Registration No. 333-43403
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 3 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 237
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 February 5, 1998 at 2:00 p.m. pursuant to Rule
487.
________________________________
FT 237
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.
STRATEGIC INCOME AND GROWTH TRUST, SERIES 1
The Trust. FT 237 (the "Trust") is a unit investment trust consisting
primarily of a portfolio of common stocks issued by companies which, in
the opinion of the Underwriter, have the potential for increasing
dividend income and capital appreciation (the "Equity Securities"). In
addition, up to 10% of the portfolio may consist of convertible
subordinated debentures (the "Convertible Bonds"). Collectively, the
Equity Securities and the Convertible Bonds are referred to herein as
the "Securities."
The objective of the Trust is to provide the potential for increasing
dividend income and capital appreciation by investing in the 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
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. Convertible
Bonds are securities that are convertible into shares of common stock of
the issuing corporation under specified conditions. See "Portfolio" and
"Rights of Unit Holders-How May Securities be Removed from the Trust?"
The Sponsor may, from time to time during a period of up to
approximately 360 days after the Initial Date of Deposit, deposit
additional Securities in the Trust or cash (including a letter of
credit) with instructions to purchase additional Securities in the
Trust. Such deposits of additional Securities or cash will be done in
such a manner that the original proportionate relationship amongst the
individual issues of the Securities shall be maintained. Any deposit by
the Sponsor of additional Securities, or the purchase of additional
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
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 Securities be Removed from the Trust?"
Public Offering Price. The Public Offering Price per Unit of the Trust
during the initial offering period is equal to a pro rata share of the
offering prices of the Convertible Bonds and 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 an initial sales charge equal to the difference between the maximum
sales charge of 5.0% of the Public Offering Price and the maximum
remaining deferred sales charge, initially $.35 per Unit. 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
January 20, 1999, a deferred sales charge of $.050 will be assessed per
Unit per month. Units purchased subsequent to the initial deferred sales
charge payment but still during the initial offering period will be
subject to the initial sales charge and the remaining deferred sales
charge payments not yet collected. The deferred sales charge will be
paid from funds in the Income and/or Capital Accounts, if
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Ohio Company
The date of this Prospectus is February 5, 1998
Page 1
sufficient, or from the periodic sale of Equity Securities. The total
maximum sales charge assessed to Unit holders on a per Unit basis will
be 5.0% of the Public Offering Price equivalent to 5.076% of the net
amount invested, exclusive of the deferred sales charge). A pro rata
share of interest accrued but unpaid on the Convertible Bonds after the
First Settlement Date to the date of settlement and accumulated
dividends, if any, in the Income Account is included in the Public
Offering Price. Upon completion of the deferred sales charge period, the
secondary market Public Offering Price per Unit for the Trust will not
include deferred payments, but will instead include only a one-time
initial sales charge of 5.0% of the Public Offering Price (equivalent to
5.263% of the net amount invested), which will be reduced by 1/2 of 1%
on each March 1, commencing March 1, 1999 to a minimum sales charge of
3.0%. The minimum amount which an investor may purchase of the Trust is
$1,000. The sales charge is reduced on a graduated scale for sales
involving at least $50,000. 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
distributions per Unit to Unit holders (based on most recent quarterly
or semi-annual ordinary dividend declared with respect to the Equity
Securities and the stated coupon rate of the Convertible Bonds) at the
opening of business on the Initial Date of Deposit was $.3960. This
estimate will vary with changes in the Trust's fees and expenses, in
dividends or interest received, and with the sale of the Securities.
There is no assurance that the estimated net annual distributions will
be realized in the future.
Dividend and Capital Distributions. Distributions of dividends and
capital (in the case of the Equity Securities) and income and principal
(in the case of the Convertible Bonds), if any, received by the Trust
will be paid on the Distribution Date to Unit holders of record on the
Record Date as set forth in the "Summary of Essential Information."
Distributions of funds in the Capital Account, if any, will be made at
least annually in December of each year. Any distribution will be net of
the expenses of the Trust. See "What is the Federal Tax Status of Unit
Holders?" Additionally, upon termination of the Trust, the Trustee will
distribute, upon surrender of Units for redemption, to each Unit holder
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?"
Secondary Market for Units. After the initial offering period, while
under no obligation to do so, the Sponsor intends to, and the
Underwriter may, maintain a market for Units of the Trust and offer to
repurchase such Units at prices which are based on the aggregate bid
side evaluation of the Convertible Bonds and the aggregate underlying
value of Equity Securities in the Trust (generally determined by the
closing sale prices of listed Equity Securities and the bid prices of
over-the-counter traded Equity Securities) plus or minus cash, if any,
in the Capital and Income Accounts of the Trust. If a secondary market
is maintained during the initial offering period, the prices at which
Units will be repurchased will be based upon the aggregate offering side
evaluation of the Convertible Bonds and the aggregate underlying value
of the Equity Securities in the Trust (generally determined by the
closing sale prices of listed Equity Securities and the ask prices of
over-the-counter traded Equity Securities) plus or minus cash, if any,
in the Capital and Income Accounts of the Trust. If a secondary market
is not maintained, a Unit holder may redeem Units through redemption at
prices based upon the aggregate offering side evaluation (during the
initial offering period) or aggregate bid side evaluation (subsequent to
the initial offering period) of the Convertible Bonds and 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 2,500 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. Unit holders electing an In-Kind Distribution will receive a cash
payment representing their proportionate amount of the Convertible
Bonds. Any deferred sales charge remaining on Units at the time of their
sale or redemption will be collected at that time. See "Rights of Unit
Holders-How May Units be Redeemed?"
Page 2
Termination. Commencing no later than the Mandatory Termination Date,
Securities will begin to be sold as prescribed by the Sponsor. The
Trustee shall provide written notice of any termination of the Trust to
Unit holders which will specify when Unit holders may surrender their
certificates for cancellation and will include a form to enable Unit
holders to elect an In-Kind Distribution if such Unit holder owns at
least 2,500 Units of the Trust, rather than to receive payment in cash
for such Unit holder's pro rata share of the amounts realized upon the
disposition by the Trustee of the Securities. Unit holders electing an
In-Kind Distribution will receive a cash payment representing their
proportionate amount of the Convertible Bonds. To be effective, the
election form, together with surrendered certificates and other
documentation required by the Trustee, must be returned to the Trustee
at least ten business days prior to the Mandatory Termination Date. Unit
holders not electing 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 Securities or the general condition of the stock
market, volatile interest rates or economic recession. The Trust's
portfolio is not managed and Securities will not be sold by the Trust
regardless of market fluctuations, although some Securities may be sold
under certain limited circumstances. See "Portfolio-Risk Factors."
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-February 5, 1998
Underwriter: The Ohio Company
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
General Information
<S> <C>
Principal Amount of Convertible Bonds in the Trust $ 18,000
Initial Number of Units (1) 20,241
Fractional Undivided Interest in the Trust per Unit (1) 1/20,241
Public Offering Price:
Aggregate Offering Price Evaluation of Securities in Portfolio (2) $ 199,377
Aggregate Offering Price Evaluation of Securities per Unit $ 9.850
Maximum Sales Charge of 5.0% of the Public Offering Price per Unit
(5.076% of the net amount invested, exclusive of the deferred sales charge) (3) $ .500
Less Deferred Sales Charge per Unit $ (.350)
Public Offering Price per Unit (3) $ 10.000
Sponsor's Initial Repurchase Price per Unit $ 9.500
Redemption Price per Unit (based on the aggregate offering side evaluation of the Convertible Bonds
and the aggregate underlying value of Equity Securities, less the deferred sales charge) (4) $ 9.500
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
CUSIP Number 30264N 743
First Settlement Date February 10, 1998
Mandatory Termination Date February 28, 2004
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 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) $.0060 per Unit.
Regular Income Distribution Record Date Fifteenth day of each March, June, September and December commencing March
15, 1998.
Regular Income Distribution Date (7) Last day of each March, June, September and December commencing March 31,
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 listed Equity Security 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. The Convertible Bonds are valued at
their aggregate offering side evaluation.
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. The initial sales charge applies to all Units and
represents an amount equal to the difference between the maximum sales
charge for the Trust of 5.0% of the Public Offering Price and the amount
of the maximum remaining deferred sales charge (initially $.350 per
Unit). Subsequent to the Initial Date of Deposit, the amount of the
initial sales charge will vary with changes in the aggregate underlying
value of the Securities underlying the Trust. In addition to the
initial sales charge, Unit holders will pay a deferred sales charge of
$.050 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 January 20, 1999. During the initial
offering period, Units purchased subsequent to the initial deferred
sales charge payment will be subject to the initial sales charge and the
remaining deferred sales charge payments not yet collected. These
deferred sales charge payments will be paid from funds in the Income
and/or Capital Accounts, if sufficient, or from the periodic sale of
Securities. See "Fee Table" and "Public Offering" for additional
information. Commencing on January 21, 1999, the secondary market sales
charge will not include the deferred sales charge payments but will
instead include only a one-time initial sales charge of 5.0% of the
Public Offering Price and will decrease by 1/2 of 1% on each subsequent
March 1, commencing March 1, 1999 to a minimum sales charge of 3.0% as
described under "Public Offering." 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 interest accrued
but unpaid on the Convertible Bonds and accumulated dividends on the Equity
Securities in such Income Account. The Public Offering Price as shown
reflects the value of the 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 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 $.0028 per
Unit.
(6) The Trust (and therefore Unit holders) will bear all or a portion of
its organizational and offering costs (including costs of preparing the
registration statement, the trust indenture and other closing documents,
registering Units with the Securities and Exchange Commission and
states, the initial audit of the Trust portfolio, legal fees and the
initial fees and expenses of the Trustee but not including the expenses
incurred in the printing of preliminary and final prospectuses, and
expenses incurred in the preparation and printing of brochures and other
advertising materials and any other selling expenses) as is common for
mutual funds. Total organizational and offering expenses will be charged
off over a period not to exceed five years from the Initial Date of
Deposit. See "What are the Expenses and Charges?" and "Statement of Net
Assets."
(7) 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 six years 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 sales charge imposed on purchase
(as a percentage of public offering price) 1.50%(a) $ .150
Deferred sales charge
(as a percentage of public offering price) 3.50%(b) .350
________ ________
5.00% $ .500
======== ========
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Trustee's fee .099% $.0096
Portfolio supervision, bookkeeping, administrative, amortization
of organizational and offering costs and evaluation fees .190% .0185
Other operating expenses .013% .0013
________ ________
Total .302% $.0294
======== ========
</TABLE>
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years 6 Years
______ _______ _______ _______
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming the Strategic Income and Growth Trust,
Series 1 has an estimated operating expense ratio of .302% and a
5% annual return on the investment throughout the periods $ 53 $ 59 $ 66 $ 69
_____________
<FN>
(a) The Initial Sales Charge is actually the difference between the
maximum total sales charge of 5.0% and the maximum remaining deferred
sales charge (initially $.350 per Unit) and would exceed 1.5% if the
Public Offering Price exceeds $10.00 per Unit.
(b) The actual fee is $.050 per Unit per month, irrespective of purchase
or redemption price deducted monthly commencing July 20, 1998 through
January 20, 1999. If a Unit holder sells or redeems Units before all of
these deductions have been made, the balance of the deferred sales
charge payments remaining will be deducted from the sales or redemption
proceeds. If the Unit price is less than $10.00 per Unit, the deferred
sales charge will exceed 3.5%. Units purchased subsequent to the initial
deferred sales charge payment will be subject to the previously
collected deferred sales charge payments at the time of purchase and any
remaining deferred sales charge payments not yet collected.
</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 sales charge imposed on reinvestment of
dividends is not reflected until the year following payment of the
dividend; the cumulative expenses would be higher if sales charges on
reinvested dividends were reflected in the year of reinvestment. The
example should not be considered a representation of past or future
expenses or annual rate of return; the actual expenses and annual rate
of return may be more or less than those assumed for purposes of the
example.
Page 5
STRATEGIC INCOME AND GROWTH TRUST, SERIES 1
FT 237
What is the FT Series?
FT 237 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 previously known as The First Special
Situations Trust Series. This Series consists of an underlying separate
unit investment trust designated as: Strategic Income and Growth Trust,
Series 1. 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 the Securities, together
with an irrevocable letter or letters of credit of a financial
institution in an amount at least equal to the purchase price of such
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 increasing
dividend income and capital appreciation by investing in the Securities.
The portfolio of the Trust consists primarily of Equity Securities,
although up to 10% of the portfolio may be invested in Convertible
Bonds. The portfolio consists of well-respected companies in strong
financial positions traded on major U.S. securities exchanges. The
portfolio distributions are expected to yield approximately 4%. The
Equity Securities included in the portfolio have a good history of
annual dividend increases and currently have a low relative price to
earnings ratio. For example, the Equity Securities selected for the
portfolio as a whole have raised their dividends over the past five
years at a rate approximately double that of the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index") and have a price to
earnings ratio as of February 4, 1998 which is approximately 18.5% lower
than that of the S&P 500 Index. In addition, the Equity Securities in
the portfolio have historically had less volatility
than the S&P 500 Index over the last 12 months, as measured by Beta, a
commonly used measure of volatility. There is, however, no guarantee
that the objective of the Trust will be achieved and an investment in
the Trust should be made with an understanding of the market risks and
investment characteristics of both bonds and common stocks.
With the deposit of the Securities on the Initial Date of Deposit, the
Sponsor established a percentage relationship between the amounts of
individual 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 Securities in the Trust or cash
(including a letter of credit) with instructions to purchase additional
Securities in the Trust, and Units may be continuously offered for sale
to the public by means of this Prospectus, resulting in a potential
increase in the outstanding number of Units of the Trust. Any deposit by
the Sponsor of additional 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 Securities deposited in the
Trust on the Initial, or any subsequent, Date of Deposit. See "Rights of
Unit Holders-How May Securities be Removed from the Trust?" The original
percentage relationship of each Security to the Trust is set forth
herein under "Schedule of Investments." Since the prices of the
underlying Securities will fluctuate daily, the ratio, on a market value
basis, will also change daily. The portion of Securities represented by
each Unit will not change as a result of the deposit of additional
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 Securities and because the Trust will pay the associated
brokerage fees. To minimize this effect, the Trust will try to purchase
the Securities as close to the evaluation time or as close to the
evaluation price as possible. The Trustee may from time to time retain
and pay compensation to the Sponsor (or an affiliate of the Sponsor) to
act as agent for the Trust with respect to acquiring Securities for the
Page 6
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 Securities as set forth under
"Summary of Essential Information." To the extent that Units of the
Trust are redeemed, the aggregate value of the 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 Securities or cash by the Sponsor, the aggregate value of the
Securities in the Trust will be increased by amounts allocable to
additional Units, and the fractional undivided interest represented by
each Unit of the Trust will be decreased proportionately. See "Rights of
Unit Holders-How May Units be Redeemed?"
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 the Underwriter or dealers of the Trust.
Subsequent to the initial offering period, First Trust Advisors L.P., an
affiliate of the Sponsor, 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
aggregate number of Units of the Trust outstanding at any time during
the year. For a discussion of the services performed by the Trustee
pursuant to its obligations under the Indenture, reference is made to
the material set forth under "Rights of Unit Holders."
The Trustee's and 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.
Certain or all of the expenses incurred in establishing the Trust,
including costs of preparing the registration statement, the 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 five years from the Initial Date of Deposit. The following
Page 7
additional charges are or may be incurred by the Trust: all legal and
annual auditing 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 Securities or any part of the Trust (no such taxes or
charges are being levied or made or, to the knowledge of the Sponsor,
contemplated). The above expenses and the Trustee's annual fee, when
paid or owing to the Trustee, are secured by a lien on the Trust. In
addition, the Trustee is empowered to sell 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 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 Securities will have
to be sold to meet Trust expenses. These sales may result in capital
gains or losses to Unit holders. See "What is the Federal Tax Status of
Unit Holders?"
The Indenture requires the Trust to be audited on an annual basis at the
expense of the Trust by independent auditors selected by the Sponsor. So
long as the Sponsor is making a secondary market for the Units, the
Sponsor is required to bear the cost of such annual audits to the extent
such cost exceeds $0.0050 per Unit. Unit holders of the Trust covered by
an audit may obtain a copy of the audited financial statements upon
request.
How is Accrued Interest Treated?
Accrued interest is the accumulation of unpaid interest on a security
from the last day on which interest thereon was paid. Interest on the
Convertible Bonds in the Trust generally is paid semi-annually to the
Trust. However, interest on the Convertible Bonds in the Trust is
accounted for daily on an accrual basis. Because of this, the Trust
always has an amount of interest earned but not yet collected by the
Trustee because of non-collected coupons. For this reason, with respect
to sales settling subsequent to the First Settlement Date, the Public
Offering Price of Units will have added to it the proportionate share of
accrued and undistributed interest to the date of settlement.
In an effort to reduce the amount of accrued interest which would
otherwise have to be paid in addition to the Public Offering Price in
the sale of Units to the public, the Trustee will advance the amount of
accrued interest as of the First Settlement Date and the same will be
distributed to the Sponsor as the Unit holder of record as of the First
Settlement Date. Consequently, the amount of accrued interest to be
added to the Public Offering Price of Units will include only accrued
interest from the First Settlement Date to the date of settlement, less
any distributions from the Interest Account subsequent to the First
Settlement Date.
Except through an advancement of its own funds, the Trustee has no cash
for distribution to Unit holders of amounts applicable to the
Convertible Bonds until it receives interest payments on the Convertible
Bonds in the Trust. The Trustee will recover its advancements without
interest or other costs to the Trust from interest received on the
Convertible Bonds in the Trust. When these advancements have been
recovered, regular distributions of income to Unit holders will
commence. See "Rights of Unit Holders-How are Income and Capital
Distributed?"
Because of the varying interest payment dates of the Convertible Bonds,
accrued interest at any point in time will be greater than the amount of
interest actually received by the Trust and distributed to Unit holders.
Therefore, there will always remain an item of accrued interest that is
added to the value of the Units. If a Unit holder sells or redeems all
or a portion of his or her Units, he or she will be entitled to receive
his or her proportionate share of the accrued interest from the purchase
of his or her Units. Since the Trustee has the use of amounts held in
the Income Account for distributions to Unit holders and since such
Account is non-interest-bearing to Unit holders, the Trustee benefits
thereby.
Page 8
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.
Neither the Sponsor nor Chapman and Cutler has reviewed the Equity
Securities to be deposited in the Trust. Rather, they have assumed that
(i) (A) Equity Securities qualify as equity for Federal income tax
purposes and that, accordingly, amounts received by the Trust with
respect to the Equity Securities will qualify as dividends as defined in
Section 316 of the Code and (B) such dividends would generally be
eligible for the dividends received deduction if the Equity Securities
were directly held by a corporate Unit holder for at least 46 days and
(ii) the Convertible Bonds qualify as debt 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 pro rata share of the income derived from each
Security when such income is considered to be received by the Trust.
Each Unit holder will also be required to include in taxable income for
Federal income tax purposes, original issue discount with respect to his
or her interest in any Convertible Bonds held by the Trust at the same
time and in the same manner as though the Unit holder were the direct
owner of such interest.
2. Each Unit holder will be considered to have received all of the
dividends and interest paid on his or her pro rata portion of each
Security when such dividends and interest are received by the Trust
regardless of whether such dividends or interest are used to pay a
portion of the deferred sales charge. Unit holders will be taxed in this
manner regardless of whether distributions from the Trust are actually
received by the Unit holder or are automatically reinvested.
3. Each Unit holder will have a taxable event when the Trust disposes
of a 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, generally including sales charges, is
allocated among his or her pro rata portion of each 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 his or her tax basis for his or her pro rata portion
of each Security held by such Trust. Unit holders must reduce the tax
basis of their Units for their share of accrued interest received, if
any, on Convertible Bonds delivered after the date the Unit holders pay
for their Units to the extent that such interest accrued on such
Convertible Bonds during the period from the Unit holder's settlement
date to the date such Convertible Bonds are delivered to the Trust and,
consequently, such Unit holders may have an increase in taxable gain or
reduction in capital loss upon the disposition of such Units. It should
be noted that certain legislative proposals have been made which could
affect the calculation of basis for Unit holders holding securities that
are substantially identical to the Securities. 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.
Page 9
4. The basis of each Unit and of each Convertible Bond which was
issued with original issue discount (or which has market discount) must
be increased by the amount of accrued original issue discount (and
market discount, if the Unit holder elects to include market discount in
income as it accrues) and the basis of each Unit and of each Convertible
Bond which was purchased by the Trust at a premium must be reduced by
the annual amortization of bond premium which the Unit holder has
properly elected to amortize under Section 171 of the Code. The tax
basis reduction requirements of the Code relating to amortization of
bond premium may, under some circumstances, result in the Unit holder
realizing a taxable gain when his or her Units are sold or redeemed for
an amount equal to or less than his or her original cost. Original issue
discount is effectively treated as interest for Federal income tax
purposes and the amount of original issue discount in this case is
generally the difference between the bond's purchase price and its
stated redemption price at maturity. A Unit holder will be required to
include in gross income for each taxable year the sum of his or her
daily portions of any original issue discount attributable to the
Convertible Bonds held by the Trust as such original issue discount
accrues for such year even though the income is not distributed to the
Unit holders during such year unless a Convertible Bond's original issue
discount is less than a "de minimis" amount as determined under the
Code. To the extent the amount of such discount is less than the
respective "de minimis" amount, such discount shall be treated as zero.
In general, original issue discount accrues daily under a constant
interest rate method which takes into account the semi-annual
compounding of accrued interest. Unit holders should consult their tax
advisers regarding the Federal income tax consequences and accretion of
original issue discount.
5. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of 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
Securities held by the Trust will generally be considered a capital loss
(except in the case of a dealer or a financial institution). Unit
holders should consult their tax advisers regarding the recognition of
such capital gains and losses for Federal income tax purposes.
The Convertible Bonds-Premium. If a Unit holder's tax basis of his or
her pro rata portion in any Convertible Bonds held by the Trust exceeds
the amount payable by the issuer of the Convertible Bonds with respect
to such pro rata interest upon maturity (or, in certain cases, the call
date) of the Convertible Bond, such excess would be considered premium
which may be amortized by the Unit holder at the Unit holder's election
as provided in Section 171 of the Code. Unit holders should consult
their tax advisors regarding whether such election should be made and
the manner of amortizing premium.
The Convertible Bonds-Original Issue Discount. Certain of the
Convertible Bonds in the Trust may have been acquired with "original
issue discount." In the case of any Convertible Bonds in the Trust
acquired with "original issue discount" that exceeds a "de minimis"
amount as specified in the Code, such discount is includable in taxable
income of the Unit holders on an accrual basis computed daily, without
regard to when payments of interest on such Convertible Bonds are
received. The Code provides a complex set of rules regarding the accrual
of original issue discount. These rules provide that original issue
discount generally accrues on the basis of a constant compound interest
rate over the term of the Convertible Bonds. Unit holders should consult
their tax advisers as to the amount of original issue discount which
accrues.
Special original issue discount rules apply if the purchase price of the
Convertible Bond by the Trust exceeds its original issue price plus the
amount of original issue discount which would have previously accrued
based upon its issue price (its "adjusted issue price"). Similarly these
special rules would apply to a Unit holder if the tax basis of his or
her pro rata portion of a Convertible Bond issued with original issue
discount exceeds his or her pro rata portion of its adjusted issue
price. Unit holders should also consult their tax advisers regarding
these special rules.
It is possible that a Convertible Bond that has been issued at an
original issue discount may be characterized as a "high-yield discount
obligation" within the meaning of Section 163(e)(5) of the Code. To the
extent that such an obligation is issued at a yield in excess of six
percentage points over the applicable Federal rate, a portion of the
original issue discount on such obligation will be characterized as a
Page 10
distribution on stock (e.g., dividends) for purposes of the dividends
received deduction which is available to certain corporations with
respect to certain dividends received by such corporation.
The Convertible Bonds-Market Discount. If a Unit holder's tax basis in
his or her pro rata portion of Convertible Bonds is less than the
allocable portion of such Convertible Bond's stated redemption price at
maturity (or, if issued with original issue discount, the allocable
portion of its "revised issue price"), such difference will constitute
market discount unless the amount of market discount is "de minimis" as
specified in the Code. Market discount accrues daily computed on a
straight line basis, unless the Unit holder elects to calculate accrued
market discount under a constant yield method. Unit holders should
consult their tax advisers as to the amount of market discount which
accrues.
Accrued market discount is generally includable in taxable income to the
Unit holders as ordinary income for Federal tax purposes upon the
receipt of serial principal payments on the Convertible Bonds, on the
sale, maturity or disposition of such Convertible Bonds by the Trust,
and on the sale by a Unit holder of Units, unless a Unit holder elects
to include the accrued market discount in taxable income as such
discount accrues. If a Unit holder does not elect to annually include
accrued market discount in taxable income as it accrues, deductions for
any interest expense incurred by the Unit holder which is incurred to
purchase or carry his or her Units will be reduced by such accrued
market discount. In general, the portion of any interest expense which
was not currently deductible would ultimately be deductible when the
accrued market discount is included in income. Unit holders should
consult their tax advisers regarding whether an election should be made
to include market discount in income as it accrues and as to the amount
of interest expense which may not be currently deductible.
The Convertible Bonds-Basis. The tax basis of a Unit holder with respect
to his or her interest in a Convertible Bond is increased by the amount
of original issue discount (and market discount, if the Unit holder
elects to include market discount, if any, on the Convertible Bonds held
by the Trust in income as it accrues) thereon properly included in the
Unit holder's gross income as determined for Federal income tax purposes
and reduced by the amount of any amortized premium which the Unit holder
has properly elected to amortize under Section 171 of the Code. A Unit
holder's tax basis in his or her Units will equal his or her tax basis
in his or her pro rata portion of all of the assets of the Trust.
Deferred Sales Charge. Generally, the tax basis of a Unit holder
includes sales charges, and such charges are not deductible. A portion
of the sales charge for the Trust is deferred. It is possible that for
Federal income tax purposes a portion of the deferred sales charge may
be treated as interest which would be deductible by a Unit holder
subject to limitations on the deduction of investment interest. In such
a case, the non-interest portion of the deferred sales charge would be
added to the Unit holder's tax basis in his or her Units. The deferred
sales charge could cause the Unit holder's Units to be considered to be
debt-financed under Section 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 sales charge. Unit holders should consult
their own tax advisers as to the income tax consequences of the deferred
sales charge.
Dividends Received Deduction. A 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, and during
the period specified in, 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.
Page 11
To the extent dividends received by a Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of
such dividends, since the dividends received deduction is generally
available only with respect to dividends paid by domestic corporations.
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.
Unit holders 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 a Security is disposed of by the
Trust or if the Unit holder disposes of a Unit. For taxpayers other than
corporations, net capital gain (which is defined as net long-term
capital gain over net short-term capital loss for the taxable year) is
subject to a maximum marginal stated tax rate of either 28% or 20%,
depending upon the holding periods of the capital assets. Capital 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 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. 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. The date on which a Unit is acquired (i.e., the
"trade date") is excluded for purposes of determining the holding period
of the Unit. It should be noted that legislative proposals are
introduced from time to time that affect tax rates and could affect
relative differences at which ordinary income and capital gains are taxed.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered
into after April 30, 1993. Unit holders and prospective investors should
consult with their tax advisers regarding the potential effect of this
provision on their investment in Units.
If the Unit holder disposes of a Unit, he 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
Securities represented by the Unit. The Taxpayer Relief Act of 1997 (the
"1997 Tax Act") includes provisions that treat certain transactions
designed to reduce or eliminate risk of loss and opportunities for gain
(e.g., short sales, offsetting notional principal contracts, futures or
forward contracts, or similar transactions) as constructive sales for
purposes of recognition of gain (but not loss) and for purposes of
determining the holding period. Unit holders should consult their own
tax advisors with regard to any such constructive sales rules.
Special Tax Consequences of In-Kind Distributions Upon Redemption of
Units or Termination of the Trust. As discussed in "Rights of Unit
Holders-How are Income and Capital Distributed?", under certain
circumstances a Unit holder who owns at least 2,500 Units of the Trust
may request an In-Kind Distribution upon the redemption of Units or the
termination of the Trust. The Unit holder requesting an In-Kind
Distribution will be liable for expenses related thereto (the
"Distribution Expenses") and the amount of such In-Kind Distribution
Page 12
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 Securities plus, possibly, cash. Unit holders electing
an In-Kind Distribution will receive a cash payment representing their
proportionate amount of the Convertible Bonds.
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 Securities. A "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 Securities in
exchange for his or her pro rata portion in the Securities held by the
Trust. However, if a Unit holder also receives cash in exchange for a
fractional share of an 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 or her tax basis in
such fractional share of an Security held by the Trust.
Because the Trust will own many Securities, a Unit holder who requests
an In-Kind Distribution will have to analyze the tax consequences with
respect to each Security owned by the Trust. The amount of taxable gain
(or loss) recognized upon such exchange will generally equal the sum of
the gain (or loss) recognized under the rules described above by such
Unit holder with respect to each Security owned by the Trust. Unit
holders who request an In-Kind Distribution are advised to consult their
tax advisers in this regard.
Computation of the Unit Holder's Tax Basis. Initially, a Unit holder's
tax basis in his or her 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 Securities held in the Trust in accordance with the
proportion of the fair market values of such Securities on the valuation
date nearest the date the Units are purchased in order to determine such
Unit holder's tax basis for his or her pro rata portion of each 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. Unit holders must reduce the tax basis of their Units for their
share of accrued interest received, if any, on Convertible Bonds
delivered after the date the Unit holders pay for their Units to the
extent that such interest accrued on such Convertible Bonds during the
period from the Unit holder's settlement date to the date such
Convertible Bonds are delivered to the Trust and, consequently, such
Unit holders may have an increase in taxable gain or reduction in
capital loss upon the disposition of such Units.
Foreign Investors. A Unit holder who is a foreign investor (i.e., an
investor other than a U.S. citizen or resident or a U.S. corporation,
partnership, estate or trust) will generally be subject to United States
Federal income taxes, including withholding taxes, on distributions from
the Trust relating to such investor's share of dividend income paid on
the Equity Securities (other than those that are not treated as United
States source income, if any). However, interest income (including any
original issue discount) on, or any gain from the sale or other
disposition of, his or her pro rata interest in any Convertible Bond or
the sale of his or her Units will not be subject to United States
Federal income taxes, including withholding taxes, provided that all of
the following conditions are met: (i) the interest income or gain is not
effectively connected with the conduct by the foreign investor of a
trade or business within the United States, (ii) if the interest is
United States source income (which is the case for each Convertible Bond
held by the Trust) and the Convertible Bond is issued after July 18,
1984 (which is the case for each Convertible Bond held by the Trust),
then the foreign investor does not own, directly or indirectly, 10% or
more of the total combined voting power of all classes of voting stock
of the issuer of the Convertible Bond and the foreign investor is not a
controlled foreign corporation related (within the meaning of Section
864(d)(4) of the Code) to the issuer of the Convertible Bond, (iii) with
respect to any gain, the foreign investor (if an individual) is not
present in the United States for 183 days or more during his or her
taxable year and (iv) the foreign investor provides all certification
which may be required of his or her status (foreign investors may
contact the sponsor to obtain a Form W-8 which must be filed with the
Trustee and refiled every three calendar years thereafter). Foreign
Page 13
investors should consult their tax advisers with respect to United
States tax consequences of ownership of Units.
It should be noted that the Tax Act includes a provision which
eliminates the exemption from United States taxation, including
withholding taxes, for certain "contingent interest." The provision
applies to interest received after December 31, 1993. No opinion is
expressed herein regarding the potential applicability of this provision
and whether United States taxation or withholding taxes could be imposed
with respect to income derived from the Units as a result thereof. Unit
holders and prospective investors should consult with their tax advisers
regarding the potential effect of this provision on their investment in
Units.
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 (other than those that are not
treated as U.S. source income, if any) will generally be subject to U.S.
income taxation and withholding in the case of Units held by non-
resident alien individuals, foreign corporations or other non-U.S.
persons. Such persons should consult their tax advisers.
It should be noted that payments to the Trust of dividends on Equity
Securities that are attributable to foreign corporations may be subject
to foreign withholding taxes and Unit holders should consult their tax
advisers regarding the potential tax consequences relating to the
payment of any such withholding taxes by the Trusts. Any dividends
withheld as a result thereof will nevertheless be treated as income to
the Unit holders. Because, under the grantor trust rules, an investor is
deemed to have paid directly his or her share of foreign taxes that have
been paid or accrued, if any, an investor may be entitled to a foreign
tax credit or deduction for U.S. income tax purposes with respect to
such taxes. The 1997 Tax Act imposes a required holding period for such
credits. Investors should consult their tax advisers with respect to
foreign withholding taxes and foreign tax credits.
Unit holders desiring to purchase Units for tax-deferred plans and IRAs
should consult their broker for details on establishing such accounts.
Units may also be purchased by persons who already have self-directed
plans established. See "Are Investments in the Trust Eligible for
Retirement Plans?"
Except as specifically provided above, 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. As used herein, the term "U.S. Unit
holder" means an owner of a Unit in the Trust that (a) is (i) for United
States Federal income tax purposes a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof, or (iii) an estate or trust the income of which is
subject to United States Federal income taxation regardless of its
source or (b) does not qualify as a U.S. Unit holder in paragraph (a)
but whose income from a Unit is effectively connected with such Unit
holder's conduct of a United States trade or business. The term also
includes certain former citizens of the United States whose income and
gain on the Units will be taxable. 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.
Are Investments in the Trust Eligible for Retirement Plans?
Units of the Trust are eligible for purchase by Individual Retirement
Accounts, Keogh Plans, pension funds and other tax-deferred retirement
plans. Generally, the Federal income tax relating to capital gains and
income received in each of the foregoing plans is deferred until
distributions are received. Distributions from such plans are generally
treated as ordinary income but may, in some cases, be eligible for
special averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax
laws related thereto and should consult their attorneys or tax advisers
with respect to the establishment and maintenance of any such plan. Such
plans are offered by brokerage firms and other financial institutions.
Fees and charges with respect to such plans may vary.
Page 14
PORTFOLIO
What are the Convertible Bonds?
A portion of the Trust consists of different issues of Convertible
Bonds, all of which are listed on a national securities exchange or are
traded in the over-the-counter market. Convertible Bonds have a
conversion privilege which, under specified circumstances, offers the
holder the right to exchange such security for common stock of the
issuing corporation. Convertible Bonds obligate the issuing company to
pay a stated annual rate of interest and to return the principal amount
after a specified period of time. The income offered by Convertible
Bonds is generally higher than the dividends received from the
underlying common stock, but lower than similar quality non-convertible
debt securities. See "What are the Securities Selected for the Strategic
Income and Growth Trust, Series 1?" for a general description of the
companies.
What are the Equity Securities?
The Trust consists of different issues of Equity Securities issued by
companies listed on a national securities exchange or The Nasdaq Stock
Market or traded in the over-the-counter market. See "What are the
Securities Selected for the Strategic Income and Growth Trust, Series
1?" for a general description of the companies.
Risk Factors. An investment in Units of the Trust should be made with an
understanding of the problems and risks such an investment may entail.
The Trust consists of such of the Convertible Bonds and Equity
Securities listed under "Schedule of Investments" as may continue to be
held from time to time in the Trust and any additional Securities
acquired and held by the Trust pursuant to the provisions of the
Indenture, 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 Securities. However, should any contract for the
purchase of any of the 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 Securities in
accordance with the Indenture, refund the cash and sales charge
attributable to such failed contract to all Unit holders on the next
distribution date.
Because certain of the 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 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 Securities such as those acquired in
connection with a merger or other transaction. See "Rights of Unit
Holders-How May Securities be Removed from the Trust?" Securities,
however, will not be sold by the Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation or
depreciation.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be
in the over-the-counter market. As a result, the existence of a liquid
trading market for the Equity Securities may depend on whether dealers
will make a market in the Equity Securities. There can be no assurance
that a market will be made for any of the Equity Securities, that any
market for the Equity Securities will be maintained or of the liquidity
of the Equity Securities in any markets made. In addition, the Trust may
be restricted under the Investment Company Act of 1940 from selling
Equity Securities to the Sponsor. The price at which the Equity
Securities may be sold to meet redemptions and the value of the Trust
will be adversely affected if trading markets for the Equity Securities
are limited or absent.
An investment in Units should be made with an understanding of the risks
which an investment in common stocks entails, including the risk that
the financial condition of the issuers of the Equity Securities or the
general condition of the common stock market may worsen, and the value
of the Equity Securities and therefore the value of the Units may
decline. Common stocks are especially susceptible to general stock
market movements and to volatile increases and decreases of value as
market confidence in and perceptions of the issuers change. These
perceptions are based on unpredictable factors, including expectations
regarding government, economic, monetary and fiscal policies, inflation
and interest rates, economic expansion or contraction, and global or
Page 15
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.
An investment in Units should also be made with an understanding of the
risks which an investment in convertible bonds entails. Convertible
bonds generally offer income yields that are higher than the dividend
yield, if any, of the underlying common stock, but lower than the yield
of non-convertible debt securities issued by the corporation of similar
investment quality. Convertible bonds are usually priced at a premium to
their conversion value-i.e., the value of the common stock received if
the holder were to exchange the convertible bond. The holder of the
convertible bond may choose at any time to exchange the convertible bond
for a specified number of shares of the common stock of the corporation,
or occasionally a subsidiary company, at a specified price, as defined
by the corporation when the convertible bond is issued. Accordingly, the
value of the convertible bond may generally be expected to increase
(decrease) as the price of the associated common stock increases
(decreases). Also, the market value of convertible bonds tends to be
influenced by the level of interest rates and tends to decline as
interest rates increase and, conversely, to increase as interest rates
decline. Convertible bonds rank senior to common stocks in an issuer's
capital structure, but are junior to non-convertible debt securities. As
convertible bonds are considered junior to any non-convertible debt
securities issued by the corporation, convertible bonds are typically
rated by established credit rating agencies at one level below the
rating on such corporation's non-convertible debt.
All of the Convertible Bonds in the Trust are considered "high-
yield, high-risk," or "junk bonds." In recent years there have been wide
fluctuations in interest rates and thus in the value of fixed-rate debt
obligations generally. These Convertible Bonds are, under most
circumstances, subject to greater market fluctuations and risk of loss
of income and principal than are investments in lower-yielding, higher-
rated securities, and their value may decline precipitously because of
increases in interest rates, not only because the increases in interest
rates generally decrease values, but also because increased interest
rates may indicate an economic slowdown and a decrease in the value of
assets generally that may adversely affect the credit of issuers of high-
yield, high-risk securities, resulting in a higher incidence of defaults
among high-yield, high-risk securities. A slowdown in the economy, or a
development adversely affecting an issuer's creditworthiness, may result
in the issuer being unable to produce sufficient cash flow to meet its
interest and principal requirements. For an issuer that has outstanding
both commercial bank debt and high-yield, high-risk securities, an
increase in interest rates will increase that issuer's interest expense
insofar as the interest rate on the bank debt is fluctuating. The
Sponsor cannot predict future economic policies or their consequences
or, therefore, the course or extent of any similar market fluctuations
in the future.
Page 16
Certain of the Securities in the Trust are in ADR or GDR form. ADRs,
which evidence American Depositary Receipts and GDRs, which evidence
Global Depositary Receipts, represent common stock deposited with a
custodian in a depositary. American Depositary Shares and Global
Depositary Shares (collectively, the "Depositary Receipts") are issued
by a bank or trust company to evidence ownership of underlying
securities issued by a foreign corporation. These instruments may not
necessarily be denominated in the same currency as the securities into
which they may be converted. For purposes of the discussion herein, the
terms ADR and GDR generally include American Depositary Shares and
Global Depositary Shares, respectively.
Depositary Receipts may be sponsored or unsponsored. In an unsponsored
facility, the depositary initiates and arranges the facility at the
request of market makers and acts as agent for the Depositary Receipts
holder, while the company itself is not involved in the transaction. In
a sponsored facility, the issuing company initiates the facility and
agrees to pay certain administrative and shareholder-related expenses.
Sponsored facilities use a single depositary and entail a contractual
relationship between the issuer, the shareholder and the depositary;
unsponsored facilities involve several depositaries with no contractual
relationship to the company. The depositary bank that issues Depositary
Receipts generally charges a fee, based on the price of the Depositary
Receipts, upon issuance and cancellation of the Depositary Receipts.
This fee would be in addition to the brokerage commissions paid upon the
acquisition or surrender of the security. In addition, the depositary
bank incurs expenses in connection with the conversion of dividends or
other cash distributions paid in local currency into U.S. dollars and
such expenses are deducted from the amount of the dividend or
distribution paid to holders, resulting in a lower payout per underlying
shares represented by the Depositary Receipts than would be the case if
the underlying share were held directly. Certain tax considerations,
including tax rate differentials and withholding requirements, arising
from applications of the tax laws of one nation to nationals of another
and from certain practices in the Depositary Receipts market may also
exist with respect to certain Depositary Receipts. In varying degrees,
any or all of these factors may affect the value of the Depositary
Receipts compared with the value of the underlying shares in the local
market. In addition, the rights of holders of Depositary Receipts may be
different than those of holders of the underlying shares, and the market
for Depositary Receipts may be less liquid than that for the underlying
shares. Depositary Receipts are registered securities pursuant to the
Securities Act of 1933 and may be subject to the reporting requirements
of the Securities Exchange Act of 1934.
For the Securities that are Depositary Receipts, currency fluctuations
will affect the U.S. dollar equivalent of the local currency price of
the underlying domestic share and, as a result, are likely to affect the
value of the Depositary Receipts and consequently the value of the
Securities. The foreign issuers of securities that are Depositary
Receipts may pay dividends in foreign currencies which must be converted
into dollars. Most foreign currencies have fluctuated widely in value
against the United States dollar for many reasons, including supply and
demand of the respective currency, the soundness of the world economy
and the strength of the respective economy as compared to the economies
of the United States and other countries. Therefore, for any securities
of issuers (whether or not they are in Depositary Receipt form) whose
earnings are stated in foreign currencies, or which pay dividends in
foreign currencies or which are traded in foreign currencies, there is a
risk that their United States dollar value will vary with fluctuations
in the United States dollar foreign exchange rates for the relevant
currencies.
Unit holders will be unable to dispose of any of the Securities in the
Portfolio, as such, and will not be able to vote the Securities. As the
holder of the Securities, the Trustee will have the right to vote all of
the voting stocks in the Trust and will vote such stocks in accordance
with the instructions of the Sponsor.
Investors should note that because the Underwriter uses the list of
Securities which comprise the portfolio in its independent capacity as
an investment advisor to individuals, mutual funds, employee benefit
plans and other institutions and persons and distributes this
information to various individuals and entities, the Underwriter may
recommend or effect from time to time the purchase or sale of one or
more of the Securities. This may have an effect on the prices of the
Securities which is adverse to the interest of the purchasers of Units
of the Trust. Additionally, this may have an impact on the price paid by
the Trust for the Securities as well as the price received upon
redemption of the Units or upon the termination of the Trust. Investors
Page 17
should also note that Securities will not be removed from the Trust and
additional Units of the Trust may be created even if the Underwriter no
longer believes certain or all of the Securities have the potential to
provide capital appreciation over the life of the Trust or issues a sell
recommendation regarding any of the Securities included in the Trust.
The Underwriter has acquired or may acquire the Securities for the
Sponsor and thereby benefits from transaction fees. The Underwriter in
its general securities business acts as agent or principal in connection
with the purchase and sale of securities, including the Securities in
the Trust, and may act as a market maker in certain of the Equity
Securities. The Underwriter also from time to time may issue reports on
and make recommendations relating to securities, which may include the
Securities.
What are the Securities Selected for the Strategic Income and Growth
Trust, Series 1?
CONVERTIBLE BONDS
_________________
Micron Technology, Inc., headquartered in Boise, Idaho, through
subsidiaries, designs, develops, makes and sells semiconductor memory
products, personal computer systems, custom complex printed circuit
board, memory module and system level assemblies.
National Semiconductor Corporation, headquartered in Santa Clara,
California, designs, develops, makes and markets analog intensive, mixed-
signal and other integrated circuits for applications in the
communications, personal systems, consumer and industrial markets. The
company markets its products throughout the world through a direct sales
force and a network of distributors.
Tenet Healthcare Corporation, headquartered in Santa Barbara,
California, owns or operates 131 acute care hospitals and related
healthcare facilities in 22 states; and holds investments in other
healthcare companies.
EQUITY SECURITIES
_________________
BASIC MATERIALS
E.I. du Pont de Nemours and Company, headquartered in Wilmington,
Delaware, explores for, develops and produces crude oil and natural gas;
makes polymers, elastomers, finishes and performance films; makes
specialty fibers and chemicals; produces agricultural products; and
makes electronic materials and medical products. The company
participates in five principal business segments-Petroleum Operations;
Polymers; Fibers; Chemicals; and Diversified Businesses.
International Flavors & Fragances, Inc., headquartered in New York, New
York, creates and makes flavors and fragrances used by others to impart
or improve flavor or fragrance in a wide variety of consumer products.
CAPITAL GOODS
Emerson Electric Company, headquartered in St. Louis, Missouri, through
segments, designs, makes and sells electrical, electromechanical and
electronic products and systems.
Minnesota Mining & Manufacturing Company, headquartered in St. Paul,
Minnesota, manufactures industrial, electronic, health, consumer and
information-imaging products for distribution worldwide. The company's
products include adhesives, abrasives, laser imagers and "Scotch" brand
products.
COMMUNICATIONS
Ameritech Corporation, headquartered in Chicago, Illinois, provides
advanced telecommunications services in Illinois, Indiana, Michigan,
Ohio and Wisconsin, including local exchange and toll service, network
access and communications products; cellular and other wireless
services; cable TV; directory and electronic advertising services; and
on-line services.
British Telecommunications plc (ADR), headquartered in London, England,
provides telecommunications services. The company provides local and
long-distance telephone call products and services in the United
Kingdom, telephone exchange lines to homes and businesses, international
telephone calls to and from the United Kingdom and telecommunications
equipment for customers' premises. The company also has international
operations.
Page 18
GTE Corporation, headquartered in Stamford, Connecticut, operates
telephone properties in the United States, Canada, the Dominican
Republic and Venezuela. The company publishes telephone directories,
operates cellular mobile radio telephone systems, provides air-to-ground
telephone service, and supplies command, control and communications
systems.
Telecom Corporation of New Zealand (ADR), headquartered in Wellington,
New Zealand, through subsidiaries, provides local, national, and
international telephone services and other telecommunications services
including cellular, directories, leased circuits, mobile radio, paging
and data communications and distributes telecommunications equipment in
New Zealand.
CONSUMER CYCLICALS
Chrysler Corporation, headquartered in Auburn Hills, Michigan, the third
largest auto maker of United States passenger cars and trucks, makes,
assembles and sells cars and trucks under the brand names "Chrysler,"
"Dodge," "Plymouth," "Eagle" and "Jeep," and related parts and
accessories and provides financial services to customers and dealers.
J.C. Penney Company, Inc., headquartered in Plano, Texas, operates a
nationwide chain of department stores under the J.C. Penney name,
augmented by the JCPenney Catalog, selling mainly apparel, shoes,
jewelry, accessories and home furnishings and operates retail drug
stores. The company also markets life, accident and credit insurance.
CONSUMER STAPLES
Anheuser-Busch Companies, Inc., headquartered in St. Louis,
Missouri, through subsidiaries, brews beer, makes metal beverage
containers, recycles metal and glass beverage containers and operates
theme parks.
B.A.T. Industries plc (ADR), headquartered in London, England, makes
tobacco products including cigarettes, cigars, cigarillos, and pipe
tobaccos. The company also provides life and general insurance,
annuities, pensions, unit trust management, asset management and private
banking services.
H.J. Heinz Company, headquartered in Pittsburgh, Pennsylvania, makes,
packages and sells processed food products, including ketchup and
sauces/condiments, pet food, baby food, frozen meals and snacks, frozen
potatoes and vegetables, soups, beans and pasta. The company also
provides weight control services and sells food products to food service
operators.
Phillip Morris Companies Inc., headquartered in New York, New York, is
the world's largest producer and marketer of consumer packaged goods.
Its five principal operating companies are Kraft Foods, Inc., Miller
Brewing Company, Philip Morris International Inc., Philip Morris U.S.A.
and Philip Morris Capital Corporation.
ENERGY
Amoco Corporation, headquartered in Chicago, Illinois, operates one of
the largest worldwide integrated organizations in the petroleum industry
that explores for, develops and produces crude oil and natural gas. The
company also refines, sells and transports petroleum and related
products, and makes and sells chemical products.
British Petroleum Company plc (ADR), headquartered in London, England,
one of the world's largest petroleum and petrochemical groups, produces,
transports, refines and markets crude oil, natural gas and related
products; and makes and markets petrochemicals and related products. The
company also operates tankers for its own use and for third parties.
Mobil Corporation, headquartered in Fairfax, Virginia, produces,
transports, refines and markets petroleum and natural gas and related
products; and makes and markets chemicals.
Royal Dutch Petroleum Company, headquartered in The Hague, The
Netherlands, owns 60% of the Royal Dutch/Shell Group of companies. These
companies are involved in all phases of the petroleum industry from
exploration to final processing and delivery. The company has no
operations of its own and virtually the whole of its income is derived
from its 60% interest in the Royal Dutch/Shell Group of Companies.
Page 19
REAL ESTATE INVESTMENT TRUSTS (REITs)
American General Hospitality Corporation, headquartered in Dallas,
Texas, through American General Hospitality Operating Partnership, L.P.
(Operating Partnership), of which it has on 88.5% ownership interest, owns
20 hotels containing over 4,600 guest rooms in 13 states.
Duke Realty Investments, Inc., headquartered in Indianapolis, Indiana,
owns and manages a diversified portfolio of over 260 industrial, office
and retail properties located in eight states.
INMC Mortgage Holdings, Inc., headquartered in Pasadena, California,
conducts mortgage conduit activities for jumbo mortgage loans and
provides related financial services.
Kimco Realty Corporation, headquartered in New Hyde Park, New York,
operates over 250 neighborhood and community shopping centers and two
regional malls located in 30 states. The company also holds interests in
62 retail store leases and provides management services for shopping
centers owned by affiliated entities and various real estate joint
ventures.
Nationwide Health Properties, Inc., headquartered in Newport Beach,
California, owns or has investments in over 200 healthcare facilities in
30 states.
FINANCIAL INSTITUTIONS
Banc One Corporation, headquartered in Columbus, Ohio, through
subsidiaries, conducts a general banking business through 1,500 offices
in Arizona, Colorado, Illinois, Indiana, Kentucky, Louisiana, Ohio,
Oklahoma, Texas, Utah, West Virginia and Wisconsin.
Bankers Trust New York Corporation, headquartered in New York, New York,
with subsidiaries, operates a general banking business through offices
in New York City and other cities as well as foreign branches, and
equity investments in banking and financial institutions in numerous
countries. The company also provides finance, advisory, risk management,
transaction processing and trading and positioning services.
Fleet Financial Group, Inc., headquartered in Boston, Massachusetts,
through subsidiaries, conducts a general commercial banking and trust
business through a network of over 1,200 branches, 2,000 ATMs and
telephone banking centers. The company also provides other activities
related to banking and finance.
Marsh & McLennan Companies, Inc., headquartered in New York, New York,
through subsidiaries and affiliates, provides insurance and reinsurance
services worldwide as broker, agent or consultant for clients and
designs, distributes and administers a wide range of insurance and
financial products and services. The company also provides consulting,
securities investment advisory and management services.
National City Corporation, headquartered in Cleveland, Ohio, operates a
full service commercial banking business through over 800 offices in
Indiana, Kentucky, Ohio and Pennsylvania.
NationsBank Corporation, headquartered in Charlotte, North Carolina,
through subsidiaries, conducts a general banking business through over
2,600 offices and over 5,000 automated teller machines in 17 states and
Washington, D.C. The company also offers corporate banking and
investment banking services in the United States and abroad and provides
lending services through over 250 offices in 32 states.
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 10
banking subsidiaries in Delaware, Florida, Indiana, Kentucky,
Massachusetts, New Jersey, Ohio, and Pennsylvania and conducts
nonbanking operations throughout the United States.
United Asset Management Corporation, headquartered in Boston,
Massachusetts, owns investment management subsidiaries which operate as
investment advisers that manage both domestic and international
investment portfolios for corporate, government and union pension funds,
endowments, foundations, mutual funds and individuals.
HEALTHCARE
American Home Products Corporation, headquartered in Madison, New
Jersey, makes healthcare products, infant nutritionals, cardiovascular
and metabolic disease therapies, mental health products, anti-
inflammatory/analgesic products and vaccines, over-the-counter drugs,
medical supplies and diagnostics and food products.
Page 20
Merck & Co., Inc., headquartered in Whitehouse Station, New Jersey,
discovers, develops, makes and markets a broad range of human and animal
health products and services. The company also administers managed
prescription drug programs.
TECHNOLOGY
Lucent Technologies, Inc., headquartered in Murray Hill, New Jersey, is
one of the world's leading designers, developers and manufacturers of
telecommunications systems, software and products and is a leading
global marketer of business communications systems and computers.
Raytheon Company (Class B), headquartered in Lexington, Massachusetts,
makes commercial and defense electronics products; provides energy-
related and other engineering and construction services; makes small
aircraft; and makes major household appliances.
UTILITIES
Cinergy Corp., headquartered in Cincinnati, Ohio, through subsidiaries,
supplies electric and/or gas service in Indiana, Kentucky and Ohio.
Duke Energy Corporation, headquartered in Charlotte, North Carolina,
supplies electricity at retail in over 200 cities, towns and
unincorporated communities in the Piedmont sections of North Carolina
and South Carolina and at wholesale to other incorporated municipalities
and several private utilities. The company serves an area with a
population of approximately 5,100,000. Principal communities served
include Charlotte, Durham, Greensboro and Winston-Salem, North Carolina
and Greenville and Spartanburg, South Carolina. Nantahala Power and
Light Co., a wholly-owned subsidiary, operates 11 hydroelectric stations
and buys supplemental power which provides services to 55,000 customers
located in western North Carolina.
Texas Utilities Company, headquartered in Dallas, Texas, through
subsidiaries, supplies electricity in eastern, north central and western
Texas. The company also provides accounting, financial, computer,
information technology and other administrative services; owns a natural
gas pipeline system; and acquires, stores and delivers fuel gas.
Western Resources, Inc., headquartered in Topeka, Kansas, with
subsidiaries, generates, transmits, distributes, transports and sells
electric energy in Kansas. The company also purchases, transmits,
distributes, transports and sells natural gas in Kansas and Oklahoma.
Westar Security, Inc., a wholly-owned subsidiary, provides monitored
electronic security services.
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 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 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 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 Securities ("Replacement Securities"). Any
Replacement Security will be identical to those which were the subject
of the Failed Contract Obligation. The Replacement Securities must be
purchased within 20 days after delivery of the notice of a failed
contract, and the purchase price may not exceed the amount of funds
reserved for the purchase of the Failed Contract Obligations.
If the right of limited substitution described in the preceding
paragraphs is not utilized to acquire Replacement Securities in the
event of a failed contract, the Sponsor will refund the sales charge
attributable to such Failed Contract Obligations to all Unit holders of
the Trust, and the Trustee will distribute the principal attributable to
such Failed Contract Obligations not more than 120 days after the date
on which the Trustee received a notice from the Sponsor that a
Replacement Security would not be deposited in the Trust. In addition,
Unit holders should be aware that, at the time of receipt of such
principal, they may not be able to reinvest such proceeds in other
securities at a yield equal to or in excess of the yield which such
Page 21
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 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 Securities between the time
of the cash deposit and the purchase of the Securities and because the
Trust will pay the associated brokerage fees.
The Trust consists of the 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 Securities
acquired and held by the Trust pursuant to the provisions of the
Indenture (including provisions with respect to deposits into the Trust
of Securities or cash in connection with the issuance of additional
Units).
Once all of the 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 Securities only
under limited circumstances. See "Rights of Unit Holders-How May
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 from
and after January 1, 2000. 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 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 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 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 Securities. The
Sponsor is unable to predict whether any such litigation will be
instituted, or if instituted, whether such litigation might have a
material adverse effect on the Trust.
Legislation. From time to time Congress considers proposals to reduce
the rate of the dividends-received deductions. Enactment into law of a
proposal to reduce the rate would adversely affect the after-tax return
to investors who can take advantage of the deduction. Unit holders are
urged to consult their own tax advisers. Further, at any time after the
Initial Date of Deposit, legislation may be enacted that could
negatively affect the Securities in the Trust or the issuers of the
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 Securities to achieve their business goals.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. During the initial
offering period, the Public Offering Price is based on the aggregate
offering side evaluation of the Convertible Bonds and 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 an initial sales charge equal to the difference between the maximum
Page 22
sales charge of 5.0% of the Public Offering Price and the maximum
remaining deferred sales charge, initially $.350 per Unit. 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
January 20, 1999, a deferred sales charge of $.050 will be assessed per
Unit per month. Units purchased subsequent to the initial deferred sales
charge payment but still during the initial offering period will be
subject to the initial sales charge and the remaining deferred sales
charge payments not yet collected. The deferred sales charge will be
paid from funds in the Income and/or Capital Accounts, if sufficient, or
from the periodic sale of Securities. The total maximum sales charge
assessed to Unit holders on a per Unit basis will be 5.0% of the Public
Offering Price (equivalent to 5.076% of the net amount invested,
exclusive of the deferred sales charge). Also added to the Public
Offering Price is a pro rata share of accumulated dividends, if any, in
the Income Account and a proportionate share of interest accrued but
unpaid on the Convertible Bonds after the First Settlement Date to the
date of settlement. See "How is Accrued Interest Treated?" Upon
completion of the deferred sales charge period, the secondary market
Public Offering Price per Unit for the Trust will not include deferred
payments, but will instead include only a one-time initial sales charge
of 5.0% of the Public Offering Price (equivalent to 5.263% of the net
amount invested), which will be reduced by 1/2 of 1% on each March 1,
commencing March 1, 1999 to a minimum sales charge of 3.0%.
During the initial offering period, the Sponsor's Repurchase Price is
based on the aggregate offering side evaluation of the Convertible Bonds
and 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 divided by the number of Units of the Trust
outstanding, reduced by the deferred sales charge not yet paid. For
secondary market sales after the completion of the initial offering
period, the Sponsor's Repurchase Price is based on the aggregate bid
side evaluation of the Convertible Bonds and the aggregate underlying
value of the Equity Securities in the Trust (generally determined by the
closing sale prices of listed Equity Securities and the bid prices of
over-the-counter traded Equity Securities), plus or minus cash, if any,
in the Income and Capital Accounts of the Trust, divided by the number
of outstanding Units in the Trust.
The minimum amount which an investor may purchase of the Trust is
$1,000. The Sponsor reserves the right to reject, in whole or in part,
any order for the purchase of Units. The applicable sales charge for
both primary and secondary market sales is reduced by a discount as
indicated below for volume purchases as a percentage of the Public
Offering Price (except for sales made pursuant to a "wrap fee account"
or similar arrangements as set forth below):
<TABLE>
<CAPTION>
Primary and Secondary
_____________________
Percent of Percent of
Dollar Amount of Transaction Offering Net Amount
at Public Offering Price* Price Invested
____________________________ __________ __________
<S> <C> <C>
$ 50,000 but less than $100,000 0.25% 0.2506%
$100,000 but less than $250,000 0.50% 0.5025%
$250,000 but less than $500,000 1.00% 1.0101%
$500,000 or more 2.00% 2.0408%
<FN>
* The breakpoint sales charges are also applied on a Unit basis
utilizing a breakpoint equivalent in the above table of $10 per Unit and
will be applied on whichever basis is more favorable to the investor.
The breakpoints will be adjusted to take into consideration purchase
orders stated in dollars which cannot be completely fulfilled due to the
requirement that only whole Units be issued.
</FN>
</TABLE>
Any such reduced sales charge shall be the responsibility of the selling
Underwriter, broker/dealer, bank or other selling agent. The reduced
sales charge structure will apply on all purchases of Units in the Trust
by the same person on any one day from the Underwriter or any one
broker/dealer, bank or other selling agent. Additionally, Units
purchased in the name of the spouse of a purchaser or in the name of a
child of such purchaser under 21 years of age will be deemed, for the
purposes of calculating the applicable sales charge, to be additional
purchases by the purchaser. The reduced sales charges will also be
applicable to a trustee or other fiduciary purchasing securities for a
single trust estate or single fiduciary account. The purchaser must
Page 23
inform the Underwriter, broker/dealer, bank or other selling agent of
any such combined purchase prior to the sale, in order to obtain the
indicated discount. In addition, with respect to employees, officers and
directors (including their immediate family members, defined as spouses,
children, grandchildren, parents, grandparents, siblings, mothers-in-
law, fathers-in-law, sons-in-law and daughters-in-law, and trustees,
custodians or fiduciaries for the benefit of such persons) of the
Sponsor, Underwriter, broker/dealers, banks or other selling agents and
their subsidiaries and vendors providing services to the Sponsor, Units
may be purchased at the Public Offering Price less the concession the
Sponsor typically allows to dealers and other selling agents.
Investors who purchase Units through registered broker/dealers who
charge periodic fees for financial planning, investment advisory or
asset management services or provide such services in connection with
the establishment of an investment account for which a comprehensive
"wrap fee" charge is imposed may purchase Units in the primary or
secondary market at the Public Offering Price, less the concession the
Sponsor typically would allow such broker/dealer. See "Public Offering-
How are Units Distributed?"
Had the Units of the Trust been available for sale on the business day
prior to the Initial Date of Deposit, the Public Offering Price would
have been as indicated in "Summary of Essential Information." The Public
Offering Price of Units on the date of the prospectus or during the
initial offering period may vary from the amount stated under "Summary
of Essential Information" in accordance with fluctuations in the prices
of the underlying Securities and changes in the amount of interest
accrued but unpaid on the Convertible Bonds. During the initial offering
period, the aggregate value of the Units of the Trust shall be
determined on the basis of the aggregate offering side evaluation of the
Convertible Bonds and 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 value of the Convertible Bonds is
determined by the Evaluator (1) on the basis of current offering prices
for the Convertible Bonds obtained from dealers or brokers who
customarily deal in convertible securities comparable to those held by
the Trust; (2) if such prices are not available for any of the
Convertible Bonds, on the basis of current market prices for comparable
securities; (3) by determining the value of the Convertible Bonds by
appraisal; or (4) by any combination of the above. The aggregate
underlying value of the Equity Securities will be determined in the
following manner: if the Equity Securities are listed, this evaluation
is generally based on the closing sale prices on that exchange (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, 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.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the aggregate bid side
evaluation of the Convertible Bonds and the aggregate underlying value
of the Equity Securities therein, plus or minus cash, if any, in the
Income and Capital Accounts of the Trust plus the applicable sales
charge. The aggregate underlying value of the Equity Securities for
secondary market sales is calculated in the same manner as described
above for sales made during the initial offering period with the
exception that bid prices are used instead of ask prices. The offering
price of the Convertible Bonds in the Trust may be expected to be
greater than the bid price of such Convertible Bonds by approximately 1-
2% of the aggregate principal amount or stated value of such Convertible
Bonds.
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. Delivery of Certificates representing Units so ordered will be
made three business days following such order or shortly thereafter. See
"Rights of Unit Holders-How May Units be Redeemed?" for information
regarding the ability to redeem Units ordered for purchase.
Page 24
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 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 Securities in the Trust and
create additional Units. Units reacquired by the Sponsor during the
initial offering period (at prices based upon the aggregate offering
side evaluation of the Convertible Bonds and the aggregate underlying
value of the Equity Securities in the Trust, plus or minus a pro rata
share of cash, if any, in the Income and Capital Accounts of the Trust),
may be resold at the then current Public Offering Price. Upon the
termination of the initial offering period, unsold Units created or
reacquired during the initial offering period will be sold or resold at
the then current Public Offering Price.
Upon completion of the initial offering, Units repurchased in the
secondary market (see "Public Offering-Will There be a Secondary
Market?") may be offered by this prospectus at the secondary market
public offering price determined in the manner described above.
It is the intention of the Sponsor to qualify Units of the Trust for
sale in a number of states. Sales initially will be made to dealers and
other selling agents at prices which represent a concession or agency
commission of 3.5% of the Public Offering Price, and, for secondary
market sales, 3.5% of the Public Offering Price (or 65% of the then
current maximum sales charge on March 1, 1999 and thereafter).
Effective on each March 1, commencing March 1, 1999, such sales charge
will be reduced by 1/2 of 1% to a minimum sales charge of 3.0%. However,
resales of Units of the Trust by such dealers and other selling agents
to the public will be made at the Public Offering Price described in the
prospectus. The Sponsor reserves the right to change the amount of the
concession or agency commission from time to time. Certain commercial
banks may be making Units of the Trust available to their customers on
an agency basis. A portion of the sales charge paid by these customers
is retained by or remitted to the banks in the amounts indicated above.
Under the Glass-Steagall Act, banks are prohibited from underwriting
Trust Units; however, the Glass-Steagall Act does permit certain agency
transactions and the banking regulators have not indicated that these
particular agency transactions are not permitted under such Act. In
Texas and in certain other states, any banks making Units available must
be registered as broker/dealers under state law.
What are the Sponsor's and Underwriter's Profits?
The Underwriter of the Trust will receive a gross sales commission equal
to 5.0% of the Public Offering Price of the Units (equivalent to 5.076%
of the net amount invested, exclusive of the deferred sales charge),
less any reduced sales charge as described under "Public Offering-How is
the Public Offering Price Determined?" See "Underwriting" for
information regarding the receipt of the excess gross sales commissions
by the Sponsor from the Underwriter and additional concessions available
to the Underwriter, dealers and other selling agents. 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 Securities to the Trust (which is based on the Evaluator's
determination of the aggregate offering price of the underlying
Securities of the Trust on the Initial Date of Deposit as well as
subsequent deposits) and the cost of such Securities to the Sponsor. See
Note (2) of "Schedule of Investments."
In maintaining a market for the Units, the Sponsor or Underwriter will
also realize profits or sustain losses in the amount of any difference
between the price at which Units are purchased and the price at which
Units are resold (which price includes a sales charge of 5.0% subject to
reduction beginning March 1, 1999) or redeemed. The secondary market
public offering price of Units may be greater or less than the cost of
such Units to the Sponsor or Underwriter.
Will There be a Secondary Market?
After the initial offering period, although not obligated to do so, the
Sponsor intends to, and the Underwriter may, maintain a market for the
Units and continuously offer to purchase Units at prices, subject to
change at any time, based upon the aggregate bid side evaluation of the
Convertible Bonds and the aggregate underlying value of the Equity
Page 25
Securities in the Trust plus or minus cash, if any, in the Income and
Capital Accounts of the Trust. All expenses incurred in maintaining a
secondary market, other than the fees of the Evaluator and the costs of
the Trustee in transferring and recording the ownership of Units, will
be borne by the Sponsor. If the supply of Units exceeds demand, or for
some other business reason, the Sponsor or Underwriter may discontinue
purchases of Units at such prices. IF A UNIT HOLDER WISHES TO DISPOSE OF
HIS OR HER UNITS, HE OR SHE SHOULD INQUIRE OF THE SPONSOR OR UNDERWRITER
AS TO CURRENT MARKET PRICES PRIOR TO MAKING A TENDER FOR REDEMPTION TO
THE TRUSTEE. Units subject to a deferred sales charge which are sold or
tendered for redemption prior to such time as the entire deferred sales
charge on such Units has been collected will be assessed the amount of
the remaining deferred sales charge at the time of sale or redemption.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee.
Ownership of Units may be evidenced by registered certificates executed
by the Trustee and the Sponsor. Delivery of certificates representing
Units ordered for purchase is normally made three business days
following such order or shortly thereafter. Certificates are
transferable by presentation and surrender to the Trustee properly
endorsed or accompanied by a written instrument or instruments of
transfer. Certificates to be redeemed must be properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unit
holder must sign exactly as his or her name appears on the face of the
certificate with the signature guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other
signature guaranty program in addition to, or in substitution for,
STAMP, as may be accepted by the Trustee. In certain instances, the
Trustee may require additional documents such as, but not limited to,
trust instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority. Record ownership
may occur before settlement.
Certificates will be issued in fully registered form, transferable only
on the books of the Trustee in denominations of one Unit or any multiple
thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form. The
Trustee will maintain an account for each such Unit holder and will
credit each such account with the number of Units purchased by that Unit
holder. Within two business days of the issuance or transfer of Units
held in uncertificated form, the Trustee will send to the registered
owner of Units a written initial transaction statement containing a
description of the Trust; the number of Units issued or transferred; the
name, address and taxpayer identification number, if any, of the new
registered owner; a notation of any liens and restrictions of the issuer
and any adverse claims to which such Units are or may be subject or a
statement that there are no such liens, restrictions or adverse claims;
and the date the transfer was registered. Uncertificated Units are
transferable through the same procedures applicable to Units evidenced
by certificates (described above), except that no certificate need be
presented to the Trustee and no certificate will be issued upon the
transfer unless requested by the Unit holder. A Unit holder may at any
time request the Trustee to issue certificates for Units.
Although no such charge is now made or contemplated, a Unit holder may
be required to pay $2.00 to the Trustee per certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or exchange. For new certificates
issued to replace destroyed, stolen or lost certificates, the Unit
holder may be required to furnish indemnity satisfactory to the Trustee
and pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
How are Income and Capital Distributed?
The Trustee will distribute any net income received with respect to any
of the 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
Page 26
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 selling broker/dealer. 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
Securities in the Trust, to the extent not used to meet redemptions of
Units or pay expenses, will, however, be distributed on the last day of
each month to Unit holders of record on the fifteenth day of such month
if the amount available for distribution equals at least $0.01 per Unit.
The Trustee is not required to pay interest on funds held in the Capital
Account of the Trust (but may itself earn interest thereon and therefore
benefit from the use of such funds). Notwithstanding, distributions of
funds in the Capital Account, if any, will be made on the last day of
each December to Unit holders of record as of December 15. See "What is
the Federal Tax Status of Unit Holders?"
It is anticipated that the deferred sales charge will be collected from
the Capital Account and that amounts in the Capital Account will be
sufficient to cover the cost of the deferred sales charge. However, to
the extent that amounts in the Capital Account are insufficient to
satisfy the then current deferred sales charge obligation, Securities
may be sold to meet such shortfall. Distributions of amounts necessary
to pay the deferred portion of the sales charge will be made to an
account designated by the Sponsor for purposes of satisfying Unit
holders' deferred sales charge obligations.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of any distribution made by
the Trust if the Trustee has not been furnished the Unit holder's tax
identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and
may be recovered by the Unit holder only when filing a tax return. Under
normal circumstances the Trustee obtains the Unit holder's tax
identification number from the selling broker. However, a Unit holder
should examine his or her statements from the Trustee to make sure that
the Trustee has been provided a certified tax identification number in
order to avoid this possible "back-up withholding." In the event the
Trustee has not been previously provided such number, one should be
provided as soon as possible.
Within a reasonable time after the Trust is terminated, each Unit holder
will, upon surrender of his or her Units for redemption, receive: (i)
the pro rata share of the amounts realized upon the disposition of
Securities, unless he or she elects an In-Kind Distribution as described
under "Other Information-How May the Indenture be Amended or
Terminated?" and (ii) a pro rata share of any other assets of the Trust,
less expenses of the Trust.
The Trustee will credit to the Income Account of the Trust any income or
dividends received on the Securities therein, including that part of the
proceeds of any disposition of Convertible Bonds which represents
accrued interest. 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.
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 Securities
sold during the year and the 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
Page 27
City of New York, the certificates representing the Units to be
redeemed, or in the case of uncertificated Units, delivery of a request
for redemption, duly endorsed or accompanied by proper instruments of
transfer with signature guaranteed as explained above (or by providing
satisfactory indemnity, as in connection with lost, stolen or destroyed
certificates), and payment of applicable governmental charges, if any.
No redemption fee will be charged. On the third business day following
such tender, the Unit holder will be entitled to receive in cash an
amount for each Unit equal to the Redemption Price per Unit next
computed after receipt by the Trustee of such tender of Units. The "date
of tender" is deemed to be the date on which Units are received by the
Trustee (if such day is a day 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 sales
charge on such Units has been collected will be assessed the amount of
remaining deferred sales charge at the time of redemption.
Any Unit holder tendering 2,500 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. Unit holders electing an In-Kind Distribution will
receive a cash payment representing their proportionate amount of the
Convertible Bonds. However, no In-Kind Distribution requests submitted
during the nine business days prior to the Trust's 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 or her 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 Securities in the manner
described below.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of the principal amount of a
Unit redemption if the Trustee has not been furnished the redeeming Unit
holder's tax identification number in the manner required by such
regulations. For further information regarding this withholding, see
"Rights of Unit Holders-How are Income and Capital Distributed?" In the
event the Trustee has not been previously provided such number, one must
be provided at the time redemption is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of the Trust to the extent that funds are
available for such purpose, or from the Capital Account. All other
amounts paid on redemption shall be withdrawn from the Capital Account
of the Trust.
The Trustee is empowered to sell Securities of the Trust in order to
make funds available for redemption. To the extent that Securities are
sold, the size and diversity of the Trust will be reduced. Such sales
may be required at a time when Securities would not otherwise be sold
and might result in lower prices than might otherwise be realized.
The Redemption Price per Unit will be determined on the basis of the
aggregate bid side evaluation of the Convertible Bonds and 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 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 Securities not applied to the purchase of such Securities; (2)
the aggregate value of the Convertible Bonds based on the bid prices of
Page 28
the Convertible Bonds and 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) interest accrued on the Convertible Bonds and
dividends receivable on the Equity Securities trading ex-dividend as of
the date of computation; and deducting therefrom: (1) amounts
representing any applicable taxes or governmental charges payable out of
the Trust; (2) any amounts owing to the Trustee for its advances; (3) an
amount representing estimated accrued expenses of the Trust, including
but not limited to fees and expenses of the Trustee (including legal and
auditing fees), the Evaluator and supervisory fees, if any; (4) cash
held for distribution to Unit holders of record of the Trust as of the
business day prior to the evaluation being made; and (5) other
liabilities incurred by the Trust; and finally dividing the results of
such computation by the number of Units of the Trust outstanding as of
the date thereof. The Redemption Price per Unit will be assessed the
amount, if any, of the remaining deferred sales charge at the time of
redemption.
The aggregate value of the Convertible Bonds will be determined (1) on
the basis of current bid prices of the Convertible Bonds obtained from
dealers or brokers who customarily deal in convertible securities
comparable to those held by the Trust, (2) on the basis of bid prices
for convertible securities comparable to any convertible securities for
which bid prices are not available, (3) by determining the value of the
convertible securities by appraisal, or (4) by any combination of the
above.
The aggregate value of the Equity Securities will be determined in the
following manner: if the Equity Securities are listed, this evaluation
is generally based on the closing sale prices on that exchange (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, 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 of the market (as appropriate) or (c) by any combination of the
above.
The difference between the bid and offering prices of the Convertible
Bonds may be expected to average 1-2% of the principal amount or stated
value. Therefore, the price at which Units may be redeemed could be less
than the price paid by the Unit holder.
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.
How May Units be Purchased by the Sponsor or Underwriter?
The Trustee shall notify the Sponsor and Underwriter of any tender of
Units for redemption. If the Sponsor's or Underwriter's bid in the
secondary market at that time equals or exceeds the Redemption Price per
Unit, it may purchase such Units by notifying the Trustee before 1:00
p.m. Eastern time on the same business day and by making payment
therefor to the Unit holder not later than the day on which the Units
would otherwise have been redeemed by the Trustee. Units held by the
Sponsor or Underwriter may be tendered to the Trustee for redemption as
any other Units. In the event the Sponsor or Underwriter does not
purchase Units, the Trustee may sell Units tendered for redemption in
the over-the-counter market, if any, as long as the amount to be
received by the Unit holder is equal to the amount he or she would have
received on redemption of the Units.
The offering price of any Units acquired by the Sponsor or Underwriter
will be in accord with the Public Offering Price described in the then
Page 29
effective prospectus describing such Units. Any profit or loss resulting
from the resale or redemption of such Units will belong to the Sponsor
or Underwriter.
How May 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 a 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 principal, interest or dividends or there exists any
legal question or impediment affecting such Security, that the issuer of
the Security has breached a covenant which would affect the payments of
principal, interest or dividends, the credit standing of the issuer or
otherwise impair the sound investment character of the Security, that
the issuer has defaulted on the payment on any other of its outstanding
obligations, or that the price of the 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 Security 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 Securities is prohibited. The Sponsor shall instruct the Trustee to
reject any offer made by an issuer of any of the Convertible Bonds to
issue new obligations in exchange and substitution for any Convertible
Bonds pursuant to a refunding or refinancing plan, except that the
Sponsor may instruct the Trustee to accept such an offer or to take any
other action with respect thereto as the Sponsor may deem proper if the
issuer is in default with respect to such Convertible Bonds or in the
written opinion of the Sponsor the issuer will probably default in
respect to such Convertible Bonds in the foreseeable future. Any
obligations so received in exchange or substitution will be held by the
Trustee subject to the terms and conditions in the Indenture to the same
extent as Convertible Bonds originally deposited thereunder. Within five
days after the deposit of obligations in exchange or substitution for
underlying Convertible Bonds, the Trustee is required to give notice
thereof to each Unit holder of the affected Trust, identifying the
Convertible Bonds eliminated and the Convertible Bonds substituted
therefor.
Pursuant to the Indenture and with limited exceptions, the Trustee may
sell any securities or other property acquired in exchange for Equity
Securities such as those acquired in connection with a merger or other
transaction. If offered such new or exchanged securities or property,
the Trustee shall reject the offer. However, in the event such
securities or property are nonetheless acquired by the Trust, they may
be accepted for deposit in the Trust and either sold by the Trustee or
held in the Trust pursuant to the direction of the Sponsor (who may rely
on the advice of the Portfolio Supervisor). Proceeds from the sale of
Equity Securities (or any securities or other property received by the
Trust in exchange for Equity Securities) by the Trustee are credited to
the Capital Account of the Trust for distribution to Unit holders or to
meet redemptions. The Trustee may from time to time retain and pay
compensation to the Sponsor (or an affiliate of the Sponsor) to act as
agent for the Trust with respect to selling Equity Securities from the
Trust. In acting in such capacity the Sponsor or its affiliate will be
held subject to the restrictions under the Investment Company Act of
1940, as amended.
Pursuant to the Indenture, the Trustee is not permitted to exercise the
conversion option on any of the Convertible Bonds in the Trust or
continue to hold securities received upon such exercise in the Trust. If
any of the Convertible Bonds are called for redemption, the Sponsor in
consultation with the Portfolio Supervisor will instruct the Trustee to
either (i) tender the Convertible Bonds for redemption; (ii) sell the
Convertible Bonds prior to redemption; or (iii) exercise the conversion
option on the Convertible Bonds and exchange the Convertible Bonds at
the specified price for a specified number of shares of common stock of
the issuer; and then sell the shares of common stock received upon the
exercise of such option.
The Trustee may also sell 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 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
Page 30
of individual issues of Securities. To the extent this is not
practicable, the composition and diversity of the 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 UNDERWRITER, SPONSOR, TRUSTEE AND EVALUATOR
Who is the Underwriter?
The Ohio Company is a full-service investment banking and brokerage firm
headquartered in Columbus, Ohio with over 50 branch offices spread
throughout Ohio, Florida, Indiana, Michigan and West Virginia. The Ohio
Company provides retail brokerage services with over 200 investment
executives and institutional service with eight investment executives. A
wide array of financial services are provided including: equity research
(following approximately 125 companies), Nasdaq and NYSE equity trading
(making markets in over 80 stocks and providing the services of a
dedicated NYSE floor broker), corporate and public finance, taxable and
municipal bond trading desks and asset management (approximately $2.0
billion under active management.)
Founded in 1925, The Ohio Company has a current capital position of
nearly $35 million, ranking near the top of regional securities firms.
The Ohio Company has built and maintained a reputation for over 70 years
of providing high quality investment banking and brokerage service to
institutions, corporations, municipalities and individuals.
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 Series), The First Trust Insured Corporate Trust, The
First Trust of Insured Municipal Bonds and The First Trust GNMA. First
Trust introduced the first insured unit investment trust in 1974 and to
date more than $9 billion in First Trust unit investment trusts have
been deposited. The Sponsor's employees include a team of professionals
with many years of experience in the unit investment trust industry. The
Sponsor is a member of the National Association of Securities Dealers,
Inc. and Securities Investor Protection Corporation and has its
principal offices at 1001 Warrenville Road, Lisle, Illinois 60532;
telephone number (630) 241-4141. As of December 31, 1996, the total
partners' capital of Nike Securities L.P. was $9,005,203 (audited).
(This paragraph relates only to the Sponsor and not to the Trust or to
any series thereof. 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 Securities. For information
relating to the responsibilities of the Trustee under the Indenture,
reference is made to the material set forth under "Rights of Unit
Holders."
The Trustee and any successor trustee may resign by executing an
instrument in writing and filing the same with the Sponsor and mailing a
copy of a notice of resignation to all Unit holders. Upon receipt of
such notice, the Sponsor is obligated to appoint a successor trustee
promptly. If the Trustee becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, the Sponsor may
remove the Trustee and appoint a successor as provided in the Indenture.
If upon resignation of a trustee no successor has accepted the
appointment within 30 days after notification, the retiring trustee may
Page 31
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 Securities. In the event of the failure of the
Sponsor to act under the Indenture, the Trustee may act thereunder and
shall not be liable for any action taken by it in good faith under the
Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or upon or in
respect of 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
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%
Page 32
of the Unit holders of the Trust or by the Trustee when the value of the
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 Securities
deposited in such Trust during the initial 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 a broker/dealer,
including the Sponsor. If the Trust is liquidated because of the
redemption of unsold Units of the Trust by a broker/dealer, the Sponsor
will refund to each purchaser of Units of the Trust the entire sales
charge paid by such purchaser. In the event of termination, written
notice thereof will be sent by the Trustee to all Unit holders of the
Trust. Within a reasonable period after termination, the Trustee will
follow the procedures set forth under "Rights of Unit Holders-How are
Income and Capital Distributed?"
Commencing during the period beginning nine business days prior to, and
no later than, the Mandatory Termination Date, 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
Securities. Written notice of any termination of the Trust specifying
the time or times at which Unit holders may surrender their certificates
for cancellation shall be given by the Trustee to each Unit holder at
his or her address appearing on the registration books of the Trust
maintained by the Trustee. At least 60 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 2,500 Units of the Trust, rather than to receive payment
in cash for such Unit holder's pro rata share of the amounts realized
upon the disposition by the Trustee of Securities. Unit holders electing
an In-Kind Distribution will receive a cash payment representing their
proportionate amount of the Convertible Bonds. To be effective, the
election form, together with surrendered certificates and other
documentation required by the Trustee, must be returned to the Trustee
at least ten business days prior to the Mandatory Termination Date of
the Trust. Unit holders not electing a distribution of shares of
Securities will receive a cash distribution from the sale of the
remaining 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 Indenture, 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 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 Securities are sold prior to the Mandatory Termination
Date, Unit holders will not benefit from any appreciation they would
have received on the Securities had the Securities not been sold at such
time. The Trustee will then distribute to each Unit holder his or her
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.
UNDERWRITING
The Underwriter named below has purchased Units in the following amount:
<TABLE>
<CAPTION>
Number
Name Address of Units
_______ __________ ________
<S> <C> <C>
The Ohio Company 155 East Broad Street 20,241
Columbus, OH 43215 =======
</TABLE>
Page 33
On the Initial Date of Deposit, the Underwriter of the Trust became the
owner of the Units of the Trust and entitled to the benefits thereof, as
well as the risks inherent therein.
The Underwriter Agreement provides that a public offering of the Units
of the Trust will be made at the Public Offering Price described in the
Prospectus. Units may also be sold to or through dealers and others
during the initial offering period and in the secondary market at prices
representing a concession or agency commission as described in "Public
Offering-How are Units Distributed?"
The Underwriter has agreed to underwrite additional Units of the Trust
as they become available. The Sponsor will receive from the Underwriter
the difference between the gross sales commission and the Underwriter
concession listed below. The Underwriter concession will be calculated
as a percentage of the Public Offering Price per Unit according to the
following schedule:
Underwriting Concession
____________ __________
Less than $15,000,000 3.60%
$15,000,000 but less than $20,000,000 3.75%
$20,000,000 but less than $25,000,000 3.90%
$25,000,000 or more 4.00%
From time to time the Sponsor may implement programs under which the
Underwriter and dealers of the Trust may receive nominal awards from the
Sponsor for each of their registered representatives who have sold a
minimum number of UIT Units during a specified time period. In addition,
at various times the Sponsor may implement other programs under which
the sales force of the Underwriter or dealers may be eligible to win
other nominal awards for certain sales efforts, or under which the
Sponsor will reallow to any such Underwriter or dealer that sponsors
sales contests or recognition programs conforming to criteria
established by the Sponsor, or participates in sales programs sponsored
by Sponsor, an amount not exceeding the total applicable sales charges
on the sales generated by such person at the public offering price
during such programs. Also, the Sponsor in its discretion may from time
to time pursuant to objective criteria established by the Sponsor pay
fees to the Underwriter or qualifying dealers for certain services or
activities which are primarily intended to result in sales of Units of
the Trust. Such payments are made by the Sponsor out of its own assets,
and not out of the assets of the Trust. These programs will not change
the price Unit holders pay for their Units or the amount that the Trust
will receive from the Units sold.
The Sponsor may from time to time in its advertising and sales materials
compare the then current estimated returns on the Trust and returns over
specified periods on other similar Trusts sponsored by Nike Securities
L.P. with returns on 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.
Information on percentage changes in the dollar value of Units, on the
basis of changes in Unit price may be included from time to time in
advertisements, sales literature, reports and other information
furnished to current or prospective Unit holders. Total return figures
are not averaged, and may not reflect deduction of the sales charge,
which would decrease the return. Average annualized return figures
reflect deduction of the maximum sales charge. No provision is made for
any income taxes payable.
Past performance may not be indicative of future results. The Trust'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, or performance data from Lipper Analytical Services, Inc. and
Morningstar Publications, Inc. or from publications such as Money, The
New York Times, U.S. News and World Report, Business Week, Forbes or
Fortune. As with other performance data, performance comparisons should
not be considered representative of the Trust's relative performance for
any future period.
Page 34
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
FT 237
We have audited the accompanying statement of net assets, including the
schedule of investments, of FT 237, comprised of Strategic Income and
Growth Trust, Series 1, as of the opening of business on February 5,
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 February 5,
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 237,
comprised of Strategic Income and Growth Trust, Series 1 at the opening
of business on February 5, 1998 in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
February 5, 1998
Page 35
Statement of Net Assets
STRATEGIC INCOME AND GROWTH TRUST, SERIES 1
FT 237
At the Opening of Business on the Initial Date of Deposit
February 5, 1998
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Securities represented by purchase contracts (1) (2) $199,377
Accrued interest on underlying convertible bonds (2) (3) 238
Organizational and offering costs (4) 45,000
________
244,615
Less distributions payable (3) (238)
Less accrued organizational and offering costs (4) (45,000)
Less liability for deferred sales charge (5) (7,084)
________
Net assets $192,293
========
Units outstanding 20,241
ANALYSIS OF NET ASSETS
Cost to investors (6) $202,414
Less sales charge (6) (10,121)
________
Net assets $192,293
========
<FN>
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Securities listed under "Schedule of
Investments" is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $250,000 issued by The Chase
Manhattan Bank has been deposited with the Trustee as collateral, which
is sufficient to cover the monies necessary for the purchase of the
Securities pursuant to contracts for the purchase of such Securities.
(3) The Trustee will advance to the Trust the amount of net interest
accrued on the convertible bonds to February 10, 1998, the First
Settlement Date, for distribution to the Sponsor as the Unit holder of
record.
(4) The Trust will bear all or a portion of its estimated organizational
and offering costs which will be deferred and charged off over a period
not to exceed five years from the Initial Date of Deposit. The estimated
organizational and offering costs are based on 1,500,000 Units of the
Trust expected to be issued. To the extent the number of Units issued is
larger or smaller, the estimate will vary.
(5) Represents the amount of mandatory distributions from the Trust
($.350 per Unit), payable to the Sponsor in seven 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 January 20, 1999. If Units are redeemed
prior to January 20, 1999, the remaining amount of the deferred sales
charge applicable to such Units will be payable at the time of redemption.
(6) The aggregate cost to investors includes a sales charge computed at
the rate of 5.0% of the Public Offering Price (equivalent to 5.076% of
the net amount invested, exclusive of the deferred sales charge),
assuming no reduction of sales charge as described under "Public
Offering-How is the Public Offering Price Determined?"
</FN>
</TABLE>
Page 36
Schedule of Investments
STRATEGIC INCOME AND GROWTH TRUST, SERIES 1
FT 237
At the Opening of Business on the Initial Date of Deposit-February 5, 1998
<TABLE>
<CAPTION>
Convertible Bonds
Percentage
Aggregate of Aggregate Cost of
Principal Name of Issuer Offering Redemption Securities
Amount of Convertible Bonds (1) (2) Rating (3) Price Provisions (4) to Trust (5)
_________ ___________________________ _________ ___________ _____________ ____________
<C> <S> <C> <C> <C> <C>
$6,000 Micron Technology Incorporated
7.00%, Due 07/01/2004 B+ 3.07% 2001 @ 103 $6,120
6,000 National Semiconductor Corporation
6.50%, Due 10/01/2002 BB 2.95% 1998 @ 103.71 5,888
6,000 Tenet Healthcare Corporation
6.00%, Due 12/01/2005 B+ 2.73% 1999 @ 103 5,445
</TABLE>
<TABLE>
<CAPTION>
Equity Securities Market
Value per
Share of
Number Ticker Symbol and Equity
of Shares Name of Issuer of Equity Securities (1) Securities
_________ _______________________________________ __________
<C> <S> <C> <C> <C>
BASIC MATERIALS
42 DD E.I. du Pont de Nemours and Company 1.26% $59.688 2,507
83 IFF International Flavors & Fragances, Inc. 1.81% 43.500 3,611
CAPITAL GOODS
37 EMR Emerson Electric Company 1.14% 61.688 2,282
33 MMM Minnesota Mining & Manufacturing Company 1.45% 87.813 2,898
COMMUNICATIONS
76 AIT Ameritech Corporation 1.60% 42.000 3,192
60 BTY British Telecommunications plc (ADR) 2.98% 98.938 5,936
113 GTE GTE Corporation 3.07% 54.125 6,116
171 NZT Telecom Corporation of New Zealand (ADR) 3.17% 36.938 6,316
CONSUMER CYCLICALS
166 C Chrysler Corporation 3.02% 36.313 6,028
88 JCP J.C. Penney Company, Inc. 2.95% 66.750 5,874
CONSUMER STAPLES
48 BUD Anheuser-Busch Companies, Inc. 1.09% 45.188 2,169
294 BTI B.A.T. Industries plc (ADR) 2.80% 19.000 5,586
39 HNZ H.J. Heinz Company 1.10% 56.313 2,196
117 MO Phillip Morris Companies Inc. 2.49% 42.375 4,958
ENERGY
73 AN Amoco Corporation 3.12% 85.250 6,223
82 BP British Petroleum Company plc (ADR) 3.34% 81.250 6,663
51 MOB Mobil Corporation 1.81% 70.813 3,611
70 RD Royal Dutch Petroleum Company (6) 1.86% 52.875 3,701
REITS
248 AGT American General Hospitality Corporation 3.45% 27.750 6,882
289 DRE Duke Realty Investments, Inc. 3.44% 23.750 6,864
270 NDE INMC Mortgage Holdings, Inc. 3.60% 26.563 7,172
</TABLE>
Page 37
Schedule of Investments (cont.)
STRATEGIC INCOME AND GROWTH TRUST, SERIES 1
FT 237
At the Opening of Business on the Initial Date of Deposit-February 5, 1998
<TABLE>
<CAPTION>
Equity Securities
Market
Percentage Value per
of Aggregate Share of Cost of
Number Ticker Symbol and Offering Equity Securities
of Shares Name of Issuer of Equity Securities (1) Price Securities to Trust (5)
_________ _______________________________________ ____________ __________ ____________
<C> <S> <C> <C> <C>
REITS (continued)
210 KIM Kimco Realty Corporation 3.63% $ 34.500 $ 7,245
275 NHP Nationwide Health Properties, Inc. 3.58% 25.938 7,133
FINANCIAL INSTITUTIONS
55 ONE Banc One Corporation 1.66% 60.063 3,304
70 BT Bankers Trust New York Corporation 3.77% 107.500 7,525
37 FLT Fleet Financial Group, Inc. 1.39% 75.000 2,775
72 MMC Marsh & McLennan Companies, Inc. 2.72% 75.313 5,423
34 NCC National City Corporation 1.08% 63.313 2,153
49 NB NationsBank Corporation 1.55% 62.875 3,081
74 PNC PNC Bank Corp. 2.03% 54.563 4,038
212 UAM United Asset Management Corporation 2.40% 22.563 4,783
HEALTHCARE
32 AHP American Home Products Corporation 1.45% 90.375 2,892
28 MRK Merck & Co., Inc. 1.61% 114.938 3,218
TECHNOLOGY
20 LU Lucent Technologies, Inc. 0.95% 94.563 1,891
40 RTN/B Raytheon Company (Class B) 1.10% 54.688 2,188
UTILITIES
166 CIN Cinergy Corp. 2.82% 33.875 5,623
114 DUK Duke Energy Corporation 3.12% 54.563 6,220
146 TXU Texas Utilities Company 2.97% 40.625 5,931
139 WR Western Resources, Inc. 2.87% 41.125 5,716
______ ________
Total Investments 100% $199,377
====== ========
____________
<FN>
(1) All Securities are represented by regular way contracts to purchase
such Securities for the performance of which an irrevocable letter of
credit has been deposited with the Trustee. The contracts to purchase
Securities were entered into by the Sponsor on February 5, 1998.
(2) The number of shares of common stock per $1,000 par value into which
each of the Convertible Bonds are convertible is as follows:
Micron Technology Incorporated 14.8272 shares until 07/01/2004
National Semiconductor Corporation 23.375 shares until 10/01/2002
Tenet Healthcare Corporation 25.9043 shares until 12/01/2005*
* The Convertible Bonds of Tenet Healthcare Corporation (Tenet) are
convertible into shares of Vencor, Inc. and not into shares of Tenet.
However, Tenet is responsible for the principal and interest payments on
the bonds.
(3) All ratings are by Standard & Poor's. All such ratings were obtained
from an information reporting service. See "Description of Bond Ratings."
(4) There is shown under this heading the year in which each issue of
Convertible Bonds initially is redeemable and the redemption price for
that year or, if currently redeemable, the redemption price in effect on
Page 38
the Initial Date of Deposit. Issues of Convertible Bonds are redeemable
at declining prices (but not below par value) in subsequent years.
Redemption pursuant to call provisions generally will occur at times
when the redeemed Convertible Bonds have an offering side valuation
which represents a premium over par or for original issue discount
Convertible Bonds a premium over the accreted value. To the extent that
the Convertible Bonds were deposited in the Trust at a price higher than
the price at which they are redeemed, this will represent a loss of
capital when compared with the original Public Offering Price of the
Units. Conversely, to the extent that the Convertible Bonds were
acquired at a price lower than the redemption price, this will represent
an increase in capital when compared to the original Public Offering
Price of the Units. Distributions will generally be reduced by the
amount of the income which would otherwise have been paid with respect
to redeemed Convertible Bonds and there will be distributed to Unit
holders the principal amount and any premium received on such redemption
(except to the extent the proceeds of the redeemed Convertible Bonds are
used to pay for Unit redemptions).
(5) The cost of the Securities to the Trust represents the aggregate
offering side evaluation of the Convertible Bonds and 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 Securities has been determined by the Evaluator, an
affiliate of the Sponsor. The aggregate underlying value of the
Securities on the Initial Date of Deposit was $199,377. Cost and loss to
Sponsor relating to the Securities sold to the Trust were $200,191
and $814, respectively.
(6) This Equity Security represents the common stock of a foreign
company which trades directly on a United States national securities
exchange.
</FN>
</TABLE>
Page 39
DESCRIPTION OF BOND RATINGS*
Standard & Poor's. A brief description of the applicable Standard &
Poor's rating symbols and their meanings follows:
A Standard & Poor's corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a
specific debt obligation. This assessment may take into consideration
obligors such as guarantors, insurers, or lessees.
The bond rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or
suitability for a particular investor.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable.
Standard & Poor's does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information.
The ratings may be changed, suspended or withdrawn as a result of
changes in, or unavailability of, such information, or for other
circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default-capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance
with the terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangements under the
laws of bankruptcy and other laws affecting creditors' rights.
AAA - Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small
degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds
in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds
in higher rated categories.
Bonds rated `BB,' `B,' `CCC,' `CC' are regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal.
`BB' indicates the least degree of speculation and `C,' the highest
degree of speculation. While such Bonds will likely have some quality
and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB - Bonds rated BB have less near-term vulnerability to default than
other speculative grade debt. However, it faces major ongoing
uncertainties or exposure to adverse business, financial or economic
conditions that could lead to inadequate capacity to meet timely
interest and principal payments.
B - Bonds rated B have greater vulnerability to default but presently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions would likely impair
capacity or willingness to pay interest and repay principal.
CCC - Bonds rated CCC have a current identifiable vulnerability to
default, and is dependent on favorable business, financial and economic
conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal.
CC - The rating CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC rating.
________________
* As published by the rating companies.
Page 40
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
D - Bonds are rated D when the issue is in payment default, or the
obligor has filed for bankruptcy. The D rating is used when interest or
principal payments are not made on the date due, even if the applicable
grace period has not expired, unless S&P believes that such payments
will be made during such grace period.
Plus (+) or Minus (-): The ratings from "AA" to "BBB" may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.
Provisional Ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of
the project being financed by the bonds being rated and indicates that
payment of debt service requirements is largely or entirely dependent
upon the successful and timely completion of the project. This rating,
however, while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of default
upon failure of, such completion. The investor should exercise his/her
own judgment with respect to such likelihood and risk.
Credit Watch: Credit Watch highlights potential changes in ratings of
bonds and other fixed income securities. It focuses on events and trends
which place companies and government units under special surveillance by
S&P's 180-member analytical staff. These may include mergers, voter
referendums, actions by regulatory authorities, or developments gleaned
from analytical reviews. Unless otherwise noted, a rating decision will
be made within 90 days. Issues appear on Credit Watch where an event,
situation, or deviation from trends occurred and needs to be evaluated
as to its impact on credit ratings. A listing, however, does not mean a
rating change is inevitable. Since S&P continuously monitors all of its
ratings, Credit Watch is not intended to include all issues under
review. Thus, rating changes will occur without issues appearing on
Credit Watch.
Moody's Investors Service, Inc. A brief description of the applicable
Moody's Investors Service, Inc. rating symbols and their meanings follows:
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues. Their safety is so absolute that with the occasional
exception of oversupply in a few specific instances, characteristically,
their market value is affected solely by money market fluctuations.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long term risks
appear somewhat larger than in Aaa securities. Their market value is
virtually immune to all but money market influences, with the occasional
exception of oversupply in a few specific instances.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future. The market value of A-rated bonds may be
influenced to some degree by economic performance during a sustained
period of depressed business conditions, but, during periods of
normalcy, A-rated bonds frequently move in parallel with Aaa and Aa
obligations, with the occasional exception of oversupply in a few
specific instances.
A 1 and Baa 1 - Bonds which are rated A 1 and Baa 1 offer the maximum in
security within their quality group, can be bought for possible
upgrading in quality, and additionally, afford the investor an
opportunity to gauge more precisely the relative attractiveness of
offerings in the market place.
Baa - Bonds which are rated Baa are considered as medium grade
obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well. The market value of Baa-rated bonds is more
Page 41
sensitive to changes in economic circumstances, and aside from
occasional speculative factors applying to some bonds of this class, Baa
market valuations will move in parallel with Aaa, Aa, and A obligations
during periods of economic normalcy, except in instances of oversupply.
Ba - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
Ca - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Moody's bond rating symbols may contain numerical modifiers of a generic
rating classification. The modifier 1 indicates that the bond ranks at
the high end of its category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower
end of its generic rating category.
Con.(- - -) - Bonds for which the security depends upon the completion
of some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation
experience, (c) rentals which begin when facilities are completed, or
(d) payments to which some other limiting condition attaches.
Parenthetical rating denotes probable credit stature upon completion of
construction or elimination of basis of condition.
Page 42
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Page 43
CONTENTS:
Summary of Essential Information 4
Strategic Income and Growth Trust, Series 1
FT 237:
What is the FT Series? 6
What are the Expenses and Charges? 7
How is Accrued Interest Treated? 8
What is the Federal Tax Status of Unit Holders? 9
Are Investments in the Trust Eligible for
Retirement Plans? 14
Portfolio:
What are the Convertible Bonds? 15
What are the Equity Securities? 15
Risk Factors 15
What are the Securities Selected for the
Strategic Income and Growth Trust, Series 1? 18
What are Some Additional Considerations
for Investors? 21
Public Offering:
How is the Public Offering Price Determined? 22
How are Units Distributed? 25
What are the Sponsor's and Underwriter's Profits? 25
Will There be a Secondary Market? 25
Rights of Unit Holders:
How is Evidence of Ownership Issued
and Transferred? 26
How are Income and Capital Distributed? 26
What Reports will Unit Holders Receive? 27
How May Units be Redeemed? 27
How May Units be Purchased by the Sponsor
or Underwriter? 29
How May Securities be Removed
from the Trust? 30
Information as to Underwriter, Sponsor, Trustee and
Evaluator:
Who is the Underwriter? 31
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
Underwriting 33
Report of Independent Auditors 35
Statement of Net Assets 36
Notes to Statement of Net Assets 36
Schedule of Investments 37
Description of Bond Ratings 40
____________
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.
The Ohio Company
STRATEGIC INCOME AND GROWTH TRUST
SERIES 1
The Ohio Company
155 East Broad Street
Columbus, Ohio 43215
1-800-255-1825
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
February 5, 1998
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 44
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 237, 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 237, 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 February 5, 1998.
FT 237
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 ) February 5, 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 February 5, 1998 in
Amendment No. 3 to the Registration Statement (Form S-6) (File
No. 333-43403) and related Prospectus of FT 237.
ERNST & YOUNG LLP
Chicago, Illinois
February 5, 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 237 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 237
TRUST AGREEMENT
Dated: February 5, 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 STRATEGIC & INCOME GROWTH TRUST, SERIES 1
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 as 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 of Securities on the Initial Date
of Deposit is as set forth in the Prospectus under "Schedule of
Investments."
D. The Record Date shall be as set forth in the prospectus
for the sale of Units dated the date hereof (the "Prospectus")
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee as set forth in the Prospectus under "Summary of
Essential Information," calculated based on the largest number of
Units outstanding during each period in respect of which a
payment is made pursuant to Section 3.05, payable on a
Distribution Date. Such fee may exceed the actual cost of
providing such evaluation services for the Trust, but at no time
will the total amount received for evaluation services rendered
to unit investment trusts of which Nike Securities L.P. is the
sponsor in any calendar year exceed the aggregate cost to the
Evaluator of supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee as set forth in the Prospectus under "Summary of
Essential Information," calculated based on the largest number of
Units outstanding during each period in respect of which a
payment is made pursuant to Section 3.05. However, in no event,
except as may otherwise be provided in the Standard Terms and
Conditions of Trust, shall the Trustee receive compensation in
any one year from any Trust of less than $2,000 for such annual
compensation.
I. The Initial Date of Deposit for the Trust is February
5, 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. The term "Principal Account" as set forth in the
Standard Terms and Conditions of Trust shall be replaced with the
term "Capital Account."
B. 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 237.
C. The words "dividends and interest" shall be substituted
for "dividends" where the latter appears in Section 2.01(f) and
Section 3.02; and the words "dividends or interest" shall be
substituted for "dividends" in Section 3.07(a) and (b). Other
references to "dividends" throughout the Standard Terms and
Conditions of Trust shall be similarly interpreted to refer to
dividends and/or interest as the context shall indicate.
D. 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. Any notice, demand, direction
or instruction to be given to the Trustee shall be in writing and
shall be duly given if delivered to the Unit Investment Trust
Offices of the Trustee, 4 New York Plaza, 6th Floor, New York,
New York 10004-2413.
E. 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."
F. 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."
G. Section 1.01(18) shall be amended to read in its
entirety as follows:
"(18) "Securities" shall mean convertible subordinated
debentures and/or equity securities of corporations or other
entities deposited in the Trust Fund as specified in the
Trust Agreement thereof, which Securities are listed in
Schedule A to the Trust Agreement or are Securities
deposited in the Trust Fund pursuant to Section 2.01(b)
hereof, and Replacement Securities acquired pursuant to
Section 3.12 hereof, as may from time to time be construed
to be held as part of the Trust Fund."
H. 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, or (iii) cash (or a Letter of Credit in lieu
of cash) with instructions to purchase additional
Securities, in an amount equal to the portion of the Unit
Value of the Units created by such deposit attributable to
the Securities to be purchased pursuant to such
instructions. Except as provided in the following
subparagraphs (2), (3) and (4) the Depositor, in each case,
shall ensure that each deposit of additional Securities
pursuant to this Section shall maintain, as nearly as
practicable, the Percentage Ratio. Each such deposit of
additional Securities shall be made pursuant to a Notice of
Deposit of Additional Securities delivered by the Depositor
to the Trustee. Instructions to purchase additional
Securities shall be in writing, and shall specify the name
of the Security, CUSIP number, if any, aggregate amount,
price or price range and date to be purchased. When
requested by the Trustee, the Depositor shall act as broker
to execute purchases in accordance with such instructions;
the Depositor shall be entitled to compensation therefor in
accordance with applicable law and regulations. The Trustee
shall have no liability for any loss or depreciation
resulting from any purchase made pursuant to the Depositor's
instructions or made by the Depositor as broker.
(2) Additional Securities (or Contract Obligations
therefor) may, at the Depositor's discretion, be deposited
or purchase in round lots. If the amount of the deposit is
insufficient to acquire round lots of each Security to be
acquired, the additional Securities shall be deposited or
purchased in the order of the Security in the Trust most
under-represented immediately before the deposit with
respect to the Percentage Ratio.
(3) If at the time of a deposit of additional
Securities, Securities of an issue deposited on the Initial
Date of Deposit (or of an issue of Replacement Securities
acquired to replace an issue deposited on the Initial Date
of Deposit) are unavailable, cannot be purchased at
reasonable prices or their purchase is prohibited or
restricted by applicable law, regulation or policies, the
Depositor may (i) deposit, or instruct the Trustee to
purchase, in lieu thereof, another issue of Securities or
Replacement Securities or (ii) deposit cash or a letter of
credit in an amount equal to the valuation of the issue of
Securities whose acquisition is not feasible with
instructions to acquire such Securities of such issue when
they become available.
(4) Any contrary authorization in the preceding
subparagraphs (1) through (3) notwithstanding, deposits of
additional Securities made after the 90-day period
immediately following the Initial Date of Deposit (except
for deposits made to replace Failed Contract Obligations if
such deposits occur 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."
I. 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) with cash in an amount sufficient to satisfy the
obligations to which the Letter(s) of Credit relates. Any
substituted Letter(s) of Credit shall be released by the
Trustee."
J. 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."
K. 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."
L. 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."
M. Section 3.05 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."
N. The first paragraph of Subsection II of Section 3.05(a)
is amended to read as follows:
"II. (a) The Trustee, as of the "First Settlement Date"
specified in the prospectus for the Units dated the date of
the Initial Date of Deposit, shall advance from its own
funds and shall pay to the Depositor as owner then of record
the amount of interest accrued to such date on Securities
which are convertible subordinated debentures in the Trust
Fund. The Trustee shall be entitled to reimbursement,
without interest, for such advancement from dividends and
interest received by the Trust Fund before any further
distribution shall be made from the Income Account to Unit
holders. Subsequent distributions shall be made as
hereinafter provided. On each Distribution Date, the
Trustee shall distribute to each Unit holder of record at
the close of business on the Record Date 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) 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 distributions in the manner provided in clause (1)
of the second preceding paragraph."
O. 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."
P. 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."
Q. Section 3.07 of the Standard Terms and Conditions of
Trust is hereby amended by adding the following new paragraph
after the last paragraph of such section:
"If any of the Securities which are convertible
subordinated debentures are called for redemption, the
Sponsor, in consultation with the Portfolio Supervisor, will
instruct the Trustee to either (i) tender the Security for
redemption; (ii) sell the Security prior to redemption; or
(iii) exercise the conversion option on the Security,
exchange the Security at the specified price for a specified
number of shares of common stock of the issuer and then as
soon as possible sell the shares of common stock received
upon the exercise of such option; provided, however, that if
the Depositor shall not within five Business Days direct the
Trustee to take specific action, the Trustee shall sell the
Security prior to redemption. The Trustee shall have no
liability for any loss or depreciation resulting from any
action taken pursuant to the Depositor's direction or
otherwise pursuant to this paragraph."
R. 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."
S. 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."
T. 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."
U. 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."
V. The second sentence of Section 4.01(b) of the Standard
Terms and Conditions of Trust shall be amended to insert the
following subsection immediately following subsection (a) and
change subsections (b),(c) and (d) to (c),(d) and (e),
respectively:
"(b) on the basis of current offering prices for the
Securities which are convertible subordinated debentures as
obtained from investment dealers or brokers who customarily
deal in securities comparable to those held by the Trust,"
W. 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 subsection (3)
through the end of such sentence and replacing it with the
following:
"(3) all other income from the Securities
(including dividends receivable on the Securities
trading ex-dividend and interest accrued on the
Securities not subject to collection and distribution
as of the date of such valuation) as of the close of
business on the date of such Evaluation, 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."
X. The first sentence of the first paragraph of
Section 5.02 of the Standard Terms and Conditions of Trust shall
be amended as follows:
"Any Certificate evidencing a Unit or Units tendered
for redemption by a Unit holder or his duly authorized
attorney to the Trustee at its unit investment trust office
in the City of New York, or any Unit in uncertificated form
tendered by means of an appropriate request for redemption
in form approved by the Trustee shall be paid by the Trustee
on the third business day following the day on which tender
for redemption is made in proper form (being herein called
the "Settlement Date")."
Y. The reference in the first sentence of the third
paragraph of Section 5.02 of the Standard Terms and Conditions of
Trust to "seven calendar days" shall be replaced with the phrase
"three business days."
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 2,500 Units or more of a
Trust and request a distribution in kind of (i) such Unit
holder's pro rata portion of each of the Securities in such
Trust, in whole shares, and (ii) cash equal to such Unit
holder's pro rata portion of the Income and Capital Accounts
as follows: (x) a pro rata portion of the net proceeds of
sale of the Securities representing any fractional shares
included in such Unit holder's pro rata share of the
Securities and (y) such other cash as may properly be
included in such Unit holder's pro rata share of the sum of
the cash balances of the Income and Capital Accounts in an
amount equal to the Unit Value determined on the basis of a
Trust Fund Evaluation made in accordance with Section 5.01
determined by the Trustee on the date of tender less amounts
determined in clauses (i) and (ii)(x) of this Section.
Subject to Section 5.05 with respect to Rollover Unit
holders, if applicable, to the extent possible,
distributions of Securities pursuant to an in kind
redemption of Units shall be made by the Trustee through the
distribution of each of the Securities in book-entry form to
the account of the Unit holder's bank or broker-dealer at
the Depository Trust Company. Unit holders requesting an in-
kind distribution will, however, receive a cash payment
representing such Unit holders' pro rata portion of
Securities which are convertible subordinated debentures.
Any distribution in kind will be reduced by customary
transfer and registration charges."
AA. 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)"
BB. Section 8.02 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The fourth sentence of the second paragraph shall
be deleted and replaced with the following:
"The Trustee will honor duly executed requests for
in-kind distributions received (accompanied by the
electing Unit holder's Certificate, if issued) by the
close of business ten business days prior to the
Mandatory Termination Date. Unit holders requesting an
in-kind distribution will, however, receive a cash
payment representing such Unit holders' pro rata
portion of Securities which are convertible
subordinated debentures."
(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."
CC. 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.
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:
Joan A. Currie
Assistant Treasurer
FIRST TRUST ADVISOR 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 237
(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
February 5, 1998
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: FT 237
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of FT 237 in connection with the
preparation, execution and delivery of a Trust Agreement dated
February 5, 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. 333-43403)
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
February 5, 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 237
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of FT 237 (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 February 5, 1998 (the
"Indenture") between Nike Securities L.P., as Depositor, The
Chase Manhattan Bank, as Trustee, and First Trust Advisors L.P.,
as Evaluator and 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 as 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 convertible subordinated
debentures (the "Convertible Bonds") and common stock (the
"Equity Securities") (collectively, "the Securities") as such
terms are defined in the Prospectus. For purposes of the opinion
set forth below, it is assumed that (i)(A) the Equity Securities
qualify as equity for Federal income tax purposes and that,
accordingly, amounts received by the Trust with respect to the
Equity Securities will qualify as dividends as defined in Section
316 of the Internal Revenue Code of 1986 (the "Code") and (B)
such dividends would generally be eligible for the dividends
received deduction if the Equity Securities was directly held by
a Unit holder for at least 46 days and (ii) the Convertible Bonds
qualify as debt 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, of the Internal Revnue Code of 1986 (the "Code").
(ii) Each Unit holder will be considered the owner of a pro
rata share of each Convertible Bond of the Trust in the
proportion that the number of Units held by a Unit holder 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 each Unit holder 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 or her pro rata share of income derived from
each Trust asset when such income is considered to be received by
the Trust. Each Unit holder will also be required to include in
taxable income for Federal income tax purposes, original issue
discount with respect to his or her interest in any Convertible
Bond held by the Trust which was issued with original issue
discount at the same time and in the same manner, as though the
Unit holder were the direct owner of such interest. Original
issue discount will be treated as zero with respect to
Convertible Bonds if it is "de minimis" within the meaning of
Section 1273 of the Code. A Unit holder may elect to include in
taxable income for Federal income tax purposes, market discount
as it accrues with respect to his or her interest in any
Convertible Bond held by the Trust which he or she is considered
to have acquired with market discount at the same time and in the
same manner as though the Unit holder were the direct owner of
such interst.
(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 or her 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 or her Units. Before adjustment, such
basis would normally be cost if the Unit holder had acquired his
or her Units by purchase. In addition, such basis will be
increased by the Unit holder's aliquot share of the accrued
original issue discount with respect to each Convertible Bond
held by the Trust for which there was original issue discount at
the time such Convertible Bond was issued, and by accrued market
discount which the Unit holder has elected to annually include in
income with respect to each Convertible Bond, and reduced by the
Unit holder's aliquot share of the amortized acquisition premium,
if any, which the Unit holder has properly elected to amortize
under Section 171 of the Code on each Convertible Bond held by
the Trust. The tax cost reduction requirements of the Code
relating to amortization of bond premium may, under some
circumstances, result in the Unit holder realizing a taxable gain
when his or her Units are sold or redeemed for an amount equal to
or less than original cost.
(iv) If the Trustee disposes of a Security (whether by sale,
exchange, liquidation, redemption, payment on maturity or
otherwise) gain or loss will be recognized to the Unit holder
(subject to various nonrecognition provisions under the Code) and
the amount thereof will be measured by comparing the Unit
holder's aliquot share of the total proceeds from the transaction
with his or her basis for his or her fractional interest in the
Security disposed of. Such basis is ascertained by apportioning
the tax basis for his or her Units (as of the date on which the
Units were acquired) ratably, according to their values as of
date nearest the valuation date nearest the date on which he or
she purchased such Units. A Unit holder's basis in his or her
Units and of his or her fractional interest in each Convertible
Bond must be reduced by the Unit holder's share of the amortized
acquisition premium, if any, on Convertible Bonds held by the
Trust which the Unit holder has properly elected to amortize
under Section 171 of the Code, and must be increased by the Unit
holder's share of the accrued original issue discount with
respect to each Convertible Bond which, at the time the Security
was issued, had original issue discount, and by accrued market
discount which the Unit holder has elected to annually include in
income. 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 are 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
which exceed such current and accumulated earnings and profits
will first reduce a Unit holder's tax basis in such Equity
Security (and accordingly his or her basis in such Units), and to
the extent that such dividends exceed a Unit holder's tax basis
in such Equity Security shall be treated as gain form the sale or
exchange of property.
(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 United States Unit holder
receives cash in addition to Equity Securities. An "Equity
Security" for this purpose is a particular class of stock issued
by a particular corporation. A Unit holder will not recognize
gain or loss if a Unit holder only receives Equity Securities in
exchange for his or her pro rata portion in the Equity Securities
held by the Trust. However, if a Unit holder also receives cash
in exchange for a fractional share of an Equity Security held by
the Trust, such Unit holder will generally recognize gain or loss
based upon the difference between the amount of cash received by
the Unit holder and his or her 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.
Dividends received by a Trust which are attributable to a
domestic corporation owning Units in the Trust and which are
taxable as ordinary income may be eligible for the 70% dividends
received deduction pursuant to Section 243(a) of the Code,
subject to the limitations imposed by Sections 246 and 246A of
the Code. It should be noted that various legislative proposals
that would affect the dividends received deduction have been
introduced.
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 him or her. The Tax
Reform Act of 1986 (the "Act"), among other things, provides that
certain itemized deductions, such as investment expenses, tax
return preparation fees and employee business expenses will be
deductible by individuals only the extent they exceed 2% of such
individual's adjusted gross income (similar limitations apply to
estates and trusts). Unit holders may be required to treat some
or all of the expenses paid by the Trust as miscellaneous
itemized deductions subject to this limitation.
The Code provides a complex set of rules governing the
accrual of original issue discount. These rules provide that
original issue discount generally accrues on the basis of a
constant compound interest rate. Special rules apply if the
purchase price of a Convertible Bond exceeds its original issue
price plus the amount of original issue discount which would have
previously accrued, based upon its issue price (its "adjusted
issue price"). Similarly, these special rules would apply to a
Unit holder if the tax basis of his or her pro rata portion of a
Convertible Bond issued with original issue discount exceeds his
or her pro rata portion of its adjusted issue price. It is
possible that a Convertible Bond that has been issued at an
original issue discount may be characterized as a "high-yield
discount obligation" within the meaning of Section 163(e)(5) of
the Code. To the extent that such an obligation is issued at a
yield in excess of six percentage points over the applicable
Federal rate, a portion of the original issue discount on such
obligation will be characterized as a distribution on stock
(e.g., dividends) for purposes of the dividends received
deduction which is available to certain corporations with respect
to certain dividends received by such corporations.
If a Unit holder's tax basis in his interest in any
Convertible Bond held by the Trust is less than his or her
allocable portion of such Convertible Bond's stated redemption
price at maturity (or, if issued with original issue discount,
his or her allocable portion of its revised issue price on the
date he or she buys such Units), such difference will constitute
market discount unless the amount of market discount is "de
minimis" as specified in the Code. Market discount accrues daily
computed on a straight line basis, unless the Unit holder elects
to calculate accrued market discount under a constant yield
method.
Accrued market discount is generally includible in taxable
income of the Unit holders as ordinary income for Federal tax
purposes upon the receipt of serial principal payments on
Convertible Bonds held by the Trust, on the sale, maturity or
disposition of such Convertible Bonds by the Trust and on the
sale of a Unit holder's Units unless a Unit holder elects to
include the accrued market discount in taxable income as such
discount accrues. If a Unit holder does not elect to annually
include accrued market discount in taxable income as it accrues,
deductions of any interest expense incurred by the Unit holder to
purchase or carry his or her Units will be reduced by such
accrued market discount. In general, the portion of any interest
which is not currently deductible is deductible when the accrued
market discount is included in income upon the sale or redemption
of the securities or the sale of Units.
The tax basis of a Unit holder with respect to his or her
interest in an obligation is increased by the amount of original
issue discount (and market discount, if the Unit holder elects to
include market discount, if any, on the Convertible Bonds held by
the Trust in income as it accrues) thereon properly included in
the Unit holder's gross income as determined for Federal income
tax purposes and reduced by the amount of any amortized premium
which the Unit holder has properly elected to amortize under
Section 171 of the Code. A Unit holder's tax basis in his or her
Units will equal his or her tax basis in his or her pro rata
portion of all the assets of the Trust.
A Unit holder will recognize taxable gain (or loss) when all
or part of his or her pro rata interest in a Security is disposed
of for an amount greater (or less) than his or her tax basis
therefor in a taxable transaction, subject to various non
recognition provisions of the Code.
As previously discussed, gain attributable to any
Convertible Bond deemed to have been acquired by the Unit holder
with market discount will be treated as ordinary income to the
extent the gain does not exceed the amount of accrued market
discount not previously taken into income. The tax basis
reduction requirements of the Code relating to amortization of
bond premium may, under certain circumstances, result in the Unit
holder realizing a taxable gain when his or her Units are sold or
redeemed for an amount equal to or less than his or her original
cost.
If a 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 Trust assets including his or her pro rata portion of all
of the Securities represented by the Unit. This may result in a
portion of the gain, if any, on such sale being taxable as
ordinary income under the market discount rules (assuming no
election was made by the Unit holder to include market discount
in income as it accrues) as previously discussed.
"The Revenue Reconciliation Act of 1993" (the "1993 Tax Act")
raised tax rates on ordinary income above the rates at which
capital gains are subject to tax in certain circumstances.
Because some or all capital gains are taxed at a comparatively
lower rate under the 1993 Tax Act, the 1993 Tax Act includes a
provision that recharacterizes capital gains as ordinary income in
the case of certain financial transactions that are "conversion
transactions" effective for transactions entered into after April
30, 1993.
A Unit holder who is a foreign investor (i.e., an investor
other than a United States citizen or resident or United States
corporation, partnership, estate or trust) will be subject to
United States Federal income taxes, including withholding taxes
on distributions from the Trust relating to such investor's share
of dividend income paid on Equity Securities. A Unit holder who
is a foreign investor will not be subject to United States
Federal income taxes, including withholding taxes on interest
income (including any original issue discount) on, or any gain
from the sale or other disposition of, his or her pro rata
interest in any Security held by the Trust or the sale of his or
her Units provided that all of the following conditions are met:
(i) the interest income or gain is not effectively
connected with the conduct by the foreign investor of a
trade or business within the United States;
(ii) the interest is United States source income (which
is the case for most securities issued by United States
issuers), the Security is issued after July 18, 1984 (which
is the case for each Security held by the Trust), the
foreign investor does not own, directly or indirectly, 10%
or more of the total combined voting power of all classes of
voting stock of the issuer of the Security and the foreign
investor is not a controlled foreign corporation related
(within the meaning of Section 864(d)(4) of the Code) to the
issuer of the Security;
(iii) with respect to any gain, the foreign investor (if
an individual) is not present in the United States for 183
days or more during his or her taxable year; and
(iv) the foreign investor provides all certification
which may be required of his status.
It should be noted that the 1993 Tax Act includes a provision
which eliminates the exemption from United States taxation,
including withholding taxes, for certain "contingent interest."
This provision applies to interest received after December 31,
1993. No opinion is expressed herein regarding the potential
applicability of this provision and whether United States
taxation or withholding taxes could be imposed with respect to
income derived from the Units as a result thereof.
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 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. 333-43403)
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
February 5, 1998
The Chase Manhattan Bank, as Trustee of
FT 237
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Attention: Mr. Thomas Porrazzo
Vice President
Re: FT 237
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 237 (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. 333-43403) 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
February 5, 1998
The Chase Manhattan Bank, as Trustee of
FT 237
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Attention: Mr. Thomas Porrazzo
Vice President
Re: FT 237
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
237 (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
February 5, 1998
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: FT 237
Gentlemen:
We have examined the Registration Statement File No.
333-43403 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> Strategic Income and Growth Trust
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> Other
<FISCAL-YEAR-END> FEB-05-1998
<PERIOD-START> FEB-05-1998
<PERIOD-END> FEB-05-1998
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<PAID-IN-CAPITAL-COMMON> 199,152
<SHARES-COMMON-STOCK> 20,218
<SHARES-COMMON-PRIOR> 20,218
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<DISTRIBUTIONS-OF-INCOME> 0
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<NUMBER-OF-SHARES-SOLD> 0
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
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<PER-SHARE-NAV-BEGIN> 0
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