File No. 33-62954
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
POST-EFFECTIVE
AMENDMENT NO. 3
TO
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
THE FIRST TRUST GNMA SERIES 67
(Exact Name of Trust)
NIKE SECURITIES L.P.
(Exact Name of Depositor)
1001 Warrenville Road
Lisle, Illinois 60532
(Complete address of Depositor's principal executive offices)
NIKE SECURITIES L.P. CHAPMAN AND CUTLER
Attn: James A. Bowen Attn: Eric F. Fess
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
(Name and complete address of agents for service)
It is proposed that this filing will become effective (check
appropriate box)
: : immediately upon filing pursuant to paragraph (b)
: x : April 30, 1997
: : 60 days after filing pursuant to paragraph (a)
: : on (date) pursuant to paragraph (a) of rule (485 or 486)
Pursuant to Rule 24f-2 under the Investment Company Act of
1940, the issuer has registered an indefinite amount of
securities. A 24f-2 Notice for the offering was last filed on
February 20, 1996.
<PAGE>
THE FIRST TRUST GNMA FUND, SERIES 67
12,331,938 UNITS
PROSPECTUS
Part One
Dated April 25, 1997
Note: Part One of this Prospectus may not be distributed unless accompanied by
Part Two.
The Trust
The First Trust GNMA Fund, Series 67 (the "Trust") is a fixed portfolio of
taxable mortgage-backed securities of the modified pass-through type (the
"Securities") which involve large pools of mortgages and are fully guaranteed
as to principal and interest by the Government National Mortgage Association
("GNMA"). All of the Securities in the Trust consist of pools of mortgages on
1- to 4-family dwellings with terms of up to 30 years. At March 17, 1997,
each Unit represented a 1/12,331,938 undivided interest in the principal and
net income of the Trust (see "The Fund" in Part Two).
The Units being offered by this Prospectus are issued and outstanding Units
which have been purchased by the Sponsor in the secondary market or from the
Trustee after having been tendered for redemption. The profit or loss
resulting from the sale of Units will accrue to the Sponsor. No proceeds from
the sale of Units will be received by the Trust.
Public Offering Price per 1,000 Units
The Public Offering Price per 1,000 Units is equal to the aggregate value of
the Securities in the Portfolio of the Trust divided by the number of Units
outstanding, multiplied by 1,000, plus a sales charge of 4.0% of the Public
Offering Price (4.167% of the amount invested). At March 17, 1997, the Public
Offering Price per 1,000 Units was $725.36 plus net interest accrued to date
of settlement (three business days after such date) of $2.93 (see "Market for
Units" in Part Two).
Please retain both parts of this Prospectus for future reference.
______________________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
______________________________________________________________________________
NIKE SECURITIES L.P.
Sponsor
<PAGE>
Estimated Current Return and Estimated Long-Term Return
Estimated Current Return to Unit holders was 7.66% per annum on March 17,
1997. Estimated Long-Term Return to Unit holders was 6.92% per annum on March
17, 1997. Estimated Current Return is calculated by dividing the Estimated
Net Annual Interest Income per 1,000 Units by the Public Offering Price per
1,000 Units. Estimated Long-Term Return is calculated using a formula which
(1) takes into consideration and determines and factors in the relative
weightings of the market values, yields (which take into account the
amortization of premiums and the accretion of discounts) and estimated average
life of all of the Securities in the Trust and (2) takes into account the
expenses and sales charge associated with each Unit of the Trust. Since the
market values and estimated average lives of the Securities and the expenses
of the Trust will change, there is no assurance that the present Estimated
Current Return and Estimated Long-Term Return indicated above will be realized
in the future. Estimated Current Return and Estimated Long-Term Return are
expected to differ because the calculation of the Estimated Long-Term Return
reflects the estimated date and amount of principal returned while the
Estimated Current Return calculations include only Net Annual Interest Income
and Public Offering Price. The above figures are based on estimated per 1,000
Unit cash flows. Estimated cash flows will vary with changes in fees and
expenses, with changes in current interest rates, and with the principal
prepayment, redemption, maturity, exchange or sale of the underlying
Securities and with changes in the average life assumptions of the GNMA pools.
See "What are Estimated Current Return and Estimated Long-Term Return?" in
Part Two.
<PAGE>
THE FIRST TRUST GNMA FUND, SERIES 67
SUMMARY OF ESSENTIAL INFORMATION AS OF MARCH 17, 1997
Sponsor: Nike Securities L.P.
Evaluator: Securities Evaluation Service, Inc.
Trustee: The Chase Manhattan Bank
<TABLE>
<CAPTION>
GENERAL INFORMATION
<S> <C>
Principal Amount of Securities in the Trust $8,386,622
Number of Units 12,331,938
Fractional Undivided Interest in the Trust per Unit 1/12,331,938
Public Offering Price:
Aggregate Value of Securities in the Portfolio $8,622,676
Aggregate Value of Securities per 1,000 Units $699.21
Principal Cash, Estimated Principal Paydown, and
Expected Distribution, Net, per 1,000 units $(2.99)
Sales Charge 4.167% (4.0% of Public Offering Price,
excluding Principal Cash, Estimated Principal
Paydown, and Expected Distribution, Net, per 1,000 Units) $29.14
Public Offering Price per 1,000 Units $725.36*
Redemption Price and Sponsor's Repurchase Price per
1,000 Units ($29.14 less than the Public Offering
Price per 1,000 Units) $696.22*
Liquidation Amount of the Trust $2,000,000
</TABLE>
Date Trust Established March 29, 1994
Mandatory Termination Date December 31, 2043
[FN]
*Plus net interest accrued to date of settlement (three business days after
purchase) (see "Public Offering Price per 1,000 Units" herein and "Redemption
of Units" and "Purchase of Units by the Sponsor" in Part Two).
<PAGE>
THE FIRST TRUST GNMA FUND, SERIES 67
SUMMARY OF ESSENTIAL INFORMATION AS OF MARCH 17, 1997
Sponsor: Nike Securities L.P.
Evaluator: Securities Evaluation Service, Inc.
Trustee: The Chase Manhattan Bank
<TABLE>
<CAPTION>
SPECIAL INFORMATION
<S> <C>
Calculation of Estimated Net Annual Interest
Income per 1,000 Units:
Estimated Annual Interest Income $57.81
Less: Estimated Annual Expense 2.26
______
Estimated Net Annual Interest Income $55.55
======
Estimated Daily Rate of Net Interest
Accrual per 1,000 Units $.1543
======
Estimated Current Return Based on Public Offering Price 7.66%
======
Estimated Long-Term Return Based on Public Offering Price 6.92%
======
</TABLE>
Trustee's Annual Fee: $.90 per 1,000 Units outstanding, exclusive of expenses
of the Trust.
Evaluator's Annual Fee: $.30 per 1,000 Units outstanding plus $.25 per
evaluation for each issue of underlying securities in excess of 50 issues.
Evaluations are made at 4:00 p.m. Eastern time.
Supervisory Fee: Maximum of $.15 per 1,000 Units outstanding annually.
Distributions will generally be made on the last day of each month to Unit
holders of record on the first day of the month.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Unit Holders of The First Trust
GNMA Fund, Series 67
We have audited the accompanying statement of assets and liabilities,
including the portfolio, of The First Trust GNMA Fund, Series 67 as of
December 31, 1996, and the related statements of operations and changes in net
assets for each of the two years in the period then ended and for the period
from the Date of Deposit, March 29, 1994, to December 31, 1994. These
financial statements are the responsibility of the Trust's Sponsor. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1996,
by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The First Trust GNMA Fund,
Series 67 at December 31, 1996, and the results of its operations and changes
in its net assets for each of the two years in the period then ended and for
the period from the Date of Deposit, March 29, 1994, to December 31, 1994, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
March 28, 1997
<PAGE>
THE FIRST TRUST GNMA FUND, SERIES 67
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Securities, at market value (cost $8,793,835) (Note 1) $8,948,236
Receivable from investment transactions 113,287
Accrued interest 61,424
Cash 10,237
__________
9,133,184
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND NET ASSETS
<S> <C> <C>
Payable to Sponsor 59,797
__________
Net assets, applicable to 12,497,519 outstanding
units of fractional undivided interest:
Cost of Trust assets (Note 1) $8,793,835
Unrealized appreciation 154,401
Distributable funds 125,151
__________
$9,073,387
==========
Net asset value per 1,000 units $726.02
==========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST GNMA FUND, SERIES 67
PORTFOLIO
December 31, 1996
The portfolio consists of the following Government National Mortgage
Association mortgage-backed securities of the modified pass-through type:
<TABLE>
<CAPTION>
Principal Coupon Range of stated Market
amount rate maturities (a) value
<C> <C> <C> <C>
$8,671,647 8.5%3/01/22 to 7/20/24 $8,948,236
========== ===========
</TABLE>
Note to portfolio:
(a) The principal amount of securities listed by coupon rate and range of
stated maturities represents an aggregate of individual securities
having varying stated maturities within such range. Securities are
grouped by coupon rate with a range of stated maturities because current
market conditions accord no difference in price among the securities
grouped together. The market value of the securities could be affected
by a change in their assumed average maturity or by the actual
maturities of the individual securities.
[FN]
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST GNMA FUND, SERIES 67
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
the Date
of Deposit,
March 29,
Year ended Year ended 1994, to
Dec. 31, Dec. 31, Dec. 31,
1996 1995 1994
<S> <C> <C> <C>
Interest income $824,710 $1,059,690 577,479
Expenses:
Trustee's fees and related expenses (21,311) (23,712) (6,065)
Evaluator's fees (4,159) (4,135) (2,384)
Supervisory fees (2,050) (1,903) (1,145)
_________________________________
Investment income - net 797,190 1,029,940 567,885
Net gain (loss) on investments:
Net realized gain (loss) 4,792 (252) -
Change in unrealized appreciation/
depreciation (183,276) 798,681 (461,004)
_________________________________
(178,484) 798,429 (461,004)
_________________________________
Net increase (decrease) in net assets
resulting from operations $618,706 1,828,369 106,881
=================================
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST GNMA FUND, SERIES 67
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Period from
the Date
of Deposit,
March 29,
Year ended Year ended 1994, to
Dec. 31, Dec. 31, Dec. 31,
1996 1995 1994
<S> <C> <C> <C>
Net increase (decrease) in net assets
resulting from operations:
Investment income - net $797,190 1,029,940 567,885
Net realized gain (loss) on
investments 4,792 (252) -
Change in unrealized appreciation/
depreciation on investments (183,276) 798,681 (461,004)
____________________________________
618,706 1,828,369 106,881
Units issued (1,281,399 and 11,791,798
in 1995 and 1994, respectively):
Securities purchased - 1,233,254 11,863,911
Distributions to unit holders:
Investment income - net (833,943) (1,072,022) (532,127)
Principal (2,096,475) (1,609,545) (170,472)
____________________________________
(2,930,418) (2,681,567) (702,599)
Unit redemption (1,169,557 and 306,121
in 1996 and 1995, respectively):
Principal portion (887,246) (301,804) -
Net interest accrued (3,342) (1,133) -
____________________________________
(890,588) (302,937) -
____________________________________
Total increase (decrease) in net assets (3,202,300) 77,119 11,268,193
Net assets:
At the beginning of the period 12,275,687 12,198,568 930,375
____________________________________
At the end of the period (including
distributable funds applicable to
Trust units of $125,151, $286,314
and $64,308 at December 31, 1996,
1995 and 1994, respectively) $9,073,387 12,275,687 12,198,568
====================================
Trust units outstanding at the end of
the period 12,497,519 13,667,076 12,691,798
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST GNMA FUND, SERIES 67
NOTES TO FINANCIAL STATEMENTS
1. Significant accounting policies
Security valuation -
Securities are stated at values as determined by Securities Evaluation
Service, Inc. (the Evaluator), certain shareholders of which are officers of
the Sponsor. The values of the securities are based on (1) current bid prices
for the securities obtained from dealers or brokers who customarily deal in
securities comparable to those held by the Trust, (2) current bid prices for
comparable securities, (3) appraisal or (4) any combination of the above.
Security cost -
The Trust's cost of its portfolio is based on the offering prices of the
securities on the Date of Deposit, March 29, 1994, and each subsequent Date of
Deposit for additions to the Trust. The premium or discount is recognized as
interest income on a pro rata basis as principal paydowns are received.
Realized gain (loss) from security transactions is reported on an identified
cost basis. Sales and redemptions of securities are recorded on the trade
date.
Federal income taxes -
The Trust, which is an association taxable as a corporation under the Internal
Revenue Code, intends to qualify for and elect tax treatment as a "regulated
investment company" under the Internal Revenue Code of 1986. By qualifying
for and electing such treatment, the Fund will not be subject to Federal
income tax on net investment income or net capital gains distributed to its
unit holders. As the Trust distributes its entire net capital gains, if any,
and net investment income each year, no Federal income tax provision is
required.
Expenses of the Trust -
Prior to September 1, 1995, the Trustee was United States Trust Company of New
York; effective September 1, 1995, The Chase Manhattan Bank succeeded United
States Trust Company of New York as Trustee. The Trustee's fees are $.90 per
1,000 units outstanding, exclusive of expenses of the Trust. An annual fee of
$.30 per 1,000 units outstanding plus $.25 per evaluation for each issue of
underlying securities in excess of 50 issues is payable to the Evaluator.
Additionally, the Trust pays all related expenses of the Trustee, recurring
financial reporting costs and an annual supervisory fee payable to an
affiliate of the Sponsor.
Distributions to unit holders -
Distributions of investment income - net and principal to unit holders are
presented on a cash basis as reported by the Trustee. Accordingly, no
adjustments are made to reflect the amortization of premium or discount as
discussed above under "Security cost." Principal distributions represent a
tax return of capital to unit holders.
<PAGE>
2. Other information
Cost to investors -
The cost to initial investors of units of the Trust was based on the aggregate
offering price of the securities on the date of an investor's purchase, plus a
sales charge of 3.8% of the public offering price which is equivalent to
approximately 3.950% of the net amount invested.
Selected data per 1,000 units of the Trust
outstanding throughout the period -
<TABLE>
<CAPTION>
Period from
the Date
of Deposit,
March 29,
Year ended Year ended 1994, to
Dec. 31, Dec. 31, Dec. 31,
1996 1995 1994
<S> <C> <C> <C>
Interest income $60.97 77.79 61.32
Expenses (2.03) (2.18) (1.02)
_______________________________
Investment income - net 58.94 75.61 60.30
Distributions to unit holders:
Investment income - net (63.14) (78.25) (53.35)
Principal (157.07) (117.32) (22.13)
Net gain (loss) on investments (10.90) 57.01 (57.43)
_______________________________
Total increase (decrease) in
net assets (172.17) (62.95) (72.61)
Net assets:
Beginning of the period 898.19 961.14 1,033.75
_______________________________
End of the period $726.02 898.19 961.14
===============================
</TABLE>
Accrued interest to the initial Date of Deposit and each subsequent Date of
Deposit, totaling $60,832, plus net interest accruing to the first settlement
date, April 6, 1994, and each settlement date for subsequent additions to the
Trust, totaling $22,231, was or will be distributed to the Sponsor as the unit
holder of record. The Payable to Sponsor, as reported in the accompanying
Statement of Assets and Liabilities, represents a portion of such amounts
which have not yet been remitted to the Sponsor. The Sponsor has agreed to
this treatment in order to provide equal distributions to all unit holders.
The Sponsor will receive payments upon the terminations of the Trust.
<PAGE>
THE FIRST TRUST GNMA FUND, SERIES 67
PART ONE
Must be Accompanied by Part Two
___________________
P R O S P E C T U S
___________________
SPONSOR: Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
(800) 621-1675
TRUSTEE: The Chase Manhattan Bank
4 New York Plaza, 6th Floor
New York, New York 10004-2413
LEGAL COUNSEL Chapman and Cutler
TO SPONSOR: 111 West Monroe Street
Chicago, Illinois 60603
LEGAL COUNSEL Carter, Ledyard & Milburn
TO TRUSTEE: 2 Wall Street
New York, New York 10005
INDEPENDENT Ernst & Young LLP
AUDITORS: Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, securities in any jurisdiction to any person to whom it is not
lawful to make such offer in such jurisdiction.
This Prospectus does not contain all the information set forth in the
registration statement and exhibits relating thereto, which the Trust has
filed with the Securities and Exchange Commission, Washington, D.C., under the
Securities Act of 1933 and the Investment Company Act of 1940, and to which
reference is hereby made.
THE FIRST TRUST (REGISTERED TRADEMARK) GNMA
PROSPECTUS NOTE: THIS PART TWO PROSPECTUS MAY
Part Two ONLY BE USED WITH PART ONE
Dated April 30, 1997
The First Trust GNMA (the "Fund"), including the various series of The
First Trust GNMA, consists of series of trusts (the "Trusts" or "Series"
of the Fund), each of which consists of a fixed portfolio of taxable
mortgage-backed securities of the fully modified pass-through type,
which involve large pools of mortgages and are fully guaranteed as to
principal and interest by the Government National Mortgage Association
("GNMA"), (the "Securities" or "Ginnie Maes") including so-called
"Ginnie Mae IIs." Each Series of the Fund consists of pools of mortgages
on 1- to 4- family dwellings of up to 30 years (the "Long Term Trusts")
or in the case of Series 64 and 69 of up to 15 years (the "Medium Term
Trusts"). The Portfolio, essential information based thereon and
financial statements, including a report of independent auditors
relating to the series of the Fund offered hereby, are contained in Part
One to which reference should be made for such information.
The Objectives of the Fund are monthly distributions of interest and
principal and conservation of capital through an investment in a
portfolio of Ginnie Maes.
The guaranteed payment of principal and interest afforded by Ginnie Maes
may make investment in each Series of the Fund other than the Foreign
Investor Series particularly well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other tax-deferred
retirement plans. In addition, the ability to buy single Units (minimum
purchase $1,000 and $250 for tax-deferred retirement plans such as IRA
accounts) enables such investors to tailor the dollar amount of their
purchases of Units to take the maximum possible advantage of the annual
deductions available for contributions to such plans. Investors should
consult with their tax advisers before investing. See "Why are
Investments in the Trusts Suitable for Retirement Plans?"
Offering. The Units offered hereby are issued and outstanding Units
which have been reacquired either by purchase from the Trustee of Units
tendered for redemption or by purchase in the open market. The price
paid in each instance was not less than the value of the Securities per
Unit, plus net interest accrued to the date of settlement, determined as
provided herein under "How is the Public Offering Price Determined?" Any
profit or loss resulting from the sale of Units will accrue to the
Sponsor or other dealers selling the Units and no proceeds from any such
sale will be received by the Fund.
The Public Offering Price per 1,000 Units is equal to the aggregate bid
price of the Securities in the Portfolio of the Fund divided by the
number of Units outstanding multiplied by 1,000, plus a sales charge of
4.0% of the Public Offering Price (4.167% of the amount invested) for
the Long Term Trusts and 3.50% of the Public Offering Price (3.627% of
the amount invested) for the Medium Term Trusts. The sales charge is
reduced on a graduated scale for sales involving at least $100,000 of
principal invested. See "How is the Public Offering Price Determined?",
particularly for the method of evaluation.
Monthly Distributions of principal, prepayments of principal, if any,
and interest received by the Fund will be paid in cash unless the Unit
holder elects to have them automatically reinvested as described herein.
See "How Can Distributions to Unit Holders be Reinvested?" Any such
reinvestment is made at net
BOTH PARTS OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Page 1
asset value, that is, without a sales charge. Investors, at the time of
purchase, will have the ability to designate that only principal
payments (including prepayments) or only interest payments or both are
to be reinvested. Monthly distributions will be made as indicated in
Part One for each Trust. Information with respect to the estimated
current return and estimated long-term return to Unit holders is also
contained in Part One.
Market. The Sponsor, although not obligated to do so, intends to
maintain a market for the Units at prices based upon the aggregate bid
price of the Securities in the Portfolio of the Series of the Fund. In
the absence of such a market, a Unit holder will nonetheless be able to
dispose of the Units through redemption at prices based upon the bid
prices of the underlying Securities. (See "How May Units be Redeemed?")
Page 2
The First Trust GNMA
What is the First Trust GNMA?
The First Trust GNMA (the "Fund"), including the various series of The
First Trust GNMA, is a series of trusts, all similar but separate with
different series numbers. Each was created under the laws of the State
of New York pursuant to a Trust Agreement (the "Indenture"), dated the
Initial Date of Deposit with Nike Securities L.P., as Sponsor, The Chase
Manhattan Bank, as Trustee, Securities Evaluation Service, Inc. as
Evaluator, and First Trust Advisors L.P., as Portfolio Supervisor. On
the Date of Deposit, the Sponsor deposited with the Trustee interest-
bearing obligations, including delivery statements relating to contracts
for the purchase of certain such obligations and irrevocable letters of
credit issued by a financial institution in the amounts required for
such purchases (the "Securities" or "Ginnie Maes"). The Trustee
thereafter credited the account of the Sponsor for Units of each Trust
representing the entire ownership of the Fund which Units are being
offered hereby.
The objectives of the Fund and each Series thereof are monthly
distributions of interest and principal and conservation of capital
through an investment in a fixed portfolio of Securities (the
"Portfolio") consisting of Ginnie Maes guaranteed by the Government
National Mortgage Association ("GNMA"). Although the Ginnie Maes are
backed by the full faith and credit of the United States, the Units of
the Fund, as such, are not backed by such full faith and credit. The
Fund may be an appropriate investment medium for investors who desire to
participate in a portfolio of taxable fixed income securities offering
the safety of capital provided by securities backed by the full faith
and credit of the United States but who do not wish to invest the
minimum $25,000 which is required for a direct investment in GNMA
guaranteed securities. Because regular payments of principal are to be
received and certain of the Securities from time to time may be redeemed
or will mature in accordance with their terms or may be sold under
circumstances described herein, the Fund is not expected to retain its
present size and composition. Units will remain outstanding until
redeemed upon tender to the Trustee by any Unit holder (which may
include the Sponsor) or until the termination of a series of the Fund
pursuant to the Indenture.
In selecting Ginnie Maes for deposit in the Fund, the following factors,
among others, were considered by the Sponsor: (i) the types of such
securities available; (ii) the prices and yields of such securities
relative to other comparable securities, including the extent to which
such securities are trading at a premium or at a discount from par; and
(iii) the maturities of such securities. See "Portfolio" in Part One for
information with respect to the Securities selected for deposit in the
Fund. The Ginnie Maes included in the Fund are backed by the
indebtedness secured by the mortgages contained in the underlying
mortgage pools.
The Sponsor has the limited right to direct the Trustee to purchase
additional securities, which must satisfy the criteria previously
described for Securities originally included in such Series of the Fund,
with moneys held in the Principal Account of such Series of the Fund
representing the proceeds of Securities sold as described under the
caption "How May Securities be Removed from the Fund?" or the proceeds
of Securities sold which proceeds are not required for the purpose of
redemption of Units. The Trustee shall notify all Unit holders of the
affected Series of the acquisition of such additional securities within
five days of such acquisition.
Risk Factors. An investment in Units of the Trusts should be made with
an understanding of the risks which an investment in fixed rate long-
term debt obligations may entail, including the risk that the value of
the Portfolio and hence of the Units will decline with increases in
interest rates. The value of the underlying Securities will fluctuate
inversely with changes in interest rates. In addition, the potential for
appreciation of the underlying Securities, which might otherwise be
expected to occur as a result of a decline in interest rates, may be
limited or negated by increased principal prepayments in respect of the
underlying mortgages. For example, the high inflation during certain
periods, together with the fiscal measures adopted to attempt to deal
with it, has resulted in wide fluctuations in interest rates and, thus,
in the value of fixed rate long-term debt obligations generally. The
Sponsor cannot predict whether such fluctuations will continue in the
future or whether the reinvestment of principal will mitigate the impact
of these fluctuations.
The Portfolio of the Trusts consists of Ginnie Maes (or contracts to
purchase Ginnie Maes) fully guaranteed as to payments of principal and
interest by GNMA. Each group of Ginnie Maes described herein as having a
Page 3
specified range of maturities includes individual mortgage-backed
securities which have varying ranges of maturities within each range set
forth in the Portfolio. Current market conditions accord little or no
difference in price among individual Ginnie Mae securities with the same
coupon within certain ranges of stated maturity dates on the basis of
the difference in the maturity dates of each Ginnie Mae. A purchase of
Ginnie Maes with the same coupon rate and maturity date within such
range will be considered an acquisition of the same security for both
additional deposits and for the reinvestment of principal. In the
future, however, the difference in maturity ranges could affect the
market value of the individual Ginnie Maes. At such time, any additional
purchases by the Trusts will take into account the maturities of the
individual securities. The mortgages underlying the Ginnie Maes in the
Trusts have an original stated maturity of up to 30 years.
The reinvestment of principal by the Trustee in additional Ginnie Maes
may result in Securities being acquired at a market discount or market
premium.
The Portfolio of the Trusts may contain Securities which were acquired
at a market discount. Such Securities trade at less than par value
because the interest coupons thereon are lower than interest coupons on
comparable debt securities being issued at currently prevailing interest
rates. If such interest rates for newly issued and otherwise comparable
securities increase, the market discount of previously issued securities
will become greater, and if such interest rates for newly issued
comparable securities decline, the market discount of previously issued
securities will be reduced, other things being equal. Investors should
also note that the value of Ginnie Maes purchased at a market discount
will increase in value faster than Ginnie Maes purchased at a market
premium if interest rates decrease. Conversely, if interest rates
increase, the value of Ginnie Maes purchased at a market discount will
decrease faster than Ginnie Maes purchased at a premium. In addition, if
interest rates rise, the prepayment risk of higher yielding, premium
Ginnie Maes and the prepayment benefit for lower yielding, discount
Ginnie Maes will be reduced. Market discount attributable to interest
changes does not indicate a lack of market confidence in the issue.
Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure or defect in any of the Securities.
The Portfolio of the Trusts may contain Securities which were acquired
at a market premium. Such Securities trade at more than par value
because the interest coupons thereon are higher than interest coupons on
comparable debt securities being issued at currently prevailing interest
rates. If such interest rates for newly issued and otherwise comparable
securities decrease, the market premium of previously issued securities
will be increased, and if such interest rates for newly issued
comparable securities increase, the market premium of previously issued
securities will be reduced, other things being equal. The current
returns of securities trading at a market premium are initially higher
than the current returns of comparably rated debt securities of a
similar type issued at currently prevailing interest rates because
premium securities tend to decrease in market value as they approach
maturity when the face amount becomes payable. Because part of the
purchase price is thus returned not at maturity but through current
income payments, early redemption of a premium security at par or early
prepayments of principal will result in a reduction in yield.
Prepayments of principal on securities purchased at a market premium are
more likely than prepayments on securities purchased at par or at a
market discount and the level of prepayments will generally increase if
interest rates decline. Market premium attributable to interest changes
does not indicate market confidence in the issue.
During the Reinvestment Period, the Sponsor will direct the Trustee to
reinvest principal payments and prepayments into additional securities.
Precise duplication of the Ginnie Maes to be purchased with reinvested
principal may not be possible because fractions of Ginnie Maes may not
be purchased and substantially similar securities may not be available,
but duplication will be the goal of the Sponsor with respect to the
purchase of additional securities. Principal amounts which cannot be
reinvested will be distributed to Unit holders semiannually unless the
amount available for distribution is less than $1.00 per 100 Units.
After the Reinvestment Period, principal will not be reinvested and will
be distributed monthly to Unit holders. See "How are Interest and
Principal Distributed?"
THE MORTGAGES UNDERLYING A GINNIE MAE MAY BE PREPAID AT ANY TIME WITHOUT
PENALTY. A LOWER OR HIGHER CURRENT RETURN ON UNITS MAY OCCUR DEPENDING
ON (I) WHETHER THE PRICE AT WHICH THE RESPECTIVE GINNIE MAES WERE
ACQUIRED BY A TRUST IS LOWER OR HIGHER THAN PAR, (II) WHETHER PRINCIPAL
Page 4
IS REINVESTED OR DISTRIBUTED TO UNIT HOLDERS AND (III) IF REINVESTMENT
OCCURS, WHETHER THE GINNIE MAES PURCHASED BY THE TRUSTEE WITH REINVESTED
PRINCIPAL ARE PURCHASED AT A PREMIUM OR DISCOUNT FROM PAR. DURING
PERIODS OF DECLINING INTEREST RATES, PREPAYMENTS OF GINNIE MAES MAY
OCCUR WITH INCREASING FREQUENCY BECAUSE, AMONG OTHER REASONS, MORTGAGORS
MAY BE ABLE TO REFINANCE THEIR OUTSTANDING MORTGAGES AT LOWER INTEREST
RATES. IN SUCH A CASE, (I) THE REINVESTMENT OF PRINCIPAL MAY BE AT
PRICES WHICH RESULT IN A LOWER RETURN ON UNITS OR (II) PRINCIPAL WILL BE
DISTRIBUTED TO UNIT HOLDERS WHO CANNOT REINVEST SUCH PRINCIPAL
DISTRIBUTIONS IN OTHER SECURITIES AT AN ATTRACTIVE YIELD.
Each Unit represents the fractional undivided interest in a Trust set
forth in the "Summary of Essential Information" in Part One of this
Prospectus. To the extent that any Units are redeemed by the Trustee,
the fractional undivided interest in a Trust represented by each
unredeemed Unit will increase, although the actual interest represented
by such fraction will remain substantially unchanged. Units will remain
outstanding until redeemed upon tender to the Trustee by any Unit
holder, which may include the Sponsor, or until the termination of the
Indenture.
Description of Securities. The Ginnie Maes included in the Fund are
backed by the indebtedness secured by underlying mortgage pools
containing either up to 30 year mortgages or up to 15 year mortgages on
1- to 4-family dwellings. The pool of mortgages which is to underlie a
particular new issue of Ginnie Maes is assembled by the proposed issuer
of such Ginnie Maes. The issuer is typically a mortgage banking firm,
and in every instance must be a mortgagee approved by and in good
standing with the Federal Housing Administration ("FHA"). In addition,
GNMA imposes its own criteria on the eligibility of issuers, including a
net worth requirement.
The mortgages which are to comprise a new Ginnie Mae pool may have been
originated by the issuer itself in its capacity as a mortgage lender or
may be acquired by the issuer from a third party, such as another
mortgage banker, a banking institution, the Veterans Administration
("VA") (which in certain instances acts as a direct lender and thus
originates its own mortgages) or one of several other governmental
agencies. All mortgages in any given pool will be insured under the
National Housing Act, as amended ("FHA-insured"), or Title V of the
Housing Act of 1949 ("FMHA Insured") or guaranteed under the
Servicemen's Readjustment Act of 1944, as amended, or Chapter 37 of
Title 38, U.S.C. ("VA-guaranteed"). Such mortgages will have a date for
the first scheduled monthly payment of principal that is not more than
one year prior to the date on which GNMA issues its guaranty commitment
as described below, will have comparable interest rates and maturity
dates, and will meet additional criteria of GNMA. All mortgages in the
pools backing the Ginnie Maes contained in the Fund are mortgages on 1-
to 4-family dwellings (having either a stated maturity of up to 30 years
or a stated maturity of up to 15 years). In general, the mortgages in
these pools provided for equal monthly payments over the life of the
mortgage (aside from prepayments) designed to repay the principal of the
mortgage over such period, together with interest at the fixed rate on
the unpaid balance.
To obtain GNMA approval of a new pool of mortgages, the issuer will file
with GNMA an application containing information concerning itself,
describing generally the pooled mortgages, and requesting that GNMA
approve the issue and issue its commitment (subject to GNMA's
satisfaction with the mortgage documents and other relevant
documentation) to guarantee the timely payment of principal of and
interest on the Ginnie Maes to be issued by the issuer. If the
application is in order, GNMA will issue its commitment and will assign
a GNMA pool number to the pool. Upon completion of the required
documentation (including detailed information as to the underlying
mortgages, a custodial agreement with a Federal or state regulated
financial institution satisfactory to GNMA pursuant to which the
underlying mortgages will be held in safekeeping, and a detailed
guaranty agreement between GNMA and the issuer), the issuance of the
Ginnie Maes is permitted. When the Ginnie Maes are issued, GNMA will
endorse its guarantee thereon. The aggregate principal amount of the
Ginnie Maes issued will be equal to the then aggregate unpaid principal
balances of the pooled mortgages. The interest rate borne by the Ginnie
Maes is currently fixed at 1/2 of 1% below the interest rate of the
pooled 1- to 4-family mortgages, the differential being applied to the
payment of servicing and custodial charges as well as GNMA's guaranty fee.
Ginnie Mae IIs consist of jumbo pools of mortgages consisting of pools
of mortgages from more than one issuer. The major advantage of Ginnie
Mae IIs lies in the fact that a central paying agent sends one check to
the holder on the required payment date. This greatly simplifies the
current procedure of collecting distributions from each issuer of a
Ginnie Mae, since such distributions are often received late.
Page 5
All of the Ginnie Maes in the Fund, including the Ginnie Mae IIs, are of
the "fully modified pass-through" type, i.e., they provided for timely
monthly payments to the registered holders thereof (including the Fund)
of their pro rata share of the scheduled principal payments on the
underlying mortgages, whether or not collected by the issuers,
including, on a pro rata basis, any prepayments of principal of such
mortgages received and interest (net of the servicing and other charges
described above) on the aggregate unpaid principal balance of such
Ginnie Maes, whether or not the interest on the underlying mortgages has
been collected by the issuers.
The Ginnie Maes in the Fund are guaranteed as to timely payment of
principal and interest by GNMA. Funds received by the issuers on account
of the mortgages backing the Ginnie Maes in the Fund are intended to be
sufficient to make the required payments of principal of and interest in
such Ginnie Maes but, if such funds are insufficient for that purpose,
the guaranty agreements between the issuers and GNMA require the issuers
to make advances sufficient for such payments. If the issuers fail to
make such payments, GNMA will do so.
GNMA is authorized by Section 306(g) of Title III of the National
Housing Act to guarantee the timely payment of principal of and interest
on securities which are based on or backed by a trust or pool composed
of mortgages insured by FHA, the Farmers' Home Administration ("FMHA")
or guaranteed by the VA. Section 306(g) provides further that the full
faith and credit of the United States is pledged to the payment of all
amounts which may be required to be paid under any guaranty under such
subsection. An opinion of an Assistant Attorney General of the United
States, dated December 9, 1969, states that such guaranties "constitute
general obligations of the United States backed by its full faith and
credit."*
GNMA is empowered to borrow from the United States Treasury to the
extent necessary to make any payments of principal and interest required
under such guaranties.
Ginnie Maes are backed by the aggregate indebtedness secured by the
underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages and,
except to the extent of funds received by the issuers on account of such
mortgages, Ginnie Maes do not constitute a liability of nor evidence any
recourse against such issuers, but recourse thereon is solely against
GNMA. Holders of Ginnie Maes (such as the Fund) have no security
interest in or lien on the underlying mortgages.
The GNMA guaranties referred to herein relate only to payment of
principal of and interest on the Ginnie Maes in the Fund and not to the
Units offered hereby.
Monthly payments of principal will be made, and additional prepayments
of principal may be made, to the Fund in respect of the mortgages
underlying the Ginnie Maes in the Fund. All of the mortgages in the
pools relating to the Ginnie Maes in the Portfolio are subject to
prepayment without any significant premium or penalty at the option of
the mortgagors. While the mortgages on 1- to 4-family dwellings
underlying the Ginnie Maes have a stated maturity of either up to 30
years or up to 15 years, it has been the experience of the mortgage
industry that the average life of comparable mortgages, owing to
prepayments, refinancings and payments from foreclosures, is
considerably less.
In the mid 1970s, published yield tables for Ginnie Maes utilized a 12
year average life assumption for Ginnie Mae pools of 26-30 year
mortgages on 1- to 4-family dwellings. This assumption was derived from
the FHA experience relating to prepayments on such mortgages during the
period from the mid 1950s to the mid 1970s. This 12 year average life
assumption was calculated in respect of a period during which mortgage
lending rates were fairly stable. THE ASSUMPTION IS NO LONGER AN
ACCURATE MEASURE OF THE AVERAGE LIFE OF GINNIE MAES OR THEIR UNDERLYING
SINGLE FAMILY MORTGAGE POOLS. RECENTLY IT HAS BEEN OBSERVED THAT
MORTGAGES ISSUED AT HIGH INTEREST RATES HAVE EXPERIENCED ACCELERATED
PREPAYMENT RATES WHICH WOULD INDICATE A SIGNIFICANTLY SHORTER AVERAGE
LIFE THAN 12 YEARS. Today, research analysts use complex formulae to
scrutinize the prepayments of mortgage pools in an attempt to predict
more accurately the average life of Ginnie Maes. The bases for the
calculation of the estimated average life of the Securities in a Series
of the Trust and other related matters is set forth in "What are
Estimated Current Return and Estimated Long-Term Return?"
_____________
* Any statement in this Prospectus that a particular security is backed
by the full faith and credit of the United States is based upon the
opinion of an Assistant Attorney General of the United States and should
be so construed.
Page 6
SOME OF THE MORTGAGES ON 1- TO 4-FAMILY DWELLINGS UNDERLYING THE
GINNIE MAES IN THE FUND HAVE A STATED MATURITY OF UP TO 15 YEARS.
ALTHOUGH GINNIE MAES COMPOSED OF 15 YEAR MORTGAGES HAVE HISTORICALLY
TRADED ON THE BASIS OF A 7-YEAR AVERAGE LIFE ASSUMPTION. TODAY, RESEARCH
ANALYSTS USE COMPLEX FORMULAE TO SCRUTINIZE THIS PREPAYMENT OF MORTGAGE
POOLS IN AN ATTEMPT TO PREDICT MORE ACCURATELY THE AVERAGE LIFE OF
GINNIE MAES. BECAUSE THE MORTGAGES HAVE A SHORTER AVERAGE LIFE, THE
PERCENTAGE OF EACH PAYMENT WHICH IS ACTUALLY A RETURN OF PRINCIPAL WILL
INCREASE MUCH MORE QUICKLY THAN IS TRUE FOR LONGER-TERM MORTGAGES.
A number of factors, including homeowner's mobility, change in family
size and mortgage market interest rates will affect the average life of
the Ginnie Maes in the Portfolio. For example, Ginnie Maes issued during
a period of high interest rates will be backed by a pool of mortgage
loans bearing similarly high rates. In general, during a period of
declining interest rates, new mortgage loans with interest rates lower
than those charged during periods of high rates will become available.
To the extent a homeowner has an outstanding mortgage with a high rate,
he may refinance his mortgage at a lower interest rate or he may rapidly
prepay his old mortgage. Should this happen, a Ginnie Mae issued with a
high interest rate may experience a rapid prepayment of principal as the
underlying mortgage loans prepay in whole or in part. Accordingly, there
can be no assurance that the prepayment levels which will be actually
realized will conform to the experience of the FHA, other mortgage
lenders or other Ginnie Mae investors. It is not possible to
meaningfully predict prepayment levels regarding the Ginnie Maes in the
Fund. Therefore, the termination of any Series of the Fund might be
accelerated as a result of prepayments made as described herein.
In addition to prepayments as described above, sales of Securities in
the Fund under certain permitted circumstances may result in an
accelerated termination of the Fund. Also, it is possible that, in the
absence of a secondary market for the Units or otherwise, redemptions of
Units may occur in sufficient numbers to reduce a series of the Fund to
a size resulting in such termination. Early termination of a series of
the Fund may have important consequences to the Unit holder, e.g., to
the extent that Units were purchased with a view to an investment of
longer duration, the overall investment program of the investor may
require readjustment; or the overall return on investment may be less or
greater than anticipated, depending in part on whether the purchase
price paid for Units represented the payment of an overall premium or a
discount, respectively, above or below the stated principal amounts of
the underlying mortgages. In addition, a capital gain or loss for tax
purposes may result from termination of a series of the Fund.
What is the Rating of the Units?
Standard and Poor's Ratings Group, a Division of McGraw-Hill, Inc.
("Standard & Poor's") has rated Units of the Fund "AAA." This is the
Page 6
highest rating assigned by Standard & Poor's. See "Description of
Standard & Poor's Rating." The obtaining of this rating by the Fund
should NOT be construed as an approval of the offering of the Units by
Standard & Poor's or as a guarantee of the market value of the Fund or
the Units. Standard & Poor's has indicated that this rating is not a
recommendation to buy, hold or sell Units nor does it take into account
the extent to which expenses of the Fund or sales by the Fund of
Securities for less than the purchase price paid by the Fund will reduce
payment to Unit holders of the interest and principal required to be
paid on such Securities. There is no guarantee that the "AAA" investment
rating with respect to the Units will be maintained. Standard & Poor's
was compensated by the Sponsor for its services in rating Units of the
Fund.
What are Estimated Current Return and Estimated Long-Term Return?
Debt securities are customarily offered to investors on a "yield price"
basis (as contrasted to a "dollar price" basis) at the lesser of the
price as computed to maturity of such debt security or to an earlier
redemption date. Since Units of the Fund are offered on a dollar price
basis, the estimated rate of return on an investment in Units of the
Fund is stated in terms of "Estimated Current Return and Estimated Long-
Term Return." Estimated Current Return is computed by multiplying the
Estimated Net Annual Interest Income per 1,000 Units by $1,000 and
dividing the result by the Public Offering Price per 1,000 Units (as
described in Part One). If the price of such 1,000 Units is less than
$1,000, the yield to maturity will be greater than the Estimated Current
Return; if the price of such 1,000 Units is greater than $1,000, the
yield to maturity will be less than the Estimated Current Return. A
change in either the Estimated Net Annual Interest Income or the Public
Offering Price will result in a change in the Estimated Current Return.
Page 7
The Public Offering Price will vary in accordance with fluctuations in
the value of the underlying Securities. The Net Annual Interest income
will change as Securities mature or are paid, sold, or as scheduled
payments of principal or prepayments of principal are made, or as the
expenses of the Fund change.
Unlike Estimated Current Return, Estimated Long-Term Return is a measure
of the estimated return to the investor earned over the estimated life
of the Fund. The Estimated Long-Term Return represents an average of the
yields to estimated average life of the Securities in the Fund and is
adjusted to reflect expenses and sales charges. The estimated long-term
return figure is calculated using an estimated average life for the
Securities. Estimated average life is an essential factor in the
calculation of Estimated Long-Term Return. When the Fund has a shorter
average life than is estimated, Estimated Long-Term Return will be
higher if a Series of the Trust contains Securities priced at a discount
and lower if the Securities are priced at a premium. Conversely, when
the Fund has a longer average life than is estimated, Estimated Long-
Term Return will be lower if the Securities are priced at a discount and
higher if the Securities are priced at a premium. In order to calculate
estimated average life, an estimated prepayment rate for the remaining
term of the mortgage pool must be determined. Each of the primary market
makers in GNMA securities has sophisticated computer models which are
used to determine the estimated prepayment rate for GNMA securities.
Each computer model takes into account a number of factors and
assumptions including: actual prepayment data reported by GNMA for
recent periods on a particular pool, the impact of aging on the
prepayment of mortgage pools, the current interest rate environment, the
coupon, the housing environment, historical trends on GNMA securities as
a group, geographical factors and general economic trends. Because of
differences in the weighting of such factors and assumptions, such
computer models maintained by the market makers in GNMA securities
produce estimated prepayment rates which vary. In connection with the
deposit of Securities in the Fund, the Sponsor, in determining an
estimated prepayment rate, has utilized information provided by a market
maker in GNMA securities which it believes to be reliable. However, it
is possible that another computer model might provide an estimated
prepayment rate which would prove over the life of the Securities to be
more accurate. Once an appropriate estimated prepayment rate is
ascertained, an estimated average life is calculated. The estimated
average life for the Fund is subject to change with alterations in the
data used in any of the underlying assumptions. The actual average lives
of the Securities and the actual long-term returns will be different
from the estimated average lives and the estimated long-term returns. In
calculating Estimated Long-Term Return, the average yield for the
Portfolio is derived by weighting each Security's yield by the market
value of the Security and by the amount of time remaining to the
estimated average life. Once the average yield on the Securities in the
Fund is computed, this figure is then adjusted for estimated expenses
and the effect of the maximum sales charge paid by investors. The
Estimated Long-Term Return calculation does not take into account
certain delays in distributions of income and the timing of other
receipts and distributions on Units and may, depending on maturities,
overstate or understate the impact of sales charges. Both of these
factors may result in a lower return.
Both Estimated Current Return and Estimated Long-Term Return are subject
to fluctuation with changes in the compositions of the Portfolio of the
Fund, principal payments and prepayments and changes in market value of
the underlying Securities and changes in fees and expenses, including
sales charges. In addition, return figures may not be directly
comparable to yield figures used to measure other investments, and since
return figures are based on certain assumptions and variables, the
actual returns received by a Unit holder may be higher or lower.
Payments received in respect of the mortgages underlying the Ginnie Maes
in the Fund will consist of a portion representing interest and a
portion representing principal. Although the aggregate monthly payment
made by the obligor on each mortgage remains constant (aside from
optional prepayments of principal), in the early years most of each such
payment will represent interest, while in later years, the proportion
representing interest will decline and the proportion representing
principal will increase. However, by reason of optional prepayments,
principal payments in the earlier years on the mortgages underlying the
Ginnie Maes may be substantially in excess of those required by the
amortization schedules of such mortgages. Therefore, principal payments
in later years may be substantially less since the aggregate unpaid
principal balances of such underlying mortgages may have been greatly
reduced. To the extent that the underlying mortgages bearing higher
interest rates in the Fund are prepaid faster than the other underlying
Page 8
mortgages, the Net Annual Interest Income and the Estimated Returns on
the Units can be expected to decline. Monthly payments to the Unit
holders will reflect all of the foregoing factors.
Record Dates and Distribution Dates for monthly distributions of
principal and interest are as indicated in Part One for each Trust.
How is Accrued Interest Treated?
Accrued interest is the accumulation of unpaid interest on a security
from the last day on which interest thereon was paid. Interest on the
Securities in the Fund is paid monthly to the Fund. However, interest on
the Securities in the Fund is accounted for daily on an accrual basis.
Because of this, the Fund always has an amount of interest earned but
not yet collected by the Trustee. For this reason, the Public Offering
Price of Units will have added to it the proportionate share of accrued
and undistributed interest to the date of settlement. Unit holders will
receive on the next distribution date of a Trust the amount, if any, of
accrued interest paid on their Units.
Except through an advancement of its own funds, the Trustee has no cash
for distribution to Unit holders until it receives interest payments on
the Securities in the Fund. The Trustee will recover its advancements
without interest or other costs to the Fund from interest received on
the Securities in the Fund. (See "How are Interest and Principal
Distributed?")
Because of the varying interest payment dates of the Securities, accrued
interest at any point in time will be greater than the amount of
interest actually received by the Fund and distributed to Unit holders.
Therefore, there will always remain an item of accrued interest that is
added to the value of the Units. If a Unit holder sells or redeems all
or a portion of his Units, he will be entitled to receive his
proportionate share of the accrued interest from the purchaser of his
Units. Since the Trustee has the use of the interest held in the
Interest Account for distributions to Unit holders and since such
Account is non-interest bearing to Unit holders, the Trustee benefits
thereby. See "Public Offering: How is the Public Offering Price
Determined?" for information with respect to the uncertainty during
certain periods of each month of the precise amount of accrued interest
of the Ginnie Maes.
What are the Expenses and Charges?
At no cost to the Fund, the Sponsor has borne all the expenses of
creating and establishing the Fund, including the cost of the initial
preparation, printing and execution of the Indenture and the
certificates for the Units, legal, accounting and other out-of-pocket
expenses. The Sponsor will not receive any fees in connection with its
activities relating to the Fund. However, First Trust Advisors L.P., an
affiliate of the Sponsor, will receive an annual supervisory fee, which
is not to exceed the amount set forth in Part One, for providing
portfolio supervisory services for the Fund. Such fee is based on the
number of Units outstanding in the Fund on January 1 of each year except
for Trusts which were established subsequent to January 1, in which case
the fee will be based on the number of Units outstanding in such Trusts
as of the respective Dates of Deposit. The fee may exceed the actual
costs of providing such supervisory services for each Fund, but at no
time will the total amount received for portfolio supervisory services
rendered to unit investment trusts of which Nike Securities L.P. is the
Sponsor in any calendar year exceed the aggregate cost to First Trust
Advisors L.P. of supplying such services in such year.
The Trustee pays certain expenses of the Fund for which it is reimbursed
by the Fund. For each aggregate valuation of the Securities in a series
of the Fund, the Evaluator will receive the fee indicated under "Summary
of Essential Information" in Part One of this Prospectus. The Trustee
will receive for its ordinary recurring services to the Fund an annual
fee computed at $.90 per annum per $1,000 principal amount of underlying
Securities. For a discussion of the services performed by the Trustee
pursuant to its obligations under the Indenture, reference is made to
the material set forth under "Rights of Unit Holders." The Trustee's and
Evaluator's fees are payable monthly on or before each Distribution Date
from the Interest Account to the extent funds are available and then
from the Principal Account. Since the Trustee has the use of the funds
being held in the Principal and Interest Accounts for future
distributions, payment of expenses and redemptions and since such
Accounts are non-interest bearing to Unit holders, the Trustee benefits
thereby. Part of the Trustee's compensation for its services to the Fund
is expected to result from the use of these funds. Both fees may be
increased without approval of the Unit holders by amounts not exceeding
Page 9
proportionate increases under the category "All Services Less Rent of
Shelter" in the Consumer Price Index published by the United States
Department of Labor.
The following additional charges are or may be incurred by the Fund: all
expenses (including legal and annual auditing expenses) of the Trustee
incurred in connection with its responsibilities under the Indenture,
except in the event of negligence, bad faith or willful misconduct on
its part; the expenses and costs of any action undertaken by the Trustee
to protect the Fund and the rights and interests of the Unit holders;
fees of the Trustee for any extraordinary services performed under the
Indenture; indemnification of the Trustee for any loss, liability or
expense incurred by it without negligence, bad faith or willful
misconduct on its part, arising out of or in connection with its
acceptance or administration of the Fund; indemnification of the Sponsor
for any loss, liability or expense incurred without gross negligence,
bad faith or willful misconduct in acting as Depositor of the Fund; all
taxes and other government charges imposed upon the Securities or any
part of the fund (no such taxes or charges are being levied or made or,
to the knowledge of the Sponsor, contemplated); and expenditures
incurred in contacting Unit holders upon termination of the Fund. The
above expenses and the Trustee's annual fee, when paid or owing to the
Trustee, are secured by a lien on the Fund. In addition, the Trustee is
empowered to sell Securities in order to make funds available to pay all
these amounts if funds are not otherwise available in the Interest and
Principal Accounts. Due to the minimum principal amount in which
Securities may be required to be sold, the proceeds of such sales may
exceed the amount necessary for the payment of such fees and expenses.
So long as the Sponsor is maintaining a secondary market for a Series of
the Fund, the Indenture requires that such Series will be audited on an
annual basis at the expense of the Fund by independent auditors selected
by the Sponsor. The Trustee shall not be required, however, to cause
such an audit to be performed if its cost to a Series of the Fund shall
exceed $.50 per 1,000 Units on an annual basis. Unit holders of a Series
of the Fund covered by an audit may obtain a copy of the audited
financial statements of such Series from the Trustee upon request.
What is the Tax Status of Unit Holders?
Each Trust, which is an association taxable as a corporation under the
Internal Revenue Code, intends to qualify on a continuing basis for
special federal income tax treatment as a regulated investment company
under the Internal Revenue Code of 1986, as amended (the "Code"). If a
Trust so qualifies and timely distributes to Unit holders 90% or more of
its taxable income (without regard to its net capital gain, i.e., the
excess of its long-term capital gain over its net short-term capital
loss), it will not be subject to Federal income tax on the portion of
its taxable income (including any net capital gain) that it distributes
to Unit holders. In addition, to the extent a Trust distributes to Unit
holders at least 98% of its taxable income (including any net capital
gain), it will not be subject to the 4% excise tax on certain
undistributed income of "regulated investment companies." Each Trust
intends to timely distribute its taxable income (including any net
capital gains) to avoid the imposition of Federal income tax or the
excise tax.
Each Trust intends to file its Federal income tax returns on a calendar
year basis. In any taxable year of a Trust, the distributions of a
Trust's income, other than distributions which are designated as capital
gain dividends, will, to the extent of the earnings and profits of such
Series, constitute dividends for Federal income tax purposes which are
taxable as ordinary income to the Unit holders. To the extent that
distributions to a Unit holder in any year exceed a Trust's current and
accumulated earnings and profits, they will be treated as a return of
capital and will reduce the Unit holder's basis in his Units, and to the
extent that they exceed his basis, will be treated as a gain from the
sale of his Units as discussed below. Distributions from a Trust will
not be eligible for the 70% dividends received deduction for
corporations. Although distributions generally will be treated as
distributed when paid, distributions declared in October, November or
December, payable to Unit holders of record on a specified date in one
of those months and paid during January of the following year will be
treated as having been distributed by a Trust (and received by the Unit
holders) on December 31 of the year such distributions are declared.
Under the Code, certain miscellaneous itemized deductions, such as
investment expenses, tax return preparation fees and employee business
expenses, will be deductible by individuals only to the extent they
exceed 2% of adjusted gross income. Miscellaneous itemized deductions
subject to this limitation under present law do not include expenses
incurred by a Trust as long as the Units of the Trust are held by or for
Page 10
500 or more persons at all times during the taxable year or another
exception is met. In the event the Units of a Trust are held by fewer
than 500 persons, additional taxable income will be realized by the
individual and Unit holders in excess of the distributions received from
such Trust.
Distributions of a Trust's net capital gain which the Trust designates
as capital gain dividends will be taxable to Unit holders as long-term
capital gains, regardless of the length of time the Units have been held
by a Unit holder. However, if a Unit holder receives a long-term capital
gain dividend (or is allocated a portion of their Trust's undistributed
long-term capital gain) and sells his Units at a loss prior to holding
them for 6 months, such loss will be recharacterized as long-term
capital loss to the extent of such long-term capital gain received as a
dividend or allocated to a Unit holder. Distributions in partial
liquidation, reflecting the proceeds of prepayments, redemptions,
maturities (including monthly mortgage payments of principal) or sales
of Securities (exclusive of net capital gain) will not be taxable to
Unit holders of such Trust to the extent that they represent a return of
capital for tax purposes. The portion of distributions which represents
a return of capital will, however, reduce a Unit holder's basis in his
Units, and to the extent they exceed the basis of his Units will be
taxable as a capital gain. A Unit holder may recognize a taxable gain or
loss when his Units are sold or redeemed. Such gain or loss will
generally constitute either a long-term or short-term capital gain or
loss depending upon the length of time the Unit holder has held his
Units. Any loss of Units held six months or less will be treated as long-
term capital loss to the extent of any long-term capital gains dividends
received (or deemed to have been received) by the Unit holder with
respect to the Units. For taxpayers other than corporations, net capital
gains are presently subject to a maximum stated marginal tax rate of 28
percent. However, it should be noted that legislative proposals are
introduced from time to time that affect tax rates and could affect
relative differences at which ordinary income and capital gains are
taxed. A capital loss is long-term if the asset is held for more than
one year and short-term if held for one year or less.
The "Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax
rates on ordinary income while capital gains remain subject to a 28%
maximum stated rate for taxpayers other than corporations. Because some
or all capital gains are taxed at a comparatively lower rate under the
Tax Act, the Tax Act includes a provision that recharacterizes capital
gains as ordinary income in the case of certain financial transactions
that are "conversion transactions" effective for transactions entered
into after April 30, 1993. Unit holders and prospective investors should
consult with their tax advisers regarding the potential effect of this
provision on their investment in Units.
If a Ginnie Mae has been purchased by a Trust at a market discount
(i.e., for a purchase price less than its stated redemption price at
maturity (or, if issued with original issue discount, its "revised issue
price")), unless the amount of market discount is "de minimis" as
specified in the Code, each payment of principal on the Ginnie Mae will
generally constitute ordinary income to the Trust to the extent of any
accrued market discount unless the Trust elects to include the accrued
market discount in taxable income as it accrues. In the case of a Ginnie
Mae, the amount of market discount that is deemed to accrue each month
shall generally be the amount of discount that bears the same ratio to
the total amount of remaining market discount that the amount of
interest paid during the accrual period (each month) bears to the total
amount of interest remaining to be paid on the Ginnie Mae as of the
beginning of the accrual period.
Each Unit holder of the Trusts shall receive an annual statement
describing the tax status of the distributions paid by the Trusts.
Investment in the Trusts may be particularly well suited for purchase by
funds and accounts of individual investors that are exempt from Federal
income taxes such as Individual Retirement Accounts, Keogh Plans,
pension funds and other tax-deferred retirement plans. (See "Why are
Investments in the Trusts Suitable for Retirement Plans?")
Each Unit holder will be requested to provide the Unit holder's taxpayer
identification number to the Trustee and to certify that the Unit holder
has not been notified that payments to the Unit holder are subject to
back-up withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions
by the Trusts to such Unit holder (including amounts received upon the
redemption of Units) will be subject to back-up withholding.
The foregoing discussion relates only to the Federal income tax status
of the Trusts and to the tax treatment of distributions by the Trusts to
United States Unit holders.
Page 11
A Unit holder who is a foreign investor (i.e., an investor other than a
United States citizen or resident or a United States corporation,
partnership, estate or trust) should be aware that, generally, subject
to applicable tax treaties, distributions from the Trusts which
constitute dividends for Federal income tax purposes (other than
dividends which the Trusts designate as capital gain dividends) will be
subject to United States income taxes, including withholding taxes.
However, distributions received by a foreign investor from the Trusts
that are designated by the Trusts as capital gain dividends should not
be subject to United States Federal income taxes, including withholding
taxes, if all of the following conditions are met: (i) the capital gain
dividend is not effectively connected with the conduct by the foreign
investor of a trade or business within the United States, (ii) the
foreign investor (if an individual) is not present in the United States
for 183 days or more during his or her taxable year, and (iii) the
foreign investor provides all certification which may be required of his
status (foreign investors may contact the Sponsor to obtain a Form W-8
which must be filed with the Trustee and refiled every three calendar
years thereafter). Foreign investors should consult their tax advisers
with respect to United States tax consequences of ownership of Units.
Units in the Trusts and Trust distributions may also be subject to state
and local taxation and Unit holders should consult their tax advisers in
this regard.
Distributions reinvested into additional Units of the Trusts will be
taxed to a Unit holder in the manner described above (i.e., as ordinary
income, long-term capital gain or as a return of capital).
Why are Investments in the Trusts Suitable for Retirement Plans?
A Trust may be well suited for purchase by Individual Retirement
Accounts, Keogh Plans, pension funds and other tax-deferred retirement
plans. Generally, the Federal income tax relating to capital gains and
income received in each of the foregoing plans is deferred until
distributions are received. Distributions from such plans are generally
treated as ordinary income but may, in some cases, be eligible for
special averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax
laws related thereto and should consult their attorneys or tax advisers
with respect to the establishment and maintenance of any such plan. Such
plans are offered by brokerage firms and other financial institutions.
The Trust will waive the $1,000 minimum investment requirement for tax-
deferred retirement plan accounts. The minimum investment is $250 for
tax-deferred retirement plans such as IRA accounts. Fees and charges
with respect to such plans may vary.
How Can Distributions to Unit Holders be Reinvested?
Universal Distribution Option. Unit holders may elect to participate in
a Universal Distribution Option which permits a Unit holder to direct
the Trustee to distribute principal or interest payments, or both, to
any investment vehicle for which the Unit holder has an existing
account. For example, at a Unit holder's direction, the Trustee would
automatically distribute on the applicable distribution date interest
income or principal, or both, on the participant's Units to, among other
investment vehicles, a Unit holder's checking, bank savings, money
market, insurance, reinvestment or any other account. All such
distributions, of course, are subject to the minimum investment and
sales charges, if any, of the particular investment vehicle to which
distributions are directed. The Trustee will notify the participant of
each distribution pursuant to the Universal Distribution Option. The
Trustee will distribute directly to the Unit holder any distributions
which are not accepted by the specified investment vehicle. A
participant may at any time, by so notifying the Trustee in writing,
elect to terminate his participation in the Universal Distribution
Option and receive future distributions on his Units in cash.
Distribution Reinvestment Option. The Sponsor has entered into an
arrangement with Oppenheimer Management Corporation which permits any
Unit holder of a Series of the Fund to elect to have each distribution
of interest income or principal, or both, on his Units automatically
reinvested in shares of Oppenheimer Government Securities Fund.
Oppenheimer Management Corporation is the investment adviser of
Oppenheimer Government Securities Fund which is an open-end, diversified
management investment company. Oppenheimer Government Securities Fund
seeks a high current return and safety of principal by investing
principally in obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities, including GNMA mortgage-backed
securities, as is considered consistent with the preservation of capital
and maintenance of liquidity. The objectives and policies of Oppenheimer
Government Securities Fund are presented in more detail in the
prospectus pertaining to such Fund.
Page 12
Each person who purchases Units of a Series of the Fund may use the card
attached to Part One of the prospectus to request a prospectus
describing Oppenheimer Government Securities Fund and a form by which
such a person may elect to become a participant in the Distribution
Reinvestment Option with respect to Oppenheimer Government Securities
Fund. After electing participation, each distribution of interest income
or principal, or both, on the participant's Units will automatically be
applied by the Trustee to purchase shares (or fractions thereof) of
Oppenheimer Government Securities Fund without a sales charge and with
no minimum initial and subsequent investment requirements.
The transfer agent for Oppenheimer Government Securities Fund will mail
to each participant in the Distribution Reinvestment Option,
confirmations of all transactions undertaken for such participant in
connection with the receipt of distributions from The First Trust GNMA
and the purchase of shares (or fractions thereof) of Oppenheimer
Government Securities Fund.
A participant may at any time, by so notifying the Trustee in writing,
elect to terminate his participation in the Distribution Reinvestment
Option and receive future distributions on his Units in cash. There will
be no charge or other penalty for such termination. The Sponsor and
Oppenheimer Government Securities Fund have the right to terminate the
Distribution Reinvestment Option, in whole or in part.
It should be remembered that even if distributions are directed through
the Universal Distribution Option or are reinvested through the
Distribution Reinvestment Option, they are still treated as
distributions for income tax purposes.
Unit holders of Trusts of the Fund participating in IRAs, Keogh Plans,
pension funds and other tax-deferred retirement plans may find it highly
advantageous to participate in the Universal Distribution Option or the
Distribution Reinvestment Option in order to keep the monies in the
account fully invested at all times. Should either of such options be
selected, an account with an identical registration to that established
at the time the Units of a Trust are purchased will be set up in the
option selected by the investor. Investors should consult with their
plan custodian as to the appropriate disposition of distributions.
Unless participants in IRAs, Keogh Plans and other tax-deferred
retirement plans elect either the Universal Distribution Option or the
Distribution Reinvestment Option, cash distributions will be sent to the
custodian of the retirement plan and will not be sent to the investor.
See "Why are Investments in Trusts Suitable for Retirement Plans?"
PUBLIC OFFERING
How is the Public Offering Price Determined?
Although it is not obligated to do so, the Sponsor intends to maintain a
market for the Units and continuously to offer to purchase Units at
prices, subject to change at any time, based upon the aggregate bid
price of the Securities in the Portfolios of each Series of the Fund
plus interest accrued to the date of settlement. All expenses incurred
in maintaining a secondary market, other than the fees of the Evaluator
and the costs of the Trustee in transferring and recording the ownership
of Units, will be borne by the Sponsor. If the supply of Units exceeds
demand, or for some other business reason, the Sponsor may discontinue
purchases of Units at such prices. IF A UNIT HOLDER WISHES TO DISPOSE OF
HIS UNITS, HE SHOULD INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES
PRIOR TO MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE. Prospectuses
relating to certain other funds indicate an intention, subject to
change, on the part of the respective sponsors of such funds to
repurchase units of those funds on the basis of a price higher than the
bid prices of the securities in the funds. Consequently, depending upon
the prices actually paid, the repurchase price of other sponsors for
units of their funds may be computed on a somewhat more favorable basis
than the repurchase price offered by the Sponsor for Units of each
Series of the Fund in secondary market transactions. As in each Series
of this Fund, the purchase price per unit of such funds will depend
primarily on the value of the securities in the portfolios of such funds.
Units are offered to the public at the Public Offering Price. The Public
Offering Price is based on the Evaluator's determination of the
aggregate bid price of the Securities in the Fund, including any money
in the Principal Account other than money required to redeem tendered
Units, and also includes a sales charge of 4.0% of the Public Offering
Price (which is equivalent to 4.167% of the net amount invested) for
Page 13
Long Term Trusts or a sales charge of 3.5% of the Public Offering Price
(which is equivalent to 3.627% of the net amount invested) for Medium
Term Trusts. Also added to the Public Offering Price is a proportionate
share of interest accrued but unpaid on the Securities to the date of
settlement of Units. (See "How is Accrued Interest Treated?")
The sales charge is reduced by a discount as indicated below for volume
purchases (except for sales made pursuant to a "wrap fee account" or
similar arrangements as set forth below):
<TABLE>
<CAPTION>
Long-Term Trusts Medium-Term Trusts
Discount Dealer Concession Discount Dealer Concession
Dollar Amount of Expressed as a Expressed as a Expressed as a Expressed as a
Transaction at Percentage of Percentage of Percentage of Percentage of
Public Offering Price Public Offering Price Public Offering Price Public Offering Price Public Offering Price
__________________ _____________________ _____________________ _____________________ _____________________
<S> <C> <C> <C> <C>
$ 100,000 - $249,999 .25% 2.50% .25% 2.05%
$ 250,000 - $499,999 .50% 2.50% .50% 2.05%
$ 500,000 - $999,999 .75% 2.70% .75% 2.05%
$1,000,000 or more 1.50% 2.70% 1.20% 2.25%
</TABLE>
An investor may aggregate purchases of Units of two consecutive similar
series of a particular GNMA Trust for purposes of calculating the
discount for volume purchases listed above. Additionally, with respect
to the employees, officers and directors (including their immediate
families and trustees, custodian or a fiduciary for the benefit of such
person) of Nike Securities L.P. and its subsidiaries the sales charge is
reduced by 2% of the Public Offering Price for purchases of Units during
the secondary offering period.
Any such reduced sales charge, including pursuant to a Letter of Intent
described below, shall be the responsibility of the selling dealer. For
the Long Term Trusts, the Sponsor will pay Underwriters an additional
concession of .10% for purchases between $100,000 and $499,999 and .20%
for purchases over $500,000. This reduced sales charge structure will
apply on all purchases of Units in the Fund by the same person on any
one day from any one dealer. For purposes of calculating the applicable
sales charge, purchases of Units in the Fund will not be aggregated with
any other purchases by the same person of units in any series of tax-
exempt unit investment trusts sponsored by Nike Securities L.P.
Additionally, Units purchased in the name of the spouse of a purchaser
or in the name of a child of such purchaser under 21 years of age will
be deemed for the purposes of calculating the applicable sales charge to
be additional purchases by the purchaser. The reduced sales charges will
also be applicable to a trustee or other fiduciary purchasing securities
for a single trust or single fiduciary account.
In addition, a purchaser desiring to purchase during a 12-month period
$1,000,000 or more of a series of The First Trust GNMA may qualify for a
reduced sales charge by signing a nonbinding Letter of Intent. After
signing a Letter of Intent, at the date total purchases, less
redemptions, of units of series of the First Trust GNMA by a purchaser
(including units purchased in the name of the spouse of a purchaser or
in the name of a child of such purchaser under 21 years of age) exceed
$1,000,000, the selling dealer will make a retroactive reduction of the
sales charge on such units in the amount of 1.5% (reduced by any
previous discount received on the units) of the Public Offering Price of
the units. If a purchaser does not complete the required purchases under
the Letter of Intent within the 12-month period, no such retroactive
sales charge reduction shall be made. To qualify as a purchase under a
Letter of Intent, each purchase of units of The First Trust GNMA must
equal or exceed $100,000.
Units may be purchased at the Public Offering Price less the concession
the Sponsor typically allows to dealers and other selling agents for
purchases (see "Public Offering-How are Units Distributed?") by
investors who purchase Units through registered investment advisers,
certified financial planners and registered broker-dealers who in each
case either charge periodic fees for financial planning, investment
advisory or asset management services, or provide such services in
connection with the establishment of an investment account for which a
comprehensive "wrap fee" charge is imposed.
The aggregate bid price of the Securities in the Fund is determined by
the Evaluator on the basis of bid prices or offering prices as is
appropriate, (1) on the basis of current market prices for the
Securities obtained from dealers or brokers who customarily deal in
Securities comparable to those held by the Fund; (2) if such prices are
not available for any of the Securities, on the basis of current market
prices for comparable securities; (3) by determining the value of the
Securities by appraisal; or (4) by any combination of the above.
Page 14
There is a period of a few days (usually about five business days),
beginning on the first day of each month, during which the total amount
of payments (including prepayments, if any) of principal for the
preceding month on the various mortgages underlying each of the Ginnie
Maes in the Fund will not yet have been reported by the issuer to GNMA
and made generally available to the public. During this period, the
precise principal amount of the underlying mortgages remaining
outstanding for each Ginnie Mae in the Fund, and therefore the precise
principal amount of such Security, will not be known, although the
precise principal amount outstanding for the preceding month will be
known. Therefore, the precise amount of principal to be acquired by the
Trustee as a holder of such Securities which may be distributed to Unit
holders with the next monthly distribution will not be known. The
Sponsor does not expect that the amounts of such prepayments and the
differences in such principal amounts from month to month will be
material in relation to the Fund due to the number of mortgages
underlying each Ginnie Mae and the number of such Securities in each
series of the Fund. However, there can be no assurance that they will
not be material. For purposes of the determination by the Evaluator of
bid prices of the Ginnie Maes in the Fund and for purposes of
calculations of accrued interest on the Units, during the period in each
month prior to the time when the precise amounts of principal of the
Ginnie Maes for the month become publicly available, the Evaluator will
base its evaluations and calculations, which are the basis for
calculations of the Public Offering Price, the Sponsor's Repurchase
Price in the secondary market and the Redemption Price, upon the average
monthly principal distribution for the preceding twelve month period.
The Sponsor expects that the differences in such principal amounts from
month to month will not be material to the applicable series of the
Fund. Nevertheless, the Sponsor will adopt procedures as to pricing and
evaluation for the Units of the Fund, with such modifications, if any,
deemed necessary by the Sponsor for the protection of Unit holders
designed to minimize the impact of such differences upon the calculation
of the accrued interest on the Units, the Public Offering Price, the
Sponsor's Repurchase Price in the secondary market and the Redemption
Price. However, under circumstances involving significant prepayments of
mortgages, Unit holders may receive principal distributions on the next
ensuing distribution date in excess of the average monthly principal
distribution for the preceding twelve month period.
The Evaluator will be requested to make a determination of the aggregate
price of the Securities in the Fund, on a bid price basis, as of the
close of trading on the New York Stock Exchange (4:00 p.m. Eastern time)
on each day on which it is open, effective for all sales, purchases or
redemptions made subsequent to the last preceding determination. No
evaluation will be made, however, on any day on which the Ginnie Mae
securities markets are not generally open for business.
Although payment is normally made three business days following the
order for purchase, payment may be made prior thereto. Cash, if any,
made available to the Sponsor prior to the date of settlement for the
purchase of Units may be used in the Sponsor's business and may be
deemed to be a benefit to the Sponsor, subject to the limitations of the
Securities Exchange Act of 1934. Delivery of Certificates representing
Units so ordered will be made three business days following such order
or shortly thereafter. Initial transaction statements for Units held in
uncertificated form representing Units so ordered will be issued to the
registered owner of such Units within two business days of the issuance
of such Units. See "How May Units be Redeemed?" for information
regarding the ability to redeem Units ordered for purchase.
How are Units Distributed?
The Sponsor intends to continue qualification of the Units for sale in a
number of states. Sales may be made to dealers and others at prices
which represent a concession or agency commission of $25.00 per 1,000
Units, but the Sponsor reserves the right to change the amount of the
concession to dealers and others from time to time. Certain commercial
banks are making Units of the Fund available to their customers on an
agency basis. A portion of the sales charge paid by these customers is
retained by or remitted to the banks in the amounts indicated in the
second preceding sentence. Under the Glass-Steagall Act, banks are
prohibited from underwriting Fund Units; however, the Glass-Steagall Act
does permit certain agency transactions and the banking regulators have
not indicated that these particular agency transactions are not
permitted under such Act.
Page 15
What are the Profits of the Sponsor?
The Sponsor will receive a gross sales commission equal to 4.0% of the
Public Offering Price of the Units (equivalent to 4.167% of the net
amount invested) for the Long Term Trusts and 3.5% of the Public
Offering Price (equivalent to 3.627% of the net amount invested) for the
Medium Term Trusts. The Sponsor will receive from dealers and others the
excess of such gross sales commission over the dealer concession or
agency commission. (See "How is the Public Offering Price Determined?")
Although any reduced sales charge shall be the responsibility of the
selling dealer, the Sponsor will reimburse dealers for discounts made
available to purchasers as described in "How is the Public Offering
Price Determined?"
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between the
price at which Units are purchased (based on the bid prices of the
Securities in the Fund) and the price at which Units are resold (which
price is also based on the bid prices of the Securities in the Fund and
includes a sales charge of 4.0% for the Long Term Trusts and 3.5% for
the Medium Term Trusts) or redeemed (based on the bid prices of the
Securities in the Fund). The secondary market Public Offering Price of
Units may be greater or less than the cost of such Units to the Sponsor.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee.
Ownership of Units may be evidenced by registered certificates executed
by the Trustee and the Sponsor. Delivery of certificates representing
Units ordered for purchase is normally made five business days following
such order or shortly thereafter. Certificates are transferable by
presentation and surrender to the Trustee properly endorsed or
accompanied by a written instrument or instruments of transfer.
Certificates to be redeemed must be properly endorsed or accompanied by
a written instrument or instruments of transfer. A Unit holder must sign
exactly as his name appears on the face of the certificate with the
signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP") or such other signature guaranty program in
addition to, or in substitution for, STAMP, as may be accepted by the
Trustee. In certain instances the Trustee may require additional
documents such as, but not limited to, trust instruments, certificates
of death, appointments as executor or administrator or certificates of
corporate authority. Record ownership may occur before settlement.
Certificates will be issued in fully registered form, transferable only
on the books of the Trustee in denominations of one Unit or any multiple
thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form. The
Trustee will maintain an account for each such Unit holder and will
credit each such account with the number of Units purchased by that Unit
holder. Within two business days of the issuance or transfer of Units
held in uncertificated form, the Trustee will send to the registered
owner of Units a written initial transaction statement containing a
description of the Fund; the number of Units issued or transferred; the
name, address and taxpayer identification number, if any, of the new
registered owner; a notation of any liens and restrictions of the issuer
and any adverse claims to which such Units are or may be subject or a
statement that there are no such liens, restrictions or adverse claims;
and the date the transfer was registered. Uncertificated Units are
transferable through the same procedures applicable to Units evidenced
by certificates (described above), except that no certificate need be
presented to the Trustee and no certificate will be issued upon transfer
unless requested by the Unit holder. A Unit holder may at any time
request the Trustee to issue certificates for Units.
Although no such charge is now made or contemplated, a Unit holder may
be required to pay $2.00 to the Trustee per certificate reissued or
transferred, and to pay any governmental charge that may be imposed in
connection with each such transfer or exchange. For new certificates
issued to replace destroyed, stolen, or lost certificates, the Unit
holder may be required to furnish indemnity satisfactory to the Trustee
and pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
How are Interest and Principal Distributed?
The terms of the Ginnie Maes provide for payment to the holders thereof
(including the Fund) on the fifteenth day of each month of amounts
Page 16
collected by or due to the issuers thereof with respect to the
underlying mortgages during the preceding month, except for the first
payment, which is not due until 45 days after the initial issue date of
each Ginnie Mae. Interest from the Fund, including moneys representing
penalties for the failure to make timely payments on Securities or
liquidated damages for default or breach of any condition or term of the
Securities will be distributed as specified in Part One for each Trust
on a pro rata basis to Unit holders of record as of the preceding Record
Date. All distributions will be net of applicable expenses.
The pro rata share of cash in the Principal Account will also be
computed as of the first day of each month and distributions to the Unit
holders as of such Record Date will be made as specified in Part One for
each Trust. Proceeds from the disposition of any of the Securities or
amounts representing principal on the Securities received after such
Record Date and prior to the following Distribution Date will be held in
the Principal Account and not distributed until the next Distribution
Date. The Trustee is not required to pay interest on funds held in the
Principal or Interest Account (but may itself earn interest thereon and
therefore benefits from the use of such funds) nor to make a
distribution from the Principal Account unless the amount available for
distribution shall equal at least $1.00 per 1,000 Units.
The Trustee will credit to the Interest Account all interest received by
the Fund, including moneys representing penalties for the failure to
make timely payments on Securities or liquidated damages for default or
breach of any condition or term of the Securities and that part of the
proceeds of any disposition of Securities which represents accrued
interest. Other receipts will be credited to the Principal Account.
Persons who purchase Units between a Record Date and a Distribution Date
will receive their first distribution on the second Distribution Date
after the purchase.
As of the first day of each month, the Trustee will deduct from the
Interest Account and, to the extent funds are not sufficient therein,
from the Principal Account, amounts necessary to pay the expenses of the
Fund. The Trustee also may withdraw from said accounts such amounts, if
any, as it deems necessary to establish a reserve for any governmental
charges payable out of the Fund. Amounts so withdrawn shall not be
considered a part of the Fund's assets until such time as the Trustee
shall return all or any part of such amounts to the appropriate account.
In addition, the Trustee may withdraw from the Interest Account and the
Principal Account such amounts as may be necessary to cover redemption
of Units by the Trustee.
Record Dates and Distribution Dates for monthly distributions will be as
indicated in Part One for each Trust. Distributions for an IRA, Keogh,
pension funds or other tax-deferred retirement plan will not be sent to
the individual Unit holder; these distributions will go directly to the
custodian of the plan to avoid the penalties associated with premature
withdrawals from such accounts.
What Reports Will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of interest, if any, and the
amount of other receipts, if any, which are being distributed, expressed
in each case as a dollar amount per 1,000 Units. Within a reasonable
time after the end of each calendar year, the Trustee will furnish to
each person who at any time during the calendar year was a Unit holder
of record, a statement as to (1) the Interest Account: interest received
(including amounts representing interest received upon any disposition
of Securities, penalties for the failure to make timely payments on
Securities or liquidated damages for default or breach of any condition
or term of the Securities), deductions for payment of applicable taxes
and for fees and expenses of the Fund, redemption of Units and the
balance remaining after such distributions and deductions, expressed
both as a total dollar amount and as a dollar amount representing the
pro rata share per 1,000 Units outstanding on the last business day of
such calendar year; (2) the Principal Account: payments of principal on
Securities, the dates of disposition of any Securities and the net
proceeds received therefrom (excluding any portion representing
interest), deduction for payment of applicable taxes and for fees and
expenses of the Fund, redemptions of Units, and the balance remaining
after such distributions and deductions expressed both as a total dollar
amount and as a dollar amount per 1,000 Units; (3) the Securities held
and the number of Units outstanding on the last business day of such
calendar year; (4) the Redemption Price per 1,000 Units based upon the
last computation thereof made during such calendar year; (5) the dollar
amounts actually distributed during such calendar year from the Interest
Account and from the Principal Account, separately stated; and (6) such
Page 17
other information as the Trustee may deem appropriate. Unit holders of
Units in uncertificated form shall receive no less frequently than once
each year a dated written statement containing the name, address and
taxpayer identification number, if any, of the registered owner, the
number of Units registered in the name of the registered owner on the
date of the statement and certain other information that will be
provided as required under applicable law.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Securities furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his Units by tender to the
Trustee at its corporate trust office in the City of New York of the
certificates representing the Units to be redeemed, or, in the case of
uncertificated Units, delivery of a request for redemption, duly
endorsed or accompanied by proper instruments of transfer with signature
guaranteed as explained above (or by providing satisfactory indemnity,
as in connection with lost, stolen or destroyed certificates), and
payment of applicable governmental charges, if any. No redemption fee
will be charged. On the third business day following such tender, the
Unit holder will be entitled to receive in cash an amount for each Unit
equal to the Redemption Price per Unit next computed after receipt by
the Trustee of such tender of Units. The "date of tender" is deemed to
be the date on which Units are received by the Trustee (if such day is a
day on which the New York Stock Exchange is open for trading), except
that as regards Units received after 4:00 p.m. Eastern time (or as of
any earlier closing time on a day on which the New York Stock Exchange
is scheduled in advance to close at such earlier time), the date of
tender is the next day on which the New York Stock Exchange is open for
trading and such Units will be deemed to have been tendered to the
Trustee on such day for redemption at the redemption price computed on
that day. Units so redeemed shall be cancelled.
Accrued interest to the settlement date paid on redemption shall be
withdrawn from the Interest Account or, if the balance therein is
insufficient, from the Principal Account. All other amounts paid on
redemption shall be withdrawn from the Principal Account.
The Redemption Price (as well as the secondary market Public Offering
Price) will be determined on the basis of the bid price of the
Securities in the Fund as of the close of trading on the New York Stock
Exchange (4:00 p.m. Eastern time) on the date any such determination is
made. The Redemption Price per Unit is the pro rata share of each Unit
determined by the Trustee on the basis of (1) the cash on hand in the
Fund or moneys in the process of being collected, (2) the value of the
Securities in the Fund based on the bid prices of the Securities and (3)
interest accrued thereon, less (a) amounts representing taxes or other
governmental charges payable out of the Fund and (b) the accrued
expenses of the Fund. The Evaluator may determine the value of the
Securities in the Fund (1) on the basis of current bid prices of the
Securities obtained from dealers or brokers who customarily deal in
securities comparable to those held by the Fund, (2) on the basis of bid
prices for securities comparable to any securities for which bid prices
are not available, (3) by determining the value of the Securities by
appraisal, or (4) by any combination of the above. See "How is the
Public Offering Price Determined?" for information with respect to the
uncertainty during certain periods of each month of the precise amount
of principal and accrued interest of the Ginnie Maes.
The difference between the bid and offering price of such Securities may
be expected to average 1/4 to 1/2 of 1% of the principal amount of such
Securities. Therefore, the price at which Units may be redeemed could be
less than the price paid by the Unit holder.
The Trustee is empowered to sell underlying Securities in order to make
funds available for redemption. To the extent that Securities are sold,
the size and diversity of the Fund will be reduced. Such sales may be
required at a time when Securities would not otherwise be sold and might
result in lower prices than might otherwise be realized. Ginnie Maes are
sold in minimum face amounts which range from $25,000 to $100,000. Due
to the minimum principal amount in which Ginnie Maes may be required to
be sold, the proceeds of such sales may exceed the amount necessary for
payment of Units redeemed. Such excess proceeds will be placed in the
Principal Account and eligible for distribution pro rata to all
remaining Unit holders of record.
The right of redemption may be suspended and payment postponed for any
period during which the New York Stock Exchange is closed, other than
for customary weekend and holiday closings, or during which the
Page 18
Securities and Exchange Commission determines that trading on that
Exchange is restricted or an emergency exists, as a result of which
disposal or evaluation of the Securities is not reasonably practicable,
or for such other periods as the Securities and Exchange Commission may
by order permit.
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid price in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase
such Units by notifying the Trustee before the close of business on the
second succeeding business day and by making payment therefor to the
Unit holder not later than the day on which the Units would otherwise
have been redeemed by the Trustee. Units held by the Sponsor may be
tendered to the Trustee for redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be in
accord with the Public Offering Price described in the then currently
effective prospectus describing such Units. Any profit or loss resulting
from the resale or redemption of such Units will belong to the Sponsor.
How May Securities be Removed from the Fund?
The Sponsor is empowered, but not obligated, to direct the Trustee to
dispose of Securities in the event certain events occur that adversely
affect the value of Securities including default in payment of interest
or principal, default in payment of interest or principal of other
obligations guaranteed or backed by the full faith and credit of the
United States of America, institution of legal proceedings, default
under other documents adversely affecting debt service, decline in price
or the occurrence of other market or credit factors.
If any default in the payment of principal or interest on any Security
occurs and if the Sponsor fails to instruct the Trustee to sell or to
hold such Security within thirty days after notification by the Trustee
to the Sponsor of such default, the Trustee may, in its discretion, sell
the defaulted Security and not be liable for any depreciation or loss
thereby incurred.
The Trustee is also empowered to sell, for the purpose of redeeming
Units tendered by any Unit holder and for the payment of expenses for
which funds may not be available, such of the Securities in a list
furnished by the Sponsor as the Trustee in its sole discretion may deem
necessary. Except as stated under "What is the First Trust GNMA?", the
acquisition by a Trust of any securities other than the Securities
initially deposited is prohibited.
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in 1991,
acts as Sponsor for successive series of The First Trust Combined
Series, The First Trust Special Situations Trust, The First Trust
Insured Corporate Trust, The First Trust of Insured Municipal Bonds, The
First Trust GNMA, Templeton Growth and Treasury Trust, Templeton Foreign
Fund & U.S. Treasury Securities Trust and The Advantage Growth and
Treasury Securities Trust. First Trust introduced the first insured unit
investment trust in 1974 and to date more than $9 billion in First Trust
unit investment trusts have been deposited. The Sponsor's employees
include a team of professionals with many years of experience in the
unit investment trust industry. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and Securities Investor
Protection Corporation and has its principal offices at 1001 Warrenville
Road, Lisle, Illinois 60532; telephone number (630) 241-4141. As of
December 31, 1996, the total partners' capital of Nike Securities L.P.
was $9,005,203 (audited). (This paragraph relates only to the Sponsor
and not to the Trust or to any series thereof or to any other
Underwriter. The information is included herein only for the purpose of
informing investors as to the financial responsibility of the Sponsor
and its ability to carry out its contractual obligations. More detailed
financial information will be made available by the Sponsor upon request.)
Who is the Trustee?
The Trustee is The Chase Manhattan Bank, with its principal executive
office located at 270 Park Avenue, New York, New York 10017 and its unit
investment trust offices at 4 New York Plaza, 6th floor, New York, New
Page 19
York 10004-2413. Unit holders who have questions regarding the Fund may
call the Customer Service Help Line at 1-800-682-7520. The Trustee is a
member of the New York Clearing House Association and is subject to
supervision and examination by the Superintendent of Banks of the State
of New York, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not
participated in the selection of the Securities. For information
relating to the responsibilities of the Trustee under the Indenture,
reference is made to the material set forth under "Rights of Unit
Holders."
The Trustee and any successor trustee may resign by executing an
instrument in writing and filing the same with the Sponsor and mailing a
copy of a notice of resignation to all Unit holders. Upon receipt of
such notice, the Sponsor is obligated to appoint a successor trustee
promptly. If the Trustee becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, the Sponsor may
remove the Trustee and appoint a successor as provided in the Indenture.
If upon resignation of a trustee no successor has accepted the
appointment within 30 days after notification, the retiring trustee may
apply to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of a trustee becomes effective
only when the successor trustee accepts its appointment as such or when
a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or
consolidation to which a Trustee shall be a party, shall be the
successor Trustee. The Trustee must be a banking corporation organized
under the laws of the United States or any State and having at all times
an aggregate capital, surplus and undivided profits of not less than
$5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and Trustee shall be under no liability to Unit holders for
taking any action or for refraining from taking any action in good faith
pursuant to the Indenture, or for errors in judgment, but shall be
liable only for their own willful misfeasance, bad faith, gross
negligence (ordinary negligence in the case of the Trustee) or reckless
disregard of their obligations and duties. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the
Trustee of any of the Securities. In the event of the failure of the
Sponsor to act under the Indenture, the Trustee may act thereunder and
shall not be liable for any action taken by it in good faith under the
Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or upon or in
respect of the Fund which the Trustee may be required to pay under any
present or future law of the United States of America or of any other
taxing authority having jurisdiction. In addition, the Indenture
contains other customary provisions limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or become incapable of acting or become bankrupt or its
affairs are taken over by public authorities, then the Trustee may (a)
appoint a successor Sponsor at rates of compensation deemed by the
Trustee to be reasonable and not exceeding amounts prescribed by the
Securities and Exchange Commission, or (b) terminate the Indenture and
liquidate the Fund as provided herein, or (c) continue to act as Trustee
without terminating the Indenture.
Who is the Evaluator?
The Evaluator is Securities Evaluation Service, Inc., 531 East Roosevelt
Road, Suite 200, Wheaton, Illinois 60187. The Evaluator may resign or
may be removed by the Sponsor and the Trustee, in which event the
Sponsor and the Trustee are to use their best efforts to appoint a
satisfactory successor. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor Evaluator.
If upon resignation of the Evaluator no successor has accepted
appointment within 30 days after notice of resignation, the Evaluator
may apply to a court of competent jurisdiction for the appointment of a
successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Indenture
Page 20
shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee, Sponsor or Unit holders for errors in
judgment. This provision shall not protect the Evaluator in any case of
willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties.
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment is
(1) to cure any ambiguity or to correct or supplement any provision of
the Indenture which may be defective or inconsistent with any other
provision contained therein, or (2) to make such other provisions as
shall not adversely affect the interest of the Unit holders (as
determined in good faith by the Sponsor and the Trustee), provided that
the Indenture is not amended to increase the number of Units issuable
thereunder or to permit the deposit or acquisition of securities either
in addition to or in substitution for any of the Securities initially
deposited in the Fund, except for the purchase of additional Securities
for Series of the Fund pursuant to the Indenture. In the event of any
amendment, the Trustee is obligated to notify promptly all Unit holders
of the substance of such amendment.
The Trust may be liquidated at any time by consent of 100% of the Unit
holders or by the Trustee when the value of the Fund, as shown by any
evaluation, is less than 40% of the aggregate principal amount of the
Securities initially deposited in the Fund or in the event that Units
not yet sold aggregating more than 60% of the Units initially deposited
are tendered for redemption by the Underwriters, including the Sponsor.
The Indenture will terminate upon the redemption, sale or other
disposition of the last Security held thereunder, but in no event shall
it continue beyond the end of the calendar year preceding the fiftieth
anniversary of the execution of the Indenture. In the event of
termination, written notice thereof will be sent by the Trustee to all
Unit holders. Within a reasonable period after termination, the Trustee
will sell any Securities remaining in the Fund, and, after paying all
expenses and charges incurred by the Fund, will distribute to each Unit
holder (including the Sponsor if it then holds any Units), upon
surrender for cancellation of his Units, his pro rata share of the
balances remaining in the Interest and Principal Accounts, all as
provided in the Indenture.
Legal Opinions
The legality of the Units offered hereby was passed upon on the Date of
Deposit for each series by Chapman and Cutler, 111 West Monroe Street,
Chicago, Illinois 60603, as counsel for the Sponsor. Carter, Ledyard &
Milburn, 2 Wall Street, New York, New York 10005, acted as counsel for
the Trustee for Series 57 through 70, inclusive, and will act as Counsel
for the Trustee for subsequent Series of the Fund.
Experts
The financial statements, including the Portfolio, of each Trust
appearing in Part One of this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon appearing elsewhere therein and in the
Registration Statement, and are included in reliance upon such reports
given upon the authority of such firm as experts in accounting and
auditing.
Page 21
DESCRIPTION OF STANDARD & POOR'S RATING*
A Standard & Poor's rating on the units of an investment trust
(hereinafter referred to collectively as "units" and "trust") is a
current assessment of creditworthiness with respect to the investments
held by such trust. This assessment takes into consideration the
financial capacity of the issuers and of any guarantors, insurers,
lessees, or mortgagors with respect to such investments. The assessment,
however, does not take into account the extent to which trust expenses
or portfolio asset sales for less than the trust's purchase price will
reduce payment to the Unit holder of the interest and principal required
to be paid on the portfolio assets. In addition, the rating is not a
recommendation to purchase, sell, or hold units, inasmuch as the rating
does not comment as to market price of the units or suitability for a
particular investor.
Trusts rated "AAA" are composed exclusively of assets that are rated
"AAA" by Standard & Poor's or, have, in the opinion of Standard &
Poor's, credit characteristics comparable to assets rated "AAA," or
certain short-term investments. Standard & Poor's defines its "AAA"
rating for such assets as the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is very strong.
_________________
* As described by Standard & Poor's.
Page 22
This page is intentionally left blank.
Page 23
CONTENTS:
The First Trust (registered trademark) GNMA:
What is the First Trust GNMA? 3
What is the Rating of the Units? 7
What are Estimated Current Return
and Estimated Long-Term Return? 7
How is Accrued Interest Treated? 9
What are the Expenses and Charges? 9
What is the Tax Status of Unit Holders? 10
Why are Investments in the Trusts Suitable for
Retirement Plans? 12
How Can Distributions to Unit Holders be
Reinvested? 12
Public Offering:
How is the Public Offering Price Determined? 13
How are Units Distributed? 15
What are the Profits of the Sponsor? 16
Rights of Unit Holders:
How is Evidence of Ownership Issued and
Transferred? 16
How are Interest and Principal Distributed? 16
What Reports Will Unit Holders Receive? 17
How May Units be Redeemed? 18
How May Units be Purchased by the Sponsor? 19
How May Securities be Removed from the Fund? 19
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 19
Who is the Trustee? 19
Limitations on Liabilities of Sponsor and Trustee 20
Who is the Evaluator? 20
Other Information:
How May the Indenture be Amended or
Terminated? 21
Legal Opinions 21
Experts 21
Description of Standard & Poor's Rating 22
__________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO, WHICH THE TRUST
HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940,
AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (REGISTERED TRADEMARK)
THE FIRST TRUST
GNMA
Prospectus
Part Two
April 30, 1997
First Trust (registered trademark)
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
THIS PART TWO MUST BE
ACCOMPANIED BY PART ONE.
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 24
CONTENTS OF POST-EFFECTIVE AMENDMENT
OF REGISTRATION STATEMENT
This Post-Effective Amendment of Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Auditors
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The First Trust GNMA Series 67, certifies that it
meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Post-Effective
Amendment of its Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized in the
Village of Lisle and State of Illinois on April 30, 1997.
THE FIRST TRUST GNMA SERIES 67
(Registrant)
By NIKE SECURITIES L.P.
(Depositor)
By Robert M. Porcellino
Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment of Registration Statement has been
signed below by the following person in the capacity and on the
date indicated:
Signature Title Date
Robert D. Van Kampen Sole Director of )
Nike Securities )
Corporation, )
the General Partner ) April 30, 1997
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-2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated March 28, 1997 in
this Post-Effective Amendment to the Registration Statement and
related Prospectus of The First Trust GNMA dated April 25, 1997.
ERNST & YOUNG LLP
Chicago, Illinois
April 24, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
Post Effective Amendment to form S-6 and is qualified in its entirety
by reference to such Post Effective Amendment to form S-6.
</LEGEND>
<SERIES>
<NUMBER> 067
<NAME> GNMA SERIES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 8,793,835
<INVESTMENTS-AT-VALUE> 8,948,236
<RECEIVABLES> 174,711
<ASSETS-OTHER> 10,237
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9,133,184
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 59,797
<TOTAL-LIABILITIES> 59,797
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8,793,835
<SHARES-COMMON-STOCK> 12,497,519
<SHARES-COMMON-PRIOR> 13,667,076
<ACCUMULATED-NII-CURRENT> 125,151
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 154,401
<NET-ASSETS> 9,073,387
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 824,710
<OTHER-INCOME> 0
<EXPENSES-NET> 27,520
<NET-INVESTMENT-INCOME> 797,190
<REALIZED-GAINS-CURRENT> 4,792
<APPREC-INCREASE-CURRENT> (183,276)
<NET-CHANGE-FROM-OPS> 618,706
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 833,943
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 2,096,475
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 1,169,557
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (3,202,300)
<ACCUMULATED-NII-PRIOR> 286,314
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
