to the extent practicable, to an extent which will
maintain the same proportionate relationship among the Securities
contained in a Trust as existed prior to such sale.
During the initial offering period, the Sponsor's Repurchase Price is
based on the aggregate offering price of the Securities in a Trust, plus
or minus cash, if any, in the Interest and Principal Accounts of such
Trust, plus, until the earlier of six months after the Initial Date of
Deposit or the end of the initial offering period, estimated
organization costs, divided by the number of Units of such Trust
outstanding and reduced by the deferred sales charge not yet paid. For
secondary market sales after the completion of the initial offering
period, the Sponsor's Repurchase Price is based on the aggregate bid
price of the Securities in the Trust, plus or minus cash, if any, in the
Interest and Principal Accounts of a Trust divided by the number of
Units of such Trust outstanding.
The minimum amount which an investor may purchase of a Trust is $1,000.
The sales charge during the initial offering period is reduced by a
discount as indicated below for volume purchases (except for sales made
pursuant to a "wrap fee account" or similar arrangements as set forth
below):
Discount Dollar Amount of Expressed as a
Transaction at Public Percentage of Public
Offering Price* Offering Price
____________________ ____________________
$ 100,000 - $249,999 0.25%
$ 250,000 - $499,999 0.50%
$ 500,000 - $999,999 0.75%
$1,000,000 or more 1.50%
* The breakpoint sales charges are also applied on a Unit basis
utilizing a breakpoint equivalent in the above table of $10 per Unit and
will be applied on whichever basis is more favorable to the investor.
The breakpoints will be adjusted to take into consideration purchase
orders stated in dollars which cannot be completely fulfilled due to the
requirement that only whole Units be issued.
An investor may aggregate purchases of Units of the Trusts for purposes
of calculating the discount for volume purchases listed above.
Additionally, 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, and vendors 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 in the primary or secondary market at the Public
Offering Price less the concession the Sponsor typically allows to
dealers and other selling agents for purchases (see "Public Offering-How
are Units Distributed?") by investors who purchase Units through
registered investment advisers, certified financial planners or
registered broker-dealers who in each case either charge periodic fees
for financial planning, investment advisory or asset management
services, or provide such services in connection with the establishment
of an investment account for which a comprehensive "wrap fee" charge is
imposed.
Any such reduced sales charge shall be the responsibility of the selling
broker/dealers, banks or others. This reduced sales charge structure
will apply on all purchases of Units in the Trusts by the same person on
any one day from any one broker/dealer, bank or other. For purposes of
calculating the applicable sales charge, except as noted in this
section, purchases of Units of the Trusts will not be aggregated with
any other purchases by the same person of units in any series of tax-
Page 18
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.
On the Initial Date of Deposit, the Public Offering Price per Unit with
respect to each Trust is as indicated in the "Summary of Essential
Information." In addition to fluctuations in the amount of interest
accrued but unpaid on Securities in the Trusts, the Public Offering
Price at any time during the initial offering period will vary from the
Public Offering Price stated herein in accordance with fluctuations in
the prices of the underlying Securities.
The aggregate price of the Securities in the Trusts is determined by
Securities Evaluation Service, Inc. acting as evaluator (the
"Evaluator") on the basis of bid prices or offering prices as is
appropriate, (1) on the basis of current market prices for the
Securities obtained from dealers or brokers who customarily deal in
Securities comparable to those held by the Trusts; (2) if such prices
are not available for any of the Securities, on the basis of current
market prices for comparable securities; (3) by determining the value of
the Securities by appraisal; or (4) by any combination of the above.
There is a period of a few days (usually about five business days),
beginning on the first day of each month, during which the total amount
of payments (including prepayments, if any) of principal for the
preceding month of the various mortgages underlying each of the Ginnie
Maes in the Trusts will not yet have been reported by the issuer to GNMA
and made generally available to the public. During this period, the
precise principal amount of the underlying mortgages remaining
outstanding for each Ginnie Mae in the Trusts, 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 offering prices and 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 in the secondary market and the Redemption
Price per Unit, upon the average monthly principal distribution for the
preceding twelve month period. The Sponsor expects that the differences
in such principal amounts from month to month will not be material to
the Trusts. Nevertheless, the Sponsor will adopt procedures as to
pricing and evaluation for the Units of the Trusts, with such
modifications, if any, deemed necessary by the Sponsor for the
protection of Unit holders, designed to minimize the impact of such
differences upon the calculation of the accrued interest on the Units,
the Public Offering Price per Unit, the Sponsor's Repurchase Price per
Unit in the secondary market and the Redemption Price per Unit.
During the initial offering period, a determination of the aggregate
price of the Securities in the Trusts is made by the Evaluator on an
offering price basis, as of the close of trading on the New York Stock
Exchange on each day on which it is open, effective for all sales made
subsequent to the last preceding determination. For secondary market
purposes, the Evaluator will be requested to make such a determination,
on a bid price basis, as of the close of trading on the New York Stock
Exchange (generally 4:00 p.m. Eastern time) on each day on which it is
open, effective for all sales, purchases or redemptions made subsequent
to the last preceding determination. No evaluation will be made,
however, on any day on which the Ginnie Mae securities markets are not
generally open for business.
The Public Offering Price of the Units during the initial offering
period is equal to the offering price per Unit of the Securities in a
Trust plus the applicable sales charge. After the completion of the
initial offering period, the secondary market Public Offering Price will
be equal to the bid price per Unit of the Securities in a Trust plus the
applicable sales charge. The offering price of Securities in a Trust was
greater than the bid price of such Securities on the Initial Date of
Deposit by the aggregate amount and the amount per Unit indicated in
"Portfolio" for each Trust.
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.
Page 19
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?
During the initial offering period, Units issued on the Initial Date of
Deposit and additional Units issued after such date in respect of
additional Ginnie Maes deposited by the Sponsor, will be distributed to
the public at the Public Offering Price. Units reacquired by the Sponsor
during the initial offering period may be resold at the then current
Public Offering Price. Upon completion of the initial offering period,
Units repurchased in the secondary market (see "Public Offering-Will
There be a Secondary Market?") may be offered by this Prospectus at the
secondary market public offering price determined in the manner
described above.
It is the intention of the Sponsor to qualify Units for sale in a number
of states. Sales initially will be made to broker/dealers, banks or
others at prices which represent a concession or agency commission of
3.0% per Unit. For secondary market sales, broker/dealers, banks or
others will receive a concession of 3.0% of the Public Offering Price.
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. Under the Glass-Steagall Act, banks are
prohibited from underwriting Trust Units; however, the Glass-Steagall
Act does permit certain agency transactions and the banking regulators
have not indicated that these particular agency transactions are not
permitted under such Act.
From time to time the Sponsor may implement programs under which
broker/dealers, banks or others of the Trusts 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
investment characteristics that may differ from those of the Trusts.
U.S. Government bonds, for example, are backed by the full faith and
credit of the U.S. Government and bank CDs and money market accounts are
insured by an agency of the federal government. Money market accounts
and money market funds provide stability of principal, but pay interest
at rates that vary with the condition of the short-term debt market. The
investment characteristics of the Trusts are described more fully
elsewhere in this Prospectus.
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 Sponsor's Profits?
The Sponsor will receive a gross sales commission during the initial
offering period equal to 4.25% of the Public Offering Price per Unit
(equivalent to 4.301% and 4.305% of the net amount invested, exclusive
of the deferred sales charge for Series 74 and Series 75, respectively)
Page 20
of the Trusts. Any reduced sales charge shall be the responsibility of
the selling broker/dealers, banks or others, for discounts made
available to purchasers as described in "Public Offering-How is the
Public Offering Price Determined?" See "Public Offering-How are Units
Distributed?" for information regarding additional concessions available
to broker/dealers, banks or others. In addition, the Sponsor may be
considered to have realized a profit or the Sponsor may be considered to
have sustained a loss, as the case may be for a Trust, in the amount of
any difference between the cost of the Securities to such Trust and the
cost of such Securities to the Sponsor. See "Portfolio." During the
initial offering period, broker/dealers, banks or others also may
realize profits or sustain losses from the sale of Units or as a result
of fluctuations after the Initial Date of Deposit in the offering prices
of the Securities and hence in the Public Offering Price received by the
broker/dealers, banks or others.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between the
price at which Units are purchased (based on the bid prices of the
Securities in a Trust) and the price at which Units are resold (which
price is also based on the bid prices of the Securities in such Trust
and includes a sales charge of 4.25%) or redeemed. The secondary market
public offering price of Units may be greater or less than the cost of
such Units to the Sponsor.
Will There be a Secondary Market?
After the initial offering period, although 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 a
Trust plus interest accrued to the date of settlement. To the extent
that a secondary market is maintained during the initial offering
period, the prices at which Units of the Trusts will be repurchased will
be based upon the aggregate offering side evaluation of the Securities
in the portfolio of a Trust. The aggregate bid prices of the underlying
Securities in the Trusts, upon which the Sponsor's Repurchase Price and
the Redemption Price are based, are expected to be less than the related
aggregate offering prices (which is the evaluation method used during
the initial public offering period). All expenses incurred in
maintaining a secondary market, other than the fees of the Evaluator and
the costs of the Trustee in transferring and recording the ownership of
Units, will be borne by the Sponsor. If the supply of Units exceeds
demand, or for some other business reason, the Sponsor may discontinue
purchases of Units at such prices. Units subject to a deferred sales
charge which are sold or tendered for redemption prior to such time as
the entire deferred sales charge on such Units has been collected will
be assessed the amount of the remaining deferred sales charge at the
time of sale or redemption. 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. UNITS SUBJECT TO
A DEFERRED SALES CHARGE WHICH ARE SOLD OR TENDERED FOR REDEMPTION PRIOR
TO SUCH TIME AS THE ENTIRE DEFERRED SALES CHARGE ON SUCH UNITS HAS BEEN
COLLECTED WILL BE ASSESSED THE AMOUNT OF THE REMAINING DEFERRED SALES
CHARGE AT THE TIME OF SALE OR REDEMPTION.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee.
Ownership of Units may be evidenced by registered certificates executed
by the Trustee and the Sponsor. Delivery of certificates representing
Units ordered for purchase is normally made three business days
following such order or shortly thereafter. Certificates are
transferable by presentation and surrender to the Trustee properly
endorsed or accompanied by a written instrument or instruments of
transfer. Certificates to be redeemed must be properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unit
holder must sign exactly as his 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 the Trust; the number of Units issued or transferred; the
Page 21
name, address and taxpayer identification number, if any, of the new
registered owner; a notation of any liens and restrictions of the issues
and any adverse claims to which such Units are or may be subject or a
statement that there are no such liens, restrictions or adverse claims;
and the date the transfer was registered. Uncertificated Units are
transferable through the same procedures applicable to Units evidenced
by certificates (described above), except that no certificate need be
presented to the Trustee and no certificate will be issued upon transfer
unless requested by the Unit holder. A Unit holder may at any time
request the Trustee to issue certificates for Units.
Although no such charge is now made or contemplated, a Unit holder may
be required to pay $2.00 to the Trustee per certificate reissued or
transferred, and to pay any governmental charge that may be imposed in
connection with each such transfer or exchange. For new certificates
issued to replace destroyed, stolen or lost certificates, the Unit
holder may be required to furnish indemnity satisfactory to the Trustee
and pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
How are Interest and Principal Distributed?
The terms of the Ginnie Maes provide for payment to the holders thereof
(including the 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.
It is anticipated that the deferred sales charge will be collected from
the proceeds received on principal distributions. However, to the extent
that such amounts are insufficient to satisfy the then current deferred
sales charge obligation, Securities may be sold to meet such shortfall.
Distributions of amounts necessary to pay the deferred portion of the
sales charge will be made to an account designated by the Sponsor for
purposes of satisfying Unit holders' deferred sales charge obligations.
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 the
Trusts. 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 the Trusts. 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.
Page 22
What Reports Will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of interest, if any, and the
amount of other receipts, if any, which are being distributed, expressed
in each case as a dollar amount per Unit. Within a reasonable time after
the end of each calendar year, the Trustee will furnish to each person
who at any time during the calendar year was a Unit holder of record, a
statement for their respective Trust 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. Units subject to a
deferred sales charge which are sold or tendered for redemption prior to
such time as the entire deferred sales charge on such Units has been
collected will be assessed the amount of the remaining deferred sales
charge at the time of sale or redemption.
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 secondary market Public
Offering Price) will be determined on the basis of the bid price of the
Securities in a Trust, while the Public Offering Price of Units during
the initial offering period will be determined on the basis of the
offering price of the Securities, as of the close of trading on the New
York Stock Exchange (generally 4:00 p.m. Eastern time) on the date any
such determination is made. At the opening of business on the Initial
Date of Deposit the Public Offering Price per Unit (which is based on
the offering prices of the Securities in the Trust and includes the
sales charge) exceeded the Unit value at which Units could have been
redeemed (based upon the current bid prices of the Securities in each
Trust) by the amount per Unit set forth in the "Summary of Essential
Information." The Redemption Price per Unit is the pro rata share of
each Unit determined by the Trustee on the basis of (1) the cash on hand
in a Trust or moneys in the process of being collected, (2) the value of
the Securities in a Trust based on the prices of the Securities and (3)
Page 23
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 a Trust, (2) on the basis of bid prices for securities
comparable to any securities for which bid prices are not available, (3)
by determining the value of the Securities by appraisal, or (4) by any
combination of the above. See "Public Offering-How is the Public
Offering Price Determined?" for information with respect to the
uncertainty during certain periods of each month of the precise amount
of principal and accrued interest of the Ginnie Maes. The Redemption
Price per Unit will be assessed the amount, if any, of the remaining
deferred sales charge at the time of redemption. Until the earlier of
six months after the Initial Date of Deposit or the end of the initial
offering period, the Redemption Price per Unit will included estimated
organization costs as set forth under "Summary of Essential Information"
for each Trust.
The difference between the bid and offering prices of such Securities
may be expected to average 1/4 to 1/2 of 1% of the principal amount of
such Securities. Therefore, the price at which Units may be redeemed could
be less than the price paid by the Unit holder. At the opening of business
on the Initial Date of Deposit the aggregate current offering price of such
Securities exceeded the Redemption Price (based upon current bid prices of
such Securities) by the aggregate amount and the amount per Unit indicated in
the Portfolio for each Trust.
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. The Trustee may from time to time regain and pay compensation
Page 24
to the Sponsor (or an affiliate of the Sponsor) to act as agent for the
Trusts with respect to selling Securities from the Trusts. In acting in
such capacity the Sponsor or its affiliate will be held subject to the
restrictions under the Investment Company Act of 1940, as amended.
Except as stated under "The First Trust GNMA Reinvestment Income Trust-
What is the First Trust GNMA Reinvestment Income Trust?", the
acquisition by the Trusts 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
Treasury Securities Trust. First Trust introduced the first insured unit
investment trust in 1974 and to date more than $25 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, 1998, the total partners' capital of Nike Securities L.P.
was $18,506,548 (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.)
Who is the Trustee?
The Trustee is The Chase Manhattan Bank, with its principal executive
office located at 270 Park Avenue, New York, New York 10017 and its unit
investment trust office at 4 New York Plaza, 6th floor, New York, New
York 10004-2413. Unit holders who have questions regarding the Trusts
may call the Customer Service Help Line at 1-800-682-7520. The Trustee
is subject to supervision by the Superintendent of Banks of the State of
New York, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not
participated in the selection of the 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
Page 25
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 Trust which the Trustee may be required to pay under any
present or future law of the United States of America or of any other
taxing authority having jurisdiction. In addition, the Indenture
contains other customary provisions limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or become incapable of acting or become bankrupt or its
affairs are taken over by public authorities, then the Trustee may (a)
appoint a successor Sponsor at rates of compensation deemed by the
Trustee to be reasonable and not exceeding amounts prescribed by the
Securities and Exchange Commission, or (b) terminate the Indenture and
liquidate a 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.
The Trusts 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 a 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
December 31, 2048. 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.
Page 26
Legal Opinions
The legality of the Units offered hereby will be passed upon by Chapman
and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as counsel
for the Sponsor. Carter, Ledyard & Milburn, 2 Wall Street, New York, New
York 10005, will act as counsel for the Trustee.
Experts
The statements of net assets, including the portfolios, of the Trusts at
the opening of business on the Initial Date of Deposit, appearing in
this Prospectus and Registration Statement have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein and in the Registration Statement, and are
included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
Page 27
The First Trust GNMA Reinvestment Income Trust,
Series 74
<TABLE>
<CAPTION>
<S> <C>
Special Information
Calculation of Estimated Net Annual Interest Income per Unit (1)
Estimated Annual Interest (excluding the effect of premiums) $ .8000
Less: Estimated Annual Expense $ .0239
Estimated Net Annual Interest Income per Unit $ .7761
Estimated Daily Rate of Net Interest Accrual per Unit $ .0022
Estimated Current Return Based on Public Offering Price (2) 7.31%
Estimated Long-Term Return Based on Public Offering Price (2) 5.66%
Estimated Average Life (3) 4.93 yrs.
CUSIP 30264V 547
Security Code 56635
</TABLE>
Trustee's Annual Fee $.0092 per annum per Unit outstanding annually,
exclusive of expenses of the Trust, commencing
March 16, 1999.
Income Distributions
Estimated first distribution of $.0259 per Unit will be paid on April
30, 1999 to Unit holders of record on April 1, 1999 (The First General
Record Date). The estimated first distribution will consist entirely of
interest.
Subsequent distributions will be paid on or shortly after the last day
of each month to holders of record of Units on the first day of such
month.
Principal Distributions
During the Reinvestment Period principal will be reinvested subject to
certain exceptions. Principal not reinvested will be distributed on June
30 and December 31 of each year to all Unit holders of record on June 1
and December 1, respectively. After the Reinvestment Period, principal
will be distributed with the income distributions described above.
No distributions need be made from the Principal Account if the balance
therein is less than $1.00 per 100 Units.
____________________
(1) Assumes delivery of all Securities; in the event that any contract
for the purchase of Securities shall be delayed or not be completed, the
Estimated Returns may be reduced.
(2) The Estimated Current Return is computed by dividing the Estimated
Net Annual Interest Income per Unit by the Public Offering Price per
Unit. The Estimated Net Annual Interest Income per Unit will vary with
changes in fees and expenses of the Trustee, Sponsor and Evaluator and
with the principal prepayment, redemption, maturity, exchange or sale of
Securities while the Public Offering Price will vary with changes in the
offering price of the underlying Securities; therefore, there is no
assurance that the present Estimated Current Return indicated above will
be realized in the future. The Estimated Long-Term Return is calculated
using a formula which (1) takes into consideration, and determines and
factors in the relative weightings of, the market values, yields (which
takes into account the amortization of premiums and the accretion of
discounts) and estimated average life of all of the Securities in the
Trust and (2) takes into account the expenses and sales charge
associated with each Unit of the Trust. Since the market values and
estimated average lives of the Securities and the expenses of the Trust
will change, there is no assurance that the present Estimated Long-Term
Return as indicated above will be realized in the future. The Estimated
Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the
date and estimated amount of principal returned while the Estimated
Current Return calculation includes only the Net Annual Interest Income
and Public Offering Price. Neither rate reflects the true return to Unit
holders which is lower because neither includes the effect of certain
delays in distributions to Unit holders and includes an internal
compounding rate that takes into account the premium coupon rate of the
Securities. These figures are based on per Unit cash flows. Cash flows
will vary with changes in fees and expenses, with the principal
prepayment, principal reinvestment, redemption, maturity, exchange or
sale of the underlying Securities and with changes in the average life
assumptions of the GNMA pools. Estimated Cash Flows for this Trust are
available upon request at no charge from the Sponsor.
(3) Estimated Average Life is calculated as described in "The First
Trust GNMA Reinvestment Income Trust-What are Estimated Current Return
and Estimated Long-Term Return?" and takes into consideration the
reinvestment of principal during the life of the Reinvestment Period.
Page 28
Portfolio
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 74
At the Opening of Business on the Initial Date of Deposit-March 16, 1999
Government National Mortgage Association,
Modified Pass-Through Mortgage-Backed Securities
<TABLE>
<CAPTION>
Cost of Cost of Profit
Principal Years of Stated Securities to Securities to or (Loss)
Amount Coupon Rate Maturity Sponsor (1) Trust (2) to Sponsor
_________ ___________ _______________ ____________ ____________ __________
<S> <C> <C> <C> <C> <C>
$224,801 8.0% 2020 - 2022 $235,058 $235,760 $702
========== ======== ======== ======
_______________
<FN>
(1) All Securities on the Initial Date of Deposit are represented by the
Sponsor's contracts to purchase such Securities. Such contracts were
acquired by the Sponsor on March 15, 1999. Interest will begin accruing
to the benefit of Unit holders from March 19, 1999, the First Settlement
Date of the Trust.
(2) The cost of the Securities to the Trust represents the offering side
evaluation of the Securities as determined by Securities Evaluation
Service, Inc. The offering side evaluation is greater than the current
bid side evaluation of the Securities which is the basis on which the
Redemption Price per Unit is determined, less the deferred sales charge.
The aggregate value based on the bid side evaluation at the opening of
business on the Initial Date of Deposit was $235,339, which is $421
($.01873 per Unit; .1873% of the aggregate principal amount) lower than
the aggregate cost of the Securities to the Trust based on the offering
side evaluation.
</FN>
</TABLE>
In addition to the information as to the GNMA fully modified pass-
through mortgage-backed Securities set forth under "Portfolio" for
Series 74, the Trustee will furnish Unit holders a statement listing the
name of issuer, pool number, interest rate, maturity date and principal
amount for each such Security in Series 74 upon written request.
Page 29
The First Trust GNMA Reinvestment Income Trust,
Series 75
<TABLE>
<CAPTION>
<S> <C>
Special Information
Calculation of Estimated Net Annual Interest Income per Unit (1)
Estimated Annual Interest (excluding the effect of premiums) $ .9000
Less: Estimated Annual Expense $ .0239
Estimated Net Annual Interest Income per Unit $ .8761
Estimated Daily Rate of Net Interest Accrual per Unit $ .0024
Estimated Current Return Based on Public Offering Price (2) 8.03%
Estimated Long-Term Return Based on Public Offering Price (2) 5.38%
Estimated Average Life (3) 4.01 yrs.
CUSIP 30264V 554
Security Code 56634
</TABLE>
Trustee's Annual Fee $.0092 per annum per Unit outstanding annually,
exclusive of expenses of the Trust, commencing
March 16, 1999.
Income Distributions
Estimated first distribution of $.0292 per Unit will be paid on April
30, 1999 to Unit holders of record on April 1, 1999 (The First General
Record Date). The estimated first distribution will consist entirely of
interest.
Subsequent distributions will be paid on or shortly after the last day
of each month to holders of record of Units on the first day of such
month.
Principal Distributions
During the Reinvestment Period principal will be reinvested subject to
certain exceptions. Principal not reinvested will be distributed on June
30 and December 31 of each year to all Unit holders of record on June 1
and December 1, respectively. After the Reinvestment Period, principal
will be distributed with the income distributions described above.
No distributions need be made from the Principal Account if the balance
therein is less than $1.00 per 100 Units.
________________
(1) Assumes delivery of all Securities; in the event that any contract
for the purchase of Securities shall be delayed or not be completed, the
Estimated Returns may be reduced.
(2) The Estimated Current Return is computed by dividing the Estimated
Net Annual Interest Income per Unit by the Public Offering Price per
Unit. The Estimated Net Annual Interest Income per Unit will vary with
changes in fees and expenses of the Trustee, Sponsor and Evaluator and
with the principal prepayment, redemption, maturity, exchange or sale of
Securities while the Public Offering Price will vary with changes in the
offering price of the underlying Securities; therefore, there is no
assurance that the present Estimated Current Return indicated above will
be realized in the future. The Estimated Long-Term Return is calculated
using a formula which (1) takes into consideration, and determines and
factors in the relative weightings of, the market values, yields (which
takes into account the amortization of premiums and the accretion of
discounts) and estimated average life of all of the Securities in the
Trust and (2) takes into account the expenses and sales charge
associated with each Unit of the Trust. Since the market values and
estimated average lives of the Securities and the expenses of the Trust
will change, there is no assurance that the present Estimated Long-Term
Return as indicated above will be realized in the future. The Estimated
Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the
date and estimated amount of principal returned while the Estimated
Current Return calculation includes only the Net Annual Interest Income
and Public Offering Price. Neither rate reflects the true return to Unit
holders which is lower because neither includes the effect of certain
delays in distributions to Unit holders and includes an internal
compounding rate that takes into account the premium coupon rate of the
Securities. These figures are based on per Unit cash flows. Cash flows
will vary with changes in fees and expenses, with the principal
prepayment, principal reinvestment, redemption, maturity, exchange or
sale of the underlying Securities and with changes in the average life
assumptions of the GNMA pools. Estimated Cash Flows for this Trust are
available upon request at no charge from the Sponsor.
(3) Estimated Average Life is calculated as described in "The First
Trust GNMA Reinvestment Income Trust-What are Estimated Current Return
and Estimated Long-Term Return?" and takes into consideration the
reinvestment of principal during the life of the Reinvestment Period.
Page 30
Portfolio
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 75
At the Opening of Business on the Initial Date of Deposit-March 16, 1999
Government National Mortgage Association,
Modified Pass-Through Mortgage-Backed Securities
<TABLE>
<CAPTION>
Cost of Cost of Profit
Principal Years of Stated Securities to Securities to or (Loss)
Amount Coupon Rate Maturity Sponsor (1) Trust (2) to Sponsor
_________ ___________ _______________ ____________ _____________ __________
<S> <C> <C> <C> <C> <C>
$338,897 9.0% 2019 - 2021 $363,679 $365,267 $1,588
========== ======== ======== ======
___________________
<FN>
(1) All Securities on the Initial Date of Deposit are represented by the
Sponsor's contracts to purchase such Securities. Such contracts were
acquired by the Sponsor on March 15, 1999. Interest will begin accruing
to the benefit of Unit holders from March 19, 1999, the First Settlement
Date of the Trust.
(2) The cost of the Securities to the Trust represents the offering side
evaluation of the Securities as determined by Securities Evaluation
Service, Inc. The offering side evaluation is greater than the current
bid side evaluation of the Securities which is the basis on which the
Redemption Price per Unit is determined, less the deferred sales charge.
The aggregate value based on the bid side evaluation at the opening of
business on the Initial Date of Deposit was $364,632, which is $635
($.01874 per Unit; .1874% of the aggregate principal amount) lower than
the aggregate cost of the Securities to the Trust based on the offering
side evaluation.
</FN>
</TABLE>
In addition to the information as to the GNMA fully modified pass-
through mortgage-backed Securities set forth under "Portfolio" for
Series 75, the Trustee will furnish Unit holders a statement listing the
name of issuer, pool number, interest rate, maturity date and principal
amount for each such Security in Series 75 upon written request.
Page 31
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, Series 74 and Series 75
We have audited the accompanying statements of net assets, including the
portfolios, of The First Trust GNMA Reinvestment Income Trust, Series 74
and Series 75 (the "Trusts") as of the opening of business on March 16,
1999. These statements of net assets are the responsibility of the
Trusts' Sponsor. Our responsibility is to express an opinion on these
statements of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of net assets
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
statements of net assets. Our procedures included confirmation of the
letter of credit allocated among the Trusts at the opening of business
on March 16, 1999. An audit also includes assessing the accounting
principles used and significant estimates made by the Sponsor, as well
as evaluating the overall presentation of the statements of net assets.
We believe that our audit of the statements of net assets provides a
reasonable basis for our opinion.
In our opinion, the statements of net assets referred to above present
fairly, in all material respects, the financial position of The First
Trust GNMA Reinvestment Income Trust, Series 74 and Series 75 at the
opening of business on March 16, 1999 in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
March 16, 1999
Page 32
Statements of Net Assets
At the Opening of Business On the Initial Date of Deposit- March 16, 1999
<TABLE>
<CAPTION>
The First Trust The First Trust
GNMA GNMA
Reinvestment Reinvestment
Income Trust Income Trust
Series 74 Series 75
_____________ _____________
<S> <C> <C>
NET ASSETS
Delivery statements relating to Sponsor's contracts
to purchase Securities (1) (2) $235,760 $365,267
Accrued interest on underlying Securities (2) (3) 749 1,271
236,509 366,538
Less liability for reimbursement to Sponsor for organization costs (4) (281) (373)
________ ________
Less distributions payable (3) (749) (1,271)
Less liability for deferred sales charge (5) (7,306) (11,014)
________ ________
Net assets $228,173 $353,880
======== ========
Outstanding Units of fractional undivided interest 22,480 33,890
ANALYSIS OF NET ASSETS
Cost to investors (6) $238,594 $369,977
Less gross underwriting commissions (6) (10,140) (15,724)
Less estimated reimbursement to Sponsor organization costs (4) (281) (373)
________ ________
Net assets $228,173 $353,880
======== ========
</TABLE>
NOTES TO STATEMENTS OF NET ASSETS
(1) The aggregate offering price of the Securities listed under
"Portfolio" for each Trust on the Initial Date of Deposit herein and
their cost to such Trust are the same. The offering prices shown above
have been determined by Securities Evaluation Service, Inc., certain
shareholders of which are officers of the Sponsor.
(2) Pursuant to delivery statements relating to contracts to purchase
Securities, an irrevocable letter of credit issued by The Chase
Manhattan Bank, of which $800,000 is allocable to the Trusts, has been
deposited with the Trustee as collateral. The amount of available letter
of credit and the amount expected to be utilized for the Trusts is shown
below. The amount expected to be utilized is (a) the cost to the
applicable Trust of the principal amount of the Securities to be
purchased, (b) accrued interest on those Securities to the Initial Date
of Deposit and (c) accrued interest on those Securities from the Initial
Date of Deposit to the expected dates of delivery of the Securities.
<TABLE>
<CAPTION>
Accrued Accrued
Aggregate Interest to Interest to
Letter of Credit Offering Initial Expected
To be Price of Date of Date of
Allocated Utilized Securities Deposit Delivery
_________ _________ __________ ___________ ___________
<S> <C> <C> <C> <C> <C>
The First Trust GNMA Reinvestment
Income Trust, Series 74 $350,000 $236,859 $235,760 $ 749 $350
The First Trust GNMA Reinvestment
Income Trust, Series 75 $450,000 $367,131 $365,267 $1,271 $593
</TABLE>
Page 33
(3) The Trustee will advance to the Trusts the amount of accrued
interest to March 19, 1999, the First Settlement Date of the Trusts, for
distribution to the Sponsor as the Unit holder of record.
(4) A portion of the Public Offering Price consists of an amount
sufficient to reimburse the Sponsor for all or a portion of the costs of
establishing the Trusts. These costs have been estimated at $.0125 and
$.0110 per Unit for Series 74 and Series 75, respectively. A payment
will be made at the earlier of six months after the Initial Date of
Deposit or the end of the initial offering period to an account
maintained by the Trustee from which the obligation of the investors to
the Sponsor will be satisfied. To the extent that actual organization
costs of a Trust are greater than the estimated amount, only the
estimated organization costs added to the Public Offering Price will be
reimbursed to the Sponsor and deducted from the assets of such Trust.
(5) Represents the amount of mandatory distributions from the Trusts
($.325 per Unit), payable to the Sponsor in five equal monthly
installments beginning on March 20, 2000, and on the twentieth business
day of each month thereafter(or if such day is not a business day, on
the preceding business day) through July 20, 2000. If Units are redeemed
prior to July 20, 2000, the remaining amount of the deferred sales
charge applicable to such Units will be payable at the time of redemption.
(6) The aggregate cost to investors includes a sales charge computed at
the rate of 4.25% of the Public Offering Price (equivalent to 4.301% and
4.305% of the net amount invested, exclusive of the deferred sales
charge for Series 74 and Series 75, respectively), assuming no reduction
of sales charge as set forth under "Public Offering-How is the Public
Offering Price Determined?"
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 34
This page is intentionally left blank.
Page 35
CONTENTS:
Summary of Essential Information 3
The First Trust GNMA Reinvestment Income Trust:
What is the First Trust GNMA Reinvestment
Income Trust? 6
Risk Factors 7
What is the Rating of the Units? 11
What are Estimated Current Return and
Estimated Long-Term Return? 11
How is Accrued Interest Treated? 13
What are the Expenses and Charges? 13
What is the Tax Status of Unit Holders? 14
Are Investments in the Trusts
Eligible for Retirement Plans? 16
How Can Distributions to Unit Holders be
Reinvested? 16
Public Offering:
How is the Public Offering Price Determined? 17
How are Units Distributed? 20
What are the Sponsor's Profits? 20
Will There be a Secondary Market? 21
Rights of Unit Holders:
How is Evidence of Ownership Issued and
Transferred? 21
How are Interest and Principal Distributed? 22
What Reports Will Unit Holders Receive? 23
How May Units be Redeemed? 23
How May Units be Purchased by the Sponsor? 24
How May Securities be Removed from a Trust? 24
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 25
Who is the Trustee? 25
Limitations on Liabilities of Sponsor and Trustee 25
Who is the Evaluator? 26
Other Information:
How May the Indenture be Amended or
Terminated? 26
Legal Opinions 27
Experts 27
The First Trust GNMA Reinvestment Income Trust,
Series 74 28
Portfolio 29
The First Trust GNMA Reinvestment Income Trust,
Series 75 30
Portfolio 31
Report of Independent Auditors 32
Statements of Net Assets 33
Description of Standard & Poor's Rating 34
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO, WHICH THE FUND
HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940,
AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
GNMA
REINVESTMENT INCOME TRUST
SERIES 74 and SERIES 75
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
24-Hour Pricing Line:
1-800-446-0132
March 16, 1999
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 36
CONTENTS OF REGISTRATION STATEMENT
Item A.Bonding arrangements of Depositor:
Nike Securities L.P. is covered by a Brokers' Fidelity
Bond, in the total amount of $500,000, the insurer being
National Union Fire Insurance Company of Pittsburgh.
Item B.This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Prospectus
The signatures
Exhibits
S-1
SIGNATURES
The Registrant, The First Trust GNMA Reinvestment Income
Trust, Series 74 and Series 75 hereby identifies Series 8 of The
First Trust GNMA, The First Trust Combined Series 248, The First
Trust GNMA Reinvestment Income Trust, Series 68 and The First
Trust Special Situations Trust, Series 18 for purposes of the
representations required by Rule 487 and represents the
following:
(1) that the portfolio securities deposited in the series
as to the securities of which this Registration Statement is
being filed do not differ materially in type or quality from
those deposited in such previous series;
(2) that, except to the extent necessary to identify the
specific portfolio securities deposited in and to provide
essential financial information for, the series with respect to
the securities of which this Registration Statement is being
filed, this Registration Statement does not contain disclosures
that differ in any material respect from those contained in the
registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and
(3) that it has complied with Rule 460 under the Securities
Act of 1933.
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The First Trust GNMA Reinvestment Income Trust,
Series 74 and Series 75 has duly caused this Amendment of
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Village of Lisle
and State of Illinois on March 16, 1999.
THE FIRST TRUST GNMA REINVESTMENT
INCOME TRUST, SERIES 72 AND
SERIES 73
By: NIKE SECURITIES L.P.
(Depositor)
By: Robert M. Porcellino
Vice President
S-2
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE* DATE
Robert D. Van Kampen Director )
of Nike Securities )
Corporation, the ) March 16, 1999
General Partner of )
Nike Securities L.P.)
)
)
David J. Allen Director of Nike ) Robert M. Porcellino
Securities ) Attorney-in-Fact**
Corporation, the )
General Partner of )
Nike Securities L.P.
* The title of the person named herein represents his capacity
in and relationship to Nike Securities L.P., 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-3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated March 16, 1999 in
Amendment No. 1 to the Registration Statement (Form S-6) (File
No. 333-63947) and related Prospectus of The First Trust GNMA
Reinvestment Income Trust, Series 74 and Series 75.
ERNST & YOUNG LLP
Chicago, Illinois
March 16, 1999
CONSENT OF COUNSEL
The consent of counsel are contained in their respective
opinions filed by this amendment as Exhibits 3.1 and 3.4 to the
Registration Statement.
CONSENT OF SECURITIES EVALUATION SERVICE, INC.
The consent of Securities Evaluation Service, Inc. to the
use of its name in the Prospectus included in the Registration
Statement is filed as Exhibit 4.1 to the Registration Statement
CONSENT OF STANDARD & POOR'S RATINGS SERVICES, A DIVISION OF THE
McGRAW-HILL COMPANIES, INC.
The consent of Standard & Poor's Ratings Services, A Division of
the McGraw-Hill Companies, Inc. to the use of its name in the
Prospectus included in the Registration Statement is filed as
Exhibit 4.2 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust GNMA, Series 62 and subsequent Series,
effective December 19, 1991 among Nike Securities L.P.,
as Depositor, United States Trust Company of New York as
Trustee, Securities Evaluation Service, Inc., as
Evaluator, and Nike Financial Advisory Services L.P. as
Portfolio Supervisor (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-44532] filed on
behalf of The First Trust GNMA, Series 62).
1.1.1 Form of Trust Agreement for Series 74 and Series 75 among
Nike Securities L.P., as Depositor, The Chase Manhattan
Bank (National Association), as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and First Trust
Advisors L.P., as Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File
No. 33-42683] filed on behalf of The First Trust Special
Situations Trust, Series 18)
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities L.P.,
Depositor (incorporated by reference to Amendment No. 1
to Form S-6 [File No. 33-42683] filed on behalf of The
First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
1.6 Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-43289] filed on
behalf of The First Trust Combined Series 145).
S-5
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by
reference).
3.1 Opinion of counsel as to legality of securities being
registered.
3.4 Opinion of counsel as to advancement of funds by Trustee.
4.1 Consent of Securities Evaluation Service, Inc.
4.2 Consent of Standard & Poor's Ratings Services, A Division
of the McGraw-Hill Companies, Inc.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on
page S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File
No. 33-63483] filed on behalf of The First Trust Combined
Series 258).
S-6
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 74
AND SERIES 75
TRUST AGREEMENT
Dated: March 16, 1999
This Trust Agreement among Nike Securities L.P., as
Depositor, Chase Manhattan Bank, as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and First Trust Advisors
L.P., as Portfolio Supervisor sets forth certain provisions in
full and incorporates other provisions by reference to the
document entitled "Standard Terms and Conditions of Trust for The
First Trust GNMA, Series 62 and subsequent Series, effective
December 19, 1991" (herein called the "Standard Terms and
Conditions of Trust"), and such provisions as are set forth in
full and such provisions as are incorporated by reference
constitute a single instrument. All references herein to
Articles and Sections are to Articles and Sections of the
Standard Terms and Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the Provisions of Part II hereof, all the
provisions contained in the Standard Terms and Conditions of
Trust are herein incorporated by reference in their entirety and
shall be deemed to be a part of this instrument as fully and to
the same extent as though said provisions had been set forth in
full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST SERIES 74
("SERIES 74")
The following special terms and conditions are hereby agreed
to:
(A) The Securities defined in Section 1.01(5) listed in
Schedule A hereto have been deposited in trust under this Trust
Agreement and shall include any securities deposited in the Fund
pursuant to Section 2.01 hereof.
(B) The number of Units in the Trust referred to in
Section 2.03 is set forth under "Summary of Essential
Information - Number of Units" in the Prospectus.
(C) For the Trust the First General Record Date shall be
set forth under "Special Information - Distributions" of the
Prospectus.
(D) For the Trust the First Settlement Date shall be set
forth under "Summary of Essential Information - First Settlement
Date" in the Prospectus.
(E) For the Trust the Record Dates and the Distribution
Dates shall be set forth under "Special Information -
Distributions" in the Prospectus.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST SERIES 75
("SERIES 75")
The following special terms and conditions are hereby agreed
to:
(A) The Securities defined in Section 1.01(5) listed in
Schedule A hereto have been deposited in trust under this Trust
Agreement and shall include any securities deposited in the Fund
pursuant to Section 2.01 hereof.
(B) The number of Units in the Trust referred to in
Section 2.03 is set forth under "Summary of Essential
Information - Number of Units" in the Prospectus.
(C) For the Trust the First General Record Date shall be
set forth under "Special Information - Distributions" of the
Prospectus.
(D) For the Trust the First Settlement Date shall be set
forth under "Summary of Essential Information - First Settlement
Date" in the Prospectus.
(E) For the Trust the Record Dates and the Distribution
Dates shall be set forth under "Special Information -
Distributions" in the Prospectus.
PART III
(A) Any reference in the Standard Terms and Conditions of
Trust to "per 1,000 Units" shall be amended to read "per 100
Units," and any reference to "$1 per Unit" shall be amended to
read "$10 per Unit."
(B) Section 1.01(2) of the Standard Terms and Conditions of
Trust shall be amended to read as follows:
"(2) "Trustee" shall mean the Chase Manhattan Bank, or
any successor trustee as hereinafter provided."
All references to United States Trust Company of New York in
the Standard Terms and Conditions of Trust shall be amended to
refer to The Chase Manhattan Bank.
(C) Section 1.01(4) of the Standard Terms and Conditions of
Trust shall be amended to read as follows:
"(4) "Portfolio Supervisor" shall mean First
Trust Advisors L.P. and its successors in interest, or
any successor portfolio supervisor appointed as
hereinafter provided."
(D) The first and second paragraphs of Section 2.01 are
hereby restated in their entirety as follows:
Section 2.01. Deposit of Securities. (a) The Depositor, on
the date of the Trust Agreement, has deposited with the Trustee
in trust the Securities listed in Schedule A to the Trust
Agreement in bearer form or duly endorsed in blank or accompanied
by all necessary instruments of assignment and transfer in proper
form or Contract Obligations relating to such Securities to be
held, managed and applied by the Trustee as herein provided. The
Depositor shall deliver the Securities listed on said Schedule A
which were not actually delivered concurrently with the execution
and delivery to the Trust Agreement and which were represented by
Contract Obligations to the Trustee within 10 calendar days after
said execution and delivery (the "Delivery Period"). If a
contract to buy such Securities between the Depositor and seller
is terminated by the seller thereof for any reason beyond the
control of the Depositor or if for any other reason the
Securities are not delivered to the Trust by the end of the
Delivery Period, the Trustee shall immediately draw on the letter
of credit, if any, apply the monies in accordance with Section
3.03(b), and the Depositor shall forthwith take the remedial
action specified in Section 3.13. If the Depositor does not take
the action specified in Section 3.13 within 10 calendar days of
the end of the Delivery Period, the Trustee shall forthwith take
the action specified in Section 3.13.
(b)(1)From time to time following the Initial Date of
Deposit, the Depositor is hereby authorized, in its
discretion, to assign, convey to and deposit with the
Trustee (i) additional Securities, duly endorsed in blank or
accompanied by all necessary instruments of assignment and
transfer in proper form, (ii) Contract Obligations relating
to such additional Securities, accompanied by cash and/or
letter(s) of credit as specified in paragraph (c) of this
Section 2.01, or (iii) cash (or a letter of credit in lieu
of cash) with instructions to purchase additional
Securities, in an amount equal to the portion of the Unit
Value of the Units created by such deposit attributable to
the Securities to be purchased pursuant to such
instructions. Except as provided in the following
subparagraphs (2), (3) and (4) the Depositor, in each case,
shall ensure that each deposit of additional Securities
pursuant to this Section shall maintain, as nearly as
practicable, the Percentage Ratio. Each such deposit of
additional Securities shall be made pursuant to a Notice of
Deposit of Additional Securities delivered by the Depositor
to the Trustee. Instructions to purchase additional
Securities shall be in writing, and shall specify the name
of the Security, CUSIP number, if any, aggregate amount,
price or price range and date to be purchased. When
requested by the Trustee, the Depositor shall act as broker
to execute purchases in accordance with such instructions;
the Depositor shall be entitled to compensation therefor in
accordance with applicable law and regulations. The Trustee
shall have no liability for any loss or depreciation
resulting from any purchase made pursuant to the Depositor's
instructions or made by the Depositor as broker.
(2) Additional Securities (or Contract Obligations
therefor) may, at the Depositor's discretion, be deposited
or purchased in round lots. If the amount of the deposit is
insufficient to acquire round lots of each Security to be
acquired, the additional Securities shall be deposited or
purchased in the order of the Security in the Trust most
under-represented immediately before the deposit with
respect to the Percentage Ratio.
(3) If at the time of a deposit of additional
Securities, Securities of an issue deposited on the Initial
Date of Deposit (or of an issue of Replacement Securities
acquired to replace an issue deposited on the Initial Date
of Deposit) are unavailable, cannot be purchased at
reasonable prices or their purchase is prohibited or
restricted by applicable law, regulation or policies, the
Depositor may (i) deposit, or instruct the Trustee to
purchase, in lieu thereof, another issue of Securities or
Replacement Securities or (ii) deposit cash or a letter of
credit in an amount equal to the valuation of the issue of
Securities whose acquisition is not feasible with
instructions to acquire such Securities of such issue when
they become available.
(4) Any contrary authorization in the preceding
subparagraphs (1) through (3) notwithstanding, deposits of
additional Securities made after the 90-day period
immediately following the Initial Date of Deposit (except
for deposits made to replace Failed Contract Obligations if
such deposits occur with 20 days from the date of a failure
occurring within such initial 90-day period) shall maintain
exactly the Percentage Ratio existing immediately prior to
such deposit.
(5) In connection with and at the time of any deposit
of additional Securities pursuant to this Section 2.01(b),
the Depositor shall exactly replicate Cash (as defined
below) received or receivable by the Trust as of the date of
such deposit. For purposes of this paragraph, "Cash" means,
as to the Principal Account, cash or other property (other
than Securities) on hand in the Principal Account or
receivable and to be credited to the Principal Account as of
the date of the deposit (other than amounts to be
distributed solely to persons other than holders of Units
created by the deposit) and, as to the Income Account, cash
or other property (other than Securities) received by the
Trust as of the date of the deposit or receivable by the
Trust in respect of a record date for a payment on a
Security which has occurred or will occur before the Trust
will be the holder of record of a Security, reduced by the
amount of any cash or other property received or receivable
on any Security allocable (in accordance with the Trustee's
calculations of distributions from the Income Account
pursuant to Section 3.05) to a distribution made or to be
made in respect of a Record Date occurring prior to the
deposit. Such replication will be made on the basis of a
fraction, the numerator of which is the number of Units
created by the deposit and the denominator of which is the
number of Units which are outstanding immediately prior to
the deposit."
(E) Section 2.01 is hereby amended to include the following
subsection:
"(c) In connection with the deposits described in
Section 2.01 (a) and (b), the Depositor has, in the case of
Section 2.01(a) deposits, and, prior to the Trustee
accepting a Section 2.01(b) deposit, will, deposit cash
and/or letter(s) of credit (meeting the conditions set forth
in Section 2.07) in an amount sufficient to purchase the
Contract Obligations (the "Purchase Amount") relating to
Securities which are not actually delivered to the Trustee
at the time of such deposit, the terms of which
unconditionally allow the Trustee to draw on the full amount
of the available letter of credit. The Trustee may allow
the Depositor to substitute for any letter(s) of credit
deposited with the Trustee in connection with the deposits
described in Section 2.01(a) and (b) cash in an amount
sufficient to satisfy the obligations to which the letter(s)
of credit relates. Any substituted letter(s) of credit
shall be released by the Trustee. The Trustee may deposit
such cash or cash drawn on the letter of credit in a non-
interest bearing account for the Trust."
(F) The third paragraph of Section 2.01 is hereby amended
as subsection (d).
(G) The following Section 2.07 shall be added immediately
after Section 2.06.
"Section 2.07. Letter of Credit. The Trustee shall not
accept any letter of credit under this Indenture unless the
stated expiration date of the letter of credit is at least thirty
days from the respective date of deposit of Contract Obligations
pursuant to Section 2.01(a) or 2.01(b). The Trustee is
authorized to downpost the amount available under the letter of
credit, if any, deposited by the Depositor by an amount equal to
the purchase price of Contract Obligations representing
Securities delivered to the Trust on the date of delivery of such
Securities."
(H) Section 3.01 of the Standard Terms and Conditions of
Trust shall be replaced in its entirety with the following:
"Section 3.01. Initial Cost. Subject to reimbursement as
hereinafter provided, the cost of organizing the Trust and the
sale of the Trust Units shall be borne by the Depositor,
provided, however, that the liability on the part of the
Depositor under this section shall not include any fees or other
expenses incurred in connection with the administration of the
Trust subsequent to the deposit referred to in Section 2.01. At
the earlier of six months after the Initial Date of Deposit or
the conclusion of the primary offering period (as certified by
the Depositor to the Trustee), the Trustee shall withdraw from
the Account or Accounts specified in the Prospectus or, if no
Account is therein specified, from the Principal Account, and pay
to the Depositor the Depositors reimbursable expenses of
organizing the Trust in an amount certified to the Trustee by the
Depositor. In no event shall the amount paid by the Trustee to
the Depositor for the Depositors reimbursable expenses of
organizing the Trust exceed the estimated per Unit amount of
organization costs set forth in the Prospectus for the Trust
multiplied by the number of Units of the Trust outstanding at the
earlier of six months after the Initial Date of Deposit or the
conclusion of the primary offering period; nor shall the
Depositor be entitled to or request reimbursement for expenses of
organizing the Trust incurred after the earlier of six months
after the Initial Date of Deposit or the conclusion of the
primary offering period. If the cash balance of the Principal
Account is insufficient to make such withdrawal, the Trustee
shall, as directed by the Depositor, sell Securities identified
by the Depositor, or distribute to the Depositor Securities
having a value, as determined under Section 4.01 as of the date
of distribution, sufficient for such reimbursement. Securities
sold or distributed to the Depositor to reimburse the Depositor
pursuant to this Section shall be sold or distributed by the
Trustee, to the extent practicable, in the percentage ratio then
existing. The reimbursement provided for in this section shall
be for the account of Unit holders of record at the earlier of
six months after the Initial Date of Deposit or the conclusion of
the primary offering period. Any assets deposited with the
Trustee in respect of the expenses reimbursable under this
Section 3.01 shall be held and administered as assets of the
Trust for all purposes hereunder. The Depositor shall deliver to
the trustee any cash identified in the Statement of Net Assets of
the Trust included in the Prospectus not late than the expiration
of the Delivery Period and the Depositors obligation to make
such delivery shall be secured by the letter of credit deposited
pursuant to Section 2.01. Any cash which the Depositor has
identified as to be used for reimbursement of expenses pursuant
to this Section 3.01 shall be held by the Trustee, without
interest, and reserved for such purpose and, accordingly, prior
to the earlier of six months after the Initial Date of Deposit or
the conclusion of the primary offering period, shall not be
subject to distribution or, unless the Depositor otherwise
directs, used for payment of redemptions in excess of the per
Unit amount payable pursuant to the next sentence. If a Unit
holder redeems Units prior to the earlier of six months after the
Initial Date of Deposit or the conclusion of the primary offering
period, the Trustee shall pay the Unit holder, in addition to the
Redemption Value of the tendered Units, unless otherwise directed
by the Depositor, an amount equal to the estimated per Unit cost
of organizing the Trust set forth in the Prospectus, or such
lower revision thereof most recently communicated to the Trustee
by the Depositor pursuant to Section 5.01, multiplied by the
number of Units tendered for redemption; to the extent the cash
on hand in the Trust is insufficient for such payments, the
Trustee shall have the power to sell Securities in accordance
with Section 5.02. As used herein, the Depositors reimbursable
expenses of organizing the Trust shall include the cost of the
initial preparation and typesetting of the registration
statement, prospectuses (including preliminary prospectuses), the
indenture, and other documents relating to the Trust, SEC and
state blue sky registration fees, the cost of the initial
valuation of the portfolio and audit of the Trust, the initial
fees and expenses of the Trustee, and legal and other out-of-
pocket expenses related thereto, but not including the expenses
incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and printing
of brochures and other advertising materials and any other
selling expenses."
(I) Section 3.05 of Article III of the Standard Terms and
Conditions of Trust is hereby amended to include the following
subsection:
"Section 3.05(e) deduct from the Interest
Account or, to the extent funds are not available in
such Account, from the Principal Account and pay to the
Depositor the amount that it is entitled to receive
pursuant to Section 3.15."
(J) Section 3.06(B)(3) is amended in its entirety to read
as follows:
"(3) the amount paid for purchases of New
Securities, Replacement Securities or Reinvestment
Securities pursuant to Section 3.13 and for redemptions
pursuant to Section 5.02."
(K) The title of Section 3.13 of Article III of the
Standard Terms and Conditions of Trust is hereby amended in its
entirety to read as follows:
"Section 3.13. Limited Replacement of Special
Securities; Replacement Securities; Reinvestment of
Principal."
(L) Section 3.13 of Article III of the Standard Terms and
Conditions of Trust is hereby amended by inserting the following
paragraphs immediately preceding the last paragraph of such
Section:
"From the Initial Date of Deposit until such time
as the Depositor notifies the Trustee in writing that
such action is impractical (the "Reinvestment Period"),
the Trustee shall, as directed by the Depositor, enter
into contracts (which the Depositor shall have approved
as satisfactory in form and substance) to purchase
obligations to be held as Securities hereunder as part
of the Trust Fund (the "Reinvestment Securities") and
shall pay for the same with the moneys held in the
Principal Account representing the payment or
prepayment of principal on the underlying Securities to
the extent that such proceeds are not required for the
purpose of redemption of Units or other charges to the
Principal Account then pending. In giving such
direction, the Depositor shall determine that the
Reinvestment Securities to be acquired pursuant to such
contract are taxable, mortgage-backed securities of the
modified pass-through type, fully guaranteed as to
principal and interest by the Government National
Mortgage Association and are substantially similar as
to maturity and interest rates as the Securities upon
which the principal used to purchase such Reinvestment
Securities was received.
The Trustee may purchase the Reinvestment
Securities for deposit in the Trust Fund directly from
market makers in such Securities or may retain the
Depositor or other brokers to purchase the Reinvestment
Securities and pay them usual and customary brokerage
commissions for such transactions. Funds remaining in
the Principal Account subsequent to a purchase of
Reinvestment Securities will remain in such Account
until such time as they can be invested into additional
Reinvestment Securities. During the Reinvestment
Period, amounts in the Principal Account which, the
Depositor determines and so notifies the Trustee in
writing or via facsimile, are (a) unable to be invested
into Reinvestment Securities or (b) are required to be
distributed for "regulated investment company" tax
purposes shall be distributed on the next semi-annual
distribution date, June 30 and December 31 of each
year, to Unit holders of record on June 1 and December
1, respectively.
At such time as the Depositor shall determine that
the reinvestment of cash from the Principal Account
into Reinvestment Securities shall no longer be
practical, the Depositor shall notify the Trustee, in
writing, that the Reinvestment Period is terminated.
Upon termination of the Reinvestment Period,
unreinvested amounts remaining in the Principal Account
and amounts subsequently credited to the Principal
Account shall be distributed in accordance with Section
3.05."
(M) The last paragraph of Section 3.13 of the Standard
Terms and Conditions of Trust is replaced as follows:
"Whenever a New Security is acquired by the
Depositor pursuant to the provisions of this Section
3.13, the Trustee shall, within five days thereafter,
mail to all Holders of Units of the respective Trust
Fund notice of such acquisition, including an
identification of the failed Special Security and the
New Security acquired.
The Trustee shall not be liable or responsible in
any way for depreciation or loss incurred by reason of
any purchase made pursuant to any direction of the
Depositor provided in this Section 3.13, and in the
absence of such direction the Trustee shall have no
duty to make any purchase. The Depositors shall not be
liable for errors of judgment in respect of this
Section 3.13; provided however, that this provision
shall not protect the Depositor against any liability
to which it would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of its
reckless disregard of its obligations and duties
hereunder."
(N) The phrase "in an amount which shall not exceed $0.15
per 1000 Units" in the first sentence of Section 3.14 shall be
amended to read "as set forth in the Prospectus per Unit".
(O) Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraphs
which shall be entitled Section 3.15:
"Section 3.15. Bookkeeping and Administrative Expenses. As
compensation for providing bookkeeping and other administrative
services of a character described in 26(a)(2)(C) of the
Investment Company Act of 1940 to the extent such services are in
addition to, and do not duplicate, the services to be provided
hereunder by the Trustee or the Portfolio Supervisor, the
Depositor shall receive against a statement or statements
therefor submitted to the Trustee monthly or annually an
aggregate annual fee in an amount which shall not exceed an
amount set forth in the Prospectus under "Special Information"
times the number of Units outstanding as of January 1 of such
year except for a year or years in which an initial offering
period as determined by Section 4.01 of this Indenture occurs, in
which case the fee for a month is based on the number of Units
outstanding at the end of such month (such annual fee to be pro
rated for any calendar year in which the Depositor provides
service during less than the whole of such year), but in no event
shall such compensation when combined with all compensation
received from other unit investment trusts for which the
Depositor hereunder is acting as Depositor for providing such
bookkeeping and administrative services in any calendar year
exceed the aggregate cost to the Depositor for the cost of
providing services to such unit investment trusts. Such
compensation may, from time to time, be adjusted provided that
the total adjustment upward does not, at the time of such
adjustment, exceed the percentage of the total increase, after
the date hereof, in consumer prices for services as measured by
the United States Department of Labor Consumer Price Index
entitled "All Services Less Rent of Shelter" or similar index, if
such index should no longer be published. The consent or
concurrence of any Unit holder hereunder shall not be required
for any such adjustment or increase. Such compensation shall be
paid by the Trustee, upon receipt of invoice therefor from the
Depositor, upon which, as to the cost incurred by the Depositor
of providing services hereunder the Trustee may rely, and shall
be charged against the Interest and Principal Accounts on or
before the Distribution Date following the Monthly Record Date on
which such period terminates. The Trustee shall have no
liability to any Certificateholder or other person for any
payment made in good faith pursuant to this Section.
If the cash balance in the Interest and Principal Accounts
shall be insufficient to provide for amounts payable pursuant to
this Section 3.15, the Trustee shall have the power to sell (i)
Securities from the current list of Securities designated to be
sold pursuant to Section 5.02 hereof, or (ii) if no such
Securities have been so designated, such Securities as the
Trustee may see fit to sell in its own discretion, and to apply
the proceeds of any such sale in payment of the amounts payable
pursuant to this Section 3.15.
Any moneys payable to the Depositor pursuant to this Section
3.15 shall be secured by a prior lien on the Trust Fund except
that no such lien shall be prior to any lien in favor of the
Trustee under the provisions of Section 6.04 herein."
(P) All provisions regarding the Distribution Date included
in Section 3.05 of Article III of the Standard Terms and
Conditions of Trust are hereby amended to change the Distribution
Date from the first day of the month following the Record Date to
the last day of the month in which the Record Date occurs.
(Q) Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraph
which shall be entitled Section 3.16:
"Section 3.16. Deferred Sales Charge. If the
prospectus related to the Trust specifies a deferred sales
charge, the Trustee shall, on the dates specified in and as
permitted by such Prospectus (the "Deferred Sales Charge
Payment Dates"), withdraw from the Principal Account, an
amount per Unit specified in such Prospectus and credit such
amount to a special non-Trust account designated by the
Depositor out of which the deferred sales charge will be
distributed to or on the order of the Depositor on such
Deferred Sales Charge Payment Dates (the "Deferred Sales
Charge Account"). If the balance in the Principal Account
is insufficient to make such withdrawal, the Trustee shall,
as directed by the Depositor, advance funds in an amount
required to fund the proposed withdrawal and be entitled to
reimbursement of such advance upon the deposit of additional
monies in the Principal Account, and/or sell Securities and
credit the proceeds thereof to the Deferred Sales Charge
Account, provided, however, that the aggregate amount
advanced by the Trustee at any time for payment of the
deferred sales charge shall not exceed $15,000. Such
direction shall, if the Trustee is directed to sell a
Security, identify the Security to be sold and include
instructions as to the execution of such sale. In the
absence of such direction by the Depositor, the Trustee
shall sell Securities sufficient to pay the deferred sales
charge (and any unreimbursed advance then outstanding) in
full, and shall select Securities to be sold in such manner
as will maintain (to the extent practicable) the relative
proportion of number of shares of each Security then held.
The proceeds of such sales, less any amounts paid to the
Trustee in reimbursement of its advances, shall be credited
to the Deferred Sales Charge Account. If a Unit holder
redeems Units prior to full payment of the deferred sales
charge, the Trustee shall, if so provided in the related
Prospectus, on the Redemption Date, withhold from the
Redemption Price payable to such Unit holder an amount equal
to the unpaid portion of the deferred sales charge and
distribute such amount to the Deferred Sales Charge Account.
If the Trust is terminated for reasons other than that set
forth in Section 6.01(g), the Trustee shall, if so provided
in the related Prospectus, on the termination of the Trust,
withhold from the proceeds payable to Unit holders an amount
equal to the unpaid portion of the deferred sales charge and
distribute such amount to the Deferred Sales Charge Account.
If the Trust is terminated pursuant to Section 6.01(g)(ii),
the Trustee shall not withhold from the proceeds payable to
Unit holders any amounts of unpaid deferred sales charges.
If pursuant to Section 5.02 hereof, the Depositor shall
purchase a Unit tendered for redemption prior to the payment
in full of the deferred sales charge due on the tendered
Unit, the Depositor shall pay to the Unit holder the amount
specified under Section 5.02 less the unpaid portion of the
deferred sales charge. All advances made by the Trustee
pursuant to this Section shall be secured by a lien on the
Trust prior to the interest of the Unit holders."
(R) Notwithstanding anything to the contrary in Sections
3.16 and 4.05 of the Standard Terms and Conditions of Trust, so
long as Nike Securities L.P. is acting as Depositor, the Trustee
shall have no power to remove the Portfolio Supervisor.
(S) The phrase "of $0.30 per 1,000 Units" in the first
sentence of Section 4.03 shall be amended to read "as set forth
in the Prospectus per Unit".
(T) Section 5.01 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The fourth sentence of the first paragraph of
Section 5.01 shall be amended by deleting the phrase "and
(iii)" and adding the following, "(iii) amounts representing
unpaid accrued organization costs, and (iv)"; and
(ii) The following text shall immediately precede
the last sentence of the first paragraph of Section 5.01:
"The resulting figure is herein called a "Trust
Fund Evaluation." Prior to the payment to the Depositor of
its reimbursable organization costs to be made at the
earlier of six months after the Initial Date of Deposit or
the conclusion of the primary offering period in accordance
with Section 3.10, for purposes of determining the Trust
Fund Evaluation under this Section 5.01, the Trustee shall
rely upon the amounts representing unpaid accrued
organization costs in the estimated amount per Unit set
forth in the Prospectus until such time as the Depositor
notifies the Trust in writing of a revised estimated amount
per Unit representing unpaid accrued organization costs.
Upon receipt of such notice, the Trustee shall use this
revised estimated amount per Unit representing unpaid
accrued organization costs in determining the Trust Fund
Evaluation but such revision of the estimated expenses shall
not effect calculations made prior thereto and no adjustment
shall be made in respect thereof."
(U) The first sentence of the first paragraph of Section
5.02 of the Standard Terms and Conditions of Trust shall be
replaced with the following:
"Any Unit evidenced by a Certificate tendered for redemption
by a Certificateholder or his duly authorized attorney or any
Unit held in uncertificated form tendered by a Holder of Units or
his duly authorized attorney by means of an appropriate request
for redemption in a form approved by the Trustee to the Trustee
at its unit investment trust office in the City of New York,
shall be paid by the Trustee on the third business day following
the day on which tender for redemption is made in proper form
(being herein called the "Redemption Date").
(V) The first two sentences of Section 6.04 shall be
deleted and the following shall be substituted therefor:
"For services performed under this Indenture the Trustee
shall be paid an amount per annum set forth in the Prospectus.
Such compensation shall accrue daily and be computed on the basis
of the largest number of Units outstanding during the calendar
year except during the initial offering period (as specified to
the Trustee by the Depositor), in which case the fee is
calculated based on the number of Units outstanding during the
period for which the compensation is paid (such annual fee to be
prorated for any calendar year in which the Trustee provides
services during less than the whole of such year). However, in
no event, shall the Trustee receive compensation in any one year
from any Trust of less than $2,000 for such annual compensation."
(W) The third sentence of the second paragraph of Section
8.02 shall be replaced with the following:
"Commencing no earlier than nine business days prior to the
termination of the Trust, the Trustee will liquidate the
Securities during such period and in such daily amounts as the
Depositor shall direct, and shall:"
IN WITNESS WHEREOF, Nike Securities L.P., United States
Trust Company of New York, Securities Evaluation Service, Inc.
and First Trust Advisors L.P. have each caused this Trust
Agreement to be executed and the respective corporate seal to be
hereto affixed and attested (if applicable) by authorized
officers; all as of the day, month and year first above written.
NIKE SECURITIES L.P., Depositor
By Robert M. Porcellino
Senior Vice President
THE CHASE MANHATTAN BANK, Trustee
By Rosalia A. Raviele
Vice President
(SEAL)
Attest:
Joan A. Currie
Assistant Secretary
SECURITIES EVALUATION SERVICE,
INC., Evaluator
By James G. Prince
Vice President and Assistant
Secretary
(SEAL)
Attest:
Jerry Klaas
Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Robert M. Porcellino
Senior Vice President
-3-
SCHEDULE A TO TRUST AGREEMENT
SECURITIES DEPOSITED
IN
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 74
AND SERIES 75
(Note:Incorporated herein and made a part hereof is the
"Portfolio" for Series 74 and Series 75 as set forth
in the Prospectus and any other securities that may
be deposited subsequent to the Initial Date of
Deposit pursuant to this Trust Agreement.)
SCHEDULE B TO TRUST AGREEMENT
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, Series 74 and
Series 75
NOTICE OF DEPOSIT OF ADDITIONAL SECURITIES
Dated: March 16, 1999
Pursuant to Section 2.01 of the Trust Agreement dated March
16, 1999 among Nike Securities L.P., as Depositor, United States
Trust Company of New York, as Trustee, Securities Evaluation
Service, Inc., as Evaluator, and First Trust Advisors L.P., as
Portfolio Supervisor (the "Trust Agreement"), the Depositor
hereby certifies to the Trustee as follows:
(a) The additional securities listed in Appendix A
hereto are hereby deposited in trust and have a
substantially equal percentage relationship between the
principal amounts of the Securities of specified interest
rates and years of maturity as specified in the Trust's
prospectus dated March 16, 1999.
(b) In accordance with Section 2.03 of the Trust
Agreement, an additional ______________ Units should be
issued as a result of the deposit referred to in (a) above.
Taking into account the above Units, the total number of
Units in the Trust issued as of the date of this notice
is_____________
(c) Taking into account that Units issued in (b)
above, the fractional undivided interest in and ownership of
the Trust represented by each Unit is _________
NIKE SECURITIES L.P.
By
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 606063
March 16, 1999
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: The First Trust GNMA Reinvestment Income Trust,
Series 74 and Series 75
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of The First Trust GNMA Reinvestment Income
Trust, Series 74 and Series 75 (the "Fund"), in connection with
the preparation, execution and delivery of a Trust Agreement for
Series 72 dated March 16, 1998 among Nike Securities L.P., as
Depositor, The Chase Manhattan Bank, as Trustee, Securities
Evaluation Service, Inc., as Evaluator and First Trust Advisors
L.P., as Portfolio Supervisor pursuant to which the Depositor has
delivered to and deposited the Securities listed in Schedule A to
the Trust Agreement with the Trustee and pursuant to which the
Trustee has issued to or on the order of the Depositor a
certificate or certificates representing units of fractional
undivided interest in and ownership of the Fund created under
said Trust Agreement.
In connection therewith, we have examined such pertinent
records and documents and matters of law as we have deemed
necessary in order to enable us to express the opinions
hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units
in the Fund have been duly authorized; and
2. The Units in the Fund, however evidenced, when duly
executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will
constitute valid and binding obligations of the Fund and the
Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 333-63947)
relating to the Units referred to above, to the use of our name
and to the reference to our firm in said Registration Statement
and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EFF:erg
Exhibit 3.4
CARTER, LEDYARD & MILBURN
2 Wall Street
New York, New York 10005
March 16, 1999
The Chase Manhattan Bank
as Trustee of
The First Trust GNMA Reinvestment Income
Trust, Series 74 and The First Trust GRIT, Series 75
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Attention: Mr. Thomas Porrazzo
Vice President
Re:The First Trust GNMA Reinvestment Income Trust, Series 74
and
The First Trust GNMA Reinvestment Income Trust, Series 75
Dear Sirs:
We are acting as counsel for The Chase Manhattan Bank
("Chase") in connection with the execution and delivery of a
Trust Agreement (the "Trust Agreement") dated today's date (which
Trust Agreement incorporates by reference a certain Standard
Terms and Conditions of Trust dated December 19, 1991 and the
same are collectively referred to herein as the "Indenture")
among Nike Securities L.P., as Depositor (the "Depositor"),
Securities Evaluation Services, Inc., as Evaluator (the
"Evaluator), First Trust Advisors L.P., as Portfolio Supervisor
(the "Supervisor"), and Chase, as Trustee (the "Trustee"),
establishing The First Trust GNMA Reinvestment Income Trust,
Series 74 and The First Trust GNMA Reinvestment Income Trust,
Series 75 (each, a "Trust"), and the confirmation by Chase, as
Trustee under the Indenture, that it has registered on the
registration books of the Trust the ownership by the Depositor of
a number of units constituting the entire interest in the Trust
(such aggregate units being herein called "Units"), each of which
represents an undivided interest in the respective Trust which
consists of taxable mortgage-backed securities guaranteed as to
principal and interest by the Government National Mortgage
Association (collectively, the "Securities").
We have examined the Indenture, a specimen of the
certificates to be issued thereunder (the "Certificates"),the
Closing Memorandum dated today's date (the "Closing Memorandum"),
today's date, and such other documents as we have deemed
necessary in order to render this opinion. Based on the
foregoing we are of the opinion that:
1. Chase is a duly organized and existing corporation
having the powers of a trust company under the laws of the State
of New York.
2. The Trust Agreement and Indenture have been duly
executed and delivered by Chase and, assuming due execution and
delivery by the other parties thereto, constitute the valid and
legally binding obligations of Chase.
3. The Certificates are in proper form for execution and
delivery by Chase, as Trustee.
4. Chase, as Trustee, has registered on the registration
books of the Trust the ownership of the Units by the Depositor.
Upon receipt of confirmation of the effectiveness of the
registration statement for the sale of the Units filed with the
Securities and Exchange Commission under the Securities Act of
1933, the Trustee may deliver Certificates for such Units, in
such names and denominations as the Depositor may request, to or
upon the order of the Depositor as provided in the Closing
Memorandum.
5. Chase, as Trustee, may lawfully under the New York
Banking Law advance to the Trust Fund amounts as may be necessary
to provide the distribution to be made to the Depositor on the
First Settlement Date (as defined in the Indenture) and be
reimbursed, without interest, for such advance from funds in the
interest account, as provided in the Indenture.
In rendering the foregoing opinion we have not considered,
among other things, whether the Securities have been duly
authorized and delivered.
We consent to the filing of this opinion as an exhibit to
the Registration Statement (No. 333-63947) filed with the
Securities and Exchange Commission with respect to the
registration of the sale of the Units and to the references to
our name under the caption "Legal Opinions" in such Registration
Statement and the preliminary prospectus included therein.
Very truly yours,
CARTER, LEDYARD & MILBURN
EXHIBIT 4.1
SES
Securities Evaluation Service, Inc.
Suite 200
531 E. Roosevelt Road
Wheaton, Illinois 60187
March 16, 1999
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 74
AND SERIES 75
Gentlemen:
We have examined the Registration Statement File No.
333-63947 for the above captioned fund. We hereby consent to the
use in the Registration Statement of the references to Securities
Evaluation Service, Inc. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
Securities Evaluation Service, Inc.
James R. Couture
President
Exhibit 4.2
STANDARD & POOR'S CORPORATION
Managed Fund Ratings
25 Broadway
New York, New York 10004-1064
March 16, 1999
Nike Securities, L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re:The First Trust GNMA Reinvestment Income Trust, Series 74
and Series 75
Gentlemen:
Pursuant to your request for a Standard & Poor's rating on
the units of the Trust, SEC# 333-63947 we have reviewed the
information presented to us and have assigned an 'AAA' rating to
the units in the Trust. The rating is a direct reflection of the
portfolio of the Trust, which will be composed solely of
mortgage-backed securities fully guaranteed as to principal and
interest by the Government National Mortgage Association (GNMA)
and the full faith and credit of the United States is pledged to
the payment of the securities in the trust.
STANDARD & POOR'S WILL MAINTAIN SURVEILLANCE ON THE 'AAA'
RATING UNTIL APRIL 16, 2000. ON THIS DATE, THE RATING WILL BE
AUTOMATICALLY WITHDRAWN BY STANDARD & POOR'S UNLESS A POST
EFFECTIVE LETTER IS REQUESTED BY THE TRUST.
You have permission to use the name of Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc.
and the above-assigned rating in connection with your
dissemination of information relating of these units, provided
that it is understood that the rating is not a "market" rating
nor a recommendation to buy, hold, or sell the units of the trust
or the securities contained in the Trust. Further, it should be
understood the rating does not take into account the extend to
which fund expenses or portfolio asset sales for less than the
fund's purchase price will reduce payment to the unit holders of
the interest and principal required to be paid on the portfolio
assets. Standard & Poor's reserves the right to advise its own
clients, subscribers, and the public of the rating. Standard &
Poor's relies on the sponsor and its counsel, accountants, and
other experts for the accuracy and completeness of the
information submitted in connection with the rating. Standard &
Poor's does not independently verify the truth or accuracy of any
such information.
This letter evidences our consent to the use of the name of
Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. and the above-assigned rating in the registration
statement or prospectus relating to the units or the trust.
However, this letter should not be construed as a consent by us,
within the meaning of Section 7 of the Securities Act of 1933, to
the use of the name of Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. in connection with
the ratings assigned to the securities contained in the trust.
You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commission.
Please be certain to send us three copies of your final
prospectus as soon as it becomes available. Should we not
receive them within a reasonable time after the closing or should
they not conform to the representations made to us, we reserve
the right to withdraw the rating.
We are pleased to have had the opportunity to be of service
to you. If we can be of further help, please do not hesitate to
call upon us.
Sincerely,
Sandford B. Bragg
Managing Director
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