Registration No. 333-46548
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 467
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 October 26, 2000 at 2:00 p.m. pursuant to Rule 487.
________________________________
Utility Preferred Trust
FT 467
FT 467 is a series of a unit investment trust, the FT Series. FT 467
consists of a single portfolio known as Utility Preferred Trust (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.
J.J.B. Hilliard, W.L. Lyons, Inc.
The date of this prospectus is October 26, 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 9
Portfolio 9
Risk Factors 10
Public Offering 12
Distribution of Units 13
The Sponsor's Profits 14
The Secondary Market 14
How We Purchase Units 14
Expenses and Charges 15
Tax Status 16
Retirement Plans 17
Rights of Unit Holders 18
Income and Capital Distributions 18
Redeeming Your Units 19
Removing Securities from the Trust 20
Amending or Terminating the Indenture 21
Information on Hilliard Lyons, the Sponsor,
Trustee and Evaluator 21
Other Information 22
Moody's Preferred Stock Ratings 23
Standard & Poor's Issue Credit Rating Definitions 23
Page 2
Summary of Essential Information
Utility Preferred Trust
FT 467
At the Opening of Business on the
Initial Date of Deposit-October 26, 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) $ 9.550
Maximum Sales Charge of 4.50% of the Public Offering Price
per Unit (4.712% of the net amount invested) (3) $ .450
Public Offering Price per Unit (4) $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.550
Redemption Price per Unit (based on aggregate underlying value of Securities) (5) $ 9.550
Estimated Net Annual Distribution per Unit for the first year (6) $ .7704
CUSIP Number 30265U 613
Security Code 59828
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date October 31, 2000
Mandatory Termination Date (7) October 31, 2007
Income Distribution Record Date Fifteenth day of each month, commencing November 15, 2000.
Income Distribution Date (6) Last day of each month, commencing November 30, 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) 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, $.7674
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. 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 seven 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 4.50%(a) $.450
======== ========
Organization Costs
(as a percentage of public offering price)
Estimated organization costs .200%(b) $.0200
======== ========
Estimated Annual Trust Operating Expenses(c)
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative and evaluation fees .100% $.0098
Creation and development fee .250%(d) .0245
Trustee's fee and other operating expenses .155%(e) .0152
________ ________
Total .505% $.0495
======== ========
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 7 Years
______ _______ _______ _______
$521 $624 $736 $859
This example will not differ if you hold rather than sell your Units at
the end of each period.
________________
<FN>
(a) The maximum sales charge is equal to 4.50% of the Public Offering
Price (equivalent to 4.712% of the net amount invested).
(b) 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.
(c) 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.
(d) 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
.25%. 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 2.75% of a Unit holder's initial
investment.
(e) 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 467
We have audited the accompanying statement of net assets, including the
schedule of investments, of FT 467, comprised of the Utility Preferred
Trust, as of the opening of business on October 26, 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 October 26, 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 467,
comprised of the Utility Preferred Trust, at the opening of business on
October 26, 2000 in conformity with accounting principles generally
accepted in the United States.
ERNST & YOUNG LLP
Chicago, Illinois
October 26, 2000
Page 5
Statement of Net Assets
Utility Preferred Trust
FT 467
At the Opening of Business on the
Initial Date of Deposit-October 26, 2000
<TABLE>
<CAPTION>
<S> <C>
NET ASSETS
Investment in Securities represented by purchase contracts (1) (2) $143,267
Less liability for reimbursement to Sponsor for organization costs (3) (300)
________
Net assets $142,967
========
Units outstanding 15,002
ANALYSIS OF NET ASSETS
Cost to investors (4) $150,018
Less maximum sales charge (4) (6,751)
Less estimated reimbursement to Sponsor for organization costs (3) (300)
________
Net assets $142,967
========
______________
<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) The aggregate cost to investors in the Trust includes a maximum
sales charge computed at the rate of 4.50% of the Public Offering Price
per Unit (equivalent to 4.712% of the net amount invested), assuming no
reduction of sales charge as set forth under "Public Offering."
</FN>
</TABLE>
Page 6
Schedule of Investments
Utility Preferred Trust
FT 467
At the Opening of Business on the
Initial Date of Deposit-October 26, 2000
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of
of Rating(2) Offering Redemption Value per Securities to
Shares Name of Issue of Securities (1) Moody's S&P Price Provisions (3) Share the Trust (4)
____ _________________________ _______ ___ ________ ________ ______ _____________
<C> <S> <C> <C> <C> <C> <C> <C>
394 Alabama Power Company, Series B, 7.000%, a2 A 5.88% 02/26/03 @ 25 $21.375 $ 8,422
Due 12/31/47
394 Appalachian Power Company, Series B, 7.300%, baa1 BBB+ 5.88% 04/22/03 @ 25 21.375 8,422
Due 06/30/38
378 BGE Capital Trust I, 7.160%, Due 06/30/38 a2 A- 5.89% 06/15/03 @ 25 22.313 8,434
367 Consumers Energy Co. Financing II, 8.200%, ba1 BB 5.87% 09/01/02 @ 25 22.938 8,418
Due 09/01/27
375 The Detroit Edison Company, 7.625%, baa2 BBB- 5.89% 03/31/01 @ 25 22.500 8,437
Due 03/31/26
381 Duke Capital Financing Trust II, Series U, baa1 A- 5.88% 09/30/03 @ 25 22.125 8,430
7.375%, Due 06/30/38
377 Duquesne Light Company, Series E, 7.375%, a3 BBB+ 5.89% 05/01/03 @ 25 22.375 8,435
Due 04/15/38
394 Enterprise Capital Trust I, Series A, 7.440%, baa2 BB+ 5.88% 03/31/03 @ 25 21.375 8,422
Due 03/31/47
404 FPC Capital I, Series A, 7.100%, Due 05/13/39 a2 BBB+ 5.89% 04/13/04 @ 25 20.875 8,434
394 Georgia Power Company, 6.600%, aaa AAA 5.88% 11/25/03 @ 25 21.375 8,422
Due 12/31/38
375 Indiana Michigan Power Co., Series B, 7.600%, baa3 BBB 5.89% 05/07/03 @ 25 22.500 8,437
Due 06/30/38
377 National Rural Utilities Cooperative Finance a2 A 5.89% 09/15/03 @ 25 22.375 8,435
Corp., 7.375%, Due 09/15/47
385 Ohio Power Co., 7.375%, Due 06/30/38 baa1 BBB+ 5.88% 04/29/03 @ 25 21.875 8,422
371 Potomac Electric Power Co. Trust I, 7.375%, a1 BBB+ 5.87% 06/01/03 @ 25 22.688 8,417
Due 06/01/38
406 Reliant Energy, Inc. Trust I, Series C, 7.200%, baa1 BBB- 5.88% 02/26/04 @ 25 20.750 8,425
Due 03/31/48
391 The Southern Company Capital Trust IV, a3 BBB+ 5.88% 06/30/03 @ 25 21.563 8,431
7.125%, Due 06/30/28
384 Virginia Electric & Power Co., Series A, a3 A- 5.88% 06/30/03 @ 25 21.938 8,424
7.150%, Due 06/30/38
_______ ________
Total Investments 100% $143,267
======= ========
_____________
<FN>
See "Notes to Schedule of Investments" on page 8.
Page 7
NOTES TO SCHEDULE OF INVESTMENTS
(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 each of the Securities. 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 October 26, 2000. Each Security was originally issued with
a par or stated value per share of $25.
(2) For a brief description of the rating symbols and their related
meanings, see "Moody's Preferred Stock Ratings" and "Standard & Poor's
Issue Credit Ratings Definitions." 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
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 $144,046 and $779, respectively.
</FN>
</TABLE>
Page 8
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 467,
consists of a single portfolio known as Utility Preferred Trust.
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.
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 Trust's objective is to provide investors with the potential for
above-average current income by investing in preferred stocks and trust
preferred securities issued by utility companies located primarily in
the eastern United States, which were professionally selected by J.J.B.
Hilliard, W.L. Lyons, Inc. ("Hilliard Lyons").
Preferred securities are unique securities that combine some of the
Page 9
characteristics of both stocks and bonds. Like bonds, the preferred
securities selected for this Trust pay a fixed rate of return and are
sold on the basis of current yield. However, like stocks, they are
traded on the major exchanges.
A preferred security is typically brought to market at a price of $25
per Unit with a fixed quarterly payout of interest. Preferred securities
are generally callable by the issuer at par beginning five years after
the date they are issued. Dividends are paid to preferred stockholders
before common stockholders and are usually cumulative to the holder of
record.
Because there are so many variations and subtle differences in issues of
preferred securities, investors usually rely on the investment rating
systems of Standard & Poor's and Moody's and the advice of professional
analysts in selecting quality preferred securities.
Preferred securities are an often overlooked investment vehicle, which
has resulted in a unique opportunity for investors. Currently, most
utility preferreds are yielding at or above their coupon rate, an
environment that may not continue for the long term.
We believe an investment in the Trust offers investors a unique
opportunity to meet income objectives and produce higher-yielding
returns than other income-oriented investments if Units are held to
maturity.
The preferred securities in the Trust were carefully selected by the
Hilliard Lyons Fixed Income Department with particular emphasis on the
financial capacity of each utility company to meet current and future
dividend payments. Utilities were also analyzed for their abilities to
generate earnings per share, asset coverage per share and overall yield.
On the initial date of deposit, each of the preferred securities in the
Trust is priced at or below its initial offering price, resulting in a
yield that is equal to or higher than the coupon rate. If interest rates
were to remain at their current levels or go higher, it is unlikely that
the securities would be called, and the preferred securities would be
sold at the maturity date of the Trust at their market prices, which
will probably be equal to or less than $25 per share. However, if
interest rates should go lower, there is a possibility that some of the
preferred securities would be called prior to maturity, usually for cash
and at par value, which would result in capital appreciation to you if
the securities were purchased at a price less than par.
Finally, the portfolio of utility companies was selected primarily from
the eastern region of the United States, the region of Hilliard Lyons'
expertise and market coverage.
You should be aware that predictions stated herein may not be realized.
In addition, the Securities contained in the Trust are not intended to
be representative of the utility sector as a whole and the performance
of the Trust is expected to differ from that of the utility sector. 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. 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 assurance that the issuers of the Securities
included in the Trust will be able to pay dividends at their stated rate
in the future. In addition, all of the Securities are subject to
optional redemption prior to their stated maturities. The optional
redemption provisions for the majority of the Securities begins in 2003.
Page 10
If Securities are redeemed prior to the termination of the Trust the
dividends you receive from the Trust will be reduced and you may be
unable to reinvest the cash you receive from these redemptions in
securities with as high a dividend rate.
Preferred Stocks. Approximately 41% 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 59% 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.
Two of the Securities included in the Trust are rated below "BBB" by
Standard & Poor's and one of the Securities in the Trust is rated below
"baa" by Moody's. Preferred Stocks and Trust Preferred Securities that
are rated lower than "BBB" by Standard & Poor's or "baa" by Moody's are
considered to be below investment grade and are regarded as having
significant speculative characteristics. While these Securities will
likely have some quality and protective characteristics, they may be
outweighed by large uncertainties or major exposures to adverse
conditions.
Utility Industry. Because more than 25% of the Trust is invested in
securities issued by utility companies, the Trust is considered to be
concentrated in the utility industry. A portfolio concentrated in a
single industry may present more risks than a portfolio broadly
diversified over several industries. 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 industry 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.
Securities Selection. While Hilliard Lyons has carefully evaluated and
approved the Securities in the Trust for this purpose, they may choose
for any reason not to recommend any or all of the Securities for another
purpose or at a later date. This may affect the value of your Units. In
addition, Hilliard Lyons in its general securities business acts as
agent or principal in connection with buying and selling stocks,
including the Securities, and may have bought the Securities for the
Trust, thereby benefiting. Hilliard Lyons also acts as a market maker,
underwrites certain issues, and provides investment banking services to
companies, which may include the issuers of certain of the Securities.
Page 11
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 maximum 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 maximum sales charge, which you will pay at the time of purchase, is
equal to 4.50% of the Public Offering Price (equivalent to 4.712% of the
net amount invested), which will be reduced by 1/2 of 1% on each
subsequent October 31, commencing October 31, 2001, to a minimum sales
charge of 3.00%.
Discounts for Certain Persons.
If you invest at least $100,000, the maximum sales charge is reduced, as
follows:
Your maximum
If you invest sales charge
(in thousands):* will be:
_______________ ____________
$100 but less than $250 4.00%
$250 but less than $500 3.50%
$500 or more 3.00%
* 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.
Page 12
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. 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. 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%. In addition, if you
purchase Units of the Trust using proceeds from the sale of shares of
Louisiana Gas & Electric Company, the sales charge on such Units will be
reduced to 3.5% of the Public Offering Price.
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.
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 3.50% of the Public
Offering Price per Unit (or 65% of the maximum sales charge after
October 31, 2001). However, for Units which are purchased using redemption
or termination proceeds or proceeds from the sale of Louisiana Gas & Electric
Company shares, this amount will be reduced to 2.50% of the sales price
of these Units.
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:
_________________ ___________
$5 but less than $10 .10%
$10 but less than $25 .20%
$25 but less than $50 .30%
$50 or more .40%
Page 13
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 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.
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.
Page 14
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
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 .25%. 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 2.75% 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
Page 15
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.
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 preferred stock in domestic corporations (the
"Stocks") and trust preferred securities of domestic 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 and the Debt Obligations constitute debt.
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.
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).
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
Page 16
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.
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 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
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.
State and Local 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.
Under the existing income tax laws of the State and City of New York,
the Trust will not be taxed as a corporation, and the income of the
Trust will be treated as the income of the Unit holders in the same
manner as for federal income tax purposes.
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
Page 17
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.
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.
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
Page 18
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 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."
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
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 2,500 Units or more for redemption, 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.
Page 19
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.
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;
- 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
Page 20
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
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 2,500 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) 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 Hilliard Lyons,
the Sponsor, Trustee and Evaluator
Hilliard Lyons.
J.J.B. Hilliard, W.L. Lyons, Inc., established in 1854, is a member of
the New York Stock Exchange. Hilliard Lyons is a full service firm which
engages in virtually every phase of the investment banking and
securities brokerage business, offering stocks, bonds, options,
retirement plans, money market funds, mutual funds, annuities, real
estate, trust and estate planning and investment management. Hilliard
Lyons has more than 90 offices in the midwestern and southeastern United
States.
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:
Page 21
- 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
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
Page 22
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.
Moody's Preferred Stock Ratings
Because of the fundamental differences between preferred stocks and
bonds, Moody's employs a variation of their familiar bond rating symbols
in the quality ranking of preferred stock.
These symbols, presented below, are designed to avoid comparison with
bond quality in absolute terms. It should always be borne in mind that
preferred stock occupies a junior position to bonds within a particular
capital structure and that these securities are rated within the
universe of preferred stocks.
aaa An issue rated "aaa" is considered to be a top-quality preferred
stock. This rating indicates good asset protection and the least risk of
dividend impairment within the universe of preferred stocks.
aa An issue rated "aa" is considered a high-grade preferred stock. This
rating indicates that there is a reasonable assurance the earnings and
asset protection will remain relatively well maintained in the
foreseeable future.
a An issue rated "a" is considered to be an upper-medium-grade
preferred stock. While risks are judged to be somewhat greater than in
the "aaa" and "aa" classifications, earnings and asset protection are,
nevertheless, expected to be maintained at adequate levels.
baa An issue rated "baa" is considered to be a medium-grade preferred
stock, neither highly protected nor poorly secured. Earnings and asset
protection appear adequate at present, but may be questionable over any
great length of time.
ba An issue rated "ba" is considered to have speculative elements. Its
future cannot be considered well assured. Earnings and asset protection
may be very moderate and not well safeguarded during adverse periods.
Uncertainty of position characterizes preferred stocks in this class.
b An issue rated "b" generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of
other terms of the issue over any long period of time may be small.
caa An issue rated "caa" is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the
future status of payments.
ca An issue rated "ca" is speculative in a high degree and is likely to
be in arrears on dividends with little likelihood of eventual payments.
c This is the lowest-rated class of preferred or preference stock.
Issues so rated can thus be regarded as having extremely poor prospects
of ever attaining any real investment standing.
As in the case of bond ratings, Moody's applies to preferred stock
ratings the numerical modifiers 1, 2, and 3 in rating classifications
"aa" through "b." The modifier 1 indicates that the security ranks in
the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the issue ranks
in the lower end of its generic rating category.
Standard & Poor's
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
Page 23
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.
BB An obligation rated "BB" is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which
could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
B An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to
Page 24
meet its financial commitment on the obligation. Adverse business,
financial, or economic conditions will likely impair the obligor's
capacity or willingness to meet its financial commitment on the
obligation.
CCC An obligation rated "CCC" is currently vulnerable to nonpayment, and
is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In
the event of adverse business, financial, or economic conditions, the
obligor is not likely to have the capacity to meet its financial
commitment on the obligation.
CC An obligation rated "CC" is currently highly vulnerable to nonpayment.
C A subordinated debt or preferred stock obligation rated "C" is
currently highly vulnerable to nonpayment. The "C" rating may be used to
cover a situation where a bankruptcy petition has been filed or similar
action taken, but payments on this obligation are being continued. A "C"
also will be assigned to a preferred stock issue in arrears on dividends
or sinking fund payments, but that is currently paying.
D An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date
due even if the applicable grace period has not expired, unless Standard
& Poor's believes that such payments will be made during such grade
period. The "D" rating also will be used upon the filing of a bankruptcy
petition or the taking of a similar action if payments on an obligation
are jeopardized.
Plus(+) or Minus(-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.
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Page 27
Utility Preferred Trust
FT 467
J.J.B. Hilliard, W.L. Lyons, Inc.
Hilliard Lyons Center
501 South Fourth Street
Louisville, KY 40202
1-800-444-1854
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 Utility Preferred
Trust, 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. 333-46548) 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]
October 26, 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 467 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 October 26, 2000. Capitalized terms
have been defined in the prospectus.
Table of Contents
Risk Factors
Preferred Stocks 1
Trust Preferred Securities 1
Concentration
Utility Companies 2
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
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
Page 1
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.
Concentration
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
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
Page 2
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 3
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 467, 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 467, 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 October 26, 2000.
FT 467
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 ) October 26, 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 October 26, 2000 in
Amendment No. 1 to the Registration Statement (Form S-6) (File
No. 333-46548) and related Prospectus of FT 467.
ERNST & YOUNG LLP
Chicago, Illinois
October 26, 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 467 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. 33-46755] 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
