Registration No. 333-45816
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 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 466
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 September 22, 2000 at 2:00 p.m. pursuant to Rule 487.
________________________________
Preferred Income Portfolio, Series 4
FT 466
FT 466 is a series of a unit investment trust, the FT Series. FT 466
consists of a single portfolio known as Preferred Income Portfolio,
Series 4 (the "Trust"). The Trust invests in a diversified portfolio of
preferred stocks and trust preferred securities (collectively, the
"Securities") selected to provide the potential for a high level of
current income and capital preservation.
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 September 22, 2000
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 10
Portfolio 10
Risk Factors 11
Public Offering 13
Distribution of Units 15
The Sponsor's Profits 16
The Secondary Market 16
How We Purchase Units 16
Expenses and Charges 16
Tax Status 18
Retirement Plans 20
Rights of Unit Holders 20
Income and Capital Distributions 21
Redeeming Your Units 21
Removing Securities from the Trust 22
Amending or Terminating the Indenture 23
Information on the Sponsor, Trustee and Evaluator 24
Other Information 25
Page 2
Summary of Essential Information
Preferred Income Portfolio, Series 4
FT 466
At the Opening of Business on the
Initial Date of Deposit-September 22, 2000
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
<S> <C>
Initial Number of Units (1) 15,002
Fractional Undivided Interest in the Trust per Unit (1) 1/15,002
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ 9.900
Maximum Sales Charge of 4.40% of the Public Offering Price
per Unit (4.444% of the net amount invested, exclusive of
the deferred sales charge) (3) $ .440
Less Deferred Sales Charge per Unit $ (.340)
Public Offering Price per Unit (4) $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.560
Redemption Price per Unit (based on aggregate underlying
value of Securities less the deferred sales charge) (5) $ 9.560
Estimated Net Annual Distribution per Unit for the first year (6) $ .7717
CUSIP Number 30265V 306
Fee Accounts CUSIP Number 30265V 314
Security Code 59632
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date September 27, 2000
Mandatory Termination Date (7) September 22, 2005
Income Distribution Record Date Fifteenth day of each month, commencing October 15, 2000.
Income Distribution Date (6) Last day of each month, commencing October 31, 2000.
______________
<FN>
(1) As of the close of business on the Initial Date of Deposit, we may
adjust the number of Units of the Trust so that the Public Offering
Price per Unit will equal approximately $10.00. If we make such an
adjustment, the fractional undivided interest per Unit will vary from
the amount indicated above.
(2) Each listed Security is valued at its last closing sale price. If a
Security is not listed, or if no closing sale price exists, it is valued
at its closing ask price. Evaluations for purposes of determining the
purchase, sale or redemption price of Units are made as of the close of
trading on the New York Stock Exchange ("NYSE") (generally 4:00 p.m.
Eastern time) on each day on which it is open (the "Evaluation Time").
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Table" and "Public Offering."
(4) The Public Offering Price shown above reflects the value of the
Securities on the business day prior to the Initial Date of Deposit. No
investor will purchase Units at this price. The price you pay for your
Units will be based on their valuation at the Evaluation Time on the
date you purchase your Units. On the Initial Date of Deposit the Public
Offering Price per Unit will not include any accumulated dividends on
the Securities. After this date, a pro rata share of any accumulated
dividends on the Securities will be included.
(5) 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."
(6) The estimated net annual distribution for subsequent years, $.7495
per Unit, is expected to be less than that set forth above for the first
year because a portion of the Securities included in the Trust will be
sold during the first year to pay for organization costs and the
deferred sales charge. The actual net annual distribution you will
receive will vary from that set forth above with changes in the Trust's
fees and expenses, in dividends received and with the sale of
Securities. See "Fee Table" and "Expenses and Charges." Distributions
from the Capital Account will be made monthly on the last day of the
month to Unit holders of record on the fifteenth day of such month if
the amount available for distribution equals at least $1.00 per 100
Units. In any case, we will distribute any funds in the Capital Account
in December of each year.
(7) See "Amending or Terminating the Indenture."
</FN>
</TABLE>
Page 3
Fee Table
This Fee Table describes the fees and expenses that you may, directly or
indirectly, pay if you buy and hold Units of the Trust. See "Public
Offering" and "Expenses and Charges." Although the Trust has a term of
approximately five years and is a unit investment trust rather than a
mutual fund, this information allows you to compare fees.
<TABLE>
<CAPTION>
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Maximum sales charge 4.40% $.440
======== ========
Initial sales charge (paid at time of purchase) 1.00%(a) $.100
Deferred sales charge (paid in installments or at redemption) 3.40%(b) .340
Organization Costs
(as a percentage of public offering price)
Estimated organization costs .204%(c) $.0200
======== ========
Estimated Annual Trust Operating Expenses(d)
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative and evaluation fees .100% $.0098
Creation and development fee .350%(e) .0343
Trustee's fee and other operating expenses .144%(f) .0141
________ ________
Total .594% $.0582
======== ========
Example
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 would be:
1 Year 3 Years 5 Years
______ _______ _______
$519 $641 $773
This example will not differ if you hold rather than sell your Units at
the end of each period.
________________
<FN>
(a) The amount of the initial sales charge is equal to the difference
between the maximum sales charge (4.40% of the Public Offering Price)
and any remaining deferred sales charge.
(b) The deferred sales charge is a fixed dollar amount equal to $.340
per Unit, which, as a percentage of the Public Offering Price, will vary
over time. The deferred sales charge will be deducted in five monthly
installments commencing April 20, 2001.
(c) Estimated organization costs 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.
(d) With the exception of the creation and development fee, each of the
fees listed herein is assessed on a fixed dollar amount per Unit basis
which, as a percentage of average net assets, will vary over time.
(e) The creation and development fee compensates the Sponsor for creating
and developing the Trust. During the life of the Trust, this fee is
accrued daily based on the Trust's net asset value at the annual rate of
.35%. The Trust pays the amount of any accrued creation and development
fee to the Sponsor monthly from the Trust's assets. In connection with
the creation and development fee, in no event will the Sponsor collect
over the life of the Trust more than 2.85% of a Unit holder's initial
investment.
(f) Other operating expenses include the costs incurred by the Trust for
annually updating the Trust's registration statement. Historically, we
paid these costs. Other operating expenses do not, however, include
brokerage costs and other portfolio transaction fees. In certain
circumstances, the Trust may incur additional expenses not set forth
above. See "Expenses and Charges."
</FN>
</TABLE>
Page 4
Report of Independent Auditors
The Sponsor, Nike Securities L.P., and Unit Holders
FT 466
We have audited the accompanying statement of net assets, including the
schedule of investments, of FT 466, comprised of the Preferred Income
Portfolio, Series 4, as of the opening of business on September 22,
2000. 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 auditing standards generally
accepted in the United States. 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 September 22, 2000. 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 466,
comprised of the Preferred Income Portfolio, Series 4, at the opening of
business on September 22, 2000 in conformity with accounting principles
generally accepted in the United States.
ERNST & YOUNG LLP
Chicago, Illinois
September 22, 2000
Page 5
Statement of Net Assets
Preferred Income Portfolio, Series 4
FT 466
At the Opening of Business on the
Initial Date of Deposit-September 22, 2000
<TABLE>
<CAPTION>
<S> <C>
NET ASSETS
Investment in Securities represented by purchase contracts (1) (2) $148,524
Less liability for reimbursement to Sponsor for organization costs (3) (300)
Less liability for deferred sales charge (4) (5,101)
________
Net assets $143,123
========
Units outstanding 15,002
ANALYSIS OF NET ASSETS
Cost to investors (5) $150,024
Less maximum sales charge (5) (6,601)
Less estimated reimbursement to Sponsor for organization costs (3) (300)
________
Net assets $143,123
========
______________
<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 $200,000 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.
(3) 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 $.0200 per
Unit for the Trust. A payment will be made as of the earlier of six
months after the Initial Date of Deposit or the end of the initial
offering period to an account maintained by the Trustee from which the
obligation of the investors to the Sponsor will be satisfied. To the
extent that actual organization costs are greater than the estimated
amount, only the estimated organization costs added to the Public
Offering Price will be reimbursed to the Sponsor and deducted from the
assets of the Trust.
(4) Represents the amount of mandatory deferred sales charge
distributions from the Trust ($.340 per Unit), payable to us in five
equal monthly installments beginning on April 20, 2001 and on the 20th
day of each month thereafter (or if such date is not a business day, on
the preceding business day) through August 20, 2001. If you redeem Units
before August 20, 2001 you will have to pay the remaining amount of the
deferred sales charge applicable to such Units when you redeem them.
(5) The aggregate cost to investors in the Trust includes a maximum
sales charge (comprised of an initial and a deferred sales charge)
computed at the rate of 4.40% of the Public Offering Price per Unit
(equivalent to 4.444% of the net amount invested, exclusive of the
deferred sales charge), assuming no reduction of sales charge as set
forth under "Public Offering."
</FN>
</TABLE>
Page 6
Schedule of Investments
Preferred Income Portfolio, Series 4
FT 466
At the Opening of Business on the
Initial Date of Deposit-September 22, 2000
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of
of Offering Redemption Value per Securities to
Shares Name of Issue of Securities (1) Rating (2) Price Provisions (3) Share the Trust (4)
____ _________________________ _______ ________ ________ ______ ____________
<C> <S> <C> <C> <C> <C> <C>
211 ABN Amro Capital Funding Trust II, 7.125% (5) A+ 3.12% 04/01/04 @ 25 $22.000 $ 4,642
214 Abbey National Plc, 7.00% (5) A+ 3.12% 04/29/04 @ 25 21.688 4,641
211 Abbey National Plc, 7.25% (5) A+ 3.12% 06/15/04 @ 25 22.000 4,642
206 Alabama Power Company, Series J AAA 3.12% 05/26/04 @ 25 22.500 4,635
6.75%, Due 06/30/2039
186 American General Corp. Capital I, A 3.13% 09/08/04 @ 25 25.000 4,650
7.875%, Due 09/30/2048
189 Bank One Corporation Capital I, BBB+ 3.13% 09/20/04 @ 25 24.563 4,643
8.00%, Due 09/15/2029
183 Bank One Corporation Capital II, BBB+ 3.13% 08/15/05 @ 25 25.375 4,644
8.50%, Due 08/15/2030
192 BellSouth Corporation Capital Funding, AA- 3.13% 08/01/04 @ 25 24.188 4,644
7.375%, Due 08/01/2039
182 Chase Manhattan Corporation Capital VIII, A- 3.12% 07/31/05 @ 25 25.438 4,630
Series H, 8.25%, Due 07/15/2030
210 Citigroup Capital VI, 6.875%, A 3.13% 03/15/04 @ 25 22.125 4,646
Due 03/15/2029
204 Consolidated Edison Company of New York, A+ 3.12% 07/01/04 @ 25 22.750 4,641
7.35%, Due 07/01/2039
184 Duke Capital Corporation Capital Financing A- 3.13% 08/31/04 @ 25 25.250 4,646
Trust III, 8.375%, Due 08/31/2029
205 Duke Energy Corporation Capital Financing A- 3.12% 06/30/04 @ 25 22.625 4,638
Trust II, 7.20%, Due 03/31/2039
184 Edison International Trust II, Series B, BBB+ 3.12% 10/29/04 @ 25 25.188 4,635
8.60%, Due 10/29/2029
180 FleetBoston Financial Corp. Capital Trust VI, BBB+ 3.12% 06/30/05 @ 25 25.750 4,635
8.80%, Due 06/30/2030
215 Florida Progress Corporation Capital I, BBB+ 3.13% 04/13/04 @ 25 21.625 4,649
7.10%, Due 05/13/2039
99 Freddie Mac, 5.79% AA- 3.13% 06/30/09 @ 50 47.000 4,653
215 Great-West Life Assurance Capital I, Series A, A- 3.13% 06/30/04 @ 25 21.625 4,649
7.25%, Due 06/30/2048
171 Household International, Inc. Capital Trust V, BBB+ 3.12% 06/08/05 @ 25 27.125 4,638
10.00%, Due 06/30/2030
189 Lehman Brothers Holdings Capital Trust I, BBB+ 3.13% 03/31/04 @ 25 24.563 4,642
8.00%, Due 03/31/2048
</TABLE>
Page 7
Schedule of Investments (cont'd.)
Preferred Income Portfolio, Series 4
FT 466
At the Opening of Business on the
Initial Date of Deposit-September 22, 2000
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of
of Offering Redemption Value per Securities to
Shares Name of Issue of Securities (1) Rating (2) Price Provisions (3) Share the Trust (4)
____ _________________________ _______ ________ ________ ______ _____________
<C> <S> <C> <C> <C> <C> <C>
191 Lehman Brothers Holdings Capital Trust II, BBB+ 3.12% 06/30/04 @ 25 $24.250 $ 4,632
7.875%, Due 06/30/2048
186 Magna International Inc., Series B, BBB+ 3.13% 09/21/04 @ 25 25.000 4,650
8.875%, Due 09/21/2048
202 Merrill Lynch & Co., Inc. Preferred Capital A 3.13% 09/30/08 @ 25 23.000 4,646
Trust V, 7.28%
186 OGE Energy Corp. Capital Trust I, A- 3.13% 10/15/04 @ 25 25.000 4,650
8.375%, Due 10/15/2039
217 Royal Bank of Scotland, Series H, 7.25% (5) A- 3.12% 03/31/04 @ 25 21.375 4,638
195 Royal Bank of Scotland, Series I, 8.00% (5) A- 3.12% 09/30/04 @ 25 23.750 4,631
188 Royal Bank of Scotland, Series J, 8.50% (5) A- 3.12% 12/31/04 @ 25 24.625 4,630
182 Sempra Energy Capital Trust I, Series A, BBB+ 3.13% 02/23/05 @ 25 25.563 4,653
8.90%, Due 02/23/2030
215 Tennessee Valley Authority, Series A, AAA 3.12% 05/01/04 @ 25 21.563 4,636
6.50%, Due 05/01/2029
111 Weingarten Realty Investment, Series C, 7.00% A- 3.12% 03/15/04 @ 50 41.688 4,627
191 Westpac Capital Trust I, 8.00% A- 3.13% 07/16/04 @ 25 24.313 4,644
216 Wisconsin Energy Corp. Capital Trust I, A- 3.13% 03/25/04 @ 25 21.500 4,644
6.85%, Due 03/31/2039
_______ ______
Total Investments 100% $148,524
======= ========
__________
<FN>
(1) Shown under this heading is the stated dividend rate of each of the
Securities, expressed as a percentage of par or stated value. Also shown
is the stated maturity date of the Trust Preferred Securities; the
Preferred Stocks have no stated maturity date. 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 September 22, 2000. Each Security was originally issued with a par or
stated value per share equal to $25, except for the Freddie Mac 5.79%
Preferred Stock and the Weingarten Realty Investment, Series C, 7.00%
Preferred Stock, both of which were originally issued with a par or
stated value per share equal to $50.
(2) The ratings are by Standard & Poor's. For a brief description of the
rating symbols and their related meanings, see "Issue Credit
Definitions" in the Information Supplement. Such ratings were obtained
from an information reporting service.
(3) The Securities are first redeemable on such date and at such price
as listed above. Optional redemption provisions, which may be exercised
in whole or in part, are at prices of par or stated value. Optional
redemption provisions generally will occur at times when the redeemed
Securities have an offering side evaluation which represents a premium
over par or stated value. To the extent that the Securities were
acquired at a price higher than the redemption price, this will
represent a loss of capital when compared with the Public Offering Price
of the Units when acquired. Distributions will generally be reduced by
the amount of the dividends which otherwise would have been paid with
respect to redeemed Securities, and any principal amount received on
such redemption after satisfying any redemption requests for Units
received by the Trust will be distributed to Unit holders. Certain of
the Securities have provisions which would allow for their redemption
prior to the earliest stated call date pursuant to the occurrence of
certain extraordinary events.
(4) The cost of the Securities to the Trust represents the aggregate
underlying value with respect to the Securities acquired (generally
Page 8
determined by the closing sale prices of the listed Securities and the
ask prices of the over-the-counter traded Securities at the Evaluation
Time on the business day preceding the Initial Date of Deposit). The
valuation of the Securities has been determined by the Evaluator, an
affiliate of ours. The cost of the Securities and our loss (which is
the difference between the cost of the Securities to us and the cost
of the Securities to the Trust) are $149,036 and $512, respectively.
(5) This Security represents the preferred stock or trust preferred
security of a foreign company which trades directly on a U.S. national
securities exchange.
</FN>
</TABLE>
Page 9
The FT Series
The FT Series Defined.
We, Nike Securities L.P. (the "Sponsor"), have created hundreds of
similar yet separate series of a unit investment trust which we have
named the FT Series. The series to which the prospectus relates, FT 466,
consists of a single portfolio known as Preferred Income Portfolio,
Series 4.
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 among Nike Securities L.P., as Sponsor, The
Chase Manhattan Bank as Trustee and First Trust Advisors L.P. as
Portfolio Supervisor and Evaluator, governs the operation of the Trust.
YOU MAY GET MORE SPECIFIC DETAILS CONCERNING THE NATURE, STRUCTURE AND
RISKS OF THIS PRODUCT IN AN "INFORMATION SUPPLEMENT" BY CALLING THE
TRUSTEE AT 1-800-682-7520.
How We Created the Trust.
On the Initial Date of Deposit, we deposited a portfolio of preferred
stocks and trust preferred securities with the Trustee, and in turn the
Trustee delivered documents to us representing our ownership of the
Trust in the form of units ("Units").
After the Initial Date of Deposit, we may deposit additional Securities
in the Trust, or cash (including a letter of credit) with instructions
to buy more Securities, to create new Units for sale. If we create
additional Units we will attempt, to the extent practicable, to maintain
the percentage relationship established among the Securities on the
Initial Date of Deposit (as set forth in "Schedule of Investments"), and
not the percentage relationship existing on the day we are creating new
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 Securities will fluctuate daily, the ratio of
Securities in the Trust, on a market value basis, will also change
daily. The portion of Securities represented by each Unit will not
change as a result of the deposit of additional Securities or cash in
the Trust. If we deposit cash, you and new investors may experience a
dilution of your investment. This is because prices of Securities will
fluctuate between the time of the cash deposit and the purchase of the
Securities, and because the Trust pays the associated brokerage fees. To
reduce this dilution, the Trust will try to buy the Securities as close
to the Evaluation Time and as close to the evaluation price as possible.
In addition, because the Trust pays the brokerage fees associated with
its creation of new Units and with the sale of Securities to meet
redemption and exchange requests, frequent redemption and exchange
activity will likely result in higher brokerage expenses.
An affiliate of the Trustee may receive these brokerage fees or the
Trustee may retain and pay us (or our affiliate) to act as agent for the
Trust to buy Securities. If we or an affiliate of ours act as agent to
the Trust, we will be subject to the restrictions under the Investment
Company Act of 1940, as amended.
We cannot guarantee that the Trust will keep its present size and
composition for any length of time. Securities may be called or redeemed
prior to the Mandatory Termination Date or may periodically be 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. However, Securities will not be sold to take
advantage of market fluctuations or changes in anticipated rates of
appreciation or depreciation, or if they no longer meet the criteria by
which they were selected. You will not be able to dispose of or vote any
of the Securities in the Trust. 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 Income Distribution Date.
Any Replacement Security the Trust acquires will be identical to those
from the failed contract.
Portfolio
Objectives.
The objective of the Trust is to provide the potential for a high level
of current income and capital preservation by investing in a portfolio
of preferred stocks and trust preferred securities of foreign and
Page 10
domestic corporations and REITs. By adhering to a "buy and hold"
philosophy, investors will be able to focus on the long term potential
of the companies held in the portfolio.
Each of the Securities included in the Trust has been carefully selected
by a team of experienced financial professionals utilizing database
screening techniques and fundamental analysis and are rated "BBB" or
better by Standard & Poor's Corporation.
Of course, as with any similar investments, there can be no guarantee
that the objective of the Trust will be achieved. See "Risk Factors" for
a discussion of the risks of investing in the Trust.
Risk Factors
Price Volatility. The Trust invests in preferred stocks and trust
preferred securities of U.S. and foreign companies and REITs. The value
of the Trust's Units will fluctuate with changes in the value of these
stocks. Preferred stock and trust preferred securities prices fluctuate
for several reasons including changes in investors' perceptions of the
financial condition of an issuer or the general condition of the
relevant stock market, or when political or economic events affecting
the issuers occur. In addition, preferred stock and trust preferred
securities may be sensitive to interest rates, as the cost of capital
rises and borrowing costs increase. However, because preferred stock
dividends are fixed (though not guaranteed) and preferred stocks
typically have superior rights to common stocks in dividend
distributions and liquidation, they are generally less volatile than
common stocks.
Because the Trust is not managed, the Trustee will not sell stocks in
response to or in anticipation of market fluctuations, as is common in
managed investments. As with any investment, we cannot guarantee that
the performance of 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.
Dividends. There is no guarantee that the issuers of the Securities will
declare dividends in the future or that if declared they will either
remain at current levels or increase over time. In addition, there is no
assurance that the issuers of the Securities included in the Trust will
be able to pay dividends at their stated rate in the future.
Preferred Stocks. Approximately 31% of the Trust consists of Preferred
Stocks. Preferred Stocks are unique securities that combine some of the
characteristics of both common stocks and bonds. Preferred Stocks
generally pay a fixed rate of return and are sold on the basis of
current yield, like bonds. However, because they are equity securities,
Preferred Stocks provide equity ownership of a company and the income is
paid in the form of dividends. Preferred Stocks typically have a yield
advantage over common stocks as well as comparably-rated fixed income
investments.
Trust Preferred Securities. Approximately 69% of the Trust consists of
Trust Preferred Securities. Trust Preferred Securities are limited-life
preferred securities typically issued by corporations, generally in the
form of interest-bearing notes or preferred securities, or by an
affiliated business trust of a corporation, generally in the form of
beneficial interests in subordinated debentures or similarly structured
securities. Dividend payments of the Trust Preferred Securities
generally coincide with interest payments on the underlying obligations.
Trust Preferred Securities generally have a yield advantage over
traditional preferred stocks, but unlike preferred stocks, distributions
are treated as interest rather than dividends for federal income tax
purposes and therefore, are not eligible for the dividends-received
deduction. Trust Preferred Securities are subject to unique risks which
include the fact that dividend payments will only be paid if interest
payments on the underlying obligations are made, which interest payments
are dependent on the financial condition of the issuer and may be
deferred for up to 20 consecutive quarters, and that the underlying
obligations, and thus the Trust Preferred Securities, may be prepaid
after a stated call date or as a result of certain tax or regulatory
events.
Real Estate Investment Trusts. One of the Securities in the Trust is
issued by a Real Estate Investment Trust ("REIT"). REITs are financial
vehicles that pool investors' capital to purchase or finance real
estate. REITs may concentrate their investments in specific geographic
areas or in specific property types, i.e., hotels, shopping malls,
residential complexes and office buildings. The value of a REIT and the
ability of a REIT to distribute income may be adversely affected by
several factors, including rising interest rates, changes in the
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national, state and local economic climate and real estate conditions,
perceptions of prospective tenants of the safety, convenience and
attractiveness of the properties, the ability of the owner to provide
adequate management, maintenance and insurance, the cost of complying
with the Americans with Disabilities Act, increased competition from new
properties, the impact of present or future environmental legislation
and compliance with environmental laws, changes in real estate taxes and
other operating expenses, adverse changes in governmental rules and
fiscal policies, adverse changes in zoning laws, and other factors
beyond the control of the issuers of the REITs.
Financial Services Industry. Because more than 25% of the Trust is
invested in Securities issued by companies in the financial services
industry, including banks and thrifts, insurance companies and
investment firms, it is considered to be concentrated in the financial
services industry. A portfolio concentrated in a single industry may
present more risks than a portfolio broadly diversified over several
industries. Banks, thrifts and their holding companies are especially
subject to the adverse effects of economic recession; volatile interest
rates; portfolio concentrations in geographic markets and in commercial
and residential real estate loans; and competition from new entrants in
their fields of business. Although recently-enacted legislation repealed
most of the barriers which separated the banking, insurance and
securities industries, these industries are still extensively regulated
at both the federal and state level and may be adversely affected by
increased regulations.
Banks and thrifts face increased competition from nontraditional lending
sources as regulatory changes, such as the recently enacted financial-
services overhaul legislation, permit new entrants to offer various
financial products. Technological advances such as the Internet allow
these nontraditional lending sources to cut overhead and permit the more
efficient use of customer data.
Brokerage firms, broker/dealers, investment banks, finance companies and
mutual fund companies are also financial services providers. These
companies compete with banks and thrifts to provide traditional
financial service products, in addition to their traditional services,
such as brokerage and investment advice. In addition, all financial
service companies face shrinking profit margins due to new competitors,
the cost of new technology and the pressure to compete globally.
Companies involved in the insurance industry are engaged in
underwriting, selling, distributing or placing of property and casualty,
life or health insurance. Insurance company profits are affected by many
factors, including interest rate movements, the imposition of premium
rate caps, competition and pressure to compete globally. Property and
casualty insurance profits may also be affected by weather catastrophes
and other disasters. Life and health insurance profits may be affected
by mortality rates. Already extensively regulated, insurance companies'
profits may also be adversely affected by increased government
regulations or tax law changes.
Utility Industry. The Trust is also considered to be concentrated in
Securities issued by utility companies. General problems of such issuers
would include the imposition of rate caps, increased competition due to
deregulation, the difficulty in obtaining an adequate return on invested
capital or in financing large construction programs, the limitations on
operations and increased costs and delays attributable to environmental
considerations, and the capital market's ability to absorb utility debt.
In addition, taxes, government regulation, international politics, price
and supply fluctuations, volatile interest rates and energy conservation
may cause difficulties for utilities. All of such issuers have been
experiencing certain of these problems in varying degrees.
In addition, federal, state and municipal governmental authorities may
review existing, and impose additional, regulations governing the
licensing, construction and operation of nuclear power plants.
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
the industries represented by these issuers, 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 share prices of the Securities.
Foreign Stocks. Certain of the Securities in the Trust are issued by
foreign companies, which makes the Trust subject to more risks than if
it invested solely in domestic Securities. These Securities are
directly listed on a U.S. securities exchange. Risks of foreign
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Securities include higher brokerage costs; different accounting
standards; expropriation, nationalization or other adverse political
or economic developments; currency devaluations, blockages or transfer
restrictions; restrictions on foreign investments and exchange of
securities; inadequate financial information; and lack of liquidity of
certain foreign markets.
Public Offering
The Public Offering Price.
You may buy Units at the Public Offering Price, the per Unit price of
which is comprised of the following:
- The aggregate underlying value of the Securities;
- The amount of any cash in the Income and Capital Accounts;
- Dividends receivable on Securities; and
- The total sales charge (which combines an initial up-front sales
charge and a deferred 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 prices of the Securities and changes in
the value of the Income and/or Capital Accounts.
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 ("Record Owner") 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.
Organization Costs. 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 Trust
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 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 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.
Minimum Purchase.
The minimum amount you can purchase of the Trust is $1,000 worth of
Units ($500 if you are purchasing Units for your Individual Retirement
Account or any other qualified retirement plan).
Sales Charges.
The sales charge you will pay has both an initial and a deferred
component. The initial sales charge, which you will pay at the time of
purchase, is equal to the difference between the maximum sales charge of
4.40% of the Public Offering Price and the maximum remaining deferred
sales charge (initially $.340 per Unit). This initial sales charge is
initially equal to approximately 1.00% of the Public Offering Price of a
Unit, but will vary from 1.00% depending on the purchase price and as
deferred sales charge payments are made. When the Public Offering Price
exceeds $10.00 per Unit, the initial sales charge will exceed 1.00% of
the Public Offering Price.
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Monthly Deferred Sales Charge. In addition, five monthly deferred sales
charge payments of $.068 per Unit will be deducted from the Trust's
assets on approximately the twentieth day of each month from April 20,
2001 through August 20, 2001. If you buy Units at a price of less than
$10.00 per Unit, the dollar amount of the deferred sales charge will not
change, but the deferred sales charge on a percentage basis will be more
than 3.40% of the Public Offering Price.
If you purchase Units after the last deferred sales charge payment has
been assessed, your sales charge will consist of a one-time initial
sales charge of 4.40% of the Public Offering Price per Unit (equivalent
to 4.603% of the net amount invested), which will be reduced by 1/2 of
1% on each subsequent September 30, commencing September 30, 2001, to a
minimum sales charge of 3.00%.
Discounts for Certain Persons.
If you invest at least $50,000 (except if you are purchasing for "Fee
Accounts" as described below), the maximum sales charge is reduced, as
follows:
If you invest Your maximum sales
(in thousands):* charge will be:
_______________ ____________
$50 but less than $100 4.15%
$100 but less than $250 3.90%
$250 but less than $500 3.40%
$500 but less than $1,000 2.40%
$1,000 or more 1.50%
* 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. To
help you reach the above levels, you can combine the Units you purchase
of the Trust with any other same day purchases of other trusts for which
we are Principal Underwriter and are currently in the initial offering
period. In addition, we will also consider Units you purchase in the
name of your spouse or child under 21 years of age to be purchases by
you. The reduced sales charges will also apply to a trustee or other
fiduciary purchasing Units for a single trust estate or single fiduciary
account. You must inform your dealer of any combined purchases before
the sale in order to be eligible for the reduced sales charge.
Broker/dealers will receive a concession of 1.00% of the Public Offering
Price on Units sold subject to the sales charge reduction for purchases
of $1 million or more. In all other instances, any reduced sales charge
is the responsibility of the party making the sale.
You may use redemption or termination proceeds from any unit investment
trust we sponsor to purchase Units of the Trust during the initial
offering period at the Public Offering Price less 1.00%. Please note
that any deferred sales charge remaining on units you redeem to buy
Units of this Trust will be deducted from those redemption proceeds.
Investors purchasing Units through registered broker/dealers who charge
periodic fees in lieu of commissions or who charge for financial
planning, investment advisory or asset management services, or provide
these or comparable services as part of an investment account where a
comprehensive "wrap fee" or similar charge is imposed ("Fee Accounts")
will not be assessed the initial or deferred sales charge described in
this section on the purchase of Units. We reserve the right to limit or
deny purchases of Units not subject to the initial or deferred sales
charge by investors whose frequent trading activity we determine to be
detrimental to the Trust.
Employees, officers and directors (and immediate family members) of the
Sponsor, our related companies, dealers and their affiliates, and
vendors providing services to us may purchase Units at the Public
Offering Price less the applicable dealer concession. Immediate family
members include spouses, children, grandchildren, parents, grandparents,
siblings, mothers-in-law, fathers-in-law, sons-in-law, daughters-in-law,
brothers-in-law and sisters-in-law, and trustees, custodians or
fiduciaries for the benefit of such persons.
You will be charged the deferred sales charge per Unit regardless of any
discounts. However, if you are eligible to receive a discount such that
the maximum sales charge you must pay is less than the applicable
maximum deferred sales charge, including Fee Accounts Units, you will be
credited the difference between your maximum sales charge and the
maximum deferred sales charge at the time you buy your Units. If you
elect to have distributions reinvested into additional Units of the
Trust, in addition to the reinvestment Units you receive you will also
be credited additional Units with a dollar value at the time of
Page 14
reinvestment sufficient to cover the amount of any remaining deferred
sales charge to be collected on such reinvestment Units. The dollar
value of these additional credited Units (as with all Units) will
fluctuate over time, and may be less on the dates deferred sales charges
are collected than their value at the time they were issued.
The Value of the Securities.
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 certain national holidays
on which the NYSE is closed.
The aggregate underlying value of the Securities will be determined as
follows: if the Securities are listed on a securities exchange or The
Nasdaq Stock Market, their value is generally based on the closing sale
prices on that exchange or system (unless it is determined that these
prices are not appropriate as a basis for valuation). However, if there
is no closing sale price on that exchange or system, they are valued
based on the closing ask prices. If the Securities are not so listed,
or, if so listed and the principal market for them is other than on that
exchange or system, their value will generally be based on the current
ask prices on the over-the-counter market (unless it is determined that
these prices are not appropriate as a basis for valuation). If current
ask prices are unavailable, the valuation is generally determined:
a) On the basis of current ask prices for comparable securities;
b) By appraising the value of the Securities on the ask side of the
market; or
c) By any combination of the above.
After the initial offering period is over, the aggregate underlying
value of the Securities will be determined as set forth above, except
that bid prices are used instead of ask prices when necessary.
Distribution of Units
We intend to qualify Units of the Trust for sale in a number of states.
All Units will be sold at the then current Public Offering Price.
Dealer Concessions.
Dealers and other selling agents can purchase Units at prices which
reflect a concession or agency commission of 3.20% of the Public
Offering Price per Unit (or 65% of the maximum sales charge after
September 30, 2001). However, for Units subject to a sales charge which
are purchased using redemption or termination proceeds, this amount will
be reduced to 2.20% of the sales price of these Units. Dealers and other
selling agents will receive an additional volume concession or agency
commission of .30% of the Public Offering Price if they purchase at
least $100,000 worth of Units on the Initial Date of Deposit or $250,000
on any day thereafter or if they were eligible to receive a similar
concession in connection with sales of similarly structured trusts
sponsored by us which are currently in the initial offering period.
Dealers and other selling agents who sell Units of the Trust during the
initial offering period in the dollar amounts shown below will be
entitled to the following additional sales concessions as a percentage
of the Public Offering Price:
Total Sales Additional
(in millions): Concession:
_________________ ___________
$1 but less than $10 .20%
$10 or more .30%
Dealers and other selling agents will not receive a concession on the
sale of Units which are not subject to the initial or deferred sales
charge, but such Units will be included in determining whether the above
volume sales levels are met. Dealers and other selling agents who,
during any consecutive 12-month period, sell at least $2 billion worth
of primary market units of unit investment trusts sponsored by us will
receive a concession of $30,000 in the month following the achievement
of this level. We reserve the right to change the amount of concessions
or agency commissions from time to time. Certain commercial banks may be
Page 15
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.
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 charge on Units sold by such persons during such
programs. We make these payments out of our own assets and not out of
Trust assets. These programs will not change the price you pay for your
Units.
Investment Comparisons.
From time to time we may compare the 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, BusinessWeek,
Forbes or Fortune. The investment characteristics of the Trust differ
from other comparative investments. You should not assume that these
performance comparisons will be representative of the Trust's future
performance.
The Sponsor's Profits
We will receive a gross sales commission equal to the maximum sales
charge per Unit of the Trust 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 4 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 Units, any difference between the price at
which we purchase Units and the price at which we sell or redeem them
will be a profit or loss to us.
The Secondary Market
Although not obligated, 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, Trustee costs to transfer and record the ownership of
Units and costs incurred in annually updating the Trust's registration
statement. We may discontinue purchases of Units at any time. IF YOU
WISH TO DISPOSE OF YOUR UNITS, YOU SHOULD ASK US FOR THE CURRENT MARKET
PRICES BEFORE MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE. If you sell
or redeem your Units before you have paid the total deferred sales
charge on your Units, you will have to pay the remainder at that time.
How We Purchase Units
The Trustee will notify us of any tender of Units for redemption. If our
bid is equal to or greater than the Redemption Price per Unit, we may
purchase the Units. You will receive your proceeds from the sale 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.
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 Income
Account if funds are available, and then from the Capital Account. The
Income and Capital Accounts are noninterest-bearing to Unit holders, so
Page 16
the Trustee may earn interest on these funds, thus benefiting from their
use.
As Sponsor, we will be compensated for providing bookkeeping and other
administrative services to the Trust, and will receive brokerage fees
when the Trust uses us (or an affiliate of ours) as agent in buying or
selling Securities. Legal and regulatory filing fees and expenses
associated with updating the Trust's registration statement yearly are
also now chargeable to the Trust. Historically, we paid these fees and
expenses. First Trust Advisors L.P., an affiliate of ours, acts as both
Portfolio Supervisor and Evaluator to the Trust and will receive the
fees set forth under "Fee Table" for providing portfolio supervisory and
evaluation services to the Trust. In providing portfolio supervisory
services, the Portfolio Supervisor may purchase research services from a
number of sources, which may include underwriters or dealers of the Trust.
The fees payable to us, First Trust Advisors L.P. and the 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 be more than the actual cost of
providing such service in such year.
As Sponsor, we will receive a fee from the Trust for creating and
developing the Trust, including determining the Trust's objectives,
policies, composition and size, selecting service providers and
information services and for providing other similar administrative and
ministerial functions. The "creation and development fee" is accrued
(and becomes a liability of the Trust) on a daily basis. The dollar
amount of the creation and development fee accrued each day, which will
vary with fluctuations in the Trust's net asset value, is determined by
multiplying the net asset value of the Trust on that day by 1/365 of the
annual creation and development fee of .35%. The total amount of any
accrued but unpaid creation and development fee is paid to the Sponsor
on a monthly basis from the assets of the Trust. If you redeem your
Units, you will only be responsible for any accrued and unpaid creation
and development fee through the date of redemption. In connection with
the creation and development fee, in no event will the Sponsor collect
over the life of the Trust more than 2.85% of a Unit holder's initial
investment. We do not use this fee to pay distribution expenses or as
compensation for sales efforts.
In addition to the Trust's operating expenses, and the fees set forth
above, 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 your rights and interests;
- 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.
The above expenses and the Trustee's annual fee are secured by a lien on
the Trust. Since the Securities are all common stocks and dividend
income is unpredictable, we cannot guarantee that dividends will be
sufficient to meet any or all expenses of the Trust. If there is not
enough cash in the Income or Capital Accounts, the Trustee has the power
to sell Securities to make cash available to pay these charges which may
result in capital gains or losses to you. See "Tax Status."
The Trust will be audited on an annual basis. So long as we are making a
secondary market for Units, we will bear the costs of these annual
audits to the extent the cost exceeds $0.0050 per Unit. Otherwise, the
Trust will pay for the audit. You can receive a copy of the audited
financial statements by notifying the Trustee.
Page 17
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
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 your state, local or foreign
taxes. As with any investment, you should consult your own tax
professional about your particular consequences.
Assets of the Trust.
The Trust will hold (i) preferred stock in domestic and foreign
corporations (the "Stocks"), (ii) interests in real estate investment
trusts (the "REIT Shares") and (iii) trust preferred securities of
domestic and foreign corporations (the "Debt Obligations"). All of the
foregoing assets constitute the "Trust Assets." For purposes of this
federal tax discussion, it is assumed that the Stocks constitute equity,
the Debt Obligations constitute debt and that the REIT Shares constitute
qualifying shares in real estate investment trusts for federal income
tax purposes.
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 each of the Trust Assets, and as such you will be
considered to have received a pro rata share of income (i.e., interest,
dividends, accruals of original issue discount and market discount, and
capital gains, if any) from each Trust Asset when such income is
considered to be received by the Trust. In addition, the income from
the Trust which you must take into account for federal income tax
purposes is not reduced by amounts used to pay Trust expenses
(including the deferred sales charge, if any).
Your Tax Basis and Income or Loss upon Disposition.
If the Trust disposes of Trust Assets, 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 Trust
Assets from your share of the total proceeds received in the
transaction. You can generally determine your initial tax basis in each
Trust Asset by apportioning the cost of your Units, generally including
sales charges, among each Trust Asset ratably according to its 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 certain dividends that exceed a corporation's
accumulated earnings and profits or in the case of original issue
discount, market discount, premium and accrued interest with regard to
the Debt Obligations, 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 Trust Asset 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 Code may, however,
treat certain capital gains as ordinary income in special situations
(for example, in the case of gain on the Debt Obligations attributable
to market discount). In addition, capital gain received from assets held
for more than one year that is considered "recaptured section 1250 gain"
(which may be the case, for example, with some capital gains
attributable to the REIT Shares) is taxed at a maximum stated tax rate
of 25%.
Dividends from REIT Shares.
Some dividends on the REIT Shares may qualify as "capital gain
dividends," taxable to you as long-term capital gains. If you hold a
Unit for six months or less or if the Trust holds a REIT Share for six
months or less, any loss incurred by you related to the disposition of
such REIT Share will be treated as a long-term capital loss to the
Page 18
extent of any long-term capital gain distributions received (or deemed
to have been received) with respect to such REIT Shares. Distributions
of income or capital gains declared on the REIT Shares in October,
November or December will be deemed to have been paid to you on December
31 of the year they are declared, even when paid by the REIT during the
following January.
Discount, Accrued Interest and Premium on Debt Obligations.
Some Debt Obligations may have been sold with original issue discount.
This generally means that the Debt Obligations 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 Unit and of each Debt Obligation
which was issued with original issue discount must be increased as
original issue discount accrues.
Some Debt Obligations may have been purchased by you or the Trust at a
market discount. Market discount is generally the excess of the stated
redemption price at maturity for the Debt Obligation over the purchase
price of the Debt Obligation (not including unaccrued original issue
discount). Market discount can arise based on the price the Trust pays
for a Debt Obligation 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 Debt Obligation, when
the Debt Obligation 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 Debt Obligations may have been purchased by you or
the Trust at a premium. Generally, if the tax basis of your pro rata
portion of any Debt Obligation exceeds the amount payable at maturity,
such excess is considered premium. You may elect to amortize premium. If
you make this election, you may reduce your interest income received on
the Debt Obligation 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 Debt
Obligation, you must include the accrued interest in your tax basis in
that Debt Obligation. When the Trust receives this accrued interest, you
must treat it as a return of capital and reduce your tax basis in the
Debt Obligation.
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 Debt
Obligations that were issued with original issue discount.
Dividends Received Deduction.
A corporation that owns Units will generally not be entitled to the
dividends received deduction with respect to many dividends received by
the Trust, because the dividends received deduction is not available for
dividends from most foreign corporations or from REITs. Because the Debt
Obligations are treated as debt (not equity) for federal income tax
purposes, distributions from the Debt Obligations are not eligible for
the dividends received deduction.
In-Kind Distributions.
Under certain circumstances, you may request an In-Kind Distribution of
Trust Assets when you redeem your Units (except for Fee Accounts) or at
the Trust's termination. If you request an In-Kind Distribution you will
be responsible for any expenses related to this distribution. By
electing to receive an In-Kind Distribution, you will receive Trust
Assets plus, possibly, cash.
You will not recognize gain or loss if you only receive Trust Assets in
exchange for your pro rata portion of the Trust Assets held by the
Trust. However, if you also receive cash in exchange for a fractional
portion of a Trust Asset, you will generally recognize gain or loss
based on the difference between the amount of cash you receive and your
tax basis in such fractional portion of the Trust Asset.
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
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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 and dividend payments on the Trust Assets of foreign companies
that are paid to the Trust may be subject to foreign withholding taxes.
Any income 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.
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 some of the income from the Trust 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.
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 review
the tax laws regarding these plans and 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. It is your responsibility to notify the Trustee when
you become Record Owner, but normally your broker/dealer provides this
notice. You may elect to hold your Units in either certificated or
uncertificated form. All Fee Accounts Units, however, will be held in
uncertificated form.
Certificated Units. When you purchase your Units you can request that
they be evidenced by certificates, which will be delivered shortly after
your order. 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. You can transfer or redeem your
certificated Units by endorsing and surrendering the certificate to the
Trustee, along with a written instrument 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.
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. 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.
Uncertificated Units. 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:
- 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.
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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.
Unit Holder Reports.
In connection with each distribution, the Trustee will provide you with
a statement detailing the per Unit amount of income (if any)
distributed. After the end of each calendar year, the Trustee will
provide you:
- A summary of transactions in the Trust for the year;
- A list of any Securities sold during the year and the Securities held
at the end of that year by the Trust;
- The Redemption Price per Unit, computed on the 31st day of December
of such year (or the last business day before); and
- Amounts of income and capital distributed during the year.
You may request from the Trustee copies of the evaluations of the
Securities as prepared by the Evaluator to enable you to comply with
federal and state tax reporting requirements.
Income and Capital Distributions
You will begin receiving distributions on your Units only after you
become a Record Owner. The Trustee will credit dividends received on the
Trust's Securities to the Income Account. All other receipts, such as
return of capital, are credited to the Capital Account.
The Trustee will distribute any net income in the Income Account on or
near the Income Distribution Dates to Unit holders of record on the
preceding Income Distribution Record Date. See "Summary of Essential
Information." No income distribution will be paid if accrued expenses of
the Trust exceed amounts in the Income Account on the Income
Distribution Dates. Distribution amounts will vary with changes in the
Trust's fees and expenses, in dividends received and with the sale of
Securities. The Trustee will distribute amounts in the Capital Account,
net of amounts designated to meet redemptions, pay the deferred sales
charge or pay expenses, 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. If the Trustee does not have your TIN it is
required to withhold a certain percentage of your distribution and
deliver such amount to the Internal Revenue Service ("IRS"). You may
recover this amount by giving your TIN to the Trustee, or when you file
a tax return. However, you should check your statements to make sure the
Trustee has your TIN to avoid this "back-up withholding."
We anticipate that there will be enough money in the Capital Account to
pay the deferred sales charge. If not, the Trustee may sell Securities
to meet the shortfall.
Within a reasonable time after the Trust is terminated, you will receive
a pro rata share of the money from the sale of the Securities. However,
if you are eligible, you may elect to receive an In-Kind Distribution as
described under "Amending or Terminating the Indenture." You will
receive a pro rata share of any other assets remaining in the Trust,
after deducting any unpaid expenses.
The Trustee may establish reserves (the "Reserve Account") within the
Trust for any state and local taxes and any governmental charges to be
paid out of the Trust.
Redeeming Your Units
You may redeem all or a portion of your Units at any time by sending the
certificates representing the Units you want to redeem to the Trustee at
its unit investment trust office. If your Units are uncertificated, you
need only deliver a request for redemption to the Trustee. In either
case, the certificates or the redemption request 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
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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 income will be withdrawn
from the Income Account of the Trust if funds are available for that
purpose, or from the Capital Account. All other amounts paid on
redemption will be taken from the Capital Account of the Trust. The IRS
will require the Trustee to withhold a portion of your redemption
proceeds if the Trustee does not have your TIN, as generally discussed
under "Income and Capital Distributions."
If you tender 1,000 Units or more for redemption (except for Fee
Accounts), rather than receiving cash you may elect to receive an In-
Kind Distribution in an amount equal to the Redemption Price per Unit by
making this request in writing to the Trustee at the time of tender.
However, no In-Kind Distribution requests submitted during the nine
business days prior to the Trust's Mandatory Termination Date will be
honored. Where possible, the Trustee will make an In-Kind Distribution
by distributing each of the Securities in book-entry form to your bank
or broker/dealer account at the Depository Trust Company. The Trustee
will subtract any customary transfer and registration charges from your
In-Kind Distribution. As a tendering Unit holder, you will receive your
pro rata number of whole shares of the Securities that make up the
portfolio, and cash from the Capital Account equal to the fractional
shares to which you are entitled.
The Trustee may sell Securities 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.
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 Income and Capital Accounts not designated to purchase
Securities;
2. the aggregate underlying value of the Securities held in the Trust; and
3. dividends receivable on the Securities trading ex-dividend as of the
date of computation; and
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;
5. liquidation costs for foreign Securities, if any; and
6. other liabilities incurred by the Trust; and
dividing
1. the result by the number of outstanding Units of the Trust.
Any remaining deferred sales charge on the Units when you redeem them
will be deducted from your redemption proceeds. In addition, until the
earlier of six months after the Initial Date of Deposit or the end of
the initial offering period, the Redemption Price per Unit will include
estimated organization costs as set forth under "Fee Table."
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 defaults in the payment of a declared
dividend;
- Any action or proceeding prevents the payment of dividends;
- There is any legal question or impediment affecting the Security;
Page 22
- The issuer of the Security has breached a covenant which would affect
the payment of dividends, 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;
- There has been a public tender offer made for a Security or a merger
or acquisition is announced affecting a Security, and that in our opinion
the sale or tender of the Security is in the best interest of Unit
holders; 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.
Except in the limited instance in which the Trust acquires Replacement
Securities, as described in "The FT Series," the Trust may not acquire
any securities or other property other than the Securities. The Trustee,
on behalf of the Trust, will reject any offer for new or exchanged
securities or property in exchange for a Security, such as those
acquired in a merger or other transaction. If such exchanged securities
or property are nevertheless acquired by the Trust, at our instruction,
they will either be sold or held in the Trust. In making the
determination as to whether to sell or hold the exchanged securities or
property we may get advice from the Portfolio Supervisor. Any proceeds
received from the sale of Securities, exchanged securities or property
will be credited to the Capital Account of the Trust for distributions
to Unit holders or to meet redemption requests. The Trustee may retain
and pay us or an affiliate of ours to act as agent for the Trust to
facilitate selling Securities, exchanged securities or property from the
Trust. If we or our affiliate act in this capacity, we will be held
subject to the restrictions under the Investment Company Act of 1940, as
amended.
The Trustee may sell Securities designated by us, or, absent our
direction, at its own discretion, in order to meet redemption requests
or pay expenses. In designating Securities to be sold, we will try to
maintain the proportionate relationship among the Securities. If this is
not possible, the composition and diversification of the Securities in
the Trust may be changed. To get the best price for the Trust we may
specify minimum amounts (generally 100 shares) in which blocks of
Securities are to be sold. We may consider sales of units of trusts we
sponsor when we make recommendations to the Trustee as to which
broker/dealers they select 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 earlier:
- Upon the consent of 100% of the Unit holders;
- If the value of the Securities owned by the Trust as shown by any
evaluation is less than the lower of $2,000,000 or 20% of the total
value of Securities deposited in the Trust during the initial offering
period ("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.
Prior to termination the Trustee will send written notice 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 your entire sales charge; however, termination of the
Trust before the Mandatory Termination Date for any other stated reason
will result in all remaining unpaid deferred sales charges on your Units
being deducted from your termination proceeds. For various reasons, the
Trust may be reduced below the Discretionary Liquidation Amount and
could therefore be terminated before 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 and timing of the sale of
Securities. Because the Trustee must sell the Securities within a
relatively short period of time, the sale of Securities as part of the
Page 23
termination process may result in a lower sales price than might
otherwise be realized if such sale were not required at this time.
If you own at least 1,000 Units of the Trust the Trustee will send you a
form at least 30 days prior to the Mandatory Termination Date which will
enable you to receive an In-Kind Distribution of Securities (reduced by
customary transfer and registration charges and subject to any
additional restrictions imposed on Fee Accounts by "wrap fee" plans)
rather than the typical cash distribution. You must notify the Trustee
at least ten business days prior to the Mandatory Termination Date if
you elect this In-Kind Distribution option. If you do not elect to
participate in the In-Kind Distribution option you will receive a cash
distribution from the sale of the remaining Securities, along with your
interest in the Income and Capital Accounts of the Trust, within a
reasonable time after the Trust is terminated. Regardless of the
distribution involved, the Trustee will deduct from the Trust any
accrued costs, expenses, advances or indemnities provided for by the
Indenture, including estimated compensation of the Trustee and costs of
liquidation and any amounts required as a reserve to pay any taxes or
other governmental charges.
Information on the Sponsor, Trustee and Evaluator
The Sponsor.
We, Nike Securities L.P., specialize in the underwriting, trading and
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
- 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 $27 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, 1999, the total partners' capital of
Nike Securities L.P. was $19,881,035 (audited).
This information refers only to us 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.
Code of Ethics. The Sponsor and the Trust have adopted a code of ethics
requiring the Sponsor's employees who have access to information on
Trust transactions to report personal securities transactions. The
purpose of the code is to avoid potential conflicts of interest and to
prevent fraud, deception or misconduct with respect to the Trust.
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 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
Page 24
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 First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532.
The Trustee, Sponsor and Unit holders may rely on the accuracy of any
evaluation prepared by the Evaluator. The Evaluator will make
determinations in good faith based upon the best available information,
but 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
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 details concerning the nature, structure and risks
of this product.
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Page 27
FIRST TRUST(registered trademark)
Preferred Income Portfolio, Series 4
FT 466
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 Preferred Income
Portfolio, Series 4, 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. 333-45816) and
- Investment Company Act of 1940 (file no. 811-05903)
Information about the Trust, including its Code of Ethics, can be
reviewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington D.C. Information regarding the operation of
the Commission's Public Reference Room may be obtained by calling the
Commission at
1-202-942-8090.
Information about the Trust is available on the EDGAR Database on the
Commission's Internet site at http://www.sec.gov.
To obtain copies at prescribed rates -
Write: Public Reference Section of the Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0102
e-mail address: [email protected]
September 22, 2000
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 466 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 September 22, 2000. Capitalized
terms have been defined in the prospectus.
Table of Contents
Risk Factors
Preferred Stocks 1
Trust Preferred Securities 1
Real Estate Investment Trusts 2
Dividends 3
Foreign Issuers 3
Issue Credit Rating Definitions 4
Concentrations
Financial Services Industry 5
Utility Companies 7
Risk Factors
Preferred Stocks. An investment in Units should be made with an
understanding of the risks which an investment in preferred stocks
entails, including the risk that the financial condition of the issuers
of the Securities or the general condition of the preferred stock market
may worsen, and the value of the preferred stocks and therefore the
value of the Units may decline. Preferred stocks may be susceptible to
general stock market movements and to volatile increases and decreases
of value as market confidence in and perceptions of the issuers change.
These perceptions are based on unpredictable factors, including
expectations regarding government, economic, monetary and fiscal
policies, inflation and interest rates, economic expansion or
contraction, market liquidity, and global or regional political,
economic or banking crises. Preferred stocks are also vulnerable to
Congressional reductions in the dividends-received deduction which would
adversely affect the after-tax return to the investors who can take
advantage of the deduction. Such a reduction might adversely affect the
value of preferred stocks in general. Holders of preferred stocks, as
owners of the entity, have rights to receive payments from the issuers
of those preferred stocks that are generally subordinate to those of
creditors of, or holders of debt obligations or, in some cases, other
senior preferred stocks of, such issuers. Preferred stocks do not
represent an obligation of the issuer and, therefore, do not offer any
assurance of income or provide the same degree of protection of capital
as do debt securities. The issuance of additional debt securities or
senior preferred stocks will create prior claims for payment of
principal and interest and senior dividends which could adversely affect
the ability and inclination of the issuer to declare or pay dividends on
its preferred stock or the rights of holders of preferred stock with
respect to assets of the issuer upon liquidation or bankruptcy. The
value of preferred stocks is subject to market fluctuations for as long
as the preferred stocks remain outstanding, and thus the value of the
Securities may be expected to fluctuate over the life of the Trust to
values higher or lower than those prevailing on the Initial Date of
Deposit.
Trust Preferred Securities. Holders of Trust Preferred Securities incur
risks in addition to or slightly different than the typical risks of
holding preferred stocks. As previously discussed, Trust Preferred
Securities are limited-life preferred securities that are typically
issued by corporations, generally in the form of interest-bearing notes
or preferred securities issued by corporations, or by an affiliated
business trust of a corporation, generally in the form of beneficial
interests in subordinated debentures issued by the corporation, or
similarly structured securities. The maturity and dividend rate of the
Trust Preferred Securities are structured to match the maturity and
coupon interest rate of the interest-bearing notes, preferred securities
or subordinated debentures. Trust Preferred Securities usually mature on
Page 1
the stated maturity date of the interest-bearing notes, preferred
securities or subordinated debentures and may be redeemed or liquidated
prior to the stated maturity date of such instruments for any reason on
or after their stated call date or upon the occurrence of certain
extraordinary circumstances at any time. Trust Preferred Securities
generally have a yield advantage over traditional preferred stocks, but
unlike preferred stocks, distributions on the Trust Preferred Securities
are treated as interest rather than dividends for Federal income tax
purposes. Unlike most preferred stocks, distributions received from
Trust Preferred Securities are not eligible for the dividends-received
deduction. Certain of the risks unique to Trust Preferred Securities
include: (i) distributions on Trust Preferred Securities will be made
only if interest payments on the interest-bearing notes, preferred
securities or subordinated debentures are made; (ii) a corporation
issuing the interest-bearing notes, preferred securities or subordinated
debentures may defer interest payments on these instruments for up to 20
consecutive quarters and if such election is made, distributions will
not be made on the Trust Preferred Securities during the deferral
period; (iii) certain tax or regulatory events may trigger the
redemption of the interest-bearing notes, preferred securities or
subordinated debentures by the issuing corporation and result in
prepayment of the Trust Preferred Securities prior to their stated
maturity date; (iv) future legislation may be proposed or enacted that
may prohibit the corporation from deducting its interest payments on the
interest-bearing notes, preferred securities or subordinated debentures
for tax purposes, making redemption of these instruments likely; (v) a
corporation may redeem the interest-bearing notes, preferred securities
or subordinated debentures in whole at any time or in part from time to
time on or after a stated call date; (vi) Trust Preferred Securities
holders have very limited voting rights; and (vii) payment of interest
on the interest-bearing notes, preferred securities or subordinated
debentures, and therefore distributions on the Trust Preferred
Securities, is dependent on the financial condition of the issuing
corporation.
Real Estate Investment Trusts ("REITs"). An investment in the Trust
should be made with an understanding of risks inherent in an investment
in REITs specifically and real estate generally (in addition to
securities market risks). Generally, these include economic recession,
the cyclical nature of real estate markets, competitive overbuilding,
unusually adverse weather conditions, changing demographics, changes in
governmental regulations (including tax laws and environmental,
building, zoning and sales regulations), increases in real estate taxes
or costs of material and labor, the inability to secure performance
guarantees or insurance as required, the unavailability of investment
capital and the inability to obtain construction financing or mortgage
loans at rates acceptable to builders and purchasers of real estate.
Additional risks include an inability to reduce expenditures associated
with a property (such as mortgage payments and property taxes) when
rental revenue declines, and possible loss upon foreclosure of mortgaged
properties if mortgage payments are not paid when due.
REITs are financial vehicles that have as their objective the pooling of
capital from a number of investors in order to participate directly in
real estate ownership or financing. REITs are generally fully integrated
operating companies that have interests in income-producing real estate.
Equity REITs emphasize direct property investment, holding their
invested assets primarily in the ownership of real estate or other
equity interests. REITs obtain capital funds for investment in
underlying real estate assets by selling debt or equity securities in
the public or institutional capital markets or by bank borrowing. Thus,
the returns on common equities of the REITs in which the Trust invests
will be significantly affected by changes in costs of capital and,
particularly in the case of highly "leveraged" REITs (i.e., those with
large amounts of borrowings outstanding), by changes in the level of
interest rates. The objective of an equity REIT is to purchase income-
producing real estate properties in order to generate high levels of
cash flow from rental income and a gradual asset appreciation, and they
typically invest in properties such as office, retail, industrial, hotel
and apartment buildings and healthcare facilities.
REITs are a creation of the tax law. REITs essentially operate as a
corporation or business trust with the advantage of exemption from
corporate income taxes provided the REIT satisfies the requirements of
Sections 856 through 860 of the Internal Revenue Code. The major tests
for tax-qualified status are that the REIT (i) be managed by one or more
trustees or directors, (ii) issue shares of transferable interest to its
owners, (iii) have at least 100 shareholders, (iv) have no more than 50%
of the shares held by five or fewer individuals, (v) invest
substantially all of its capital in real estate related assets and
derive substantially all of its gross income from real estate related
assets and (vi) distributed at least 95% of its taxable income to its
shareholders each year. If any REIT in the Trust's portfolio should fail
to qualify for such tax status, the related shareholders (including the
Trust) could be adversely affected by the resulting tax consequences.
The underlying value of the Securities and the Trust's ability to make
distributions to Unit holders may be adversely affected by changes in
national economic conditions, changes in local market conditions due to
changes in general or local economic conditions and neighborhood
characteristics, increased competition from other properties,
obsolescence of property, changes in the availability, cost and terms of
mortgage funds, the impact of present or future environmental
legislation and compliance with environmental laws, the ongoing need for
capital improvements, particularly in older properties, changes in real
estate tax rates and other operating expenses, regulatory and economic
impediments to raising rents, adverse changes in governmental rules and
fiscal policies, dependency on management skill, civil unrest, acts of
God, including earthquakes and other natural disasters (which may result
in uninsured losses), acts of war, adverse changes in zoning laws, and
Page 2
other factors which are beyond the control of the issuers of the REITs
in a Trust. The value of the REITs may at times be particularly
sensitive to devaluation in the event of rising interest rates.
REITs may concentrate investments in specific geographic areas or in
specific property types, i.e., hotels, shopping malls, residential
complexes and office buildings. The impact of economic conditions on
REITs can also be expected to vary with geographic location and property
type. Investors should be aware the REITs may not be diversified and are
subject to the risks of financing projects. REITs are also subject to
defaults by borrowers, self-liquidation, the market's perception of the
REIT industry generally, and the possibility of failing to qualify for
pass-through of income under the Internal Revenue Code, and to maintain
exemption from the Investment Company Act of 1940. A default by a
borrower or lessee may cause the REIT to experience delays in enforcing
its right as mortgagee or lessor and to incur significant costs related
to protecting its investments. In addition, because real estate
generally is subject to real property taxes, the REITs in the Trust may
be adversely affected by increases or decreases in property tax rates
and assessments or reassessments of the properties underlying the REITs
by taxing authorities. Furthermore, because real estate is relatively
illiquid, the ability of REITs to vary their portfolios in response to
changes in economic and other conditions may be limited and may
adversely affect the value of the Units. There can be no assurance that
any REIT will be able to dispose of its underlying real estate assets
when advantageous or necessary.
The issuer of REITs generally maintains comprehensive insurance on
presently owned and subsequently acquired real property assets,
including liability, fire and extended coverage. However, certain types
of losses may be uninsurable or not be economically insurable as to
which the underlying properties are at risk in their particular locales.
There can be no assurance that insurance coverage will be sufficient to
pay the full current market value or current replacement cost of any
lost investment. Various factors might make it impracticable to use
insurance proceeds to replace a facility after it has been damaged or
destroyed. Under such circumstances, the insurance proceeds received by
a REIT might not be adequate to restore its economic position with
respect to such property.
Under various environmental laws, a current or previous owner or
operator of real property may be liable for the costs of removal or
remediation of hazardous or toxic substances on, under or in such
property. Such laws often impose liability whether or not the owner or
operator caused or knew of the presence of such hazardous or toxic
substances and whether or not the storage of such substances was in
violation of a tenant's lease. In addition, the presence of hazardous or
toxic substances, or the failure to remediate such property properly,
may adversely affect the owner's ability to borrow using such real
property as collateral. No assurance can be given that one or more of
the REITs in the Trust may not be presently liable or potentially liable
for any such costs in connection with real estate assets they presently
own or subsequently acquire while such REITs are held in the Trust.
Dividends. Shareholders of common stocks have rights to receive payments
from the issuers of those common stocks that are generally subordinate
to those of creditors of, or holders of debt obligations or preferred
stocks of, such issuers. Common stocks do not represent an obligation of
the issuer and, therefore, do not offer any assurance of income or
provide the same degree of protection of capital as do debt securities.
The issuance of additional debt securities or preferred stock will
create prior claims for payment of principal, interest and dividends
which could adversely affect the ability and inclination of the issuer
to declare or pay dividends on its common stock or the rights of holders
of common stock with respect to assets of the issuer upon liquidation or
bankruptcy.
Foreign Issuers. Since certain of the Securities included in the Trust
consist of securities of foreign issuers, an investment in the Trust
involves certain investment risks that are different in some respects
from an investment in a trust which invests entirely in the securities
of domestic issuers. These investment risks include future political or
governmental restrictions which might adversely affect the payment or
receipt of payment of dividends on the relevant Securities, the
possibility that the financial condition of the issuers of the
Securities may become impaired or that the general condition of the
relevant stock market may worsen (both of which would contribute
directly to a decrease in the value of the Securities and thus in the
value of the Units), the limited liquidity and relatively small market
capitalization of the relevant securities market, expropriation or
confiscatory taxation, economic uncertainties and foreign currency
devaluations and fluctuations. In addition, for foreign issuers that are
not subject to the reporting requirements of the Securities Exchange Act
of 1934, there may be less publicly available information than is
available from a domestic issuer. Also, foreign issuers are not
necessarily subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those
applicable to domestic issuers. The securities of many foreign issuers
are less liquid and their prices more volatile than securities of
comparable domestic issuers. In addition, fixed brokerage commissions
and other transaction costs on foreign securities exchanges are
generally higher than in the United States and there is generally less
government supervision and regulation of exchanges, brokers and issuers
in foreign countries than there is in the United States. However, due to
the nature of the issuers of the Securities selected for the Trust, the
Sponsor believes that adequate information will be available to allow
the Supervisor to provide portfolio surveillance for the Trust.
On the basis of the best information available to the Sponsor at the
present time, none of the Securities in the Trust are subject to
exchange control restrictions under existing law which would materially
interfere with payment to the Trust of dividends due on, or proceeds
Page 3
from the sale of, the Securities. However, there can be no assurance
that exchange control regulations might not be adopted in the future
which might adversely affect payment to the Trust. The adoption of
exchange control regulations and other legal restrictions could have an
adverse impact on the marketability of international securities in the
Trust and on the ability of the Trust to satisfy its obligation to
redeem Units tendered to the Trustee for redemption. In addition,
restrictions on the settlement of transactions on either the purchase or
sale side, or both, could cause delays or increase the costs associated
with the purchase and sale of the foreign Securities and correspondingly
could affect the price of the Units.
Investors should be aware that it may not be possible to buy all
Securities at the same time because of the unavailability of any
Security, and restrictions applicable to the Trust relating to the
purchase of a Security by reason of the federal securities laws or
otherwise.
Issue Credit Rating Definitions
A Standard & Poor's issue credit rating is a current opinion of the
creditworthiness of an obligor with respect to a specific financial
obligation, a specific class of financial obligations, or a specific
financial program (including ratings on medium term note programs and
commercial paper programs). It takes into consideration the
creditworthiness of guarantors, insurers, or other forms of credit
enhancement on the obligation and takes into account the currency in
which the obligation is denominated. The issue credit rating is not a
recommendation to purchase, sell, or hold a financial obligation,
inasmuch as it does not comment as to market price or suitability for
particular investor.
Issue credit ratings are based on current information furnished by the
obligors or obtained by Standard & Poor's from other sources it
considers reliable. Standard & Poor's does not perform an audit in
connection with any credit rating and may, on occasion, rely on
unaudited financial information. Credit ratings may be changed,
suspended, or withdrawn as a result of changes in, or unavailability of,
such information, or based on other circumstances.
Issue credit ratings can be either long-term or short-term. Short-term
ratings are generally assigned to those obligations considered short-
term in the relevant market. In the United States, for example, that
means obligations with an original maturity of no more than 365 days-
including commercial paper. Short-term ratings are also used to indicate
the creditworthiness of an obligor with respect to put features on long-
term obligations. The result is a dual rating, in which the short-term
rating addresses the put feature, in addition to the usual long-term
rating. Medium-term notes are assigned long-term ratings.
Long-Term Issue Credit Ratings
Issue credit ratings are based, in varying degrees, on the following
considerations:
1. Likelihood of payment: capacity and willingness of the obligor to
meet its financial commitment on an obligation in accordance with the
terms of the obligation;
2. Nature of and provisions of the obligation;
3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization, or other arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.
The issue rating definitions are expressed in terms of default risk. As
such, they pertain to senior obligations of an entity. Junior
obligations are typically rated lower than senior obligations, to
reflect the lower priority in bankruptcy, as noted above. (Such
differentiation applies when an entity has both senior and subordinated
obligations, secured and unsecured obligations, or operating company and
holding company obligations.) Accordingly, in the case of junior debt,
the rating may not conform exactly with the category definition.
AAA: An obligation rated "AAA" has the highest rating assigned by
Standard & Poor's. The obligator's capacity to meet its financial
commitment on the obligation is extremely strong.
AA: An obligation rated "AA" differs from the highest rated
obligations only in small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A: An obligation rated "A" is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.
BBB: An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity of the
obligor to meet its financial commitment on the obligation. Obligations
rated "BB," "B," "CCC," "CC" and "C" are regarded as having significant
speculative characteristics. "BB" indicates the least degree of
speculation and "C" the highest. While such obligations will likely have
some quality and protective characteristics, these may be outweighed by
large uncertainties or major exposures 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.
Page 4
Concentrations
Financial Services Industry. An investment in Units of the Trust should
be made with an understanding of the problems and risks inherent in the
bank and financial services sector in general.
Banks, thrifts and their holding companies are especially subject to the
adverse effects of economic recession, volatile interest rates,
portfolio concentrations in geographic markets and in commercial and
residential real estate loans, and competition from new entrants in
their fields of business. Banks and thrifts are highly dependent on net
interest margin. Recently, bank profits have come under pressure as net
interest margins have contracted, but volume gains have been strong in
both commercial and consumer products. There is no certainty that such
conditions will continue. Bank and thrift institutions had received
significant consumer mortgage fee income as a result of activity in
mortgage and refinance markets. As initial home purchasing and
refinancing activity subsided, this income diminished. Economic
conditions in the real estate markets, which have been weak in the past,
can have a substantial effect upon banks and thrifts because they
generally have a portion of their assets invested in loans secured by
real estate. Banks, thrifts and their holding companies are subject to
extensive federal regulation and, when such institutions are state-
chartered, to state regulation as well. Such regulations impose strict
capital requirements and limitations on the nature and extent of
business activities that banks and thrifts may pursue. Furthermore, bank
regulators have a wide range of discretion in connection with their
supervisory and enforcement authority and may substantially restrict the
permissible activities of a particular institution if deemed to pose
significant risks to the soundness of such institution or the safety of
the federal deposit insurance fund. Regulatory actions, such as
increases in the minimum capital requirements applicable to banks and
thrifts and increases in deposit insurance premiums required to be paid
by banks and thrifts to the Federal Deposit Insurance Corporation
("FDIC"), can negatively impact earnings and the ability of a company to
pay dividends. Neither federal insurance of deposits nor governmental
regulations, however, insures the solvency or profitability of banks or
their holding companies, or insures against any risk of investment in
the securities issued by such institutions.
The statutory requirements applicable to and regulatory supervision of
banks, thrifts and their holding companies have increased significantly
and have undergone substantial change in recent years. To a great
extent, these changes are embodied in the Financial Institutions Reform,
Recovery and Enforcement Act; enacted in August 1989, the Federal
Deposit Insurance Corporation Improvement Act of 1991, the Resolution
Trust Corporation Refinancing, Restructuring, and Improvement Act of
1991 and the regulations promulgated under these laws. Many of the
regulations promulgated pursuant to these laws have only recently been
finalized and their impact on the business, financial condition and
prospects of the Securities in the Trust's portfolio cannot be predicted
with certainty. Periodic efforts to introduce legislation broadening the
ability of banks to compete with new products have not been successful,
but if enacted could lead to more failures as a result of increased
competition and added risks. Failure to enact such legislation, on the
other hand, may lead to declining earnings and an inability to compete
with unregulated financial institutions. Efforts to expand the ability
of federal thrifts to branch on an interstate basis have been initially
successful through promulgation of regulations, and legislation to
liberalize interstate banking has recently been signed into law. Under
the legislation, banks will be able to purchase or establish subsidiary
banks in any state, one year after the legislation's enactment. Since
mid-1997, banks have been allowed to turn existing banks into branches.
Consolidation is likely to continue. The Securities and Exchange
Commission and the Financial Accounting Standards Board require the
expanded use of market value accounting by banks and have imposed rules
requiring market accounting for investment securities held in trading
accounts or available for sale. Adoption of additional such rules may
result in increased volatility in the reported health of the industry,
and mandated regulatory intervention to correct such problems.
Additional legislative and regulatory changes may be forthcoming. For
example, the bank regulatory authorities have proposed substantial
changes to the Community Reinvestment Act and fair lending laws, rules
and regulations, and there can be no certainty as to the effect, if any,
that such changes would have on the Securities in the Trust's portfolio.
In addition, from time to time the deposit insurance system is reviewed
by Congress and federal regulators, and proposed reforms of that system
could, among other things, further restrict the ways in which deposited
moneys can be used by banks or reduce the dollar amount or number of
deposits insured for any depositor. Such reforms could reduce
profitability as investment opportunities available to bank institutions
become more limited and as consumers look for savings vehicles other
than bank deposits. Banks and thrifts face significant competition from
other financial institutions such as mutual funds, credit unions,
mortgage banking companies and insurance companies, and increased
competition may result from legislative broadening of regional and
national interstate banking powers as has been recently enacted. Among
other benefits, the legislation allows banks and bank holding companies
to acquire across previously prohibited state lines and to consolidate
their various bank subsidiaries into one unit. The Sponsor makes no
prediction as to what, if any, manner of bank and thrift regulatory
actions might ultimately be adopted or what ultimate effect such actions
might have on the Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5%
of the outstanding shares of any class of voting securities of a bank or
Page 5
bank holding company, (2) acquiring control of a bank or another bank
holding company, (3) acquiring all or substantially all the assets of a
bank, or (4) merging or consolidating with another bank holding company,
without first obtaining Federal Reserve Board ("FRB") approval. In
considering an application with respect to any such transaction, the FRB
is required to consider a variety of factors, including the potential
anti-competitive effects of the transaction, the financial condition and
future prospects of the combining and resulting institutions, the
managerial resources of the resulting institution, the convenience and
needs of the communities the combined organization would serve, the
record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the
prospective availability to the FRB of information appropriate to
determine ongoing regulatory compliance with applicable banking laws. In
addition, the federal Change In Bank Control Act and various state laws
impose limitations on the ability of one or more individuals or other
entities to acquire control of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends
by bank holding companies. In the policy statement, the FRB expressed
its view that a bank holding company experiencing earnings weaknesses
should not pay cash dividends which exceed its net income or which could
only be funded in ways that would weaken its financial health, such as
by borrowing. The FRB also may impose limitations on the payment of
dividends as a condition to its approval of certain applications,
including applications for approval of mergers and acquisitions. The
Sponsor makes no prediction as to the effect, if any, such laws will
have on the Securities or whether such approvals, if necessary, will be
obtained.
Companies involved in the insurance industry are engaged in
underwriting, reinsuring, selling, distributing or placing of property
and casualty, life or health insurance. Other growth areas within the
insurance industry include brokerage, reciprocals, claims processors and
multiline insurance companies. Insurance company profits are affected by
interest rate levels, general economic conditions, and price and
marketing competition. Property and casualty insurance profits may also
be affected by weather catastrophes and other disasters. Life and health
insurance profits may be affected by mortality and morbidity rates.
Individual companies may be exposed to material risks including reserve
inadequacy and the inability to collect from reinsurance carriers.
Insurance companies are subject to extensive governmental regulation,
including the imposition of maximum rate levels, which may not be
adequate for some lines of business. Proposed or potential tax law
changes may also adversely affect insurance companies' policy sales, tax
obligations, and profitability. In addition to the foregoing, profit
margins of these companies continue to shrink due to the commoditization
of traditional businesses, new competitors, capital expenditures on new
technology and the pressures to compete globally.
In addition to the normal risks of business, companies involved in the
insurance industry are subject to significant risk factors, including
those applicable to regulated insurance companies, such as: (i) the
inherent uncertainty in the process of establishing property-liability
loss reserves, particularly reserves for the cost of environmental,
asbestos and mass tort claims, and the fact that ultimate losses could
materially exceed established loss reserves which could have a material
adverse effect on results of operations and financial condition; (ii)
the fact that insurance companies have experienced, and can be expected
in the future to experience, catastrophe losses which could have a
material adverse impact on their financial condition, results of
operations and cash flow; (iii) the inherent uncertainty in the process
of establishing property-liability loss reserves due to changes in loss
payment patterns caused by new claims settlement practices; (iv) the
need for insurance companies and their subsidiaries to maintain
appropriate levels of statutory capital and surplus, particularly in
light of continuing scrutiny by rating organizations and state insurance
regulatory authorities, and in order to maintain acceptable financial
strength or claims-paying ability rating; (v) the extensive regulation
and supervision to which insurance companies' subsidiaries are subject,
various regulatory initiatives that may affect insurance companies, and
regulatory and other legal actions; (vi) the adverse impact that
increases in interest rates could have on the value of an insurance
company's investment portfolio and on the attractiveness of certain of
its products; (vii) the need to adjust the effective duration of the
assets and liabilities of life insurance operations in order to meet the
anticipated cash flow requirements of its policyholder obligations; and
(vii) the uncertainty involved in estimating the availability of
reinsurance and the collectibility of reinsurance recoverables.
The state insurance regulatory framework has, during recent years, come
under increased federal scrutiny, and certain state legislatures have
considered or enacted laws that alter and, in many cases, increase state
authority to regulate insurance companies and insurance holding company
systems. Further, the National Association of Insurance Commissioners
("NAIC") and state insurance regulators are re-examining existing laws
and regulations, specifically focusing on insurance companies,
interpretations of existing laws and the development of new laws. In
addition, Congress and certain federal agencies have investigated the
condition of the insurance industry in the United States to determine
whether to promulgate additional federal regulation. The Sponsor is
unable to predict whether any state or federal legislation will be
enacted to change the nature or scope of regulation of the insurance
industry, or what effect, if any, such legislation would have on the
industry.
All insurance companies are subject to state laws and regulations that
require diversification of their investment portfolios and limit the
amount of investments in certain investment categories. Failure to
Page 6
comply with these laws and regulations would cause non-conforming
investments to be treated as non-admitted assets for purposes of
measuring statutory surplus and, in some instances, would require
divestiture.
Environmental pollution clean-up is the subject of both federal and
state regulation. By some estimates, there are thousands of potential
waste sites subject to clean up. The insurance industry is involved in
extensive litigation regarding coverage issues. The Comprehensive
Environmental Response Compensation and Liability Act of 1980
("Superfund") and comparable state statutes ("mini-Superfund") govern
the clean-up and restoration by "Potentially Responsible Parties"
("PRP's"). Superfund and the mini-Superfunds ("Environmental Clean-up
Laws or "ECLs") establish a mechanism to pay for clean-up of waste sites
if PRP's fail to do so, and to assign liability to PRP's. The extent of
liability to be allocated to a PRP is dependent on a variety of factors.
The extent of clean-up necessary and the assignment of liability has not
been fully established. The insurance industry is disputing many such
claims. Key coverage issues include whether Superfund response costs are
considered damages under the policies, when and how coverage is
triggered, applicability of pollution exclusions, the potential for
joint and several liability and definition of an occurrence. Similar
coverage issues exist for clean up and waste sites not covered under
Superfund. To date, courts have been inconsistent in their rulings on
these issues. An insurer's exposure to liability with regard to its
insureds which have been, or may be, named as PRPs is uncertain.
Superfund reform proposals have been introduced in Congress, but none
have been enacted. There can be no assurance that any Superfund reform
legislation will be enacted or that any such legislation will provide
for a fair, effective and cost-efficient system for settlement of
Superfund related claims.
Proposed federal legislation which would permit banks greater
participation in the insurance business could, if enacted, present an
increased level of competition for the sale of insurance products. In
addition, while current federal income tax law permits the tax-deferred
accumulation of earnings on the premiums paid by an annuity owner and
holders of certain savings-oriented life insurance products, no
assurance can be given that future tax law will continue to allow such
tax deferrals. If such deferrals were not allowed, consumer demand for
the affected products would be substantially reduced. In addition,
proposals to lower the federal income tax rates through a form of flat
tax or otherwise could have, if enacted, a negative impact on the demand
for such products.
Companies engaged in investment banking/brokerage and investment
management include brokerage firms, broker/dealers, investment banks,
finance companies and mutual fund companies. Earnings and share prices
of companies in this industry are quite volatile, and often exceed the
volatility levels of the market as a whole. Recently, ongoing
consolidation in the industry and the strong stock market has benefited
stocks which investors believe will benefit from greater investor and
issuer activity. Major determinants of future earnings of these
companies are the direction of the stock market, investor confidence,
equity transaction volume, the level and direction of long-term and
short-term interest rates, and the outlook for emerging markets.
Negative trends in any of these earnings determinants could have a
serious adverse effect on the financial stability, as well as the stock
prices, of these companies. Furthermore, there can be no assurance that
the issuers of the Securities included in the Target 10 Trust will be
able to respond in a timely manner to compete in the rapidly developing
marketplace. In addition to the foregoing, profit margins of these
companies continue to shrink due to the commoditization of traditional
businesses, new competitors, capital expenditures on new technology and
the pressures to compete globally.
Utility Companies. An investment in Units of the Trust should be made
with an understanding of the characteristics of the utility industry and
the risks which such an investment may entail. General problems of the
public utility industry include the difficulty in obtaining an adequate
return on invested capital despite frequent increases in rates which
have been granted by the public service commissions having jurisdiction,
the difficulty in financing large construction programs during an
inflationary period, the restrictions on operations and increased cost
and delays attributable to environmental and other regulatory
considerations, the difficulty to the capital markets in absorbing
utility debt and securities, the difficulty in obtaining fuel for
electric generation at reasonable prices, and the effects of energy
conservation. There is no assurance that such public service commissions
will, in the future, grant rate increases or that any such increases
will be adequate to cover operating and other expenses and debt service
requirements. All of the public utilities which are issuers of the
Securities in the portfolio have been experiencing many of these
problems in varying degrees. Furthermore, utility stocks are
particularly susceptible to interest rate risk, generally exhibiting an
inverse relationship to interest rates. As a result, utility stock
prices may be adversely affected as interest rates rise. The Sponsor
makes no prediction as to whether interest rates will rise or fall or
the effect, if any, interest rates may have on the Securities in the
portfolio. In addition, federal, state and municipal governmental
authorities may from time to time review existing, and impose
additional, regulations governing the licensing, construction and
operation of nuclear power plants, which may adversely affect the
ability of the issuers of certain of the Securities in the Trust's
portfolio to make dividend payments on their Securities.
Utilities are generally subject to extensive regulation by state utility
commissions which, for example, establish the rates which may be charged
and the appropriate rate of return on an approved asset base, which must
be approved by the state commissions. Certain utilities have had
difficulty from time to time in persuading regulators, who are subject
to political pressures, to grant rate increases necessary to maintain an
adequate return on investment and voters in many states have the ability
Page 7
to impose limits on rate adjustments (for example, by initiative or
referendum). Any unexpected limitations could negatively affect the
profitability of utilities whose budgets are planned far in advance. In
addition, gas pipeline and distribution companies have had difficulties
in adjusting to short and surplus energy supplies, enforcing or being
required to comply with long-term contracts and avoiding litigation from
their customers, on the one hand, or suppliers, on the other.
Recently, the California Public Utility Commission ("CPUC") announced
its intention to deregulate the electric utility industry in California.
This change will eventually result in full competition between electric
utilities and independent power producers in the generation and sale of
power to all customers in California by the year 2002. In September of
1996, the California Legislature passed and the Governor signed into law
Assembly Bill 1890 (AB 1890) to restructure the California electrical
industry by promoting competition and allowing customers a right to
choose their electrical supplier. Preliminary assessments of the CPUC
plan and the new law suggest that the deregulation of the electric
utility industry in California could have a significant adverse effect
on electric utility stocks of California issuers. Furthermore, the move
toward full competition in California could indicate that similar
changes may be made in other states in the future which could negatively
impact the profitability of electric utilities. Further deregulation
could adversely affect the issuer of certain of the Securities in the
portfolio. In view of the uncertainties regarding the CPUC deregulation
plan, it is unclear what effect, if any, that full competition will have
on electric utilities in California or whether similar changes will be
adopted in the other states.
Certain of the issuers of the Securities in the Trust may own or operate
nuclear generating facilities. Governmental authorities may from time to
time review existing, and impose additional, requirements governing the
licensing, construction and operation of nuclear power plants. Nuclear
generating projects in the electric utility industry have experienced
substantial cost increases, construction delays and licensing
difficulties. These have been caused by various factors, including
inflation, high financing costs, required design changes and rework,
allegedly faulty construction, objections by groups and governmental
officials, limits on the ability to finance, reduced forecasts of energy
requirements and economic conditions. This experience indicates that the
risk of significant cost increases, delays and licensing difficulties
remain present until completion and achievement of commercial operation
of any nuclear project. Also, nuclear generating units in service have
experienced unplanned outages or extensions of scheduled outages due to
equipment problems or new regulatory requirements sometimes followed by
a significant delay in obtaining regulatory approval to return to
service. A major accident at a nuclear plant anywhere, such as the
accident at a plant in Chernobyl, could cause the imposition of limits
or prohibitions on the operation, construction or licensing of nuclear
units in the United States.
Page 8
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 466, hereby identifies The First Trust
Special Situations Trust, Series 4; The First Trust Special
Situations Trust, Series 18; 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; FT 286; The
First Trust Combined Series 272; FT 412; and FT 438 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 466, 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 September 22, 2000.
FT 466
By NIKE SECURITIES L.P.
Depositor
By Robert M. Porcellino
Senior 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
David J. Allen Sole Director )
of Nike Securities )
Corporation, the ) September 22, 2000
General Partner of )
Nike Securities L.P. )
)
)
) Robert M. Porcellino
) Attorney-in-Fact**
)
)
* The title of the person named herein represents his
capacity in and relationship to Nike Securities L.P.,
Depositor.
** An executed copy of the related power of attorney
was filed with the Securities and Exchange Commission in
connection with the Amendment No. 1 to Form S-6 of The
First Trust Combined Series 258 (File No. 33-63483) and
the same is hereby incorporated herein by this reference.
S-3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated September 22, 2000
in Amendment No. 1 to the Registration Statement (Form S-6) (File
No. 333-45816) and related Prospectus of FT 466.
ERNST & YOUNG LLP
Chicago, Illinois
September 22, 2000
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement
will be filed as Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 22 and
certain subsequent Series, effective November 20, 1991
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and First Trust
Advisors L.P. as Portfolio Supervisor (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
43693] filed on behalf of The First Trust Special
Situations Trust, Series 22).
1.1.1 Form of Trust Agreement for FT 466 among Nike Securities
L.P., as Depositor, The Chase Manhattan Bank, as
Trustee, First Trust Advisors L.P., as Evaluator, and
First Trust Advisors L.P., as Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities
L.P., Depositor (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-
6 [File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
1.6 Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-46655] 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).
2.2 Copy of Code of Ethics (incorporated by reference to
Amendment No. 1 to form S-6 [File No. 333-31176] filed
on behalf of FT 415).
S-5
3.1 Opinion of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal income tax status of
securities being registered.
3.3 Opinion of counsel as to New York income tax status of
securities being registered.
3.4 Opinion of counsel as to advancement of funds by
Trustee.
4.1 Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on
page S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
63483] filed on behalf of The First Trust Combined
Series 258).
S-6
