Registration No. 333-72819
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2 to Form S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES
OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust:
FT 329
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agents for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
E. Title of Securities Being Registered:
An indefinite number of Units pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as
amended
F. Approximate date of proposed sale to public:
As soon as practicable after the effective date of the
Registration Statement.
|XXX|Check box if it is proposed that this filing will become
effective on March 23, 1999 at 2:00 p.m. pursuant to Rule
487.
________________________________
The First Trust Corporate Income Trust (High Yield),
Intermediate Series 16
FT 329
FT 329 consists of a unit investment trust known as The First Trust
Corporate Income Trust (High Yield), Intermediate Series 16 (the
"Trust"). The Trust consists of a portfolio of interest-bearing, high-
yield corporate debt obligations of domestic and foreign companies
("Securities"). The Trust seeks to provide a high level of current income.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
First Trust (registered trademark)
1-800-621-9533
The date of this prospectus is March 23, 1999
Page 1
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 9
Portfolio 9
Risk Factors 10
Public Offering 11
Distribution of Units 13
The Sponsor's Profits 14
The Secondary Market 14
How We Purchase Units 14
Expenses and Charges 15
Tax Status 15
Retirement Plans 17
Rights of Unit Holders 17
Distributions 18
Redeeming Your Units 19
Removing Securities from the Trust 20
Amending or Terminating the Indenture 21
Description of Bond Ratings 21
Information on the Sponsor, Trustee and Evaluator 23
Other Information 24
Page 2
Summary of Essential Information
THE FIRST TRUST CORPORATE INCOME TRUST (HIGH YIELD),
INTERMEDIATE SERIES 16
FT 329
At the Opening of Business on the Initial Date of Deposit of the
Securities-March 23, 1999
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: Muller Data Corporation
<TABLE>
<CAPTION>
<S> <C>
Initial Number of Units 65,000
Fractional Undivided Interest in the Trust per Unit 1/65,000
Principal Amount (Par Value) of Securities per Unit (1) $ 10.000
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit $ 9.7625
Maximum Sales Charge of 4.5% of the Public Offering Price per Unit
(4.712% of the net amount invested) $ .4600
Public Offering Price per Unit (2) $ 10.2225
Sponsor's Initial Repurchase Price per Unit (3) $ 9.7625
Redemption Price per Unit (based on aggregate underlying value of Securities) (3) $ 9.6625
Weighted Average Maturity of the Securities 8.60 years
First Settlement Date March 26, 1999
Mandatory Termination Date (4) August 29, 2008
</TABLE>
<TABLE>
<CAPTION>
Monthly Semi-Annual
Distribution Option Distribution Option
___________________ ___________________
<S> <C> <C>
Distributions (5):
Estimated Net Annual Interest Income per Unit $ .8192 $ .8242
Initial Distribution per Unit $ .0432 $ .0435
Partial Distribution per Unit $ N.A. $ .1373
Estimated Regular Distribution per Unit $ .0682 $ .4121
Estimated Current Return (6) 8.01% 8.06%
Estimated Long-Term Return (6) 7.90% 7.95%
CUSIP 30264V 240 30264V 257
Security Code 56613 56614
____________
<FN>
(1) Because certain of the Securities may, in certain circumstances, be
sold, redeemed or mature in accordance with their terms, we cannot
guarantee that the Unit value at the Mandatory Termination Date will be
equal to the Principal Amount (Par Value) of Securities per Unit stated
above.
(2) The Public Offering Price shown above reflects the value of the
Securities on the business day prior to the Initial Date of Deposit.
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"). No investor will purchase Units at this price.
Additional Units may be created during the day of the Initial Date of
Deposit which, along with the Units described above, will be valued as
of the Evaluation Time on the Initial Date of Deposit and sold to
investors at the Public Offering Price per Unit based on this valuation.
On the Initial Date of Deposit the Public Offering Price per Unit will
not include any accrued interest on the Securities. After the Initial
Date of Deposit, the Public Offering Price per Unit will include a pro
rata share of any accrued interest on the Securities. See "Fee Table"
and "Public Offering."
(3) Until the earlier of six months after the Initial Date of Deposit or
the end of the initial offering period the Sponsor's Initial Repurchase
Price per Unit and the Redemption Price per Unit will include the
estimated organization costs per Unit set forth under "Fee Table." After
such date, the Sponsor's Repurchase Price and Redemption Price per Unit
will not include such estimated organization costs. See "Redeeming Your
Units."
(4) See "Amending or Terminating the Indenture."
(5) You may elect to receive distributions either monthly or semi-
annually. Distributions will be paid on the last business day of a
payment month ("Distribution Date") to Unit holders of record on the
fifteenth day of such month ("Distribution Record Date"). The amount of
the Estimated Regular Distributions per Unit was calculated on the basis
of the Estimated Net Annual Interest Income per Unit less the estimated
annual expenses and divided by twelve for monthly distributions or two
for semi-annual distributions. The Initial and Partial Distributions per
Unit differ from estimated regular distributions because they do not
represent a full month or six-month period. Each Unit holder, regardless
of the distribution option chosen, will receive the Initial Distribution
per Unit on April 30, 1999. Semi-annual Unit holders will receive the
Partial Distribution per Unit on June 30, 1999. Estimated Regular
Distributions per Unit will occur monthly, beginning in May 1999 for
monthly Unit holders and will occur each June and December, beginning
December 1999 for semi-annual Unit holders. The actual distribution you
receive will vary from that set forth above with changes in the Trust's
fees and expenses and with the sale or redemption of Securities.
Distributions from the Principal Account will be made monthly if the
amount available for distribution equals at least $1.00 per 100 Units.
Notwithstanding, distributions of funds in the Principal Account, if
any, will be made in December of each year. See "Expenses and Charges"
and "Distributions."
(6) Estimated Current Return is calculated by dividing Estimated Net
Annual Interest Income per Unit by the Public Offering Price. Estimated
Long-Term Return is calculated using a formula which (1) factors in the
relative weightings of the market values, yields (which take into
account the amortization of premiums and the accretion of discounts) and
estimated retirements of the Securities; and (2) takes into account a
compounding factor, the sales charge and expenses. There is no assurance
that the Estimated Current and Long-Term Returns set forth above will be
realized in the future because the various components used to calculate
these figures, such as Trust expenses, market values and estimated
retirements of the Securities, will change. In addition, neither rate
reflects the true return you will receive, which will be lower, because
neither includes the effect of certain delays in distributions.
</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 and receive distributions either monthly
or semi-annually. See "Public Offering" and "Expenses and Charges."
Although the Trust has a term of approximately ten years and is a unit
investment trust rather than a mutual fund, this information shows you a
comparison of fees.
<TABLE>
<CAPTION>
Monthly Distribution Option Semi-Annual Distribution Option
___________________________ _______________________________
Amount Amount
per Unit per Unit
________ ________
<S> <C> <C> <C> <C>
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Maximum sales charge imposed on purchase 4.5% $.460 4.5% $.460
======== ======== ======== ========
Organization Costs
(as a percentage of public offering price)
Estimated organization costs .210%(a) $.0215 .210%(a) $.0215
======== ======== ======== ========
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative
and evaluation fees .126%(b) $.0132 .126%(b) $.0132
Trustee's fee and other operating expenses .218% .0228 .170% .0178
________ ________ ________ ________
Total .344% $.0360 .296% $.0310
======== ======== ======== ========
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
vary, based on these assumptions your costs under each distribution
option would be:
Monthly Semi-Annual
Distribution Option Distribution Option
___________________ ___________________
1 Year $506 $501
3 Years $578 $563
5 Years $657 $632
10 Years $889 $832
The example will not differ if you hold rather than sell your Units at
the end of each period.
_______________________
<FN>
(a) You will bear all or a portion of the costs incurred in organizing
the Trust. These estimated organization costs are included in the price
you pay for your Units 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.
(b) The Evaluator will receive a fee of $25 per daily evaluation. We
have made an estimate of the number of Units we expect to create in
order to determine the per Unit amount of the Evaluator's fee. To the
extent our estimate differs from the actual Units created, the per Unit
amount of the Evaluator fee will vary.
</FN>
</TABLE>
Page 4
Report of Independent Auditors
The Sponsor, Nike Securities L.P., and Unit Holders
FT 329
We have audited the accompanying statement of net assets, including the
schedule of investments, of FT 329, comprised of The First Trust
Corporate Income Trust (High Yield), Intermediate Series 16, as of the
opening of business on March 23, 1999. 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 March 23, 1999.
An audit also includes assessing the accounting principles used and
significant estimates made by the Sponsor, as well as evaluating the
overall presentation of the 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 329,
comprised of The First Trust Corporate Income Trust (High Yield),
Intermediate Series 16, at the opening of business on March 23, 1999 in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
March 23, 1999
Page 5
Statement of Net Assets
THE FIRST TRUST CORPORATE INCOME TRUST (HIGH YIELD),
INTERMEDIATE SERIES 16
FT 329
At the Opening of Business on the Initial Date of Deposit-March 23, 1999
<TABLE>
<CAPTION>
<S> <C>
NET ASSETS
Investments in Securities represented by purchase contracts (1)(2) $634,563
Accrued interest on underlying Securities (2)(3) 16,015
________
650,578
Less liability for reimbursement to Sponsor for organization costs (4) (1,398)
Less distributions payable (3) (16,015)
_________
Net assets $633,165
=========
Outstanding units 65,000
ANALYSIS OF NET ASSETS
Cost to investors (5) $664,464
Less maximum sales charge (5) (29,901)
Less estimated reimbursement to Sponsor for organization costs (4) (1,398)
_________
Net assets $633,165
=========
________________
<FN>
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Securities listed under "Schedule of
Investments" is based on their aggregate underlying value.
(2) An irrevocable letter of credit issued by The Chase Manhattan Bank,
of which $725,000 will be allocated to the Trust, has been deposited
with the Trustee as collateral, covering the monies necessary for the
purchase of the Securities according to their purchase contracts
($634,563), accrued interest to the Initial Date of Deposit ($16,015)
and accrued interest from the Initial Date of Deposit to the expected
dates of delivery of the Securities ($309).
(3) The Trustee will advance to the Trust the amount of net interest
accrued to the First Settlement Date which will be distributed to the
Sponsor as Unit holder of record.
(4) A portion of the Public Offering Price consists of an amount
sufficient to reimburse the Sponsor for all or a portion of the costs of
establishing the Trust. These costs have been estimated at $.0215 per
Unit for the Trust. A payment will be made as of the earlier of six
months after the Initial Date of Deposit or the end of the initial
offering period to an account maintained by the Trustee from which the
obligation of the investors to the Sponsor will be satisfied. To the
extent that actual organization costs are greater than the estimated
amount, only the estimated organization costs added to the Public
Offering Price will be reimbursed to the Sponsor and deducted from the
assets of the Trust.
(5) The aggregate cost to investors in the Trust includes a maximum
sales charge computed at the rate of 4.5% of the Public Offering Price
per Unit (equivalent to 4.712% of the net amount invested), assuming no
reduction of sales charge as set forth under "Public Offering."
</FN>
</TABLE>
Page 6
Schedule of Investments
THE FIRST TRUST CORPORATE INCOME TRUST (HIGH YIELD),
INTERMEDIATE SERIES 16
FT 329
At the Opening of Business on the
Initial Date of Deposit of the Securities-March 23, 1999
<TABLE>
<CAPTION>
Cost of
Aggregate Issue and Country of Issuer Represented by Redemption Securities
Principal Sponsor's Contracts to Purchase Securities (1) Rating (3) Provisions (4) to the Trust (2)
_________ ______________________________________________ __________ ______________ ________________
<C> <S> <C> <C> <C>
$ 50,000 Adelphia Communications (United States), B+ $ 55,625
Senior Notes, 9.875%, Due 03/01/2007
50,000 American Standard, Inc. (United States), BB- 49,625
Company Guarantee, 7.375%, Due 02/01/2008
50,000 Coca-Cola Femsa SA (Mexico), BB+ 51,063
Notes, 8.95%, Due 11/01/2006
50,000 Columbia/HCA Healthcare Corporation (United States), BB+ 46,062
Notes, 7.25%, Due 05/20/2008
50,000 HMH Properties (United States), BB 2003 @ 103.985 48,875
Company Guarantee, 7.875%, Due 08/01/2008
50,000 Owens-Illinois, Inc. (United States), BB+ 53,438
Senior Notes, 8.10%, Due 05/15/2007
50,000 Perez Companc SA (Argentina), BBB- 44,750
Notes, 8.125%, Due 07/15/2007
50,000 Revlon Consumer Products (United States), B- 2003 @ 104.313 43,500
Senior Subordinate Notes, 8.625%, Due 02/01/2008
50,000 Ryland Group, Inc. (United States), B+ 2003 @ 104.125 48,500
Senior Subordinate Notes, 8.25%, Due 04/01/2008
50,000 Telefonica de Argentina (Argentina), BBB- 47,562
Notes, 9.125%, Due 05/07/2008
50,000 Transportacion Maritma ADS (Mexico), BB- 41,688
Senior Notes, 10.00%, Due 11/15/2006
50,000 Unisys Corporation (United States), BB- 2003 @ 103.938 52,750
Senior Notes, 7.875%, Due 04/01/2008
50,000 Del E. Webb Corporation (United States), B- 2002 @ 104.875 51,125
Senior Subordinate Debentures, 9.75%, Due 01/15/2008
_________ _________
$650,000 $634,563
========= =========
__________
<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. We entered into purchase
contracts for the Securities on March 22, 1999 and we expect that they
will all settle on or prior to March 25, 1999.
(2) The cost of the Securities to the Trust represents the aggregate
underlying value with respect to the Securities acquired (generally
determined by the aggregate offering price of the Securities on the
business day before the Initial Date of Deposit). The valuation of the
Securities has been determined by the Evaluator. The cost of the
Page 7
Securities to us and our profit (which is the difference between the
cost of the Securities to us and the cost of the Securities to the
Trust) are $634,563 and $0, respectively. In addition, the aggregate bid
price of the Securities on the business day before the Initial Date of
Deposit and the annual interest income to the Trust were $628,063 and
$55,588, respectively.
(3) Ratings are by Standard & Poor's and have been obtained from a
corporate bond information reporting service.
(4) Certain Securities may be redeemed before their stated maturity.
This column shows when a Security is initially redeemable and the
redemption price for that year. Securities are redeemable at declining
prices (but not below par value) in subsequent years. Certain Securities
may also be redeemed in whole or in part other than by operation of the
stated redemption provisions under certain circumstance detailed in the
instruments creating them. Such redemption provisions may result in a
redemption price less than the value of the Securities on the Initial
Date of Deposit. Redemption pursuant to call provisions generally will
occur at times when the redeemed Securities have an offering side
valuation which represents a premium over par. To the extent that
Securities were deposited in the Trust at a price higher than the price
at which they are redeemed, this will represent a loss of capital when
compared with the original Public Offering Price of the Units.
Distributions will generally be reduced by the amount of the income
which would otherwise have been paid with respect to redeemed Securities
and Unit holders will receive a distribution of the principal amount and
any premium received on such redemption (except to the extent the
proceeds of the redeemed Securities are used to pay for Unit
redemptions). Estimated Current Return and Estimated Long-Term Return
may also be affected by such redemptions.
</FN>
</TABLE>
Page 8
The FT Series
The FT Series Defined.
We, Nike Securities L.P. (the "Sponsor"), have created several similar
yet separate series of an investment company which we have named the FT
Series. We designate each of these investment company series, the 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 consists of a unit investment trust known as The First
Trust Corporate Income Trust (High Yield), Intermediate Series 16.
Mandatory Termination Date.
The Trust will terminate on the Mandatory Termination Date,
approximately ten 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,
First Trust Advisors L.P. as Portfolio Supervisor and Muller Data
Corporation as Evaluator, governs the operation of the Trust.
How We Created the Trust.
On the Initial Date of Deposit, we deposited the Securities (fully
backed by an irrevocable letter of credit of a financial institution)
with the Trustee. In return for depositing the Securities, the Trustee
delivered documents to us representing our ownership of the Trust, in
the form of units ("Units").
With the deposit of the contracts to buy Securities on the Initial Date
of Deposit we established a percentage relationship among 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 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.
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 in the
Trust.
We cannot guarantee that the Trust will keep its present size and
composition for any length of time. Securities may periodically be
redeemed or sold under certain circumstances, 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 will vote all
of the Securities and will do so based on our instructions.
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 Distribution Date. Any Replacement
Security the Trust acquires must satisfy the initial selection criteria
and be substantially similar 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 Trust's objective is to provide investors with a high level of
current income through an investment in a fixed portfolio of both
domestic and foreign high-yield, high risk corporate debt obligations.
The Trust has an expected life of approximately ten years. A diversified
Page 9
portfolio helps to offset the risks normally associated with such an
investment, although it does not eliminate them entirely. See "Risk
Factors" for a discussion of the risks of investing in the Trust.
Securities Selection
We considered the following factors, among others, in selecting the
Securities for the Trust:
- - The price of the Securities relative to other issues of similar
quality and maturity;
- - The present rating and credit quality of the issuer of the Security
and potential for improvement;
- - The diversification of the Securities as to location of issuer;
- - The income to the Trust;
- - Whether the Securities were issued after July 18, 1984; and
- - The stated maturity of the Securities.
As of the Initial Date of Deposit, all of the Securities were rated "B3"
or better by Moody's Investors Service, Inc. ("Moody's"), or "B-" or
better by Standard & Poor's Ratings Services, a division of The McGraw-
Hill Companies, Inc. ("Standard & Poor's"). See "Description of Bond
Ratings." After the Initial Date of Deposit, a Security's rating may be
lowered. This would not immediately cause the Security to be removed
from the Trust, but may be considered by us in determining whether to
direct the Trustee to dispose of such Security. See "Removing Securities
from the Trust."
Risk Factors
Price Volatility. The Trust invests in domestic and foreign high-yield,
high risk corporate debt obligations. High-yield, high risk corporate
bonds are subject to greater market fluctuations and risk of loss than
corporate bonds with higher investment ratings. The value of the
Securities will decline significantly with increases in interest rates,
not only because increases in rates generally decrease values, but also
because increased rates may indicate an economic slowdown. An economic
slowdown, or a reduction in an issuer's creditworthiness, may result in
the issuer being unable to maintain earnings at a level sufficient to
maintain interest and principal payments. The value of the Securities
will also fluctuate with changes in investors' perceptions of an
issuer's financial condition or the general condition of the high-yield
bond market, changes in inflation rates or when political or economic
events affecting the issuers occur.
Because the Trust is not managed, the Trustee will not sell Securities
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 the Trust will be positive over any period of time or
that you won't lose money. Units of the Trust are not deposits of any
bank and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Interest. There is no guarantee that the issuers of the Securities will
be able to satisfy their interest payment obligations to the Trust over
the life of the Trust.
High-Yield Obligations. "High-yield" or "junk" bonds, the generic names
for corporate bonds rated below "Triple B" by Standard & Poor's or
Moody's, are frequently issued by corporations in the growth stage of
their development or by established companies who are highly leveraged
or whose operations or industries are depressed. Obligations rated below
"Triple B" should be considered speculative as these ratings indicate a
quality of less than investment grade. Because high-yield bonds are
generally subordinated obligations and are perceived by investors to be
riskier than higher rated bonds, their prices tend to fluctuate more
than higher rated bonds and are affected by short-term credit
developments to a greater degree. In addition, in many cases high-yield
bonds do not have covenants which would prevent the issuer from entering
into capital restructurings or borrowing transactions which could have
the effect of reducing the ability of the issuer to meets its high-yield
debt obligations or result in a reduction of its high-yield bond ratings.
The market for high-yield bonds is smaller and less liquid than that for
investment grade bonds. High-yield bonds are generally not listed on a
national securities exchange but trade in the over-the-counter markets.
Due to the smaller, less liquid market for high-yield bonds, the bid-
offer spread on such bonds is generally greater than it is for
investment grade bonds and the purchase or sale of such bonds may take
longer to complete.
Certain Securities in the Trust may have been purchased on the Initial
Date of Deposit at prices of less than their par value at maturity,
Page 10
indicating a market discount. Other Securities in the Trust may have
been purchased on the Initial Date of Deposit at prices greater than
their par value at maturity, indicating a market premium. The coupon
interest rate of bonds purchased at a market discount was lower than
current market interest rates of newly issued bonds of comparable rating
and type and the coupon interest rate of bonds purchased at a market
premium was higher than current market interest rates of newly issued
bonds of comparable rating and type. Generally, the value of bonds
purchased at a market discount will increase in value faster than bonds
purchased at a market premium if interest rates decrease. Conversely, if
interest rates increase, the value of bonds purchased at a market
discount will decrease faster than bonds purchased at a market premium.
However, premium bonds are more likely to be called or redeemed with
declines in interest rates.
Legislation/Litigation. From time to time, various legislative
initiatives are proposed in the United States and abroad which may have
a negative impact on certain companies represented in the Trust. In
addition, litigation regarding any of the issuers of the Securities or
their respective industries may 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 value
of the Securities.
Year 2000 Problem. Many computer systems were not designed to properly
process information and data involving dates of January 1, 2000 and
thereafter. This is commonly known as the "Year 2000 Problem." We do not
expect that any of the computer system changes necessary to prepare for
January 1, 2000 will cause any major operational difficulties for the
Trust. However, we are unable to predict what impact the Year 2000
Problem will have on any of the issuers of the Securities.
Foreign Securities. The Trust is considered to be concentrated in
Securities that are U.S. dollar denominated corporate debt obligations
issued by foreign companies, which makes the Trust subject to more risks
than if it invested solely in domestic obligations. Risks of foreign
corporate bonds include losses due to future political and economic
developments, the possible seizure or nationalization of foreign
deposits, foreign currency devaluations, restrictions on foreign
investments and exchange of securities, inadequate financial information
and lack of U.S. jurisdiction over foreign issuers.
Public Offering
The Public Offering Price.
You may buy Units at the Public Offering Price. The Public Offering
Price per Unit during the initial offering period is comprised of the
following:
- - The aggregate underlying value of the Securities;
- - The amount of any cash in the Interest and Principal Accounts;
- - Net interest accrued but unpaid on the Securities after the First
Settlement Date to the date of settlement; and
- - The sales charge.
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 offering prices of the Securities, changes
in the value of the Interest and/or Principal Accounts and as interest
on the Securities accrues.
The Securities purchased with the portion of the Public Offering Price
intended to be used to reimburse the Sponsor for the Trust's
organization costs (including costs of preparing the registration
statement, the Indenture and other closing documents, registering Units
with the Securities and Exchange Commission ("SEC") and states, the
initial audit of the Trust portfolio, legal fees and the initial fees
and expenses of the Trustee) will be purchased in the same proportionate
relationship as all the Securities contained in the Trust. Securities
will be sold to reimburse the Sponsor for the Trust's organization costs
at the earlier of six months after the Initial Date of Deposit or the
end of the initial offering period (a significantly shorter time period
than the life of the Trust). During the period ending with the earlier
of six months after the Initial Date of Deposit or the end of the
initial offering period, there may be a decrease in the value of the
Securities. To the extent the proceeds from the sale of these Securities
are insufficient to repay the Sponsor for the Trust's organization
costs, the Trustee will sell additional Securities to allow the Trust to
fully reimburse the Sponsor. In that event, the net asset value per Unit
Page 11
will be reduced by the amount of additional Securities sold. Although
the dollar amount of the reimbursement due to the Sponsor will remain
fixed and will never exceed the per Unit amount set forth for the Trust
in "Statement of Net Assets," this will result in a greater effective
cost per Unit to Unit holders for the reimbursement to the Sponsor. To
the extent actual organization costs are less than the estimated amount,
only the actual organization costs will be deducted from the assets of
the Trust. When Securities are sold to reimburse the Sponsor for
organization costs, the Trustee will sell such Securities, to the extent
practicable, which will maintain the same proportionate relationship
among the Securities contained in the Trust as existed prior to such sale.
Although you are not required to pay for your Units until three business
days following your order (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.
Accrued Interest.
Accrued interest represents unpaid interest on a bond from the last day
it paid interest. Interest on the Securities generally is paid semi-
annually, although the Trust accrues such interest daily. Because the
Trust always has an amount of interest earned but not yet collected, the
Public Offering Price of Units will have added to it the proportionate
share of accrued interest to the date of settlement. You will receive
the amount, if any, of accrued interest you paid for on the next
distribution date. In addition, if you sell or redeem your Units you
will be entitled to receive your proportionate share of the accrued
interest from the purchaser of your Units.
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.
Initial Offering Period. The maximum sales charge during the initial
offering period equals 4.5% of the Public Offering Price (equivalent to
4.712% of the net amount invested).
Secondary Market. The maximum sales charge during the secondary market
is determined based upon the number of years remaining to the maturity
of each Security in the Trust, but in no event will the secondary market
sales charge exceed 5.0% of the Public Offering Price (equivalent to
5.263% of the net amount invested). For purposes of computation,
Securities will be deemed to mature either on their expressed maturity
dates, or an earlier date if: (a) they have been called for redemption
or funds have been placed in escrow to redeem them on an earlier call
date; or (b) such Securities are subject to a "mandatory tender." The
effect of this method of sales charge computation will be that different
sales charge rates will be applied to each of the Securities, in
accordance with the following schedule:
Secondary
Market
Years to Maturity Sales Charge
_________________ ________________
Less than 1 1.00%
1 but less than 2 1.50%
2 but less than 3 2.00%
3 but less than 4 2.50%
4 but less than 5 3.00%
5 but less than 6 3.50%
6 but less than 7 4.00%
7 but less than 8 4.50%
8 or more 5.00%
Discounts for Certain Persons.
If you invest at least $100,000 (except if you are purchasing for a
"wrap fee account" as described below), the maximum sales charge during
the initial offering period is reduced, as follows:
Your Maximum
If you Invest Sales Charge
(in thousands):* will be:
________________ ____________
$100 but less than $400 4.25%
$500 but less than $1,000 4.00%
$1,000 or more 3.75%
* 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.
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. We
Page 12
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 charge 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. Any reduced sales is the responsibility of the broker/dealer or
other selling agent making the sale.
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."
The Value of the Securities.
The aggregate underlying value of the Securities in the Trust will be
determined by the Evaluator as follows:
a) On the basis of current market offering prices for the Securities
obtained from dealers or brokers who customarily deal in bonds
comparable to those held by the Trust;
b) If such prices are not available for any of the Securities, on the
basis of current market offering prices of comparable bonds;
c) By determining the value of the Securities on the offering side of
the market by appraisal; or
d) By any combination of the above.
The Evaluator will appraise the aggregate underlying value of the
Securities in the Trust as of the Evaluation Time on each business day
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 New York Stock Exchange ("NYSE"): New Year's Day, Martin
Luther King, Jr.'s Birthday, Presidents' 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
value of the Securities in the Trust, plus or minus cash, if any, in the
Interest and Principal Accounts of the Trust plus interest accrued but
unpaid on the Securities to the date of settlement plus the applicable
sales charge. We calculate the aggregate underlying 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 offering prices when necessary. The offering
price of the Securities may be expected to be greater than the bid price
by approximately 1-3% of the aggregate principal amount of such
Securities.
Distribution of Units
We intend to qualify Units of the Trust for sale in a number of states.
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.
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 70% of the maximum sales charge for
secondary market sales). Dealers and other selling agents will receive
Page 13
an additional volume concession or agency commission of 0.30% of the
Public Offering Price if they purchase Units on the Initial Date of
Deposit or $250,000 worth of Units on any day thereafter or if they were
eligible to receive a similar concession in connection with sales of
similarly structured trusts sponsored by us.
We reserve the right to change the amount of concessions or agency
commissions from time to time. Certain commercial banks may be making
Units of the Trust available to their customers on an agency basis. A
portion of the sales charge paid by these customers is 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. In Texas and in
certain other states, any banks making Units available must be
registered as broker/dealers under state law.
Award Programs.
From time to time we may sponsor programs which provide awards to a
dealer's 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, we will pay to dealers who sponsor
sales contests or recognition programs that conform to our criteria, or
participate in our sales programs, amounts equal to no more than the
total applicable sales charges on the unit sales generated by such
person 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.
From time to time we may 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 various market indexes, corporate or U.S. Government bonds,
bank CDs and money market accounts or funds, (2) performance data from
Morningstar Publications, Inc. or (3) information from publications such
as Money, the New York Times, U.S. News and World Report, Business Week,
Forbes or Fortune. The investment characteristics of the Trust, which
are described more fully elsewhere in this prospectus, differ from other
comparative investments. 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 less any reduced sales charge as stated in "Public
Offering." Also, any difference between our cost to purchase the
Securities and the price at which we sell them to the Trust 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 in the Public
Offering Price they receive 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.
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.
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
Page 14
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. We may tender Units we hold to the Trustee for redemption as
any other Units. If we elect not to purchase Units, the Trustee may sell
tendered Units 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 bear the excess.
The Trustee will pay operating expenses of the Trust from the Interest
Account of the Trust if funds are available, and then from the Principal
Account. The Interest and Principal 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 our affiliates) as agent in selling
Securities. First Trust Advisors L.P., an affiliate of ours, acts as
Portfolio Supervisor and will receive the fee set forth under "Fee
Table" for providing portfolio supervisory services to the Trust. In
providing portfolio supervisory services, the Portfolio Supervisor may
purchase research services from a number of sources, which may include
dealers of the Trust.
The fees payable to the Portfolio Supervisor 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 us or our
affiliates for providing a given service to all unit investment trusts
for which we provide such services exceed the actual cost of providing
such services in such year. Muller Data Corporation acts as Evaluator
and will receive a fee of $25 per day for providing evaluation services
to the Trust.
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 the 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 with its acceptance or administration of the Trust;
- - Payment for any loss, liability or expenses we incurred without
negligence, bad faith or willful misconduct in acting as Depositor of
the Trust; and/or
- - 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. If there is not enough
cash in the Interest or Principal Accounts of the Trust, the Trustee has
the power to sell Securities in the Trust to make cash available to pay
these charges. We cannot guarantee that the interest received 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."
Tax Status
Federal Tax Status.
This section summarizes some of the main U.S. federal income tax
consequences of owning Units of the Trust. This section is current as of
the date of this prospectus. Tax laws and interpretations change
frequently, and these summaries do not describe all of the tax
consequences to all taxpayers. For example, these summaries generally do
Page 15
not describe your situation if you are a non-U.S. person, a
broker/dealer, or other investor with special circumstances. In
addition, this section does not describe state or foreign taxes. As with
any investment, you should consult your own tax professional about your
particular consequences.
Trust Status.
The Trust will not be taxed as a corporation for federal income tax
purposes. As a Unit owner, you will be treated as the owner of a pro
rata portion of the Securities and other assets held by the Trust, and
as such you will be considered to have received a pro rata share of
income (i.e., interest, accruals of original issue discount and market
discount, and capital gains, if any) from each Security when such income
is considered to be received by the Trust. This is true even if you
elect to have your distributions automatically reinvested into another
existing investment account.
Your Tax Basis and Income or Loss upon Disposition.
If your Trust disposes of Securities, you will generally recognize gain
or loss. If you dispose of your Units or redeem your Units for cash, you
will also generally recognize gain or loss. To determine the amount of
this gain or loss, you must subtract your tax basis in the related
Securities from your share of the total proceeds received in the
transaction. You can generally determine your initial tax basis in each
Security or other Trust asset by apportioning the cost of your Units,
generally including sales charges, among each Security or other Trust
asset ratably according to their value on the date you acquire your
Units. In certain circumstances, however, you may have to adjust your
tax basis after you acquire your Units (for example, in the case of
original issue discount, premium and accrued interest, as discussed
below).
If you are an individual, the maximum marginal federal tax rate for net
capital gain is generally 20% (10% for certain taxpayers in the lowest
tax bracket). Net capital gain equals net long-term capital gain minus
net short-term capital loss for the taxable year. 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. You must exclude the date you purchase your Units or the date the
Trust purchases a Security to determine the holding period. The tax
rates for capital gains realized from assets held for one year or less
are generally the same as for ordinary income. The Tax Code may,
however, treat certain capital gains as ordinary income in special
situations (for example, in the case of gain attributable to market
discount).
Discount, Accrued Interest and Premium.
Some Securities may have been sold with original issue discount. This
generally means that the Securities were originally issued at a price
below their face (or par) value. Original issue discount accrues on a
daily basis and generally is treated as interest income for federal
income tax purposes. The basis of your Units and of each Security which
was issued with original issue discount must be increased as original
issue discount accrues.
Some Securities may have been purchased at a market discount. Market
discount is generally the excess of the stated redemption price at
maturity for the Security over the purchase price of the Security (not
including unaccrued original issue discount). Market discount can arise
based on the price the Trust pays for a Security or on the price you pay
for your Units. Market discount is taxed as ordinary income. You will
recognize this income when the Trust receives principal payments on the
Security, when the Security is sold or redeemed, or when you sell or
redeem your Units. Alternatively, you may elect to include market
discount in taxable income as it accrues. Whether or not you make this
election will affect how you calculate your basis and the timing of
certain interest expense deductions.
Alternatively, some Securities may have been purchased at a premium.
Generally, if the tax basis of your pro rata portion of any Security
exceeds the amount payable at maturity, such excess is considered
premium. You may elect to amortize bond premium. If you make this
election, you may reduce your interest income received on the Security
by the amount of the premium that is amortized and your tax basis will
be reduced.
If the price of your Units included accrued interest on a Security, you
must include the accrued interest in your tax basis in that Security.
Page 16
When the Trust receives this accrued interest, you must treat it as a
return of capital and reduce your tax basis in the Security.
This discussion provides only the general rules with respect to the tax
treatment of original issue discount, market discount and premium. The
rules, however, are complex and special rules apply in certain
circumstances. For example, the accrual of market discount or premium
may differ from the discussion set forth above in the case of Securities
that were issued with original issue discount.
Limitations on the Deductibility of Trust Expenses.
Generally, for federal income tax purposes, you must take into account
your full pro rata share of the Trust's income, even if some of that
income is used to pay Trust expenses. You may deduct your pro rata share
of each expense paid by the Trust to the same extent as if you directly
paid the expense. You may be required to treat some or all of the
expenses of the Trust as miscellaneous itemized deductions. However,
individuals may only deduct certain miscellaneous itemized deductions to
the extent they exceed 2% of adjusted gross income.
Foreign, State and Local Taxes.
Interest payments on the Securities of foreign companies that are paid
to the Trust may be subject to foreign withholding taxes. Any interest
withheld will still be treated as income to you. Under the grantor trust
rules, you are considered to have paid directly your share of foreign
taxes. Therefore, for U.S. tax purposes, you may be entitled to a
foreign tax credit or deduction for those foreign taxes. Certain issuers
of the Securities which are subject to foreign withholding taxes may
have agreed, with certain exceptions, to make additional payments to the
Trust to compensate you for your foreign tax liability. These payments
will vary from Security to Security, and any additional payments
received will be treated as taxable income to you. The additional
payment will not necessarily be based upon a formula which would
otherwise compensate you for the entire tax liability triggered by your
receipt of an additional payment. Therefore, you may not be completely
compensated for the actual foreign withholding tax liability.
If you are a foreign investor (i.e., an investor other than a U.S.
citizen or resident or a U.S. corporation, partnership, estate or
trust), you will not be subject to U.S. federal income taxes, including
withholding taxes, on interest income or on any gain from the sale or
redemption of your Units, provided that certain conditions are met. You
should consult your tax advisor with respect to the conditions you must
meet in order to be exempt for U.S. tax purposes. Under the existing
income tax laws of the State and City of New York, the Trust will not be
taxed as a corporation, and the income of the Trust will be treated as
the income of the Unit holders in the same manner as for Federal income
tax purposes. You should consult your tax advisor regarding potential
foreign, state or local taxation with respect to your Units.
Retirement Plans
You may purchase Units of the Trust for:
- - 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. Before participating in a plan like this, you should consult
your attorney or tax advisor. 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 persons registered as
such on its books. If you request certificates representing the Units
you ordered 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 your name
exactly as it appears on the face of the certificate with your signature
guaranteed by an eligible institution. In certain cases the Trustee may
require additional documentation before they will transfer or redeem
your Units.
Page 17
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 establish an account for you and
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 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 ("TIN");
- - 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.
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. The Trustee does not
require such charge now, nor are they currently contemplating doing so.
If a certificate gets lost, stolen or 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 interest (if any)
distributed. After the end of each calendar year, the Trustee will
provide you with the following information:
- - The amount of interest received by the Trust less deductions for
payment of applicable taxes, fees and Trust expenses, redemption of
Units and the balance remaining on the last business day of the calendar
year;
- - The dates Securities were sold and the net proceeds received from
such sales less deduction for payment of applicable taxes, fees and
Trust expenses, redemption of Units and the balance remaining on the
last business day of the calendar year;
- - The Securities held and the number of Units outstanding on the last
business day of the calendar year;
- - The Redemption Price per Unit on the last business day of the
calendar year; and
- - The amounts actually distributed during the calendar year from the
Interest and Principal Accounts, separately stated.
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.
Distributions
You will begin receiving distributions on 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 interest
received on the Trust's Securities to the Interest Account of the Trust.
All other receipts, such as return of capital, are credited to the
Principal Account of the Trust.
After deducting the amount of accrued interest the Trustee advanced to
us as Unit holder of record as of the First Settlement Date, the Trustee
will distribute an amount substantially equal to your pro rata share of
the balance of the Interest Account calculated on the basis of one-
twelfth (one-half in the case of Unit holders electing semi-annual
distributions) of the estimated annual amount of interest received in
the Income Account after deducting estimated expenses on or near the
Distribution Dates to Unit holders of record on the preceding
Distribution Record Date. See "Summary of Essential Information."
Because interest is not received by the Trust at a constant rate
throughout the year, the distributions you receive may be more or less
than the amount credited to the Interest Account as of the Distribution
Record Date. In order to minimize fluctuations in distributions, the
Page 18
Trustee is authorized to advance such amounts as may be necessary to
provide distributions of approximately equal amounts. The Trustee will
be reimbursed, without interest, for any such advances from funds in the
Interest Account at the next Distribution Record Date. The Trustee will
distribute amounts in the Principal 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 Principal Account from the sale of Securities designated
to meet redemptions of Units or to pay expenses will not be distributed.
The Trustee is not required to pay interest on funds held in the
Interest or Principal Accounts of the Trust. However, the Trustee may
earn interest on these funds, thus benefiting from the use of such funds.
You will receive interest distributions monthly unless you elect to
receive them semi-annually. Your plan of distribution will remain in
effect until changed. During May of each year the Trustee will provide
you with information on how to change your distribution election.
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
TIN. You may recover this amount by giving your TIN to the Trustee, or
when you file a tax return. Normally, the selling broker gives your TIN
to the Trustee. However, you should check your statements from the
Trustee to make sure they have the number to avoid this "back-up
withholding." If not, 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.
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.
Universal Distribution Option. You may elect to have your principal and
interest distributions automatically distributed to any other investment
vehicle of which you have an existing account. If you elect this option,
the Trustee will notify you of each distribution made pursuant to this
option. You may elect to terminate your participation at any time by
notifying the Trustee in writing.
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 NYSE 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 NYSE is scheduled in
advance to close at such earlier time), the Date of Tender is the next
day the NYSE is open for trading.
Any amounts paid on redemption representing interest will be withdrawn
from the Interest Account of the Trust if funds are available for that
purpose, or from the Principal Account. All other amounts paid on
redemption will be taken from the Principal Account of the Trust.
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 TIN. For more information about this withholding, see
"Distributions." If the Trustee does not have your TIN, you must 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 diversification of the
Trust will be reduced. These sales may result in lower prices than if
the Securities were sold at a different time.
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Your right to redeem Units (and therefore, your right to receive
payment) may be delayed:
- - If the NYSE is closed (other than customary weekend and holiday
closings);
- - If the SEC determines that trading on the NYSE is restricted or that
an emergency exists making sale or evaluation of the Securities not
reasonably practical; or
- - 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.
The Redemption Price per Unit is determined by the Trustee by:
adding
1. cash in the Interest and Principal Accounts not designated to
purchase Securities;
2. the aggregate underlying value of the Securities held in the Trust; and
3. accrued interest on the Securities.
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, 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; and
5. other liabilities incurred by the Trust; and
dividing
1. the result by the number of outstanding Units of the Trust.
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 organization costs as set forth under "Fee Table."
The aggregate underlying 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, including situations in which:
- - The issuer of the Security has defaulted in the payment of principal
or interest on the Securities;
- - Any action or proceeding seeking to restrain or enjoin the payment of
principal or interest on the Securities has been instituted;
- - The issuer of the Security has breached a covenant which would affect
the payment of principal or interest on the Security, the issuer's
credit standing, or otherwise damage the sound investment character of
the Security;
- - The issuer has defaulted on the payment of any other of its
outstanding obligations;
- - Such Securities are the subject of an advanced refunding;
- - Such factors arise which, in our opinion, adversely affect the tax or
exchange control status of the Securities; or
- - The price of the Security has declined to such an extent, or such
other credit factors exist, that in our opinion keeping the Security
would be harmful to the Trust.
If a Security defaults in the payment of principal or interest and no
provision for payment is made, the Trustee must notify us of this fact
within 30 days. If we fail to instruct the Trustee whether to sell or
hold the Security within 30 days of our being notified, the Trustee may,
in its discretion, sell any defaulted Securities and will not be liable
for any depreciation or loss incurred thereby.
Except in the limited instance in which the Trust acquires 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, except that we may instruct the
Trustee to accept such an offer or to take any other action with respect
thereto as we may deem proper if the issuer is in default with respect
to such Securities or in our written opinion the issuer will likely
default in respect to such Securities in the foreseeable future. Any
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obligations received in exchange or substitution will be held by the
Trustee subject to the terms and conditions in the Indenture to the same
extent as Securities originally deposited in the Trust. We may get
advice from the Portfolio Supervisor before reaching a decision
regarding the receipt of new or exchanged securities or property. 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 sell Securities that we designate; or, without our
direction, in its own discretion, in order to meet redemption requests
or pay expenses. We will maintain a list with the Trustee of which
Securities should 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. 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 20% of the aggregate principal amount of
Securities deposited in the Trust during the initial offering period
(the "Discretionary Liquidation Amount"); 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. 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 the 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.
You will receive a cash distribution from the sale of the remaining
Securities, along with your interest in the Interest and Principal
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.
Description of Bond Ratings*
________________
* As published by the rating companies.
Standard & Poor's.
A brief description of the applicable Standard & Poor's rating symbols
and their meanings follows:
A Standard & Poor's corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a
specific debt obligation. This assessment may take into consideration
obligors such as guarantors, insurers, or lessees. The bond rating is
Page 21
not a recommendation to purchase, sell, or hold a security, inasmuch as
it does not comment as to market price or suitability for a particular
investor. The ratings are based on current information furnished by the
issuer or obtained by Standard & Poor's from other sources it considers
reliable. Standard & Poor's does not perform an audit in connection with
any rating and may, on occasion, rely on unaudited financial
information. The ratings may be changed, suspended or withdrawn as a
result of changes in, or unavailability of, such information, or for
other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default-capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance
with the terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangements under the
laws of bankruptcy and other laws affecting creditors' rights.
AAA - Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small
degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds
in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds
in higher rated categories.
BB, B, CCC, CC - Debt rated BB, B, CCC and CC is regarded, on balance,
as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties
or major risk exposure to adverse conditions.
Plus (+) or Minus (-): The ratings from "AA" to "BBB" may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.
Provisional Ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of
the project being financed by the bonds being rated and indicates that
payment of debt service requirements is largely or entirely dependent
upon the successful and timely completion of the project. This rating,
however, while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of default
upon failure of, such completion. The investor should exercise his/her
own judgment with respect to such likelihood and risk.
Credit Watch: Credit Watch highlights potential changes in ratings of
bonds and other fixed income securities. It focuses on events and trends
which place companies and government units under special surveillance by
S&P's 180-member analytical staff. These may include mergers, voter
referendums, actions by regulatory authorities, or developments gleaned
from analytical reviews. Unless otherwise noted, a rating decision will
be made within 90 days. Issues appear on Credit Watch where an event,
situation, or deviation from trends occurred and needs to be evaluated
as to its impact on credit ratings. A listing, however, does not mean a
rating change is inevitable. Since S&P continuously monitors all of its
ratings, Credit Watch is not intended to include all issues under
review. Thus, rating changes will occur without issues appearing on
Credit Watch.
Moody's.
A brief description of the applicable Moody's rating symbols and their
meanings follows:
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the
Page 22
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues. Their safety is so absolute that with the occasional
exception of oversupply in a few specific instances, characteristically,
their market value is affected solely by money market fluctuations.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long term risks
appear somewhat larger than in Aaa securities. Their market value is
virtually immune to all but money market influences, with the occasional
exception of oversupply in a few specific instances.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future. The market value of A-rated bonds may be
influenced to some degree by economic performance during a sustained
period of depressed business conditions, but, during periods of
normalcy, A-rated bonds frequently move in parallel with Aaa and Aa
obligations, with the occasional exception of oversupply in a few
specific instances.
A 1 and Baa 1 - Bonds which are rated A 1 and Baa 1 offer the maximum in
security within their quality group, can be bought for possible
upgrading in quality, and additionally, afford the investor an
opportunity to gauge more precisely the relative attractiveness of
offerings in the market place.
Baa - Bonds which are rated Baa are considered as medium grade
obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well. The market value of Baa-rated bonds is more
sensitive to changes in economic circumstances, and aside from
occasional speculative factors applying to some bonds of this class, Baa
market valuations will move in parallel with Aaa, Aa, and A obligations
during periods of economic normalcy, except in instances of oversupply.
Ba - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Moody's bond rating symbols may contain numerical modifiers of a generic
rating classification. The modifier 1 indicates that the bond ranks at
the high end of its category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower
end of its generic rating category.
Con.(- - -) - Bonds for which the security depends upon the completion
of some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation
experience, (c) rentals which begin when facilities are completed, or
(d) payments to which some other limiting condition attaches.
Parenthetical rating denotes probable credit stature upon completion of
construction or elimination of basis of condition.
Information on the Sponsor, Trustee and Evaluator
The Sponsor.
We, Nike Securities L.P., specialize in the underwriting, trading and
wholesale 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
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- - 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 $25 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.
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, 1998, the total partners' capital of
Nike Securities L.P. was $18,506,548 (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.
Neither we nor the Trustee will 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 SEC,
- - Terminate the Indenture and liquidate the Trust, or
- - Continue to act as Trustee without terminating the Indenture.
The Evaluator.
The Evaluator is Muller Data Corporation. The Evaluator's address is 395
Hudson Street, New York, New York 10014.
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,
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.
Experts.
Ernst & Young LLP, independent auditors, have audited the Trust's
Page 24
statement of net assets, including the schedule of investments, at the
opening of business on the Initial Date of Deposit, as set forth in
their report. We've included the Trust's statement of net assets,
including the schedule of investments, in the prospectus and elsewhere
in the registration statement in reliance on Ernst & Young LLP's report,
given on their authority as experts in accounting and auditing.
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 SEC and to which we have referred throughout. This information
states more specific risk information about the Trust.
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Page 27
FIRST TRUST (registered trademark)
The First Trust Corporate Income Trust (High Yield),
Intermediate Series 16
FT 329
Sponsor:
NIKE SECURITIES L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
THE CHASE MANHATTAN BANK
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
24-Hour Pricing Line:
1-800-446-0132
This prospectus contains information relating to The First Trust
Corporate Income Trust (High Yield), Intermediate Series 16, but does
not contain all of the information about this investment company as
filed with the Securities and Exchange Commission in Washington, D.C.
under the:
- Securities Act of 1933 (file no. 333-72819) and
- Investment Company Act of 1940 (file no. 811-05903)
To obtain copies at prescribed rates -
Write: Public Reference Section of the Commission
450 Fifth Street, N.W., Washington, D.C. 20549-6009
Call: 1-800-SEC-0330
Visit: http://www.sec.gov
March 23, 1999
PLEASE RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE
Page 28
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 329 not found in the prospectus for the Trust. This
Information Supplement is not a prospectus and does not include all of
the information you should consider before investing in the Trust. This
Information Supplement should be read in conjunction with the prospectus
for the Trust in which you are considering investing.
This Information Supplement is dated March 23, 1999. Capitalized terms
have been defined in the Prospectus.
Table of Contents
Risk Factors
High-Yield Obligations 1
Foreign Issuers 2
Liquidity 2
Exchange Controls 3
Jurisdiction Over, and U.S. Judgments Concerning,
Foreign Obligors 3
General 3
Risk Factors
High-Yield Obligations. An investment in Units of the Trust should be
made with an understanding of the risks that an investment in "high-
yield, high-risk," fixed-rate, domestic and foreign corporate debt
obligations or "junk Securities" may entail, including increased credit
risks and the risk that the value of the Units will decline, and may
decline precipitously, with increases in interest rates. In recent years
there have been wide fluctuations in interest rates and thus in the
value of fixed-rate, debt obligations generally. Securities such as
those included in the Trust are, under most circumstances, subject to
greater market fluctuations and risk of loss of income and principal
than are investments in lower-yielding, higher-rated securities, and
their value may decline precipitously because of increases in interest
rates, not only because the increases in rates generally decrease
values, but also because increased rates may indicate a slowdown in the
economy and a decrease in the value of assets generally that may
adversely affect the credit of issuers of high-yield, high-risk
securities resulting in a higher incidence of defaults among high-yield,
high-risk securities. A slowdown in the economy, or a development
adversely affecting an issuer's creditworthiness, may result in the
issuer being unable to maintain earnings or sell assets at the rate and
at the prices, respectively, that are required to produce sufficient
cash flow to meet its interest and principal requirements. For an issuer
that has outstanding both senior commercial bank debt and subordinated
high-yield, high-risk securities, an increase in interest rates will
increase that issuer's interest expense insofar as the interest rate on
the bank debt is fluctuating. However, many leveraged issuers enter into
interest rate protection agreements to fix or cap the interest rate on a
large portion of their bank debt. This reduces exposure to increasing
rates, but reduces the benefit to the issuer of declining rates. The
Sponsor cannot predict future economic policies or their consequences
or, therefore, the course or extent of any similar market fluctuations
in the future.
"High-yield" or "junk" Securities, the generic names for corporate
Securities rated below BBB by Standard & Poor's, or below Baa by
Moody's, are frequently issued by corporations in the growth stage of
their development, by established companies whose operations or
industries are depressed or by highly leveraged companies purchased in
leveraged buyout transactions. The market for high-yield Securities is
very specialized and investors in it have been predominantly financial
institutions. High-yield Securities are generally not listed on a
national securities exchange. Trading of high-yield Securities,
therefore, takes place primarily in over-the-counter markets which
consist of groups of dealer firms that are typically major securities
firms. Because the high-yield Security market is a dealer market, rather
than an auction market, no single obtainable price for a given Security
prevails at any given time. Prices are determined by negotiation between
traders. The existence of a liquid trading market for the Securities may
depend on whether dealers will make a market in the Securities. There
can be no assurance that a market will be made for any of the
Securities, that any market for the Securities will be maintained or of
the liquidity of the Securities in any markets made. Not all dealers
maintain markets in all high-yield Securities. Therefore, since there
are fewer traders in these Securities than there are in "investment
grade" Securities, the bid-offer spread is usually greater for high-
yield Securities than it is for investment grade Securities. The price
at which the Securities may be sold to meet redemptions and the value of
the Trust will be adversely affected if trading markets for the
Page 1
Securities are limited or absent. If the rate of redemptions is great,
the value of the Trust may decline to a level that requires liquidation.
Lower-rated securities tend to offer higher yields than higher-rated
securities with the same maturities because the creditworthiness of the
issuers of lower-rated securities may not be as strong as that of other
issuers. Moreover, if a Security is recharacterized as equity by the
Internal Revenue Service for federal income tax purposes, the issuer's
interest deduction with respect to the Security will be disallowed and
this disallowance may adversely affect the issuer's credit rating.
Because investors generally perceive that there are greater risks
associated with the lower-rated securities in the Trust, the yields and
prices of these securities tend to fluctuate more than higher-rated
securities with changes in the perceived quality of the credit of their
issuers. In addition, the market value of high-yield, high-risk, fixed-
income securities may fluctuate more than the market value of higher-
rated securities since high-yield, high-risk, fixed-income securities
tend to reflect short-term credit development to a greater extent than
higher-rated securities. Lower-rated securities generally involve
greater risks of loss of income and principal than higher-rated
securities. Issuers of lower-rated securities may possess fewer
creditworthiness characteristics than issuers of higher-rated securities
and, especially in the case of issuers whose obligations or credit
standing have recently been downgraded, may be subject to claims by
debtholders, owners of property leased to the issuer or others which, if
sustained, would make it more difficult for the issuers to meet their
payment obligations. High-yield, high-risk Securities are also affected
by variables such as interest rates, inflation rates and real growth in
the economy. Therefore, investors should consider carefully the relative
risks associated with investment in securities which carry lower ratings.
The value of the Units reflects the value of the portfolio securities,
including the value (if any) of securities in default. Should the issuer
of any Security default in the payment of principal or interest, the
Trust may incur additional expenses seeking payment on the defaulted
Security. Because amounts (if any) recovered by the Trust in payment
under the defaulted Security may not be reflected in the value of the
Units until actually received by the Trust, and depending upon when a
Unit holder purchases or sells his or her Units, it is possible that a
Unit holder would bear a portion of the cost of recovery without
receiving any portion of the payment recovered.
High-yield, high-risk Securities are generally subordinated obligations.
The payment of principal (and premium, if any), interest and sinking
fund requirements with respect to subordinated obligations of an issuer
is subordinated in right of payment to the payment of senior obligations
of the issuer. Senior obligations generally include most, if not all,
significant debt obligations of an issuer, whether existing at the time
of issuance of subordinated debt or created thereafter. Upon any
distribution of the assets of an issuer with subordinated obligations
upon dissolution, total or partial liquidation or reorganization of or
similar proceeding relating to the issuer, the holders of senior
indebtedness will be entitled to receive payment in full before holders
of subordinated indebtedness will be entitled to receive any payment.
Moreover, generally no payment with respect to subordinated indebtedness
may be made while there exists a default with respect to any senior
indebtedness. Thus, in the event of insolvency, holders of senior
indebtedness of an issuer generally will recover more, ratably, than
holders of subordinated indebtedness of that issuer.
Obligations that are rated lower than BBB by Standard & Poor's, or Baa
by Moody's, respectively, should be considered speculative as such
ratings indicate a quality of less than investment grade. Investors
should carefully review the objective of the Trust and consider their
ability to assume the risks involved before making an investment in the
Trust. See "Description of Security Ratings" in the prospectus for a
description of speculative ratings issued by Standard & Poor's and
Moody's.
Foreign Issuers. A portion of the Securities in the Trust are invested
in securities of foreign issuers. It is appropriate for investors in the
Trust to consider certain investment risks that distinguish investments
in Securities of foreign issuers from those of domestic issuers. Those
investment risks include future political and economic developments, the
possible imposition of withholding taxes on interest income payable on
the Securities held in the Portfolio, the possible seizure or
nationalization of foreign deposits, the possible establishment of
exchange controls or the adoption of other foreign governmental
restrictions (including expropriation, burdensome or confiscatory
taxation and moratoriums) which might adversely affect the payment or
receipt of payment of amounts due on the Securities. Investors should
realize that, although the Trust invests in U.S. dollar denominated
investments, the foreign issuers which operate internationally are
subject to currency risks. The value of Securities can be adversely
affected by political or social instability and unfavorable diplomatic
or other negative developments. In addition, because many foreign
issuers are not subject to the reporting requirements of the Securities
Exchange Act of 1934, there may be less publicly available information
about the foreign issuer than a U.S. domestic issuer. Foreign issuers
also are not necessarily subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to
those applicable to U.S. domestic issuers. However, the Sponsor
anticipates that adequate information will be available to allow the
Portfolio Supervisor to provide portfolio surveillance.
Liquidity. The Securities in the Trust may not have been registered
under the Securities Act of 1933 and may not be exempt from the
registration requirements of the Act. Most of the Securities will not be
listed on a securities exchange. Whether or not the Securities are
listed, the principal trading market for the Securities will generally
Page 2
be in the over-the-counter market. As a result, the existence of a
liquid trading market for the Securities may depend on whether dealers
will make a market in the Securities. There can be no assurance that a
market will be made for any of the Securities, that any market for the
Securities will be maintained or of the liquidity of the Securities in
any markets made. The price at which the Securities may be sold to meet
redemptions and the value of the Trust will be adversely affected if
trading markets for the Securities are limited or absent. The Trust may
also contain non-exempt Securities in registered form which have been
purchased on a private placement basis. Sales of these Securities may
not be practicable outside the United States, but can generally be made
to U.S. institutions in the private placement market which may not be as
liquid as the general U.S. securities market. Since the private
placement market is less liquid, the prices received may be less than
would have been received had the markets been broader.
Exchange Controls. On the basis of the best information available to the
Sponsor at the present time none of the Securities are subject to
exchange control restrictions under existing law which would materially
interfere with payment to the Trust of amounts due on the Securities.
However, there can be no assurance that exchange control regulations
might not be adopted in the future which might adversely affect payments
to the Trust. In addition, the adoption of exchange control regulations
and other legal restrictions could have an adverse impact on the
marketability of the Securities in the Trust and on the ability of the
Trust to satisfy its obligation to redeem Units tendered to the Trustee
for redemption.
Jurisdiction Over, and U.S. Judgments Concerning, Foreign Obligors. Non-
U.S. issuers of the Securities will generally not have submitted to the
jurisdiction of U.S. courts for purposes of lawsuits relating to those
Securities. If the Trust contains Securities of such an issuer, the
Trust as a holder of those obligations may not be able to assert its
rights in U.S. courts under the documents pursuant to which the
Securities are issued. Even if the Trust obtains a U.S. judgment against
a foreign obligor, there can be no assurance that the judgment will be
enforced by a court in the country in which the foreign obligor is
located. In addition, a judgment for money damages by a court in the
United States if obtained, will ordinarily be rendered only in U.S.
dollars. It is not clear, however, whether, in granting a judgment, the
rate of conversion of the applicable foreign currency into U.S. dollars
would be determined with reference to the due date or the date the
judgment is rendered. Courts in other countries may have rules that are
similar to, or different from, the rules of U.S. courts.
General. The Trust may consist of Securities which, in many cases, do
not have the benefit of covenants which would prevent the issuer from
engaging in capital restructurings or borrowing transactions in
connection with corporate acquisitions, leveraged buyouts or
restructurings which could have the effect of reducing the ability of
the issuer to meet its debt obligations and might result in the ratings
of the Securities and the value of the underlying Trust portfolio being
reduced.
Certain of the Securities in the Trust may have been acquired at a
market discount from par value at maturity. The coupon interest rates on
the discount Securities at the time they were purchased and deposited in
the Trust were lower than the current market interest rates for newly
issued Securities of comparable rating and type. If such interest rates
for newly issued comparable Securities increase, the market discount of
previously issued Securities will become greater, and if such interest
rates for newly issued comparable Securities decline, the market
discount of previously issued Securities will be reduced, other things
being equal. Investors should also note that the value of Securities
purchased at a market discount will increase in value faster than
Securities purchased at a market premium if interest rates decrease.
Conversely, if interest rates increase, the value of Securities
purchased at a market discount will decrease faster than Securities
purchased at a market premium. In addition, if interest rates rise, the
prepayment risk of higher yielding, premium Securities and the
prepayment benefit for lower yielding, discount Securities will be
reduced. A discount Security held to maturity will have a larger portion
of its total return in the form of capital gain and less in the form of
interest income than a comparable Security newly issued at current
market rates. Market discount attributable to interest changes does not
indicate a lack of market confidence in the issue. Neither the Sponsor
nor the Trustee shall be liable in any way for any default, failure or
defect in any of the Securities.
Certain of the Securities in the Trust may be original issue discount
Securities or zero coupon Securities. Under current law, the original
issue discount, which is the difference between the stated redemption
price at maturity and the issue price of the Securities, is deemed to
accrue on a daily basis and the accrued portion is treated as interest
income for Federal income tax purposes. On sale or redemption, any gain
realized that is in excess of the earned portion of original issue
discount will be taxable as capital gain unless the gain is attributable
to market discount in which case the accretion of market discount is
taxable as ordinary income. See "Tax Status" in the prospectus. The
current value of an original discount Security reflects the present
value of its stated redemption price at maturity. The market value tends
to increase in greater increments as the Securities approach maturity.
The effect of owning deep discount zero coupon Securities which do not
make current interest payments is that a fixed yield is earned not only
on the original investment, but also, in effect, on all earnings during
the life of the discount obligation. This implicit reinvestment of
earnings at the same rate eliminates the risk of being unable to
reinvest the income on such obligations at a rate as high as the
implicit yield on the discount obligation, but at the same time
eliminates the holder's ability to reinvest at higher rates in the
future. For this reason, the zero coupon Securities are subject to
Page 3
substantially greater price fluctuations during periods of changing
interest rates than are securities of comparable quality which make
regular interest payments.
Certain of the Securities in the Trust may have been acquired at a
market premium from par value at maturity. The coupon interest rates on
the premium Securities at the time they were purchased and deposited in
the Trust were higher than the current market interest rates for newly
issued Securities of comparable rating and type. If such interest rates
for newly issued and otherwise comparable Securities decrease, the
market premium of previously issued Securities will be increased, and if
such interest rates for newly issued comparable Securities increase, the
market premium of previously issued Securities will be reduced, other
things being equal. The current returns of Securities trading at a
market premium are initially higher than the current returns of
comparable Securities of a similar type issued at currently prevailing
interest rates because premium Securities tend to decrease in market
value as they approach maturity when the face amount becomes payable.
Because part of the purchase price is thus returned not at maturity but
through current income payments, early redemption of a premium Security
at par or early prepayments of principal will result in a reduction in
yield. Redemption pursuant to call provisions generally will, and
redemption pursuant to sinking fund provisions may, occur at times when
the redeemed Securities have an offering side valuation which represents
a premium over par or for original issue discount Securities a premium
over the accreted value. To the extent that the Securities were
deposited in the Trust at a price higher than the price at which they
are redeemed, this will represent a loss of capital when compared to the
original Public Offering Price of the Units. Because premium Securities
generally pay a higher rate of interest than Securities priced at or
below par, the effect of the redemption of premium Securities would be
to reduce Estimated Net Annual Unit Income by a greater percentage than
the par amount of such Securities bears to the total par amount of
Securities in the Trust. Although the actual impact of any such
redemptions that may occur will depend upon the specific Securities that
are redeemed, it can be anticipated that the Estimated Net Annual Unit
Income will be significantly reduced after the dates on which such
Securities are eligible for redemption.
Because certain of the Securities may from time to time under certain
circumstances be sold or redeemed or will mature in accordance with
their terms and because the proceeds from such events will be
distributed to Unit holders and will not be reinvested, no assurance can
be given that the Trust will retain for any length of time its present
size and composition. Neither the Sponsor nor the Trustee shall be
liable in any way for any default, failure or defect in any Security.
Certain of the Securities contained in the Trust may be subject to being
called or redeemed in whole or in part prior to their stated maturities
pursuant to optional redemption provisions, sinking fund provisions or
otherwise. A Security subject to optional call is one which is subject
to redemption or refunding prior to maturity at the option of the
issuer. A refunding is a method by which a Security issue is redeemed,
at or before maturity, by the proceeds of a new Security issue. A
Security subject to sinking fund redemption is one which is subject to
partial call from time to time at par or from a fund accumulated for the
scheduled retirement of a portion of an issue prior to maturity. The
exercise of redemption or call provisions will (except to the extent the
proceeds of the called Securities are used to pay for Unit redemptions)
result in the distribution of principal and may result in a reduction in
the amount of subsequent interest distributions; it may also affect the
Estimated Long-Term Return and the Estimated Current Return on Units of
the Trust. Redemption pursuant to call provisions is more likely to
occur, and redemption pursuant to sinking fund provisions may occur,
when the Securities have an offering side valuation which represents a
premium over par or for original issue discount Securities a premium
over the accreted value. Unit holders may recognize capital gain or loss
upon any redemption or call.
The contracts to purchase Securities delivered to the Trustee represent
obligations by issuers or dealers to deliver Securities to the Sponsor
for deposit in the Trust. Contracts are typically settled and the
Securities delivered within a few business days subsequent to the
Initial Date of Deposit. The percentage of the aggregate principal
amount of the Securities of the Trust relating to "when, as and if
issued" Securities or other Securities with delivery dates after the
date of settlement for a purchase made on the Initial Date of Deposit,
if any, is indicated in the section for the Trust entitled "Schedule of
Investments" in the prospectus. Interest on "when, as and if issued" and
delayed delivery Securities begins accruing to the benefit of Unit
holders on their dates of delivery. Because "when, as and if issued"
Securities have not yet been issued, as of the Initial Date of Deposit
the Trust is subject to the risk that the issuers thereof might decide
not to proceed with the offering of such Securities or that the delivery
of such Securities or the delayed delivery Securities may be delayed. If
such Securities or replacement Securities are not acquired by the Trust
or if their delivery is delayed, the Estimated Long-Term Return and the
Estimated Current Return shown in the prospectus may be reduced.
Page 4
CONTENTS OF REGISTRATION STATEMENT
A. BONDING ARRANGEMENTS OF DEPOSITOR:
Nike Securities L.P. is covered by a Brokers' Fidelity Bond,
in the total amount of $1,000,000, the insurer being
National Union Fire Insurance Company of Pittsburgh.
B. THIS REGISTRATION STATEMENT ON FORM S-6
COMPRISES THE FOLLOWING PAPERS AND
DOCUMENTS:
The facing sheet
The Prospectus
The signatures
Exhibits
S-1
SIGNATURES
The Registrant, FT 329, hereby identifies The First Trust
Special Situations Trust, Series 4; The First Trust Special
Situations Trust, Series 18; The First Trust Combined Series 248;
The First Trust Special Situations Trust, Series 69; The First
Trust Special Situations Trust, Series 108; The First Trust
Special Situations Trust, Series 119; The First Trust Special
Situations Trust, Series 190; and FT 286 for purposes of the
representations required by Rule 487 and represents the
following:
(1) that the portfolio securities deposited in the series
as to the securities of which this Registration Statement is
being filed do not differ materially in type or quality from
those deposited in such previous series;
(2) that, except to the extent necessary to identify the
specific portfolio securities deposited in, and to provide
essential financial information for, the series with respect to
the securities of which this Registration Statement is being
filed, this Registration Statement does not contain disclosures
that differ in any material respect from those contained in the
registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and
(3) that it has complied with Rule 460 under the Securities
Act of 1933.
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, FT 329, has duly caused this Amendment to
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Village of Lisle
and State of Illinois on March 23, 1999.
FT 329
By NIKE SECURITIES L.P.
Depositor
By Robert M. Porcellino
Vice President
S-2
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below by the following person in the capacity and on the date
indicated:
NAME TITLE* DATE
Robert D. Van Kampen Director )
of Nike Securities )
Corporation, the ) March 23, 1999
General Partner of )
Nike Securities L.P. )
)
)
David J. Allen Director of Nike ) Robert M. Porcellino
Securities ) Attorney-in-Fact**
Corporation, the )
General Partner )
of Nike Securities L.P.
* The title of the person named herein represents his
capacity in and relationship to Nike Securities L.P.,
Depositor.
** An executed copy of the related power of attorney
was filed with the Securities and Exchange Commission in
connection with the Amendment No. 1 to Form S-6 of The
First Trust Special Situations Trust, Series 18 (File No.
33-42683) and the same is hereby incorporated herein by
this reference.
S-3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated March 23, 1999 in
Amendment No. 1 to the Registration Statement (Form S-6) (File
No. 333-72819) and related Prospectus of FT 329.
ERNST & YOUNG LLP
Chicago, Illinois
March 23, 1999
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 MULLER DATA CORPORATION
The consent of Muller Data Corporation to the use of its
name in the Prospectus included in the Registration Statement
will be filed as Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 24 and
certain subsequent Series effective January 23, 1992
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. 33-45903] filed on behalf
of The First Trust Special Situations Trust,
Series 24).
1.1.1 Form of Trust Agreement for FT 329 among Nike Securities
L.P., as Depositor, The Chase Manhattan Bank, as
Trustee, Muller Data Corporation, as Evaluator, and
First Trust Advisors L.P., as Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities
L.P., Depositor (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-
6 [File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
1.6 Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42755] filed on
behalf of The First Trust Special Situations Trust,
Series 19).
2.1 Copy of Certificate of Ownership (included in Exhibit
1.1 filed herewith on page 2 and incorporated herein by
reference).
S-5
3.1 Opinion of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal income tax status of
securities being registered.
3.3 Opinion of counsel as to New York income tax status of
securities being registered.
3.4 Opinion of counsel as to advancement of funds by
Trustee.
4.1 Consent of Muller Data Corporation.
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-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
S-6
MEMORANDUM
FT 329
File No. 333-72819
The Prospectus and the Indenture filed with Amendment No. 1
of the Registration Statement on Form S-6 have been revised to
reflect information regarding the execution of the Indenture and
the deposit of Securities on March 23, 1999 and to set forth
certain statistical data based thereon. In addition, there are a
number of other changes described below.
THE PROSPECTUS
Cover Page The date of the Trust has been added.
Page 3 The following information for the Trust appears:
The total number of units of the Trust.
The Public Offering Price per Unit as of the
business day prior to the Date of Deposit.
The first distributions and record dates.
The Estimated Long-Term returns and Estimated
Current returns (if applicable) to Unit holders as
of the opening of business on the Date of Deposit.
Essential information based on all distribution
plans.
Summary data regarding the composition of the
portfolio of the Trust.
Estimated net annual unit income.
Page 5 The Report of Independent Auditors has been
completed.
Page 6 The Statement of Net Assets has been completed.
Page 7 The portfolio for the Trust.
Page 15 A paragraph on this page indicates how the initial
annual fee of the Trustee is calculated.
THE TRUST AGREEMENT AND STANDARD TERMS AND CONDITIONS OF TRUST
The Trust Agreement has been conformed to reflect
the execution thereof.
CHAPMAN AND CUTLER
March 23, 1999
FT 329
TRUST AGREEMENT
Dated: March 23, 1999
This Trust Agreement among Nike Securities L.P., as
Depositor, The Chase Manhattan Bank, as Trustee, Muller Data
Corporation, as Evaluator, and First Trust Advisors L.P., as
Portfolio Supervisor, sets forth certain provisions in full and
incorporates other provisions by reference to the document
entitled "Standard Terms and Conditions of Trust for The First
Trust Special Situations Trust, Series 24" effective January 23,
1992 (herein called the "Standard Terms and Conditions of
Trust"), and such provisions as are set forth in full and such
provisions as are incorporated by reference constitute a single
instrument. All references herein to Articles and Sections are
to Articles and Sections of the Standard Terms and Conditions of
Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the Provisions of Part II hereof, all the
provisions contained in the Standard Terms and Conditions of
Trust are herein incorporated by reference in their entirety and
shall be deemed to be a part of this instrument as fully and to
the same extent as though said provisions had been set forth in
full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
THE FIRST TRUST CORPORATE INCOME TRUST (HIGH YIELD),
INTERMEDIATE SERIES 16
The following special terms and conditions are hereby agreed
to:
(a) The Bonds defined in Section 1.01(5) listed in
Schedule A hereto have been deposited in trust under this
Trust Agreement.
(b) The fractional undivided interest in and ownership
of the Trust Fund represented by each Unit for a Trust is the
amount set in the "Summary of Essential Information" in the
Prospectus.
(c) The number of units in a Trust referred to in
Section 2.03 is set forth in the "Summary of Essential
Information" in the Prospectus.
(d) For each Trust the First General Record Date and
the amount of the second distribution of funds from the
Interest Account shall be the record date for the Interest
Account and the amount set forth in the "Summary of Essential
Information" in the Prospectus.
(e) For each Trust the "First Settlement Date" is the
date set forth in the "Summary of Essential Information" in
the Prospectus.
(f) the term "Bonds" as set forth in the standard
Terms and Conditions of Trust shall be replaced with the term
"Securities."
(g) The definition of "Bonds" contained in Section
1.01(5) of the Standard Terms and Conditions of Trust shall
be amended by inserting the following after "(the "Corporate
Bonds")" appearing in the first sentence thereof:
",zero coupon bonds (the "Zero Coupon Bonds")".
(h) Notwithstanding anything to the contrary in
Section 6.04 of the Standard Terms and Conditions of Trust,
the Trustees Compensation Rate shall be an annual fee in the
amount of $.0173 and $.0128 per Unit for those portions of
the Trust representing monthly and semi-annual distribution
plans, respectively, calculated based on the largest number
of Units outstanding during the calendar year except during
the initial offering period as determined by Section 4.01 of
this Indenture, in which case the fee is calculated based on
the largest number of Units outstanding during the period for
which the compensation is paid (such annual fee to be pro
rated for any calendar year in which the Trustee provides
services during less than the whole of such year).
PART III
A. Notwithstanding anything to the contrary in the
Standard Terms and Conditions of Trust, references to subsequent
Series established after the date of effectiveness of the First
Trust Special Situations Trust, Series 24 shall include FT 329.
B. Notwithstanding any provision to the contrary contained
in the Standard Terms and Conditions of Trust and in lieu of the
receipt of Certificates evidencing ownership of Units of the
Fund, the Sponsor, at its option, may elect that Units of the
Fund owned by it be reflected by book entry on the books and
records of the Trustee. For all purposes the Sponsor shall be
deemed the owner of such Units as if a Certificate evidencing
ownership of Units of the Fund had actually been issued by the
Trustee. The Units reflected by book entry on the books and
records of the Trustee may be transferable by the registered
owner of such Units by written instrument in form satisfactory to
the Trustee. The registered owner of Units reflected by book
entry on the books and records of the Trustee shall have the
right at any time to obtain Certificates evidencing ownership of
such Units.
C. Section 2.01. of Article II of the Standard Terms and
Conditions of Trust is hereby amended by inserting "(a)" prior to
the beginning of the text of the paragraph and adding the
following additional paragraphs:
"(b) From time to time following the Initial Date of
Deposit, the Depositor is hereby authorized, in its discretion,
to assign, convey to and deposit with the Trustee additional
Bonds, in bearer form or duly endorsed in blank or accompanied by
all necessary instruments of assignment and transfer in proper
form (or Contract Obligations relating to such Bonds), to be
held, managed and applied by the Trustee as herein provided.
Such deposit of additional Bonds shall be made, in each case,
pursuant to a Notice of Deposit of Additional Bonds from the
Depositor to the Trustee. The Depositor, in each case, shall
ensure that each deposit of additional Bonds pursuant to this
Section shall be, as nearly as is practicable, in the identical
ratio as the Percentage Ratio for such Bonds as is specified in
the Prospectus for the Trust and the Depositor shall ensure that
such Bonds are identical to those deposited on the Initial Date
of Deposit. The Depositor shall deliver the additional Bonds
which were not delivered concurrently with the deposit of
additional Bonds and which were represented by Contract
Obligations within 10 calendar days after such deposit of
additional Bonds (the "Additional Bonds Delivery Period"). If a
contract to buy such Bonds between the Depositor and seller is
terminated by the seller thereof for any reason beyond the
control of the Depositor or if for any other reason the Bonds are
not delivered to the Trust by the end of the Additional Bonds
Delivery Period for such deposit, the Trustee shall immediately
draw on the Letter of Credit, if any, in its entirely, apply the
monies in accordance with Section 2.01(d), and the Depositor
shall forthwith take the remedial action specified in
Section 3.14. If the Depositor does not take the action
specified in Section 3.14 within 10 calendar days of the end of
the Additional Bonds Delivery Period, the Trustee shall forthwith
take the action specified in Section 3.14.
(c) In connection with the deposits described in
Section 2.01 (a) and (b), the Depositor has, in the case of
Section 2.01(a) deposits, and, prior to the Trustee accepting a
Section 2.01(b) deposit, will, deposit cash and/or Letter(s) of
Credit in an amount sufficient to purchase the Contract
Obligations (the "Purchase Amount") relating to Bonds which are
not actually delivered to the Trustee at the time of such
deposit, the terms of which unconditionally allow the Trustee to
draw on the full amount of the available Letter of Credit. The
Trustee may deposit such cash or cash drawn on the Letter of
Credit in a non-interest bearing account for the Trust.
(d) In the event that the purchase of Contract Obligations
pursuant to any contract shall not be consummated in accordance
with said contract or if the Bonds represented by Contract
Obligations are not delivered to the Trust in accordance with
Section 2.01(a) or 2.01(b) and the monies, or, if applicable, the
monies drawn on the Letter of Credit, deposited by the Depositor
are not utilized for Section 3.14 purchases of New Bonds, such
funds, to the extent of the purchase price of Failed Contract
Obligations for which no Replacement Bond was acquired pursuant
to Section 3.14, plus all amounts described in the next
succeeding two sentences, shall be credited to the Principal
Account and distributed pursuant to Section 3.05 to Unit holders
of record as of the Record Date next following the failure of
consummation of such purchase. The Depositor shall cause to be
refunded to each Unit holder his pro rata portion of the sales
charge levied on the sale of Units to such Unit holder
attributable to such Failed Contract Obligation. The Depositor
shall also pay to the Trustee, for distribution to the Unit
holders, interest on the amount of the purchase price to the
Trust of the Failed Contract Obligation, at the rate of 5% per
annum to the date the Depositor notifies the Trustee that no
Replacement Bond will be purchased or, in the absence of such
notification, to the expiration date for purchase of a
Replacement Security specified in Section 3.14. Any amounts
remaining from monies drawn on the Letter of Credit which are not
used to purchase New Bonds or are not used to provide refunds to
Unit holders shall be paid to the Depositor.
(e) The Trustee is hereby irrevocably authorized to effect
registration or transfer of the Bonds in fully registered form to
the name of the Trustee or to the name of its nominee.
(f) In connection with and at the time of any deposit of
additional bonds pursuant to Section 2.01(b), the Depositor shall
exactly replicate Cash (as defined below) received or receivable
by the Trust as of the date of such deposit. For purposes of
this paragraph, "Cash" means, as to the Principal Account, cash
or other property (other than Bonds) on hand in the Principal
Account or receivable and to be credited to the Principal Account
as of the date of the deposit (other than amounts to be
distributed solely to persons other than holders of Units created
by the deposit) and, as to the Income Account, cash or other
property (other than Bonds) received by the Trust as of the date
of the deposit or receivable by the Trust in respect of
distributions declared but not received as of the date of the
deposit, reduced by the amount of any cash or other property
received or receivable on any Bond allocable (in accordance with
the Trustee's calculation of the monthly distribution from the
Income Account pursuant to Section 3.05) to a distribution made
or to be made in respect of a Record Date occurring prior to the
deposit. Such replication will be made on the basis of a
fraction, the numerator of which is the number of Units created
by the deposit and the denominator of which is the number of
Units which are outstanding immediately prior to the deposit."
D. Section 1.01(3) shall be amended to read as follows:
"(3) "Evaluator" shall mean Muller Data Corporation and its
successors in interest, or any successor evaluator appointed as
hereinafter provided."
E. Section 1.01(2) shall be amended to read as follows:
"(2) "Trustee" shall mean The Chase Manhattan Bank, or any
successor trustee appointed as hereinafter provided."
All references to United States Trust Company of New York in
the Standard Terms and Conditions of Trust shall be amended to
refer to The Chase Manhattan Bank.
F. Section 1.01(4) shall be amended to read as follows:
"(4)"Portfolio Supervisor" shall mean First Trust Advisors
L.P. and its successors in interest, or any successor portfolio
supervisor appointed as hereinafter provided."
G. Section 3.01 of the Standard Terms and Conditions of
Trust shall be replaced in its entirety with the following:
"Section 3.01. Initial Cost. Subject to reimbursement as
hereinafter provided, the cost of organizing the Trust and the
sale of the Trust Units shall be borne by the Depositor,
provided, however, that the liability on the part of the
Depositor under this section shall not include any fees or other
expenses incurred in connection with the administration of the
Trust subsequent to the deposit referred to in Section 2.01. At
the earlier of six months after the Initial Date of Deposit or
the conclusion of the primary offering period ( as certified by
the Depositor to the Trustee), the Trustee shall withdraw from
the Account or Accounts specified in the Prospectus or, if no
Account is therein specified, from the Principal Account, and pay
to the Depositor the Depositors reimbursable expenses of
organizing the Trust in an amount certified to the Trustee by the
Depositor. In no event shall the amount paid by the Trustee to
the Depositor for the Depositors reimbursable expenses of
organizing the Trust exceed the estimated per Unit amount of
organization costs set forth in the Prospectus for the Trust
multiplied by the number of Units of the Trust outstanding at the
earlier of six months after the Initial Date of Deposit or the
conclusion of the primary offering period; nor shall the
Depositor be entitled to or request reimbursement for expenses of
organizing the Trust incurred after the earlier of six months
after the Initial Date of Deposit or the conclusion of the
primary offering period. If the cash balance of the Principal
Account is insufficient to make such withdrawal, the Trustee
shall, as directed by the Depositor, sell Securities identified
by the Depositor, or distribute to the Depositor Securities
having a value, as determined under Section 4.01 as of the date
of distribution, sufficient for such reimbursement. Securities
sold or distributed to the Depositor to reimburse the Depositor
pursuant to this Section shall be sold or distributed by the
Trustee, to the extent practicable, in the percentage ratio then
existing. The reimbursement provided for in this section shall
be for the account of Unit holders of record at the earlier of
six months after the Initial Date of Deposit or the conclusion of
the primary offering period. Any assets deposited with the
Trustee in respect of the expenses reimbursable under this
Section 3.01 shall be held and administered as assets of the
Trust for all purposes hereunder. The Depositor shall deliver to
the trustee any cash identified in the Statement of Net Assets of
the Trust included in the Prospectus not late than the expiration
of the Delivery Period and the Depositors obligation to make
such delivery shall be secured by the letter of credit deposited
pursuant to Section 2.01. Any cash which the Depositor has
identified as to be used for reimbursement of expenses pursuant
to this Section 3.01 shall be held by the Trustee, without
interest, and reserved for such purpose and, accordingly, prior
to the earlier of six months after the Initial Date of Deposit or
the conclusion of the primary offering period, shall not be
subject to distribution or, unless the Depositor otherwise
directs, used for payment of redemptions in excess of the per
Unit amount payable pursuant to the next sentence. If a Unit
holder redeems Units prior to the earlier of six months after the
Initial Date of Deposit or the conclusion of the primary offering
period, the Trustee shall pay the Unit holder, in addition to the
Redemption Value of the tendered Units, unless otherwise directed
by the Depositor, an amount equal to the estimated per Unit cost
of organizing the Trust set forth in the Prospectus, or such
lower revision thereof most recently communicated to the Trustee
by the Depositor pursuant to Section 5.01, multiplied by the
number of Units tendered for redemption; to the extent the cash
on hand in the Trust is insufficient for such payments, the
Trustee shall have the power to sell Securities in accordance
with Section 5.02. As used herein, the Depositors reimbursable
expenses of organizing the Trust shall include the cost of the
initial preparation and typesetting of the registration
statement, prospectuses (including preliminary prospectuses), the
indenture, and other documents relating to the Trust, SEC and
state blue sky registration fees, the cost of the initial
valuation of the portfolio and audit of the Trust, the initial
fees and expenses of the Trustee, and legal and other out-of-
pocket expenses related thereto, but not including the expenses
incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and printing
of brochures and other advertising materials and any other
selling expenses."
H. The first sentence of Section 3.15. shall be amended to
read as follows:
"As compensation for providing supervisory portfolio
services under this Indenture, the Portfolio Supervisor
shall receive against a statement or statements therefor
submitted to the Trustee monthly or annually an aggregate
annual fee in the amount of $.0050 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case
the fee is calculated based on the largest number of Units
outstanding during the period for which the compensation is
paid (such annual fee to be pro rated for any calendar year
in which the Portfolio Supervisor provides services during
less than the whole of such year). Such fee may exceed the
actual cost of providing such portfolio supervision services
for the Trust, but at no time will the total amount received
for portfolio supervision services rendered to unit
investment trusts of which Nike Securities L.P. is the
sponsor in any calendar year exceed the aggregate cost to
the Portfolio Supervisor of supplying such services in such
year."
I. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraphs
which shall be entitled Section 3.16.:
"Section 3.16. Bookkeeping and Administrative Expenses. As
compensation for providing bookkeeping and other administrative
services of a character described in Section 26(a)(2)(C) of the
Investment Company Act of 1940 to the extent such services are in
addition to, and do not duplicate, the services to be provided
hereunder by the Trustee or the Portfolio Supervisor, the
Depositor shall receive against a statement or statements
therefor submitted to the Trustee monthly or annually an
aggregate annual fee of $.0019 per Unit, calculated based on the
largest number of Units outstanding during the calendar year
except during the initial offering period as determined in
Section 4.01 of this Indenture, in which case the fee is
calculated based on the largest number of Units outstanding
during the period for which the compensation is paid (such annual
fee to be pro rated for any calendar year in which the Depositor
provides services during less than the whole of such year). Such
fee may exceed the actual cost of providing such bookkeeping and
administrative services for the Trust, but at no time will the
total amount received for bookkeeping and administrative services
rendered to unit investment trusts of which Nike Securities L.P.
is the sponsor in any calendar year exceed the aggregate cost to
the Depositor of supplying such services in such year. Such
compensation may, from time to time, be adjusted provided that
the total adjustment upward does not, at the time of such
adjustment, exceed the percentage of the total increase, after
the date hereof, in consumer prices for services as measured by
the United States Department of Labor Consumer Price Index
entitled "All Services Less Rent of Shelter" or similar index, if
such index should no longer be published. The consent or
concurrence of any Unit holder hereunder shall not be required
for any such adjustment or increase. Such compensation shall be
paid by the Trustee, upon receipt of invoice therefor from the
Depositor, upon which, as to the cost incurred by the Depositor
of providing services hereunder the Trustee may rely, and shall
be charged against the Interest and Principal Accounts on or
before the Distribution Date following the Monthly Record Date on
which such period terminates. The Trustee shall have no
liability to any Certificateholder or other person for any
payment made in good faith pursuant to this Section.
If the cash balance in the Interest and Principal Accounts
shall be insufficient to provide for amounts payable pursuant to
this Section 3.16, the Trustee shall have the power to sell (i)
Bonds from the current list of Bonds designated to be sold
pursuant to Section 5.02 hereof, or (ii) if no such Bonds have
been so designated, such Bonds as the Trustee may see fit to sell
in its own discretion, and to apply the proceeds of any such sale
in payment of the amounts payable pursuant to this Section 3.16,
provided, however, that Zero Coupon Obligations may not be sold
to pay for amounts payable pursuant to this Section 3.16.
Any moneys payable to the Depositor pursuant to this Section
3.16 shall be secured by a prior lien on the Trust Fund except
that no such lien shall be prior to any lien in favor of the
Trustee under the provisions of Section 6.04 herein.
J. The Evaluators evaluation fee as set forth in Section
4.03 of the Standard Terms and Conditions of Trust is hereby
amended from $20.00 per evaluation to $25.00 per evaluation.
K. Section 5.01 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The fourth sentence of the first paragraph of
Section 5.01 shall be amended by deleting the phrase "and (iii)"
and adding the following, "(iii) amounts representing unpaid
accrued organization costs, and (iv)"; and
(ii) The following text shall immediately precede the
last sentence of the first paragraph of Section 5.01:
"The resulting figure is herein called a "Trust Fund
Evaluation." Prior to the payment to the Depositor of its
reimbursable organization costs to be made at the earlier of six
months after the Initial Date of Deposit or the conclusion of the
primary offering period in accordance with Section 3.10, for
purposes of determining the Trust Fund Evaluation under this
Section 5.01, the Trustee shall rely upon the amounts
representing unpaid accrued organization costs in the estimated
amount per Unit set forth in the Prospectus until such time as
the Depositor notifies the Trust in writing of a revised
estimated amount per Unit representing unpaid accrued
organization costs. Upon receipt of such notice, the Trustee
shall use this revised estimated amount per Unit representing
unpaid accrued organization costs in determining the Trust Fund
Evaluation but such revision of the estimated expenses shall not
effect calculations made prior thereto and no adjustment shall be
made in respect thereof."
L. The second sentence of the second paragraph of Section
8.02 shall be replaced with the following:
"Commencing no earlier than nine business days prior to
the termination of the Trust, the Trustee will liquidate the
Securities during such period and in such daily amounts as the
Depositor shall direct, and shall:"
IN WITNESS WHEREOF, Nike Securities L.P., The Chase
Manhattan Bank, Muller Data Corporation and First Trust Advisors
L.P. have each caused this Trust Agreement to be executed and the
respective corporate seal to be hereto affixed and attested (if
applicable) by authorized officers; all as of the day, month and
year first above written.
NIKE SECURITIES L.P.,
Depositor
By Robert M. Porcellino
Vice President
THE CHASE MANHATTAN BANK, Trustee
(SEAL) By Rosalia A. Raviele
Vice President
Attest:
Joan A. Currie
Second Vice President
MULLER DATA CORPORATION, Evaluator
(SEAL) By Art Brasch
Vice President
Attest:
Richard Birnbaum
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Robert M. Porcellino
Vice President
SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED
IN
FT 329
(Note: Incorporated herein and made a part hereof is the
"Schedule of Investments" as set forth for each Trust in
the Prospectus.)
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, IL 60603
March 23, 1999
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: FT 329
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of FT 329 in connection with the
preparation, execution and delivery of a Trust Agreement dated
March 10, 1999 among Nike Securities L.P., as Depositor, The Chase
Manhattan Bank, as Trustee, Muller Data Corporation, as Evaluator,
and First Trust Advisors L.P., as Portfolio Supervisor, pursuant
to which the Depositor has delivered to and deposited the
Securities listed in Schedule A to the Trust Agreement with the
Trustee and pursuant to which the Trustee has issued to or on the
order of the Depositor a certificate or certificates representing
units of fractional undivided interest in and ownership of the
Fund created under said Trust Agreement.
In connection therewith, we have examined such pertinent
records and documents and matters of law as we have deemed
necessary in order to enable us to express the opinions
hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and the
execution and issuance of certificates evidencing the Units in the
Fund have been duly authorized; and
2. The certificates evidencing the Units in the Fund when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will
constitute valid and binding obligations of the Fund and the
Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement (File No. 333-72819) relating to the
Units referred to above, to the use of our name and to the
reference to our firm in said Registration Statement and in the
related Prospectus.
Respectfully yours,
CHAPMAN AND CUTLER
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
March 23, 1999
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
The Chase Manhattan Bank
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Re: FT 329
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of FT 329 (the "Fund"), in connection with the issuance of units
of fractional undivided interests in the Trust of said Fund (the
"Trust"), under a Trust Agreement dated March 23, 1999 (the
"Indenture") between Nike Securities L.P., as Depositor, The
Chase Manhattan Bank, as Trustee, Muller Data Corporation, as
Evaluator, and First Trust Advisors L.P., as Portfolio
Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents as we have deemed pertinent. The
opinions expressed herein assume that the Trust will be
administered, and investments by the Trust from proceeds of
subsequent deposits, if any, will be made in accordance with the
terms of the Indenture. The Trust holds Corporate Bonds
("Corporate Bonds" or "the Securities") as such term is defined
in the Prospectus. For purposes of the following discussion and
opinions, it is assumed that the Securities are debt for Federal
income tax purposes.
Based upon the foregoing and upon an investigation of such
matters of law as we consider to be applicable, we are of the
opinion that, under existing Federal income tax law:
(i) The Trust is not an association taxable as a
corporation for Federal income tax purposes but will be
governed by the provisions of subchapter J (relating to
trusts) of chapter 1, of the Internal Revenue Code of 1986
(the "Code").
(ii) Each Unit holder will be considered as owning a
pro rata share of each Security of the Trust in the
proportion that the number of Units held by him bears to the
total number of Units outstanding. Under subpart E,
subchapter J of chapter 1 of the Code, income of the Trust
will be treated as income of each Unit holder in the
proportion described, and an item of Trust income will have
the same character in the hands of a Unit holder as it would
have in the hands of the Trustee. Each Unit holder will be
considered to have received his pro rata share of income
derived from each Trust asset when such income is considered
to be received by the Trust. Each Unit holder will also be
required to include in taxable income for Federal income tax
purposes, original issue discount with respect to his
interest in any Security held by the Trust which was issued
with original issue discount at the same time and in the
same manner as though the Unit holder were the direct owner
of such interest. Original issue discount will be treated
as zero if it is "de minimis" within the meaning of
Section 1273 of the Code. If a Security constitutes a "high
yield discount obligation" within the meaning of Section
163(e)(5) of the Code, certain special rules may apply. A
Unit holder may elect to include in taxable income for
Federal income tax purposes, market discount as it accrues
with respect to his interest in any Corporate Bond held by
the Trust which he is considered as having acquired with
market discount at the same time and in the same manner as
though the Unit holder were the direct owner of such
interest.
(iii) The price a Unit holder pays for his Units,
generally including sales charges, is allocated among his
pro rata portion of each Security held by the Trust (in
proportion to the fair market values thereof on the
valuation date closest to the date the Unit holder purchases
his Units), in order to determine his tax basis for his pro
rata portion of each Security held by the Trust. A Unit
holder will be required to include in gross income for each
taxable year the sum of his daily portions of original issue
discount attributable to the Securities held by the Trust as
such original issue discount accrues and will in general be
subject to Federal income tax with respect to the total
amount of such original issue discount that accrues for such
year even though the income is not distributed to the Unit
holders during such year to the extent it is greater than or
equal to the "de minimis" amount described below. To the
extent the amount of such discount is less the respective
"de minimis" amount, such discount shall be treated as zero.
In general, original issue discount accrues daily under a
constant interest rate method which takes into account the
semi-annual compounding of accrued interest.
(iv) Each Unit holder will have a taxable event when a
Security is disposed of (whether by sale, exchange,
redemption, liquidation payment on maturity or otherwise) or
when the Unit holder redeems or sells his Units. A Unit
holder's tax basis in his Units will equal his tax basis in
his pro rata portion of all the assets of the Trust. Such
basis is determined (before the adjustment described below)
by apportioning the tax basis for the Units among each of
the Securities ratably according to their values as of the
valuation date nearest the date of acquisition of the Units.
Unit holders must reduce their tax basis of the Units for
their share of accrued interest, if any, on Securities
delivered after the date the Unit holders pay for Units to
the extent such interest accrued on such Securities before
the date the Trust acquired ownership of the Securities (and
the amount of this reduction may exceed the amount of
accrued interest paid to the sellers) and, consequently such
Unit holders may have an increase in taxable gain or
reduction in capital loss upon the disposition of such
Units. Gain or loss upon the sale or redemption of Units is
measured by comparing the proceeds of such redemption or
sale with the adjusted basis of the Units represented by his
Certificate. If the Trustee disposes of Securities (whether
by sale, exchange, payment on maturity, or redemption or
otherwise), gain or loss is recognized to the Unit holder
(subject to various nonrecognition provisions of the Code).
The amount of any such gain or loss is measured by comparing
the Unit holder's pro rata portion of the total proceeds
from such disposition with his basis for his fractional
interest in the asset disposed of. The basis of each Unit
and of each Security which was issued with original issue
discount (or which has market discount) must be increased by
the amount of original issue discount (and market discount
if the Unit holder has elected to include market discount in
income as it accrues) and the basis of each Unit and of each
Security which was purchased by the Trust at a premium must
be reduced by the annual amortization of bond premium, which
the Unit holder has properly elected to amortize under
Section 171 of the Code. The tax basis reduction
requirements of the Code relating to amortization of bond
premium may, under some circumstances, result in the Unit
holder realizing a taxable gain when his Units are sold or
redeemed for an amount equal to or less than his original
cost.
Each Unit holder's pro rata share of each expense paid by
the Trust is deductible by the Unit holder to the same extent as
though the expense had been paid directly by him. It should be
noted that as a result of The Tax Reform Act of 1986, certain
miscellaneous itemized deductions, such as investment expenses,
tax return preparation fees and employee business expenses will
be deductible by an individual only to the extent they exceed 2%
of such individual's adjusted gross income (similar limitations
also apply to estates and trusts). Unit holders may be required
to treat some or all of the expenses of the Trust as
miscellaneous itemized deductions subject to this limitation.
The Code provides a complex set of rules governing the
accrual of original issue discount. These rules provide that
original issue discount generally accrues on the basis of a
constant compound interest rate over the term of the Securities.
Special rules apply if the purchase price of a Security exceeds
its original issue price plus the amount of original issue
discount which would have previously accrued, based upon its
issue price (its "adjusted issue price"). Similarly, these
special rules would apply to a Unit holder if the tax basis of
his pro rata portion of a Security issued with original issue
discount exceeds his pro rata portion of its adjusted issue
price. The application of these rules will also vary depending
on the value of the Security on the date a Unit holder acquires
his Units, and the price the Unit holder pays for his Units.
It is possible that a Corporate Bond that has been issued at
an original issue discount may be characterized as a "high-yield
discount obligation" within the meaning of Section 163(e)(5) of
the Code. To the extent that such an obligation is issued at a
yield in excess of six percentage points over the applicable
Federal rate, a portion of the original issue discount on such
obligation will be characterized as a distribution on stock
(e.g., dividends) for purposes of the dividends received
deduction which is available to certain corporations with respect
to certain dividends received by such corporations.
If a Unit holder's tax basis in his pro rata portion of any
Corporate Bond held by the Trust is less than his allocable
portion of such Corporate Bond's stated redemption price at
maturity (or, if issued with original issue discount, the
allocable portion of its revised issue price), such difference
will constitute market discount unless the amount of market
discount is "de minimis" as specified in the Code. To the extent
the amount of such discount is less than the respective "de
minimis" amount, such discount shall be treated as zero. Market
discount accrues daily computed on a straight line basis, unless
the Unit holder elects to calculate accrued market discount under
a constant yield method.
Accrued market discount is generally includible in taxable
income of the Unit holders as ordinary income for Federal tax
purposes upon the receipt of serial principal payments on
Corporate Bonds held by the Trust, on the sale, maturity or
disposition of such Corporate Bonds by the Trust and on the sale
of a Unit holder's Units unless a Unit holder elects to include
the accrued market discount in taxable income as such discount
accrues. If a Unit holder does not elect to annually include
accrued market discount in taxable income as it accrues,
deductions of any interest expense incurred by the Unit holder to
purchase or carry his Units will be reduced by such accrued
market discount. In general, the portion of any interest which
is not currently deductible is deductible when the accrued market
discount is included in income.
A Unit holder will recognize taxable gain (or loss) when all
or part of his pro rata interest in a Security is disposed of for
an amount greater (or less) than his tax basis therefor in a
taxable transaction (subject to the various nonrecognition
provisions of the Code).
As previously discussed, gain attributable to any Corporate
Bond deemed to have been acquired by the Unit holder with market
discount will be treated as ordinary income to the extent the
gain does not exceed the amount of accrued market discount not
previously taken into income. The tax basis reduction
requirements of the Code relating to amortization of bond premium
may, under certain circumstances, result in the Unit holder
realizing a taxable gain when his Units are sold or redeemed for
an amount equal to or less than his original cost.
If a Unit holder disposes of a Unit, he is deemed thereby to
have disposed of his entire pro rata interest in all Trust assets
including his pro rata portion of all of the Corporate Bonds
represented by the Unit. This may result in a portion of the
gain, if any, on such sale being taxable as ordinary income under
the market discount rules (assuming no election was made by the
Unit holder to include market discount in income as it accrues)
as previously discussed.
A Unit holder who is a foreign investor (i.e., an investor
other than a United States citizen or resident or United States
corporation, partnership, estate or trust) will not be subject to
United States Federal income taxes, including withholding taxes
on interest income (including any original issue discount) on, or
any gain from the sale or other disposition or redemption of, his
pro rata interest in any Security held by the Trust or the sale
of his Units provided that all of the following conditions are
met:
(i) the interest income or gain is not effectively
connected with the conduct by the foreign investor of a
trade or business within the United States;
(ii) either
(a) if the interest is United States source income
(which is the case for most securities issued by United
States issuers), the debt instrument is issued after
July 18, 1984, the foreign investor does not own,
directly or indirectly, 10% or more of the total
combined voting power of all classes of voting stock of
the issuer of the debt instrument and the foreign
investor is not a controlled foreign corporation
related (within the meaning of Section 864(d)(4) of the
Code) to the issuer of the debt instrument; or
(b) the interest income is not from sources within
the United States;
(iii) with respect to any gain, the foreign investor (if
an individual) is not present in the United States for 183
days or more during his or her taxable year; and
(iv) the foreign investor provides all certification
which may be required of his status.
It should be noted that there is a provision which
eliminates the exemption from United States taxation, including
withholding taxes, for certain "contingent interest." No opinion
is expressed herein regarding the potential applicability of this
provision and whether United States taxation or withholding
taxes could be imposed with respect to income derived from the
Units as a result thereof.
The scope of this opinion is expressly limited to the
matters set forth herein, and, except as expressly set forth
above, we express no opinion with respect to any other taxes,
including foreign, state or local taxes or collateral tax
consequences with respect to the purchase, ownership and
disposition of Units.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 333-72819)
relating to the Units referred to above and to the use of our
name and to the reference to our firm in said Registration
Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
EFF/erg
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
March 23, 1999
The Chase Manhattan Bank, as Trustee of
FT 329
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Attention: Mr. Thomas Porrazzo
Vice President
Re: FT 329
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for FT 329 (each, a "Trust"), which will be
established under certain Standard Terms and Conditions of Trust
dated January 23, 1992, and a related Trust Agreement dated as of
today (collectively, the "Indenture") among Nike Securities L.P.,
as Depositor (the "Depositor"), Muller Data Corporation, as
Evaluator, First Trust Advisors L.P., as Portfolio Supervisor and
The Chase Manhattan Bank as Trustee (the "Trustee"). Pursuant to
the terms of the Indenture, units of fractional undivided
interest in the Trust (the "Units") will be issued in the
aggregate number set forth in the Indenture.
We have examined and are familiar with originals or
certified copies, or copies otherwise identified to our
satisfaction, of such documents as we have deemed necessary or
appropriate for the purpose of this opinion. In giving this
opinion, we have relied upon the two opinions, each dated today
and addressed to the Trustee, of Chapman and Cutler, counsel for
the Depositor, with respect to the matters of law set forth
therein.
Based upon the foregoing, we are of the opinion that the
Trust will not constitute an association taxable as a corporation
under New York law, and accordingly will not be subject to the
New York State franchise tax or the New York City general
corporation tax.
We consent to the filing of this opinion as an exhibit to
the Registration Statement (No. 333-72819) filed with the
Securities and Exchange Commission with respect to the
registration of the sale of the Units and to the references to
our name under the captions "Tax Status" and "Legal Opinions" in
such Registration Statement and the preliminary prospectus
included therein.
Very truly yours,
Carter, Ledyard & Milburn
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
March 23, 1999
The Chase Manhattan Bank, as Trustee of
FT 329
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Attention: Mr. Thomas Porrazzo
Vice President
Re: FT 329
Dear Sirs:
We are acting as counsel for The Chase Manhattan Bank
("Chase") in connection with the execution and delivery of a
Trust Agreement (the "Trust Agreement") dated today's date (which
Trust Agreement incorporates by reference certain Standard Terms
and Conditions of Trust dated January 23, 1992, and the same are
collectively referred to herein as the "Indenture") among Nike
Securities L.P., as Depositor (the "Depositor"), Muller Data
Corporation, as Evaluator, First Trust Advisors L.P., as
Portfolio Supervisor, and Chase, as Trustee (the "Trustee"),
establishing the unit investment trust or trusts included in FT
329 (each, a "Trust"), and the confirmation by Chase, as Trustee
under the Indenture, that it has registered on the registration
books of the Trust the ownership by the Depositor of a number of
units constituting the entire interest in the Trust (such
aggregate units being herein called "Units"), each of which
represents an undivided interest in the respective Trust which
consists of corporate obligations (including, confirmations of
contracts for the purchase of certain obligations not delivered
and cash, cash equivalents or an irrevocable letter of credit or
a combination thereof, in the amount required for such purchase
upon the receipt of such obligations), such obligations being
defined in the Indenture as Securities and listed in the Schedule
to the Indenture.
We have examined the Indenture, a specimen of the
certificates to be issued thereunder (the "Certificates"), the
Closing Memorandum dated today's date, and such other documents
as we have deemed necessary in order to render this opinion.
Based on the foregoing, we are of the opinion that:
1. Chase is a duly organized and existing corporation having
the powers of a trust company under the laws of the State of New
York.
2. The Trust Agreement has been duly executed and delivered by
Chase and, assuming due execution and delivery by the other
parties thereto, constitutes the valid and legally binding
obligation of Chase.
3. The Certificates are in proper form for execution and
delivery by Chase, as Trustee.
4. Chase, as Trustee, has registered on the registration books
of the Trust the ownership of the Units by the Depositor. Upon
receipt of confirmation of the effectiveness of the registration
statement for the sale of the Units filed with the Securities and
Exchange Commission under the Securities Act of 1933, the Trustee
may deliver Certificates for such Units, in such names and
denominations as the Depositor may request, to or upon the order
of the Depositor as provided in the Closing Memorandum.
5. Chase, as Trustee, may lawfully advance to the Trust amounts
as may be necessary to provide periodic interest distributions of
approximately equal amounts, and may be reimbursed, without
interest, for any such advances from funds in the interest
account, as provided in the Indenture.
In rendering the foregoing opinion, we have not considered,
among other things, whether the Bonds have been duly authorized
and delivered.
Very truly yours,
CARTER, LEDYARD & MILBURN
Muller Data Corporation
395 Hudson Street
New York, New York 10014-3622
March 23, 1999
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: FT 329
Gentlemen:
We have examined the Registration Statement, File No.
33372819, for the referenced Trust and acknowledge that Muller
Data Corporation is currently acting as the evaluator for The
First Trust Corporate Income Trust (High Yield), Intermediate
Series 16. Subsequently, we hereby consent to the reference of
Muller Data Corporation as Trust evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
Muller Data Corporation
Art Brasch
Vice President
