Registration No. 333-39701
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 225
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 April 7, 1998 at 2:00 p.m. pursuant to Rule
487.
________________________________
FT 225
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.
American Bank Trust Series
The Trust. FT 225 is a unit investment trust consisting of a portfolio
of common stocks issued by bank holding companies which are incorporated
or headquartered in the United States.
The objective of the Trust is to provide the potential for above-average
total return through a combination of capital appreciation and rising
dividend income by investing the Trust's portfolio in common stocks
issued by bank holding companies which are incorporated or headquartered
in the United States (the "Equity Securities"). See "Schedule of
Investments." The Trust has a mandatory termination date ("Mandatory
Termination Date" or "Trust Ending Date") 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 in the Trust.
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 during a period of up to
approximately 360 days 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
amongst 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,
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 "Rights of Unit Holders-How May Equity Securities
be Removed from the Trust?"
Public Offering Price. The Public Offering Price per Unit of the Trust
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 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 structuring charge
initially equal to $.125 per Unit. This structuring charge is deferred
and will be assessed on a monthly basis over a five-month period.
Commencing on July 20, 1998, and on the twentieth day of each month
thereafter (or if such day is not a business day, on the preceding
business day) through November 19, 1998, a deferred structuring charge
of $.025 will be assessed per Unit per month. Units purchased subsequent
to the initial deferred structuring charge payment will be charged the
amount of the previously collected deferred structuring charge at the
time of purchase and will be subject to the remaining deferred
structuring charge payments not yet collected. The deferred structuring
charge will be paid from funds in the Income and/or Capital Accounts, if
sufficient, or from the periodic sale of Equity Securities. The total
maximum structuring charge assessed to Unit holders on a per Unit basis
will be
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.
First Trust (registered trademark)
1-800-621-9533
The date of this Prospectus is April 7, 1998
Page 1
$.125 (which on the Initial Date of Deposit is equivalent to 1.25% of
the Public Offering Price). The total maximum structuring charge which
may be assessed to Unit holders on a per Unit basis is 2.0% of the
Public Offering Price (equivalent to a maximum of 2.041% of the net
amount invested, exclusive of the deferred structuring charge). A pro
rata share of accumulated dividends, if any, in the Income Account is
included in the Public Offering Price. The minimum amount which an
investor may purchase of the Trust is $100,000. See "Public Offering-How
is the Public Offering Price Determined?"
UNITS OF THE TRUST ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY BANK, AND UNITS ARE NOT FEDERALLY INSURED OR OTHERWISE PROTECTED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION AND INVOLVE INVESTMENT RISK
INCLUDING LOSS OF PRINCIPAL.
Estimated Net Annual Distributions. The estimated net annual dividend
distributions to Unit holders (based on the most recent quarterly or
semi-annual ordinary dividend declared with respect to the Equity
Securities in the Trust) on the Initial Date of Deposit was $.2170 per
Unit. The actual net annual dividend distributions per Unit will vary
with changes in fees and expenses of the Trust, with changes in
dividends received and with the sale or liquidation of Equity
Securities; therefore, there is no assurance that the net annual
dividend distributions will be realized in the future.
Dividend and Capital Distributions. Cash dividends received by the Trust
will be paid on each December 31 and June 30 to Unit holders of record
on December 15 and June 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, if any, will be
made to Rollover Unit holders and others as part of the final
liquidation distribution, and in certain circumstances, 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, to each 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 "Special Redemption, Liquidation and
Investment in a New Trust." Any Unit holder may elect to have each
distribution of income or capital on his or her Units, other than the
final liquidating distribution, automatically reinvested in additional
Units of such Trust subject only to remaining deferred structuring
charge payments. See "Rights of Unit Holders-How are Income and Capital
Distributed?"
Secondary Market for Units. The Sponsor does not intend to maintain a
secondary market for Units of the Trust. A Unit holder may, however,
redeem Units through redemption 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 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 10,000 Units or more for redemption may request a distribution
of shares of Equity Securities (reduced by customary transfer and
registration charges) (an "In-Kind Distribution") in lieu of payment in
cash. See "Rights of Unit Holders-How May Units be Redeemed?" Any
deferred structuring charge remaining on Units at the time of their sale
or redemption will be collected at that time.
Special Redemption, Liquidation and Investment in a New Trust. The
Sponsor intends to create a separate 1999 series of the American Bank
Trust (the "1999 Trust") in conjunction with the termination of this
series of the Trust. The portfolio of the 1999 Trust will contain equity
securities of companies which the Sponsor believes have the potential to
provide capital appreciation and rising dividend income during the term
of the 1999 Trust. Unit holders who wish to have the proceeds from their
Units invested in the 1999 Trust must specify by March 15, 1999 (the
"Rollover Notification Date") their intention to become "Rollover Unit
holders." Rollover Unit holders' Units will be redeemed in-kind on the
Rollover Notification Date and the distributed Equity Securities sold by
the Trustee, in its capacity as Distribution Agent, during the Special
Redemption and Liquidation Period. The proceeds of the redemption will
then be invested in Units of the 1999 Trust, if such Trust is offered.
The Sponsor may stop creating new Units of the 1999 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 the 1999 Trust will be distributed at
the end of the Special Redemption and Liquidation Period. The Sponsor,
Page 2
however, anticipates that sufficient Units can be created, although
moneys in the Trust may not be fully invested on the next business day.
Rollover Unit holders will receive credit for the amount of dividends in
the Income Account of the Trust which will be included in the
reinvestment in Units of the 1999 Trust. The exchange option described
above is subject to modification, termination or suspension.
No Unit holder of the Trust, including Rollover Unit holders, will be
entitled under the Taxpayer Relief Act of 1997 to the new 20% maximum
Federal tax rate for capital gains derived from the Trust's portfolio.
See "What is the Federal Tax Status of Unit holders?"
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 include a form to enable Unit holders to
elect an In-Kind Distribution if such Unit holder owns at least 10,000
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 other documentation required by the Trustee, must be
returned to the Trustee at least ten business days prior to the
Mandatory Termination Date. Unit holders not electing the "Rollover
Option" or a distribution of shares of 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, economic recession or increased
regulation on banks. The Trust's portfolio is not managed and Equity
Securities will not be sold by the Trust regardless of market
fluctuations, although some Equity Securities may be sold under certain
limited circumstances. 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-April 7, 1998
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) 15,007
Fractional Undivided Interest in the Trust per Unit (1) 1/15,007
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities in Portfolio (2) $150,073
Aggregate Offering Price Evaluation of Equity Securities per Unit $ 10.000
Maximum Structuring Charge of 1.25% of the Public Offering Price per Unit
(1.25% of the net amount invested, exclusive of the deferred structuring charge) (3) $ .125
Less Deferred Structuring Charge per Unit $ (.125)
Public Offering Price per Unit (3) $ 10.000
Sponsor's Initial Repurchase Price per Unit $ 9.875
Redemption Price per Unit (based on aggregate underlying value of Equity Securities) (4) $ 9.875
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Cash CUSIP Number 30264N 818
Reinvestment CUSIP Number 30264Q 209
Security Code 55208
First Settlement Date April 13, 1998
Rollover Notification Date March 15, 1999
Special Redemption and
Liquidation Period April 1, 1999 through April 15, 1999
Mandatory Termination Date April 15, 1999
Discretionary Liquidation Amount The Trust may be terminated if the value thereof is less than the lower of
$2,000,000 or 20% of the total value of Equity Securities deposited in the
Trust during the initial offering period.
Trustee's Annual Fee $.0096 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) $.0160 per Unit.
Income Distribution Record Date Fifteenth day of each June and December commencing June 15, 1998.
Income Distribution Date (7) Last day of each 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 Security is not so listed, at the
closing ask price thereof.
(3) The maximum structuring charge is entirely deferred. Unit holders
will be assessed an amount equal to $.025 per Unit per month commencing
July 20, 1998 and on the twentieth day of each month thereafter (or if
such day is not a business day, on the preceding business day) through
November 19, 1998. Subsequent to the Initial Date of Deposit, the amount
of the structuring charge as a percentage of the Public Offering Price
will vary with changes in the aggregate underlying value of the Equity
Securities in the Trust. During the initial offering period, Units
purchased subsequent to the initial deferred structuring charge payment
will be charged the amount of the previously collected deferred
structuring charge at the time of purchase and will be subject to the
remaining deferred structuring charge payments not yet collected. These
deferred structuring charge payments will be paid from funds in the
Income and/or Capital Accounts, if sufficient, or from the periodic sale
of Equity Securities. See "Fee Table" and "Public Offering" for
additional information. On the Initial Date of Deposit there will be no
accumulated dividends in the Income Account. Anyone ordering Units after
such date will pay a pro rata share of any accumulated dividends in such
Income Account. The Public Offering Price as shown reflects the value of
the Equity Securities at the opening of business on the Initial Date of
Deposit and establishes the original proportionate relationship amongst
the individual securities. No sales to investors will be executed at
this price. Additional Equity Securities will be deposited during the
day of the Initial Date of Deposit which will be valued as of 4:00 p.m.
Eastern time and sold to investors at a Public Offering Price per Unit
based on this valuation.
(4) See "Rights of Unit Holders-How May Units be Redeemed?"
(5) In addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $.0010 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 12 months 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) If the 1999 Trust is offered, at the Rollover Notification Date for
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 $0.01 per Unit. Notwithstanding,
distributions of funds in the Capital Account, if any, will be made in
December of each year.
</FN>
</TABLE>
Page 4
FEE TABLE
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 13 months and is a unit investment trust
rather than a mutual fund, this information is presented to permit a
comparison of fees.
<TABLE>
<CAPTION>
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial structuring charge imposed on purchase
(as a percentage of public offering price) 0.00%(a) $.000
Deferred structuring charge
(as a percentage of public offering price) 1.25%(b) .125
________ ______
1.25% $.125
======== ======
Maximum structuring charge per year imposed on reinvested dividends(c) 1.25% $.125
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Trustee's fee .095% $.0096
Portfolio supervision, bookkeeping, administrative, amortization
of organizational and offering costs and evaluation fees .232% .0235
Other operating expenses .013% .0013
________ _______
Total .340% $.0344
======== =======
</TABLE>
<TABLE>
<CAPTION>
Example
________
Cumulative Expenses Paid for Period:
1 Year(d) 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 American Bank Trust Series has an
estimated operating expense ratio of .340% and a 5% annual return
on the investment throughout the periods $ 16 $ 49 $ 85 $ 186
_________
<FN>
(a) There is no initial structuring charge assessed on Trust Units.
(b) The actual fee is $.025 per Unit per month, irrespective of purchase
or redemption price deducted monthly commencing July 20, 1998 through
November 19, 1998. If a Unit holder sells or redeems Units before all of
these deductions have been made, the balance of the deferred structuring
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
structuring charge will exceed 1.25%. Units purchased subsequent to the
initial deferred structuring charge payment will be subject to the
previously collected deferred structuring charge payments at the time of
purchase and any remaining deferred structuring charge payments not yet
collected.
(c) Reinvested Dividends will be subject only to the deferred structuring
charge remaining at the time of reinvestment. See "Rights of Unit
Holders-How are Income and Capital Distributed?"
(d) Although the Trust has a term of only approximately 13 months 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 each year into a new Trust subject to
the deferred structuring charge.
</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. For purposes
of the example, the deferred structuring charge imposed on reinvestment
of dividends is not reflected until the year following payment of the
dividend; the cumulative expenses would be higher if structuring 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. In addition, while the Trust only has a term of approximately
13 months, investors may be able to reinvest their proceeds into a
subsequently offered trust, subject to additional structuring charges.
Page 5
AMERICAN BANK TRUST SERIES
FT 225
What is the FT Series?
FT 225 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 "Trust"). The FT Series was formerly known as the First Trust
Special Situations Trust Series. This Series consists of an underlying
separate unit investment trust designated as: American Bank Trust
Series. 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
financial institutions, together with an irrevocable letter or letters
of credit of a financial institution in an amount at least equal to the
purchase price of such securities. In exchange for the deposit of
securities or contracts to purchase securities in the Trust, the Trustee
delivered to the Sponsor documents evidencing the entire ownership of
the Trust.
The objective of the Trust is to provide the potential for above-average
total return through a combination of capital appreciation and rising
dividend income. The Equity Securities selected for the Trust were
determined by using the following two-step strategy (the "Strategy").
First, begin with all United States listed commercial banks which have a
market capitalization exceeding $100 million (in 1997 dollars). Next,
rank these bank stocks by dividend yield and select the 65 highest
dividend-yielding stocks. 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 individual 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 in the Trust, and Units may be
continuously offered for sale to the public by means of this Prospectus,
resulting in a potential increase in the outstanding number of Units of
the Trust. Any deposit by the Sponsor of additional Equity Securities or
cash 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 price 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 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 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
Page 6
proportionately. See "Rights of Unit Holders-How May Units be Redeemed?"
What are the Expenses and Charges?
With the exception of the brokerage fees discussed above and bookkeeping
and other administrative services provided to the Trust, for which the
Sponsor will be reimbursed in amounts as set forth under "Summary of
Essential Information," the Sponsor will not receive any fees in
connection with its activities relating to the Trust. 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. In providing such supervisory services, the Portfolio
Supervisor may purchase research services from a variety of sources
which may include distributors or dealers of the Trust.
Subsequent to the initial offering period, First Trust Advisors L.P., in
its capacity as Evaluator for the Trust, 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 set forth in "Summary
of Essential Information." Such fee will be based upon the largest
number of Units of the Trust outstanding during the calendar year,
except during the initial offering period, in which case the fee is
calculated based on the largest number of Units outstanding during the
period for which the compensation is paid. For a discussion of the
services performed by the Trustee pursuant to its obligations under
the Indenture, reference is made to the material set forth under
"Rights of Unit Holders."
The Trustee's and 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 registering or qualifying the Units with the states, the
initial audit of the Trust's portfolio, legal fees, 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 12 months
from the Initial Date of Deposit. 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 imposed upon the
Equity 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
Page 7
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?"
What is the Federal Tax Status of Unit Holders?
This is a general discussion of certain of the Federal income tax
consequences of the purchase, ownership and disposition of the Units.
The summary is limited to investors who hold the Units as "capital
assets" (generally, property held for investment) within the meaning of
Section 1221 of the Internal Revenue Code of 1986 (the "Code"). Unit
holders should consult their tax 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.
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 received by the Trust regardless of whether such
dividends are used to pay a portion of the deferred structuring 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 closest to the date the
Unit holder purchases his or her Units) in order to determine the tax
basis for his or her pro rata portion of each Equity Security held by
such Trust. Unit holders should consult their own tax advisors with
regard to calculation of basis. For Federal income tax purposes, a Unit
holder's pro rata portion of dividends, as defined by Section 316 of the
Code, paid by a corporation with respect to an Equity Security held by
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
which exceed such current and accumulated earnings and profits will
first reduce a Unit holder's tax basis in such Equity Security, and to
the extent that such dividends exceed a Unit holder's tax basis in such
Equity Security shall generally be treated as capital gain. In general,
the holding period for such capital gain will be determined by the
period of time a Unit holder has held his or her Units.
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 a financial institution). A Unit holder's portion of loss,
if any, upon the sale or redemption of Units or the disposition of
Equity Securities held by the Trust will generally be considered a
capital loss (except in the case of a dealer or a financial
institution). In particular, a Rollover Unit holder should be aware that
a Rollover Unit holder's loss, if any, incurred in connection with the
Page 8
exchange of Units for units in the next new series of the American Bank
Trust Series (the "1999 Trust") 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 holders deemed ownership of the
securities underlying the Units in the Trust in the manner described
above, if such substantially identical securities are 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.
Deferred Structuring Charge. Generally, the tax basis of a Unit holder
includes structuring charges, and such charges are not deductible. The
entire structuring charge for the Trust is deferred. It is possible that
for Federal income tax purposes a portion of the deferred structuring
charge may be treated as interest which would be deductible by a Unit
holder subject to limitations on the deduction of investment interest.
In such a case, the non-interest portion of the deferred structuring
charge would be added to the Unit holder's tax basis in his or her
Units. The deferred structuring charge could cause the Unit holder's
Units to be considered to be debt-financed under Section 246A of the
Code which would result in a small reduction of the dividends-received
deduction. In any case, the income (or proceeds from redemption) a Unit
holder must take into account for Federal income tax purposes is not
reduced by amounts deducted to pay the deferred structuring charge. Unit
holders should consult their own tax advisers as to the income tax
consequences of the deferred structuring charge.
Dividends Received Deduction. A corporation that owns Units will
generally be entitled to a 70% dividends received deduction with respect
to such Unit holder's pro rata portion of dividends received by 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, such as "S"
corporations, which are not eligible for the deduction because of their
special characteristics and other than for purposes of special taxes
such as the accumulated earnings tax and the personal holding
corporation tax). However, a corporation owning Units should be aware
that Sections 246 and 246A of the Code impose additional limitations on
the eligibility of dividends for the 70% dividends received deduction.
These limitations include a requirement that stock (and therefore Units)
must generally be held at least 46 days (as determined under Section
246(c) of the Code). Final regulations have been issued which address
special rules that must be considered in determining whether the 46-day
holding period requirement is met. Moreover, the allowable percentage of
the deduction will be reduced from 70% if a corporate Unit holder owns
certain stock (or Units) the financing of which is directly attributable
to indebtedness incurred by such corporation.
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.
Limitations on Deductibility of the Trust's Expenses by Unit Holders.
Each Unit holder's pro rata share of each expense paid by the 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
(similar limitations also apply to estates and trusts). Unit holders who
are individuals, trusts or estates may be required to treat some or all
of the expenses of the 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). For taxpayers other than corporations, net capital
gains (which is defined as net long-term capital gain over net short-
term capital loss for a taxable year) are subject to a maximum stated
marginal tax rate of either 28% or 20%, depending upon the holding
periods of the capital assets. Capital 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. Generally, capital
Page 9
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. Unit holders should consult their own tax advisers as to the tax
rate applicable to capital gain dividends. The Internal Revenue Service
has released preliminary guidance which provides that, in general, pass-
through entities may designate their capital gain 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 advisers as to the tax rate applicable to
capital gain dividends.
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 or she is deemed thereby to
have disposed of his or her entire pro rata interest in all assets of
the Trust involved including his or her pro rata portion of all the
Equity Securities represented by the Unit.
The Taxpayer Relief Act of 1997 (the "1997 Tax Act") includes provisions
that treat certain transaction designed to reduce or eliminate risk of
loss and opportunities for gain (e.g. short sales, offsetting notional
principal contracts, futures or forward contracts, or similar
transactions) as constructive sales for purposes of recognition of gain
(but not loss) and for purposes of determining the holding period. Unit
holders should consult their own tax advisers with regard to any such
constructive sales rules.
Special Tax Consequences of In-Kind Distributions Upon Redemption of
Units, Termination of the Trust and Investment in a 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 10,000 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. If
a Unit holder is deemed to recognize gain or loss on the In-Kind
Distribution because cash is received in addition to Equity Securities,
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 holders 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
Page 10
or her Units for units of the 1999 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 holder's deemed ownership of the securities underlying
the units in such 1999 Trust in the manner described above, if such
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 or her 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 or her Units and his or her 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 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 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.
Unit holders will be notified annually of the amounts of dividends
includable in the Unit holder's gross income and amounts of Trust
expenses which may be claimed as itemized deductions.
The foregoing discussion relates only to the tax treatment of United
States Unit holders with regard to United States Federal income taxes;
Unit holders may be subject to foreign, state and local taxation. Unit
holders should consult their tax advisers regarding potential state or
local taxation with respect to the Units.
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, each Trust is not an association taxable as a
corporation and the income of such Trusts will be treated as the income
of the Unit holders thereof.
PORTFOLIO
What are Equity Securities?
The Trust consists of different issues of Equity Securities issued by
financial institutions selected by applying the Strategy as of the
business day prior to the Initial Date of Deposit which are listed on a
national securities exchange or The Nasdaq Stock Market or traded in the
over-the-counter market. See "What are the Equity Securities Selected
for American Bank Trust Series?" for a general description of the
companies.
Hypothetical Performance Information
The following tables and graphs show hypothetical performance for the
Strategy employed by the Trust and the actual performance of both the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index")
and the Standard & Poor's Composite Bank Index (the "S&P Bank Index").
The first table and graph show hypothetical performance of the Strategy
and the actual performance of the S&P 500 Index and the S&P Bank Index
in each of the ten listed years, as of the business day prior to the
beginning of each year (and as of the most recent quarter). The second
Page 11
table and graph show hypothetical performance of the Strategy and the
actual performance of the S&P 500 Index over the past twenty-five years,
as of the beginning of each year (and as of the most recent quarter).
The second table and graph do not show the performance of the S&P Bank
Index over this period because this index was not established until
1987. The returns shown in the following tables and graphs are not
guarantees of future performance and should not be used as a predictor
of returns to be expected in connection with the Trust Portfolio. The
Strategy underperformed the S&P 500 Index and the S&P Bank Index in
certain years. Accordingly, there can be no assurance that the Trust's
Portfolio will outperform the S&P 500 Index or the S&P Bank Index over
the life of the Trust or over consecutive rollover periods, if available.
A holder of Units in the Trust would not necessarily realize as high a
Total Return on an investment in the stocks upon which the hypothetical
returns are based for the following reasons, among others: the Total
Return figures shown do not reflect structuring charges, commissions,
Trust expenses or taxes; the Trust is established at a different time of
the year; the term of the Trust varies slightly from those presented in
compiling the Total Returns; the Trust may not be fully invested at all
times or equally weighted in all stocks comprising the strategy; and
Equity Securities are often purchased or sold at prices different from
the closing prices used in buying and selling Units.
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN(2)
Hypothetical Strategy Indices
Total Returns(1) Total Returns
_____________________ ______________
Strategy S&P S&P 500
Year Stocks(1) Bank Index(3) Index(3)
____ _________ __________ ________
<S> <C> <C> <C>
1988 25.11% 25.15% 16.64%
1989 13.00% 15.47% 31.35%
1990 -35.74% -33.73% -3.30%
1991 70.04% 56.38% 30.40%
1992 52.80% 27.93% 7.62%
1993 15.00% 7.08% 9.95%
1994 1.70% -8.47% 1.34%
1995 52.78% 59.47% 37.22%
1996 29.77% 41.49% 22.82%
1997 67.64% 44.46% 33.21%
1998 thru 3/31 6.51% 12.56% 13.95%
____________
<FN>
(1) Strategy Stocks for any given period were selected by applying the
Strategy as of the business day prior to the beginning of each year.
(2) Total Return represents the sum of the percentage change in market
value of each group of stocks between the first trading day of a period
and the total dividends paid on each group of stocks during the period
divided by the opening market value of each group of stocks as of the
first trading day of a period. Total Return does not take into
consideration any structuring charges, commissions, expenses or taxes.
In addition, Total Return for the Strategy and indices assumes semi-
annual reinvestment of dividend income. Based on the year-by-year
returns contained in the table, over the 10 full years listed above, the
Strategy Stocks achieved an average annual total return of 24.81% while
the S&P Bank Index achieved an average annual total return of 19.86% and
the S&P 500 Index achieved an average annual total return of 17.93%.
Although the Trust seeks to achieve a better performance than the S&P
Bank Index and the S&P 500 Index as a whole, there can be no assurance
that the Trust will achieve a better performance over its approximately
13-month life or over consecutive rollover periods, if available.
(3) S&P Bank Index is the property of Standard & Poor's, a division of
The McGraw-Hill Companies ("Standard & Poor's"). "S&P 500 Composite
Stock Price Index" or "S&P 500" is also the property of Standard &
Poor's. The Trust is not sponsored, managed, sold or promoted by
Standard & Poor's; and Standard & Poor's has not participated in the
creation of the Trust nor in the selection of the Equity Securities
included in the Trust.
</FN>
</TABLE>
Page 12
The following table shows the Average Annual Return as of December 31,
1997 in each of the indicated periods for the Strategy Stocks, S&P Bank
Index and the S&P 500 Index:
<TABLE>
<CAPTION>
Strategy
Stocks S&P Bank S&P 500
Period Returns Returns Returns
______ __________ ________ ________
<S> <C> <C> <C>
10 years 24.81% 19.86% 17.93%
5 years 31.20% 26.15% 20.13%
3 years 49.24% 48.27% 30.94%
</TABLE>
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the hypothetical Strategy
stocks (but not the Trust), the S&P Bank Index and the S&P 500 Index
from December 31, 1987 through March 31, 1998 and should not be
considered indicative of future results. Further, these results are
hypothetical. The chart assumes that all dividends during a year are
reinvested semi-annually and does not reflect structuring charges,
commissions, expenses or taxes. There can be no assurance that the
Strategy stocks will outperform the S&P Bank Index or the S&P 500 Index
over its approximate 13-month life or over consecutive rollover periods,
if available.
Page 13
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN(2)
Hypothetical
Strategy Index
Total Returns Total Returns
_____________ _____________
Strategy S&P 500
Year Stocks(1) Index(3)
____ ________ _______
<S> <C> <C>
1973 -15.41% -14.57%
1974 -26.44% -26.33%
1975 22.23% 36.84%
1976 40.71% 23.64%
1977 6.96% -7.25%
1978 12.43% 6.49%
1979 12.48% 18.22%
1980 17.00% 32.11%
1981 22.72% -4.92%
1982 31.45% 21.14%
1983 47.94% 22.28%
1984 16.77% 6.22%
1985 46.23% 31.77%
1986 2.78% 18.31%
1987 -5.88% 5.33%
1988 25.11% 16.64%
1989 13.00% 31.35%
1990 -35.74% -3.30%
1991 70.04% 30.40%
1992 52.80% 7.62%
1993 15.00% 9.95%
1994 1.70% 1.34%
1995 52.78% 37.22%
1996 29.77% 22.82%
1997 67.64% 33.21%
1998 thru 3/31 6.51% 13.95%
____________
<FN>
(1) Strategy Stocks for any given period were selected by applying the
Strategy as of the business day prior to the beginning of each year.
(2) Total Return represents the sum of the percentage change in market
value of each group of stocks between the first trading day of a period
and the total dividends paid on each group of stocks during the period
divided by the opening market value of each group of stocks as of the
first trading day of a period. Total Return does not take into
consideration any structuring charges, commissions, expenses or taxes.
In addition, Total Return for the Strategy and S&P 500 Index assumes
semi-annual reinvestment of dividend income. Based on the year-by-year
returns contained in the table, over the 25 full years listed above, the
Strategy Stocks achieved an average annual total return of 17.89% while
the S&P 500 Index achieved an average annual total return of 12.95%.
Although the Trust seeks to achieve a better performance than the S&P
500 Index as a whole, there can be no assurance that the Trust will
achieve a better performance over its one-year life or over consecutive
rollover periods, if available.
(3) "S&P 500 Composite Stock Price Index" or "S&P 500" is the property of
Standard & Poor's. The Trust is not sponsored, managed, sold or promoted
by Standard & Poor's; and Standard & Poor's has not participated in the
creation of the Trust nor in the selection of the Equity Securities
included in the Trust.
</FN>
</TABLE>
The following table shows the Average Annual Return as of December 31,
1997 in each of the indicated periods for the Strategy Stocks and the
S&P 500 Index:
Page 14
<TABLE>
<CAPTION>
Strategy
Stocks S&P 500
Period Returns Returns
______ __________ ________
<S> <C> <C>
25 years 17.89% 12.95%
20 years 22.02% 16.51%
15 years 23.04% 17.40%
10 years 24.81% 17.93%
5 years 31.20% 20.13%
3 years 49.24% 30.94%
</TABLE>
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the hypothetical Strategy
stocks (but not the Trust) and the S&P 500 Index from December 31, 1972
through March 31, 1998 and should not be considered indicative of future
results. Further, these results are hypothetical. The chart assumes that
all dividends during a year are reinvested semi-annually and does not
reflect structuring charges, commissions, expenses or taxes. There can
be no assurance that the Strategy stocks will outperform the S&P 500
Index over its approximate 13-month life or over consecutive rollover
periods, if available.
What are the Equity Securities Selected for American Bank Trust Series?
ABC Bancorp, headquartered in Moultrie, Georgia, through its subsidiary
banks, conducts a general commercial banking business through banking
offices in southeastern Alabama and southern Georgia.
ANB Corporation, headquartered in Muncie, Indiana, through subsidiaries,
Page 9
provides commercial banking, trust, and asset management products and
services through offices in six Indiana counties.
Arrow Financial Corporation, headquartered in Glens Falls, New York,
through subsidiaries, operates a banking business through offices in
eastern New York.
Banc One Corporation, headquartered in Columbus, Ohio, through
subsidiaries, conducts a general banking business through offices in
Arizona, Colorado, Illinois, Indiana, Kentucky, Louisiana, Ohio,
Oklahoma, Texas, Utah, West Virginia and Wisconsin.
BancFirst Ohio Corp., headquartered in Zanesville, Ohio, through
subsidiaries, conducts a general commercial and consumer banking
business through branch offices in Ohio.
Bankers Trust New York Corporation, headquartered in New York, New York,
with subsidiaries, operates a general banking business through banking
offices in New York City, other cities, foreign branches and equity
investments in banking and financial institutions in numerous countries.
The company provides finance, advisory, risk management, transaction
processing and trading and positioning services.
Bar Harbor Bankshares, Inc., headquartered in Bar Harbor, Maine, is a
holding company for Bar Harbor Banking and Trust Company. The bank
operates offices along the coastal region in Maine. The bank serves
individual customers, small retail establishments, seasonal motels,
campgrounds, restaurants and the lobstering and fishing industries.
BSB Bancorp, Inc., headquartered in Binghamton, New York, through wholly-
owned BSB Bank & Trust Co., conducts a banking business through offices
and proprietary bank service locations in four New York counties.
BT Financial Corporation, headquartered in Johnstown, Pennsylvania,
through subsidiaries, operates a commercial banking business through
offices located throughout southwestern Pennsylvania. The company also
holds and leases property; provides trust and investment services; and
conducts community development activities.
Cape Cod Bank & Trust Company, headquartered in Hyannis, Massachusetts,
conducts a general banking business through banking offices in
Barnstable County, Massachusetts. The bank receives substantially all of
its deposits from, and makes substantially all of its loans to,
individuals and businesses on Cape Cod. The bank is the largest
commercial bank headquartered in Barnstable County, Massachusetts.
Chemical Financial Corporation, headquartered in Midland, Michigan,
through subsidiaries, conducts a commercial banking business through
banking offices in communities located generally across the mid-section
of Michigan.
Community Bank System, Inc., headquartered in DeWitt, New York, through
wholly-owned Community Bank, N.A., conducts banking operations through
offices located in upstate New York. The company offers a variety of
account services and installment, mortgage and other loans to
individuals and businesses and a full range of trust services.
Community Trust Bancorp, Inc., headquartered in Pikeville, Kentucky,
through wholly-owned subsidiaries, conducts a general banking business
through offices located in Kentucky, which serve customers in small and
mid-sized communities in eastern, central and south central Kentucky.
CPB, Inc., headquartered in Honolulu, Hawaii, through wholly-owned
Central Pacific Bank, operates a general banking business through
banking offices in Hawaii.
Evergreen Bancorp, Inc., headquartered in Glens Falls, New York, through
Evergreen Bank, N.A., conducts a banking and trust business through its
main offices in Glens Falls and branches in upstate New York.
F&M Bancorp, headquartered in Frederick, Maryland, through wholly-owned
Farmers and Mechanics National Bank and Home Federal Savings Bank,
conducts a general banking and trust company business through offices in
Maryland.
F&M National Corporation, headquartered in Winchester, Virginia, through
subsidiaries, operates a general banking business through offices in
Maryland, Virginia and West Virginia.
Farmers Capital Bank Corporation, headquartered in Frankfort, Kentucky,
through subsidiaries, conducts a general banking business through
offices in Kentucky.
FCNB Corporation, headquartered in Frederick, Maryland, through wholly-
owned subsidiaries, conducts a general commercial and retail banking
business through offices in Maryland.
First Charter Corporation, headquartered in Concord, North Carolina, a
bank holding company, through subsidiaries, conducts a banking business
Page 16
through full-service branch offices, limited service facilities and ATMs
in North Carolina. The company also offers discount brokerage services,
insurance and annuity sales, and financial planning services.
First Commonwealth Financial Corporation, headquartered in Indiana,
Pennsylvania, through First Commonwealth Bank, conducts a general
banking business through offices in communities mainly in central
western Pennsylvania.
First Financial Bancshares, Inc., headquartered in Abilene, Texas,
through subsidiaries, conducts a general commercial banking business
through offices in Texas.
First Hawaiian, Inc., headquartered in Honolulu, Hawaii, a registered
bank holding company conducts a commercial banking and trust business
through offices in Guam, Grand Cayman, Hawaii, Idaho, Oregon, Tokyo and
Washington. The company also provides industrial loans, finances and
leases personal property and equipment, provides consumer financing
services and foreign banking investments and activities.
First Merchants Corporation, headquartered in Muncie, Indiana, through
subsidiaries, conducts a commercial banking business through offices in
Delaware, Fayette, Henry, Madison, Randolph, Union and Wayne counties,
Indiana.
First Security Corporation, headquartered in Salt Lake City, Utah,
conducts a banking business through full service bank offices in Idaho,
Nevada, New Mexico, Oregon, Utah and Wyoming. The company originates
residential mortgage loans, originates and manages leases, and offers
insurance products and investment management services.
First Union Corporation, headquartered in Charlotte, North Carolina,
through subsidiaries, conducts a wide range of commercial and retail
banking and trust services; and provides other financial services
including mortgage banking, investment banking, home equity lending,
leasing, insurance and securities brokerage.
First United Corporation, headquartered in Oakland, California, through
subsidiaries, conducts a banking business through offices in Maryland
and West Virginia; and sells credit life and credit health and accident
insurance.
Fleet Financial Group, Inc., headquartered in Boston, Massachusetts,
through subsidiaries, conducts a general commercial banking and trust
business through a network of branches, ATMs and telephone banking
centers. The company also provides other activities related to banking
and finance.
Harleysville National Corporation, headquartered in Harleysville,
Pennsylvania, through wholly-owned Harleysville National Bank and Trust
Co., Citizens National Bank of Lansford and Security National Bank,
conducts a commercial banking and trust business through offices in
Bucks, Carbon, Montgomery and Wayne counties, Pennsylvania.
Horizon Bancorp Inc., headquartered in Beckley, West Virginia, through
its member bank subsidiaries, conducts a general commercial banking
business and provides financial services through offices located
throughout southeastern and southwestern West Virginia.
Huntington Bancshares Incorporated, headquartered in Columbus, Ohio,
through subsidiaries, conducts a full-service commercial and consumer
banking business through banking offices in six states; and also
provides mortgage banking, lease financing and trust services.
KeyCorp, headquartered in Cleveland, Ohio, through subsidiaries,
conducts a banking business through full-service banking offices in
several states. The company also provides trust, personal financial cash
management, investment banking, and international banking services.
Keystone Financial, Inc., headquartered in Harrisburg, Pennsylvania,
through subsidiaries, conducts a banking business through offices in
Pennsylvania, Maryland and West Virginia. The company also reinsures
credit life and accident and health insurance; and provides discount
brokerage, equipment leasing, mortgage banking and investment advisory
services.
Mahoning National Bancorp, Inc., headquartered in Youngstown, Ohio,
conducts a commercial and retail banking business through offices
located throughout Mahoning and Trumbull counties, Ohio.
Mercantile Bancoporation, Inc., headquartered in St. Louis, Missouri,
through subsidiaries, conducts a general banking and trust business in
Arkansas, Illinois, Iowa, Kansas and Missouri.
Mercantile Bancshares Corporation, headquartered in Baltimore, Maryland,
through subsidiaries, conducts a general banking business through
Page 17
offices in Delaware, Maryland and Virginia. The company also provides
mortgage banking, insurance, reinsurance of credit insurance and
extensions of credit in Pennsylvania.
Michigan Financial Corporation, headquartered in Marquette, Michigan,
through subsidiaries, conducts a general commercial banking business
through offices in counties of Michigan's Upper Peninsula region.
Mid-Am, Inc., headquartered in Bowling Green, Ohio, through
subsidiaries, operates a commercial banking business through banking
offices located in western Ohio and in southern Michigan; a collection
agency in Florida; a broker/dealer firm; and a data processing company.
Mid-America Bancorp, headquartered in Louisville, Kentucky, through
subsidiaries, conducts a general banking business through its main
office and branch offices in Jefferson County, Kentucky; and issues and
sells throughout the United States, retail money orders and similar
consumer-type payment instruments.
J.P. Morgan & Company, Inc., headquartered in New York, New York,
provides corporate finance advice and arranges financing; underwrites
and trades securities; manages pension and other investment funds;
provides operational services; and offers banking and asset management
services.
NBT Bancorp Inc., headquartered in Norwich, New York, through wholly-
owned NBT Bank, N.A., conducts a general commercial banking business
through branches in northern and central New York counties.
National City Corporation, headquartered in Cleveland, Ohio, operates a
full-service commercial banking business through offices in Indiana,
Kentucky, Ohio and Pennsylvania.
National Penn Bancshares, Inc., headquartered in Boyertown,
Pennsylvania, through subsidiaries, conducts a commercial and retail
banking business through full-service branches and three loan production
offices in southeastern Pennsylvania. The company also invests in and
holds certain intangible investments; and reinsures credit life and
accident and health insurance.
One Valley Bancorp, Inc., headquartered in Charleston, West Virginia,
through subsidiaries, conducts a commercial banking business through 89
banking locations in West Virginia and central Virginia.
Pacific Century Financial Corporation, headquartered in Honolulu,
Hawaii, through subsidiaries, operates a general banking business and
savings and loan business; reinsures and sells credit life and credit
accident and health insurance; provides bankers liability insurance,
leasing and leasing services, and advisory services; and conducts
investment and lending activities.
People's First Corporation, headquartered in Paducah, Kentucky, through
subsidiaries, conducts a general banking business through offices in
western Kentucky and northeastern Tennessee.
Pinnacle Banc Group, Inc., headquartered in Oak Brook, Illinois, a bank
holding company, operates a general commercial and savings bank business
through locations in metropolitan Chicago and the quad cities. Services
provided include commercial, consumer, and real estate lending;
installment credit lending; collections; safe deposit operations; and a
full range of deposit services to individuals and businesses.
PNC Bank Corp., headquartered in Pittsburgh, Pennsylvania, through
subsidiaries, conducts consumer banking, corporate banking, real estate
banking, mortgage banking and asset management. The company operates
banking subsidiaries in Delaware, Florida, Indiana, Kentucky,
Massachusetts, New Jersey, Ohio and Pennsylvania; and conducts
nonbanking operations throughout the United States.
Regions Financial Corporation, headquartered in Birmingham, Alabama,
through subsidiaries, conducts a general commercial banking business
through offices in Alabama, Florida, Georgia, Louisiana and Tennessee;
and provides services in mortgage banking, credit life insurance,
leasing, commercial accounts receivable, and securities brokerage.
Royal Bancshares of Pennsylvania, Inc. (Class A), headquartered in
Narberth, Pennsylvania, through wholly-owned Royal Bank of Pennsylvania
(Bank), provides a full range of banking services to individual and
corporate customers through offices in eastern Pennsylvania.
S&T Bancorp, Inc., headquartered in Indiana, Pennsylvania, through
wholly-owned S&T Bank, operates banking offices in Allegheny, Armstrong,
Clearfield, Indiana, Jefferson and Westmoreland counties in Western
Pennsylvania.
Seacoast Banking Corporation of Florida, headquartered in Stuart,
Florida, through wholly-owned First National Bank and Trust Co. of the
Treasure Coast (FNTC), operates a retail banking business through
offices in Florida.
Page 18
Southwest National Corporation, headquartered in Greensburg,
Pennsylvania, through wholly-owned Southwest National Bank of
Pennsylvania, operates a general banking business through offices in
Allegheny and Westmoreland counties, Pennsylvania.
Suffolk Bancorp, headquartered in Riverhead, New York, through wholly-
owned Suffolk County National Bank, conducts a general banking business
through offices throughout Suffolk County, New York.
Summit Bancorp, headquartered in Princeton, New Jersey, through
subsidiaries, conducts a general banking business through offices in New
Jersey and Pennsylvania. The company also provides securities and
insurance brokerage, venture capital investment, commercial lending,
lease financing, asset-backed lending production and related services.
Sun Bancorp, Inc., headquartered in Selinsgrove, Pennsylvania, conducts
a commercial and retail banking business through offices in central
Pennsylvania.
Susquehanna Bancshares, Inc., headquartered in Lititz, Pennsylvania,
through subsidiaries, conducts a general banking business through full-
service and limited-service offices in Maryland and Pennsylvania. The
company also offers credit related insurance products.
Tompkins County Trustco, Inc., headquartered in Ithaca, New York,
through wholly-owned Tompkins County Trust Co., provides commercial
banking and trust and investment management services through full
service branch offices located in Schuyler and Tompkins counties, New
York.
Trustco Bank Corporation, headquartered in Schenectady, New York,
provides commercial banking and trust services through offices in
Schenectady, New York and surrounding counties.
Union Planters Corporation, headquartered in Memphis, Tennessee, through
subsidiaries, conducts a general banking and trust business through full-
service banking offices in Tennessee, Mississippi, Missouri, Louisiana,
Kentucky, Arkansas and Alabama. The company also has automated teller
locations.
United Bankshares, Inc., headquartered in Charleston, West Virginia,
through United National Bank and United Bank, both wholly-owned,
conducts a commercial banking business in West Virginia and Virginia.
Valley National Bancorp, headquartered in Wayne, New Jersey, through
wholly-owned Valley National Bank, conducts a commercial and retail
banking business through offices in counties located in northern New
Jersey.
Vermont Financial Services Corporation, headquartered in Brattleboro,
Vermont, through subsidiaries, conducts a national commercial banking
business and a savings bank business through offices in Massachusetts,
New Hampshire and Vermont.
Wesbanco, Inc., headquartered in Wheeling, West Virginia, through
subsidiaries, operates a general banking, commercial and trust business
through offices in Ohio and West Virginia.
Wilmington Trust Corporation, headquartered in Wilmington, Delaware,
through subsidiaries, conducts a commercial banking and trust company
business through full-service branch locations in Delaware, Florida,
Maryland and Pennsylvania. Asset management and trust services include
trust, custodial and investment management services for corporate,
institutional and individual clients.
The Sponsor has obtained the foregoing company descriptions from sources
it deems reliable. The Sponsor has not independently verified the
provided information either in terms of accuracy or completeness.
Risk Factors
An investment in Units of the Trust should be made with an understanding
of the problems and risks inherent in the financial institutions
industry in general. Banks, thrifts and their holding companies are
especially subject to the adverse effects of economic recession,
volatile interest rates, portfolio concentrations in geographic markets
and in commercial and residential real estate loans, and competition
from new entrants in their fields of business. Banks and thrifts are
highly dependent on net interest income. Recent profits have benefited
from the relatively high yield on earning assets and relatively low cost
of funds. There is no certainty that such conditions will continue,
especially in a rising interest rate environment. Commercial loan demand
for banks has not been robust and an increasing number of commercial
loans have been securitized, which may have a potentially adverse effect
Page 19
on the market share of the commercial banking system. Bank and thrift
institutions have received significant consumer mortgage fee income as a
result of activity in mortgage and refinance markets. As initial home
purchasing and refinancing activity subsides, this income is expected to
diminish to a lower level. Economic conditions in the real estate
markets, which have been weak in the recent past, can have a substantial
effect upon banks and thrifts because they generally have a portion of
their assets invested in loans secured by real estate, as has recently
been the case for a number of banks and thrifts with respect to
commercial real estate in the northeastern and southwestern regions of
the United States. Banks, thrifts and their holding companies are
subject to extensive federal regulation and, when such institutions are
state-chartered, to state regulation as well. Such regulations impose
strict capital requirements and limitations on the nature and extent of
business activities that banks and thrifts may pursue. Furthermore, bank
regulators have a wide range of discretion in connection with their
supervisory and enforcement authority and may substantially restrict the
permissible activities of a particular institution if deemed to pose
significant risks to the soundness of such institution or the safety of
the federal deposit insurance fund. Regulatory actions, such as
increases in the minimum capital requirements applicable to banks and
thrifts and increases in deposit insurance premiums required to be paid
by banks and thrifts to the Federal Deposit Insurance Corporation
("FDIC"), can negatively impact earnings and the ability of a company to
pay dividends. Neither federal insurance of deposits nor governmental
regulations, however, insures the solvency or profitability of banks or
their holding companies, or insures against any risk of investment in
the securities issued by such institutions.
The statutory requirements applicable to and regulatory supervision of
banks, thrifts and their holding companies have increased significantly
and have undergone substantial change in recent years. To a great
extent, these changes are embodied in the Financial Institutions Reform,
Recovery and Enforcement Act; enacted in August 1989, the Federal
Deposit Insurance Corporation Improvement Act of 1991, the Resolution
Trust Corporation Refinancing, Restructuring, and Improvement Act of
1991 and the regulations promulgated under these laws. Many of the
regulations promulgated pursuant to these laws have only recently been
finalized and their impact on the business, financial condition and
prospects of the Equity Securities in the Trust's portfolio cannot be
predicted with certainty. Periodic efforts by recent Administrations to
introduce legislation broadening the ability of banks to compete with
new products have not been successful, but if enacted could lead to more
failures as a result of increased competition and added risks. Failure
to enact such legislation, on the other hand, may lead to declining
earnings and an inability to compete with unregulated financial
institutions. Efforts to expand the ability of federal thrifts to branch
on an interstate basis have been initially successful through
promulgation of regulations, and legislation to liberalize interstate
banking has recently been signed into law. Under the legislation, banks
will be able to purchase or establish subsidiary banks in any state, one
year after the legislation's enactment. Starting in mid-1997, banks were
allowed to turn existing banks into branches. Consolidation is likely to
continue. The Securities and Exchange Commission and the Financial
Accounting Standards Board require the expanded use of market value
accounting by banks and have imposed rules requiring market accounting
for investment securities held in trading accounts or available for
sale. Adoption of additional such rules may result in increased
volatility in the reported health of the industry, and mandated
regulatory intervention to correct such problems. Additional legislative
and regulatory changes may be forthcoming. For example, the bank
regulatory authorities have proposed substantial changes to the
Community Reinvestment Act and fair lending laws, rules and regulations,
and there can be no certainty as to the effect, if any, that such
changes would have on the Equity Securities in the Trust's portfolio. In
addition, from time to time the deposit insurance system is reviewed by
Congress and federal regulators, and proposed reforms of that system
could, among other things, further restrict the ways in which deposited
monies can be used by banks or reduce the dollar amount or number of
deposits insured for any depositor. Such reforms could reduce
profitability as investment opportunities available to bank institutions
become more limited and as consumers look for savings vehicles other
than bank deposits. Banks and thrifts face significant competition from
other financial institutions such as mutual funds, credit unions,
mortgage banking companies and insurance companies, and increased
competition may result from legislative broadening of regional and
national interstate banking powers as has been recently enacted. Among
other benefits, the legislation allows banks and bank holding companies
to acquire across previously prohibited state lines and to consolidate
Page 20
their various bank subsidiaries into one unit. The Sponsor makes no
prediction as to what, if any, manner of bank and thrift regulatory
actions might ultimately be adopted or what ultimate effect such actions
might have on the Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5%
of the outstanding shares of any class of voting securities of a bank or
bank holding company, (2) acquiring control of a bank or another bank
holding company, (3) acquiring all or substantially all the assets of a
bank, or (4) merging or consolidating with another bank holding company,
without first obtaining Federal Reserve Board ("FRB") approval. In
considering an application with respect to any such transaction, the FRB
is required to consider a variety of factors, including the potential
anti-competitive effects of the transaction, the financial condition and
future prospects of the combining and resulting institutions, the
managerial resources of the resulting institution, the convenience and
needs of the communities the combined organization would serve, the
record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the
prospective availability to the FRB of information appropriate to
determine ongoing regulatory compliance with applicable banking laws. In
addition, the federal Change In Bank Control Act and various state laws
impose limitations on the ability of one or more individuals or other
entities to acquire control of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends
by bank holding companies. In the policy statement, the FRB expressed
its view that a bank holding company experiencing earnings weaknesses
should not pay cash dividends which exceed its net income or which could
only be funded in ways that would weaken its financial health, such as
by borrowing. The FRB also may impose limitations on the payment of
dividends as a condition to its approval of certain applications,
including applications for approval of mergers and acquisitions. The
Sponsor makes no prediction as to the effect, if any, such laws will
have on the Equity Securities or whether such approvals, if necessary,
will be obtained.
Some of the nation's largest banks, already working to upgrade their own
computer systems to meet the year 2000 deadline, are concerned that some
borrowers may fail to upgrade their computers in time, creating problem
loans and increasing overall loan losses. Banks considered most
vulnerable by analysts include those lending primarily to small
businesses, which aren't as likely as large businesses to have a plan
for upgrading their computers. Also at risk are banks with significant
exposure overseas, where many foreign businesses are not moving as
quickly to resolve this problem. Analysts warn that it will be difficult
for banks to determine their potential loan losses related to year 2000
credit risk.
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
nor the Trustee shall be liable in any way for any failure in any of the
Equity Securities. However, should any contract for the purchase of any
of the Equity Securities initially deposited hereunder fail, the Sponsor
will, unless substantially all of the moneys held in 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. 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 or keep any
securities or other property acquired in exchange for Equity Securities
such as those acquired in connection with a merger or other transaction.
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
Page 21
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 they 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
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.
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.
The Sponsor and the Trustee shall not be liable in any way for any
default, failure or defect in any Security. In the event of a notice
that any Equity Security will not be delivered ("Failed Contract
Obligations") to 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
Page 22
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, 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.
The Trust consists of the Equity Securities listed under "Schedule of
Investments" (or contracts to purchase such 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?"
Like other investment companies, financial and business organizations
and individuals around the world, the Trust could be adversely affected
if the computer systems used by the Sponsor, Evaluator, Portfolio
Supervisor or Trustee or other service providers to the Trust do not
properly process and calculate date-related information and data
involving dates of January 1, 2000 and thereafter. This is commonly
known as the "Year 2000 Problem." The Sponsor, Evaluator, Portfolio
Supervisor and Trustee are taking steps that they believe are reasonably
designed to address the Year 2000 Problem with respect to computer
systems that they use and to obtain reasonable assurances that
comparable steps are being taken by the Trust's other service providers.
At this time, however, there can be no assurance that these steps will
be sufficient to avoid any adverse impact to the Trust.
The Year 2000 Problem is expected to impact corporations, which may
include issuers of the Equity Securities contained in the Trust, to
varying degrees based upon various factors, including, but not limited
to, their industry sector and degree of technological sophistication.
The Sponsor is unable to predict what impact, if any, the Year 2000
Problem will have on issuers of the Equity Securities contained in the 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
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 advisors. Further, at any time after the
Initial Date of Deposit, legislation may be enacted that could
negatively affect the Equity Securities in the Trust or the issuers of
the Equity Securities. Changing approaches to regulation, particularly
with respect to the environment or with respect to the petroleum
industry, 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.
Page 23
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 prices of listed Equity Securities and
the ask prices of over-the-counter traded Equity Securities), plus or
minus cash, if any, in the Income and Capital Accounts of the Trust,
plus a deferred structuring charge equal to $.125 per Unit. The deferred
structuring charge will be assessed monthly ($.025 per Unit per month)
over a five-month period commencing on July 20, 1998, and on the
twentieth day of each month thereafter (or if such day is not a business
day, on the preceding business day) through November 19, 1998. Units
purchased subsequent to the initial deferred structuring charge payment
but still during the initial offering period will be charged the amount
of the previously collected deferred structuring charge at the time of
purchase and will be subject to the remaining deferred structuring
charge payments not yet collected. The deferred structuring charge will
be paid from funds in the Income and/or Capital Accounts, if sufficient,
or from the periodic sale of Equity Securities. At the Initial Date of
Deposit, the total maximum structuring charge assessed to Unit holders
on a per Unit basis will be 1.25% of the Public Offering Price
(equivalent to 1.25% of the net amount invested, exclusive of the
deferred structuring charge). A pro rata share of accumulated dividends,
if any, in the Income Account is included in the Public Offering Price.
The total maximum structuring charge which may be assessed to Unit
holders on a per Unit basis is 2.0% of the Public Offering Price.
The minimum amount which an investor may purchase of the Trust is
$100,000.
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 system (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. If the
Equity Securities are not so listed or, if so listed and the principal
market therefor is other than on the exchange, the evaluation shall
generally be based on the current ask prices on the over-the-counter
market (unless it is determined that these prices are inappropriate as a
basis for evaluation). If current ask prices are unavailable, the
evaluation is generally determined (a) on the basis of current ask
prices for comparable securities, (b) by appraising the value of the
Equity Securities on the ask side of the market or (c) by any
combination of the above.
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 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. See "Rights of Unit Holders-How May Units be Redeemed?" for
information regarding the ability to redeem Units ordered for purchase.
How are Units Distributed?
During the initial offering period (i) for Units issued on the Initial
Date of Deposit and (ii) for additional Units issued after such date as
additional Equity Securities are deposited by the Sponsor, Units will be
distributed to the public at the then current Public Offering Price. The
initial offering period may be up to approximately 360 days. During such
period, the Sponsor may deposit additional Equity Securities in the
Trust and create additional Units.
Page 24
The Sponsor may from time to time in its advertising and sales materials
compare the then current estimated returns on the Trust and returns over
specified periods on other similar Trusts sponsored by Nike Securities
L.P. or investment strategies utilized by the Trust (which may show
performance net of expenses and charges which the Trust would have
charged) with returns on other taxable investments such as the common
stocks comprising the Dow Jones Industrial Average, 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.
Past performance may not be indicative of future results. The Trust's
portfolio is not managed. Unit price and return fluctuate with the value
of the common stocks in the Trust's portfolio, so there may be a gain or
loss when Units are sold.
Trust performance may be compared to performance on a total return basis
of the Dow Jones Industrial Average, the S&P 500 Composite Price Stock
Index, other investment indices, 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.
What are the Sponsor's Profits?
The Sponsor of the Trust will receive a gross structuring fee equal to
$.125 per Unit. 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 subsequent deposits) and
the cost of such Equity Securities to the Sponsor. See Note (2) of
"Schedule of Investments." During the initial offering period, the
Sponsor may realize profits or sustain losses as a result of
fluctuations after the Initial Date of Deposit in the Public Offering
Price received by the Sponsor upon the sale of Units.
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.
Unit holders will hold their Units in uncertificated (i.e. book entry)
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, 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. Units are transferable by presentation to the Trustee of
a written instrument or instruments of transfer. A Unit holder must sign
the instrument or instruments of transfer exactly as his or her name
appears on the records of the Trustee 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.
Although no such charge is now made or contemplated, a Unit holder may
be required to pay any governmental charge that may be imposed in
connection with the transfer or exchange of Units.
Page 25
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." Persons who
purchase Units will commence receiving distributions only after such
person becomes a record owner. Notification to the Trustee of the
transfer of Units is the responsibility of the purchaser, but in the
normal course of business such notice is provided by the Sponsor. The
pro rata share of cash in the Capital Account of the Trust will be
computed as of the fifteenth day of each month. Proceeds received on the
sale of any Equity Securities in the Trust, to the extent not used to
meet redemptions of Units, pay the deferred structuring charge 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 distributions, and in certain circumstances, earlier. See
"What is the Federal Tax Status of Unit Holders?"
It is anticipated that the deferred structuring 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 structuring charge.
However, to the extent that amounts in the Capital Account are
insufficient to satisfy the then current deferred structuring charge
obligation, Equity Securities may be sold to meet such shortfall.
Distributions of amounts necessary to pay the deferred structuring
charge will be made to an account designated by the Sponsor for purposes
of satisfying Unit holders' deferred structuring 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 only when filing a tax return. Under
normal circumstances the Trustee obtains the Unit holder's tax
identification number from the Sponsor. 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 or her
Units for redemption, receive (i) the pro rata share of the amounts
realized upon the disposition of Equity Securities, unless he or she
elects an In-Kind Distribution as described under "Rights of Unit
Holders-How May the Indenture be Amended or Terminated?" and (ii) a pro
rate 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 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 structuring 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 26
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 or her Units by tendering
to the Trustee, at its unit investment trust office in the City of New York,
a request for redemption, duly endorsed or accompanied by proper
instruments of transfer with signature guaranteed as explained above 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 in 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 structuring charge
on such Units has been collected will be assessed the amount of
remaining deferred structuring charge at the time of redemption.
Any Unit holder tendering 10,000 Units or more 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 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 above.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of the principal amount of a
Unit redemption if the Trustee has not been furnished the redeeming Unit
holder's tax identification number in the manner required by such
regulations. For further information regarding this withholding, see
"Rights of Unit Holders-How are Income and Capital Distributed?" In the
event the Trustee has not been previously provided such number, one must
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
Page 27
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 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 structuring charge at the time of redemption.
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 that
system (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 therefor is other than on the exchange,
the evaluation shall generally be based on the current ask or bid prices
(as appropriate) on the over-the-counter market (unless these prices are
inappropriate as a basis for evaluation). If current ask or bid prices
(as appropriate) are unavailable, the evaluation is generally determined
(a) on the basis of current ask or bid prices (as appropriate) for
comparable securities, (b) by appraising the value of the Equity
Securities on the ask or bid side (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 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
If the 1999 Trust is offered to investors, a special redemption and
liquidation will be made of all Units of the Trust held by any Unit
holder (a "Rollover Unit holder") who affirmatively notifies the Trustee
in writing that he or she desires to participate as a Rollover Unit
holder by the Rollover Notification Date specified in the "Summary of
Essential Information."
All Units of Rollover Unit holders will be redeemed In-Kind during the
Special Redemption and Liquidation Period and the underlying Equity
Securities will be distributed to the Distribution Agent on behalf of
Page 28
the Rollover Unit holders. During the 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 may engage the Sponsor, as its agent, or other
brokers to sell the distributed Equity Securities. The Equity Securities
will be sold as quickly as is practicable during the Special Redemption
and Liquidation Period, subject to the Sponsor's sensitivity that the
concentrated sale of large volumes of Equity Securities may affect
market prices in a manner adverse to the interests of investors. 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 Special Redemption and Liquidation
Period; for less liquid Equity Securities, on each of the first two days
of the 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 Special Redemption and Liquidation Period.
The Rollover Unit holders' proceeds will be invested in the 1999 Trust,
if it is registered and offered for sale. The proceeds of redemption
available on each day will be used to buy 1999 Trust units as the
proceeds become available at the Public Offering Price of the 1999 Trust.
The Sponsor intends to create 1999 Trust units as quickly as possible,
dependent upon the availability and reasonably favorable prices of the
equity securities included in the 1999 Trust portfolio, and it is
intended that Rollover Unit holders will be given first priority to
purchase the 1999 Trust units. There can be no assurance, however, that
the 1999 Trust will be created, or if created, as to the exact timing of
the creation of the 1999 Trust units or the aggregate number of 1999
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
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 1999 Trust units will be distributed within a
reasonable time after such occurrence. However, since the Sponsor can
create units, the Sponsor anticipates that sufficient units can be
created, although moneys in the 1999 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, the 1999 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 Special Redemption and Liquidation Period. In
accordance with the Rollover Unit holders' offer to purchase the 1999
Trust units, the proceeds of the sales (and any other cash distributed
upon redemption) will be invested in the 1999 Trust, at the public
offering price.
This process of redemption, liquidation, and investment in a new Trust
is intended to allow for the fact that the portfolios selected are
chosen on the basis of growth and income potential only for a year, 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 the 1999 Trust and each subsequent series of the Trust,
approximately a year after that Series' creation. However, there is no
assurance that any such subsequent series of the Trust will be offered.
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
Page 29
holders could then receive a less favorable average Unit price than if
they bought all their Units of the Trust on any given day of the 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 1999
Trust, no cash would be distributed at that time to pay any taxes.
Included in the cash for the Special Redemption and Liquidation may 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. No Unit holder of the Trust, including Rollover Unit
holders, will be entitled under the Taxpayer Relief Act of 1997 to the
new 20% maximum Federal tax rate for capital gains derived from the
Trust's portfolio. 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 period as they 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 ("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 the Special Redemption and Liquidation, and will not be charged
any additional structuring charge. 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 in the 1999 Trust. The Trust might also be reduced below 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 Special Redemption and Liquidation Period will be sold by the
Sponsor as quickly as possible without, in its 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 1999 Trust 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 before. See "Rights of Unit Holders-How May Units be Redeemed?" The
Sponsor may modify the terms of the 1999 Trust 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 effective date of such amendment.
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 payments
of dividends, the credit standing of the issuer or otherwise impair the
sound investment character of the Equity Security, that the issuer has
defaulted on the payment on any other of its outstanding obligations, or
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 Contract 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
Page 30
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
redeeming Units of the 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.
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in 1991,
acts as Sponsor for successive series of The First Trust Combined
Series, the FT Series (formerly known as The First Trust Special
Situations Trust), The First Trust Insured Corporate Trust, The First
Trust of Insured Municipal Bonds 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, 1997, the total
partners' capital of Nike Securities L.P. was $11,724,071 (audited).
(This paragraph relates only to the Sponsor and not to the Trust or to
any series thereof or to the 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
copy of a notice of resignation to all Unit holders. Upon receipt of
Page 31
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 or the Trustee, in
which event the Sponsor and the Trustee are to use their best efforts to
appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor
Evaluator. If upon resignation of the Evaluator no successor has
accepted appointment within 30 days after notice of resignation, the
Evaluator may apply to a court of competent jurisdiction for the
appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Indenture
shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee, Sponsor or Unit holders for errors in
judgment. This provision shall not protect the Evaluator in any case of
willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties.
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment is
(1) to cure any ambiguity or to correct or supplement any provision of
the Indenture which may be defective or inconsistent with any other
Page 32
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 such 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 of the Trust by the Underwriter, the
Sponsor will refund to each purchaser of Units of the Trust the entire
structuring 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?"
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
shall be given by the Trustee to each Unit holder at his or her address
appearing on the registration books of the Trust maintained by the
Trustee. At least 30 days prior to the Maturity 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
10,000 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 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 Unit holders
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.
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.
Page 33
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
FT 225
We have audited the accompanying statement of net assets, including the
schedule of investments, of FT 225, comprised of American Bank Trust
Series, at the opening of business on April 7, 1998. 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 April 7, 1998.
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 225,
comprised of American Bank Trust Series, at the opening of business on
April 7, 1998 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
April 7, 1998
Page 34
Statement of Net Assets
AMERICAN BANK TRUST SERIES
FT 225
At the Opening of Business on the
Initial Date of Deposit-April 7, 1998
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by purchase contracts (1) (2) $150,073
Organizational and offering costs (3) 16,000
____________
166,073
Less accrued organizational and offering costs (3) (16,000)
Less liability for deferred structuring charge (4) (1,876)
____________
Net assets $148,197
============
Units outstanding 15,007
ANALYSIS OF NET ASSETS
Cost to investors (5) $150,073
Less deferred structuring charge (5) (1,876)
____________
Net Assets $148,197
============
<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 $200,000 issued by The Chase
Manhattan Bank has been deposited with the Trustee as collateral, which
is sufficient to cover the monies necessary for the purchase of the
Equity Securities pursuant to contracts for the purchase of such Equity
Securities.
(3) The Trust will bear all or a portion of its estimated organizational
and offering costs which will be deferred and charged off over a period
not to exceed 12 months from the Initial Date of Deposit. The estimated
organizational and offering costs are based on 1,000,000 Units of the
Trust expected to be issued. To the extent the number of Units issued is
larger or smaller, the estimate will vary.
(4) Represents the amount of mandatory distributions from the Trust
($.125 per Unit), payable to the Sponsor in five equal monthly
installments beginning on July 20, 1998, and on the twentieth day of
each month thereafter (or if such day is not a business day, on the
preceding business day) through November 19, 1998. If Units are redeemed
prior to November 19, 1998, the remaining amount of the deferred
structuring charge applicable to such Units will be payable at the time
of redemption.
(5) The aggregate cost to investors includes a deferred structuring
charge computed at the rate of 1.25% of the Public Offering Price
(equivalent to 1.25% of the net amount invested, exclusive of the
deferred structuring charge).
</FN>
</TABLE>
Page 35
Schedule of Investments
AMERICAN BANK TRUST SERIES
FT 225
At the Opening of Business on the
Initial Date of Deposit-April 7, 1998
<TABLE>
<CAPTION>
Percentage Market Cost of
of Aggregate Value Equity
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Equity Securities (1) Price Share to Trust (2)
__________ _______________________________________ ____________ ______ ___________
<C> <S> <C> <C> <C>
129 ABCB ABC Bancorp 1.54% $ 17.875 $ 2,306
80 ANBC ANB Corporation 1.55% 29.000 2,320
74 AROW Arrow Financial Corporation 1.53% 31.000 2,294
36 ONE Banc One Corporation 1.56% 65.000 2,340
47 BFOH BancFirst Ohio Corp. 1.53% 49.000 2,303
18 BT Bankers Trust New York Corporation 1.53% 127.250 2,290
40 BHB Bar Harbor Bankshares, Inc. 1.52% 57.000 2,280
72 BSBN BSB Bancorp, Inc. 1.53% 32.000 2,304
40 BTFC BT Financial Corporation 1.53% 57.250 2,290
53 CCBT Cape Cod Bank & Trust Company 1.55% 43.750 2,319
52 CHFC Chemical Financial Corporation 1.52% 44.000 2,288
63 CBU Community Bank System, Inc. 1.53% 36.438 2,296
73 CTBI Community Trust Bancorp, Inc. 1.54% 31.625 2,309
121 CPBI CPB, Inc. 1.53% 19.000 2,299
96 EVGN Evergreen Bancorp, Inc. 1.53% 23.938 2,298
56 FMBN F&M Bancorp 1.54% 41.375 2,317
67 FMN F&M National Corporation 1.53% 34.313 2,299
30 FFKT Farmers Capital Bank Corporation 1.55% 77.500 2,325
72 FCNB FCNB Corporation 1.55% 32.250 2,322
97 FCTR First Charter Corporation 1.53% 23.750 2,304
78 FCF First Commonwealth Financial Corporation 1.54% 29.625 2,311
59 FFIN First Financial Bancshares, Inc. 1.54% 39.125 2,308
58 FHWN First Hawaiian, Inc. 1.53% 39.500 2,291
57 FRME First Merchants Corporation 1.54% 40.500 2,308
97 FSCO First Security Corporation 1.53% 23.688 2,298
41 FTU First Union Corporation 1.55% 56.750 2,327
115 FUNC First United Corporation 1.54% 20.125 2,314
27 FLT Fleet Financial Group, Inc. 1.55% 86.313 2,330
54 HNBC Harleysville National Corporation 1.55% 43.125 2,329
78 HZWV Horizon Bancorp Inc. 1.53% 29.500 2,301
62 HBAN Huntington Bancshares Incorporated 1.53% 37.063 2,298
60 KEY KeyCorp 1.54% 38.500 2,310
58 KSTN Keystone Financial, Inc. 1.55% 40.000 2,320
63 MGNB Mahoning National Bancorp, Inc. 1.54% 36.750 2,315
41 MTL Mercantile Bancoporation, Inc. 1.54% 56.438 2,314
61 MRBK Mercantile Bancshares Corporation 1.53% 37.750 2,303
70 MFCB Michigan Financial Corporation 1.54% 33.000 2,310
81 MIAM Mid-Am, Inc. 1.55% 28.625 2,319
72 MAB Mid-America Bancorp 1.54% 32.188 2,318
16 JPM J.P. Morgan & Company, Inc. 1.54% 144.750 2,316
84 NBTB NBT Bancorp Inc. 1.55% 27.625 2,320
</TABLE>
Page 36
Schedule of Investments (cont.)
AMERICAN BANK TRUST SERIES
FT 225
At the Opening of Business on the
Initial Date of Deposit-April 7, 1998
<TABLE>
<CAPTION>
Percentage Market Cost of
of Aggregate Value Equity
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Equity Securities (1) Price Share to Trust (2)
__________ _______________________________________ ____________ ______ ___________
<C> <S> <C> <C> <C>
31 NCC National City Corporation 1.54% $ 74.688 $ 2,315
65 NPBC National Penn Bancshares, Inc. 1.54% 35.500 2,307
60 OV One Valley Bancorp, Inc. 1.55% 38.750 2,325
96 BOH Pacific Century Financial Corporation 1.54% 24.063 2,310
63 PKFY People's First Corporation 1.54% 36.625 2,307
65 PINN Pinnacle Banc Group, Inc. 1.55% 35.750 2,324
38 PNC PNC Bank Corp. 1.55% 61.125 2,323
55 RGBK Regions Financial Corporation 1.54% 42.000 2,310
114 RBPAA Royal Bancshares of Pennsylvania, Inc. (Class A) 1.54% 20.250 2,308
41 STBA S&T Bancorp, Inc. 1.52% 55.625 2,281
62 SBCFA Seacoast Banking Corporation of Florida 1.53% 37.000 2,294
46 SWPA Southwest National Corporation 1.53% 50.000 2,300
73 SUBK Suffolk Bancorp 1.53% 31.500 2,299
46 SUB Summit Bancorp 1.54% 50.188 2,309
64 SUBI Sun Bancorp, Inc. 1.53% 36.000 2,304
62 SUSQ Susquehanna Bancshares, Inc. 1.54% 37.375 2,317
68 TMP Tompkins County Trustco, Inc. 1.54% 33.938 2,308
82 TRST Trustco Bank Corporation 1.54% 28.125 2,306
37 UPC Union Planters Corporation 1.54% 62.438 2,310
84 UBSI United Bankshares, Inc. 1.53% 27.375 2,300
58 VLY Valley National Bancorp 1.54% 39.813 2,309
79 VFSC Vermont Financial Services Corporation 1.55% 29.375 2,321
85 WSBC Wesbanco, Inc. 1.53% 27.000 2,295
35 WILM Wilmington Trust Corporation 1.55% 66.500 2,328
________ ________
Total Investments 100% $150,073
======== ========
____________
<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 April 7, 1998.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was
$150,073. Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $151,634 and $1,561, respectively.
</FN>
</TABLE>
Page 37
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Page 38
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Page 39
CONTENTS:
Summary of Essential Information 4
American Bank Trust Series
FT 225:
What is The FT Series? 6
What are the Expenses and Charges? 7
What is the Federal Tax Status of Unit Holders? 8
Portfolio:
What are Equity Securities? 11
Hypothetical Performance Information 11
What are the Equity Securities Selected for
American Bank Trust Series? 15
Risk Factors 19
What are Some Additional Considerations
for Investors? 22
Public Offering:
How is the Public Offering Price Determined? 24
How are Units Distributed? 24
What are the Sponsor's Profits? 25
Rights of Unit Holders:
How is Evidence of Ownership Issued
and Transferred? 25
How are Income and Capital Distributed? 26
What Reports will Unit Holders Receive? 27
How May Units be Redeemed? 27
Special Redemption, Liquidation and Investment
In a New Trust 28
How May Equity Securities be Removed
from the Trust? 30
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 31
Who is the Trustee? 31
Limitations on Liabilities of Sponsor and Trustee 32
Who is the Evaluator? 32
Other Information:
How May the Indenture be Amended or Terminated? 32
Legal Opinions 33
Experts 33
Report of Independent Auditors 34
Statement of Net Assets 35
Notes to Statement of Net Assets 35
Schedule of Investments 36
____________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO, WHICH THE FUND
HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940,
AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
AMERICAN BANK TRUST SERIES
Nike Securities L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
April 7, 1998
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 40
-APPENDIX-
The graph which appears on page 13 represents a comparison between a
$100,000 investment made on December 31, 1987 in those stocks which
comprise the Strategy Stocks and S&P Bank Index and the the S&P 500
Index as of December 31 of each respective year. The chart indicates
that $100,000 invested on December 31, 1987 in the stocks which comprise
the Strategy would on March 31, 1998 be worth $977,279, as opposed to
$688,921 had the $100,000 been invested in the stocks which comprise the
S&P Bank Index and $592,627 had the $100,000 been invested in the S&P
500 Stocks. Each figure assumes that dividends received during each year
will be reinvested semi-annually and structuring charges, commissions,
expenses and taxes were not considered in determining total returns.
The graph which appears on page 15 represents a comparison between a
$100,000 investment made on December 31, 1972 in those stocks which
comprise the Strategy Stocks and the S&P 500 Index as of December 31 of
each respective year. The chart indicates that $100,000 invested on
December 31, 1972 in the stocks which comprise the Strategy would on
March 31, 1998 be worth $6,525,806, as opposed to $2,391,546 had the
$100,000 been invested in the stocks which comprise the S&P 500 Index.
Each figure assumes that dividends received during each year will be
reinvested semi-annually and structuring charges, commissions, expenses
and taxes were not considered in determining total returns.
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 225, 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 225, 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 April 7, 1998.
FT 225
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 ) April 7, 1998
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 April 7, 1998 in
Amendment No. 2 to the Registration Statement (Form S-6) (File
No. 333-39701) and related Prospectus of FT 225.
ERNST & YOUNG LLP
Chicago, Illinois
April 7, 1998
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 225 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 225
TRUST AGREEMENT
Dated: April 7, 1998
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 AMERICAN BANK TRUST SERIES
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 the calendar year except during the
initial offering period as determined in Section 4.01 of this
Indenture, in which case the fee is calculated based on the
number of units outstanding during the period for which the
compensation is paid (such annual fee to be pro rated for any
calendar year in which the Trustee provides services during less
than the whole of such year). 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 April 7,
1998.
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. Notwithstanding anything to the contrary in the
Standard Terms and Conditions of Trust, references to subsequent
Series established after the date of effectiveness of the First
Trust Special Situations Trust, Series 24 shall include FT 225.
B. The term "Principal Account" as set forth in the
Standard Terms and Conditions of Trust shall be replaced with the
term "Capital Account."
C. 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.
D. 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."
E. 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."
F. 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."
G. 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."
H. 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."
I. 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."
J. 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."
K. Paragraph (b) of Section 2.01 shall be restated in its
entirety as follows:
(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, and/or (iii) cash (or a Letter of Credit in
lieu of cash) with instructions to purchase additional
Securities, in an amount equal to the portion of the Unit
Value of the Units created by such deposit attributable to
the Securities to be purchased pursuant to such
instructions. Except as provided in the following
subparagraphs (2), (3) and (4) the Depositor, in each case,
shall ensure that each deposit of additional Securities
pursuant to this Section shall maintain, as nearly as
practicable, the Percentage Ratio. Each such deposit of
additional Securities shall be made pursuant to a Notice of
Deposit of Additional Securities delivered by the Depositor
to the Trustee. Instructions to purchase additional
Securities shall be in writing, and shall specify the name
of the Security, CUSIP number, if any, aggregate amount,
price or price range and date to be purchased. When
requested by the Trustee, the Depositor shall act as broker
to execute purchases in accordance with such instructions;
the Depositor shall be entitled to compensation therefor in
accordance with applicable law and regulations. The Trustee
shall have no liability for any loss or depreciation
resulting from any purchase made pursuant to the Depositor's
instructions or made by the Depositor as broker.
(2) Additional Securities (or Contract Obligations
therefor) may, at the Depositor's discretion, be deposited
or purchased in round lots. If the amount of the deposit is
insufficient to acquire round lots of each Security to be
acquired, the additional Securities shall be deposited or
purchased in the order of the Security in the Trust most
under-represented immediately before the deposit with
respect to the Percentage Ratio.
(3) If at the time of a deposit of additional
Securities, Securities of an issue deposited on the Initial
Date of Deposit (or of an issue of Replacement Securities
acquired to replace an issue deposited on the Initial Date
of Deposit) are unavailable, cannot be purchased at
reasonable prices or their purchase is prohibited or
restricted by applicable law, regulation or policies, the
Depositor may (i) deposit, or instruct the Trustee to
purchase, in lieu thereof, another issue of Securities or
Replacement Securities or (ii) deposit cash or a letter of
credit in an amount equal to the valuation of the issue of
Securities whose acquisition is not feasible with
instructions to acquire such Securities of such issue when
they become available.
(4) Any contrary authorization in the preceding
subparagraphs (1) through (3) notwithstanding, deposits of
additional Securities made after the 90-day period
immediately following the Initial Date of Deposit (except
for deposits made to replace Failed Contract Obligations if
such deposits occur within 20 days from the date of a
failure occurring within such initial 90-day period) shall
maintain exactly the Percentage Ratio existing immediately
prior to such deposit.
(5) In connection with and at the time of any deposit
of additional Securities pursuant to this Section 2.01(b),
the Depositor shall exactly replicate Cash (as defined
below) received or receivable by the Trust as of the date of
such deposit. For purposes of this paragraph, "Cash" means,
as to the 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.
L. 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 for any
Letter(s) of Credit deposited with the Trustee in connection with
the deposits described in Section 2.01(a) and (b) cash in an
amount sufficient to satisfy the obligations to which the
Letter(s) of Credit relates. Any substituted Letter(s) of Credit
shall be released by the Trustee."
M. 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."
N. 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."
O. 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."
P. 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 third
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."
Q. 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."
R. 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."
S. 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.
T. 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."
U. 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."
V. 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 an 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.
W. 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."
X. 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.
Y. 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.
Z. 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 10,000 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."
AA. 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 Unit(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 during the
Special Redemption and Liquidation Period on such date or
dates specified by the Depositor. 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
redemption date equal to the net asset value (determined on
the basis of the Trust Fund Evaluation as of the redemption
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 redemption date.
All Securities included in a Unit holder's Rollover
Distribution shall be sold by the Distribution Agent during
the Special Redemption and Liquidation Period specified in
the Prospectus pursuant to the Depositor's direction, and
the Distribution Agent shall, unless directed otherwise by
the Depositor, 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 a New Trust." Should the
Depositor fail to provide direction, the Distribution Agent
shall sell the Securities in the manner provided in the
prospectus. The Distribution Agent shall have no
responsibility for any loss or depreciation incurred by
reason of any sale made pursuant to this Section.
Upon completion of all 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 its discretion at any time, decide not to offer any new
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."
BB. 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 value of
Securities deposited in such Trust during the initial
offering period, or (ii)"
CC. 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
By Robert M. Porcellino
Vice President
THE CHASE MANHATTAN BANK,
Trustee
By Rosalia A. Raviele
Vice President
[SEAL]
ATTEST:
John Koopman
Assistant Treasurer
FIRST TRUST ADVISORS L.P.,
Evaluator
By Robert M. Porcellino
Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Robert M. Porcellino
Vice President
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
FT 225
(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
April 7, 1998
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: FT 225
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of FT 225 in connection with the
preparation, execution and delivery of a Trust Agreement dated
April 7, 1998 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. 333-39701)
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
April 7, 1998
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 225
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of FT 225 (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 April 7, 1998 (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.
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, but will be governed
by the provisions of subchapter J (relating to trusts) of Chapter
1, Internal Revenue Code of 1986 (the "Code"); each Unit holder
will be treated as the owner of a pro rata portion of each of the
assets of the Trust, in the proportion that the number of Units
held by him bears to the total number of Units outstanding; under
Subpart E, Subchapter J of Chapter 1 of the Code, income of the
Trust will be treated as income of the Unit holders in the
proportion described above; 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.
III. Gain or loss will be recognized to a Unit holder
(subject to various nonrecognition provisions under the Code)
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. 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.
IV. If the Trustee disposes of a Trust asset (whether by
sale, exchange, liquidation, redemption, payment on maturity or
otherwise) gain or loss will be recognized to a Unit holder
(subject to various nonrecognition provisions under the Code) and
the amount thereof will be measured by comparing the Unit
holders aliquot share of the total proceeds from the transaction
with his basis for his fractional interest in the asset disposed
of. Such basis is ascertained by apportioning the tax basis for
his Units (as of the date on which the Units were acquired) among
each of the Trusts assets (as of the date on which his Units
were acquired) ratably according to their values as of the
valuation date nearest the date on which he purchased the Units.
A Unit holders basis in his Units and his fractional interest in
each of the Trust assets must be reduced, but not below zero, by
the Unit holders pro rata portion of dividends with respect to
each Equity Security which are not taxable as ordinary income.
V. 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 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 of 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.
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.
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. 333-39701)
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
April 7, 1998
The Chase Manhattan Bank, as Trustee of
FT 225
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Attention: Mr. Thomas Porrazzo
Vice President
Re: FT 225
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 225 (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. 333-39701) 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
April 7, 1998
The Chase Manhattan Bank, as Trustee of
FT 225
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Attention: Mr. Thomas Porrazzo
Vice President
Re: FT 225
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
225 (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
April 7, 1998
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: FT 225
Gentlemen:
We have examined the Registration Statement File No.
333-39701 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> American Bank Trust Series
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<S> <C>
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</TABLE>
