SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 286
B. Name of Depositor: NIKE SECURITIES L.P.
C. Complete Address of Depositor's 1001 Warrenville Road
Principal Executive Offices: Lisle, Illinois 60532
D. Name and Complete Address of
Agents for Service: NIKE SECURITIES L.P.
Attention: James A. Bowen
Suite 300
1001 Warrenville Road
Lisle, Illinois 60532
CHAPMAN & CUTLER
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60606
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 the Public: ____ Check if it is
proposed that this filing
will become effective on
_____ at ____ p.m.
pursuant to Rule 487.
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
FT 286
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
FORM N-8B-2 FORM S-6
ITEM NUMBER 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 Information as to
depositor Sponsor, Trustee and
Evaluator
3. Name and address of Information as to
trustee Sponsor, Trustee and
Evaluator
4. Name and address of Underwriting
principal underwriters
5. State of organization The FT Series
of trust
6. Execution and termination The FT Series; Other
of trust agreement Information
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 Rights of Unit Holders
securities
(b) Cumulative or distributive
securities The FT Series
(c) Redemption Rights of Unit Holders
(d) Conversion, transfer, etc. Rights of Unit Holders
(e) Periodic payment plan
certificates *
(f) Voting rights Rights of Unit Holders;
Other Information
(g) Notice of certificate- Rights of Unit Holders;
holders Other Information
(h) Consents required Rights of Unit Holders;
Other Information
(i) Other provisions The FT Series
11. Types of securities comprising The FT Series
12. Certain information
regarding periodic payment
plan certificates *
13. (a) Load, fees, expenses, etc. Summary of Essential
Information; Public
Offering; The FT Series
(b) Certain information
regarding periodic payment
plan certificates *
(c) Certain percentages Summary of Essential
Information; The FT
Series; Public Offering
(d) Difference in price offered Public Offering
for any class of transactions
to any class or group of
individuals
(e) Certain other load fees, Rights of Unit Holders
expenses, etc. payable by
holders
(f) Certain profits receivable The FT Series
by depositor, principal
underwriters, trustee or
affiliated persons
(g) Ratio of annual charges to
income *
14. Issuance of trust's Rights of Unit Holders
securities
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
disposition of income Rights of Unit Holders
(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 and
successor Information as to
Sponsor, Trustee and
Evaluator
(e) and (f) Depositor, removal Information as to
and successor 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 other *
persons 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
securities by states Public Offering
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;
Underwriting
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) N.A.S.D. membership of Information as to
principal underwriters Sponsor, Trustee and
Evaluator
40. Certain fee received by See Items 13(a) and 13(e)
principal underwriters
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 Public Offering; Rights
in underlying securities of Unit Holders
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation Information as to
of trustee 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 OR
SECURITIES
51. Insurance of holders of *
trust's securities
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust The FT Series; Rights
agreement with respect of Unit Holders
to selection or elimination
of underlying securities
(b) Transactions involving
elimination of underlying
securities *
(c) Policy regarding The FT Series; Rights
substitution or elimination of Unit Holders
of underlying 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. Certain information regarding
periodic payment plan
certificates
56. Certain information regarding
periodic payment plan
certificates
57. Certain information regarding *
periodic payment plan
certificates
58. Certain information regarding
periodic payment plan
certificates
59. Financial statements Report of Independent
(Instruction 1(b) to Auditors; Statement of
Form S-6) Net Assets
__________________________
* Inapplicable, answer negative or not required.
SUBJECT TO COMPLETION DATED SEPTEMBER 14, 1998
INSURANCE GROWTH TRUST, SERIES 3
FT 286
FT 286 includes the unit investment trust described above (the "Trust").
The Trust consists of a diversified portfolio of common stocks (the
"Securities") issued by insurance companies. The Trust seeks to provide
above-average total return through capital appreciation.
Units of the Trust are not deposits or obligations of any bank or
government agency. The Units are not guaranteed and involve investment
risk.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
First Trust (registered trademark)
1-800-621-9533
Page 1
The date of this Prospectus is , 1998
Table of Contents
Summary of Essential Information 3
Fee Table 4
Report of Independent Auditors 5
Statement of Net Assets 6
Schedule of Investments 7
The FT Series 8
Portfolio 9
Risk Factors 10
Portfolio Securities Descriptions 12
Public Offering 14
Distribution of Units 17
The Sponsor's Profits 18
The Secondary Market 18
How We Purchase Units 19
Expenses and Charges 19
Tax Status 20
Retirement Plans 24
Rights of Unit Holders 24
Income and Capital Distribution 25
Redeeming Your Units 26
Removing Securities from the Trust 27
Amending or Terminating the Indenture 28
Information on the Sponsor, Trustee and Evaluator 29
Other Information 30
Page 2
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities- , 1998
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Insurance
Growth Trust
Series 3
____________
<S> <C>
General Information
Initial Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/
Public Offering Price:
Aggregate Offering Price Evaluation of
Securities in Portfolio (2) $
Aggregate Offering Price Evaluation of Securities per Unit $ 9.900
Maximum Sales Charge 4.50% of the Public Offering Price
per Unit (4.545% of the net amount invested, exclusive of
the deferred sales charge) (3) $ .450
Less Deferred Sales Charge per Unit $ (.350)
Public Offering Price per Unit (3) $10.000
Sponsor's Initial Repurchase Price per Unit (4) $ 9.550
Redemption Price per Unit (based on aggregate underlying
value of Securities less the deferred sales charge) (4) $ 9.550
Estimated Net Annual Distributions (5) $
Cash CUSIP Number
Reinvestment CUSIP Number
Security Code
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date , 1998
Mandatory Termination Date
Discretionary Liquidation Amount The Trust may be terminated if the value of the Securities 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.
Income Distribution Record Date Fifteenth day of June and December, commencing
, 1998.
Income Distribution Date (6) Last day of June and December, commencing , 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 Security is valued at the last closing sale price, or if
no such price exists or if the Security is not so listed, at the closing
ask price thereof. 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 (the "Evaluation Time").
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Table" and "Public Offering" for
additional information regarding these charges. On the Initial Date of
Deposit there will be no accumulated dividends in the Income Account.
Anyone ordering Units after such date will pay a pro rata share of any
accumulated dividends in such Income Account. The Public Offering Price
as shown reflects the value of the Securities on the business day prior
to 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 may
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) The Sponsor's Initial Repurchase Price per Unit and the Redemption
Price per Unit set forth above and until the earlier of six months after
the Initial Date of Deposit or the initial offering period include
estimated organizational and offering costs per Unit. After the initial
offering period, the Sponsor's Repurchase Price and Redemption Price per
Unit will not include such estimated organizational and offering costs.
See "Redeeming Your Units."
(5) The actual net annual distributions you receive will vary from that
set forth above with changes in the Trust's fees and expenses, in
dividends received and with the sale of Securities. See "Fee Table" and
"Expenses and Charges."
(6) Distributions from the Capital Account will be made monthly payable
on the last day of the month to Unit holders of record on the fifteenth
day of such month if the amount available for distribution equals at
least $1.00 per 100 Units. Notwithstanding, distributions of funds in
the Capital Account, if any, will be made in December of each year.
</FN>
</TABLE>
Page 3
Fee Table
This Fee Table describes the fees and expenses that you may pay if you
buy and hold Units of the Trust. See "Public Offering" and "Expenses and
Charges." Although the Trust has a term of approximately five years and
is a unit investment trust rather than a mutual fund, this information
shows you a comparison of fees.
<TABLE>
<CAPTION>
Insurance Growth Trust,
Series 3
______________________
Amount
per Unit
Unit Holder Transaction Expenses ________
<S> <C> <C>
Initial sales charge imposed on purchase
(as a percentage of public offering price) 1.00%(a) $.100
Deferred sales charge
(as a percentage of public offering price) 3.50%(b) .350
________ ________
4.50% $.450
======== ========
Organizational and Offering Costs
Estimated Organizational and Offering Costs
(as a percentage of public offering price) %(c) $
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, % $
administrative and evaluation fees
Trustee's fee and other operating expenses %
________ ________
Total % $
======== ========
This example is intended to help you compare the cost of investing in
the Trust with the cost of investing in other investment products. The
example assumes that you invest $10,000 in the Trust for the periods
shown and sell all your Units at the end of those periods. The example
also assumes a 5% return on your investment each year and that the
Trust's operating expenses stay the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
______ _______ _______ ________
You will pay the following expenses if you do not sell your Units at the
end of each period:
1 Year 3 Years 5 Years 10 Years
______ _______ _______ ________
The example does not reflect sales charges on reinvested dividends and
other distributions. If these sales charges were included, your costs
would be higher.
<FN>
________________
(a) The Initial Sales Charge would exceed 1.00% if the Public Offering
Price exceeds $10.00 per Unit.
(b) The actual fee is $ per month per Unit, irrespective of
purchase or redemption price deducted over a ten-month period. If the
Unit price exceeds $10.00 per Unit, the deferred sales charge will be
less than 3.5%. 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 Initial
Sales Charge and to the remaining deferred sales charge payments.
(c) You will bear all or a portion of the costs incurred in organizing
the Trust (including costs of preparing the registration statement, the
trust indenture and other closing documents, registering Units with the
Securities and Exchange Commission and states, the initial audit of the
Trust portfolio, legal fees and the initial fees and expenses of the
Trustee). Estimated organizational and offering costs are included in
the Public Offering Price per Unit and will be deducted from the assets
of the Trust at the earlier of six months after the Initial Date of
Deposit or the end of the initial offering period.
</FN>
</TABLE>
Page 4
Report of Independent Auditors
The Sponsor, Nike Securities L.P., and Unit Holders
FT 286
We have audited the accompanying statement of net assets, including the
schedule of investments, of FT 286, comprised of Insurance Growth Trust,
Series 3, as of the opening of business on , 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 ,
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 286,
comprised of the Trust listed above, at the opening of business on
, 1998 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
, 1998
Page 5
Statement of Net Assets
FT 286
At the Opening of Business on the
Initial Date of Deposit- , 1998
<TABLE>
<CAPTION>
Insurance Growth
Trust
Series 3
________________
<S> <C>
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $
________
Less accrued organizational
and offering costs (3) ( )
Less liability for deferred sales charge (4) ( )
________
Net assets $
========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (5) $
Less sales charge (5) ( )
Less estimated organizational and ( )
offering costs (3)
________
Net assets $
========
<FN>
NOTES TO STATEMENTS 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 $ issued by The Chase
Manhattan Bank, has been deposited with the Trustee as collateral,
covering the monies necessary for the purchase of the Securities
according to purchase contracts for such Securities.
(3) A portion of the Public Offering Price consists of Securities in an
amount sufficient to pay for all or a portion of the costs incurred in
establishing the Trust. These costs have been estimated at $.0200 per
Unit, based upon the expected number of Units to be created. A
distribution will be made at the earlier of six months after the Initial
Date of Deposit or the end of the initial offering period to an account
maintained by the Trustee from which your organizational and offering
cost obligation to us will be paid. To the extent the number of Units
issued is larger or smaller than the estimate, the actual distribution
per Unit at the earlier of six months after the Initial Date of
Deposit or the end of the initial offering period may differ from that
set forth above.
(4) Represents the amount of mandatory distributions from the Trust ($
per Unit), payable to us in ten equal monthly installments beginning on
, 1998 and on the twentieth day of each month thereafter (or
if such date is not a business day, on the preceding business day)
through , 1999. If you redeem Units before ,
1999 you will have to pay the remaining amount of the deferred sales
charge applicable to such Units when you redeem them.
(5) The aggregate cost to investors in the Trust includes a maximum
total sales charge computed at the rate of 4.50% of the Public Offering
Price (equivalent to 4.545% of the net amount invested, exclusive of the
deferred sales charge), assuming no reduction of sales charge as set
forth under "Public Offering."
</FN>
</TABLE>
Page 6
Schedule of Investments
Insurance Growth Trust, Series 3
FT 286
At the Opening of Business on the
Initial Date of Deposit- , 1998
<TABLE>
<CAPTION>
Approximate
Percentage Market
of Aggregate Value Cost of
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Securities (1) Price (3) Share to Trust (2)
_________ _______________________________________ ____________ ______ ____________
<S> <C> <C> <C> <C>
FINANCIAL GUARANTEE
KRE Capital Re Corporation 4% $ $
CMT CMAC Investment Corporation 4%
EFS Enhance Financial Services Group, Inc. 4%
MBI MBIA, Inc. 4%
MTG MGIC Investment Corporation 4%
LIFE/HEALTH
AFL AFLAC, Inc. 4%
CNC Conseco, Inc. 4%
NFS Nationwide Financial Services, Inc. (Class A) 4%
RLR ReliaStar Financial Corporation 4%
SAI SunAmerica, Inc. 4%
MULTI-LINE
AEG AEGON N.V. (American Registered Shares) (3) 4%
AXA AXA-UAP (ADR) 4%
ALL Allstate Corporation 4%
AIG American International Group, Inc. 4%
CI CIGNA Corporation 4%
HIG The Hartford Financial Services Group, Inc. 4%
HMN Horace Mann Educators Corporation 4%
ORI Old Republic International Corporation 4%
PROPERTY/CASUALTY
ACL ACE Limited (3) 4%
CB The Chubb Corporation 4%
RE Everest Reinsurance Holdings, Inc. 4%
ER Executive Risk, Inc. 4%
FMT Fremont General Corporation 4%
OC Orion Capital Corporation 4%
PGR Progressive Corporation 4%
______ _________
Total Investments 100% $
====== =========
__________
<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 , 1998.
(2) The cost of the Securities to the Trust represents the aggregate
underlying value with respect to the Securities acquired (generally
determined by the last sale prices of the listed Securities and the ask
prices of the over-the-counter traded 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 $ . Cost and loss to Sponsor relating to the Securities sold
to the Trust were $ and $ , respectively.
(3) This Security represents the common stock of a foreign company which
trades directly on a United States national securities exchange.
</FN>
</TABLE>
Page 7
The FT Series
The FT Series Defined.
We, Nike Securities L.P. (the "Sponsor"), have created a series of
similar yet separate investment companies which we have named The FT
Series. We designate each FT Series with a different series number.
You may get more specific details on some of the information in this
Prospectus in an "Information Supplement" by calling the Trustee at 1-
800-682-7520.
What We Call the Trust.
This FT Series contains the following unit investment trust: Insurance
Growth Trust, Series 3.
Mandatory Termination Date.
The Trust will terminate on the Mandatory Termination Date. The
Mandatory Termination Date for this Trust is approximately five years
from the date of this Prospectus. This date is shown in "Summary of
Essential Information." The Trust was created under the laws of the
State of New York by a Trust Agreement (the "Indenture") dated the
Initial Date of Deposit. This agreement, entered into between Nike
Securities L.P., as Sponsor, The Chase Manhattan Bank as Trustee and
First Trust Advisors L.P. as Portfolio Supervisor and Evaluator, governs
the operation of the Trust.
How We Created the Trust.
On the Initial Date of Deposit, we deposited contracts to buy common
stocks ("Securities") with the Trustee, backed by an irrevocable letter
of credit of a financial institution in an amount sufficient to purchase
these Securities. In return for depositing the Securities, the Trustee
delivered documents to us representing our ownership of the Trust, in
the form of units ("the Units").
With the deposit of the contracts to buy Securities on the Initial Date
of Deposit we established a percentage relationship between the
Securities in the Trust's portfolio, as stated under "Schedule of
Investments." After the Initial Date of Deposit, we may deposit
additional Securities in the Trust, or cash (including a letter of
credit) with instructions to buy more Securities, in order to create new
Units for sale. If we create additional Units we will attempt, to the
extent practicable, to maintain the original percentage relationship
established among the Securities on the Initial Date of Deposit, and not
the actual percentage relationship existing on the day we are creating
Units, since the two may differ. This 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 "Removing
Securities from the Trust."
Since the prices of the underlying Securities will fluctuate daily, the
ratio of Securities in the Trust, 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 or cash
in the Trust. If we deposit cash, you and new investors may experience a
dilution of your investment. This is because prices of Securities will
fluctuate between the time of the cash deposit and the purchase of the
Securities, and because the Trust will pay brokerage fees to buy
Securities. To reduce this dilution, the Trust will try to buy the
Securities as close to the evaluation time and as close to the
evaluation price as possible.
An affiliate of the Trustee may receive these brokerage fees or the
Trustee may, from time to time, retain and pay us (or an affiliate) to
act as agent for the Trust to buy Securities. If we or an affiliate of
ours act as agent to the Trust we will be subject to the restrictions
under the Investment Company Act of 1940, as amended.
The Trust consists of the Securities listed in the Schedule of
Investments that continue to be held along with any additional
Page 8
Securities acquired and held by the Trust. The Trust also includes cash
held in the Income and Capital Accounts.
We cannot guarantee that the Trust will keep its present size and
composition for any length of time. Securities may be sold under certain
circumstances from time to time, and the proceeds from these sales will
be used to meet Trust obligations or distributed to Unit holders, but
will not be reinvested. The Trust will not, however, sell Securities to
take advantage of market fluctuations or changes in anticipated rates of
appreciation or depreciation, or if the Securities no longer meet the
criteria by which they were selected. You will not be able to dispose of
any of the Securities in the Trust or vote the Securities. As the holder
of the Securities, the Trustee has the right to vote all of Securities
and will do so as we instruct.
Neither we nor the Trustee will be liable for a failure in any of the
Securities. However, if a contract for the purchase of any of the
Securities initially deposited in the Trust fails, unless we can
purchase substitute Securities ("Replacement Securities") we will refund
to you that portion of the purchase price and sales charge resulting
from the failed contract on the next Income Distribution Date. Any
Replacement Security the Trust acquires will be identical to those from
the failed contract. The Trustee must purchase the Replacement
Securities within 20 days after it receives notice of a failed contract,
and the purchase price may not be more than the amount of funds reserved
for the purchase of the failed contract.
Portfolio
Objectives
The objective of the Trust is to provide investors with the potential
for above-average capital appreciation through an investment in a
diversified portfolio of common stocks of companies that are involved in
several lines of insurance, including financial guarantee, life and
health, multi-line, and property and casualty. A diversified portfolio
helps to offset the risks normally associated with such an investment,
although it does not eliminate them entirely. The companies selected for
the Insurance Growth Trust have been researched and evaluated using
database screening techniques, fundamental analysis, and the judgment of
the Sponsor's research analysts.
In an industry whose products are used by almost every American family,
the Sponsor believes the companies selected are ideally positioned to
take advantage of the many trends shaping the insurance industry.
Despite prospects for above-average earnings growth, the companies
chosen for the Trust currently trade, on average, at below-market price
to earnings ratios. The attractive valuations relative to earnings
prospects should provide the potential for capital appreciation in
excess of market returns. In addition, insurance companies benefit from
a declining interest rate environment, as a large portion of their
assets are invested in fixed income securities which rise in value when
interest rates decline. Given the modest and relatively stable rate of
inflation in the recent past and the outlook for continued low levels of
inflation, the Sponsor believes that interest rates will remain at their
relatively low levels or perhaps decline, maintaining a positive
interest rate environment for insurance companies.
Insurance companies are expanding their businesses by reaching customers
in new ways. In addition to selling through traditional insurance
agents, insurance products are increasingly being marketed through
financial planners, banks, direct mail, telemarketing and on-line via
the Internet. By selling insurance products through new distribution
Page 9
channels, the Sponsor believes that too many insurance companies
offering the same products create an environment of excess capacity.
Increased consolidation activity is expected to occur at an accelerating
rate, in order to eliminate that excess capacity. By restructuring
through mergers or acquisitions, insurers can streamline operations,
boost profits, and enhance shareholder value from any takeover premiums.
Risk Factors
Price Volatility. The Trust invests in common stocks of U.S. and foreign
companies. The value of the Units of a Trust will fluctuate with changes
in the value of the underlying common stocks. The market value of common
stocks is constantly changing due to various factors including shifting
perceptions regarding the financial condition of the issuers, the
general condition of the relevant stock market or political and economic
events on a regional or global level. In this regard, common stocks may
move up or down rapidly and unpredictably and the value of your Units
may be more or less than the price you originally paid. Because the
Trust is not managed, the Trustee will not sell stocks in response to or
in anticipation of market fluctuations, as is common in managed
investments. As with any investment, we cannot guarantee that the
performance of a Trust will be positive over any period of time.
Certain of the Securities in the Trust have market capitalizations of
less than $1 billion. The share prices of these small-cap companies are
often more volatile than the share prices of companies with larger
capitalizations. This is a result of several factors common to many such
issuers, including limited trading volumes and less publicly available
information regarding such issuers, limited product lines, markets or
financial resources, and lack of management depth or experience.
Dividends. Common stocks represent ownership interests in the issuers,
not obligations of the issuers. Accordingly, common stockholders have a
right to receive dividends only after the company has provided for
payment of its creditors, bondholders and preferred stockholders.
Ownership of common stock does not ensure that you will receive dividend
payments. Dividends are paid only when declared by an issuer's board of
directors and there is no guarantee that future dividends will be
declared or that if declared they will either remain at current levels
or increase over time.
Insurance Industry. Insurance company profits are affected by interest
rate levels, general economic conditions, and price and marketing
competition. Property and casualty insurance profits may also be
affected by weather catastrophes and other disasters. Life and health
insurance profits may be affected by mortality and morbidity rates.
Individual companies may be exposed to material risks including reserve
inadequacy and the inability to collect from reinsurance carriers.
Insurance companies are subject to extensive governmental regulation,
including the imposition of maximum rate levels, which may not be
adequate in some lines of business. Proposed or potential tax laws
changes may also adversely affect insurance companies' policy sales, tax
obligations, and profitability. In addition to the foregoing, profit
margins of these companies continue to shrink due to the commoditazation
of traditional businesses, new competitors, capital expenditures on new
technology and the pressures to compete globally.
Legislation/Litigation. From time to time, various legislative
initiatives, such as those affecting environmental protection or the
tobacco, petroleum, or financial institutions industries, are proposed
in the United States and abroad which may have a negative impact on the
share prices of certain of the companies represented in the Trust. In
addition, litigation regarding any of the issuers of the Securities or
of the industries represented by such issuers, such as the ongoing
litigation concerning companies in the U.S. tobacco industry, may
Page 10
negatively impact the share prices of these Securities. We cannot
predict what impact any pending or proposed legislation or pending or
threatened litigation will have on the share prices of the Securities.
Year 2000 Problem. Like other investment companies, financial and
business organizations and individuals around the world, the Trust could
be adversely affected if the computer systems we use, as well as that
used by the Evaluator, Portfolio Supervisor, Trustee or other service
providers to the Trust do not properly process and calculate date-
related information and data involving dates of January 1, 2000 and
thereafter. This is commonly known as the "Year 2000 Problem." Each of
these parties is taking steps that we believe will address this problem.
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. We are
unable to predict what impact, if any, the Year 2000 Problem will have
on the Trust or on the issuers of Securities contained therein.
Foreign Stocks. The Trust contains common stocks of foreign companies.
This involves additional risks than with trusts investing solely in
common stocks of domestic issuers. These additional investment risks
include the risk of losses due to future political and economic
developments, the deterioration of the financial condition of the
issuers or the general condition of the relevant stock market, foreign
withholding taxes, restrictions on foreign investments and exchange of
securities, and the relative lack of liquidity of certain foreign stock
markets. The quantity and quality of publicly available information
regarding foreign issuers is usually not as good as that provided for
U.S. companies because foreign issuers are generally not subject to the
same reporting and accounting requirements as domestic issuers.
The common stock of foreign issuers is also subject to the effect of
foreign currency devaluations and fluctuations in the value of the
common stocks and dividends of such issuers in terms of U.S. dollars. In
addition, fixed brokerage commissions and other transaction costs on
foreign securities exchanges are generally higher than in the United
States. There is also generally less government supervision and
regulation of exchanges, brokers and issuers in foreign countries than
in the United States.
The purchase and sale of the foreign Securities will generally occur
only in foreign securities markets. We do not believe that the Trust
will have problems acquiring or disposing of the foreign Securities.
However, certain of the factors stated above may make it impossible to
buy or sell certain foreign Securities in a timely manner.
Exchange Rates. Because securities of foreign issuers generally pay
dividends and trade in foreign currencies, there is the risk that the
U.S. dollar value of these securities (and therefore Units) will vary
with fluctuations in foreign exchange rates. Most foreign currencies
have fluctuated widely in value against the U.S. dollar for many
reasons, including:
supply and demand of the respective currency,
- - the rate of inflation in the respective economies compared to the United
States,
- - the impact of interest rate differentials between different currencies
on the movement of foreign currency rates,
- - the balance of imports and exports goods and services,
- - 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.
Currencies are generally traded by leading international commercial
banks and institutional investors. From time to time, central banks in a
Page 11
number of countries also are major buyers and sellers of foreign
currencies, mostly to prevent or reduce substantial exchange rate
fluctuations.
The Evaluator will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange markets.
However, these markets can be quite volatile, depending on the activity
of the large international commercial banks, various central banks,
large multi-national corporations, speculators and other buyers and
sellers of foreign currencies. Since actual foreign currency
transactions may not be instantly reported, the exchange rates estimated
by the Evaluator may not reflect the amount the International Trusts
would receive, in U.S. dollars, had the Trustee sold any particular
currency in the market. The Trustee will conduct the foreign exchange
transaction of the International Trusts with foreign exchange dealers
acting as principals on a spot (i.e., cash) buying basis. Although
foreign exchange dealers trade on a net basis, they do make a profit
based on the difference between the bid price and offer price of a
particular currency.
Portfolio Securities Descriptions
Financial Guarantee
___________________
Capital Re Corporation, headquartered in New York, New York, through
subsidiaries, reinsures financial guaranties of investment grade debt
obligations, concentrating on municipal bond insurance. The company also
reinsures financial guaranties of investment grade non-municipals,
mortgage guaranty, trade credit and other specialty insurance lines.
CMAC Investment Corporation, headquartered in Philadelphia,
Pennsylvania, provides private mortgage insurance coverage in the United
States to residential mortgage lenders, including mortgage bankers,
mortgage brokers, commercial banks and savings institutions.
Enhance Financial Services Group, Inc., headquartered in New York, New
York, through subsidiaries, provides reinsurance of financial guaranties
of municipal and asset-backed debt obligations issued by monoline
financial guaranty insurers, and insures and reinsures various specialty
lines of business. Monoline financial guaranty insurers guaranty to the
holders of debt obligations the full and timely payment of principal and
interest.
MBIA, Inc., headquartered in Armonk, New York, through wholly-owned MBIA
Insurance Corporation, writes municipal bond insurance which provides an
unconditional and irrevocable guarantee of the payment of principal and
interest when due on insured municipal bonds. MBIA Insurance Corporation
also writes insurance for new issues of municipal bonds and for bonds
traded in the secondary market.
MGIC Investment Corporation, headquartered in Milwaukee, Wisconsin,
through subsidiaries, provides private mortgage insurance in the United
States to savings institutions, mortgage bankers, commercial banks,
mortgage brokers, credit unions and other lenders. The company also
provides various underwriting and contract services related to home
mortgage lending.
Life/Health
___________
AFLAC, Inc., headquartered in Columbus, Georgia, through subsidiaries,
writes supplemental health insurance, mainly limited to reimbursement
for the medical, non-medical and surgical expenses of cancer. The
company also sells individual and group life, accident and health
insurance.
Conseco, Inc., headquartered in Carmel, Indiana, through subsidiaries,
develops, markets and administrates annuity, supplemental health and
individual life products.
Page 12
Nationwide Financial Services, Inc. (Class A), headquartered in
Columbus, Ohio, offers long-term savings and retirement products to
retail and institutional customers throughout the United States.
Products offered include variable and fixed annuities, life insurance,
mutual funds, retirement products and administrative services.
ReliaStar Financial Corporation, headquartered in Minneapolis,
Minnesota, through subsidiaries, issues and distributes individual life
insurance and annuities, group life and health insurance, life and
health reinsurance; and it sells and manages mutual funds. The company
operates in four business segments: Individual Insurance, Employee
Benefits, Life and Health Reinsurance and Pension.
SunAmerica, Inc., headquartered in Los Angeles, California, through
subsidiaries, sells tax-deferred, long-term savings products for the pre-
retirement market, including single premium insurance products, and
fixed and variable annuities. SunAmerica also provides broker-dealer
operations; retirement trust services; asset management; and premium
financing.
Multi-Line
___________
AEGON N.V. (American Registered Shares), headquartered in The Hague,
Netherlands, through subsidiaries, offers a full line of life, accident,
health and general insurance in the Netherlands, the United States and
Europe. The company also engages in non-insurance activities, mainly in
the area of financial services.
AXA-UAP (ADR), headquartered in Paris, France, through subsidiaries,
markets life insurance, property and casualty insurance, and
reinsurance. The company also conducts asset management, investment
banking, securities trading, brokerage, real estate and other financial
services activities.
Allstate Corporation, headquartered in Northbrook, Illinois, through
subsidiaries, writes property-liability insurance, primarily private
passenger automobile and homeowners policies, and offers life insurance,
annuity and group pension products.
American International Group, Inc., headquartered in New York, New York,
provides a broad range of insurance and insurance-related activities and
financial services in the United States and abroad. The company also
owns and operates ski slopes and related facilities in Vermont.
CIGNA Corporation, headquartered in Philadelphia, Pennsylvania, provides
life and health insurance, retirement and employee benefits, property
and casualty insurance, asset management, managed care products and
services, and individual financial services.
The Hartford Financial Services Group, Inc., headquartered in Hartford,
Connecticut, writes commercial property and casualty insurance, personal
automobile and homeowners coverages, and a variety of life insurance
plans. The company also reinsures third-party risks.
Horace Mann Educators Corporation, headquartered in Springfield,
Illinois, through subsidiaries, markets and underwrites personal lines
of property/casualty and life insurance and retirement annuities.
Old Republic International Corporation, headquartered in Chicago,
Illinois, through subsidiaries, writes property, liability, life,
disability, title and mortgage guaranty insurance in 50 states and Guam,
Puerto Rico, the Virgin Islands, Washington, D.C. and all Canadian
provinces.
Property/Casualty
_________________
ACE Limited, headquartered in Hamilton, Bermuda, through subsidiaries,
provides property and casualty insurance coverage, including excess
liability, directors and officers liability, satellite, aviation and
excess property insurance. The company also provides financial line
products to industrial, commercial and other enterprises.
Page 13
The Chubb Corporation, headquartered in Warren, New Jersey, through
subsidiaries, writes property and casualty insurance, including personal
and commercial insurance coverage. The company also develops real
estate, mainly in New Jersey and Florida.
Everest Reinsurance Holdings, Inc., headquartered in Newark, New Jersey,
through subsidiaries, provides reinsurance to property/casualty insurers
in selected markets in the United States and in international markets.
The company also provides property and casualty insurance to
policyholders in the United States.
Executive Risk, Inc., headquartered in Simsbury, Connecticut, develops,
markets and underwrites specialty insurance products, principally
professional liability coverage, but also crime, inland marine and other
property-casualty lines.
Fremont General Corporation, headquartered in Santa Monica, California,
through subsidiaries, writes, sells and services workers' compensation
and medical malpractice insurance, mainly in California and Illinois;
operates commercial finance and thrift and loan businesses; and provides
financial services.
Orion Capital Corporation, headquartered in New York, New York, through
subsidiaries, underwrites workers compensation insurance; professional
liability insurance for architects, engineers, accountants and lawyers;
non-standard commercial and personal automobile insurance; and other
lines of insurance.
Progressive Corporation, headquartered in Mayfield Heights, Ohio,
through subsidiaries, provides personal automobile insurance and other
specialty property-casualty insurance and related services throughout
the United States and in Canada. The company also processes business for
involuntary plans and provides claim services to fleet owners and other
insurance companies.
We have obtained the foregoing descriptions from sources it deems
reliable. We have not independently verified the provided information
either in terms of accuracy or completeness.
Public Offering
The Public Offering Price.
You may buy Units at the Public Offering Price. The Public Offering
Price per Unit is comprised of the following:
- - the aggregate underlying U.S. dollar value of the Securities;
- - the amount of any cash in the Income and Capital Accounts; and
- - the total sales charge (which combines an initial up-front sales charge
and a deferred sales charge).
A portion of the Public Offering Price per Unit during the initial
offering period consists of Securities in an amount sufficient to pay
for all or a portion of the costs incurred in establishing the Trust.
The organizational and offering costs will be deducted from the assets
of the Trust as of the earlier of six months after the Initial Date of
Deposit or the end of the initial offering period.
Although you are not required to pay for your Units until three business
days following the order for purchase (the "date of settlement"), you
may pay before then. You will become the owner of Units on the date of
settlement if payment has been received. If you pay for your Units
before the date of settlement, we may use your payment during this time
and it may be considered a benefit to us, subject to the limitations of
the Securities Exchange Act of 1934.
Page 14
Minimum Purchase and Sales Charges.
Minimum Purchase.
The minimum amount you can purchase of the Trust is $1,000 worth of
Units ($500 if you are purchasing Units for your Individual Retirement
Account or any other qualified retirement plan).
Sales Charges.
The sales charge you will pay has both an initial and deferred
component. The initial sales charge, which you will pay at the time of
purchase, is equal to approximately 1% of the Public Offering Price of a
Unit. This initial sales charge is actually equal to the difference
between the maximum total sales charge of 4.50% and the maximum
remaining deferred sales charge (initially $.350 per Unit) and will vary
from 1% with changes in the aggregate underlying U.S. dollar value of
the Securities, changes in the Income and Capital Accounts and as
deferred sales charge payments are made. In addition, ten monthly
deferred sales charges of $.035 per Unit will be deducted from the
Trust's assets on approximately the twentieth day of each month from
, 1998 through , 1999. The total maximum sales charge during the
initial offering period will be 4.5% of the Public Offering Price per
Unit (equivalent to 4.545% of the net amount invested, exclusive of the
deferred sales charge).
After the initial offering period, if you purchase Units after the last
deferred sales charge payment has been assessed your sales charge will
consist of a one-time initial sales charge of 4.5% of the Public
Offering Price (equivalent to 4.712% of the net amount invested), which
will be reduced by 1/2 of 1% on each subsequent , commencing
, 1999 to a minimum sales charge of 3.0%.
Discounts for Certain Persons.
If you invest at least $50,000 (except if you are purchasing for a "wrap
fee account" as described below), the maximum sales charge is reduced,
as follows:
Your maximum
If you invest sales charge
(in thousands):* will be:
________________ ____________
$50 but less than $100 4.25%
$100 but less than $150 4.00%
$150 but less than $500 3.50%
$500 or more 2.50%
*The breakpoint sales charges are also applied on a Unit basis utilizing
a breakpoint equivalent in the above table of $10 per Unit and will be
applied on whichever basis is more favorable to the investor. The
breakpoints will be adjusted to take into consideration purchase orders
stated in dollars which cannot be completely fulfilled due to the
requirement that only whole Units be issued.
To qualify for the reduced sales charges described above, you can
combine your purchase of Units of Trust with any other purchases you
make of other trusts which we sponsor which are currently in the initial
offering period and have substantially the same sales charge structure
and years to maturity as the Trust. The reduced sales charge for
quantity purchases will apply only to purchases made by the same person
on any one day from any one dealer. However, we will consider Units you
purchase in the name of your spouse or your child under 21 years of age
to be purchases by you for determining the reduced sales charge. The
reduced sales charges will also apply to a trustee or other fiduciary
purchasing Units for a single trust estate or single fiduciary account.
You must inform your dealer of any combined purchases before the sale in
order to be eligible for the reduced sales charge.
If you own units of any other unit investment trusts which have a
similar strategy as the Trust you may use your termination proceeds from
these trusts (or redemption proceeds if they are from one of our trusts)
to purchase Units of the Trusts subject only to any remaining deferred
Page 15
sales charge to be collected on the Units of the Trust you purchase.
The following persons may purchase Units at the Public Offering Price
less the applicable dealer concession:
Employees, officers and directors of the Sponsor, our related companies,
dealers and their affiliates, and vendors providing services to us.
Immediate family members of the above (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).
If you purchase Units through registered broker/dealers who charge
periodic fees for financial planning, investment advisory or asset
management services or provide these services as part of an investment
account where a comprehensive "wrap fee" charge is imposed, you may
purchase Units in the primary or secondary market at the Public Offering
Price, less the concession we would typically allow such broker/dealer.
See "Distribution of Units-Dealer Concessions."
Every investor will be charged the deferred sales charge per Unit
regardless of any discounts. However, if you are eligible to receive a
discount such that the maximum sales charge you must pay is less than
the applicable maximum deferred sales charge, you will be credited the
difference between your maximum sales charge and the maximum deferred
sales charge at the time you buy your Units.
Changes in the Public Offering Price.
The price you pay for your Units will differ from the amount stated
under "Summary of Essential Information" due to various factors,
including:
- - fluctuations in the local currency prices of the Securities;
- - changes in the relevant currency exchange rates;
- - changes in the applicable commissions, stamp taxes, custodial fees and
other costs associated with foreign trading; and
- - changes in the value of the Income and/or Capital Accounts.
The Value of the Securities.
The aggregate underlying U.S. dollar value of the Securities in the
Trust will be determined as follows: if the Securities are listed on a
securities exchange or The Nasdaq Stock Market, this evaluation is
generally based on the closing sale prices on that exchange or system
(unless it is determined that these prices are not appropriate as a
basis for valuation). However, if there is no closing sale price on that
exchange or system, the evaluation is based on the closing ask prices.
If the Securities are not so listed, or, if so listed and the principal
market for them is other than on that exchange or system, the evaluation
will generally be based on the current ask prices on the over-the-
counter market (unless it is determined that these prices are not
appropriate 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 U.S. dollar value of the Securities on the ask side
of the market, or
c) by any combination of the above.
The total U.S. dollar value of the Securities during the initial
offering period is computed on the basis of the offering side value of
the relevant currency exchange rate expressed in U.S. dollars as of the
Evaluation Time.
The Evaluator on each business day will appraise the value of the
underlying Securities in the Trust as of the Evaluation Time and will
adjust the Public Offering Price of the Units according to this
valuation. This Public Offering Price will be effective for all orders
received before the Evaluation Time on each such day. If we or the
Trustee receive orders for purchases, sales or redemptions after that
time, or on a day which is not a business day, they will be held until
the next determination of price. The term "business day" as used in this
Prospectus will exclude Saturdays, Sundays and the following holidays as
observed by the NYSE, Inc.: New Year's Day, Martin Luther King's
Birthday, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas Day.
After the initial offering period is over, the secondary market Public
Offering Price will be determined based on the aggregate underlying U.S.
dollar value of the Securities in the Trust, plus or minus cash, if any,
in the Income and Capital Accounts of the Trust plus the applicable
sales charge. We calculate the aggregate underlying U.S. dollar value of
the Securities during the secondary market the same way as described
above for sales made during the initial offering period, except that bid
prices are used instead of ask prices when necessary. In addition, the
aggregate underlying U.S. dollar value of the Securities during the
secondary market is computed on the basis of the bid side value of the
relevant currency exchange rate expressed in U.S. dollars as of the
Evaluation Time.
Distribution of Units
During the initial offering period, Units will be sold at the current
Public Offering Price. When the initial offering period ends, Units we
have reacquired may be offered by this prospectus at the secondary
market Public Offering Price (see "The Secondary Market").
Dealer Concessions.
We intend to qualify Units of the Trust for sale in a number of states.
Dealers and other selling agents can purchase Units at prices which
represent a concession or agency commission of 3.2% of the Public
Offering Price per Unit (or 65% of the maximum sales charge after ,
1999). Dealers and selling agents will receive a concession equal to 63%
of the then current maximum remaining deferred sales charge on the sale
of Units with redemption or termination proceeds from other trusts as
described under "Public Offering." Dealers and selling agents will
receive an additional volume concession or agency commission of 0.30% of
the Public Offering Price if they purchase at least $100,000 worth of
Units on the Initial Date of Deposit or $250,000 on any day thereafter
or if they were entitled to receive this additional concession in
connection with the sale of units of the trusts contained in FT 250 or
FT 259.
Dealers and other selling agents who sell Units of the Trust during the
initial offering period in the dollar amounts below will be entitled to
the following additional sales concessions as a percentage of the Public
Offering Price:
Total Sales per Trust Additional
(in millions) Concession
_____________________ __________
$1 but less than $2 .10%
$2 but less than $3 .15%
$3 but less than $10 .20%
$10 or more .30%
We reserve the right to change the amount of concessions or agency
commissions from time to time. If we reacquire, or the Trustee redeems,
Units from brokers, dealers and others while a market is being
maintained for such Units, such entities agree to repay to us
immediately any concession or agency commission relating to the
reacquired Units. 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 kept by or given to the banks in
the amounts shown above. Under the Glass-Steagall Act, banks are
prohibited from underwriting Trust Units. However, the Glass-Steagall
Act does allow certain agency transactions and these appear to be
permitted under the Act. In Texas and in certain other states, any banks
making Units available must be registered as broker/dealers under state
law.
Page 17
Award Programs.
From time to time we may sponsor programs which award our dealers'
registered representatives who have sold a minimum number of Units
during a specified time period. We may also pay fees to qualifying
dealers for services or activities which are meant to result in sales of
Units of the Trust. In addition, if a dealer sponsors sales contests or
recognition programs that conform to criteria we establish, or
participates in sales programs we sponsor, we will reallow to that
dealer an amount equal to no more than the total applicable sales
charges on the sales generated by such person at the Public Offering
Price during such programs. We make these payments out of our own
assets, and not out of the Trust's assets. These programs will not
change the price you pay for your Units or the amount that the Trust
will receive from the Units sold.
Investment Comparisons.
We may from time to time compare the then current estimated returns of
the Trust (which may show performance net of the expenses and charges
the Trust would have incurred) and returns over specified periods of
other similar trusts we sponsor in our advertising and sales materials,
with (1) returns on other taxable investments such as the common stocks
comprising the DJIA, S&P 500 Index, Ibbotson Small-Cap Index, the S&P
Industrial Index, other investment indices, corporate or U.S. Government
bonds, bank CDs and money market accounts or money market funds, (2)
performance data from Lipper Analytical Services, Inc. and Morningstar
Publications, Inc. or (3) information from publishers such as Money, the
New York Times, U.S. News and World Report, Business Week, Forbes or
Fortune. The investment characteristics of each Trust, which are
described more fully elsewhere in this Prospectus, differ from other
comparative investments. For example, common stock indexes have much
greater diversifications than the Trust; U.S. Government bonds are
backed by the full faith and credit of the U.S. Government; and bank CDs
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. You should not assume that these performance comparisons will be
representative of the Trust's future relative performance.
The Sponsor's Profits
We will receive a gross sales commission equal to the maximum sales
charge per Unit for each Trust less any reduced sales charge as stated
in "Public Offering." Also, any difference between our cost to purchase
the Securities and the price we sell them to the Trust (which is based
on the Evaluator's determination of the aggregate underlying U.S. dollar
value of the Securities) is considered a profit or loss. (See Note 2 of
"Schedule of Investments.") During the initial offering period, dealers
and others may also realize profits or sustain losses as a result of
fluctuations after the Date of Deposit in the Public Offering Price
received by those dealers and others when they sell the Units.
In maintaining a market for the Units, any difference between the price
at which Units are purchased and the price at which they are sold (which
includes a maximum sales charge for the Trust) or redeemed will be a
profit or loss to us. The secondary market public offering price of
Units may be more or less than the cost of those Units to us.
The Secondary Market
Although we are not obligated to, we intend to maintain a market for the
Units after the initial offering period and continuously offer to
purchase Units at prices based on the Redemption Price per Unit.
Page 18
We will pay all expenses to maintain a secondary market, except the
Evaluator fees and Trustee costs to transfer and record the ownership of
Units. We may discontinue purchases of Units at any time. If you wish to
dispose of your Units, you should ask us for the current market prices
before making a tender for redemption to the Trustee. If you sell Units
subject to a deferred sales charge or tender them for redemption before
you have paid the total deferred sales charge on your Units, you will
have to pay the remainder of the deferred sales charge at that time.
How We Purchase Units
The Trustee will notify us of any tender of Units for redemption. If our
bid at that time is equal to or greater than the Redemption Price per
Unit, we may purchase the Units. You will receive the proceeds from the
sale of Units we purchase no later than if they were redeemed by the
Trustee. Units that we hold may be tendered to the Trustee for
redemption as any other Units. If we elect not to purchase Units, the
Trustee may sell Units tendered for redemption in the over-the-counter
market, if any. However, the amount you will receive is the same as you
would have received on redemption of the Units.
The Public Offering Price of any Units we acquire will be consistent
with the Public Offering Price described in the then effective
prospectus. Any profit or loss from the resale or redemption of such
Units will belong to us.
Expenses and Charges
The estimated annual expenses of the Trust are listed under "Fee Table."
If actual expenses exceed the estimate, the Trust will absorb the
excess. The Trustee will pay expenses of the Trust from the Income
Account of the Trust if funds are available, and then from the Capital
Account. The Income and Capital Accounts are noninterest-bearing to Unit
holders, so the Trustee benefits from the use of these funds.
As Sponsor, we will be compensated for providing bookkeeping and other
administrative services to the Trust, and will receive brokerage fees
when the Trust uses us (or an affiliate of ours) as agent in buying or
selling Securities. First Trust Advisors L.P., an affiliate of the
Sponsor, acts as both Portfolio Supervisor and Evaluator to the Trust
and will receive the fees set forth under "Fee Table" for providing
portfolio supervisory and evaluation services to the Trust. In providing
portfolio supervisory services, the Portfolio Supervisor may purchase
research services from a number of sources, which may include
underwriters or dealers of the Trust.
The fees payable to the Portfolio Supervisor, Evaluator and Trustee are
based on the largest aggregate number of Units of the Trust outstanding
at any time during the calendar year, except during the initial offering
period, in which case these fees are calculated based on the largest
number of Units outstanding during the period for which compensation is
paid. These fees may be adjusted for inflation without Unit holders'
approval, but in no case will the annual fees paid to the Sponsor and
our affiliate for providing services to all unit investment trusts for
which they provide such services be more than the actual cost of
providing such services in such year.
The Trust may also incur the following charges:
- - All legal and annual auditing expenses of the Trustee according to its
responsibilities under the Indenture;
- - The expenses and costs incurred by the Trustee to protect a Trust and
the rights and interests of the Unit holders;
- - Fees for any extraordinary services the Trustee performed under the
Indenture;
- - Payment for any loss, liability or expense the Trustee incurred without
negligence, bad faith or willful misconduct on its part, in connection
Page 19
with its acceptance or administration of the Trust;
- - Any offering costs incurred after the earlier of six months after the
Initial Date of Deposit or the end of the initial offering period;
- - Payment for any loss, liability or expenses we incurred without
negligence, bad faith or willful misconduct in acting as Depositor of
the Trust;
- - Foreign custodial and transaction fees, if any;
- - All taxes and other government charges imposed upon the Securities or
any part of the Trust. (No such taxes or charges are now in place or
planned as far as we know.)
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 has the power to sell Securities in the Trust to make cash
available to pay these charges, if there is not enough cash in the
Income or Capital Accounts of the Trust. Since the Securities are all
common stocks and dividend income is unpredictable, we cannot guarantee
that dividends will be sufficient to meet any or all expenses of the
Trust. These sales may result in capital gains or losses to the Unit
holders. See "Tax Status."
The Trust will be audited on an annual basis. So long as we are making a
secondary market for Units, we will bear the cost of these annual audits
to the extent the cost exceeds $0.0050 per Unit. Otherwise, the Trust
will pay for the audit. You can receive a copy of the audited financial
statements by notifying the Trustee.
Tax Status
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, as amended (the
"Code"). Please note that the following discussion is a summary of the
Federal income tax rules that are generally applicable to most Unit
holders. Different rules will apply in specific situations to some Unit
holders, and not all of the Federal income tax consequences of ownership
of the Units that may be applicable to certain Unit holders are
discussed. Except as specifically discussed below, this discussion
relates only to Unit holders that are U.S. Unit holders, which generally
includes only Unit holders that are (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.
The following discussion is based on the Federal income tax law and
interpretations of Federal income tax law that exist on the date of this
Prospectus. These laws and interpretations, of course, frequently
change. Such changes could change the Federal income tax rules that
apply to you. For these reasons, you should consult your own tax
advisors regarding the specific Federal income tax rules that apply to
you. Further, you should consult your tax advisor with respect to
foreign, state and local tax consequences of the purchase, ownership and
disposition of Units.
For purposes of the following discussion and opinions, it is assumed
that each Security is equity for Federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor,
under existing law:
1. The Trust is not an association taxable as a corporation for Federal
income tax purposes; you will be treated as the owner of a pro rata
Page 20
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. You will be considered to have received your pro
rata share of the income derived from each Security when such income is
considered to be received by the Trust.
2. You will be considered to have received all of the dividends paid on
your pro rata portion of each Security when such dividends are
considered to be received by the Trust regardless of whether such
dividends are used to pay a portion of the deferred sales charge. Unit
holders will be taxed in this manner regardless of whether distributions
from such Trust are actually received by the Unit holder.
3. You 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 you pay for your Units,
generally including sales charges, is allocated among your pro rata
portion of each Security held by the Trust (in proportion to the fair
market values on the valuation date closest to the date you purchase
your Units) in order to determine the tax basis for your pro rata
portion of each Security held by the Trust. For Federal income tax
purposes, your pro rata portion of dividends, as defined by Section 316
of the Code, paid by a corporation with respect to a Security held by
the Trust is taxable as ordinary income to the extent of such
corporation's current and accumulated "earnings and profits." Your pro
rata portion of dividends paid on such Security which exceed such
current and accumulated earnings and profits will first reduce your tax
basis in such Security, and to the extent that such dividends exceed
your tax basis in such 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 you have held your Units.
4. 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).
Deferred Sales Charge. Generally, the tax basis of a Unit holder
includes sales charges, and such charges are not deductible. 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.
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 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 the Code imposes additional limitations on the eligibility of
dividends for the 70% dividends received deduction. To the extent
dividends received by the Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of
such dividends, since the dividends received deduction is generally
Page 21
available only with respect to dividends paid by domestic corporations.
Your Limitations on Deductibility of the Trust's Expenses. Your pro rata
share of each expense paid by the Trust is deductible by you to the same
extent as though you had paid the expense directly. Please note,
however, that certain miscellaneous itemized deductions, such as
investment expenses, tax return preparation fees and employee business
expenses are 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, you may recognize
taxable gain (or loss) when a Security is disposed of by the Trust or if
you dispose of a Unit. If you dispose of a Unit, you are considered to
have disposed of your entire pro rata interest in all assets of the
Trust involved including your pro rata portion of all the Securities
represented by the Unit. Recent legislation provides that for taxpayers
other than corporations, net capital gain (which is defined as net long-
term capital gain over net short-term capital loss for the taxable year)
realized from property (with certain exclusions) is subject to a maximum
marginal stated tax rate of 20% (10% in the case of certain taxpayers in
the lowest tax bracket). Capital gain or loss is long-term if the
holding period for the asset is more than one year, and is short-term if
the holding period for the asset is one year or less. The date on which
a Unit is acquired (i.e., the "trade date") is excluded for purposes of
determining the holding period of the Unit. The legislation is generally
effective retroactively for amounts properly taken into account on or
after January 1, 1998. Capital gains realized from assets held for one
year or less are taxed at the same rates as ordinary income.
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."
Recent legislation also includes provisions that treat certain
transactions designed to reduce or eliminate risk of loss and
opportunities for gain (e.g., short sales, off-setting 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.
Special Tax Consequences of In-Kind Distributions Upon Redemption of
Units or Termination of the Trust. As discussed in "Redeeming Your
Units," under certain circumstances if you own at least 1,000 Units of
the Trust you may request an In-Kind Distribution upon the redemption of
Units or the termination of the Trust. However, you will be liable for
related expenses (the "Distribution Expenses") and the amount of the In-
Kind Distribution will be reduced by the amount of the Distribution
Expenses. As previously discussed, prior to the redemption of Units or
the termination of the Trust, you are considered to own 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 your receiving an
undivided interest in whole shares of stock plus, possibly, cash.
The potential tax consequences that may occur under an In-Kind
Distribution with respect to each Security owned by the Trust will
depend on whether or not you receive cash in addition to Securities. You
will not recognize gain or loss if you only receive Securities in
exchange for your pro rata portion in the Securities held by the Trust.
Page 22
However, if you receive cash in exchange for a fractional share of an
Security held by the Trust, you will generally recognize gain or loss
based upon the difference between the amount of cash you receive and
your tax basis in the fractional share of a Security held by the Trust.
Because the Trust will own many Securities, if you request an In-Kind
Distribution, you 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) you will recognize under the rules described above with
respect to each Security owned by the Trust.
Computing Your Tax Basis. Initially, your tax basis in your Units will
generally equal the price you paid for your 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 as of the
valuation date nearest the date the Units are purchased in order to
determine your tax basis for your pro rata portion of each Security.
Your tax basis in your Units and your pro rata portion of a Security
held by the Trust will be reduced to the extent dividends paid with
respect to such Security are received by the Trust which are not taxable
as ordinary income as described above.
General. You will be requested to provide your taxpayer identification
number to the Trustee and to certify that you have not been notified
that payments to you 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 you (including
amounts received upon the redemption of Units) will be subject to back-
up withholding. Distributions by the Trust (other than those that are
not treated as United States source income, if any) will generally be
subject to United States income taxation and withholding in the case of
Units held by non-resident alien individuals, foreign corporations or
other non-United States persons.
In general, income that is not effectively connected to the conduct of a
trade or business within the United States that is earned by non-U.S.
Unit holders and derived from dividends of foreign corporations will not
be subject to U.S. withholding tax provided that less than 25 percent of
the gross income of the foreign corporation for a three-year period
ending with the close of its taxable year preceding payment was not
effectively connected to the conduct of a trade or business within the
United States. In addition, such earnings may be exempt from U.S.
withholding pursuant to a specific treaty between the United States and
a foreign country. Non-U.S. Unit holders should consult their own tax
advisors regarding the imposition of U.S. withholding on distributions
from the Trust.
It should be noted that payments to the Trust of dividends on Securities
that are attributable to foreign corporations may be subject to foreign
withholding taxes. Any dividends withheld as a result thereof will
nevertheless be treated as income to you. Because, under the grantor
trust rules, you are considered to have paid directly your share of
foreign taxes that have been paid or accrued, if any, you may be
entitled to a foreign tax credit or deduction for United States purposes
with respect to such taxes. There is a required holding period for such
credits.
At the termination of the Trust, the Trustee will provide you with a
statement containing information relating to the dividends received by
the Trust on the Securities, the gross proceeds received by the Trust
from the disposition of any Security (resulting from redemption or the
sale of any Security) and the fees and expenses paid by the Trust. The
Trustee will also furnish annual information returns to Unit holders and
to the Internal Revenue Service.
If you wish to purchase Units for tax-deferred plans and IRAs, you
should consult your broker for details on establishing such accounts.
Units may also be purchased by persons who already have self-directed
Page 23
plans established. See "Retirement Plans."
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.
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 on capital gains and income received
in each of the above plans is deferred until you receive distributions.
These distributions are generally treated as ordinary income but may, in
some cases, be eligible for special averaging or tax-deferred rollover
treatment. If you are considering participating in a plan like this, you
should review the tax laws regarding these plans and consult your
attorney or tax adviser. Brokerage firms and other financial
institutions offer these plans with varying fees and charges.
Rights of Unit Holders
Unit Ownership.
The Trustee will treat as record owner of Units that person registered
as such on its books. If you request certificates representing the Units
you ordered for purchase they will be delivered three business days
after your order or shortly thereafter. You may transfer or redeem Units
represented by a certificate by endorsing it and surrendering it to the
Trustee, along with a written instrument(s) of transfer. You must sign
exactly as your name appears on the face of the certificate with your
signature guaranteed by an eligible institution. In certain cases the
Trustee may require additional documentation such as trust instruments,
death certificates, appointments as executor or administrator, or
certificates of corporate authority.
Certificates will be issued in fully registered form, transferable only
on the books of the Trustee in denominations of one Unit or any multiple
thereof, numbered serially for identification purposes.
You may also choose to hold your Units in uncertificated form. If you
choose this option, the Trustee will keep an account for you and will
credit your account with the number of Units you purchase. Within two
business days of the issuance or transfer of Units held in
uncertificated form, the Trustee will send to you, as the registered
owner of Units:
- - a written initial transaction statement containing a description of your
Trust;
- - the number of Units issued or transferred;
- - your name, address and taxpayer identification number;
- - a notation of any liens or restrictions of the issuer and any adverse
claims; and
- - the date the transfer was registered.
Uncertificated Units may be transferred the same way as certificated
Units, except that no certificate needs to be presented to the Trustee.
Also, no certificate will be issued when the transfer takes place unless
you request it. You may at any time request that the Trustee issue
certificates for your Units.
As a Unit holder, you may be required to pay a nominal fee to the
Trustee for each certificate reissued or transferred, and to pay any
government charge that may be imposed for each transfer or exchange.
However, the Trustee does not require such charge now, nor are they
currently contemplating doing so. If a certificate gets lost, stolen or
Page 24
destroyed, you may be required to furnish indemnity to the Trustee to
receive replacement certificates. You must surrender mutilated
certificates to the Trustee for replacement.
Unit Holder Reports.
In connection with each distribution, the Trustee will provide you with
a statement detailing the per-Unit amount of income (if any)
distributed. After the end of each calendar year, the Trustee will
provide you with the following information:
a summary of transactions in the Trust for the year;
any Securities sold during the year and the Securities held at the end
of that year by the Trust;
the Redemption Price per Unit, computed on the 31st day of December of
such year (or the last business day before); and
amounts of income and capital distributed during the year.
You may request from the Trustee copies of the evaluations of the
Securities as prepared by the Evaluator to enable you to comply with
Federal and state tax reporting requirements.
Income and Capital Distribution
You will begin receiving distributions from your Units only after you
become a Record Owner. It is your responsibility to notify the Trustee
when you become Record Owner of the Units, but normally your
broker/dealer provides this notice. The Trustee will credit any
dividends received on the Trust's Securities to the Income Account of
the Trust. All other receipts, such as return of capital, are credited
to the Capital Account of the Trust. Dividends received on the Foreign
Securities, if any, are converted into U.S. dollars at the applicable
exchange rate.
The Trustee will distribute any net income in the Income Account on or
near the Income Distribution Dates to Unit holders of record on the
preceding Income Distribution Record Date. See "Summary of Essential
Information." The Trustee will distribute amounts in the Capital Account
on the last day of each month to Unit holders of record on the fifteenth
day of each month provided the amount equals at least $1.00 per 100
Units. However, amounts in the Capital Account from the sale of
Securities designated to meet redemptions of Units, to pay the deferred
sales charge or to pay expenses will not be distributed. The Trustee is
not required to pay interest on funds held in the Income or Capital
Accounts of the Trust. However, the Trustee may earn interest on these
funds, thus benefiting from the use of such funds.
We anticipate that the deferred sales charge will be collected from the
Capital Account of the Trust and that the money in the Capital Account
will be sufficient to cover the cost of the deferred sales charge. If
there is not enough money in the Capital Account to pay the deferred
sales charge, the Trustee may sell Securities to meet the shortfall. We
will designate an account where distributions will be made to pay the
deferred sales charge.
The Trustee is required by the Internal Revenue Service to withhold a
certain percentage of any distribution the Trust makes and deliver such
amount to the Internal Revenue Service if the Trustee does not have your
tax identification number. You may recover this amount by giving your
tax identification number to the Trustee, or when you file a tax return.
Normally, the selling broker provides the Trustee your tax
identification number. However, you should check your statements from
the Trustee to make sure they have the number to avoid this "back-up
withholding." If the Trustee does not have one, you should provide it to
the Trustee as soon as possible.
Within a reasonable time after the Trust is terminated you will receive
the pro rata share of the money from the disposition of the Securities.
However, if you are eligible, you may elect to receive an In-Kind
Page 25
Distribution as described under "Amending or Terminating the Indenture."
All Unit holders will receive a pro rata share of any other assets
remaining in the Trust, excluding any unpaid expenses of the Trust.
The Trustee may establish reserves (the "Reserve Account") within the
Trust for any state and local taxes and any governmental charges to be
paid out of the Trust.
Redeeming Your Units
You may redeem all or a portion of your Units at any time by sending the
certificates representing the Units you want to redeem to the Trustee at
its unit investment trust office. If your Units are held in
uncertificated form, you need only to deliver a request for redemption
to the Trustee. In either case, the certificates or the redemption
request you send to the Trustee must be properly endorsed with proper
instruments of transfer and signature guarantees as explained in "Rights
of Unit Holders-Unit Ownership" (or by providing satisfactory indemnity
if the certificates were lost, stolen, or destroyed). No redemption fee
will be charged, but you are responsible for any governmental charges
that apply. Three business days after the day you tender your Units (the
"Date of Tender") you will receive cash in an amount for each Unit equal
to the Redemption Price per Unit calculated at the Evaluation Time on
the Date of Tender.
The Date of Tender is considered to be the date on which the Trustee
receives your certificates or redemption request (if such day is a day
the New York Stock Exchange (the "Exchange") is open for trading).
However, if your certificates or redemption request are received after
4:00 p.m. Eastern time (or after any earlier closing time on a day on
which the Exchange is scheduled in advance to close at such earlier
time), the Date of Tender is the next day the Exchange is open for
trading. Redeemed Units will then be cancelled.
Any amounts paid on redemption representing income will be withdrawn
from the Income Account of the Trust if funds are available for that
purpose, or from the Capital Account. All other amounts paid on
redemption will be taken from the Capital Account of the Trust.
If you are tendering 1,000 Units or more for redemption, rather than
receiving cash, you may elect to receive a distribution of shares of
Securities (an "In-Kind Distribution") in an amount and value equal to
the Redemption Price per Unit by making this request in writing to the
Trustee at the time of tender. However, no In-Kind Distribution requests
submitted during the nine business days prior to the Trust's Mandatory
Termination Date will be honored. Where possible, the Trustee will make
an In-Kind Distribution by distributing each of the Securities in book-
entry form to your bank account or broker/dealer at the Depository Trust
Company. The Trustee will subtract from your In-Kind Distribution any
customary transfer and registration charges. As a tendering Unit holder,
you will receive your pro rata number of whole shares of the Securities
that make up the portfolio, and cash from the Capital Account equal to
the fractional shares to which you are entitled. The Trustee may adjust
the number of shares of any Security included in your In-Kind
Distribution to make distribution of whole shares easier. This
adjustment will be made based on the value of the Securities on the Date
of Tender. If there is not enough money in the Capital Account to pay
the required cash distribution, the Trustee may sell Securities as
described above.
The Internal Revenue Service will require the Trustee to withhold a
portion of your redemption proceeds if the Trustee has not previously
been provided your Taxpayer Identification Number. For more information
about this withholding, see "Income and Capital Distribution." If the
Trustee does not have your Taxpayer Identification Number, you must
Page 26
provide it at the time of the redemption request.
The Trustee may sell Securities in the Trust to make funds available for
redemption. If Securities are sold, the size and diversity of the Trust
will be reduced. These sales may result in lower prices than if the
Securities were sold at a different time.
Your right to redeem Units (and therefore, your right to receive
payment) may be delayed:
1. if the New York Stock Exchange is closed (other than customary
weekend and holiday closings);
2. if the Securities and Exchange Commission ("SEC") determines that
trading on the New York Stock Exchange is restricted or that an
emergency exists making sale or evaluation of the Securities not
reasonably practical; and
3. for any other period permitted by SEC order.
The Trustee is not liable to any person for any loss or damage which may
result from such a suspension or postponement.
The Redemption Price.
We will determine the Redemption Price per Unit during the secondary
market based on the aggregate underlying U.S. dollar value of the
Securities in the Trust plus or minus cash, if any, in the Income and
Capital Accounts of the Trust. The Redemption Price per Unit is
determined by the Trustee by:
adding
1. cash in the Trust not designated to purchase Securities;
2. the aggregate value of the Securities held in the Trust; and
3. dividends receivable on the Securities trading ex-dividend as of the
date of computation.
deducting
1. any applicable taxes or governmental charges that need to be paid out of
the Trust;
2. any amounts owed to the Trustee for its advances;
3. estimated accrued expenses of the Trust, including, but not limited to,
fees and expenses of the Trustee (including legal fees), and 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 before the evaluation being made;
5. liquidation costs for Foreign Securities, if any; and
6. other liabilities incurred by the Trust;
dividing
the result by the number of outstanding Units of the Trust.
If there is any remaining deferred sales charge on the Units when you
redeem them, the amount of this remaining deferred sales charge will be
deducted from your redemption proceeds. In addition, until the earlier
of six months after the Initial Date of Deposit or the end of the
initial offering period, the Redemption Price per Unit will include
estimated organizational and offering costs as set forth under "Summary
of Essential Information."
The aggregate underlying U.S. dollar value of the Securities for
purposes of calculating the Redemption Price during the secondary market
is determined in the same manner as that used to calculate the Secondary
Market Public Offering Price as discussed in "Public Offering-The Value
of the Securities."
Removing Securities from the Trust
The portfolio of the Trust is not managed. However, we may, but are not
required to, direct the Trustee to dispose of a Security in certain
limited circumstances. These circumstances include, but are not limited
Page 27
to, situations in which:
- - the issuer of the Security defaults in the payment of a declared dividend;
- - any action or proceeding prevents the payment of dividends;
- - there is any legal question or impediment affecting the Security;
- - the issuer of the Security has breached a covenant which would affect
the payment of dividends or the issuer's credit standing, or otherwise
damage the sound investment character of the Security; or
- - the issuer has defaulted on the payment on any other of its outstanding
obligations to such an extent or other such credit factors exist so
that, in our opinion, keeping the Security would be harmful to the Trust.
Except in the limited instance in which the Trust may acquire
Replacement Securities to replace failed contracts to purchase
Securities, as described in "The FT Series", the Trust may not acquire
any securities or other property other than the Securities. The Trustee,
on behalf of the Trust, will reject any offer for new or exchanged
securities or property in exchange for a Security, such as those
acquired in a merger or other transaction. If such exchanged securities
or property are nevertheless acquired by the Trust, at our instruction,
they will either be sold or held in the Trust. In making the
determination as to whether to sell or hold the exchanged securities or
property we may get advice from the Portfolio Supervisor. Any proceeds
received from the sale of Securities, exchanged securities or property
will be credited to the Capital Account of the Trust for distributions
to Unit holders or to meet redemption requests. The Trustee may retain
and pay us or an affiliate of ours to act as agent for the Trust to
facilitate selling Securities, exchanged securities or property from the
Trust. If we or our affiliate act in this capacity, we will be held
subject to the restrictions under the Investment Company Act of 1940, as
amended.
The Trustee may also sell Securities that we designate; or, without our
direction, in its own discretion, in order to meet redemption requests
or pay expenses.
In designating which Securities should be sold, we will try to maintain
the proportionate relationship among the Securities. If this is not
possible, the composition and diversity of the Securities in the Trust
may be changed. To get the best price for the Trust we may have to
specify minimum amounts (generally 100 shares) in which blocks of
Securities are to be sold. We may consider sales of units of unit
investment trusts which we sponsor in making recommendations to the
Trustee on the selection of broker/dealers to execute the Trust's
portfolio transactions, or when acting as agent for the Trust in
acquiring or selling Securities on behalf of the Trust.
Amending or Terminating the Indenture
Amendments. The Indenture may be amended by us and the Trustee without
your consent:
- - to cure ambiguities;
- - to correct or supplement any defective or inconsistent provision;
- - to make any amendment required by any governmental agency; or
- - to make other changes determined not to be materially adverse to your
best interests (as determined by us and the Trustee).
Termination. As provided by the Indenture, the Trust will terminate on
the Mandatory Termination Date stated in the "Summary of Essential
Information." The Trust may be terminated prior to the Mandatory
Termination Date:
- - upon the consent of 100% of the Unit holders;
- - if 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
Page 28
value of Securities deposited in the 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 such Trust are tendered for redemption by
underwriters, including the Sponsor.
In the event of termination, the Trustee will send prior written notice
thereof to all Unit holders which will specify how you should tender
your certificates, if any, to the Trustee. If the Trust is terminated
due to this last reason, we will refund to each purchaser of Units of
such Trust the entire sales charge paid by such purchaser; however,
termination of the Trust prior to the Mandatory Termination Date for any
other stated reason will result in all remaining unpaid deferred sales
charges on your Units being deducted from your termination proceeds. For
various reasons, the Trust may be reduced below the Discretionary
Liquidation Amount and could therefore be terminated prior to the
Mandatory Termination Date.
Unless terminated earlier, the Trustee will begin to sell Securities in
connection with the termination of a Trust during the period beginning
nine business days prior to, and no later than, the Mandatory
Termination Date. We will determine the manner, timing and execution of
the sale of Securities as part of the termination of the Trust. Because
the Trustee must sell the Securities within a relatively short period of
time, the sale of Securities as part of the termination process may
result in a lower amount than might otherwise be realized if such sale
were not required at this time.
If you own at least 1,000 Units of the Trust the Trustee will send you a
form at least 30 days prior to the Mandatory Termination Date which will
enable you to receive shares of Securities included in the Trust
(reduced by customary transfer and registration charges) rather than the
typical cash distribution representing your pro rata interest in the
Trust. You must notify the Trustee at least ten business days prior to
the Mandatory Termination Date if you elect this In-Kind Distribution
option. If you do not elect to participate in the In-Kind Distribution
option for eligible Unit holders you will receive a cash distribution
from the sale of the remaining Securities, along with your interest in
the Income and Capital Accounts of the Trust, within a reasonable time
after the Trust is terminated. Regardless of the distribution involved,
the Trustee will deduct from the Trust any accrued costs, expenses,
advances or indemnities provide by the Indenture, including estimated
compensation of the Trustee and costs of liquidation and any amounts
required as a reserve to pay any taxes or other governmental charges.
Information on the Sponsor, Trustee and Evaluator
The Sponsor.
We, Nike Securities L.P., specialize in the underwriting, trading and
distribution of unit investment trusts under the "First Trust" brand
name and other securities. An Illinois limited partnership formed in
1991, we act as Sponsor for successive series of:
- - The First Trust Combined Series
- - FT Series (formerly known as The First Trust Special Situations Trust)
- - The First Trust Insured Corporate Trust
- - The First Trust of Insured Municipal Bonds
- - The First Trust GNMA
First Trust introduced the first insured unit investment trust in 1974.
To date we have deposited more than $20 billion in First Trust unit
investment trusts. Our employees include a team of professionals with
many years of experience in the unit investment trust industry.
We are a member of the National Association of Securities Dealers, Inc.
Page 29
and Securities Investor Protection Corporation. Our principal offices
are at 1001 Warrenville Road, Lisle, Illinois 60532; telephone number
(630) 241-4141. As of December 31, 1997, the total partners' capital of
Nike Securities L.P. was $11,724,071 (audited).
This information refers only to the Sponsor and not to the Trust or to
any series of the Trust or to any other dealer. We are including this
information only to inform you of our financial responsibility and our
ability to carry out our contractual obligations. We will provide more
detailed financial information on request.
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. If you have questions regarding the Trust, you may
call the Customer Service Help Line at 1-800-682-7520. The Trustee is
supervised 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 has not participated in selecting the Securities; it only
provides administrative services.
Limitations of Liabilities of Sponsor and Trustee.
The Sponsor and the Trustee will not be liable to Unit holders for
taking any action or for not taking any action in good faith according
to the Indenture. We will also not be accountable for errors in
judgment. We will only be liable for our own willful misfeasance, bad
faith, gross negligence (ordinary negligence in the Trustee's case) or
reckless disregard of our obligations and duties. The Trustee is not
liable for any loss or depreciation when the Securities are sold. If we
fail to act under the Indenture, the Trustee may do so, and the Trustee
will not be liable for any action it takes in good faith under the
Indenture.
The Trustee will not be liable for any taxes or other governmental
charges or interest on the Securities which the Trustee may be required
to pay under any present or future law of the United States or of any
other taxing authority with jurisdiction. Also, the Indenture states
other provisions regarding the liability of the Trustee.
If we do not perform any of our duties under the Indenture or are not
able to act or become bankrupt, or if our affairs are taken over by
public authorities, then the Trustee may:
appoint a successor Sponsor, paying them a reasonable rate not more than
that stated by the Securities and Exchange Commission,
terminate the Indenture and liquidate the Trust, or
continue to act as Trustee without terminating the Indenture.
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 Trustee, Sponsor and Unit holders may rely on the accuracy of any
evaluation prepared by the Evaluator. The Evaluator will make
determinations in good faith based upon the best available information.
However, the Evaluator will not be liable to the Trustee, Sponsor or
Unit holders for errors in judgment.
Other Information
Legal Opinions.
Our counsel is Chapman and Cutler, 111 W. Monroe St., Chicago, Illinois,
Page 30
60603. They have passed upon the legality of the Units offered hereby
and certain matters relating to Federal tax law. Carter, Ledyard &
Milburn acts as the Trustee's counsel, as well as special New York tax
counsel for the Trust.
Auditors.
Ernst & Young LLP, independent auditors, has audited 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 elsewhere
herein, and in the Registration Statement.
Supplemental Information.
If you write or call the Trustee, you will receive free of charge
supplemental information about this Series, which has been filed with
the Securities and Exchange Commission and to which we have referred
throughout. This information states more specific risk information about
the Trust.
Page 31
FIRST TRUST (registered trademark)
Insurance Growth Trust
Series 3
FT 286
Sponsor:
Nike Securities L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
24-Hour Pricing Line:
1-800-446-0132
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
, 1998
This Prospectus is not an offer to sell, or a solicitation of an offer
to buy, securities in any jurisdiction or to any person to whom it is
not lawful to make such offer.
There is additional information in the registration statements and
related exhibits. The Fund has filed these with the Securities and
Exchange Commission, Washington, D.C. under the Securities Act of 1933
and the Investment Company Act of 1940.
PLEASE RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE.
Page 32
First Trust (registered trademark)
The FT Series
Information Supplement
This Information Supplement provides additional information concerning
the structure, operations and risks of the unit investment trust
contained in FT 286 not found in the prospectus for the Trust. This
Information Supplement is not a prospectus and does not include all of
the information that a prospective investor should consider before
investing in the Trust. This Information Supplement should be read in
conjunction with the prospectus for the Trust in which an investor is
considering investing ("Prospectus"). Copies of the Prospectus can be
obtained by calling or writing the Trustee at the telephone number and
address indicated in the Prospectus. The Information Supplement has
been created to supplement information contained in the Prospectus.
This Information Supplement is dated , 1998. Capitalized
terms have been defined in the Prospectus.
Table of Contents
Risk Factors
Securities 1
Foreign Issuers 2
Exchange Rate 2
Concentrations
Insurance Companies 3
Risk Factors
Securities. 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 Securities or
the general condition of the relevant stock market may worsen, and the
value of the Securities and therefore the value of the Units may
decline. Common stocks are especially susceptible to general stock
market movements and to volatile increases and decreases of value, as
market confidence in and perceptions of the issuers change. These
perceptions are based on unpredictable factors, including expectations
regarding government, economic, monetary and fiscal policies, inflation
and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Both U.S. and foreign
markets have experienced substantial volatility and significant declines
recently as a result of certain or all of these factors. 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 Trusts have a right to receive dividends
only when and if, and in the amounts, declared by the issuer's board of
directors and have a right to participate in amounts available for
distribution by the issuer only after all other claims on the issuer
have been paid or provided for. Common stocks do not represent an
obligation of the issuer and, therefore, do not offer any assurance of
income or provide the same degree of protection of capital as do debt
securities. The issuance of additional debt securities or preferred
stock will create prior claims for payment of principal, interest and
dividends which could adversely affect the ability and inclination of
the issuer to declare or pay dividends on its common stock or the rights
of holders of common stock with respect to assets of the issuer upon
liquidation or bankruptcy. 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.
Foreign Issuers. Since certain of the Securities included in the
Trust consist of securities of foreign issuers, an
Page 1
investment in the Trust involves certain investment risks that are
different in some respects from an investment in a trust which invests
entirely in the securities of domestic issuers. These investment risks
include future political or governmental restrictions which might
adversely affect the payment or receipt of payment of dividends on the
relevant Securities, the possibility that the financial condition of the
issuers of the Securities may become impaired or that the general
condition of the relevant stock market may worsen (both of which would
contribute directly to a decrease in the value of the Securities and
thus in the value of the Units), the limited liquidity and relatively
small market capitalization of the relevant securities market,
expropriation or confiscatory taxation, economic uncertainties and
foreign currency devaluations and fluctuations. In addition, for foreign
issuers that are not subject to the reporting requirements of the
Securities Exchange Act of 1934, there may be less publicly available
information than is available from a domestic issuer. Also, foreign
issuers are not necessarily subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to
those applicable to domestic issuers. The securities of many foreign
issuers are less liquid and their prices more volatile than securities
of comparable domestic issuers. In addition, fixed brokerage commissions
and other transaction costs on foreign securities exchanges are
generally higher than in the United States and there is generally less
government supervision and regulation of exchanges, brokers and issuers
in foreign countries than there is in the United States. However, due to
the nature of the issuers of the Securities selected for the
Trust, the Sponsor believes that adequate information
will be available to allow the Supervisor to provide portfolio
surveillance for the Trust.
Securities issued by non-U.S. issuers generally pay dividends in foreign
currencies and are principally traded in foreign currencies. Therefore,
there is a risk that the United States dollar value of these securities
will vary with fluctuations in the U.S. dollar foreign exchange rates
for the various Securities. See "Exchange Rate" below.
On the basis of the best information available to the Sponsor at the
present time, none of the Securities in the Trust are
subject to exchange control restrictions under existing law which would
materially interfere with payment to the Trust of dividends due on, or
proceeds from the sale of, the Securities. However, there can be no
assurance that exchange control regulations might not be adopted in the
future which might adversely affect payment to the Trust. The
adoption of exchange control regulations and other legal restrictions
could have an adverse impact on the marketability of international
securities in the Trust and on the ability of the Trust
to satisfy its obligation to redeem Units tendered to the Trustee for
redemption. In addition, restrictions on the settlement of transactions
on either the purchase or sale side, or both, could cause delays or
increase the costs associated with the purchase and sale of the foreign
Securities and correspondingly could affect the price of the Units.
Investors should be aware that it may not be possible to buy all
Securities at the same time because of the unavailability of any
Security, and restrictions applicable to the Trust relating to the
purchase of a Security by reason of the federal securities laws
or otherwise.
Foreign securities generally have not been registered under the
Securities Act of 1933 and may not be exempt from the registration
requirements of such Act. Sales of non-exempt Securities by the Trust in
the United States securities markets are subject to severe restrictions
and may not be practicable. Accordingly, sales of these Securities by the
Trust will generally be effected only in foreign securities markets.
Although the Sponsor does not believe that the Trust will
encounter obstacles in disposing of the Securities, investors should
realize that the Securities may be traded in foreign countries where the
securities markets are not as developed or efficient and may not be as
liquid as those in the United States. The value of the Securities will
be adversely affected if trading markets for the Securities are limited
or absent.
Exchange Rate. The Trust may contain Securities that are principally traded
in foreign currencies and as such, involve investment risks that are substant-
ially different from an investment in a fund which invests in securities that
are principally traded in United States dollars. The United States
dollar value of the portfolios (and hence of the Units) and of the
distributions from the portfolios will vary with fluctuations in the
United States dollar foreign exchange rates for the relevant currencies.
Most foreign currencies have fluctuated widely in value against the
Page 2
United States dollar for many reasons, including supply and demand of
the respective currency, the rate of inflation in the respective
economies compared to the United States, the impact of interest rate
differentials between different currencies on the movement of foreign
currency rates, the balance of imports and exports goods and services,
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.
The post-World War II international monetary system was, until 1973,
dominated by the Bretton Woods Treaty which established a system of
fixed exchange rates and the convertibility of the United States dollar
into gold through foreign central banks. Starting in 1971, growing
volatility in the foreign exchange markets caused the United States to
abandon gold convertibility and to effect a small devaluation of the
United States dollar. In 1973, the system of fixed exchange rates
between a number of the most important industrial countries of the
world, among them the United States and most Western European countries,
was completely abandoned. Subsequently, major industrialized countries
have adopted "floating" exchange rates, under which daily currency
valuations depend on supply and demand in a freely fluctuating
international market. Many smaller or developing countries have
continued to "peg" their currencies to the United States dollar although
there has been some interest in recent years in "pegging" currencies to
"baskets" of other currencies or to a Special Drawing Right administered
by the International Monetary Fund. Currencies are generally traded by leading
international commercial banks and institutional investors (including
corporate treasurers, money managers, pension funds and insurance
companies). From time to time, central banks in a number of countries
also are major buyers and sellers of foreign currencies, mostly for the
purpose of preventing or reducing substantial exchange rate fluctuations.
Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impact of
actual and proposed government policies on the value of currencies,
interest rate differentials between the currencies and the balance of
imports and exports of goods and services and transfers of income and
capital from one country to another. These economic factors are
influenced primarily by a particular country's monetary and fiscal
policies (although the perceived political situation in a particular
country may have an influence as well-particularly with respect to
transfers of capital). Investor psychology may also be an important
determinant of currency fluctuations in the short run. Moreover,
institutional investors trying to anticipate the future relative
strength or weakness of a particular currency may sometimes exercise
considerable speculative influence on currency exchange rates by
purchasing or selling large amounts of the same currency or currencies.
However, over the long term, the currency of a country with a low rate
of inflation and a favorable balance of trade should increase in value
relative to the currency of a country with a high rate of inflation and
deficits in the balance of trade.
The Evaluator will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange markets.
However, since these markets are volatile and are constantly changing,
depending on the activity at any particular time of the large
international commercial banks, various central banks, large multi-
national corporations, speculators and other buyers and sellers of
foreign currencies, and since actual foreign currency transactions may
not be instantly reported, the exchange rates estimated by the Evaluator
may not be indicative of the amount in United States dollars the
Trust would receive had the Trustee sold any particular
currency in the market. The foreign exchange transactions of the
Trust will be conducted by the Trustee with foreign
exchange dealers acting as principals on a spot (i.e., cash) buying
basis. Although foreign exchange dealers trade on a net basis, they do
realize a profit based upon the difference between the price at which
they are willing to buy a particular currency (bid price) and the price
at which they are willing to sell the currency (offer price).
Concentrations
Insurance Companies. An investment in Units of the Trust should be made
with an understanding of the problems and risks an investment in the
insurance sector in general.
Companies involved in the insurance industry are engaged in
underwriting, reinsuring, selling, distributing or placing of property
and casualty, life or health insurance. Other growth areas within the
insurance industry include brokerage, reciprocals, claims processors and
multiline insurance companies. Multiline insurance companies provide
property and casualty coverage, as well as life and health insurance.
The Trust may also invest in diversified financial companies with
subsidiaries (including insurance brokerage, reciprocals and claims
Page 3
processors) engaged in underwriting, reinsuring, selling, distributing
or placing insurance with independent third parties.
Insurance company profits are affected by interest rate levels, general
economic conditions, and price and marketing competition. Property and
casualty insurance profits may also be affected by weather catastrophes
and other disasters. Life and health insurance profits may be affected
by mortality and morbidity rates. Individual companies may be exposed to
material risks including reserve inadequacy and the inability to collect
from reinsurance carriers. Insurance companies are subject to extensive
governmental regulation, including the imposition of maximum rate
levels, which may not be adequate for some lines of business. Proposed
or potential tax law changes may also adversely affect insurance
companies' policy sales, tax obligations, and profitability. In addition
to the foregoing, profit margins of these companies continue to shrink
due to the commoditization of traditional businesses, new competitors,
capital expenditures on new technology and the pressures to compete
globally.
In addition to the normal risks of business, companies involved in the
insurance industry are subject to significant risk factors, including
those applicable to regulated insurance companies, such as: (i) the
inherent uncertainty in the process of establishing property-liability
loss reserves, particularly reserves for the cost of environmental,
asbestos and mass tort claims, and the fact that ultimate losses could
materially exceed established loss reserves which could have a material
adverse effect on results of operations and financial condition; (ii)
the fact that insurance companies have experienced, and can be expected
in the future to experience, catastrophe losses which could have a
material adverse impact on their financial condition, results of
operations and cash flow; (iii) the inherent uncertainty in the process
of establishing property-liability loss reserves due to changes in loss
payment patterns caused by new claims settlement practices; (iv) the
need for insurance companies and their subsidiaries to maintain
appropriate levels of statutory capital and surplus, particularly in
light of continuing scrutiny by rating organizations and state insurance
regulatory authorities, and in order to maintain acceptable financial
strength or claims-paying ability rating; (v) the extensive regulation
and supervision to which insurance companies' subsidiaries are subject,
various regulatory initiatives that may affect insurance companies, and
regulatory and other legal actions; (vi) the adverse impact that
increases in interest rates could have on the value of an insurance
company's investment portfolio and on the attractiveness of certain of
its products; (vii) the need to adjust the effective duration of the
assets and liabilities of life insurance operations in order to meet the
anticipated cash flow requirements of its policyholder obligations; and
(vii) the uncertainty involved in estimating the availability of
reinsurance and the collectibility of reinsurance recoverables.
The state insurance regulatory framework has, during recent years, come
under increased federal scrutiny, and certain state legislatures have
considered or enacted laws that alter and, in many cases, increase state
authority to regulate insurance companies and insurance holding company
systems. Further, the National Association of Insurance Commissioners
("NAIC") and state insurance regulators are re-examining existing laws
and regulations, specifically focusing on insurance companies,
interpretations of existing laws and the development of new laws. In
addition, Congress and certain federal agencies have investigated the
condition of the insurance industry in the United States to determine
whether to promulgate additional federal regulation. The Underwriter is
unable to predict whether any state or federal legislation will be
enacted to change the nature or scope of regulation of the insurance
industry, or what effect, if any, such legislation would have on the
industry.
All insurance companies are subject to state laws and regulations that
require diversification of their investment portfolios and limit the
amount of investments in certain investment categories. Failure to
comply with these laws and regulations would cause non-conforming
investments to be treated as non-admitted assets for purposes of
measuring statutory surplus and, in some instances, would require
divestiture.
Environmental pollution clean-up is the subject of both federal and
state regulation. By some estimates, there are thousands of potential
waste sites subject to clean up. The insurance industry is involved in
extensive litigation regarding coverage issues. The Comprehensive
Environmental Response Compensation and Liability Act of 1980
("Superfund") and comparable state statutes ("mini-Superfund") govern
the clean-up and restoration by "Potentially Responsible Parties"
("PRP's"). Superfund and the mini-Superfunds ("Environmental Clean-up
Laws or "ECLs") establish a mechanism to pay for clean-up of waste sites
if PRP's fail to do so, and to assign liability to PRP's. The extent of
liability to be allocated to a PRP is dependent on a variety of factors.
Page 4
Further, the number of waste sites subject to clean-up is unknown. Very
few sites have been subject to clean-up to date. The extent of clean-up
necessary and the assignment of liability has not been established. The
insurance industry is disputing many such claims. Key coverage issues
include whether Superfund response costs are considered damages under
the policies, when and how coverage is triggered, applicability of
pollution exclusions, the potential for joint and several liability and
definition of an occurrence. Similar coverage issues exist for clean up
and waste sites not covered under Superfund. To date, courts have been
inconsistent in their rulings on these issues. An insurer's exposure to
liability with regard to its insureds which have been, or may be, named
as PRPs is uncertain. Superfund reform proposals have been introduced in
Congress, but none have been enacted. There can be no assurance that any
Superfund reform legislation will be enacted or that any such
legislation will provide for a fair, effective and cost-efficient system
for settlement of Superfund related claims.
Proposed federal legislation which would permit banks greater
participation in the insurance business could, if enacted, present an
increased level of competition for the sale of insurance products. In
addition, while current federal income tax law permits the tax-deferred
accumulation of earnings on the premiums paid by an annuity owner and
holders of certain savings-oriented life insurance products, no
assurance can be given that future tax law will continue to allow such
tax deferrals. If such deferrals were not allowed, consumer demand for
the affected products would be substantially reduced. In addition,
proposals to lower the federal income tax rates through a form of flat
tax or otherwise could have, if enacted, a negative impact on the demand
for such products.
Page 5
MEMORANDUM
Re: FT 286
As indicated in our cover letter transmitting the
Registration Statement on Form S-6 and other related material
under the Securities Act of 1933 to the Commission, the only
difference of consequence (except as described below) between FT
276, which is the current fund, and FT 286, the filing of which
this memorandum accompanies, is the change in the series number.
The list of securities comprising the Fund, the evaluation,
record and distribution dates and other changes pertaining
specifically to the new series, such as size and number of Units
in the Fund and the statement of condition of the new Fund, will
be filed by amendment.
1940 ACT
FORMS N-8A AND N-8B-2
These forms were not filed, as the Form N-8A and Form N-8B-2
filed in respect of Templeton Growth and Treasury Trust, Series 1
and subsequent series (File No. 811-05903) related also to the
subsequent series of the Fund.
1933 ACT
PROSPECTUS
The only significant changes in the Prospectus from the
Series 276 Prospectus relate to the series number and size and
the date and various items of information which will be derived
from and apply specifically to the bonds deposited in the Fund.
CONTENTS OF REGISTRATION STATEMENT
ITEM A Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Broker's Fidelity
Bond, in the total amount of $1,000,000, the insurer
being National Union Fire Insurance Company of
Pittsburgh.
ITEM B This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
Financial Data Schedule
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, FT 286 has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Village of Lisle and State of
Illinois on September 14, 1998.
FT 286
(Registrant)
By: NIKE SECURITIES L.P.
(Depositor)
By Robert M. Porcellino
Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE* DATE
Robert D. Van Kampen Director of
Nike Securities September 14, 1998
Corporation, the
General Partner of
Nike Securities L.P. Robert M. Porcellino
Attorney-in-Fact**
David J. Allen Director of
Nike Securiites
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., the Depositor.
** An executed copy of the related power of attorney was filed
with the Securities and Exchange Commission in connection
with Amendment No. 1 to form S-6 of The First Trust Combined
Series 258 (File No. 33-63483) and the same is hereby
incorporated by this reference.
S-2
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 ERNST & YOUNG LLP
The consent of Ernst & Young LLP to the use of its name and
to the reference to such firm in the Prospectus included in this
Registration Statement will be filed by amendment.
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 is
filed as Exhibit 4.1 to the Registration Statement.
S-3
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 Nike
Financial Advisory Services 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 286 among Nike
Securities L.P., as Depositor, The Chase Manhattan Bank,
as Trustee and First Trust Advisors L.P., as Evaluator
and 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).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by
reference).
3.1* Opinion of counsel as to legality of Securities being
registered.
3.2* Opinion of counsel as to Federal income tax status of
Securities being registered.
S-4
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).
___________________________________
* To be filed by amendment.
S-5
