SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
A. Exact Name of Trust: THE FIRST TRUST GNMA,
SERIES 68
B. Name of Depositor: NIKE SECURITIES L.P.
C. Complete Address of Depositor's 1001 Warrenville Road
Principal Executive Offices: Lisle, Illinois 60532
D. Name and Complete Address of NIKE SECURITIES L.P.
Agents for Service: Attention: James A. Bowen
1001 Warrenville Road
Lisle, Illinois 60532
CHAPMAN AND CUTLER
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
E. Title and Amount of Securities An indefinite number of Units
Being Registered: pursuant to Rule 24f-2
promulgated under the
Investment Company Act of
1940, as amended
F. Proposed Maximum Offering Price Indefinite
to the Public of the Securities
Being Registered:
G. Amount of Filing Fee (as required
by Rule 24f-2): $500.00
H. Approximate Date of Proposed _____ Check if it is proposed
Sale to the Public: that this filing will become
effective on ___ at: ___ p.m.
pursuant to Rule 487.
The registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
THE FIRST TRUST GNMA
SERIES 68
CROSS REFERENCE SHEET
Pursuant to Rule 404(c) of Regulation C Under the Securities Act
of 1933
(Form N-8B-2 Items Required by Instruction 1 as to Prospectus on
Form S-6)
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
I. Organization and General Information
1. (a) Name of trust
(b) Title of securities issued Prospectus Front Cover
Page
2. Name and address of Depositor Summary of Essential
Information
Information as to
Sponsor, Trustee
and Evaluator
3. Name and address of Trustee Summary of Essential
Information
Information as to
Sponsor, Trustee
and Evaluator
4. Name and address of principal Information as to
underwriter Sponsor, Trustee
and Evaluator
5. Organization of Trust The First Trust GNMA
6. Execution and termination of The First Trust GNMA
Trust Agreement Other Information
7. Changes of name *
8. Fiscal year *
9. Litigation *
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
II. General Description of the Trust and Securities of the Trust
10. General information regarding The First Trust GNMA
trust's securities Public Offering
Rights of Unit Holders
Information as to
Sponsor, Trustee
and Evaluator
Other Information
11. Type of securities comprising Prospectus Front Cover
units Page
The First Trust GNMA
Portfolio
12. Certain information regarding *
periodic payment certificates
13. (a) Load, fees, expenses, etc. Prospectus Front Cover
Page
Summary of Essential
Information
The First Trust GNMA
Rights of Unit Holders
(b) Certain information regarding *
periodic payment certificates
(c) Certain percentages Prospectus Front Cover
Page
Summary of Essential
Information
The First Trust GNMA
Public Offering
(d) Certain other fees, etc. Rights of Unit Holders
payable by holders
(e) Certain profits receivable Public Offering
by depositor, principal Portfolio
underwriter, trustee or
affiliated persons
(f) Ratio of annual charges to *
income
14. Issuance of trust's securities Rights of Unit Holders
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
15. Receipt and handling of payments *
from purchasers
16. Acquisition and disposition of The First Trust GNMA
underlying securities Information as to
Sponsor, Trustee
and Evaluator
17. Withdrawal or redemption Public Offering
Rights of Unit Holders
18. (a) Receipt and disposition Prospectus Front Cover
of income Page
Rights of Unit Holders
(b) Reinvestment of Rights of Unit Holders
distributions
(c) Reserves or special funds The First Trust GNMA
Rights of Unit Holders
(d) Schedule of distributions *
19. Records, accounts and reports Rights of Unit Holders
20. Certain miscellaneous provisions Information as to
of Trust Agreement Sponsor, Trustee
and Evaluator
Other Information
21. Loans to security holders *
22. Limitations on liability The First Trust GNMA
Information as to
Sponsor, Trustee
and Evaluator
23. Bonding arrangements Contents of Registration
Statement
24. Other material provisions of *
Trust Agreement
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of Depositor Information as to
Sponsor, Trustee
and Evaluator
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
26. Fees received by Depositor *
27. Business of Depositor Information as to
Sponsor, Trustee
and Evaluator
28. Certain information as to offi- *
cials and affiliated persons
of Depositor
29. Voting securities of Depositor *
30. Person controlling Depositor *
31. Payments by Depositor for *
certain services rendered to
trust
32. Payments by Depositor for *
certain services rendered
to trust
33. Remuneration of employees of *
Depositor for certain services
rendered to trust
34. Remuneration of other persons *
for certain services rendered
to trust
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities Public Offering
by states
36. Suspension of sales of trust's *
securities
37. Revocation of authority to distribute *
38. (a) Method of distribution Public Offering
(b) Underwriting agreements Public Offering
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as to
underwriter Sponsor, Trustee
and Evaluator
(b) NASD membership of principal Information as to
underwriter Sponsor, Trustee
and Evaluator
40. Certain fees received by *
principal underwriter
41. (a) Business of principal Information as to
underwriter Sponsor, Trustee
and Evaluator
(b) Branch offices of principal *
underwriter
(c) Salesmen of principal *
underwriter
42. Ownership of trust's securities *
by certain persons
43. Certain brokerage commissions *
received by principal underwriter
44. (a) Method of valuation Prospectus Front Cover
Page
Summary of Essential
Information
The First Trust GNMA
Public Offering
(b) Schedule as to offering price *
(c) Variation in offering price Public Offering
to certain persons
45. Suspension of redemption rights *
46. (a) Redemption valuation Rights of Unit Holders
(b) Schedule as to redemption *
price
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
47. Maintenance of position in Public Offering
underlying securities Rights of Unit Holders
V. Information Concerning the Trustee or Custodian
48. Organization and regulation Information as to
of Trustee Sponsor, Trustee
and Evaluator
49. Fees and expenses of Trustee The First Trust GNMA
50. Trustee's lien The First Trust GNMA
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's *
securities
VII. Policy of Registrant
52. (a) Provisions of trust agreement Rights of Unit Holders
with respect to selection or
elimination of underlying
securities
(b) Transactions involving *
elimination of underlying
securities
(c) Policy regarding substitution Rights of Unit Holders
or elimination of
underlying securities
(d) Fundamental policy not *
otherwise covered
53. Tax status of trust The First Trust GNMA
VIII. Financial and Statistical Information.
54. Trust's securities during *
last ten years
55.
56. Certain information regarding *
57. periodic payment certificates
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
58.
59. Financial statements (Instructions Opinion of Independent
1(c) to Form S-6) Public Accountants
Statement of Net Assets
of the Fund
* Inapplicable, omitted, answer negative or not required.
SUBJECT TO COMPLETION, DATED MAY 13, 1994
The First Trust GNMA
Series 68
The Trust consists of the underlying separate unit investment
trust designated Series 68. The Trust consists of a 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"), delivery statements relating to contracts
for the purchase of certain such securities and an irrevocable
letter of credit (the "Securities" or "Ginnie Maes") including
so-called "Ginnie Mae IIs." All of the Securities in Series 68
of the Trust consist of pools of mortgages on 1- to 4-family dwellings
with terms of up to 30 years.
The Objectives of each Series of the Trust are monthly distributions
of interest through an investment in a portfolio of Ginnie Maes.
With the deposit of the Securities in the Trust on
, the Initial Date of Deposit, the Sponsor established
for Series 68 a percentage relationship between the principal
amount of Ginnie Maes of specified interest rates and ranges of
maturities in the related Portfolio. From time to time, pursuant
to the Indenture, following the Initial Date of Deposit the Sponsor
may deposit additional Securities in Series 68 of the Trust and
Units may be continuously offered for sale to the public by means
of this Prospectus resulting in a potential increase in the outstanding
number of Units of the Trust. Any additional Securities deposited
in Series 68 of the Trust will maintain as far as practicable
the original percentage relationship between the principal amounts
of Ginnie Maes of specified interest rates and ranges of maturities
in the original Portfolio of the Trust. Precise duplication of
this original percentage relationship may not be possible because
fractions of Ginnie Maes may not be purchased and identical securities
may not be available, but duplication will continue to be the
goal in connection with any such additional Securities. These
original percentage relationships on the Initial Date of Deposit
are set forth under "What is the First Trust GNMA?"
The guaranteed payment of interest afforded by Ginnie Maes may
make an investment in Series 68 of the Trust 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, $250
for tax-deferred retirement plans such as IRA accounts) during
the initial offering period at a Public Offering Price per Unit
of approximately $1.00 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 Series 68 of the
Trust Suitable for Retirement Plans?"
Reinvestment of Principal by the Trust. In an effort to minimize
the effect of principal payments and prepayments during the first
10 years of the Trust ending on December 31, 2004 (the "Reinvestment
Period"), the Sponsor will direct the Trustee to reinvest all
distributions of principal into additional Ginnie Maes which are
similar as to maturity and interest rates as the Securities upon
which the principal was received. There may be times in which
such reinvestment will not be feasible because the additional
Ginnie Maes are not available or for other reasons described herein.
Semi-annually, amounts in the Principal Account which cannot be
reinvested during the Reinvestment Period will be distributed
to Unit holders unless the amount available for distribution is
less than $1.00 per 1,000 Units.
For Information on Estimated Current Return (if applicable) and
Estimated Long-Term Return, see "Special Information." Estimated
cash flows for Series 68 of the Trust are available upon request at no
charge from the Sponsor.
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.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY
NOT BE SOLD NOR MAY OFFERS BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE
AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE
BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
The date of this Prospectus is
Page 1
The Public Offering Price per 1,000 Units is equal to the aggregate
offering price of the Securities in the portfolio of a Series
of the Trust divided by the number of Units outstanding multiplied
by 1,000, plus a sales charge of 3.80% of the Public Offering
Price (3.950% of the amount invested) for Series 68. In addition,
on transactions entered into for settlement after
, there will be added an amount equal to accrued
interest from to the date of settlement
(five business days after order) less distributions from the Interest
Account subsequent to . The secondary
market Public Offering Price per 1,000 Units will be equal to
the aggregate bid price of the Securities in the portfolio of
a Series of the Trust divided by the number of Units outstanding
multiplied by 1,000, plus a sales charge of 4.00% (4.167% of the
amount invested) for Series 68. At the opening of business on
the Initial Date of Deposit, , the Public
Offering Price per 1,000 Units would have been $ for
Series 68. The sales charge is reduced on a graduated scale for
sales involving at least $100,000. See "How is the Public Offering
Price Determined?", particularly for the method of evaluation.
Each Unit represents an undivided interest in the principal and
net income of a Series of the Trust in the ratio of one Unit for
each $1.00 principal amount of Securities initially deposited
in such Series.
Monthly Distributions of interest received by Series 68 of the
Trust 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?" Monthly distributions
will be made on or shortly after the first day of each month (except
for the distribution which would be made on January 1, which instead
will be on or before December 31), to all Unit holders of record
on the 1st day of the preceding month, commencing with the First
Distribution on . The
estimated distribution will consist entirely of
principal which will be reinvested as discussed in "What is the
First Trust GNMA?" On the regular
monthly distribution of interest will commence. During the Reinvestment
Period, amounts of principal which are not reinvested will be
distributed to all Unit holders of record on June 1 and December
1, respectively. After the Reinvestment Period, amounts of principal
will be distributed in the same manner as monthly distributions
of interest income.
The Sponsor, although not obligated to do so, intends to maintain
a market for the Units of Series 68 at prices based upon the aggregate
offering price of the Securities in the portfolio of Series 68
of the Trust during the initial offering period and at prices
based upon the aggregate bid price of the Securities in the portfolio
of Series 68 of the Trust after the initial offering period. 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
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities-
Sponsor: Nike Securities L.P.
Trustee: United States Trust Company of New York
Evaluator: Securities Evaluation Service, Inc.
<TABLE>
<CAPTION>
The First Trust
GNMA
Series 68
_______________
<S> <C>
General Information
Principal Amount of Securities in the Trust $
Number of Units
Fractional Undivided Interest in the Trust per Unit 1/
Public Offering Price:
Aggregate Offering Price Evaluation of Securities in the Portfolio $
============
Aggregate Offering Price Evaluation per 1,000 Units $
Sales Charge (1) $ 3.80
____________
Public Offering Price per 1,000 Units (2) $
============
Sponsor's Initial Repurchase Price per 1,000 Units (2) $
Redemption Price per 1,000 Units $
Excess of Public Offering Price per 1,000 Units Over Redemption
Price per 1,000 Units (3) $
Excess of Sponsor's Initial Repurchase Price per 1,000 Units Over
Redemption Price per 1,000 Units (3) $
</TABLE>
First Settlement Date
Mandatory Termination Date
Discretionary Liquidation Amount A Trust may be terminated if
the principal amount thereof is
less than the lower of $2,000,000
or 40% of the total principal amount
of Securities deposited in a Trust
during the primary offering period.
Supervisory Fee Maximum of $.15 per 1,000
Units outstanding annually (4)
Evaluator's Fee $0.30 per 1,000 Units outstanding
annually plus $0.25 per evaluation for
each issue of underlying securities
in excess of 50 issues (treating
separate maturities as separate issues).
Evaluations for purposes of sale, purchase or redemption of Units
are made at 4:00 p.m. Eastern time.
[FN]
(1) Sales charges for the Trust, expressed as a percentage of
the Public Offering Price per Unit and in parenthesis as a percentage
of the Aggregate Offering Price Evaluation per 1,000 Units, are
as follows: 3.80% (3.950%) for Series 68.
(2) Anyone ordering Units for settlement after the First Settlement
Date will pay accrued interest from such date to the date of settlement
(normally five business days after order) less distributions from
the Interest Account subsequent to the First Settlement Date.
For purchases settling on the First Settlement Date, no accrued
interest will be added to the Public Offering Price. After the
initial offering period, the Sponsor's Repurchase Price per Unit
will be determined as described under the caption "Will There
Be a Secondary Market?"
(3) See "How May Units be Redeemed?"
(4) Payable to an affiliate of the Sponsor.
Page 3
THE FIRST TRUST GNMA
What is the First Trust GNMA?
The First Trust GNMA consists of the underlying separate unit
investment trust designated as Series 68 (a "Series") and such
Series is also referred to herein as the "Trust." The Trust 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, United States Trust Company
of New York, as Trustee, Securities Evaluation Service, Inc.,
as Evaluator and First Trust Advisors L.P., as Portfolio Supervisor.
On the Initial Date of Deposit, the Sponsor deposited with the
Trustee $ for Series 68 principal amount of taxable
mortgage-backed securities of the fully modified pass-through
type, delivery statements relating to contracts for the purchase
of certain such obligations and an irrevocable letter of credit
issued by a financial institution in the amount required for such
purchases (the "Securities" or "Ginnie Maes") including so-called
Ginnie Mae IIs. The Trustee thereafter credited to the account
of the Sponsor Units for Series 68 representing
the entire ownership of the Trust at the Initial Date of Deposit,
which Units are being offered hereby. 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 Trust pursuant to the Indenture.
The objectives of the Trust are monthly distributions of interest
through an investment in a 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 Trust, as such, are not backed by such full faith and credit.
The Trust may be an appropriate 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 additional Securities
may be deposited in the Trust as described herein, the Trust is
not expected to retain its present size and composition. Any additional
Securities deposited in the Trust will maintain as far as practicable
the original percentage relationship between the principal amounts
of Ginnie Maes of specified interest rates and ranges of maturities
in the original portfolio of the Trust. Precise duplication of
the original percentage relationship may not be possible due to
the fact that Ginnie Maes of a specific range of maturities and
interest rate may not be available and fractions of Ginnie Maes
may not be purchased.
Reinvestment. During the first 10 years of the Trust ending on
December 31, 2004 (the "Reinvestment Period"), the Sponsor will
direct the Trustee to reinvest all payments and prepayments of
principal from the underlying Ginnie Maes into additional Ginnie
Mae securities which have similar maturities and interest rates
as the Securities upon which the principal was received. Reinvestment
of principal into additional Ginnie Maes during periods when interest
rates are at a level different from those prevailing at the Date
of Deposit will have the effect of increasing or decreasing monthly
distributions of interest income from the Trust. Reinvestment
of principal into the Ginnie Maes eligible for inclusion in the
Trust will also have the effect of increasing the par value of
the Units for reinvestment during periods of increasing interest
rates from those prevailing at the Date of Deposit and during
periods of declining interest rates the par value of the Units
will decrease. There may be times when the Principal Account of
the Trust has cash which cannot be reinvested because additional
Ginnie Maes are not available or the amount of cash in the Principal
Account is insufficient to buy additional Ginnie Maes without
the Trust incurring disproportionate brokerage expenses. During
these periods the amounts in the Principal Account will remain
uninvested, thus, reducing the return to Unit holders. Amounts,
if any, which cannot be reinvested during the Reinvestment Period
in additional Ginnie Maes will be distributed to Unit holders
semiannually unless the amount available for distribution is less
than $1.00 per 1,000 Units. In such a circumstance, Unit holders
should be aware that at the time of the receipt of such principal
they may not be able to reinvest such principal in other securities
at a yield equal to or in excess of the yield which such principal
would have earned to Unit holders had the principal been reinvested
Page 4
in additional Ginnie Maes by the Trustee. In addition, principal
will not be reinvested and will be distributed to Unit holders
if required to maintain the status of the Trust as a "regulated
investment company." See "What is the Tax Status of Unit Holders."
The costs of acquiring the additional Ginnie Maes will be borne
by the Trust and hence, the Unit holders. The Trustee may retain
the Sponsor to purchase the additional Ginnie Maes and pay them
usual and customary brokerage commissions. There will be no attempt
to time or delay the purchase of additional Ginnie Maes for reinvestment
to take advantage of market movements.
In selecting Ginnie Maes for deposit in the Trust, 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" for information with respect to the Securities
initially selected for deposit in the Trust. The Ginnie Maes included
in the Trust are backed by the indebtedness secured by the mortgages
contained in the underlying mortgage pools.
An investment in Units of the Trust 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. 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 Trust consists of 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 specified range of maturities includes individual mortgage-backed
securities which have varying ranges of maturities within each
range set forth in the Portfolio. The percentage relationships
of the Securities deposited in the Trust on the Initial Date of
Deposit are as follows: Series 68- % coupon Ginnie Maes
maturing within a range of through constitute
% of the Portfolio. Current market conditions accord
no difference in price among individual Ginnie Mae securities
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 market value of the individual Ginnie Maes. At such time,
any additional purchases by the Trust will take into account the
maturities of the individual securities. The mortgages underlying
the Ginnie Maes in Series 68 of the Trust have a 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 Trust 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
Page 5
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 Trust 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.
The contracts to purchase Securities delivered to the Trustee
represent an obligation by issuers or dealers to deliver Securities
to the Sponsor for deposit in the Trust. Contracts are typically
settled and the Securities delivered within a few business days
subsequent to the Initial Date of Deposit. The percentage of the
aggregate principal amount of the Securities, if any, relating
to "when, as and if issued" Securities or other Securities with
delivery dates after the date of settlement for a purchase made
on the Initial Date of Deposit is indicated in the Portfolio.
Interest on "when, as and if issued" and delayed delivery Securities
begins accruing to the benefit of Unit holders on their dates
of delivery. Because "when, as and if issued" Securities have
not yet been issued, as of the Initial Date of Deposit the Trust
is subject to the risk that the issuers thereof might decide not
to proceed with the offering of such Securities or that the delivery
of such Securities or the delayed delivery Securities may be delayed.
If such Securities, or replacement securities described below,
are not acquired by the Trust or if their delivery is delayed,
the Estimated Returns shown in the "Special Information" may be
reduced.
In the event of a failure to deliver any Securities that have
been purchased for a Series of the Trust under a contract ("Failed
Securities"), the Sponsor is authorized under the Indenture to
direct the Trustee to acquire other specified securities ("Replacement
Securities") to make up the original corpus of the Series of the
Trust. The Replacement Securities must be purchased within 20
days after delivery of the notice of the failed contract and the
purchase price (exclusive of accrued interest) may not exceed
the amount of funds reserved for the purchase of the Failed Securities.
The Replacement Securities (i) must satisfy the criteria previously
described for Securities originally included in a Series of the
Trust, (ii) must maintain as far as practicable the original percentage
relationship between the principal amounts of Ginnie Maes of specified
interest rates and years of maturities in the Portfolio, and (iii)
shall not be "when, as and if issued" securities. Precise duplication
of Failed Securities may not be possible because fractions of
Ginnie Maes may not be purchased, but duplication will be the
goal of the Sponsor with respect to Replacement Securities. Whenever
Replacement Securities have been acquired for a Series of the
Trust, the Trustee shall, within five days thereafter, notify
all Unit holders of such Series of the Trust of the acquisition
of the Replacement Securities and shall, on the next monthly distribution
date which is more than 30 days thereafter, make a pro rata distribution
of the amount, if any, by which the cost to the affected Series
of the Trust of the Failed Securities exceeded the cost of the
Replacement Securities plus accrued interest. Except as provided
below, once the original corpus of the Trust is acquired, the
Trustee will have no power to vary the investment of a Series
of the
Page 6
Trust, i.e., the Trustee will have no managerial power to take
advantage of market variations to improve a Unit holder's investment.
If the right of limited substitution described in the preceding
paragraph shall not be utilized to acquire Replacement Securities
in the event of a failed contract, the Sponsor shall refund the
sales charge attributable to such failed contract pro rata to
all Unit holders, and the principal and accrued interest (at the
coupon rate of the relevant Securities to the date the Sponsor
is notified of the failure) attributable to such failed contract
shall be distributed not more than thirty days after the determination
of such failure or at such earlier time as the Trustee in its
sole discretion deems to be in the interest of the Unit holders.
Unit holders should be aware that at the time of the receipt of
such refunded principal they may not be able to reinvest such
principal in other securities at a yield equal to or in excess
of the yield which such principal would have earned to Unit holders
had the Failed Securities been delivered to a Series of the Trust.
The Sponsor may, from time to time, deposit additional Ginnie
Maes in Series 68 of the Trust (while additional Units are to
be offered to the public) maintaining, as closely as practicable,
the original percentage relationship between the principal amounts
of Ginnie Maes of specified interest rates and years of maturities
in the Portfolio of such Series.
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 1,000 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 SERIES OF THE TRUST IS LOWER OR
HIGHER THAN PAR, (II) WHETHER PRINCIPAL 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 initially offered represents the fractional undivided
interest in a Series of the Trust set forth in the "Summary of
Essential Information." To the extent that any Units are redeemed
by the Trustee, the fractional undivided interest in a Series
of the Trust represented by each unredeemed Unit will increase,
although the actual interest in such Series represented by such
fraction will remain substantially unchanged. However, if additional
Units are issued by Series 68 of the Trust (in connection with
the deposit by the Sponsor of additional Securities), the aggregate
value of Securities in such Series of the Trust will be increased
by amounts allocable to additional Units, and the fractional undivided
interest represented by each Unit in the balance will be decreased.
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 Trust
are backed by the indebtedness secured by underlying mortgage
pools of up to 30 year mortgages in the case of Series 68 of the
Trust 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.
Page 7
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 Trust are mortgages
on 1- to 4-family dwellings (having a stated maturity of up to
30 years for Securities in Series 68 of the Trust but an estimated
average life of considerably less as set forth in "Special Information").
In general, the mortgages in these pools provide 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 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 from more than
one issuer. By allowing pools to consist of multiple issuers,
it allows for larger and more geographically diverse pools. Unlike
Ginnie Mae I's which have a minimum pool size of $1 million, Ginnie
Mae II's have a minimum pool size of $7 million. In addition,
the interest rates on the mortgages within the Ginnie Mae II pools
will vary unlike the mortgages within pools in Ginnie Mae I's
which all have the same rate. The rates on the mortgages will
vary from 50 basis points to 150 basis points above the coupon
rate on the GNMA bond. This 50-150 basis point spread is allowed
for servicing and custodial fees as well as the GNMA's guaranty
fee. 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.
All of the Ginnie Maes in the Trust, including the Ginnie Mae
IIs, are of the "fully modified pass-through" type, i.e., they
provide for timely monthly payments to the registered holders
thereof (including the Trust) 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 Trust 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 Trust
are intended
Page 8
to be sufficient to make the required payments of principal of
and interest on 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 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."*
* 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.
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 Trust) 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 Trust and
not to the Units offered hereby.
Monthly payments of principal will be made, and additional prepayments
of principal may be made, to the Trust in respect of the mortgages
underlying the Ginnie Maes in the Trust. All of the mortgages
in the pools relating to the Ginnie Maes in the Portfolio of the
Trust 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 up to 30 years for Series 68 of the Trust,
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. See "Special
Information."
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?"
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 repay
Page 9
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 estimates or experience
of the FHA, other mortgage lenders, dealers or market makers or
other Ginnie Mae investors. It is not possible to meaningfully
predict prepayment levels regarding the Ginnie Maes in the Trust.
Even though the reinvestment of principal may mitigate the effects
of prepayments of principal, the termination of the Trust might
be accelerated as a result of prepayments made as described herein.
In addition to prepayments which cannot be reinvested by the Trustee,
sales of Securities of a Series of the Trust under certain permitted
circumstances may result in an accelerated termination of such
Series of the Trust. 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 Trust to a size resulting in such termination. Early termination
of such Series of the Trust 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 may result for
tax purposes from termination of a Series of the Trust.
What is the Rating of the Units?
Standard & Poor's Corporation has rated Units of each Series of
the Trust "AAA." This is the highest rating assigned by Standard
& Poor's Corporation. See "Description of Standard & Poor's Corporation
Rating." The obtaining of this rating by the Trust should not
be construed as an approval of the offering of the Units by Standard
& Poor's Corporation or as a guarantee of the market value of
a Series of the Trust or the Units. Standard & Poor's Corporation
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 a Series of the Trust or sales by the Trust
of Securities for less than the purchase price paid by a Series
of the Trust 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 Corporation will
be compensated by the Sponsor for its services in rating Units
of a Series of the Trust.
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 each Series of
the Trust are offered on a dollar price basis, the estimated rate
of return on an investment in Units of a Series of the Trust is
stated in terms of "Estimated Current Return and Estimated Long-Term
Return."
At the opening of business on the Initial Date of Deposit, the
Estimated Current Return (if applicable) and the Estimated Long-Term
Return for each Series is as set forth in the "Special Information"
herein. Estimated Current Return is computed by multiplying the
Estimated Net Annual Interest Rate per 1,000 Units by $1,000 and
dividing the result by the Public Offering Price per 1,000 Units.
The Estimated Net Annual Interest Rate per Unit will vary with
changes in fees and expenses of the Trustee and the Evaluator
and with the principal prepayment, reinvestment of principal,
redemption, maturity, exchange or sale of Securities while the
Public Offering Price will vary with changes in the offering price
of the underlying Securities; therefore, there is no assurance
that the present Estimated Current Return will be realized in
the future. Estimated Current Return does not take into account
timing of distributions of income and other amounts (including
delays in distribution to Unit Holders), and it only partially
reflects the effects of premiums paid and discounts realized in
the purchase price of Units.
Unlike Estimated Current Return, Estimated Long-Term Return is
a measure of the estimated return to the investor earned over
the estimated life of a Series of the Trust. The Estimated Long-Term
Return represents
Page 10
an average of the yields to estimated average life of the Securities
in a Series of the Trust and adjusted to reflect expenses and
sales charges. The estimated long-term return figure is calculated
using an estimated average life for the Securities as set forth
in "Special Information" herein. Estimated average life is an
essential factor in the calculation of Estimated Long-Term Return.
When a Series of the Trust 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 a
Series of the Trust 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 a Series of the Trust, 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 a Series of
the Trust provided in "Special Information" herein is subject
to change with alterations in the data used in any of the underlying
assumptions and assumes that principal payments and prepayments
will be reinvested into similar securities. 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 of a Series in the Trust 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, over or understate
the impact of sales charges. Both of these factors may result
in a lower return.
Both Estimated Current Return (if applicable) and Estimated Long-Term
Return are subject to fluctuation with changes in the compositions
of the Portfolio of a Series of the Trust, principal payments
and prepayments and changes in market value of the underlying
Securities, reinvestment of principal payments and prepayments
into additional Securities and changes in fees and expenses, including
sales charges, and therefore can be materially different than
the figures set forth in "Special Information" herein. 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. Estimated cash
flows for the Trust are available without charge to any potential
investor making an oral or written request to the Sponsor.
Payments received in respect of the mortgages underlying the Ginnie
Maes in a Series of the Trust 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
Page 11
such mortgages. Therefore, in the absence of reinvestment, principal
payments in later years would be substantially less since the
aggregate unpaid principal balances of such underlying mortgages
would have been greatly reduced. To the extent that the underlying
mortgages bearing higher interest rates in a Series of the Trust
are prepaid faster than the other underlying mortgages, the Net
Annual Interest Rate per Unit and the Estimated Returns on the
Units with respect to such Series may decline whether or not the
Trustee is able to reinvest principal. Monthly payments to the
Unit holders will reflect all of the foregoing factors.
In order to acquire certain of the Securities contracted for by
the Sponsor for deposit in a Series of the Trust, it may be necessary
to pay on the settlement dates for delivery of such Securities
amounts covering accrued interest on such Securities which exceed
the amounts furnished by the Sponsor. The Trustee has agreed to
pay for any amounts necessary to cover any such excess and will
be reimbursed therefor, without interest, when funds become available
from interest payments on the particular Securities with respect
to which such payments have been made.
Record Dates for monthly distributions of interest are the first
day of each month and the Distribution Dates for distributions
will be on or shortly after the first day of the succeeding month
(except for the distribution which would be made on January 1
which instead will be made on or before December 31).
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 Securities in each Series of the Trust is paid monthly to the
Series. However, interest on the Securities in a Series of the
Trust is accounted for daily on an accrual basis. Because of this,
a Series of the Trust always has an amount of interest earned
but not yet collected by the Trustee. For this reason, with respect
to sales settling subsequent to the First Settlement Date 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 the
Trust the amount, if any, of accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest which would
otherwise have to be paid in addition to the Public Offering Price
in the sale of Units to the public, the Trustee will advance the
amount of accrued interest as of the First Settlement Date and
the same will be distributed to the Sponsor as the Unit holder
of record as of the First Settlement Date. Consequently, the amount
of accrued interest to be added to the Public Offering Price of
Units will include only accrued interest from the First Settlement
Date to the date of settlement of Units purchased, less any distributions
from the Interest Account subsequent to the First Settlement Date.
See "Rights of Unit Holders-How are Interest and Principal Distributed?"
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 a Series of the Trust. The Trustee
will recover its advancements without interest or other costs
to a Series of the Trust from interest received on the Securities
in such Series of the Trust. When these advancements have been
recovered, regular distributions of interest to Unit holders will
commence (see "Rights of Unit Holders-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 a Series of the Trust
and distributed to Unit holders. 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 Trust, the Sponsor has borne all the expenses
of creating and establishing the Trust, 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
Page 12
with its activities relating to the Trust except that it may receive
brokerage commissions in connection with the acquisition of Securities
by the Trustee with reinvested principal. It is currently contemplated
that the Trustee will acquire such Securities in principal transactions
directly from dealers and that no brokerage fees will be paid.
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 under "Summary of Essential Information,"
for providing portfolio supervisory services for the Trust. The
fee may exceed the actual costs of providing such supervisory
services for this Trust, 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.
For purposes of evaluation of the Securities in a Series of the
Trust, the Evaluator will receive a fee as indicated in "Summary
of Essential Information." The Trustee pays certain expenses of
a Series of the Trust for which it is reimbursed by such Series
of the Trust. The Trustee will receive for its ordinary recurring
services to each Series of the Trust an annual fee computed at
$. per annum per 1,000 Units outstanding of underlying Securities.
For a discussion of the services performed by the Trustee pursuant
to its obligations under the Indentures, 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 Trust 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 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 with respect to a Series of the
Trust are or may be incurred by a Series of the Trust: all expenses
(including legal, annual auditing expenses and the costs of acquiring
Securities with reinvested principal) of the Trustee incurred
in connection with its responsibilities under the Indentures,
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 a Series of the Trust 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 connections with its acceptance or administration
of a Series of the Trust; 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
Trust; all taxes and other government charges imposed upon the
Securities or any part of a Series of the Trust (no such taxes
or charges are being levied or made upon termination of a Series
of the Trust. The above expenses and the Trustee's annual fee,
when paid or owing to the Trustee, are secured by a lien on each
Series of the Trust. 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.
Unless the Sponsor determines that such an audit is not required,
the Indenture requires the accounts of a Series of the Trust shall
be audited on an annual basis at the expense of such Series by
independent auditors selected by the Sponsor. So long as the Sponsor
is making a secondary market for Units, the Sponsor shall bear
the cost of such annual audits to the extent such cost exceeds
$.50 per 1,000 Units. Unit holders of a Series of the Trust covered
by an audit may obtain a copy of the audited financial statements
from the Trustee upon request.
Page 13
What is the Tax Status of Unit Holders?
Series 68 of 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, as amended (the "Code"). By qualifying for
and electing such treatment, Series 68 of the Trust will not be
subject to Federal income tax on taxable income or net capital
gains distributed to Unit holders. Under the Code, an excise tax
is imposed on a Series of the Trust to the extent such Series
fails to timely distribute specified percentages of the Trust's
net investment income and capital gain net income. Series 68 of
the Trust intends to timely distribute taxable income and capital
gains to avoid the imposition of such tax.
Series 68 of the Trust intends to file its Federal income tax
return on a calendar year basis. In any taxable year of Series
68 of the Trust, the distributions of the Series' income, other
than distributions which are designated as capital gain dividends,
will constitute dividends taxable as ordinary income to the Unit
holders to the extent that the amount of such distributions do
not exceed the current and accumulated earnings and profits of
Series 68 of the Trust. Distributions will not be eligible for
the dividends received deduction for corporations. 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 the Trust as long as the Units of a Series in a trust
are held by or for 500 or more persons at all times during the
taxable year. In the event the Units of a Series in a Trust are
held by fewer than 500 persons, additional taxable income will
be realized by the individual Unit holders in excess of the distributions
received from the Trust.
Distributions by Series 68 of the Trust that are designated by
it 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 the 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 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 will realize
a taxable gain or loss when his Units are sold or redeemed for
an amount different from his original cost after reduction for
previous distributions to the extent that they represented a return
of capital. Provided that Units constitute capital assets in the
hands of a Unit holder, such gain or loss will 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. For taxpayers
other than corporations, net capital gains are presently subject
to a maximum stated marginal tax rate of 28 percent.
If a Ginnie Mae has been purchased by Series 68 of the Trust at
a market discount (i.e., for a purchase price less than its outstanding
principal amount), a portion of each payment of principal on the
Ginnie Mae will constitute ordinary income to Series 68 of the
Trust to the extent of any accrued market discount. 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 Series 68 of the Trust shall receive an annual
statement describing the tax status of the distributions paid
by Series 68 of the Trust.
Investment in Series 68 of the Trust 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
Page 14
Plans, pension funds and other tax-deferred retirement plans.
(See "Why are Investments in a Series of the Trust Suitable for
Retirement Plans?")
The foregoing discussions relate only to Federal income taxes
on distributions by the Trust; such distributions may also be
subject to state and local taxation. Unit holders should consult
their own tax advisers regarding questions of state and local
taxation applicable to the Units. Foreign holders should consult
their own tax advisers with respect to United States Federal income
tax consequences of ownership of Units.
It should be remembered that even if distributions are reinvested
through the Distribution Reinvestment Option they are still treated
as distributions for income tax purposes (see "How Can Distributions
to Unit Holders be Reinvested?").
Why are Investments in a Series of the Trust Suitable for Retirement
Plans?
A Series of the 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.
Fees and charges with respect to such plans may vary.
How Can Distributions to Unit Holders be Reinvested?
The Sponsor has entered into an arrangement with Oppenheimer Management
Corporation which permits Unit holders of a Series of the Trust
to elect to have each distribution of interest income or principal,
including capital gains, or both, on their Units automatically
reinvested in shares of Oppenheimer Government Securities Fund.
Oppenheimer Management Corporation is the investment adviser of
Oppenheimer Government Securities Fund. 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 and
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.
Each person who purchases Units of a Series of the Trust may use
the accompanying form to elect to become a participant in the
Reinvestment Option with respect to Oppenheimer Government Securities
Fund. After electing participation, each distribution of interest
income, or principal, including capital gains, 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 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 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 all have
the right to terminate the Reinvestment Option, in whole or in
part.
It should be remembered that even if distributions are reinvested
through the Reinvestment Option they are still treated as distributions
for income tax purposes.
Unit holders of a Series of the Trust participating in IRAs, Keogh
Plans, pension funds and other tax-deferred retirement plans may
find it highly advantageous to participate in the Reinvestment
Option in order
Page 15
to keep the monies in the account fully invested at all times.
Should such option be selected, an account with an identical registration
to that established at the time the Units of a Series of the Trust
are purchased will be set up as 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 the 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 a Series of the Trust Suitable for Retirement
Plans?"
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. During the initial
offering period, the Public Offering Price is determined by adding
to the Evaluator's determination of the aggregate offering price
of the Securities in a Series of the Trust, including any money
in the Principal Account other than money required to redeem tendered
Units, an amount of 3.950% (equal to a sales charge of 3.80% of
the Public Offering Price which is equivalent to 3.950% of the
net amount invested) for Series 68 of the Trust. During the initial
offering period, the Sponsor's Repurchase Price is equal to the
Evaluator's determination of the aggregate offering price of the
Securities in a Series of the Trust. For secondary market sales
after the completion of the initial offering period, the Public
Offering Price is based on the Evaluator's determination of the
aggregate bid price of the Securities in a Series of the Trust,
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 Series 68 of the Trust. Also added
to the Public Offering Price is a proportionate share of interest
accrued but unpaid on the Securities after the First Settlement
Date to the date of settlement of Units (see "The First Trust
GNMA-How is Accrued Interest Treated?").
The sales charge during the initial offering period is reduced
by a discount as indicated below for volume purchases:
<TABLE>
<CAPTION>
Series 68
Discount Dealer Concession
Dollar Amount of Expressed as a Expressed as a
Transaction at Public Percentage of Percentage of
Offering Price Public Offering Price Public Offering Price
_____________________ _____________________ _____________________
<S> <C> <C>
$100,000-$249,999 .25% 2.50%
$250,000-$499,999 .50% 2.50%
$500,000-$999,999 .75% 2.70%
$1,000,000 or more 1.50% 2.70%
</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 initial and secondary
offering periods.
Any such reduced sales charge, including pursuant to a Letter
of Intent described below, shall be the responsibility of the
selling Underwriter or dealer. For Series 68 of the Trust 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 Trust by the same person on any
one day from any one Underwriter or dealer. For purposes of calculating
the applicable sales charge, purchases of Units in the Trust will
not be aggregated with any other purchases by the same person
of units in any series of tax-exempt or other 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
Page 16
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 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 Underwriter
or 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.
On the Initial Date of Deposit, the Public Offering Price per
1,000 Units with respect to each Series of the Trust is as indicated
in the "Summary of Essential Information." In addition to fluctuations
in the amount of interest accrued but unpaid on Securities in
a Series of the Trust, the Public Offering Price at any time during
the initial offering period will vary from the Public Offering
Price stated herein in accordance with fluctuations in the prices
of the underlying Securities.
The aggregate price of the Securities in a Series of the Trust
is determined by Securities Evaluation Service, Inc. acting as
evaluator (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 Trust; (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.
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 of the various mortgages underlying each
of the Ginnie Maes in the Trust 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 Trust,
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 will be reinvested into comparable securities
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 each Series
of the Trust due to the number of mortgages underlying each Ginnie
Mae and the number of such Securities in each Series of the Trust.
However, there can be no assurance that they will not be material.
For purposes of the determination by the Evaluator of the offering
prices and bid prices of the Ginnie Maes in each Series of the
Trust 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 per Unit, 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 each Series of the
Trust. Nevertheless, the Sponsor will adopt procedures as to pricing
and evaluation for the Units of the Trust, 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 per Unit, the Sponsor's Repurchase Price
per Unit in the secondary market and the Redemption Price per
Unit.
Page 17
During the initial public offering period, a determination of
the aggregate price of the Securities in each Series of the Trust
is made by the Evaluator on an offering price basis, as of the
close of trading on the New York Stock Exchange on each day on
which it is open, effective for all sales made subsequent to the
last preceding determination. For secondary market purposes, the
Evaluator will be requested to make such a determination, 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.
The Public Offering Price of the Units during the initial offering
period is equal to the offering price per Unit of the Securities
in a Series of the Trust plus the applicable sales charge. After
the completion of the initial offering period, the secondary market
Public Offering Price will be equal to the bid price per Unit
of the Securities in a Series of the Trust plus the applicable
sales charge. The offering price of Securities in a Series of
the Trust was greater than the bid price of such Securities on
the Initial Date of Deposit by the aggregate amount and the amount
per 1,000 Units indicated in the Portfolio.
Although payment is normally made five 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 five 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 "Rights of Unit Holder-How May Units be Redeemed?" for information
regarding the ability to redeem Units ordered for purchase.
How are Units Distributed?
With respect to Series 68 of the Trust during the initial offering
period, Units issued on the Initial Date of Deposit and additional
Units issued after such date in respect of additional Ginnie Maes
deposited by the Sponsor, will be distributed to the public at
the Public Offering Price. The initial offering period is 30 days
with respect to Series 68 of the Trust. Such initial offering
period may be extended by the Sponsor for up to five additional
successive 30 day periods (i.e., until 180 days after the Initial
Date of Deposit). Units of a Series reacquired by the Sponsor
during the initial offering period may be resold at the then current
Public Offering Price. Upon completion of the initial offering
period with respect to all Series of the Trust, Units repurchased
in the secondary market (see "Will There be a Secondary Market?")
may be offered by this Prospectus at the secondary market public
offering price determined in the manner described above.
It is the intention of the Sponsor to qualify Units of the Trust
for sale in a number of states. Sales initially will be made to
dealers and others at prices which represent a concession or agency
commission of $25.00 per 1,000 Units on Series 68 of the Trust,
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 Trust 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 Trust 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.
What are the Profits of the Sponsor?
The Underwriters, including the Sponsor, will receive a gross
sales commission equal to 3.80% of the Public Offering Price (equivalent
to 3.950% of the net amount invested) for Series 68 of the Trust.
The Sponsor will receive from the other Underwriters the excess
of such gross sales commission over 2.60% of the Public Offering
Price for Series 68 of the Trust. Although any reduced sales charge
shall be the responsibility of the selling Underwriter or dealer,
the Sponsor will reimburse Underwriters or dealers for discounts
made available
Page 18
to purchasers as described in "How is the Public Offering Price
Determined?" See "Underwriting" for information regarding additional
concessions available to Underwriters, dealers and others. In
addition, the Sponsor may be considered to have realized a profit
or the Sponsor may be considered to have sustained a loss, as
the case may be for each Trust, in the amount of any difference
between the cost of the Securities to each Series of the Trust
and the cost of such Securities to the Sponsor. See "Portfolio"
under the heading "Profit or (Loss) to Sponsor" for the Sponsor's
profit or loss on the Initial Date of Deposit. During the initial
offering period, the Underwriters also may realize profits or
sustain losses from the sale of Units to other Underwriters or
as a result of fluctuations after the Initial Date of Deposit
in the offering prices of the Securities and hence in the Public
Offering Price received by the Underwriters.
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 a Series of the Trust) and the price at which
Units are resold (which price is also based on the bid prices
of the Securities in such Series and includes a sales charge of
4.0% for Series 68 of the Trust) or redeemed (based on the bid
prices of the Securities in the Series). The secondary market
public offering price of Units may be greater or less than the
cost of such Units to the Sponsor.
Will There be a Secondary Market?
After the initial offering period, 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 portfolio of a Series of the Trust plus interest
accrued to the date of settlement. To the extent that a secondary
market is maintained during the initial offering period with respect
to Series 68 of the Trust, the prices at which Units of a Series
of the Trust will be repurchased will be based upon the aggregate
offering side evaluation of the Securities in the portfolio of
the Series of the Trust. The aggregate bid prices of the underlying
Securities in each Series of the Trust, upon which the Sponsor's
Repurchase Price and the Redemption Price are based, are expected
to be less than the related aggregate offering prices (which is
the evaluation method used during the initial public offering
period). 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.
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 guarantee 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.
Page 19
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 a Series of the Trust; 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 issues 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 Trust) on the fifteenth day of each month
of amounts 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 each Series
of the Trust, 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 on or shortly after the first day of each
month on a pro rata basis to Unit holders of record as of the
preceding Record Date. All distributions will be net of applicable
expenses.
During the Reinvestment Period, the pro rata share of cash in
the Principal Account which has not been reinvested or committed
for reinvestment will also be computed as of the first day of
June and December and distributions to the Unit holders as of
such Record Date will be made on or shortly after July 1 and December
31. After the Reinvestment Period, 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 on the last day of the month. 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 a Series of the Trust, 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 a Series of the Trust. 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 a Series of the Trust. Amounts so withdrawn shall not be considered
a part of the assets of such Series of the Trust 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
Page 20
from the Interest Account and the Principal Account such amounts
as may be necessary to cover redemption of Units by the Trustee.
Record Dates for monthly distributions will be the first day of
each month. Distributions will be made on or shortly after the
first day of the succeeding month (except for the distribution
which would be made on January 1 which instead will be made on
or before December 31). Distributions for an IRA, Keogh, pension
fund 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 a Series of the Trust, 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: the amount
of principal on Securities, and the net proceeds received therefrom
(excluding any portion representing interest), deduction for payment
of applicable taxes and for fees and expenses of a Series of the
Trust, 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 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 seventh
calendar day following such tender, or if the seventh calendar
day is not a business day, on the first business day prior thereto,
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, except that as regards Units received after the
close of trading on the New York Stock Exchange (4:00 p.m. Eastern
time), the date of tender is the next day on which such 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 canceled.
Page 21
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 per Unit (as well as the secondary market
Public Offering Price) will be determined on the basis of the
bid price of the Securities in a Series of the Trust, while the
Public Offering Price of Units during the initial offering period
will be determined on the basis of the offering price of the Securities,
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.
At the opening of business on the Initial Date of Deposit the
Public Offering Price per Unit (which is based on the offering
prices of the Securities in the Trust and includes the sales charge)
exceeded the Unit value at which Units could have been redeemed
(based upon the current bid prices of the Securities in each Series
of the Trust) by the amount per 1,000 Units set forth in the "Summary
of Essential Information." 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 Trust or moneys in the process
of being collected, (2) the value of the Securities in a Series
of the Trust based on the prices of the Securities and (3) interest
accrued thereon, less (a) amounts representing taxes or other
governmental charges payable out of a Series of the Trust and
(b) the accrued expenses of a Series of the Trust. The Evaluator
may determine the value of the Securities in a Series of the Trust
(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 a Series of the Trust, (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 "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 principal and accrued
interest of the Ginnie Maes.
The difference between the bid and offering prices 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.
At the opening of business on the Initial Date of Deposit the
aggregate current offering price of such Securities exceeded the
Redemption Price (based upon current bid prices of such Securities)
by the aggregate amount and the amount per 1,000 Units indicated
in the Portfolio.
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 Trust 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 reinvestment or 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 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 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.
Page 22
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 Trust?
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 the 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 $8 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 (708) 241-4141.
As of December 31, 1993, the total partners' capital of Nike Securities
L.P. was $12,743,032 (unaudited). (This paragraph relates only
to the Sponsor and not to the Trust or to any series thereof or
to any other Underwriters. 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 United States Trust Company of New York with its
principal place of business at 45 Wall Street, New York, New York
10005 and its unit investment trust offices at 770 Broadway, New
York, New York 10003. 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 Comptroller
of the Currency, 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,
Page 23
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 a Series of the Trust 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 Trust 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 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 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
Page 24
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 a Series of the Trust, except for the substitution of Replacement
Securities for Failed Securities or the purchase of additional
Securities 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.
A Series of the Trust may be liquidated at any time by consent
of 100% of the Unit holders or by the Trustee when the principal
amount of the Securities owned by such Series as shown by any
evaluation, is less than the lower of $2,000,000 or 40% of the
total principal amount of the Securities initially deposited in
such Series, 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. If a Series
of the Trust is liquidated because of the redemption of unsold
Units by the Underwriters, the Sponsor will refund to each purchaser
of Units the entire sales charge paid by such purchaser. 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 December 31, 2043. 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 a Series of the Trust, and,
after paying all expenses and charges incurred by a Series of
the Trust, 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 will be passed upon 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, will act as counsel for
the Trustee.
Experts
The statement of net assets, including the portfolio, of the Trust
at the opening of business on the Initial Date of Deposit, appearing
in this Prospectus and Registration Statement has been audited
by Ernst & Young, independent auditors, as set forth in their
report thereon appearing elsewhere herein and in the Registration
Statement, and is included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
UNDERWRITING
The Underwriters named below, including the Sponsor, have severally
purchased Units in the following respective amounts:
<TABLE>
<CAPTION>
Series 68
Name Address Units
____ _______ _____
<S> <C> <C>
Sponsor
Nike Securities L.P. 1001 Warrenville Road, Lisle, IL 60532
Underwriters
__________
==========
</TABLE>
[FN]
* This Underwriter has indicated its intention to purchase an
additional 50,000 Units from the Sponsor either on the Initial
Date of Deposit or during the initial six month offering period.
Page 25
On the Initial Date of Deposit, the Underwriters of the Trust
became the owners of the Units of such Trust and entitled to the
benefits thereof, as well as the risks inherent therein.
The Agreement Among Underwriters provides that a public offering
of the Units will be made at the Public Offering Price described
in the Prospectus. Units may also be sold to dealers and others
at prices representing a concession or agency commission of 2.50%
of the Public Offering Price per Unit for secondary market sales
for Series 68 of the Trust. See "Public Offering-How is the Public
Offering Price Determined?" for additional dealer concessions
for volume purchases. However, resales of Units by such dealers
and others to the public will be made at the Public Offering Price
described in the Prospectus. The Sponsor reserves the right to
change the amount of the concession or agency commission from
time to time.
Certain Underwriters have agreed to underwrite additional Units
of Series 68 of the Trust as they become available. In addition
to the concessions described in "Public Offering-What are the
Profits of the Sponsor?", Underwriters may be eligible for additional
concessions as set forth in the following table:
<TABLE>
<CAPTION>
Underwriting Concession
Number of Units as a Percentage of the
Underwritten Public Offering Price
_______________ _______________________
<C> <S>
100,000 2.50%
1,000,000 2.80%
</TABLE>
Total underwriting concession is based on the number of Units
an Underwriter has indicated its intention to purchase on the
Initial Date of Deposit.
From time to time the Sponsor may implement programs under which
Underwriters and dealers of the Trust may receive nominal awards
from the Sponsor for each of their registered representatives
who have sold a minimum number of UIT Units (for this purpose,
1,000 Units of The First Trust GNMA equals one UIT Unit) during
a specified time period. In addition, at various times the Sponsor
may implement other programs under which the sales force of an
Underwriter or dealer may be eligible to win other nominal awards
for certain sales efforts, or under which the Sponsor will reallow
to any such Underwriter or dealer that sponsors sales contests
or recognition programs conforming to criteria established by
the Sponsor, or participates in sales programs sponsored by the
Sponsor, an amount not exceeding the total applicable sales charges
on the sales generated by such person at the public offering price
during such programs. Also, the Sponsor in its discretion may
from time to time pursuant to objective criteria established by
the Sponsor pay fees to qualifying Underwriters or dealers for
certain services or activities which are primarily intended to
result in sales of Units of the Trust. Such payments are made
by the Sponsor out of its own assets, and not out of the assets
of the Trust. These programs will not change the price Unit holders
pay for their Units or the amount that the Trust will receive
from the Units sold.
A comparison of estimated current returns and estimated long-term
returns with the returns on various investments is one element
to consider in making an investment decision. The Sponsor may
from time to time in its advertising and sales materials compare
the then current estimated returns on the Trust and returns over
specified periods on other similar Trusts sponsored by Nike Securities
L.P. with returns on taxable investments such as corporate or
U.S. Government bonds, bank CDs and money market accounts or money
market funds, each of which has investment characteristics that
may differ from those of the Trust. U.S. Government bonds, for
example, are backed by the full faith and credit of the U.S. Government
and bank CDs and money market accounts are insured by an agency
of the federal government. Money market accounts and money market
funds provide stability of principal, but pay interest at rates
that vary with the condition of the short-term debt market. The
investment characteristics of the Trust are described more fully
elsewhere in this Prospectus.
Page 26
The First Trust GNMA, Series 68
<TABLE>
<CAPTION>
Special Information Monthly
_______
<S> <C>
Calculation of Estimated Net Annual Interest Rate per 1,000 Units (1)
Estimated Annual Interest Rate (excluding the effect of premiums) %
Less: Estimated Annual Expense ($ ) expressed as a percentage %
Estimated Net Annual Interest Rate per 1,000 Units %
Estimated Daily Rate of Net Interest Accrual per 1,000 Units %
Estimated Long-Term Return Based on Public Offering Price (2) %
Estimated Average Life yrs.
CUSIP
</TABLE>
Trustee's Annual Fee $.90 per annum per 1,000 Units outstanding
annually, exclusive of expenses of the Trust,
commencing .
Income Distributions
Estimated first distribution of $ per 1,000 Units
will be paid on to Unit holders of record on
(The First General Record Date). The estimated first
distribution will consist entirely of principal. On
the regular monthly distribution of interest will commence,
payable to Unit holders of record on .
Subsequent distributions will be paid on or shortly after the
first day of each month to holders of record of Units on the first
day of the preceding month (except for the distribution which
would be made on January 1 which instead will be on or before
December 31).
Principal
During the Reinvestment Period principal will be reinvested subject
to certain exceptions. Principal not reinvested will be distributed
on July 1 and December 31 of each year to all Unit holders of
record on June 1 and December 1, respectively. After the Reinvestment
Period, principal wil be distributed with the income distributions
described above.
No distributions need be made from the Principal Account if the
balance therein is less than $1.00 per 1,000 Units.
[FN]
________________
(1) Assumes delivery of all Securities; in the event that any
contract for the purchase of Securities shall be delayed or not
be completed, the Estimated Returns may be reduced.
(2) The 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 takes
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 such Series. 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 Long-Term Return as indicated above will be realized
in the future. The Estimated Long-Term Return reflects the date
and estimated amount of principal returned; however, the rate
does not reflect the true return to Unit holders which is lower
because the rate does not include the effect of certain delays
in the first payment to Unit holders and includes an internal
compounding rate that takes into account the premium coupon rate
of the securities. These figures are based on per 1,000 Unit cash
flows. Cash flows will vary with changes in fees and expenses,
with the principal prepayment, principal reinvestment, redemption,
maturity, exchange or sale of the underlying Securities and with
changes in the average life assumptions of the GNMA pools. Estimated
Cash Flows for this Series, are available upon request at no charge
from the Sponsor.
Page 27
Portfolio
THE FIRST TRUST GNMA, SERIES 68
At the Opening of Business on the Initial Date of Deposit-
Government National Mortgage Association, Modified Pass-Through
Mortgage-Backed Securities
<TABLE>
<CAPTION>
Cost of Profit
Principal Coupon Years of Stated Cost to Securities or (Loss) to
Amount Rate Maturity Sponsor (1) to Trust (2) Sponsor
_________ ______ _______________ ___________ ____________ _____________
<S> <C> <C> <C> <C> <C>
$ % - $ $ $
========= ====== =============== =========== ============ =============
</TABLE>
[FN]
(1) All Securities on the Initial Date of Deposit are represented
by the Sponsor's contracts to purchase such Securities. Such contracts
were acquired by the Sponsor on . Interest will begin accruing
to the benefit of Unit holders from ,
the First Settlement Date of the Trust.
(2) The cost of the Securities to the Trust represents the offering
side evaluation of the Securities as determined by Securities
Evaluation Service, Inc. The offering side evaluation is greater
than the current bid side evaluation of the Securities which is
the basis on which Redemption Price per Unit is determined. The
aggregate value based on the bid side evaluation at the opening
of business on the Initial Date of Deposit was $, which is $ ($
per 1,000 Units; % of the aggregate principal amount) lower than
the aggregate cost of the Securities to the Trust based on the
offering side evaluation.
_____________________
In addition to the information as to the GNMA fully modified pass-through
mortgage-backed Securities set forth under "Portfolio," the Trustee
will furnish Unit holders a statement listing the name of issuer,
pool number, interest rate, maturity date and principal amount
for each such Security in the Portfolio upon written request.
Page 28
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST GNMA, Series 68
We have audited the accompanying statement of net assets, including
the portfolio, of The First Trust GNMA, Series 68 (the Trust)
as of the opening of business on . This
statement of net assets is the responsibility of the Trust's Sponsor.
Our responsibility is to express an opinion on this statement
of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the statement
of net assets is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the statement of net assets. Our procedures included
confirmation of the letter of credit held by the Trustee and deposited
in the Trust at the opening of business on
. An audit also includes assessing the accounting principles
used and significant estimates made by the Sponsor, as well as
evaluating the overall presentation of the statement of net assets.
We believe that our audit of the statement of net assets provides
a reasonable basis for our opinion.
In our opinion, the statement of net assets referred to above
presents fairly, in all material respects, the financial position
of The First Trust GNMA, Series 68 at the opening of business
on in conformity with generally accepted
accounting principles.
ERNST & YOUNG
Chicago, Illinois
Page 29
Statement of Net Assets
At the Opening of Business
On the Initial Date of Deposit,
<TABLE>
<CAPTION>
The First Trust
GNMA
Series 68
_______________
<S> <C>
NET ASSETS
Delivery statements relating to Sponsor's contracts to purchase Securities (1)(2) $
Accrued interest on underlying Securities (2)(4)
____________
Less distributions payable (4)
____________
Net assets $
============
Outstanding Units of fractional undivided interest
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (3) $
Less gross underwriting commissions (3)
____________
Net assets $
============
</TABLE>
[FN]
Notes:
(1) The aggregate offering price of the Securities of the Trust
listed under "Portfolio" on the Initial Date of Deposit herein
and their cost to the Trust are the same. The offering price shown
above has been determined by Securities Evaluation Service, Inc.,
certain shareholders of which are officers of the Sponsor.
(2) Pursuant to delivery statements relating to contracts to
purchase Securities, an irrevocable letter of credit held by the
Trustee has been deposited in the Trust as collateral. The amount
of available letter of credit and the amount expected to be utilized
for the Trust is shown below. The amount expected to be utilized
is (a) the cost to the Trust of the principal amount of the Securities
to be purchased, (b) accrued interest on those Securities to the
Initial Date of Deposit and (c) accrued interest on those Securities
from the Initial Date of Deposit to the expected dates of delivery
of the Securities.
<TABLE>
<CAPTION>
Accrued Accrued
Aggregate Interest to Interest to
Letter of Credit Offering Initial Expected
To be Price of Date of Dates of
Series Available Utilized Securities Deposit Delivery
______ _________ ________ __________ ___________ ___________
<S> <C> <C> <C> <C> <C>
The First Trust GNMA, Series 68 $ $ $ $ $
</TABLE>
(3) The aggregate cost to investors (exclusive of accrued interest)
and the aggregate gross underwriting commissions of 3.80% for
Series 68 of the Trust are computed assuming no reduction of sales
charge for quantity purchases.
(4) The Trustee will advance to the Trust the amount of accrued
interest to , the First Settlement Date
of the Trust, for distribution to the Sponsor as the Unit holder
of record.
Page 30
DESCRIPTION OF STANDARD & POOR'S CORPORATION RATING*
*As described by Standard & Poor's Corporation.
A Standard & Poor's Corporation'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.
Page 31
<TABLE>
<CAPTION>
CONTENTS:
<S> <C>
Summary of Essential Information 3
The First Trust GNMA:
What is the First Trust GNMA? 4
What is the Rating of the Units? 10
What are Estimated Current Return and
Estimated Long-Term Return? 10
How is Accrued Interest Treated? 12
What are the Expenses and Charges? 12
What is the Tax Status of Unit Holders? 14
Why are Investments in a Series of the Trust
Suitable for Retirement Plans? 15
How Can Distributions to Unit Holders be
Reinvested? 15
Public Offering:
How is the Public Offering Price Determined? 16
How are Units Distributed? 18
What are the Profits of the Sponsor? 18
Will There be a Secondary Market? 19
Rights of Unit Holders:
How is Evidence of Ownership Issued and
Transferred? 19
How are Interest and Principal Distributed? 20
What Reports Will Unit Holders Receive? 21
How May Units be Redeemed? 21
How May Units be Purchased by the Sponsor? 22
How May Securities be Removed from the Trust? 23
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 23
Who is the Trustee? 23
Limitations on Liabilities of Sponsor and
Trustee 24
Who is the Evaluator? 24
Other Information:
How May the Indenture be Amended or
Terminated? 24
Legal Opinions 25
Experts 25
Underwriting 25
The First Trust GNMA, Series 68 27
Portfolio 28
Report of Independent Auditors 29
Statement of Net Assets 30
Description of Standard & Poor's Corporation Rating 31
</TABLE>
FIRST TRUST (registered trademark)
GNMA
SERIES 68
First Trust (registered trademark)
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-708-241-4141
Trustee:
United States Trust Company
of New York
770 Broadway
New York, New York 10003
1-800-682-7520
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 FUND 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.
PLEASE RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE
Page 32
MEMORANDUM
RE: THE FIRST TRUST GNMA, SERIES 68
As indicated in our cover letter transmitting the
Registration Statement on Form S-6 and other related material
under the Securities Act of 1933 to the Commission, the only
difference of consequence (except as described below) between The
First Trust GNMA, Series 67, which is the current fund, and The
First Trust GNMA, Series 68, the filing of which this memorandum
accompanies, is the change in the series number. The list of
securities comprising the Fund, the evaluation, record and
distribution dates and other changes pertaining specifically to
the new series, such as size and number of Units in the Fund and
the statement of condition of the new Fund, will be filed by
amendment.
1940 ACT
FORMS N-8A AND N-8B-2
These forms were not filed, as the Form N-8A and Form N-8B-2
filed in respect of The First Trust GNMA Fund, Series 1 (File No.
811-3969) related also to the subsequent series of the Fund.
1933 ACT
PROSPECTUS
The only significant changes in the Prospectus from the
Series 67 prospectus relate to the series number and size and the
date and various items of information which will be derived from
and apply specifically to the securities deposited in the Fund.
CONTENTS OF REGISTRATION STATEMENT
Item A. Bonding Arrangements of Depositor
Nike Securities L.P. is covered by a Brokers' Fidelity
Bond, in the total amount of $500,000, the insurer
being National Union Fire Insurance Company of
Pittsburgh.
Item B. This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The First Trust GNMA, Series 68, has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Village of Lisle
and State of Illinois on May 12, 1994.
THE FIRST TRUST GNMA, SERIES 68
(Registrant)
By: NIKE SECURITIES L.P.
(Depositor)
By: Carlos E. Nardo
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE* DATE
Robert D. Van Kampen Sole Director of )
Nike Securities )
Corporation the General )
Partner of Nike ) May 12, 1994
Securities L.P. )
)
) Carlos E. Nardo
)Attorney-in-fact**
)
* The title of the person named herein represents his capacity
in and relationship to Nike Securities L.P., the depositor.
** An executed copy of the related power of attorney was filed
with the Securities and Exchange Commission in connection
with Amendment No. 1 to Form S-6 of The First Trust Special
Situations Trust, Series 18 (File No. 33-42683) and the same
is hereby incorporated herein by this reference.
S-2
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1 and 3.4 of the Registration Statement.
CONSENT OF SECURITIES EVALUATION SERVICE, INC.
The consent of Securities Evaluation Service, Inc. to the
use of its name in the Prospectus included in this Registration
Statement will be filed as Exhibit 4.1 to the Registration
Statement.
CONSENT OF STANDARD & POOR'S CORPORATION
The consent of Standard & Poor's Corporation to the use of
its name in the Prospectus included in this Registration
Statement will be filed as Exhibit 4.2 to the Registration
Statement.
CONSENT OF ERNST & YOUNG
The consent of Ernst & Young to the use of its name and to
the reference to such firm in the Prospectus included in this
Registration Statement will be filed by Amendment.
S-3
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust GNMA, Series 62 and subsequent Series effective
December 19, 1991 among Nike Securities L.P., as Depositor,
United States Trust Company of New York as Trustee,
Securities Evaluation Service, Inc., as Evaluator, and Nike
Financial Advisory Services L.P. as Portfolio Supervisor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-44532] filed on behalf of The First Trust GNMA,
Series 62).
1.1.1_Form of Trust Agreement for Series 68 among Nike Securities
L.P., as Depositor, United States Trust Company of New York,
as Trustee, Securities Evaluation Service, Inc., as
Evaluator, and Nike Financial Advisory Services L.P., as
Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment No.
1 to Form S-6 [File No. 33-42683] filed on behalf of The
First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership Agreement
of Nike Securities L.P. (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust, Series
18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities L.P.,
Depositor (incorporated by reference to Amendment No. 1 to
Form S-6 [File No. 33-42683] filed on behalf of The First
Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
1.6_ Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-43289] filed on
behalf of The First Trust Combined Series 145).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by
reference).
S-4
3.1_ Opinion of counsel as to legality of securities being
registered.
3.3_ Opinion of counsel as to New York income tax status of
securities being registered.
3.4_ Opinion of counsel as to advancement of funds by Trustee.
4.1_ Consent of Securities Evaluation Service, Inc.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of The
First Trust Special Situations Trust, Series 18).
7.1 Power of Attorney executed by the Director listed on page
S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-42683]
filed on behalf of The First Trust Special Situations Trust,
Series 18).
________________________
To be filed by amendment.
S-5
