Registration No. 333-38331
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2 to Form S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES
OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust:
FT 223
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 December 1, 1997 at 2:00 p.m. pursuant to Rule
487.
________________________________
FT 223
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
Form N-8B-2 Item Number Form S-6 Heading in Prospectus
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust Prospectus front cover
(b) Title of securities issued Summary of Essential
Information
2. Name and address of each depositor Information as to
Sponsor, Trustee and
Evaluator
3. Name and address of trustee Information as to
Sponsor, Trustee and
Evaluator
4. Name and address of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
5. State of organization of trust The FT Series
6. Execution and termination of Other Information
trust agreement
7. Changes of name *
8. Fiscal year *
9. Litigation *
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer Public Offering
securities
(b) Cumulative or distributive The FT Series
securities
(c) Redemption Rights of Unitholders
(d) Conversion, transfer, etc. Rights of Unitholders
(e) Periodic payment plan *
(f) Voting rights Rights of Unitholders
(g) Notice of certificateholders Other Information
(h) Consents required Rights of Unitholders;
Other Information
(i) Other provisions The FT Series
11. Types of securities comprising The FT Series
units Schedule of
Investments
12. Certain information regarding
periodic payment certificates *
13. (a) Load, fees, expenses, etc. Summary of Essential
Information; Public
Offering; The FT
Series
(b) Certain information regarding
periodic payment certificates *
(c) Certain percentages Summary of Essential
Information; The FT
Series; Public
Offering
(d) Certain other fees, etc.
payable by holders Rights of Units
Holders
(e) Certain profits receivable
by depositor, principal,
underwriters, trustee or The FT Series
affiliated persons
(f) Ratio of annual charges *
to income
14. Issuance of trust's securities Rights of Unit Holders
15. Receipt and handling of payments
from purchasers *
16. Acquisition and disposition of
underlying securities The FT Series; Rights
of Unit Holders;
17. Withdrawal or redemption The FT Series; Public
Offering; Rights of
Unit Holders
18. (a) Receipt, custody and Rights of Unit Holders
disposition of income
(b) Reinvestment of distributions Rights of Unit Holders
(c) Reserves or special funds Information as to
Sponsor, Trustee and
Evaluator
(d) Schedule of distributions *
19. Records, accounts and reports Rights of Unit Holders
20. Certain miscellaneous provisions
of trust agreement
(a) Amendment Other Information
(b) Termination Other Information
(c) and (d) Trustee, removal Information as
and successor to Sponsor, Trustee
and Evaluator
(e) and (f) Depositor, removal Information as
and successor to Sponsor, Trustee
and Evaluator
21. Loans to security holders *
22. Limitations on liability The FT Series;
Information as to
Sponsor, Trustee
and Evaluator
23. Bonding arrangements Contents of
Registration
Statement
24. Other material provisions *
of trust agreement
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor Information as to
Sponsor, Trustee and
Evaluator
26. Fees received by depositor *
27. Business of depositor Information as to
Sponsor, Trustee and
Evaluator
28. Certain information as to
officials and affiliated *
persons of depositor
29. Voting securities of depositor *
30. Persons controlling depositor *
31. Payment by depositor for certain
services rendered to trust *
32. Payment by depositor for certain
other services rendered to trust *
33. Remuneration of employees of
depositor for certain services
rendered to trust *
34. Remuneration of other persons
for certain services rendered *
to trust
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's Public Offering
securities by states
36. Suspension of sales of trust's
securities *
37. Revocation of authority to *
distribute
38. (a) Method of distribution Public Offering
(b) Underwriting agreements Public Offering
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as
underwriters to Sponsor, Trustee
and Evaluator
(b) N.A.S.D. membership of
principal underwriters Information as to
Sponsor, Trustee and
Evaluator
40. Certain fees received by See Items 13(a) and
principal underwriters 13(e)
41. (a) Business of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) Branch offices of
principal underwriters *
(c) Salesmen of principal *
underwriters
42. Ownership of trust's securities
by certain persons *
43. Certain brokerage commissions
received by principal *
underwriters
44. (a) Method of valuation Summary of Essential
Information; The FT
Series, Public
Offering
(b) Schedule as to offering *
price
(c) Variation in offering Public Offering
price to certain persons
45. Suspension of redemption rights *
46. (a) Redemption valuation Rights of Unit Holders
(b) Schedule as to redemption *
price
47. Maintenance of position in Public Offering;
underlying securities Rights
of Unit Holders
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of Information as
trustee to Sponsor, Trustee
and Evaluator
49. Fees and expenses of trustee The FT Series
50. Trustee's lien The FT Series
VI. INFORMATION CONCERNING THE INSURANCE OF HOLDERS OF
SECURITIES
51. Insurance of holders of
trust's securities *
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust The FT Series;
agreement with respect to Rights of Unit Holders
selection or elimination of
underlying securities
(b) Transactions involving
elimination of underlying *
securities
(c) Policy regarding substitution The FT Series;
or elimination of underlying Rights of Unit Holders
securities
(d) Fundamental policy not
otherwise covered *
53. Tax status of Trust The FT Series
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during *
last ten years
55.
56.
57. Certain information regarding
periodic payment certificates *
58.
59. Financial statements Report of Independent
(Instruction 1(c) to Form S-6) Auditors
Statement of Net
Assets
* Inapplicable, answer negative or not required.
McDonald Select Equity Trust, Series 1998
The Trust. FT 223 is a unit investment trust consisting of a fixed,
diversified portfolio containing common stocks issued by companies which
are considered to have the potential for capital appreciation (the
"Equity Securities").
The objective of the Trust is to provide for capital appreciation by
investing the Trust's portfolio in selected common stocks of companies
having, in the Underwriter's opinion on the Initial Date of Deposit, an
above-average potential for capital appreciation. See "Schedule of
Investments." The Trust has a mandatory termination date (the "Mandatory
Termination Date" or "Trust Ending Date") of approximately two years
from the date of this Prospectus as set forth under "Summary of
Essential Information." There is, of course, no guarantee that the
objective of the Trust will be achieved.
Each Unit of the Trust represents an undivided fractional interest in
all the Equity Securities deposited therein. The Equity Securities
deposited in the Trust's portfolio have no fixed maturity date and the
value of these underlying Equity Securities will fluctuate with changes
in the values of stocks in general. See "Portfolio."
The Sponsor may, from time to time after the Initial Date of Deposit,
deposit additional Equity Securities in the Trust or cash (including a
letter of credit) with instructions to purchase additional Equity
Securities in the Trust. Such deposits of additional Equity Securities
or cash will be done in such a manner that the original proportionate
relationship among the individual issues of the Equity Securities shall
be maintained. Any deposit by the Sponsor of additional Equity
Securities, or the purchase of additional Equity Securities pursuant to
a cash deposit, will duplicate, as nearly as is practicable, the
original proportionate relationship established on the Initial Date of
Deposit, and not the actual proportionate relationship on the subsequent
date of deposit, since the two may differ. Any such difference may be
due to the sale, redemption or liquidation of any Equity Securities
deposited in the Trust on the Initial, or any subsequent, Date of
Deposit. See "What is the FT Series?" and "How May Equity Securities be
Removed from the Trust?"
Public Offering Price. The Public Offering Price per Unit of the Trust
during the initial offering period is equal to the aggregate underlying
value of the Equity Securities in the Trust (generally determined by the
closing sale prices of listed Equity Securities and the ask prices of
the over-the-counter traded Equity Securities) plus or minus a pro rata
share of cash, if any, in the Capital and Income Accounts of the Trust,
plus an initial sales charge equal to the difference between the maximum
total sales charge for the Trust (3.95% of the Public Offering Price)
and the maximum remaining deferred sales charge (initially $.295 per
Unit). Subsequent to the Initial Date of Deposit, the amount of the
initial sales charge will vary with changes in the aggregate value of
the Equity Securities. Commencing on February 27, 1998, and on the last
business day of each month thereafter through November 30, 1998 (the
"First Year Deferred Period"), a deferred sales charge of $0.0195 per
Unit per month will also be assessed. In addition, Unit holders of
record on January 4, 1999 (the "Second Year Deferred Period") will also
be assessed a one-time deferred sales charge of $0.10 per Unit on
January 15, 1999. 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. Unit holders who elect to roll
the proceeds of their Units into a new Series of the Trust
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.
McDonald & Company Securities, Inc.
The date of this Prospectus is December 1, 1997
Page 1
during the Interim Special Redemption Period (as described under
"Special Redemption, Liquidation and Investment in a New Trust") or Unit
holders who sell or redeem their Units on or before December 31, 1998
will not be assessed the deferred sales charge for the Second Year
Deferred Period; however, Units sold or tendered for redemption prior to
such time as the entire deferred sales charge assessed during the First
Year Deferred Period has been collected will be assessed the amount of
such remaining deferred sales charge at the time of sale or redemption.
The deferred sales charge assessed during both the First Year Deferred
Period and the Second Year Deferred Period will be paid from funds in
the Capital Account, if sufficient, or from the periodic sale of Equity
Securities. The total maximum sales charge assessed to Unit holders on a
per Unit basis will be 3.95% of the Public Offering Price (equivalent to
3.990% of the net amount invested, exclusive of the deferred sales
charge). A pro rata share of accumulated dividends, if any, in the
Income Account of the Trust is included in the Public Offering Price.
The minimum amount which an investor may purchase in the Trust is
$1,000. Unit holders of McDonald Select Equity Trust, Series 1997 who
elected to become Rollover Unit holders into McDonald Select Equity
Trust, Series 1998 are entitled to purchase Units of such Trust subject
only to the maximum remaining deferred sales charge, deferred as set
forth above. Only whole Units may be purchased. The sales charge imposed
on Trust Units is reduced on a graduated scale for sales involving at
least 10,000 Units. See "Public Offering-How is the Public Offering
Price Determined?"
Dividend and Capital Distributions. Cash dividends received by a Trust
will be paid on each June 30 and December 31 to Unit holders of record
on June 15 and December 15, respectively, and again as part of the final
liquidation distribution in the case of "Rollover Unit holders" and
others. Distributions of funds in the Capital Account, in certain
circumstances, may be made earlier. Any distribution of income and/or
capital will be net of the expenses of the Trust. See "What is the
Federal Tax Status of Unit Holders?" Additionally, upon termination of
the Trust, the Trustee will distribute, upon surrender of Units for
redemption, to each remaining Unit holder (other than a Rollover Unit
holder as defined below) his or her pro rata share of the Trust's
assets, less expenses, in the manner set forth under "Rights of Unit
Holders-How are Income and Capital Distributed?" For distributions to
Rollover Unit holders, see "Rights of Unit Holders-Special Redemption,
Liquidation and Investment in a New Trust." Any Unit holder may elect to
have each distribution of income or capital on his Units, other than the
final liquidating distribution, automatically reinvested in additional
Units of the Trust subject only to remaining deferred sales charge
payments, if any. See "Rights of Unit Holders-How are Income and Capital
Distributed?"
Secondary Market for Units. While under no obligation to do so, the
Sponsor intends to, and the Underwriter may, maintain a market for Units
of the Trust and offer to repurchase such Units at prices which are
based on the aggregate underlying value of Equity Securities in the
Trust (generally determined by the closing sale prices of listed Equity
Securities and the bid prices of the over-the-counter traded Equity
Securities) plus or minus cash, if any, in the Capital and Income
Accounts of the Trust. If a secondary market is maintained during the
initial offering period, the prices at which Units will be repurchased
will also be based upon the aggregate underlying value of the Equity
Securities in the Trust (generally determined by the closing sale prices
of listed Equity Securities and the ask prices of over-the-counter
traded Equity Securities) plus or minus cash, if any in the Capital and
Income Accounts of the Trust. If a secondary market is not maintained, a
Unit holder may redeem Units through the Trustee at prices based upon
the aggregate underlying value of the Equity Securities in the Trust
(generally determined by the closing sale prices of listed Equity
Securities and either the ask prices (during the initial offering
period) or the bid prices (subsequent to the initial offering period) of
the over-the-counter traded Equity Securities) plus or minus a pro rata
share of cash, if any, in the Capital and Income Accounts of the Trust.
A Unit holder tendering 2,500 Units or more of a Trust for redemption
may request a distribution of shares of Equity Securities (reduced by
customary transfer and registration charges) (an "In-Kind Distribution")
in lieu of payment in cash. See "Rights of Unit Holders-How May Units be
Redeemed?" Unit holders who elect to roll the proceeds of their Units
into a new Series of the Trust during the Interim Special Redemption
Period (as described under "Special Redemption, Liquidation and
Investment in a New Trust") or Unit holders who sell or redeem their
Units on or before December 31, 1998 will not be assessed the deferred
sales charge for the Second Year Deferred Period; however, Units sold or
tendered for redemption prior to such time as the entire deferred sales
charge assessed during the First Year Deferred Period has been collected
will be assessed the amount of such remaining deferred sales charge at
the time of sale or redemption. See "Rights of Unit Holders-How May
Units be Redeemed?"
Page 2
Special Redemption, Liquidation and Investment in a New Trust. The
Sponsor currently intends to create a new Series of the McDonald Select
Equity Trust approximately 13 months after the Initial Date of Deposit
of the Trust (the "1999 Trust") and also in conjunction with the
termination of the Trust (approximately two years after the Initial Date
of Deposit) (the "2000 Trust") (collectively, the "New Trusts"). Unit
holders will have the option to roll the proceeds of their Units into a
New Trust after either 13 months (the "Interim Rollover") or after two
years (the "Final Rollover"). To elect a Rollover option, Unit holders
must specify by the appropriate Rollover Notification Date stated in
"Summary of Essential Information" to have all of their Units redeemed
and the distributed Securities sold by the Trustee, in its capacity as
distribution agent ("Distribution Agent"), during the corresponding
Special Redemption and Liquidation Period. Unit holders electing to
participate in either the Interim Rollover ("Interim Rollover Unit
holders") or the Final Rollover ("Final Rollover Unit holders") are
collectively referred to herein as "Rollover Unit holders." The
Distribution Agent will appoint the Sponsor as its agent to determine
the manner, timing and execution of sales of underlying Equity
Securities. The proceeds of the redemption will then be invested in
Units of a New Trust, if offered, at a reduced sales charge (anticipated
to be identical to the deferred sales charge component of the Trust).
The Sponsor may, however, stop offering units of the New Trust at any
time in its sole discretion without regard to whether all the proceeds
to be invested have been invested. Cash which has not been invested on
behalf of the Rollover Unit holders in a New Trust will be distributed
shortly after the applicable Special Redemption and Liquidation Period.
However, the Sponsor anticipates that sufficient Units will be
available, although monies in the Trust may not be fully invested until
the next business day. Rollover Unit holders may purchase Units of a New
Trust at a reduced sales charge. The portfolio of a New Trust will
contain common stocks of companies satisfying the criteria established
above for the Trust. Rollover Unit holders will receive pro rata amount
of dividends in the Income Account of the Trust which will be included
in the reinvestment into Units of a New Trust. On August 5, 1997, the
Taxpayer Relief Act of 1997 (the "1997 Tax Act") was enacted which
reduces the maximum stated marginal tax rate for certain capital gains
for investments held for more than 18 months to 20% (10% in the case of
certain taxpayers in the lowest tax bracket). Rollover Unit holders
participating in the Final Rollover would qualify for such treatment,
whereas Rollover Unit holders participating in the Interim Rollover
would be subject to a maximum stated marginal tax rate of 28% to the
extent that the Interim Rollover Unit holder held his or her Units for
more than one year. Capital gains on the sale of Units held for one year
or less will be taxed at the same rate as ordinary income. See "What is
the Federal Tax Status of Unit Holders?" The exchange option described
above is subject to modification, termination or suspension.
Termination. Commencing no later than the Mandatory Termination Date,
Equity Securities will begin to be sold as prescribed by the Sponsor.
The Trustee shall provide written notice of any termination of the Trust
to Unit holders which will specify when Unit holders may surrender their
certificates for cancellation and will include a form to enable Unit
holders to elect an In-Kind Distribution if such Unit holder owns at
least 2,500 Units of the Trust, rather than to receive payment in cash
for such Unit holder's pro rata share of the amounts realized upon the
disposition by the Trustee of the Equity Securities. To be effective,
the election form, together with surrendered certificates and other
documentation required by the Trustee, must be returned to the Trustee
at least ten business days prior to the Mandatory Termination Date of
the Trust. Unit holders not electing the "Final Rollover" option or a
distribution of shares of the Equity Securities will receive a cash
distribution within a reasonable time after the Trust is terminated. See
"Rights of Unit Holders-How are Income and Capital Distributed?" and
"Other Information-How May the Indenture be Amended or Terminated?"
Risk Factors. An investment in the Trust should be made with an
understanding of the risks associated therewith, including, among other
factors, the possible deterioration of either the financial condition of
the issuers of the Equity Securities or the general condition of the
stock market, volatile interest rates or an economic recession. The
Trust is not actively managed and Equity Securities will not be sold by
the Trust to take advantage of market fluctuations or changes in
anticipated rates of appreciation. See "What are Equity Securities?-Risk
Factors."
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-December 1, 1997
Underwriter: McDonald & Company Securities, Inc.
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
General Information
<S> <C>
Initial Number of Units (1) 15,004
Fractional Undivided Interest in the Trust per Unit (1) 1/15,004
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities in Portfolio (2) $ 148,544
Aggregate Offering Price Evaluation of Equity Securities per Unit $ 9.900
Maximum Sales Charge of 3.95% of the Public Offering Price per Unit
(3.990% of the net amount invested, exclusive of the deferred sales charge) (3) $ .395
Less Deferred Sales Charge per Unit $ (.295)
Public Offering Price per Unit (3) $ 10.000
Sponsor's Initial Repurchase Price per Unit $ 9.705
Redemption Price per Unit (based on aggregate underlying value of Equity
Securities less the deferred sales charge) (4) $ 9.705
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Cash CUSIP Number 30264M 679
Reinvestment CUSIP Number 30264M 687
First Settlement Date December 4, 1997
Interim Rollover Notification Date November 2, 1998
Interim Special Redemption and Liquidation Beginning on December 1, 1998 until no later than
Period December 31, 1998.
Final Rollover Notification Date December 1, 1999
Final Special Redemption and Liquidation Period Beginning on December 1, 1999 until no later than December 31, 1999.
Mandatory Termination Date December 31, 1999
Discretionary Liquidation Amount The Trust may be terminated if the value of the Equity Securities is less
than the lower of $2,000,000 or 20% of the total value of Equity
Securities deposited in the Trust during the initial offering period.
Trustee's Annual Fee $.0098 per Unit outstanding.
Evaluator's Annual Fee $.0030 per Unit outstanding, payable to an affiliate of the Sponsor.
Evaluations for purposes of sale, purchase or redemption of Units are
made as of the close of trading (generally 4:00 p.m. Eastern time) on the
New York Stock Exchange on each day on which it is open.
Supervisory Fee (5) Maximum of $.0035 per Unit outstanding annually payable to an affiliate
of the Sponsor.
Estimated Annual Amortization of
Organizational and Offering Costs (6) $.0075 per Unit.
Income Distribution Record Date Fifteenth day of June and December, commencing June 15, 1998.
Income Distribution Date (7) Last day of June and December, commencing June 30, 1998.
______________
<FN>
(1) As of the close of business on the Initial Date of Deposit, the
number of Units of the Trust may be adjusted so that the Public Offering
Price per Unit will equal approximately $10.00. Therefore, to the extent
of any such adjustment, the fractional undivided interest per Unit will
increase or decrease accordingly, from the amounts indicated above.
(2) Each Equity Security listed on a national securities exchange or The
Nasdaq Stock Market is valued at the last closing sale price, or if no
such price exists or if the Equity Securities are not so listed, at the
closing ask price thereof.
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Table" and "Public Offering" for
additional information regarding these charges. On the Initial Date of
Deposit there will be no accumulated dividends in the Income Account.
Anyone ordering Units after such date will pay a pro rata share of any
accumulated dividends in the Income Account. The Public Offering Price
as shown reflects the value of the Equity Securities at the opening of
business on the Initial Date of Deposit and establishes the original
proportionate relationship amongst the individual securities. No sales
to investors will be executed at this price. Additional Equity
Securities will be deposited during the day of the Initial Date of
Deposit which will be valued as of 4:00 p.m. Eastern time and sold to
investors at a Public Offering Price per Unit based on this valuation.
(4) See "How May Units be Redeemed?"
(5) In addition, the Sponsor may be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $0.0028
per Unit.
(6) The Trust (and therefore Unit holders) will bear all or a portion of
its organizational and offering costs (including costs of preparing the
registration statement, the trust indenture and other closing documents,
registering Units with the Securities and Exchange Commission and
states, the initial audit of the Trust portfolio, legal fees and the
initial fees and expenses of the Trustee but not including the expenses
incurred in the printing of preliminary and final prospectuses, and
expenses incurred in the preparation and printing of brochures and other
advertising materials and any other selling expenses) as is common for
mutual funds. Total organizational and offering expenses will be charged
off over a period not to exceed two years from the Initial Date of
Deposit. See "What are the Expenses and Charges?" and "Statement of Net
Assets." Historically, the sponsors of unit investment trusts have paid
all the costs of establishing such trusts.
(7) During the Interim Special Redemption and Liquidation Period (for
Interim Rollover Unit holders) or the Final Special Redemption and
Liquidation Period (for Final Rollover Unit holders) or upon termination
of the Trust for other Unit holders, amounts in the Income Account
(which consist of dividends on the Equity Securities) will be included
in amounts distributed to or on behalf of Unit holders. Distributions
from the Capital Account will be made monthly payable on the last day of
the month to Unit holders of record on the fifteenth day of such month
if the amount available for distribution equals at least $1.00 per 100
Units. Notwithstanding, distributions of funds in the Capital Account,
if any will be made as part of the final liquidation distribution.
</FN>
</TABLE>
Page 4
FEE TABLE-McDonald Select Equity Trust, Series 1998
This Fee Table is intended to help you to understand the costs and
expenses that you will bear directly or indirectly. See "Public
Offering" and "What are the Expenses and Charges?" Although the Trust
has a term of approximately two years and is a unit investment trust
rather than a mutual fund, this information is presented to permit a
comparison of fees, assuming the principal amount and distributions are
rolled over at the Trust's termination into a New Trust subject only to
the deferred sales charges.
<TABLE>
<CAPTION>
Amount
per Unit
________
<S> <C>
Unit holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of the Public Offering Price) 1.00% (a) $ .100
Deferred Sales Charge during the First Year Deferred Period 1.95% (b) .195
(as a percentage of the Public Offering Price)
Deferred Sales Charge during the Second Year Deferred Period 1.00% (c) .100
(as a percentage of the Public Offering Price)
_______ _______
3.95% $ .395
======= =======
Maximum Sales Charge Imposed on Reinvested Dividends 2.17% (e) .217 (e)
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee .100% $.0098
Portfolio supervision, bookkeeping, administrative, amortization
of organizational and offering costs and evaluation fees .170% .0168
Other operating expenses .022% .0022
_______ _______
Total .292% $.0288
======= =======
</TABLE>
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years(d) 5 Years(d) 10 Years(d)
_______ _________ __________ _________
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment,
assuming the McDonald Select Equity Trust, Series 1998, estimated
operating expense ratio of .292% and a 5% annual return on the
investment throughout the periods $ 32 $ 67 $102 $185
_______________
<FN>
(a) The Initial Sales Charge is actually the difference between the
maximum total sales charge of 3.95% and the maximum remaining deferred
sales charge (initially $.295 per Unit) and would exceed 1.00% if the
Public Offering Price exceeds $10.00 per Unit.
(b) The actual fee during the First Year Deferred Period is $.0195 per
Unit per month, irrespective of purchase or redemption price deducted on
the last business day in each of the ten months from February 27, 1998
to November 30, 1998. If a Unit holder sells or redeems Units before all
of these First Year Deferred Period deductions have been made, the
balance of such deferred sales charge payments remaining will be
deducted from the sales or redemption proceeds. If the Unit price is
less than $10.00 per Unit, the deferred sales charge assessed during the
First Year Deferred Period will exceed 1.95%. 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.
(c) The actual fee during the Second Year Deferred Period is $0.10 per
Unit deducted on January 15, 1999. Unit holders who elect to roll their
Units into a new Series of the Trust during the Interim Special
Redemption Period or Unit holders who sell or redeem their Units on or
before December 31, 1998 will not be assessed the deferred sales charge
for the Second Year Deferred Period.
(d) Although the Trust has a term of only two years and is a unit
investment trust rather than a mutual fund, this information is
presented to permit a comparison of fees, assuming the principal amount
and distributions are rolled over every two years into a new Trust
subject only to the deferred sales charges.
(e) Reinvested Dividends will be subject only to the deferred sales
charge remaining during the First Year Deferred Period at the time of
reinvestment. Unit holders of record on January 4, 1999 will also be
subject to a deferred sales charge of $0.10 during the Second Year
Deferred Period. See "Rights of Unit Holders-How are Income and Capital
Distributed?"
</FN>
</TABLE>
The example assumes reinvestment of all dividends and distributions and
utilizes a 5% annual rate of return as mandated by Securities and
Exchange Commission regulations applicable to mutual funds. In addition,
while the Trust only has a term of approximately two years, this
information is presented to permit comparison of fees, assuming the
principal amount and distributions are rolled over at the Trust's
termination into a new series subject only to the deferred sales charge
and annual trust operation expenses. For purposes of the example, the
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 example 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. Over time, investors who elect to
participate as Interim Rollover Unit holders over consecutive years will
pay higher expenses than those electing to participate as Final Rollover
Unit holders due to the fact that the deferred sales charge assessed
during the First Year Deferred Period exceeds the deferred sales charge
assessed during the Second Year Deferred Period.
Page 5
MCDONALD SELECT EQUITY TRUST, SERIES 1998
FT 223
What is the FT Series?
FT 223 is one of a series of investment companies created by the Sponsor
under the name of the FT Series, all of which are generally similar but
each of which is separate and is designated by a different series
number. The FT Series was previously known as The First Trust Special
Situations Trust Series. This Series consists of an underlying separate
unit investment trust designated as: McDonald Select Equity Trust,
Series 1998. The Trust was created under the laws of the State of New
York pursuant to a Trust Agreement (the "Indenture"), dated the Initial
Date of Deposit, with Nike Securities L.P., as Sponsor, The Chase
Manhattan Bank, as Trustee and First Trust Advisors L.P., as Portfolio
Supervisor and Evaluator.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee
confirmations of contracts for the purchase of common stocks issued by
companies which are considered by the Underwriter to have an above-
average potential for capital appreciation (the "Equity Securities"),
together with an irrevocable letter or letters of credit of a financial
institution in an amount at least equal to the purchase price of such
Equity Securities. In exchange for the deposit of securities or
contracts to purchase securities in the Trust, the Trustee delivered to
the Sponsor documents evidencing the entire ownership of the Trust.
The objective of the Trust is to provide for capital appreciation by
investing in Equity Securities of companies having, in the Underwriter's
opinion on the Initial Date of Deposit, an above-average potential for
capital appreciation. There is, of course, no guarantee that the
objective of the Trust will be achieved.
With the deposit of the Equity Securities on the Initial Date of
Deposit, the Sponsor established a percentage relationship between the
amounts of Equity Securities in the Trust's portfolio. From time to time
following the Initial Date of Deposit, the Sponsor, pursuant to the
Indenture, may deposit additional Equity Securities in the Trust, or
cash (including a letter of credit) with instructions to purchase
additional Equity Securities, and Units may be continuously offered for
sale to the public by means of this Prospectus, resulting in a potential
increase in the outstanding number of Units of the Trust. Any deposit by
the Sponsor of additional Equity Securities, or the purchase of
additional Equity Securities pursuant to a cash deposit, will duplicate,
as nearly as is practicable, the original proportionate relationship and
not the actual proportionate relationship on the subsequent date of
deposit, since the two may differ. Any such difference may be due to the
sale, redemption or liquidation of any of the Equity Securities
deposited in the Trust on the Initial, or any subsequent, Date of
Deposit. See "Rights of Unit Holders-How May Equity Securities be
Removed from the Trust?" The original percentage relationship of each
Equity Security to the Trust is set forth herein under "Schedule of
Investments." Since the prices of the underlying Equity Securities will
fluctuate daily, the ratio, on a market value basis, will also change
daily. The portion of Equity Securities represented by each Unit will
not change as a result of the deposit of additional Equity Securities in
the Trust. If the Sponsor deposits cash, however, existing and new
investors may experience a dilution of their investment and a reduction
in their anticipated income because of fluctuations in the prices of the
Equity Securities between the time of the cash deposit and the purchase
of the Equity Securities and because the Trust will pay the associated
brokerage fees. To minimize this effect, the Trust will try to purchase
the Equity 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 Trust with respect to acquiring Equity Securities
for the Trust. 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.
On the Initial Date of Deposit, each Unit of the Trust represented the
undivided fractional interest in the Equity Securities deposited in such
Trust as set forth under "Summary of Essential Information." To the
extent that Units of the Trust are redeemed, the aggregate value of the
Equity Securities in the Trust will be reduced and the undivided
fractional interest represented by each outstanding Unit of the Trust
Page 6
will increase. However, if additional Units are issued by the Trust in
connection with the deposit of additional Equity Securities or cash by
the Sponsor, the aggregate value of the Equity Securities in the Trust
will be increased by amounts allocable to additional Units, and the
fractional undivided interest represented by each Unit of the Trust will
be decreased proportionately. See "Rights of Unit Holders-How May Units
be Redeemed?" The Trust has a Mandatory Termination Date as set forth
herein under "Summary of Essential Information."
What are the Expenses and Charges?
With the exception of bookkeeping and other administrative services
provided to the Trust, for which the Sponsor may be reimbursed in
amounts as set forth under "Summary of Essential Information," the
Sponsor will not receive any fees in connection with its activities
relating to the Trust. Certain of the expenses incurred in establishing
the Trust, including the cost of the initial preparation of documents
relating to the Trust, federal and state registration fees, the initial
fees and expenses of the Trustee, legal expenses and any other out-of-
pocket expenses may be paid by the Sponsor, and may, in part, be paid by
the Trustee.
First Trust Advisors L.P., an affiliate of the Sponsor, will receive an
annual supervisory fee, which is not to exceed the amount set forth
under "Summary of Essential Information," for providing portfolio
supervisory services for the Trust. Such fee is based on the number of
Units outstanding in the Trust on January 1 of each year except for the
year or years in which an initial offering period occurs in which case
the fee for a month is based on the number of Units outstanding at the
end of such month.
Subsequent to the initial offering period, First Trust Advisors L.P.,
the Evaluator and an affiliate of the Sponsor, will receive a fee as
indicated in the "Summary of Essential Information."
The Trustee pays certain expenses of the Trust for which it is
reimbursed by the Trust. The Trustee will receive for its ordinary
recurring services to the Trust an annual fee as indicated in "Summary
of Essential Information." Such fee will be based upon the largest
aggregate number of Units of the Trust outstanding at any time during
the calendar year. For a discussion of the services performed by the
Trustee pursuant to its obligations under the Indenture, reference is
made to the material set forth under "Rights of Unit Holders."
The Trustee's and the above described fees are payable from the Income
Account of the Trust to the extent funds are available and then from the
Capital Account of the Trust. Since the Trustee has the use of the funds
being held in the Capital and Income Accounts for payment of expenses
and redemptions and since such Accounts are noninterest-bearing to Unit
holders, the Trustee benefits thereby. Part of the Trustee's
compensation for its services to the Trust is expected to result from
the use of these funds.
Each of the above mentioned fees may be increased without approval of
the Unit holders by amounts not exceeding proportionate increases under
the category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor. In addition,
with respect to the fees payable to the Sponsor or an affiliate of the
Sponsor for providing bookkeeping and other administrative services,
supervisory services and evaluation services, such individual fees may
exceed the actual costs of providing such services for the Trust, but at
no time will the total amount received for such services rendered to all
unit investment trusts of which Nike Securities L.P. is the Sponsor in
any calendar year exceed the actual cost to the Sponsor or its affiliate
of supplying such services in such year.
Expenses incurred in establishing the Trust, including costs of
preparing the registration statement, the trust indenture and other
closing documents, registering Units with the Securities and Exchange
Commission and states, the initial audit of the Trust's portfolio and
the initial fees and expenses of the Trustee and any other out-of-pocket
expenses, will be paid by the Trust and charged off over a period not to
exceed the life of the Trust, approximately two years. The following
additional charges are or may be incurred by the Trust: all legal
expenses of the Trustee incurred by or in connection with its
responsibilities under the Indenture; the expenses and costs of any
action undertaken by the Trustee to protect the Trust and the rights and
interests of the Unit holders; fees of the Trustee for any extraordinary
services performed under the Indenture; indemnification of the Trustee
for any loss, liability or expense incurred by it without negligence,
bad faith or willful misconduct on its part, arising out of or in
connection with its acceptance or administration of the Trust;
indemnification of the Sponsor for any loss, liability or expense
incurred without gross negligence, bad faith or willful misconduct in
acting as Depositor of the Trust; all taxes and other government charges
Page 7
imposed upon the Securities or any part of the Trust (no such taxes or
charges are being levied or made or, to the knowledge of the Sponsor,
contemplated). 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 Equity Securities in the
Trust in order to make funds available to pay all these amounts if funds
are not otherwise available in the Income and Capital Accounts of the
Trust. Since the Equity Securities are all common stocks and the income
stream produced by dividend payments is unpredictable, the Sponsor
cannot provide any assurance that dividends will be sufficient to meet
any or all expenses of the Trust. As described above, if dividends are
insufficient to cover expenses, it is likely that Equity Securities will
have to be sold to meet Trust expenses. These sales may result in
capital gains or losses to Unit holders. See "What is the Federal Tax
Status of Unit Holders?"
The Indenture requires the Trust to be audited on an annual basis at the
expense of the Trust by independent auditors selected by the Sponsor. So
long as the Sponsor is making a secondary market for the Units, the
Sponsor is required to bear the cost of such annual audits to the extent
such cost exceeds $0.0050 per Unit. Unit holders of the Trust covered by
an audit may obtain a copy of the audited financial statements upon
request.
What is the Federal Tax Status of Unit Holders?
The following is a general discussion of certain of the Federal income
tax consequences of the purchase, ownership and disposition of the
Units. The summary is limited to investors who hold the Units as
"capital assets" (generally, property held for investment) within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended
(the "Code"). Unit holders should consult their tax advisers in
determining the Federal, state, local and any other tax consequences of
the purchase, ownership and disposition of Units in the Trust. For
purposes of the following discussion and opinion, it is assumed that
each Equity Security is equity for Federal income tax purposes and that
the Equity Securities may represent shares in an entity treated as a
real estate investment trust for Federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor,
under existing law:
1. The Trust is not an association taxable as a corporation for
Federal income tax purposes; each Unit holder will be treated as the
owner of a pro rata portion of each of the assets of the Trust under the
Code; and the income of the Trust will be treated as income of the Unit
holders thereof under the Code. Each Unit holder will be considered to
have received his or her pro rata share of the income derived from each
Equity Security when such income is considered to be received by the
Trust.
2. Each Unit holder will be considered to have received all of the
dividends paid on his or her pro rata portion of each Equity Security
when such dividends are considered to be received by the Trust
regardless of whether such dividends are used to pay a portion of the
deferred sales charge. Unit holders will be taxed in this manner
regardless of whether distributions from the Trust are actually received
by the Unit holder or are automatically reinvested.
3. Each Unit holder will have a taxable event when the Trust disposes
of an Equity Security (whether by sale, taxable exchange, liquidation,
redemption, or otherwise) or upon the sale or redemption of Units by
such Unit holder (except to the extent an in-kind distribution of stocks
is received by such Unit holder as described below). The price a Unit
holder pays for his or her Units is allocated among his or her pro rata
portion of each Equity Security held by the Trust (in proportion to the
fair market values thereof on the valuation date nearest the date the
Unit holder purchases his of her Units) in order to determine his or her
tax basis for his or her pro rata portion of each Equity Security held
by the Trust. It should be noted that certain legislative proposals have
been made which could affect the calculation of basis for Unit holders
holding securities that are substantially identical to the Equity
Securities. Unit holders should consult their own tax advisors with
regard to the calculation of basis. For Federal income tax purposes, a
Unit holder's pro rata portion of dividends, as defined by Section 316
of the Code, paid by a corporation with respect to an Equity Security
held by the Trust is taxable as ordinary income to the extent of such
corporation's current and accumulated "earnings and profits." A Unit
holder's pro rata portion of dividends paid on such Equity Security
Page 8
which exceeds such current and accumulated earnings and profits will
first reduce a Unit holder's tax basis in such Equity Security, and to
the extent that such dividends exceed a Unit holder's tax basis in such
Equity Security shall generally be treated as capital gain. In general,
the holding period of such capital gain will be determined by the period
of time a Unit holder has held his or her Units. Certain of the issuers
of the Equity Securities intend to qualify under special Federal income
tax rules as a "real estate investment trust" (a "REIT," shares of such
issuer held by the Trust shall be referred to as the "REIT Shares").
Because Unit holders are deemed to directly own a pro rata portion of
the REIT Shares as discussed above, Unit holders are advised to consult
their tax advisers for information relating to the tax consequences of
owning the REIT Shares. Provided such issuers qualify as a REIT, certain
distributions by such issuer on the REIT Shares may qualify as "capital
gain dividends," taxable to shareholders (and, accordingly, to the Unit
holders as owners of a pro rata portion of the REIT Shares) as long-term
capital gains, regardless of how long a shareholder has owned such
shares. In addition, distributions of income or capital gains declared
on REIT Shares in October, November or December will be deemed to have
been paid to shareholders (and, accordingly, to the Unit holders as
owners of a pro rata portion of the REIT Shares) on December 31 of the
year they are declared, even when paid by the REIT during the following
January and received by shareholders or Unit holders in such following
year.
4. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Equity Securities held by the
Trust will generally be considered a capital gain (except in the case of
a dealer or financial institution). A Unit holder's portion of loss, if
any, upon the sale or redemption of Units or the disposition of Equity
Securities held by the Trust will generally be considered a capital loss
(except in the case of a dealer or financial institution). Unit holders
should consult their tax advisers regarding the recognition of gains and
losses for Federal income tax purposes. In particular, a Rollover Unit
holder should be aware that a Rollover Unit holder's loss, if any,
incurred in connection with the exchange of Units for Units in the next
new series of the McDonald Select Equity Trust either at the Interim
Rollover or the Final Rollover (collectively, the "New Trusts"), will
generally be disallowed with respect to the disposition of any Equity
Securities pursuant to such exchange to the extent that such Unit holder
is considered the owner of substantially identical securities under the
wash sale provisions of the Code taking into account such Unit holder's
deemed ownership of the securities underlying the Units in a New Trust
in the manner described above, if such substantially identical
securities were acquired within a period beginning 30 days before and
ending 30 days after such disposition. However, any gains incurred in
connection with such an exchange by a Rollover Unit holder would be
recognized. In addition, special rules, as described below, apply to a
Unit holder's pro rata portion of the REIT shares.
Deferred Sales Charge. Generally, the tax basis of a Unit holder
includes sales charges, and such charges are not deductible. A portion
of the sales charge for the 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 should be
added to the Unit holder's tax basis in his or her Units. The deferred
sales charge could cause the Unit holder's Units to be considered to be
debt-financed under Section 264A of the Code which would result in a
small reduction of the dividends-received deduction. In any case, the
income (or proceeds from redemption) a Unit holder must take into
account for federal income tax purposes is not reduced by amounts
deducted to pay the deferred sales charge. Unit holders should consult
their own tax advisers as to the income tax consequences of the deferred
sales charge.
Dividends Received Deduction. A Unit holder will be considered to have
received all of the dividends paid on his or her pro rata portion of
each Equity Security when such dividends are considered to be received
by the Trust. Unit holders will be taxed in this manner regardless of
whether distributions from the Trust are actually received by the Unit
holder or are automatically reinvested. A corporation that owns Units
will generally be entitled to a 70% dividends received deduction with
respect to such Unit holder's pro rata portion of dividends received by
the Trust (to the extent such dividends are taxable as ordinary income,
as discussed above, and are attributable to domestic corporations) in
the same manner as if such corporation directly owned the Equity
Securities paying such dividends (other than corporate Unit holders,
Page 9
such as "S" corporations, which are not eligible for the deduction
because of their special characteristics and other than for purposes of
special taxes such as the accumulated earnings tax and the personal
holding corporation tax). However, a corporation owning Units should be
aware that Sections 246 and 246A of the Code impose additional
limitations on the eligibility of dividends for the 70% dividends
received deduction. These limitations include a requirement that stock
(and therefore Units) must generally be held at least 46 days (as
determined under Section 246(c) of the Code). Final regulations have
recently been issued which address special rules that must be considered
in determining whether the 46-day holding period requirement is met.
Moreover, the allowable percentage of the deduction will be reduced from
70% if a corporate Unit holder owns certain stock (or Units) the
financing of which is directly attributable to indebtedness incurred by
such corporation. DIVIDENDS RECEIVED ON THE REIT SHARES ARE NOT ELIGIBLE
FOR THE DIVIDENDS RECEIVED DEDUCTION. It should be noted that various
legislative proposals that would affect the dividends received deduction
have been introduced. Unit holders should consult with their tax
advisers with respect to the limitations on and possible modifications
to the dividends received deduction. To the extent dividends received by
the Trust are attributable to foreign corporations, a corporation that
owns Units will not be entitled to the dividends received deduction with
respect to its pro rata portion of such dividends, since the dividends
received deduction is generally available only with respect to dividends
paid by domestic corporations.
Limitations on Deductibility of Trust Expenses by Unit holders. Each
Unit holder's pro rata share of each expense paid by a Trust is
deductible by the Unit holder to the same extent as though the expense
had been paid directly by such Unit holder. It should be noted that as a
result of the Tax Reform Act of 1986, certain miscellaneous itemized
deductions, such as investment expenses, tax return preparation fees and
employee business expenses will be deductible by an individual only to
the extent they exceed 2% of such individual's adjusted gross income.
Unit holders may be required to treat some or all of the expenses of a
Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by
the Trust or Disposition of Units. As discussed above, a Unit holder may
recognize taxable gain (or loss) when an Equity Security is disposed of
by the Trust or if the Unit holder disposes of a Unit (although losses
incurred by Rollover Unit holders may be subject to disallowance, as
discussed above). However, any loss realized by a Unit holder with
respect to the disposition of his or her pro rata portion of the REIT
Shares, to the extent such Unit holder has owned his Units for less than
six months or a Trust has held the REIT Shares for less than six months,
will be treated as long-term capital loss to the extent of such Unit
holder's pro rata portion of any capital gain dividends received (or
deemed to have been received) with respect to the REIT Shares. The
Taxpayer Relief Act of 1997 (the "1997 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)
is subject to a maximum marginal stated tax rate of either 28% or 20%,
depending upon the holding periods of the capital assets. 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 for determining the holding period of
the Unit. Generally, capital gains realized from assets held for more
than one year but not more than 18 months are taxed at a maximum
marginal stated tax rate of 28% and capital gains realized from assets
(with certain exclusions) held for more than 18 months are taxed at a
maximum marginal stated tax rate of 20% (10% in the case of certain
taxpayers in the lowest tax bracket). Further, capital gains realized
from assets held for one year or less are taxed at the same rates as
ordinary income. Legislation is currently pending that provides the
appropriate methodology that should be applied in netting the realized
capital gains and losses. Such legislation is proposed to be effective
retroactively for tax years ending after May 6, 1997. Note, however,
that the 1997 Act provides that the application of the rules described
above in the case of pass-through entities such as the REITs will be
prescribed in future Treasury Regulations. The Internal Revenue Service
has released preliminary guidance which provides that, in general, pass-
through entities such as the REITs may designate their capital gains
dividends as either a 20% rate gain distribution or a 28% rate gain
distribution, depending on the nature of the gain received by the pass-
through entity. Unit holders should consult their own tax advisors as to
the tax rate applicable to capital gain dividends. The date on which a
Unit is acquired (i.e., the "trade date") is excluded for purposes of
Page 10
determining the holding period of a Unit. Generally, Unit holders who
elect to become Interim Rollover Unit holders will not be entitled to
the 20% (10%) reduced rate of tax because they will have held their Unit
for only approximately one year whereas Final Rollover Unit holders will
be entitled to the reduced tax rate. However, Unit holders should
consult their own tax advisors regarding the holding period and the tax
rate of capital gains. It should be noted that legislative proposals are
introduced from time to time that affect tax rates and could affect
relative differences at which ordinary income and capital gains are taxed.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered
into after April 30, 1993. Unit holders and prospective investors should
consult with their tax advisers regarding the potential effect of this
provision on their investment in Units.
If the Unit holder disposes of a Unit, he is deemed thereby to have
disposed of his or her entire pro rata interest in all assets of the
Trust including his or her pro rata portion of all the Equity Securities
represented by the Unit.
The Taxpayer Relief Act of 1997 (the "1997 Act") includes provisions
that treat certain transactions designed to reduce or eliminate risk of
loss and opportunities for gain (e.g., short sales, offsetting notional
principal contracts, futures or forward contracts or similar
transactions) as constructive sales for purposes of recognition of gain
(but not loss) and for purposes of determining the holding period. Unit
holders should consult their own tax advisors with regard to any such
constructive sales rules.
Special Tax Consequences of In-Kind Distributions Upon Redemption of
Units, Termination of the Trust and Investment in the New Trust. As
discussed in "Rights of Unit Holders-How are Income and Capital
Distributed?," under certain circumstances a Unit holder who owns at
least 2,500 Units of the Trust may request an In-Kind Distribution upon
the redemption of Units or the termination of the Trust. The Unit holder
requesting an In-Kind Distribution will be liable for expenses related
thereto (the "Distribution Expenses") and the amount of such In-Kind
Distribution will be reduced by the amount of the Distribution Expenses.
See "Rights of Unit Holders-How are Income and Capital Distributed?" As
previously discussed, prior to the redemption of Units or the
termination of the Trust, a Unit holder is considered as owning a pro
rata portion of each of the Trust's assets for Federal income tax
purposes. The receipt of an In-Kind Distribution will result in a Unit
holder receiving an undivided interest in whole shares of stock plus,
possibly, cash.
The potential tax consequences that may occur under an In-Kind
Distribution will depend on whether or not a Unit holder receives cash
in addition to Equity Securities. An "Equity Security" for this purpose
is a particular class of stock issued by a particular corporation. A
Unit holder will not recognize gain or loss if a Unit holder only
receives Equity Securities in exchange for his or her pro rata portion
in the Equity Securities held by the Trust. However, if a Unit holder
also receives cash in exchange for a fractional share of an Equity
Security held by the Trust, such Unit holder will generally recognize
gain or loss based upon the difference between the amount of cash
received by the Unit holder and his tax basis in such fractional share
of an Equity Security held by the Trust.
Because the Trust will own many Equity Securities, a Unit holder who
requests an In-Kind Distribution will have to analyze the tax
consequences with respect to each Equity Security owned by the Trust.
The amount of taxable gain (or loss) recognized upon such exchange will
generally equal the sum of the gain (or loss) recognized under the rules
described above by such Unit holder with respect to each Equity Security
owned by the Trust. Unit holders who request an In-Kind Distribution are
advised to consult their tax advisers in this regard.
As discussed in "Rights of Unit Holders-Special Redemption, Liquidation
and Investment in a New Trust," a Unit holder may elect to become a
Rollover Unit holder. To the extent a Rollover Unit holder exchanges his
Units for Units of a New Trust in a taxable transaction, such Unit
holder will recognize gains, if any, but generally will not be entitled
to a deduction for any losses recognized upon the disposition of any
Equity Securities pursuant to such exchange to the extent that such Unit
holder is considered the owner of substantially identical securities
under the wash sale provisions of the Code taking into account such Unit
Page 11
holder's deemed ownership of the securities underlying the Units in a
1999 Trust in the manner described above, if such substantially
identical securities were acquired within a period beginning 30 days
before and ending 30 days after such disposition under the wash sale
provisions contained in Section 1091 of the Code. In the event a loss is
disallowed under the wash sale provisions, special rules contained in
Section 1091(d) of the Code apply to determine the Unit holder's tax
basis in the securities acquired. Rollover Unit holders are advised to
consult their tax advisers.
Computation of the Unit holder's Tax Basis. Initially, a Unit holder's
tax basis in his Units will generally equal the price paid by such Unit
holder for his Units. The cost of the Units is allocated among the
Equity Securities held in the Trust in accordance with the proportion of
the fair market values of such Equity Securities as of the valuation
date nearest the date the Units are purchased in order to determine such
Unit holder's tax basis for his pro rata portion of each Equity Security.
A Unit holder's tax basis in his Units and his pro rata portion of an
Equity Security held by the Trust will be reduced to the extent
dividends paid with respect to such Equity Security are received by the
Trust which are not taxable as ordinary income as described above.
General. Each Unit holder will be requested to provide the Unit holder's
taxpayer identification number to the Trustee and to certify that the
Unit holder has not been notified by the Internal Revenue Service that
payments to the Unit holder are subject to back-up withholding. If the
proper taxpayer identification number and appropriate certification are
not provided when requested, distributions by the Trust to such Unit
holder (including amounts received upon the redemption of Units) will be
subject to back-up withholding. Distributions by the Trust (other than
those that are not treated as United States source income, if any) will
generally be subject to United States income taxation and withholding in
the case of Units held by non-resident alien individuals, foreign
corporations or other non-United States persons. Such persons should
consult their tax advisers.
In general, income that is not effectively connected to the conduct of a
trade or business within the United States that is earned by non-U.S.
Unit holders and derived from dividends of foreign corporations will not
be subject to U.S. withholding tax provided that less than 25 percent of
the gross income of the foreign corporation for a three-year period
ending with the close of its taxable year preceding payment was not
effectively connected to the conduct of a trade or business within the
United States. In addition, such earnings may be exempt from U.S.
withholding pursuant to a specific treaty between the United States and
a foreign country. Non-U.S. Unit holders should consult their own tax
advisers regarding the imposition of U.S. withholding on distributions
from the Trust.
It should be noted that payments to the Trust of dividends on Equity
Securities that are attributable to foreign corporations may be subject
to foreign withholding taxes and Unit holders should consult their tax
advisers regarding the potential tax consequences relating to the
payment of any such withholding taxes by the Trust. Any dividends
withheld as a result thereof will nevertheless be treated as income to
the Unit holders. Because, under the grantor trust rules, an investor is
deemed to have paid directly his share of foreign taxes that have been
paid or accrued, if any, an investor may be entitled to a foreign tax
credit or deduction for United States purposes with respect to such
taxes. The 1997 Tax Act imposes a required holding period for such
credits. Investors should consult their tax advisers with respect to
foreign withholding taxes and foreign tax credits.
At the termination of the Trust, the Trustee will furnish to each Unit
holder a statement containing information relating to the dividends
received by the Trust on the Equity Securities, the gross proceeds
received by the Trust from the disposition of any Equity Security
(resulting from redemption or the sale of any Equity Security) and the
fees and expenses paid by the Trust. The Trustee will also furnish
annual information returns to Unit holders and to the Internal Revenue
Service.
Unit holders desiring to purchase Units for tax-deferred plans and IRAs
should consult their broker for details on establishing such accounts.
Units may also be purchased by persons who already have self-directed
plans established. See "Why are Investments in the Trust Suitable for
Retirement Plans?"
The foregoing discussion relates only to the tax treatment of U.S. Unit
holders ("U.S. Unit holders") with regard to federal and certain aspects
of New York State and City income taxes. Unit holders may be subject to
taxation in New York or in other jurisdictions and should consult their
own tax advisers in this regard. As used herein, the term "U.S. Unit
holder" means an owner of a Unit in the Trust that (a) is (i) for United
States federal income tax purposes a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or
Page 12
organized in or under the laws of the United States or of any political
subdivision thereof, or (iii) an estate or trust the income of which is
subject to United States federal income taxation regardless of its
source or (b) does not qualify as a U.S. Unit holder in paragraph (a)
but whose income from a Unit is effectively connected with such Unit
holder's conduct of a United States trade or business. The term also
includes certain former citizens of the United States whose income and
gain on the Units will be taxable.
In the opinion of Carter, Ledyard & Milburn, Special Counsel to the
Trust for New York tax matters, under the existing income tax laws of
the State of New York, the Trust is not an association taxable as a
corporation and the income of the Trust will be treated as the income of
the Unit holders thereof.
Why are Investments in the Trust Suitable for Retirement Plans?
Units of the Trust may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other tax-deferred
retirement plans. Generally, the Federal income tax relating to capital
gains and income received in each of the foregoing plans is deferred
until distributions are received. Distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible
for special averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax
laws related thereto and should consult their attorneys or tax advisers
with respect to the establishment and maintenance of any such plan. Such
plans are offered by brokerage firms and other financial institutions.
Fees and charges with respect to such plans may vary.
PORTFOLIO
What are Equity Securities?
The Trust will seek to achieve its objective of capital appreciation
through an investment in a fixed, diversified portfolio of Equity
Securities. All of the Equity Securities are of domestic companies.
There are no preferred stock or convertible debt issues, nor are there
stocks of foreign companies. All of the Equity Securities are listed on
a national securities exchange or The Nasdaq Stock Market or are traded
in the over-the-counter market. See "What are the Equity Securities
Selected for the McDonald Select Equity Trust, Series 1998?"
The portfolio of the Trust consists of equity securities selected by
Bradley E. Turner, Managing Director of McDonald & Company Securities,
Inc. The companies selected will generally meet the following criteria
on the Initial Date of Deposit: a long history of earnings growth, solid
financial position and a strong competitive position. The companies
chosen are expected to have demonstrated intelligent capital allocation
decisions as evidenced by their dividend policy, reinvestment criteria
and acquisition strategy.
Established in 1924, McDonald & Company Securities, Inc. is a leading,
full-service regional investment banking, brokerage and asset management
firm servicing individuals, corporations, institutions and governments
upon the principle that the interest of clients always comes first. In
1991, McDonald & Company Securities, Inc. merged with Gradison &
Company, which now operates as the Gradison Division. This merger has
greatly enhanced the company's asset management capabilities.
McDonald & Company Securities, Inc. is a member of all major exchanges,
as well as the National Association of Securities Dealers (NASD) and the
Securities Investors Protection Corporation (SIPC).
Risk Factors. An investment in Units of the Trust should be made with an
understanding of the problems and risks such an investment may entail.
The Trust consists of such of the Equity Securities listed under
"Schedule of Investments" as may continue to be held from time to time
in the Trust and any additional Equity Securities acquired and held by
the Trust pursuant to the provisions of the Trust Agreement together
with cash held in the Income and Capital accounts. Neither the Sponsor,
the Trustee nor McDonald & Company shall be liable in any way for any
failure in any of the Equity Securities. However, should any contract
for the purchase of any of the Equity Securities initially deposited
hereunder fail, the Sponsor will, unless substantially all of the moneys
held in the Trust to cover such purchase are reinvested in substitute
Equity Securities in accordance with the Trust Agreement, refund the
cash and sales charge attributable to such failed contract to all Unit
holders on the next distribution date.
Because certain of the Equity Securities from time to time may be sold
under certain circumstances described herein, and because the proceeds
from such events will be distributed to Unit holders and will not be
reinvested, no assurance can be given that the Trust will retain for any
length of time its present size and composition. Due to the short
Page 13
duration of the Trust there is no assurance that the Trust's objective
will be achieved or that the Trust will provide for capital appreciation
in excess of the Trust's expenses. Although the portfolio is not
managed, the Sponsor may instruct the Trustee to sell Equity Securities
under certain limited circumstances. Pursuant to the Indenture and with
limited exceptions, the Trustee may sell any securities or other
property acquired in exchange for Equity Securities such as those
acquired in connection with a merger or other transaction. If offered
such new or exchanged securities or property, the Trustee shall reject
the offer. However, in the event such securities or property are
nonetheless acquired by the Trust, they may be accepted for deposit in
the Trust and either sold by the Trustee or held in the Trust pursuant
to the direction of the Sponsor (who may rely on the advice of the
Portfolio Supervisor). See "Rights of Unit Holders-How May Equity
Securities be Removed from the Trust?" Equity Securities, however, will
not be sold by the Trust to take advantage of market fluctuations or
changes in anticipated rates of appreciation or depreciation.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be
in the over-the-counter market. As a result, the existence of a liquid
trading market for the Equity Securities may depend on whether dealers
will make a market in the Equity Securities. There can be no assurance
that a market will be made for any of the Equity Securities, that any
market for the Equity Securities will be maintained or of the liquidity
of the Equity Securities in any markets made. In addition, the Trust may
be restricted under the Investment Company Act of 1940 from selling
Equity Securities to the Sponsor. The price at which the Equity
Securities may be sold to meet redemptions, and the value of the Trust,
will be adversely affected if trading markets for the Equity Securities
are limited or absent.
An investment in Units should be made with an understanding of the risks
which an investment in common stocks entails, including the risk that
the financial condition of the issuers of the Equity Securities or the
general condition of the common stock market may worsen and the value of
the Equity Securities and therefore the value of the Units may decline.
Common stocks are especially susceptible to general stock market
movements and to volatile increases and decreases of value as market
confidence in and perceptions of the issuers change. These perceptions
are based on unpredictable factors including expectations regarding
government, economic, monetary and fiscal policies, inflation and
interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Shareholders of common
stocks have rights to receive payments from the issuers of those common
stocks that are generally subordinate to those of creditors of, or
holders of debt obligations or preferred stocks of, such issuers.
Shareholders of common stocks of the type held by the Trust have a right
to receive dividends only when and if, and in the amounts, declared by
the issuer's board of directors and have a right to participate in
amounts available for distribution by the issuer only after all other
claims on the issuer have been paid or provided for. Common stocks do
not represent an obligation of the issuer and, therefore, do not offer
any assurance of income or provide the same degree of protection of
capital as do debt securities. The issuance of additional debt
securities or preferred stock will create prior claims for payment of
principal, interest and dividends which could adversely affect the
ability and inclination of the issuer to declare or pay dividends on its
common stock or the rights of holders of common stock with respect to
assets of the issuer upon liquidation or bankruptcy. The value of common
stocks is subject to market fluctuations for as long as the common
stocks remain outstanding, and thus the value of the Equity Securities
in the portfolio may be expected to fluctuate over the life of the Trust
to values higher or lower than those prevailing on the Initial Date of
Deposit.
Holders of common stocks incur more risk than holders of preferred
stocks and debt obligations because common stockholders, as owners of
the entity, have generally inferior rights to receive payments from the
issuer in comparison with the rights of creditors of, or holders of debt
obligations or preferred stocks issued by, the issuer. Cumulative
preferred stock dividends must be paid before common stock dividends and
any cumulative preferred stock dividend omitted is added to future
dividends payable to the holders of cumulative preferred stock.
Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.
Unit holders will be unable to dispose of any of the Equity Securities
in the Portfolio, as such, and will not be able to vote the Equity
Page 14
Securities. As the holder of the Equity Securities, the Trustee will
have the right to vote all of the voting stocks in the Trust and will
vote such stocks in accordance with the instructions of the Sponsor.
Investors should note that because the Underwriter uses the list of
Equity Securities which comprises the portfolio in its independent
capacity as an investment advisor to individuals, mutual funds, employee
benefit plans and other institutions and persons and distributes this
information to various individuals and entities, the Underwriter may
recommend or effect from time to time the purchase or sale of one or
more of the Equity Securities. This may have an effect on the prices of
the Equity Securities which is adverse to the interests of the
purchasers of Units of the Trust. Additionally, this may have an impact
on the price paid by the Trust for the Equity Securities as well as the
price received upon redemption of the Units or upon the termination of
the Trust. Investors should also note that Equity Securities will not be
removed from the Trust and additional Units of the Trust may be created
even if the Underwriter no longer believes certain or all of the Equity
Securities have the potential to provide capital appreciation and
increasing dividend income over the life of the Trust or issues a sell
recommendation regarding any of the Equity Securities included in the
Trust.
The Underwriter has acquired or may acquire the Equity Securities for
the Sponsor and thereby may benefit. The Underwriter in its general
securities business acts as agent or principal in connection with the
purchase and sale of equity securities, including the Equity Securities
in the Trust, and may act as a market maker in certain of the Equity
Securities. The Underwriter also from time to time may issue reports on
and make recommendations relating to equity securities, which may
include the Equity Securities.
What are the Equity Securities Selected for McDonald Select Equity
Trust, Series 1998?
AMP, Inc., headquartered in Harrisburg, Pennsylvania, designs, makes and
sells a broad range of electronic, electrical and electro-optic
connection devices and interconnection systems and connector-intensive
assemblies to original equipment manufacturers, utilities, government
agencies, value-added resellers and others in more than 125 countries.
American Bankers Insurance Group, Inc., headquartered in Miami, Florida,
through subsidiaries, provides mainly credit-related insurance including
life, disability, accidental death and dismemberment, property (sold in
connection with consumer financing) and unemployment in the United
States, Canada, Latin America, the Caribbean and the United Kingdom.
Becton Dickinson & Company, headquartered in Franklin Lakes, New Jersey,
makes and sells a broad line of medical supplies and devices and
diagnostic systems used by healthcare professionals, medical research
institutions and the general public. The company's operations consist of
two worldwide businesses: medical supplies and devices and diagnostic
systems.
Cole National Corporation (Class A), headquartered in Mayfield Heights,
Ohio, provides eyewear products and optometric services and sells
personalized gifts through more than 2,300 retail locations in 49
states. The company differentiates itself from other specialty retailers
by providing value-added services at the point of sale at all of its
retail locations.
Cooper Tire and Rubber Company, headquartered in Findlay, Ohio, makes
and sells automobile and truck tires, inner tubes, vibration control
products, hose and hose assemblies, and automotive sealing systems.
Corning, Incorporated, headquartered in Corning, New York, with
subsidiaries, makes and sells products made from specialty glasses and
related inorganic materials; optical-fiber, optical-cable and other
telecommunications products; video components; and consumer houseware
and tableware.
Dana Corporation, headquartered in Toledo, Ohio, makes and sells
products and systems for the worldwide vehicular, industrial and off-
highway original equipment markets and is a major supplier to the
related aftermarkets. The company also provides lease financing.
Duke Realty Investments, Inc., headquartered in Indianapolis, Indiana,
is a real estate investment trust which owns and manages a diversified
portfolio of 266 industrial, office and retail properties encompassing
more than 31 million square feet located in eight states.
Emerson Electric Company, headquartered in St. Louis, Missouri, through
segments, designs, makes and sells electrical, electromechanical and
electronic products and systems.
Enron Corp., headquartered in Houston, Texas, gathers, transports and
markets natural gas at wholesale; explores for and produces natural gas
Page 15
and crude oil; produces, purchases, transports and markets natural gas
liquids, crude oil, and refined petroleum products; and develops,
constructs and operates natural gas-fired power plants.
First Data Corporation, headquartered in Hackensack, New Jersey,
provides processing services to issuers of VISA and MasterCards; payment
instrument processing services to institutions and consumers; telephone
and information processing services; shareholder services; information
systems; and data processing.
Mobil Corporation, headquartered in Fairfax, Virginia, produces,
transports, refines and markets petroleum and natural gas and related
products and makes and markets chemicals.
What are Some Additional Considerations for Investors?
Investors should be aware of certain other considerations before making
a decision to invest in the Trust.
The value of the Equity Securities will fluctuate over the life of the
Trust and may be more or less than the price at which they were
deposited in the Trust. The Equity Securities may appreciate or
depreciate in value (or pay dividends) depending on the full range of
economic and market influences affecting these securities, including the
impact of the Sponsor's purchase and sale of the Equity Securities
(especially during the primary offering period of Units of the Trust and
during either the Interim or Final Special Redemption and Liquidation
Period) and other factors.
The Sponsor and the Trustee shall not be liable in any way for any
default, failure or defect in any Equity Security. In the event of a
notice that any Equity Security will not be delivered ("Failed Contract
Obligations") to the Trust, the Sponsor is authorized under the
Indenture to direct the Trustee to acquire other Equity Securities
("Replacement Securities"). Any Replacement Security will be identical
to those which were the subject of the failed contract. The Replacement
Securities must be purchased within 20 days after delivery of the notice
of a failed contract and the purchase price may not exceed the amount of
funds reserved for the purchase of the Failed Contract Obligations.
If the right of limited substitution described in the preceding
paragraphs is not utilized to acquire Replacement Securities in the
event of a failed contract, the Sponsor will refund the sales charge
attributable to such Failed Contract Obligations to all Unit holders of
the Trust and the Trustee will distribute the principal attributable to
such Failed Contract Obligations not more than 120 days after the date
on which the Trustee received a notice from the Sponsor that a
Replacement Security would not be deposited in the Trust. In addition,
Unit holders should be aware that, at the time of receipt of such
principal, they may not be able to reinvest such proceeds in other
securities at a yield equal to or in excess of the yield which such
proceeds would have earned for Unit holders of the Trust.
The Indenture also authorizes the Sponsor to increase the size of the
Trust and the number of Units thereof by the deposit of additional
Equity Securities, or cash (including a letter of credit) with
instructions to purchase additional Equity Securities, in the Trust and
the issuance of a corresponding number of additional Units. If the
Sponsor deposits cash, existing and new investors could experience a
dilution of their investments and a reduction in anticipated income
because of fluctuations in the prices of the Equity Securities between
the time of the cash deposit and the actual purchase of the Equity
Securities and because the Trust will pay the brokerage fees associated
therewith.
The Trust consists of the Equity Securities listed under "Schedule of
Investments" (or contracts to purchase such Equity Securities) as may
continue to be held from time to time in the Trust and any additional
Equity Securities acquired and held by the Trust pursuant to the
provisions of the Indenture (including provisions with respect to
deposits into the Trust of Equity Securities or cash in connection with
the issuance of additional Units).
Once all of the Equity Securities in the Trust are acquired, the Trustee
will have no power to vary the investments of the Trust, i.e., the
Trustee will have no managerial power to take advantage of market
variations to improve a Unit holder's investment, and may dispose of
Equity Securities only under limited circumstances. See "Rights of Unit
Holders-How May Equity Securities be Removed from the Trust?"
To the best of the Sponsor's knowledge, there is no litigation pending
as of the Initial Date of Deposit in respect of any Equity Security
which might reasonably be expected to have a material adverse effect on
the Trust. At any time after the Initial Date of Deposit, litigation may
Page 16
be instituted on a variety of grounds with respect to the Equity
Securities. The Sponsor is unable to predict whether any such litigation
will be instituted, or if instituted, whether such litigation might have
a material adverse effect on the Trust.
Legislation. From time to time Congress considers proposals to reduce
the rate of the dividends-received deductions. Enactment into law of a
proposal to reduce the rate would adversely affect the after-tax return
to investors who can take advantage of the deduction. Unit holders are
urged to consult their own tax advisers. Further, at any time after the
Initial Date of Deposit, legislation may be enacted, with respect to the
Equity Securities in the Trust or the issuers of the Equity Securities.
Changing approaches to regulation, particularly with respect to the
environment, may have a negative impact on certain companies represented
in the Trust. There can be no assurance that future legislation,
regulation or deregulation will not have a material adverse effect on
the Trust or will not impair the ability of the issuers of the Equity
Securities to achieve their business goals.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. During the initial
offering period, the Public Offering Price is based on the aggregate
underlying value of the Equity Securities in the Trust (generally
determined by the closing sale price of listed Equity Securities and the
ask price of over-the-counter traded Equity Securities), plus or minus
cash, if any, in the Income and Capital Accounts of the Trust, plus an
initial sales charge equal to the difference between the maximum sales
charge of 3.95% of the Public Offering Price and the maximum remaining
deferred sales charge, initially $.295 per Unit. Commencing on February
27, 1998, and on the last business day of each month thereafter through
November 30, 1998 (the "First Year Deferred Period"), a deferred sales
charge of $0.0195 per Unit per month will also be assessed. In addition,
Unit holders of record on January 4, 1999 (the "Second Year Deferred
Period") will also be assessed a one-time deferred sales charge of $0.10
per Unit on January 15, 1999. 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. Unit holders
who elect to roll the proceeds of their Units into a new Series of the
Trust during the Interim Special Redemption Period (as described under
"Rights of Unit Holders-Special Redemption, Liquidation and Investment
in a New Trust") or Unit holders who sell or redeem their Units on or
before December 31, 1998 will not be assessed the deferred sales charge
for the Second Year Deferred Period; however, Units sold or tendered for
redemption prior to such time as the entire deferred sales charge
assessed during the First Year Deferred Period has been collected will
be assessed the amount of such remaining deferred sales charge at the
time of sale or redemption. The deferred sales charge assessed during
both the First Year Deferred Period and the Second Year Deferred Period
will be paid from funds in the Income and/or Capital Accounts of the
Trust, if sufficient, or from the periodic sale of Equity Securities.
The total maximum sales charge which may be assessed to Unit holders of
the Trust on a per Unit basis is 3.95% of the Public Offering Price
(equivalent to a maximum of 3.990% of the net amount invested, exclusive
of the deferred sales charge).
During the initial offering period, the Sponsor's Repurchase Price is
based on the aggregate underlying value of the Equity Securities in the
Trust, (generally determined by the closing sale price of listed Equity
Securities and the ask price of over-the-counter traded Equity
Securities), plus or minus cash, if any, in the Income and Capital
Accounts of the Trust divided by the number of Units of the Trust
outstanding, reduced by the applicable amount of deferred sales charge
not yet paid. For secondary market sales of the Trust after completion
of the Second Year Deferred Period, the Public Offering Price is also
based upon the aggregate underlying value of the Equity Securities in
the Trust (generally determined by the closing sale prices of listed
Equity Securities and the bid prices of the over-the-counter traded
Equity Securities) plus or minus a pro rata share of cash, if any, in
the Capital and Income Accounts of the Trust plus a one-time initial
sales charge of 2.95% of the Public Offering Price (equivalent to 3.040%
of the net amount invested) divided by the number of outstanding Units
of the Trust.
The minimum amount which an investor may purchase of the Trust is
$1,000. Only whole Units may be purchased. The applicable sales charge
for both primary and secondary market sales is reduced by a discount as
indicated below for volume purchases as a percentage of Public Offering
Price (except for sales made pursuant to a "wrap fee account" or similar
arrangements as set forth below):
Page 17
<TABLE>
<CAPTION>
Primary and Secondary
_____________________
Percent of Percent of
Offering Net Amount
Number of Units Price Invested
_______________ __________ __________
<S> <C> <C>
10,000 to 24,999 0.25% 0.2506%
25,000 to 49,999 0.50% 0.5025%
50,000 to 99,999 0.75% 0.7557%
100,000 or more 1.75% 1.7810%
</TABLE>
Any such reduced sales charge shall be the responsibility of the selling
Underwriter, broker/dealer, bank or other selling agent. The reduced
sales charge structure will apply on all purchases of Units in the Trust
by the same person on any one day from the Underwriter or any dealer,
bank or other selling agent. Additionally, Units of the Trust purchased
in the name of the spouse of a purchaser or in the name of a child of
such purchaser under 21 years of age will be deemed, for the purposes of
calculating the applicable sales charge, to be additional purchases by
the purchaser. The reduced sales charges will also be applicable to a
trustee or other fiduciary purchasing securities for a single trust
estate or single fiduciary account. The purchaser must inform the
Underwriter, broker/dealer, bank or other selling agent of any such
combined purchase prior to the sale in order to obtain the indicated
discount. Unit holders of McDonald Select Equity Trust, Series 1997 who
elected to become Rollover Unit holders into McDonald Select Equity
Trust, Series 1998 are entitled to purchase Units of the Trust subject
to the maximum deferred sales charge on such Units, as set forth above.
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, Underwriter, broker/dealers,
banks or other selling agents and their subsidiaries and vendors
providing services to the Sponsor will be able to purchase Units of the
Trust at the Public Offering Price, less the applicable broker/dealer
concession during the initial offering period.
Investors who purchase Units through registered broker/dealers who
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 may purchase Units in the primary or
secondary market at the Public Offering Price, less the concession the
Sponsor typically would allow such broker/dealer. However, such
investors owning Units during the Second Year Deferred Period will be
subject to a deferred sales charge which will be paid to the Sponsor.
See "Public Offering-How are Units Distributed?"
Had the Units of the Trust been available for sale on the business day
prior to the Initial Date of Deposit, the Public Offering Price would
have been as indicated in "Summary of Essential Information." The Public
Offering Price of Units on the date of the prospectus or during the
initial offering period may vary from the amount stated under "Summary
of Essential Information" in accordance with fluctuations in the prices
of the underlying Equity Securities. During the initial offering period,
the aggregate value of the Units of the Trust shall be determined on the
basis of the aggregate underlying value of the Equity Securities therein
plus or minus cash, if any, in the Income and Capital Accounts of the
Trust. The aggregate underlying value of the Equity Securities will be
determined in the following manner: if the Equity Securities are listed
on a national securities exchange or The Nasdaq Stock Market, this
evaluation is generally based on the closing sale prices on that
exchange or that market (unless it is determined that these prices are
inappropriate as a basis for valuation) or, if there is no closing sale
price on that exchange or market, at the closing ask prices. If the
Equity Securities are not so listed or, if so listed and the principal
market therefore is other than on the exchange or market, the evaluation
shall generally be based on the current ask prices on the over-the-
counter market (unless it is determined that these prices are
inappropriate as a basis for evaluation). If current ask prices are
unavailable, the evaluation is generally determined (a) on the basis of
current ask prices for comparable securities, (b) by appraising the
value of the Equity Securities on the ask side of the market or (c) by
any combination of the above.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the aggregate underlying
Page 18
value of the Equity Securities therein, plus or minus cash, if any, in
the Income and Capital Accounts of the Trust plus the applicable sales
charge. The aggregate underlying value of the Equity Securities for
secondary market sales is calculated in the same manner as described
above for sales made during the initial offering period with the
exception that bid prices are used instead of ask prices.
Although payment is normally made three business days following the
order for purchase (the "date of settlement"), payment may be made prior
thereto. A person will become an owner of Units on the date of
settlement provided payment has been received. Cash, if any, made
available to the Sponsor prior to the date of settlement for the
purchase of Units may be used in the Sponsor's business and may be
deemed to be a benefit to the Sponsor, subject to the limitations of the
Securities Exchange Act of 1934. Delivery of Certificates representing
Units so ordered will be made three business days following such order
or shortly thereafter. See "Rights of Unit Holders-How May Units be
Redeemed?" for information regarding the ability to redeem Units ordered
for purchase.
How are Units Distributed?
During the initial offering period, Units issued on the Initial Date of
Deposit, additional Units created on subsequent Date(s) of Deposit, and
Units reacquired by the Sponsor and resold during the initial offering
period, will be sold at the current Public Offering Price. Upon the
termination of the initial offering period, unsold Units created or
Units reacquired during the initial offering period and Units reacquired
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.
It is the intention of the Sponsor to qualify Units of the Trust for
sale in a number of states. Sales will be made to dealers and others at
prices which represent a concession or agency commission of 2.0% of the
Public Offering Price for primary and secondary market sales. Brokers,
dealers and other selling agents will receive a concession or agency
commission of 1.00% of the Public Offering Price per Unit on purchases
by Rollover Unit holders and will receive an additional concession or
agency commission of $.10 per Unit on Units held in the Trust through
the Second Year Deferred Period. However, resales of Units of the Trust
by such dealers and others to the public will be made at the Public
Offering Price described in the prospectus. The Sponsor reserves the
right to change the amount of the concession or agency commission from
time to time. Certain commercial banks may be making Units of the Trust
available to their customers on an agency basis. A portion of the sales
charge paid by these customers is retained by or remitted to the banks
in the amounts indicated above. Under the Glass-Steagall Act, banks are
prohibited from underwriting Trust Units; however, the Glass-Steagall
Act does permit certain agency transactions and the banking regulators
have not indicated that these particular agency transactions are not
permitted under such Act. In Texas and in certain other states, any
banks making Units available must be registered as broker/dealers under
state law.
What are the Sponsor's and Underwriter's Profits?
The Underwriter of the Trust will receive a gross sales commission equal
to 3.95% of the Public Offering Price of the Units (equivalent to 3.990%
of the net amount invested, exclusive of the deferred sales charge),
less any reduced sales charge described under "Public Offering-How is
the Public Offering Price Determined?" and less any reduced sales charge
for Rollover Unit holders of the 1997 Trust. See "Underwriting" for
information regarding the receipt of the excess gross sales commissions
by the Sponsor from the Underwriter. In addition, the Sponsor may be
considered to have realized a profit or to have sustained a loss, as the
case may be, in the amount of any difference between the cost of the
Equity Securities to the Trust (which is based on the Evaluator's
determination of the aggregate offering price of the underlying Equity
Securities of such Trust on the Initial Date of Deposit as well as on
subsequent deposits) and the cost of such Equity Securities to the
Sponsor. See "Underwriting" and Note (2) of "Schedule of Investments"
for the Trust. During the initial offering period, the Underwriter also
may realize profits or sustain losses as a result of fluctuations after
the applicable Date of Deposit in the Public Offering Price received by
the Underwriter upon the sale of Units.
In maintaining a market for the Units, the Sponsor and Underwriter will
also realize profits or sustain losses in the amount of any difference
between the price at which Units are purchased and the price at which
Page 19
Units are resold (which price includes the applicable sales charge) or
redeemed. The secondary market public offering price of Units may be
greater or less than the cost of such Units to the Sponsor or Underwriter.
Will There be a Secondary Market?
After the initial offering period, although it is not obligated to do
so, the Sponsor intends to, and the Underwriter may, maintain a market
for the Units and continuously offer to purchase Units at prices,
subject to change at any time, based upon the aggregate underlying value
of the Equity Securities in the Trust plus or minus cash and receivables
(including dividends declared but not paid), if any, in the Income and
Capital Accounts of the Trust. All expenses incurred in maintaining a
secondary market, other than the fees of the Evaluator and the costs of
the Trustee in transferring and recording the ownership of Units, will
be borne by the Sponsor. If the supply of Units exceeds demand, or for
some other business reason, the Sponsor may discontinue purchases of
Units at such prices. IF A UNIT HOLDER WISHES TO DISPOSE OF HIS UNITS,
HE SHOULD INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES PRIOR TO
MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE. Subject to the
limitations set forth under "Rights of Unit Holders-How May Units be
Redeemed?", 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.
See "Rights of Unit Holders-How May Units be Redeemed?"
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 guaranty program in addition to, or in substitution for,
STAMP, as may be accepted by the Trustee. In certain instances the
Trustee may require additional documents such as, but not limited to,
trust instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority. Record ownership
may occur before settlement.
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
name, address and taxpayer identification number, if any, of the new
registered owner; a notation of any liens and restrictions of the issuer
and any adverse claims to which such Units are or may be subject or a
statement that there are no such liens, restrictions or adverse claims;
and the date the transfer was registered. Uncertificated Units are
transferable through the same procedures applicable to Units evidenced
by certificates (described above), except that no certificate need be
presented to the Trustee and no certificate will be issued upon the
transfer unless requested by the Unit holder. A Unit holder may at any
time request the Trustee to issue certificates for Units.
Although no such charge is now made or contemplated, a Unit holder may
be required to pay $2.00 to the Trustee per certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or exchange. For new certificates
Page 20
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 Income and Capital Distributed?
The Trustee will distribute any net income received with respect to any
of the Equity Securities in the Trust on or about the Income
Distribution Dates to Unit holders of record on the preceding Income
Record Date. See "Summary of Essential Information." Notification to the
Trustee of the transfer of Units is the responsibility of the purchaser,
but in the normal course of business such notice is provided by the
selling broker-dealer. Proceeds received on the sale of any Equity
Securities in the Trust, to the extent not used to meet redemptions of
Units or pay expenses, will, however, be distributed on the last day of
each month to Unit holders of record on the fifteenth day of such month
if the amount available for distribution equals at least $0.01 per Unit.
The Trustee is not required to pay interest on funds held in the Capital
Account of the Trust (but may itself earn interest thereon and therefore
benefit from the use of such funds). Notwithstanding, distributions of
funds in the Capital Account, if any, will be made as part of the final
liquidation distribution, and in certain circumstances, earlier. See
"What is the Federal Tax Status of Unit Holders?"
It is anticipated that the deferred sales charge will be collected from
the Capital Account and that amounts in the Capital Account will be
sufficient to cover the cost of the deferred sales charge. However, to
the extent that amounts in the Capital Account are insufficient to
satisfy the then current deferred sales charge obligation, Equity
Securities may be sold to meet such shortfall. Distributions of amounts
necessary to pay the deferred portion of the sales charge will be made
to an account designated by the Sponsor for purposes of satisfying Unit
holders' deferred sales charge obligations.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of any distribution made by
the Trust if the Trustee has not been furnished the Unit holder's tax
identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and
may be recovered by the Unit holder under certain circumstances by
contacting the Trustee, otherwise the amount may be recoverable only
when filing a tax return. Under normal circumstances the Trustee obtains
the Unit holder's tax identification number from the selling broker.
However, a Unit holder should examine his or her statements from the
Trustee to make sure that the Trustee has been provided a certified tax
identification number in order to avoid this possible "back-up
withholding." In the event the Trustee has not been previously provided
such number, one should be provided as soon as possible.
Within a reasonable time after the Trust is terminated, each Unit holder
who is not a Rollover Unit holder will, upon surrender of his Units for
redemption, receive (i) the pro rata share of the amounts realized upon
the disposition of Equity Securities, unless he or she elects an In-Kind
Distribution as described under "Other Information-How May the Indenture
be Amended or Terminated?" and (ii) a pro rata share of any other assets
of the Trust, less expenses of the Trust.
The Trustee will credit to the Income Account of the Trust any dividends
received on the Equity Securities therein. All other receipts (e.g.
return of capital, etc.) are credited to the Capital Account of the Trust.
The Trustee may establish reserves (the "Reserve Account") within the
Trust for state and local taxes, if any, and any governmental charges
payable out of the Trust.
Distribution Reinvestment Option. Any Unit holder may elect to have each
distribution of income or capital on his or her Units, other than the
final liquidating distribution in connection with the termination of the
Trust, automatically reinvested in additional Units of the Trust. Each
person who purchases Units of the Trust may elect to become a
participant in the Distribution Reinvestment Option by notifying the
Trustee of their election. The Distribution Reinvestment Option may not
be available in all states. In order to enable a Unit holder to
participate in the Distribution Reinvestment Option with respect to a
particular distribution on his Units, the card must be received by the
Trustee within 10 days prior to the Record Date for such distribution.
Each subsequent distribution of income or capital on the participant's
Units will be automatically applied by the Trustee to purchase
additional Units of the Trust. The remaining deferred sales charge
payments will be assessed on Units acquired pursuant to the
Distributions Reinvestment Option. IT SHOULD BE REMEMBERED THAT EVEN IF
DISTRIBUTIONS ARE REINVESTED, THEY ARE STILL TREATED AS DISTRIBUTIONS
FOR INCOME TAX PURPOSES.
Page 21
What Reports will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and the amount
of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per Unit. Within a reasonable period of
time after the end of each calendar year, the Trustee shall furnish to
each person who at any time during the calendar year was a Unit holder
of the Trust the following information in reasonable detail: (1) a
summary of transactions in the Trust for such year; (2) any Equity
Securities sold during the year and the Equity Securities held at the
end of such year by the Trust; (3) the redemption price per Unit based
upon a computation thereof on the 31st day of December of such year (or
the last business day prior thereto); and (4) amounts of income and
capital distributed during such year.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Securities in the Trust 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 cancelled. Units tendered for
redemption prior to such time as the entire deferred sales charge on
such Units assessed during the First Year Deferred Period has been
collected will be assessed the amount of such remaining deferred sales
charge at the time of redemption. However, Unit holders either electing
to become Interim Rollover Unit Holders or who sell or redeem their
Units on or before December 31, 1998 will not be assessed the deferred
sales charge for the Second Year Deferred Period.
Any Unit holder tendering 2,500 Units or more of the Trust for
redemption may request by written notice submitted at the time of tender
from the Trustee in lieu of a cash redemption a distribution of shares
of Equity Securities in an amount and value of Equity Securities per
Unit equal to the Redemption Price Per Unit as determined as of the
evaluation next following tender. However, no In-Kind Distribution
requests submitted during the nine business days prior to the Mandatory
Termination Date will be honored. To the extent possible, In-Kind
Distributions ("In-Kind Distributions") shall be made by the Trustee
through the distribution of each of the Equity Securities in book-entry
form to the account of the Unit holder's bank or broker-dealer at the
Depository Trust Company. An In-Kind Distribution will be reduced by
customary transfer and registration charges. The tendering Unit holder
will receive his pro rata number of whole shares of each of the Equity
Securities comprising the portfolio and cash from the Capital Account
equal to the fractional shares to which the tendering Unit holder is
entitled. The Trustee may adjust the number of shares of any issue of
Equity Securities included in a Unit holder's In-Kind Distribution to
facilitate the distribution of whole shares, such adjustment to be made
on the basis of the value of Equity Securities on the date of tender. If
funds in the Capital Account are insufficient to cover the required cash
distribution to the tendering Unit holder, the Trustee may sell Equity
Securities in the manner described below.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of the principal amount of a
Unit redemption if the Trustee has not been furnished the redeeming Unit
holder's tax identification number in the manner required by such
regulations. For further information regarding this withholding, see
Page 22
"Rights of Unit Holders-How are Income and Capital Distributed?" In the
event the Trustee has not been previously provided such number, one must
be provided at the time redemption is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of the Trust to the extent that funds are
available for such purpose, or from the Capital Account. All other
amounts paid on redemption shall be withdrawn from the Capital Account
of the Trust.
The Trustee is empowered to sell Equity Securities of the Trust in order
to make funds available for redemption. To the extent that Equity
Securities are sold, the size and diversity of the Trust will be
reduced. Such sales may be required at a time when Equity Securities
would not otherwise be sold and might result in lower prices than might
otherwise be realized.
The Redemption Price per Unit will be determined on the basis of the
aggregate underlying value of the Equity Securities in the Trust
(generally determined by the closing sale prices of the listed Equity
Securities and either the ask prices (during the initial offering
period) or the bid prices (subsequent to the initial offering period) of
the over-the-counter traded Equity Securities) plus or minus cash, if
any, in the Income and Capital Accounts of the Trust. The Redemption
Price per Unit is the pro rata share of each Unit determined by the
Trustee by adding: (1) the cash on hand in the Trust other than cash
deposited in the Trust to purchase Equity Securities not applied to the
purchase of such Equity Securities; (2) the aggregate value of the
Equity Securities (including "when issued" contracts, if any) held in
the Trust, as determined by the Evaluator on the basis of the aggregate
underlying value of the Equity Securities in the Trust next computed;
and (3) dividends receivable on the Equity Securities trading ex-
dividend as of the date of computation; and deducting therefrom: (1)
amounts representing any applicable taxes or governmental charges
payable out of the Trust; (2) any amounts owing to the Trustee for its
advances; (3) an amount representing estimated accrued expenses of the
Trust, including but not limited to fees and expenses of the Trustee
(including legal and auditing fees), the Evaluator and supervisory fees,
if any; (4) cash held for distribution to Unit holders of record of the
Trust as of the business day prior to the evaluation being made; and (5)
other liabilities incurred by the Trust; and finally dividing the
results of such computation by the number of Units of the Trust
outstanding as of the date thereof. The redemption price per Unit will
be assessed the amount, if any, of the remaining deferred sales charge
at the time of redemption, subject to the limitations set forth above.
The aggregate value of the Equity Securities will be determined in the
following manner: if the Equity Securities are listed on a national
securities exchange or The Nasdaq Stock Market, this evaluation is
generally based on the closing sale prices on that exchange or market
(unless it is determined that these prices are inappropriate as a basis
for valuation) or, if there is no closing sale price on that exchange or
system, at the closing ask prices (during the initial offering period)
or at the closing bid prices (subsequent to the initial offering
period). If the Equity Securities are not so listed or, if so listed and
the principal market therefore is other than on the exchange, the
evaluation shall generally be based on the current ask or bid prices (as
appropriate) on the over-the-counter market (unless these prices are
inappropriate as a basis for evaluation). If current ask or bid prices
(as appropriate) are unavailable, the evaluation is generally determined
(a) on the basis of current ask or bid prices (as appropriate) for
comparable securities, (b) by appraising the value of the Equity
Securities on the ask or bid side (as appropriate) of the market or (c)
by any combination of the above.
The right of redemption may be suspended and payment postponed for any
period during which the New York Stock Exchange is closed, other than
for customary weekend and holiday closings, or during which the
Securities and Exchange Commission determines that trading on the New
York Stock Exchange is restricted or any emergency exists, as a result
of which disposal or evaluation of the Securities is not reasonably
practicable, or for such other periods as the Securities and Exchange
Commission may by order permit. Under certain extreme circumstances, the
Sponsor may apply to the Equity Securities and Exchange Commission for
an order permitting a full or partial suspension of the right of Unit
holders to redeem their Units. The Trustee is not liable to any person
in any way for any loss or damage which may result from any such
suspension or postponement.
Special Redemption, Liquidation and Investment in a New Trust
It is expected that a special redemption and liquidation will be made of
all Units of the Trust held by any Unit holder (a "Rollover Unit
Page 23
holder") who affirmatively notifies the Trustee in writing that he or
she desires to take advantage of such special redemption and liquidation
by either of the Rollover Notification Dates specified in the "Summary
of Essential Information." The Sponsor intends to create a new Series of
the Trust (the "New Trust") approximately one year after the Initial
Date of Deposit of the Trust and also in conjunction with the
termination of the Trust (approximately two years after the Initial Date
of Deposit). Unit holders will have the option to roll the proceeds of
their Units into a New Trust after either one year (the "Interim
Rollover") or two years (the "Final Rollover"). Unit holders electing to
roll their proceeds into a New Trust during the Interim Rollover shall
be referred to as "Interim Rollover Unit holders" while Unit holders
electing to roll their proceeds into a New Trust at termination shall be
referred to as "Final Rollover Unit holders." Collectively both the
Interim and Final Rollover Unit holders shall be referred to as
"Rollover Unit holders." To elect a Rollover Option, Unit holders must
affirmatively notify the Trustee in writing that he or she desires to
roll over his or her Units by the applicable Rollover Notification Date
specified in the "Summary of Essential Information."
All Units of Rollover Unit holders will be redeemed In-Kind during
either the Interim Special Redemption and Liquidation Period or the
Final Special Redemption and Liquidation Period, depending on the
election of the Rollover Unit holder, and the underlying Equity
Securities will be distributed to the Distribution Agent on behalf of
the Rollover Unit holders. During the applicable Special Redemption and
Liquidation Period (as set forth in "Summary of Essential Information"),
the Distribution Agent will be required to sell all of the underlying
Equity Securities on behalf of Rollover Unit holders. The sales proceeds
will be net of brokerage fees, governmental charges or any expenses
involved in the sales.
The Distribution Agent will engage the Sponsor as its agent to sell the
distributed Equity Securities. The Sponsor will attempt to sell the
Equity Securities as quickly as is practicable during the applicable
Special Redemption and Liquidation Period. The Sponsor does not
anticipate that the period will be longer than ten business days, and it
could be as short as one day, given that the Equity Securities are
usually highly liquid. The liquidity of any Equity Security depends on
the daily trading volume of the Equity Security and the amount that the
Sponsor has available for sale on any particular day.
It is expected (but not required) that the Sponsor will generally follow
the following guidelines in selling the Equity Securities: for highly
liquid Equity Securities, the Sponsor will generally sell Equity
Securities on the first day of the applicable Special Redemption and
Liquidation Period; for less liquid Equity Securities, on each of the
first two days of the applicable Special Redemption and Liquidation
Period, the Sponsor will generally sell any amount of any underlying
Equity Securities at a price no less than 1/2 of one point under the
closing sale price of those Equity Securities on the preceding day.
Thereafter, the Sponsor intends to sell without any price restrictions
at least a portion of the remaining underlying Equity Securities, the
numerator of which is one and the denominator of which is the total
number of days remaining (including that day) in the applicable Special
Redemption and Liquidation Period.
The Rollover Unit holders' proceeds will be invested in a new series of
the Trust (the "1999 Trust" or the "2000 Trust"), if then registered in
the Unit holder's state and being offered, the portfolio of which will
contain the new Equity Securities selected by the Underwriter as of the
day prior to the Initial Date of Deposit of the New Trust. The proceeds
of redemption available on each day will be used to buy New Trust Units
as the proceeds become available at the Public Offering Price of the New
Trust, including the applicable sales charge per Unit (which for
Rollover Unit Holders is currently expected to be 2.95% of the Public
Offering Price per Unit of a New Trust).
The Sponsor intends to create the New Trust Units as quickly as possible
after the commencement of the applicable Special Redemption and
Liquidation Period, dependent upon the availability and reasonably
favorable prices of the Equity Securities included in the New Trust
portfolio, and it is intended that Rollover Unit holders will be given
first priority to purchase the New Trust Units. There can be no
assurance, however, as to the exact timing of the creation of the New
Trust Units or the aggregate number of the New Trust Units which the
Sponsor will create. The Sponsor may, in its sole discretion, stop
creating new Units (whether permanently or temporarily) at any time it
chooses, regardless of whether all proceeds of the applicable Special
Redemption and Liquidation have been invested on behalf of Rollover Unit
holders. Cash which has not been invested on behalf of the Rollover Unit
holders in New Trust Units will be distributed at the end of the
applicable Special Redemption and Liquidation Period. However, since the
Sponsor can create Units, the Sponsor anticipates that sufficient Units
Page 24
can be created, although moneys in a New Trust may not be fully invested
on the next business day.
Any Rollover Unit holder may thus be redeemed out of the Trust and
become a holder of an entirely different trust with a different
portfolio of equity securities. The Rollover Unit holders' Units will be
redeemed In-Kind and the distributed Equity Securities shall be sold
during the applicable Special Redemption and Liquidation Period. In
accordance with the Rollover Unit holders' offer to purchase the New
Trust Units, the proceeds of the sales (and any other cash distributed
upon redemption) will be invested in the New Trust, at the public
offering price, including the applicable sales charge per Unit (which is
currently expected to be 2.95% of the Public Offering Price per Unit for
each New Trust).
This process of redemption, liquidation, and investment in a New Trust
is intended to allow for the fact that the portfolio selected by the
Underwriter is chosen on the basis of potential for capital appreciation
only for a limited time, at which point a new portfolio is chosen. It is
contemplated that a similar process of redemption, liquidation and
investment in a New Trust will be available for each New Trust and each
subsequent series of the Trust, approximately one year and two years
after that Series' creation.
The Sponsor believes that the gradual redemption, liquidation and
investment in the Trust will help mitigate any negative market price
consequences stemming from the trading of large volumes of securities
and of the underlying Equity Securities in the Trust in a short,
publicized period of time. The above procedures may, however, be
insufficient or unsuccessful in avoiding such price consequences. In
fact, market price trends may make it advantageous to sell or buy more
quickly or more slowly than permitted by these procedures. Rollover Unit
holders could then receive a less favorable average Unit price than if
they bought all their Units of a New Trust on any given day of the
applicable Special Redemption Period.
It should also be noted that Rollover Unit holders may realize taxable
capital gains on the Special Redemption and Liquidation but, in certain
unlikely circumstances, will not be entitled to a deduction for certain
capital losses and, due to the procedures for investing in the
subsequent New Trusts, no cash would be distributed at that time to pay
any taxes. Included in the cash for the Special Redemption and
Liquidation will be an amount of cash attributable to the distribution
of dividend income; accordingly, Rollover Unit holders also will not
have cash distributed to pay any taxes. The 1997 Tax Act reduces the
maximum stated marginal tax rate for certain capital gains for
investments held for more than 18 months to 20% (10% in the case of
certain taxpayers in the lowest tax bracket). Rollover Unit holders
participating in the Final Rollover would qualify for such treatment
whereas Rollover Unit holders participating in the Interim Rollover
would be subject to a maximum stated marginal tax rate of 28% to the
extent that the Interim Rollover Unit holder held his or her Units for
more than one year. Capital gains on the sale of Units held for one year
or less will be taxed at the same rate as ordinary income. See "What is
the Federal Tax Status of Unit Holders?"
In addition, during this period a Unit holder will be at risk to the
extent that Equity Securities are not sold and will not have the benefit
of any stock appreciation to the extent that moneys have not been
invested; for this reason, the Sponsor will be inclined to sell and
purchase the Equity Securities in as short a time period as it can
without materially adversely affecting the price of the Equity
Securities.
Unit holders who do not inform the Distribution Agent that they wish to
have their Units so redeemed and liquidated by either the Interim or
Final Rollover Notification Date ("Remaining Unit holders") will
continue to hold Units of the Trust as described in this Prospectus
until the Trust is terminated or until the Mandatory Termination Date
listed in the "Summary of Essential Information," whichever occurs
first. These Remaining Unit holders will not realize capital gains or
losses due to a Special Redemption and Liquidation, and will not be
charged any additional sales charge except as provided under "Public
Offering." If a large percentage of Unit holders become Rollover Unit
holders, the aggregate size of the Trust will be sharply reduced. As a
consequence, expenses, if any, in excess of the amount to be borne by
the Trustee would constitute a higher percentage amount per Unit than
prior to the Special Redemption, Liquidation and Investment. The Trust
might also be reduced to the Discretionary Liquidation Amount listed in
the "Summary of Essential Information" because of the lesser number of
Units in the Trust, and possibly also due to a value reduction, however
temporary, in Units caused by the Sponsor's sales of Equity Securities;
if so, the Sponsor could then choose to liquidate the Trust without the
consent of the remaining Unit holders. See "Other Information-How May
the Indenture be Amended or Terminated?" The Equity Securities remaining
in the Trust after the Final Special Redemption and Liquidation Period
will be sold by the Sponsor as quickly as possible without, in its
Page 25
judgment, materially adversely affecting the market price of the Equity
Securities.
The Sponsor may for any reason, in its sole discretion, decide not to
sponsor the New Trusts or any subsequent series of the Trust, without
penalty or incurring liability to any Unit holder. If the Sponsor so
decides, the Sponsor shall notify the Unit holders before the Special
Redemption and Liquidation Period would have commenced. All Unit holders
will then be Remaining Unit holders, with rights to ordinary redemption
as stated above. See "Rights of Unit Holders-How May Units be Redeemed?"
The Sponsor may modify the terms of the New Trusts or any subsequent
series of the Trust. The Sponsor may also modify, suspend or terminate
the Rollover Option upon notice to the Unit holders of such amendment at
least 60 days prior to the applicable Rollover Notification Date
specified in the "Summary of Essential Information."
How May Units be Purchased by the Sponsor or Underwriter?
The Trustee shall notify the Sponsor and Underwriter of any tender of
Units for redemption. If the Sponsor's or the Underwriter's bid in the
secondary market at that time equals or exceeds the Redemption Price per
Unit, the Sponsor or the Underwriter may purchase such Units by
notifying the Trustee before 1:00 p.m. Eastern time on the same 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 or the Underwriter may be tendered to
the Trustee for redemption as any other Units. In the event the Sponsor
or the Underwriter does not purchase Units, the Trustee may sell Units
tendered for redemption in the over-the-counter market, if any, as long
as the amount to be received by the Unit holder is equal to the amount
he would have received on redemption of the Units.
The offering price of any Units acquired by the Sponsor or the
Underwriter will be in accord with the Public Offering Price described
in the then effective prospectus describing such Units. Any profit or
loss resulting from the resale or redemption of such Units will belong
to the Sponsor or the Underwriter.
How May Equity Securities be Removed from the Trust?
The portfolio of the Trust is not "managed" by the Sponsor or the
Trustee; their activities described herein are governed solely by the
provisions of the Indenture. The Indenture provides that the Sponsor may
(but need not) direct the Trustee to dispose of an Equity Security in
the event that an issuer defaults in the payment of a dividend that has
been declared, that any action or proceeding has been instituted
restraining the payment of dividends or there exists any legal question
or impediment affecting such Equity Security, that the issuer of the
Equity Security has breached a covenant which would affect the payment
of dividends, that the credit standing of the issuer has deteriorated
such that it impairs the sound investment character of the Equity
Security, that the issuer has defaulted on the payment on any other of
its outstanding obligations, that the price of the Equity Security has
declined to such an extent or other such credit factors exist so that in
the opinion of the Sponsor, the retention of such Equity Securities
would be detrimental to the Trust. Except as stated under "Portfolio-
What are Some Additional Considerations for Investors?" for Failed
Obligations, the acquisition by the Trust of any securities or other
property other than the Equity Securities is prohibited. Pursuant to the
Indenture and with limited exceptions, the Trustee may sell any
securities or other property acquired in exchange for Equity Securities
such as those acquired in connection with a merger or other transaction.
If offered such new or exchanged securities or property, the Trustee
shall reject the offer. However, in the event such securities or
property are nonetheless acquired by the Trust, they may be accepted for
deposit in the Trust and either sold by the Trustee or held in the Trust
pursuant to the direction of the Sponsor (who may rely on the advice of
the Portfolio Supervisor). Proceeds from the sale of Equity Securities
(or any securities or other property received by the Trust in exchange
for Equity Securities) by the Trustee are credited to the Capital
Account of the Trust for distribution to Unit holders or to meet
redemptions. The Trustee may from time to time retain and pay
compensation to the Sponsor (or an affiliate of the Sponsor) to act as
agent for the Trust with respect to selling Equity Securities from the
Trust. In acting in such capacity the Sponsor or its affiliate will be
held subject to the restrictions under the Investment Company Act of
1940, as amended.
The Trustee may also sell Equity Securities designated by the Sponsor,
or if not so directed, in its own discretion, for the purpose of
Page 26
redeeming Units of a Trust tendered for redemption and the payment of
expenses.
The Sponsor, in designating Equity Securities to be sold by the Trustee,
will generally make selections in order to maintain, to the extent
practicable, the proportionate relationship among the number of shares
of individual issues of Equity Securities. To the extent this is not
practicable, the composition and diversity of the Equity Securities may
be altered. In order to obtain the best price for the Trust, it may be
necessary for the Sponsor to specify minimum amounts (generally 100
shares) in which blocks of Equity Securities are to be sold. The Sponsor
may consider sales of units of unit investment trusts which it sponsors
in making recommendations to the Trustee as to the selection of broker-
dealers to execute the Trust's portfolio transactions.
INFORMATION AS TO UNDERWRITER, SPONSOR, TRUSTEE AND EVALUATOR
Who is the Underwriter?
The Underwriter, McDonald & Company Securities, Inc., is a corporation
organized under the laws of the State of Ohio. The Underwriter is a
member firm of the New York Stock Exchange, Inc. as well as other major
securities and commodities exchanges and is a member of the National
Association of Securities Dealers, Inc. The Underwriter is involved in
the business of origination, underwriting, distribution, trading,
investment banking, and brokerage of fixed income and equity securities.
The Underwriter also acts as a dealer in unlisted securities and
municipal bonds and in addition to participating as a member of various
selling groups or as an agent of other investment companies, executes
orders on behalf of investment companies for the purchase and sale of
securities of such companies and sells securities to such companies in
its capacity as a broker or dealer in securities. The Underwriter makes
a market in certain securities including Equity Securities purchased by
the Trust and may from time to time, through an affiliate or otherwise,
make principal investments in those companies and their securities.
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 and The First Trust GNMA. First Trust
introduced the first insured unit investment trust in 1974 and to date
more than $9 billion in First Trust unit investment trusts have been
deposited. The Sponsor's employees include a team of professionals with
many years of experience in the unit investment trust industry. The
Sponsor is a member of the National Association of Securities Dealers,
Inc. and Securities Investor Protection Corporation and has its
principal offices at 1001 Warrenville Road, Lisle, Illinois 60532;
telephone number (630) 241-4141. As of December 31, 1996, the total
partners' capital of Nike Securities L.P. was $9,005,203 (audited).
(This paragraph relates only to the Sponsor and not to the Trust or to
any series thereof or to any other Underwriter. 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 Trust may
call the Customer Service Help Line at 1-800-682-7520. The Trustee is
subject to supervision by the Superintendent of Banks of the State of
New York, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not
participated in the selection of the Equity Securities. For information
relating to the responsibilities of the Trustee under the Indenture,
reference is made to the material set forth under "Rights of Unit
Holders."
The Trustee and any successor trustee may resign by executing an
instrument in writing and filing the same with the Sponsor and mailing a
Page 27
copy of a notice of resignation to all Unit holders. Upon receipt of
such notice, the Sponsor is obligated to appoint a successor trustee
promptly. If the Trustee becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, the Sponsor may
remove the Trustee and appoint a successor as provided in the Indenture.
If upon resignation of a trustee no successor has accepted the
appointment within 30 days after notification, the retiring trustee may
apply to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of a trustee becomes effective
only when the successor trustee accepts its appointment as such or when
a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or
consolidation to which a Trustee shall be a party, shall be the
successor Trustee. The Trustee must be a banking corporation organized
under the laws of the United States or any State and having at all times
an aggregate capital, surplus and undivided profits of not less than
$5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit holders
for taking any action or for refraining from taking any action in good
faith pursuant to the Indenture, or for errors in judgment, but shall be
liable only for their own willful misfeasance, bad faith, gross
negligence (ordinary negligence in the case of the Trustee) or reckless
disregard of their obligations and duties. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the
Trustee of any of the Equity Securities. In the event of the failure of
the Sponsor to act under the Indenture, the Trustee may act thereunder
and shall not be liable for any action taken by it in good faith under
the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Equity Securities or upon the
interest thereon or upon it as Trustee under the Indenture or upon or in
respect of the Trust which the Trustee may be required to pay under any
present or future law of the United States of America or of any other
taxing authority having jurisdiction. In addition, the Indenture
contains other customary provisions limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or becomes incapable of acting or becomes bankrupt or its
affairs are taken over by public authorities, then the Trustee may (a)
appoint a successor Sponsor at rates of compensation deemed by the
Trustee to be reasonable and not exceeding amounts prescribed by the
Securities and Exchange Commission, or (b) terminate the Indenture and
liquidate the Trust as provided herein, or (c) continue to act as
Trustee without terminating the Indenture.
Who is the Evaluator?
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532. The
Evaluator may resign or may be removed by the Sponsor 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.
Page 28
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment is
(1) to cure any ambiguity or to correct or supplement any provision of
the Indenture which may be defective or inconsistent with any other
provision contained therein, or (2) to make such other provisions as
shall not adversely affect the interest of the Unit holders (as
determined in good faith by the Sponsor and the Trustee).
The Indenture provides that the Trust shall terminate upon the Mandatory
Termination Date indicated herein under "Summary of Essential
Information." The Trust may be liquidated at any time by consent of 100%
of the Unit holders of the Trust or by the Trustee when the value of the
Equity Securities owned by the Trust as shown by any evaluation, is less
than the lower of $2,000,000 or 20% of the total value of Equity
Securities deposited in the Trust during the primary offering period, or
in the event that Units of the Trust not yet sold aggregating more than
60% of the Units of the Trust are tendered for redemption by the
Underwriter, including the Sponsor. If the Trust is liquidated because
of the redemption of unsold Units by the Underwriter, the Sponsor will
refund to each purchaser of Units of the Trust the entire sales charge
paid by such purchaser. In the event of termination, written notice
thereof will be sent by the Trustee to all Unit holders of the Trust.
Within a reasonable period after termination, the Trustee will follow
the procedures set forth under "Rights of Unit Holders-How are Income
and Capital Distributed?" The Special Redemption and Liquidation of the
Trust could cause the Trust to be reduced below the Discretionary
Liquidation Amount and the Trust could therefore be terminated at that
time, before the Mandatory Termination Date.
Commencing during the period beginning nine business days prior to and
no later than the Mandatory Termination Date, Equity Securities will
begin to be sold in connection with the termination of the Trust. The
Sponsor will determine the manner, timing and execution of the sale of
the Equity Securities. Written notice of any termination of the Trust
specifying the time or times at which Unit holders may surrender their
certificates for cancellation shall be given by the Trustee to each Unit
holder at his address appearing on the registration books of the Trust
maintained by the Trustee. At least 60 days prior to the Mandatory
Termination Date of the Trust the Trustee will provide written notice
thereof to all Unit holders and will include with such notice a form to
enable Unit holders to elect a distribution of shares of Equity
Securities (reduced by customary transfer and registration charges), if
such Unit holder owns at least 2,500 Units of the Trust, rather than to
receive payment in cash for such Unit holder's pro rata share of the
amounts realized upon the disposition by the Trustee of Equity
Securities. To be effective, the election form, together with
surrendered certificates and other documentation required by the
Trustee, must be returned to the Trustee at least ten business days
prior to the Mandatory Termination Date of the Trust. Unit holders not
electing a distribution of shares of Equity Securities and who do not
elect the Rollover Option will receive a cash distribution from the sale
of the remaining Equity Securities within a reasonable time after the
Trust is terminated. Regardless of the distribution involved, the
Trustee will deduct from the funds of the Trust any accrued costs,
expenses, advances or indemnities provided by the Trust Agreement,
including estimated compensation of the Trustee and costs of liquidation
and any amounts required as a reserve to provide for payment of any
applicable taxes or other governmental charges. Any sale of Equity
Securities in the Trust upon termination may result in a lower amount
than might otherwise be realized if such sale were not required at such
time. In addition, to the extent that Equity Securities are sold prior
to the Mandatory Termination Date, Unit holders will not benefit from
any stock appreciation they would have received had the Equity
Securities not been sold at such time. The Trustee will then distribute
to each Unit holder his pro rata share of the balance of the Income and
Capital Accounts.
Legal Opinions
The legality of the Units offered hereby and certain matters relating to
Federal tax law have been passed upon by Chapman and Cutler, 111 West
Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
Carter, Ledyard & Milburn, will act as counsel for the Trustee and as
special New York tax counsel for the Trust.
Page 29
Experts
The statement of net assets, including the schedule of investments, of
the Trust at the opening of business on the Initial Date of Deposit
appearing in this Prospectus and Registration Statement has been audited
by Ernst & Young LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein and in the Registration Statement,
and is included in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
UNDERWRITING
The Underwriter below has purchased Units in the following amount:
<TABLE>
<CAPTION>
Number
Name Address of Units
______ _________ ________
<S> <C> <C>
UNDERWRITER
McDonald & Company 800 Superior Street, Suite 2100,
Securities, Inc. Cleveland, OH 44114 15,004
========
</TABLE>
On the Initial Date of Deposit, the Underwriter of the Trust became the
owner of the Units of the Trust and entitled to the benefits thereof, as
well as the risks inherent therein.
The Underwriter Agreement provides that a public offering of the Units
of the Trust will be made at the Public Offering Price described in the
prospectus. Units may also be sold to or through dealers and others
during the initial offering period and in the secondary market at prices
representing a concession or agency commission as described in "Public
Offering-How are Units Distributed?" The Sponsor will receive from the
Underwriter a sales concession of $.095 per Unit and the deferred sales
charge for "wrap fee account" Unit holders owning Units during the
Second Year Deferred Period.
From time to time the Sponsor may implement programs under which the
Underwriter and dealers of the Trust may receive nominal awards from the
Sponsor for each of their registered representatives who have sold a
minimum number of UIT Units during a specified time period. In addition,
at various times the Sponsor may implement other programs under which
the sales force of the Underwriter or a dealer may be eligible to win
other nominal awards for certain sales efforts, or under which the
Sponsor will reallow to any such Underwriter or dealer that sponsors
sales contests or recognition programs conforming to criteria
established by the Sponsor, or participates in sales programs sponsored
by 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 the Underwriter or qualifying dealers for certain services or
activities which are primarily intended to result in sales of Units of
the Trust. Such payments are made by the Sponsor out of its own assets,
and not out of the assets of the Trust. These programs will not change
the price Unit holders pay for their Units or the amount that the Trust
will receive from the Units sold.
The Sponsor may from time to time in its advertising and sales materials
compare the returns on the Trust and returns over specified periods on
other similar trust sponsored by Nike Securities L.P. with returns on
investments such as corporate or U.S. Government bonds, bank CDs and
money market accounts or money market funds, each of which has
investment characteristics that may differ from those of the Trust. U.S.
Government bonds, for example, are backed by the full faith and credit
of the U.S. Government and bank CDs and money market accounts are
insured by an agency of the federal government. Money market accounts
and money market funds provide stability of principal, but pay interest
at rates that vary with the condition of the short-term debt market. The
investment characteristics of the Trust are described more fully
elsewhere in this Prospectus.
Information on percentage changes in the dollar value of Units, on the
basis of changes in Unit price may be included from time to time in
advertisements, sales literature, reports and other information
furnished to current or prospective Unit holders. Total return figures
are not averaged, and may not reflect deduction of the sales charge,
which would decrease the return. Average annualized return figures
reflect deduction of the maximum sales charge. No provision is made for
any income taxes payable.
Past performance may not be indicative of future results. The Trust is
not actively managed. Unit price and return fluctuate with the value of
the common stocks in the portfolio, so there may be a gain or loss when
Units are sold.
Page 30
The Trust's performance may be compared to performance on a total return
basis with the Dow Jones Industrial Average, the S&P 500 Composite Price
Stock Index, or performance data from Lipper Analytical Services, Inc.
and Morningstar Publications, Inc. or from publications such as Money,
The New York Times, U.S. News and World Report, Business Week, Forbes or
Fortune. As with other performance data, performance comparisons should
not be considered representative of the Trust's relative performance for
any future period.
Page 31
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
FT 223
We have audited the accompanying statement of net assets, including the
schedule of investments, of FT 223, comprised of McDonald Select Equity
Trust, Series 1998, as of the opening of business on December 1, 1997.
This statement of net assets is the responsibility of the Trust's
Sponsor. Our responsibility is to express an opinion on this statement
of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of net assets is
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the statement
of net assets. Our procedures included confirmation of the letter of
credit held by the Trustee and deposited in the Trust on December 1,
1997. An audit also includes assessing the accounting principles used
and significant estimates made by the Sponsor, as well as evaluating the
overall presentation of the statement of net assets. We believe that our
audit of the statement of net assets provides a reasonable basis for our
opinion.
In our opinion, the statement of net assets referred to above presents
fairly, in all material respects, the financial position of FT 223,
comprised of McDonald Select Equity Trust, Series 1998, at the opening
of business on December 1, 1997 in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
December 1, 1997
Page 32
Statement of Net Assets
MCDONALD SELECT EQUITY TRUST, SERIES 1998
FT 223
At the Opening of Business on the
Initial Date of Deposit-December 1, 1997
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by purchase contracts (1) (2) $ 148,544
Organizational and offering costs (3) 30,000
_________
178,544
Less accrued organizational and offering costs (3) (30,000)
_________
Less liability for deferred sales charge (4) (2,926)
Net assets $ 145,618
=========
Units outstanding 15,004
ANALYSIS OF NET ASSETS
Cost to investors (5) $ 150,044
Less sales charge 5) (4,426)
_________
Net assets $ 145,618
=========
<FN>
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule of
Investments" is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $200,000 issued by The Chase
Manhattan Bank has been deposited with the Trustee as collateral,
covering the monies necessary for the purchase of the Equity Securities
pursuant to contracts for the purchase of such Equity Securities.
(3) The Trust will bear all or a portion of its estimated organizational
and offering costs which will be deferred and charged off over a period
not to exceed two years from the Initial Date of Deposit. The estimated
organizational and offering costs are based on 2,000,000 Units of the
Trust expected to be issued. To the extent the number of Units issued is
larger or smaller, the estimate will vary.
(4) Represents the amount of mandatory distributions from the Trust
($.195 per Unit), payable to the Sponsor in ten equal monthly
installments of $.0195 per Unit beginning on February 27, 1998, and on
the last business day of each month thereafter through November 30, 1998
(the "First Year Deferred Period"). If Units are redeemed on or prior to
November 30, 1998, the remaining amount of the deferred sales charge
applicable to such Units for the First Year Deferred Period will be
payable at the time of redemption. Additionally, the Trust will pay an
additional deferred sales charge of $0.10 per Unit on January 15, 1999
(the "Second Year Deferred Period"), which will be based on the Units
outstanding on January 4, 1999. Units that are redeemed on or before
December 31, 1998 will not be assessed the deferred sales charge for the
Second Year Deferred Period.
(5) The aggregate cost to investors includes a sales charge computed at
the rate of 2.95% of the Public Offering Price representing the initial
sales charge and the deferred sales charge for the First Year Deferred
Period (equivalent to 2.980% of the net amount invested, exclusive of
the deferred sales charge), assuming no reduction of sales charge for
quantity purchases or for Rollover Unit holders of prior series of the
Trust.
</FN>
</TABLE>
Page 33
Schedule of Investments
MCDONALD SELECT EQUITY TRUST, SERIES 1998
FT 223
At the Opening of Business on the
Initial Date of Deposit-December 1, 1997
<TABLE>
<CAPTION>
Market Cost of
Number Percentage of Value Equity
of Ticker Symbol and Aggregate per Securities to
Shares Name of Issuer of Equity Securities (1) Offering Price Share the Trust (2)
_______ _______________________________________ ______________ _______ _____________
<S> <C> <C> <C> <C>
285 AMP AMP, Inc. 8.34% $43.438 $ 12,380
306 ABI American Bankers Insurance Group, Inc. 8.34% 40.500 12,393
240 BDX Becton Dickinson & Company 8.33% 51.563 12,375
359 CNJ Cole National Corporation (Class A) 8.34% 34.500 12,386
553 CTB Cooper Tire and Rubber Company 8.33% 22.375 12,373
292 GLW Corning, Incorporated 8.34% 42.438 12,392
265 DCN Dana Corporation 8.34% 46.750 12,389
538 DRE Duke Realty Investments, Inc. 8.33% 23.000 12,374
225 EMR Emerson Electric Company 8.33% 55.000 12,375
319 ENE Enron Corp. 8.32% 38.750 12,361
437 FDC First Data Corporation 8.33% 28.313 12,373
172 MOB Mobil Corporation 8.33% 71.938 12,373
________ ________
Total Investments 100% $148,544
======== ========
______________
<FN>
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on December 1, 1997. The Trust has a mandatory termination date of
December 31, 1999.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the closing sale prices of listed
Equity Securities and the ask prices of over-the-counter traded Equity
Securities on the business day preceding the Initial Date of Deposit).
The valuation of the Equity Securities has been determined by the
Evaluator, an affiliate of the Sponsor. The aggregate underlying value
of the Equity Securities on the Initial Date of Deposit, was $148,544.
Cost and loss to Sponsor relating to the purchase of the Equity
Securities sold to the Trust were $151,042 and $2,498, respectively.
</FN>
</TABLE>
Page 34
This page is intentionally left blank.
Page 35
CONTENTS:
Summary of Essential Information:
McDonald Select Equity Trust, Series 1998 4
FT 223:
What is The FT Series? 6
What are the Expenses and Charges? 7
What is the Federal Tax Status of Unit Holders? 8
Why are Investments in the Trust Suitable for
Retirement Plans? 13
Portfolio:
What are Equity Securities? 13
Risk Factors 13
What are the Equity Securities Selected for
McDonald Select Equity Trust, Series 1998? 15
What are Some Additional Considerations for
Investors? 16
Public Offering:
How is the Public Offering Price Determined? 17
How are Units Distributed? 19
What are the Sponsor's and Underwriter's Profits? 19
Will There be a Secondary Market? 20
Rights of Unit Holders:
How is Evidence of Ownership Issued and Transferred? 20
How are Income and Capital Distributed? 21
What Reports will Unit Holders Receive? 22
How May Units be Redeemed? 22
Special Redemption, Liquidation and
Investment in a New Trust 23
How May Units be Purchased by the
Sponsor or Underwriter? 26
How May Equity Securities be Removed from the Trust? 26
Information as to Underwriter, Sponsor, Trustee
and Evaluator:
Who is the Underwriter? 27
Who is the Sponsor? 27
Who is the Trustee? 27
Limitations on Liabilities of Sponsor and Trustee 28
Who is the Evaluator? 28
Other Information:
How May the Indenture be Amended or Terminated? 29
Legal Opinions 29
Experts 30
Underwriting 30
Report of Independent Auditors 32
Statement of Net Assets 33
Notes to Statement of Net Assets 33
Schedule of Investments 34
When Units of the Trust are no longer available, or for investors who
will reinvest into subsequent series of the Trust, this Prospectus may
be used as a preliminary prospectus for a future series; in which case
investors should note the following:
INFORMATION CONTAINED HEREIN IS SUBJECT TO AMENDMENT. A REGISTRATION
STATEMENT RELATING TO SECURITIES OF A FUTURE SERIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, SECURITIES IN ANY STATE TO ANY PERSON TO WHOM IT IS
NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO, WHICH THE TRUST
HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940,
AND TO WHICH REFERENCE IS HEREBY MADE.
MCDONALD SELECT EQUITY TRUST
SERIES 1998
McDonald & Company
Securities, Inc.
800 Superior Street
Suite 2100
Cleveland, OH 44114
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
December 1, 1997
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 36
CONTENTS OF REGISTRATION STATEMENT
A. Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Brokers' Fidelity Bond,
in the total amount of $1,000,000, the insurer being
National Union Fire Insurance Company of Pittsburgh.
B. This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
Financial Data Schedule
S-1
SIGNATURES
The Registrant, FT 223, hereby identifies The First Trust
Special Situations Trust, Series 4 Great Lakes Growth and
Treasury Trust, Series 1; The First Trust Special Situations
Trust, Series 18 Wisconsin Growth and Treasury Securities Trust,
Series 1; The First Trust Special Situations Trust, Series 69
Target Equity Trust Value Ten Series; The First Trust Special
Situations Trust, Series 108; The First Trust Special Situations
Trust, Series 119 Target 5 Trust, Series 2 and Target 10 Trust,
Series 8; and The First Trust Special Situations Trust, Series
190 Biotechnology Growth Trust, Series 3 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, FT 223, has duly caused this Amendment to
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Village of Lisle
and State of Illinois on December 1, 1997.
FT 223
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 Amendment to the 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 ) December 1, 1997
General Partner of )
Nike Securities L.P.)
)
)
David J. Allen Director of ) Robert M. Porcellino
Nike 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 December 1, 1997 in
Amendment No. 2 to the Registration Statement (Form S-6) (File
No. 333-38331) and related Prospectus of FT 223.
ERNST & YOUNG LLP
Chicago, Illinois
December 1, 1997
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement
will be filed as Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 22 and
certain subsequent Series, effective November 20, 1991
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and First Trust
Advisors L.P. as Portfolio Supervisor (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
43693] filed on behalf of The First Trust Special
Situations Trust, Series 22).
1.1.1 Form of Trust Agreement for Series 223 among Nike
Securities L.P., as Depositor, The Chase Manhattan Bank,
as Trustee, First Trust Advisors L.P., 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. 33-42755] filed on
behalf of The First Trust Special Situations Trust,
Series 19).
2.1 Copy of Certificate of Ownership (included in Exhibit
1.1 filed herewith on page 2 and incorporated herein by
reference).
S-5
3.1 Opinion of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal income tax status of
securities being registered.
3.3 Opinion of counsel as to New York income tax status of
securities being registered.
3.4 Opinion of counsel as to advancement of funds by
Trustee.
4.1 Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on
page S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
63483] filed on behalf of The First Trust Combined
Series 258).
S-6
FT 223
TRUST AGREEMENT
Dated: December 1, 1997
The Trust Agreement among Nike Securities L.P., as Depositor, The
Chase Manhattan Bank, as Trustee and First Trust Advisors L.P.,
as Evaluator and 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 Special Situations Trust, Series 22 and
certain subsequent Series, Effective November 20, 1991" (herein
called the "Standard Terms and Conditions of Trust"), 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 and Part III 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 MCDONALD SELECT EQUITY TRUST, SERIES 1998
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
for the sale of Units dated the date hereof (the "Prospectus")
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee as set forth in the Prospectus under "Summary of
Essential Information," calculated based on the largest number of
Units outstanding during each period in respect of which a
payment is made pursuant to Section 3.05, payable on a
Distribution Date. Such fee may exceed the actual cost of
providing such evaluation services for the Trust, but at no time
will the total amount received for evaluation services rendered
to unit investment trusts of which Nike Securities L.P. is the
sponsor in any calendar year exceed the aggregate cost to the
Evaluator of supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee as set forth in the Prospectus under "Summary of
Essential Information," calculated based on the largest number of
Units outstanding during each period in respect of which a
payment is made pursuant to Section 3.05. However, in no event,
except as may otherwise be provided in the Standard Terms and
Conditions of Trust, shall the Trustee receive compensation in
any one year from any Trust of less than $2,000 for such annual
compensation.
I. The Initial Date of Deposit for the Trust is December
1, 1997.
J. The minimum amount of Equity Securities to be sold by
the Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
PART III
A. Section 1.01(2) shall be amended to read as follows:
"(2) "Trustee" shall mean The Chase Manhattan Bank, or
any successor trustee appointed 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.
B. Section 1.01(26) shall be added to read as follows:
"(26) The term "Rollover Unit holder" shall be defined
as set forth in Section 5.05, herein." The terms "Interim
Rollover Unit holders" and "Final Rollover Unit holders" as
defined in the Prospectus shall also apply individually to
the term "Rollover Unit holder." In addition, any reference
to the "Rollover Unit holder" as it relates exclusively to
"Interim Rollover Unit holders" shall be interpreted to
apply only to such Unit holders and any reference to the
"Rollover Unit holders" as it relates exclusively to "Final
Rollover Unit holders" shall be interpreted to apply only to
such Unit holders.
C. Section 1.01(27) shall be added to read as follows:
"(27) The "Rollover Notification Date" shall be
defined as set forth in the Prospectus under "Summary of
Essential Information." The dates specified in the
Prospectus for the "Interim Rollover Notification Date" and
the "Final Rollover Notification Date" in "Summary of
Essential Information" shall also apply individually to the
term "Rollover Notification Date" provided herein. In
addition, any reference to the "Rollover Notification Date"
as it relates exclusively to "Interim Rollover Unit holders"
shall be interpreted to apply only to such Unit holders and
any reference to the "Rollover Notification Date" as it
relates exclusively to "Final Rollover Unit holders" shall
be interpreted to apply only to such Unit holders.
D. Section 1.01(28) shall be added to read as follows:
"(28) The term "Rollover Distribution" shall be
defined as set forth in Section 5.05, herein."
E. Section 1.01(29) shall be added to read as follows:
"(29) The term "Distribution Agent" shall refer to the
Trustee acting in its capacity as distribution agent
pursuant to Section 5.02 herein."
F. Section 1.01(30) shall be added to read as follows:
"(30) The term "Special Redemption and Liquidation
Period" shall be as set forth in the Prospectus under
"Summary of Essential Information." The dates specified in
the Prospectus for the "Interim Special Redemption Period"
and the "Final Special Redemption and Liquidation Period" in
"Summary of Essential Information" shall also apply
individually to the term "Special Redemption and Liquidation
Period" provided herein. In addition, any reference to the
"Special Redemption and Liquidation Period" as it relates
exclusively to "Interim Rollover Unit holders" shall be
interpreted to apply only to such Unit holders and any
reference to the "Special Redemption and Liquidation Period"
as it relates exclusively to "Final Rollover Unit holders"
shall be interpreted to apply only to such Unit holders.
G. The term "Principal Account" as set forth in the
Standard Terms and Conditions of Trust shall be replaced with the
term "Capital Account."
H. Paragraph (b) of Section 2.01 shall be restated in its
entirety as follows and, in connection therewith, the third
paragraph of Section 3.02 shall be deleted:
(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 purchase 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 or deposits made
to a Trust originally established as a regulated investment
company) 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 Capital Account, cash or other property (other
than Securities) on hand in the Capital Account or
receivable and to be credited to the Capital 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.
I. The second paragraph of Section 3.02 of the Standard
Terms and Conditions is hereby deleted and replaced with the
following sentence:
"Any non-cash distributions (other than a non-taxable
distribution of the shares of the distributing corporation
which shall be retained by a Trust) received by a Trust
shall be dealt with in the manner described at Section 3.11,
herein, and shall be retained or disposed of by such Trust
according to those provisions. The proceeds of any
disposition shall be credited to the Income Account of a
Trust. Neither the Trustee nor the Depositor shall be
liable or responsible in any way for depreciation or loss
incurred by reason of any such sale."
J. Paragraph (c) of Subsection II of Section 3.05 of the
Standard Terms and Conditions of Trust is hereby amended to read
as follows:
"On each Distribution Date the Trustee shall distribute
to each Unit holder of record at the close of business on
the Record Date immediately preceding such Distribution Date
an amount per Unit equal to such Unit holder's pro rata
share of the balance of the Capital Account (except for
monies on deposit therein required to purchase Contract
Obligations) computed as of the close of business on such
Record Date after deduction of any amounts provided in
Subsection I."
K. Section 3.05.II(a) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (a) On each Distribution Date, the Trustee shall
distribute to each Unit holder of record at the close of
business on the Record Date immediately preceding such
Distribution Date an amount per Unit equal to such Unit
holder's Income Distribution (as defined below), plus such
Unit holder's pro rata share of the balance of the Capital
Account (except for monies on deposit therein required to
purchase Contract Obligations) computed as of the close of
business on such Record Date after deduction of any amounts
provided in Subsection I, provided, however, that the
Trustee shall not be required to make a distribution from
the Capital Account unless the amount available for
distribution shall equal $1.00 per 100 Units.
Each Trust shall provide the following distribution
elections: (1) distributions to be made by check mailed to
the post office address of the Unit holder as it appears on
the registration books of the Trustee, or (2) if provided
for in the Prospectus, the following reinvestment option:
The Trustee will, for any Unit holder who provides
the Trustee written instruction, properly executed and
in form satisfactory to the Trustee, received by the
Trustee no later than its close of business 10 business
days prior to a Record Date (the "Reinvestment Notice
Date"), reinvest such Unit holder's distribution from
the Income and Capital Accounts in Units of the Trust,
purchased from the Depositor, to the extent the
Depositor shall make Units available for such purchase,
at the Depositor's offering price as of the fifth
business day prior to the following Distribution Date,
and at such reduced sales charge as may be described in
the prospectus for the Trusts. If, for any reason, the
Depositor does not have Units of the Trust available
for purchase, the Trustee shall distribute such Unit
holder's distribution from the Income and Capital
Accounts in the manner provided in clause (1) of the
preceding paragraph. The Trustee shall be entitled to
rely on a written instruction received as of the
Reinvestment Notice Date and shall not be affected by
any subsequent notice to the contrary. The Trustee
shall have no responsibility for any loss or
depreciation resulting from any reinvestment made in
accordance with this paragraph, or for any failure to
make such reinvestment in the event the Depositor does
not make Units available for purchase.
Any Unit holder who does not effectively elect
reinvestment in Units of their respective Trust pursuant to
the preceding paragraph shall receive a cash distribution in
the manner provided in clause (1) of the second preceding
paragraph."
L. Section 3.05.II(b) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (b) For purposes of this Section 3.05, the Unit
holder's Income Distribution shall be equal to such Unit
holder's pro rata share of the cash balance in the Income
Account computed as of the close of business on the Record
Date immediately preceding such Income Distribution after
deduction of (i) the fees and expenses then deductible
pursuant to Section 3.05.I. and (ii) the Trustee's estimate
of other expenses properly chargeable to the Income Account
pursuant to the Indenture which have accrued, as of such
Record Date, or are otherwise properly attributable to the
period to which such Income Distribution relates."
M. Section 3.11 of the Standard Terms and Conditions of
Trust is hereby deleted in its entirety and replaced with the
following language:
"Section 3.11. Notice to Depositor.
In the event that the Trustee shall have been notified
at any time of any action to be taken or proposed to be
taken by at least a legally required number of holders of
any Securities deposited in a Trust, the Trustee shall take
such action or omit from taking any action, as appropriate,
so as to insure that the Securities are voted as closely as
possible in the same manner and the same general proportion
as are the Securities held by owners other than such Trust.
In the event that an offer by the issuer of any of the
Securities or any other party shall be made to issue new
securities, or to exchange securities, for Trust Securities,
the Trustee shall reject such offer. However, should any
issuance, exchange or substitution be effected
notwithstanding such rejection or without an initial offer,
any securities, cash and/or property received shall be
deposited hereunder and shall be promptly sold, if
securities or property, by the Trustee pursuant to the
Depositor's direction, unless the Depositor advises the
Trustee to keep such securities or property. The Depositor
may rely on the Portfolio Supervisor in so advising the
Trustee. The cash received in such exchange and cash
proceeds of any such sales shall be distributed to Unit
holders on the next distribution date in the manner set
forth in Section 3.05 regarding distributions from the
Capital Account. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by
reason of any such sale.
Neither the Depositor nor the Trustee shall be liable
to any person for any action or failure to take action
pursuant to the terms of this Section 3.11.
Whenever new securities or property is received and
retained by a Trust pursuant to this Section 3.11, the
Trustee shall, within five days thereafter, mail to all Unit
holders of such Trust notices of such acquisition unless
legal counsel for such Trust determines that such notice is
not required by The Investment Company Act of 1940, as
amended."
N. 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.I.(e) deduct from the Interest Account
or, to the extent funds are not available in such Account,
from the Capital Account and pay to the Depositor the amount
that it is entitled to receive pursuant to Section 3.14.
O. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraphs
which shall be entitled Section 3.14.:
"Section 3.14. Bookkeeping and Administrative Expenses.
As compensation for providing bookkeeping and other
administrative services of a character described in Section
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 as set forth in the Prospectus 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
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 Income and Capital 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 Income and Capital Accounts
shall be insufficient to provide for amounts payable
pursuant to this Section 3.14, 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 3.14.
Any moneys payable to the Depositor pursuant to this
Section 3.14 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. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraph
which shall be entitled Section 3.15:
"Section 3.15. 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 Capital 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 Capital 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 Capital 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. 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 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."
Q. Section 5.02 of the Standard Terms and Conditions of
Trust is amended by adding the following after the second
paragraph of such section:
"Notwithstanding anything herein to the contrary, in
the event that any tender of Units pursuant to this Section
5.02 would result in the disposition by the Trustee of less
than a whole Security, the Trustee shall distribute cash in
lieu thereof and sell such Securities as directed by the
Sponsors as required to make such cash available.
Subject to the restrictions set forth in the
Prospectus, Unit holders may redeem 2,500 Units or more of a
Trust and request a distribution in kind of (i) such Unit
holder's pro rata portion of each of the Securities in such
Trust, in whole shares, and (ii) cash equal to such Unit
holder's pro rata portion of the Income and Capital Accounts
as follows: (x) a pro rata portion of the net proceeds of
sale of the Securities representing any fractional shares
included in such Unit holder's pro rata share of the
Securities and (y) such other cash as may properly be
included in such Unit holder's pro rata share of the sum of
the cash balances of the Income and Capital Accounts in an
amount equal to the Unit Value determined on the basis of a
Trust Fund Evaluation made in accordance with Section 5.01
determined by the Trustee on the date of tender less amounts
determined in clauses (i) and (ii)(x) of this Section.
Subject to Section 5.05 with respect to Rollover Unit
holders, if applicable, to the extent possible,
distributions of Securities pursuant to an in kind
redemption of Units shall be made by the Trustee through the
distribution of each of the Securities in book-entry form to
the account of the Unit holder's bank or broker-dealer at
the Depository Trust Company. Any distribution in kind will
be reduced by customary transfer and registration charges."
R. The following Section 5.05 shall be added:
"Section 5.05. Rollover of Units. (a) If the
Depositor shall offer a subsequent series of the Trust (the
"New Series"), the Trustee shall, at the Depositor's sole
cost and expense, include in the notice sent to Unit holders
specified in Section 8.02 a form of election whereby Unit
holders, whose redemption distribution would be in an amount
sufficient to purchase at least one Unit of the New Series,
may elect to have their Units(s) redeemed in kind in the
manner provided in Section 5.02, the Securities included in
the redemption distribution sold, and the cash proceeds
applied by the Distribution Agent to purchase Units of a New
Series, all as hereinafter provided. The Trustee shall
honor properly completed election forms returned to the
Trustee, accompanied by any Certificate evidencing Units
tendered for redemption or a properly completed redemption
request with respect to uncertificated Units, by its close
of business on the Rollover Notification Date. The notice
and form of election to be sent to Unit holders in respect
of any redemption and purchase of Units of a New Series as
provided in this section shall be in such form and shall be
sent at such time or times as the Depositor shall direct the
Trustee in writing and the Trustee shall have no
responsibility therefor. The Distribution Agent acts solely
as disbursing agent in connection with purchases of Units
pursuant to this Section and nothing herein shall be deemed
to constitute the Distribution Agent a broker in such
transactions.
All Units so tendered by a Unit holder (a "Rollover
Unit holder") shall be redeemed and cancelled on the
Rollover Notification Date. Subject to payment by such
Rollover Unit holder of any tax or other governmental
charges which may be imposed thereon, such redemption is to
be made in kind pursuant to Section 5.02 by distribution of
cash and/or Securities to the Distribution Agent on the
Rollover Notification Date of the net asset value
(determined on the basis of the Trust Fund Evaluation as of
the Rollover Notification Date in accordance with
Section 4.01) multiplied by the number of Units being
redeemed (herein called the "Rollover Distribution"). Any
Securities that are made part of the Rollover Distribution
shall be valued for purposes of the redemption distribution
as of the Rollover Notification Date.
All Securities included in a Unit holder's Rollover
Distribution shall be sold by the Distribution Agent on the
Special Redemption and Liquidation Date specified in the
Prospectus pursuant to the Depositor's direction, and the
Distribution Agent shall employ the Depositor as broker in
connection with such sales. For such brokerage services,
the Depositor shall be entitled to compensation at its
customary rates, provided however, that its compensation
shall not exceed the amount authorized by applicable
Securities laws and regulations. The Depositor shall direct
that sales be made in accordance with the guidelines set
forth in the Prospectus under the heading "Special
Redemption, Liquidation and Investment in New Trusts."
Should the Depositor fail to provide direction, the
Distribution Agent shall sell the Securities in the manner
provided in the prospectus for " less liquid Equity
Securities." The Distribution Agent shall have no
responsibility for any loss or depreciation incurred by
reason of any sale made pursuant to this Section.
Upon each trade date for sales of Securities included
in the Rollover Unit holder's Rollover Distribution, the
Distribution Agent shall, as agent for such Rollover Unit
holder, enter into a contract with the Depositor to purchase
from the Depositor Units of a New Series (if any), at the
Depositor's public offering price for such Units on such
day, and at such reduced sales charge as shall be described
in the prospectus for such Trust. Such contract shall
provide for purchase of the maximum number of Units of a New
Series whose purchase price is equal to or less than the
cash proceeds held by the Distribution Agent for the Unit
holder on such day (including therein the proceeds
anticipated to be received in respect of Securities traded
on such day net of all brokerage fees, governmental charges
and any other expenses incurred in connection with such
sale), to the extent Units are available for purchase from
the Depositor. In the event a sale of Securities included
in the Rollover Unit holder's redemption distribution shall
not be consummated in accordance with its terms, the
Distribution Agent shall apply the cash proceeds held for
such Unit holder as of the settlement date for the purchase
of Units of a New Series to purchase the maximum number of
units which such cash balance will permit, and the Depositor
agrees that the settlement date for Units whose purchase was
not consummated as a result of insufficient funds will be
extended until cash proceeds from the Rollover Distribution
are available in a sufficient amount to settle such
purchase. If the Unit holder's Rollover Distribution will
produce insufficient cash proceeds to purchase all of the
Units of a New Series contracted for, the Depositor agrees
that the contract shall be rescinded with respect to the
Units as to which there was a cash shortfall without any
liability to the Rollover Unit holder or the Distribution
Agent. Any cash balance remaining after such purchase shall
be distributed within a reasonable time to the Rollover Unit
holder by check mailed to the address of such Unit holder on
the registration books of the Trustee. Units of a New Series
will be uncertificated unless and until the Rollover Unit
holder requests a certificate. Any cash held by the
Distribution Agent shall be held in a non-interest bearing
account which will be of benefit to the Distribution Agent
in accordance with normal banking procedures. Neither the
Trustee nor the Distribution Agent shall have any
responsibility or liability for loss or depreciation
resulting from any reinvestment made in accordance with this
paragraph, or for any failure to make such reinvestment in
the event the Depositor does not make Units available for
purchase.
(b) Notwithstanding the foregoing, the Depositor may,
in their discretion at any time, decide not to offer Trust
Series in the future, and if so, this Section 5.05
concerning the Rollover of Units shall be inoperative.
(c) The Distribution Agent shall receive no fees for
performing its duties hereunder. The Distribution Agent
shall, however, be entitled to receive indemnification and
reimbursement from the Trust for any and all expenses and
disbursements to the same extent as the Trustee is permitted
reimbursement hereunder."
S. Paragraph (g) of Section 6.01 of the Standard Terms and
Conditions of Trust is hereby amended by inserting the following
after the first word thereof:
"(i) the value of any Trust as shown by an evaluation
by the Trustee pursuant to Section 5.01 hereof shall be less
than the lower of $2,000,000 or 20% of the total principal
amount of Securities deposited in such Trust, or (ii)"
T. Section 1.01(4) 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."
U. Section 1.01(3) shall be amended to read as follows:
"(3) "Evaluator" shall mean First Trust Advisors L.P.
and its successors in interest, or any successor evaluator
appointed as hereinafter provided."
V. The first sentence of Section 3.13. shall be amended to
read as follows:
"As compensation for providing supervisory portfolio
services under this Indenture, the Portfolio Supervisor
shall receive, in arrears, against a statement or statements
therefor submitted to the Trustee monthly or annually an
aggregate annual fee in an amount which shall not exceed
$0.0035 per Unit outstanding as of January 1 of such year
except for a Trust during the year or years in which an
initial offering period as determined in 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 Portfolio Supervisor provides services during
less than the whole of such year), but in no event shall
such compensation when combined with all compensation
received from other series of the Trust for providing such
supervisory services in any calendar year exceed the
aggregate cost to the Portfolio Supervisor for the cost of
providing such services."
W. 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. The expenses incurred in
establishing a Trust, including the cost of the preparation
and typesetting of the registration statement, prospectuses
(including preliminary prospectuses), the indenture and
other documents relating to the Trust, printing of
Certificates, Securities and Exchange Commission and state
blue sky registration fees, the costs 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, to the
extent not borne by the Depositor, shall be borne by the
Trust. To the extent the funds in the Income and Capital
Accounts of the Trust shall be insufficient to pay the
expenses borne by the Trust specified in this Section 3.01,
the Trustee shall advance out of its own funds and cause to
be deposited and credited to the Income Account such amount
as may be required to permit payment of such expenses. The
Trustee shall be reimbursed for such advance on each Record
Date from funds on hand in the Income Account or, to the
extent funds are not available in such Account, from the
Capital Account, in the amount deemed to have accrued as of
such Record Date as provided in the following sentence (less
prior payments on account of such advances, if any), and the
provisions of Section 6.04 with respect to the reimbursement
of disbursements for Trust expenses, including, without
limitation, the lien in favor of the Trustee therefor and
the authority to sell Securities as needed to fund such
reimbursement, shall apply to the payment of expenses and
the amounts advanced pursuant to this Section. For the
purposes of the preceding sentence and the addition provided
in clause (4) of the first sentence of Section 5.01, the
expenses borne by the Trust pursuant to this Section shall
be deemed to have been paid on the date of the Trust
Agreement and to accrue at a daily rate over the time period
specified for their amortization provided in the Prospectus;
provided, however, that nothing herein shall be deemed to
prevent, and the Trustee shall be entitled to, full
reimbursement for any advances made pursuant to this Section
no later than the termination of the Trust. For purposes of
calculating the accrual of organizational expenses under
this Section 3.01, the Trustee shall rely on the written
estimates of such expenses provided by the Depositor
pursuant to Section 5.01."
X. Section 5.01 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The first sentence of the first paragraph of
Section 5.01 shall be amended by deleting the phrase
"together with all other assets of the Trust" at the end of
such sentence and adding the following at the conclusion
thereof: ", plus (4) amounts representing organizational
expenses paid from the Trust less amounts representing
accrued organizational expenses of the Trust, plus (5) all
other assets of the Trust."
(ii) The following shall be added at the end of the
first paragraph of Section 5.01:
Until the Depositor has informed the Trustee that
there will be no further deposits of Additional
Securities pursuant to section 2.01(b), the Depositor
shall provide the Trustee with written estimates of (i)
the total organizational expenses to be borne by the
Trust pursuant to Section 3.01 and (ii) the total
number of Units to be issued in connection with the
initial deposit and all anticipated deposits of
additional Securities. For purposes of calculating the
Trust Fund Evaluation and Unit Value, the Trustee shall
treat all such anticipated expenses as having been paid
and all liabilities therefor as having been incurred,
and all Units as having been issued, in each case on
the date of the Trust Agreement, and, in connection
with each such calculation, shall take into account a
pro rata portion of such expense and liability based on
the actual number of Units issued as of the date of
such calculation. In the event the Trustee is informed
by the Depositor of a revision in its estimate of total
expenses or total Units and upon the conclusion of the
deposit of additional Securities, the Trustee shall
base calculations made thereafter on such revised
estimates or actual expenses, respectively, but such
adjustment shall not affect calculations made prior
thereto and no adjustment shall be made in respect
thereof.
Y. Section 2.03(a) of the Standard Terms and Conditions of
Trust shall be amended by adding the following sentence after the
first sentence of such section:
"The number of Units may be increased through a split
of the Units or decreased through a reverse split thereof,
as directed in writing by the Depositor, at any time when
the Depositor is the only beneficial holder of Units, which
revised number of Units shall be recorded by the Trustee on
its books. The Trustee shall be entitled to rely on the
Depositor's direction as certification that no person other
than the Depositor has a beneficial interest in the Units
and the Trustee shall have no liability to any person for
action taken pursuant to such direction."
Z. The following shall be added immediately following the
first sentence of paragraph (c) of Section 2.01:
"The Trustee may allow the Depositor to substitute any
Letter(s) of Credit deposited with the Trustee in connection with
the deposits described in Section 2.01(a) and (b) with 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."
AA. Notwithstanding anything to the contrary in Sections
3.15 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.
BB. Section 8.02 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The fourth sentence of the second paragraph shall
be deleted and replaced with the following:
"The Trustee will honor duly executed requests for in-
kind distributions received (accompanied by the electing
Unit holder's Certificate, if issued) by the close of
business ten business days prior to the Mandatory
Termination Date."
(ii) The first sentence of the fourth paragraph shall
be deleted and replaced with the following:
"Commencing no earlier than the business day following
that date on which Unit holders must submit to the Trustee
notice of their request to receive an in-kind distribution
of Securities at termination, the Trustee will liquidate the
Securities not segregated for in-kind distributions during
such period and in such daily amounts as the Depositor shall
direct."
IN WITNESS WHEREOF, Nike Securities L.P., The Chase
Manhattan Bank 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
ByRobert M. Porcellino
Vice President
THE CHASE MANHATTAN BANK,
Trustee
ByRosalia A. Raviele
Vice President
[SEAL]
ATTEST:
Joan Currie
Assistant Treasurer
FIRST TRUST ADVISORS L.P.,
Evaluator
ByRobert M. Porcellino
Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
ByRobert M. Porcellino
Vice President
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
FT 223
(Note: Incorporated herein and made a part hereof for the
Trust is the "Schedule of Investments" for the Trust as set forth
in the Prospectus.)
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
December 1, 1997
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: FT 223
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of FT 223 in connection with the
preparation, execution and delivery of a Trust Agreement dated
December 1, 1997 among Nike Securities L.P., as Depositor, The
Chase Manhattan Bank, as Trustee and First Trust Advisors L.P. as
Evaluator and 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 certificates evidencing the Units in the Fund 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. 333-38331)
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
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
December 1, 1997
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
The Chase Manhattan Bank
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Re: FT 223
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of FT 223 (the "Fund"), in connection with the issuance of units
of fractional undivided interest in the Trust of said Fund (the
"Trust"), under a Trust Agreement, dated December 1, 1997 (the
"Indenture"), among Nike Securities L.P., as Depositor, The Chase
Manhattan Bank, as Trustee and Muller Data Corporation, as
Evaluator, and First Trust Advisors L.P., as Portfolio
Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents we have deemed pertinent. The opinions
expressed herein assume that the Trust will be administered, and
investments by the Trust from proceeds of subsequent deposits, if
any, will be made, in accordance with the terms of the Indenture.
The Trust holds Equity Securities as such term is defined in the
Prospectus. For purposes of the following discussion and
opinion, it is assumed that each Equity Security is equity for
Federal income tax purposes and that Equity Securities may
represent shares in an entity treated as a real estate investment
trust for federal income tax purposes.
Based upon the foregoing and upon an investigation of such
matters of law as we consider to be applicable, we are of the
opinion that, under existing United States Federal income tax
law:
I. The Trust is not an association taxable as a
corporation for Federal income tax purposes; each Unit holder
will be treated as the owner of a pro rata portion of each of the
assets of the Trust under the Internal Revenue Code of 1986 (the
"Code") in the proportion that the number of Units held by him
bears to the total number of Units outstanding; the income of the
Trust will be treated as income of the Unit holders in the
proportion described above under the Code; and an item of Trust
income will have the same character in the hands of a Unit holder
as it would have in the hands of the Trustee. Each Unit holder
will be considered to have received his pro rata share of income
derived from the Trust asset when such income is considered to be
received by the Trust.
II. The price a Unit holder pays for his Units, generally
including sales charges, is allocated among his pro rata portion
of each Equity Security held by the Trust (in proportion to the
fair market values thereof on the valuation date closest to the
date the Unit holder purchases his Units) in order to determine
his tax basis for his pro rata portion of each Equity Security
held by the Trust. For Federal income tax purposes, a Unit
holder's pro rata portion of distributions of cash or property by
a corporation with respect to an Equity Security ("dividends" as
defined by Section 316 of the Code) is taxable as ordinary income
to the extent of such corporation's current and accumulated
"earnings and profits." A Unit holder's pro rata portion of
dividends paid on such Equity Security which exceeds such current
and accumulated earnings and profits will first reduce a Unit
holder's tax basis in such Equity Security, and to the extent
that such dividends exceed a Unit holder's tax basis in such
Equity Security shall be treated as gain from the sale or
exchange of property. In general, any such gain will be short
term unless a Unit holder has held his Units for more than one
year. Certain of the issuers of the Equity Securities intend to
qualify under special Federal income tax rules as "real estate
investment trusts" (a "REIT," shares of such issuer held by the
Trust shall be referred to as the "REIT Shares"). Because Unit
holders are deemed to directly own a pro rata portion of the REIT
Shares as discussed above, Unit holders are advised to consult
their tax advisers for information relating to the tax
consequences of owning the REIT Shares. Provided such issuer
qualifies as a REIT certain distributions by such issuer on the
REIT Shares may qualify as "capital gain dividends," taxable to
shareholders (and, accordingly, to the Unit holders as owners of
a pro rata portion of the REIT Shares) as long-term capital gain,
regardless of how long a shareholder has owned such shares. In
addition, distributions of income or capital gains declared on
REIT shareholders (and, accordingly, to the Unit holders as
owners of a pro rata portion of the REIT Shares) on December 31,
of the year they are declared; even when paid by the REIT during
the following January and received by shareholders or Unit
holders in such following year.
III. Gain or loss will be recognized to a Unit holder
(subject to various nonrecognition provisions under the Code)
when the Trust disposes of an Equity Security (whether by sale,
exchange, liquidation, redemption, or otherwise) or upon
redemption or sale of his Units, except to the extent an in kind
distribution of stock is received by such Unit holder from the
Trust as discussed below. A Unit holder's portion of gain, if
any, upon the sale or redemption of Units or the disposition of
Equity Securities held by the Trust will generally be considered
a capital gain (except in the case of a dealer or financial
institution). Such gain or loss is measured by comparing the
proceeds of such redemption or sale with the adjusted basis of
his Units. Before adjustment, such basis would normally be cost
if the Unit holder had acquired his Units by purchase. Such
basis will be reduced, but not below zero, by the Unit holder's
pro rata portion of dividends with respect to each Equity
Security which is not taxable as ordinary income. However, any
loss realized by a Unit holder with respect to the disposition of
his pro rata portion of the REIT Shares, to the extent such Unit
holder has owned his Units for less than six months or the Trust
has held the REIT Shares for less than six months, will be
treated as long-term capital loss to the extent of the Unit
holder's pro rata portion of any capital gain dividends received
(or deemed to have been received) with respect to the REIT
Shares.
IV. Under the indenture, under certain circumstances, a
Unit holder tendering Units for redemption may request an in kind
distribution of Equity Securities upon the redemption of Units or
upon the termination of the Trust. As previously discussed,
prior to the redemption of Units or the termination of the Trust,
a Unit holder is considered as owning a pro rata portion of each
of the Trust's assets. The receipt of an in kind distribution
will result in a Unit holder receiving an undivided interest in
whole shares of stock and possibly cash. The potential federal
income tax consequences which may occur under an in kind
distribution with respect to each Equity Security owned by the
Trust will depend upon whether or not a United States Unit holder
receives cash in addition to Equity Securities. An "Equity
Security" for this purpose is a particular class of stock issued
by a particular corporation. A Unit holder will not recognize
gain or loss if a Unit holder only receives Equity Securities in
exchange for his or her pro rata portion in the Equity Securities
held by the Trust. However, if a Unit holder also receives cash
in exchange for a fractional share of an Equity Security held by
the Trust, such Unit holder will generally recognize gain or loss
based upon the difference between the amount of cash received by
the Unit holder and his tax basis in such fractional share of an
Equity Security held by the Trust. The total amount of taxable
gains (or losses) recognized upon such redemption will generally
equal the sum of the gain (or loss) recognized under the rules
described above by the redeeming Unit holder with respect to each
Equity Security owned by the Trust.
A domestic corporation owning Units in the Trust may be
eligible for the 70% dividends received deduction pursuant to
Section 243(a) of the Code with respect to such Unit holders' pro
rata portion of dividends received by the Trust (to the extent
such dividends are taxable as ordinary income, as discussed
above, and are attributable to domestic corporations), subject to
the limitations imposed by Sections 246 and 246A of the Code.
However, dividends received on the REIT Shares are not eligible
for the Dividends received reduction.
Section 67 of the Code provides that certain miscellaneous
itemized deductions, such as investment expenses, tax return
preparation fees and employee business expenses will be
deductible by an individual only to the extent they exceed 2% of
such individual's adjusted gross income. Unit holders may be
required to treat some or all of the expenses of the Trust as
miscellaneous itemized deductions subject to this limitation.
A Unit holder will recognize taxable gain (or loss)when all
or part of the pro rata interest in an Equity Security is either
sold by the Trust or redeemed or when a Unit holder disposes of
his Units in a taxable transaction, in each case for an amount
greater (or less) than his tax basis therefor; subject to various
nonrecognition provisions of the Code.
It should be noted that payments to the Trust of dividends
on Equity Securities that are attributable to foreign
corporations may be subject to foreign withholding taxes and Unit
holders should consult their tax advisers regarding the potential
tax consequences relating to the payment of any such withholding
taxes by the Trust. Any dividends withheld as a result thereof
will nevertheless be treated as income to the Unit holders.
Because under the grantor trust rules, an investor is deemed to
have paid directly his share of foreign taxes that have been paid
or accrued, if any, an investor may be entitled to a foreign tax
credit or deduction for United States tax purposes with respect
to such taxes. A required holding period is imposed, however,
for such credit.
Any gain or loss recognized on a sale or exchange will,
under current law, generally be capital gain or loss.
The scope of this opinion is expressly limited to the
matters set forth herein, and, except as expressly set forth
above, we express no opinion with respect to any other taxes,
including foreign, state or local taxes or collateral tax
consequences with respect to the purchase, ownership and
disposition of Units.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 333-38331)
relating to the Units referred to above and to the use of our
name and to the reference to our firm in said Registration
Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
EFF/erg
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
December 1, 1997
The Chase Manhattan Bank, as Trustee of
FT 223
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Attention: Mr. Thomas Porrazzo
Vice President
Re: FT 223
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for the unit investment trust or trusts contained in
FT 223 (each, a "Trust"), which will be established under certain
Standard Terms and Conditions of Trust dated November 20, 1991,
and a related Trust Agreement dated as of today (collectively,
the "Indenture") among Nike Securities L.P., as Depositor (the
"Depositor"), First Trust Advisors L.P., as Evaluator, First
Trust Advisors L.P., as Portfolio Supervisor, and The Chase
Manhattan Bank, as Trustee (the "Trustee"). Pursuant to the
terms of the Indenture, units of fractional undivided interest in
the Trust (the "Units") will be issued in the aggregate number
set forth in the Indenture.
We have examined and are familiar with originals or
certified copies, or copies otherwise identified to our
satisfaction, of such documents as we have deemed necessary or
appropriate for the purpose of this opinion. In giving this
opinion, we have relied upon the two opinions, each dated today
and addressed to the Trustee, of Chapman and Cutler, counsel for
the Depositor, with respect to the matters of law set forth
therein.
Based upon the foregoing, we are of the opinion that:
1. The Trust will not constitute an association taxable as
a corporation under New York law, and accordingly will not be
subject to the New York State franchise tax or the New York City
general corporation tax.
2. Under the income tax laws of the State and City of New
York, the income of the Trust will be considered the income of
the holders of the Units.
We consent to the filing of this opinion as an exhibit to
the Registration Statement (No. 333-38331) 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 captions "What is the Federal Tax Status of
Unit-holders?" and "Legal Opinions" in such Registration
Statement and the preliminary prospectus included therein.
Very truly yours,
CARTER, LEDYARD & MILBURN
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
December 1, 1997
The Chase Manhattan Bank, as Trustee of
FT 223
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Attention: Mr. Thomas Porrazzo
Vice President
Re: FT 223
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 certain Standard Terms
and Conditions of Trust dated November 20, 1991, and the same are
collectively referred to herein as the "Indenture") among Nike
Securities L.P., as Depositor (the "Depositor"), First Trust
Advisors L.P., as Evaluator; First Trust Advisors L.P., as
Portfolio Supervisor; and Chase, as Trustee (the "Trustee"),
establishing the unit investment trust or trusts included in FT
223 (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 common stocks (including, confirmations of contracts
for the purchase of certain stocks not delivered and cash, cash
equivalents or an irrevocable letter of credit or a combination
thereof, in the amount required for such purchase upon the
receipt of such stocks), such stocks being defined in the
Indenture as Securities and referenced in the Schedule to the
Indenture.
We have examined the Indenture, a specimen of the
certificates to be issued hereunder (the "Certificates"), the
Closing Memorandum dated todays 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 has been duly executed and
delivered by Chase and, assuming due execution and delivery by
the other parties thereto, constitutes the valid and legally
binding obligation 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 advance to the Trust
amounts as may be necessary to provide periodic interest
distributions of approximately equal amounts, and be reimbursed,
without interest, for any such advances 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.
Very truly yours,
CARTER, LEDYARD & MILBURN
First Trust Advisors L.P.
1001 Warrenville Road
Lisle, Illinois 60532
December 1, 1997
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: FT 223
Gentlemen:
We have examined the Registration Statement File No.
333-38331 for the above captioned fund. We hereby consent to the
use in the Registration Statement of the references to First
Trust Advisors L.P. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
First Trust Advisors L.P.
Robert M. Porcellino
Vice President
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted
from Amendment number 1 to form S-6 and is qualified in its entirety by
reference to such Amendment number 1 to form S-6.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> McDonald Select Equity Trust, Series 1998
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> Other
<FISCAL-YEAR-END> DEC-01-1997
<PERIOD-START> DEC-01-1997
<PERIOD-END> DEC-01-1997
<INVESTMENTS-AT-COST> 148,544
<INVESTMENTS-AT-VALUE> 148,544
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 148,544
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 148,544
<SHARES-COMMON-STOCK> 15,004
<SHARES-COMMON-PRIOR> 15,004
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 148,544
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
