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
REINVESTMENT INCOME TRUST,
SERIES 71
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 71
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.
Preliminary Prospectus Dated February 14, 1996
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 71
_______ Units (A Unit Investment Trust)
The attached final Prospectus for a prior Series of the Fund
is hereby used as a preliminary Prospectus for the above stated
Series. The narrative information and structure of the attached
final Prospectus will be substantially the same as that of the
final Prospectus for this Series. Information with respect to
pricing, the number of Units, dates and summary information
regarding the characteristics of securities to be deposited in
this Series is not now available and will be different since each
Series has a unique Portfolio. Accordingly the information
contained herein with regard to the previous Series should be
considered as being included for informational purposes only.
Ratings of the securities in this Series are expected to be
comparable to those of the securities deposited in the previous
Series. However, the Estimated Current Return for this Series
will depend on the interest rates and offering prices of the
securities in this Series and may vary materially from that of
the previous Series.
A registration statement relating to the units of this
Series will be filed with the Securities and Exchange Commission
but has not yet become effective. Information contained herein
is subject to completion or amendment. Such Units may not be
sold nor may offer to buy 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 the Units in any state in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any
such state.
The First Trust (registered trademark)
GNMA Reinvestment Income Trust "GRIT"
The Trust consists of the underlying separate unit investment
trust designated Series 68 (the "Trust" or "Series"). 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 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 January 24, 1995, 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 practical 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 Reinvestment
Income Trust?"
The guaranteed payment of principal and 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 a Series 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 period
when such reinvestment is practical, in the opinion of the Sponsor
(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. The Sponsor
currently expects the Reinvestment Period to last 10-12 years
from the Initial Date of Deposit. 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.
UNITS OF THE TRUST ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY BANK, AND UNITS ARE NOT FEDERALLY INSURED OR OTHERWISE
PROTECTED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION AND INVOLVE
INVESTMENT RISK INCLUDING LOSS OF PRINCIPAL.
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.
The date of this Prospectus is January 24, 1995
Page 1
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.
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 4.25% of the Public Offering
Price (4.439% of the amount invested) for Series 68. In addition,
on transactions entered into for settlement after January 31,
1995, there will be added an amount equal to accrued interest
from January 31, 1995 to the date of settlement (five business
days after order) less distributions from the Interest Account
subsequent to January 31, 1995. 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 4.5% (4.712% of the amount invested) for Series
68. At the opening of business on the Initial Date of Deposit,
January 24, 1995, the Public Offering Price per 1,000 Units would
have been $1,058.42 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 the last day of each month to all Unit holders
of record on the first day of such month, commencing with the
First Distribution on March 31, 1995. The estimated distribution
will consist entirely of interest. During the Reinvestment Period,
amounts of principal which the Trustee is unable to reinvest will
be distributed on June 30 and December 31 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?").
Risk Factors. An investment in the Trust should be made with an
understanding of the risks associated therewith, including, among
other factors, the volatility of interest rates and the early
return of principal if reinvestment is not practical. See "What
is the First Trust GNMA Reinvestment Income Trust?-Risk Factors."
Page 2
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities-January 24, 1995
Sponsor: Nike Securities L.P.
Trustee: United States Trust Company of New York
Evaluator: Securities Evaluation Service, Inc.
<TABLE>
<CAPTION>
The First Trust
GNMA
Reinvestment
Income Trust,
Series 68
______________
<S> <C>
General Information
Principal Amount of Securities in the Trust $ 1,964,583
Number of Units 1,964,583
Fractional Undivided Interest in the Trust per 1,000 Units 1/1,964,583
Public Offering Price:
Aggregate Offering Price Evaluation of Securities in the Portfolio $ 1,990,982
============
Aggregate Offering Price Evaluation per 1,000 Units $ 1,013.44
Sales Charge (1) $ 44.98
____________
Public Offering Price per 1,000 Units (2) $ 1,058.42
============
Sponsor's Initial Repurchase Price per 1,000 Units (2) $ 1,013.44
Redemption Price per 1,000 Units $ 1,012.19
Excess of Public Offering Price per 1,000 Units Over
Redemption Price per 1,000 Units (3) $ 46.23
Excess of Sponsor's Initial Repurchase Price per 1,000 Units
Over Redemption Price per 1,000 Units (3) $ 1.25
</TABLE>
First Settlement Date January 31, 1995
Mandatory Termination Date December 31, 2044
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 (4) Maximum of $0.15 per 1,000 Units
outstanding annually. (5)
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: 4.25% (4.439%) 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) In addition, the Sponsor will be reimbursed for bookkeeping
and other administrative expenses currently at a maximum annual
rate of $0.10 per 1,000 Units.
(5) Payable to an affiliate of the Sponsor.
Page 3
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST
What is the First Trust GNMA Reinvestment Income Trust?
The First Trust GNMA Reinvestment Income Trust 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 $1,964,583 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 1,964,583 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 practical
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 period when such reinvestment is practical
in the opinion of the Sponsor (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. The Sponsor
currently expects the Reinvestment Period to last 10-12 years
from the Initial Date of Deposit. Reinvestment of principal into
additional Ginnie Maes during periods when interest rates are
at a level different from those prevailing at the Initial 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 Initial 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 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
Page 4
been reinvested 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. Although it is currently
anticipated that the Trustee will purchase Ginnie Maes directly
from market makers, 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.
Risk Factors. 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 68-9.00% coupon Ginnie Maes maturing
within a range of 2016 through 2018 constitute 100% 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 an original stated maturity of up to 30 years.
The reinvestment of principal by the Trustee in additional Ginnie
Maes may result in Securities being acquired at a market discount
or market premium.
The Portfolio of the 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 prepayment benefit for lower yielding, discount Ginnie
Maes will be reduced. Market discount attributable
Page 5
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 practical 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 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
Page 6
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 practical,
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.
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
Page 7
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 Is, which have a minimum pool size of $1 million, Ginnie
Mae IIs 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 Is 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 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
Page 8
(g) provides further that the full faith and credit of the United
States is pledged to the payment of all amounts which may be required
to be paid under any guaranty under such subsection. An opinion
of an Assistant Attorney General of the United States, dated December
9, 1969, states that such guaranties "constitute general obligations
of the United States backed by its full faith and credit."* GNMA
is empowered to borrow from the United States Treasury to the
extent necessary to make any payments of principal and interest
required under such guaranties.
_________________
* 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.
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 1970's 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 1950's 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
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 the Trustee is unable to reinvest,
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
Page 9
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 Ratings Group, a Division of McGraw-Hill, Inc.
("Standard & Poor's") has rated Units of each Series of the Trust
"AAA." This is the highest rating assigned by Standard & Poor's.
See "Description of Standard & Poor's 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 or as a guarantee
of the market value of a Series of the Trust or the Units. Standard
& Poor's has indicated that this rating is not a recommendation
to buy, hold or sell Units nor does it take into account the extent
to which expenses of 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 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 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
and adjusting this figure upward for the reinvestment of principal
and is 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
Page 10
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 and
is adjusted upward for the reinvestment of principal. 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 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.
Page 11
Record Dates for monthly distributions of interest are the first
day of each month and the Distribution Dates for distributions
will be on the last day of such month.
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. With the exception of bookkeeping and
other administrative services provided to the Trust, for which
the Sponsor will be reimbursed in amounts as set forth under "Summary
of Essential Information," the Sponsor will not receive any fees
in connection 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. Such bookkeeping and administrative
charges 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 fees payable
to the Sponsor for such bookkeeping and administrative services
may exceed the actual costs of providing such services for this
Trust, but at no time will the total amount received for such
services rendered to unit investment trusts of which Nike Securities
L.P. is the Sponsor in any calendar year exceed the actual cost
to the Sponsor of supplying such services in such year. 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
Page 12
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
$0.90 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
$0.50 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.
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
returns 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
Page 13
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.
The Revenue Reconciliation Act of 1993 (the "Tax Act") raised
tax rates on ordinary income while capital gains remain subject
to a 28% maximum stated rate. Because some or all capital gains
are taxed at a comparatively lower rate under the Tax Act, the
Tax Act includes a provision that recharacterizes capital gains
as ordinary income in the case of certain financial transactions
that are "conversion transactions" effective for transactions
entered into after April 30, 1993. Unit holders and prospective
investors should consult with their tax advisers regarding the
potential effect of this provision on their investment in Units.
If a Ginnie Mae has been purchased by Series 68 of the Trust at
a market discount (i.e., for a purchase price less than its outstanding
principal amount), unless the amount of market discount is "de
minimis" as specified in the Code, 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 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.
Page 14
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,
or both, on their Units automatically reinvested in shares of
any open-end fund offered by OppenheimerFunds. In addition, Unit
holders of a Series of the Trust may elect to have each distribution
of interest income or principal, or both, on their Units automatically
reinvested into any other established account designated by the
Unit holder (collectively, the "Reinvestment Option"). Oppenheimer
Management Corporation is the investment adviser of OppenheimerFunds,
which includes Oppenheimer Government Securities Fund, a fund
with similar objectives to the Trust. Oppenheimer Government Securities
Fund 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 any open-end fund offered
by OppenheimerFunds. After electing participation, each distribution
of interest income or principal, or both, on the participant's
Units will automatically be applied by the Trustee to purchase
shares (or fractions thereof) of any open-end fund offered by
OppenheimerFunds without a sales charge and with no minimum initial
and subsequent investment requirements.
The transfer agent for the selected open-end fund offered by OppenheimerFunds
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 Reinvestment
Income Trust and the purchase of shares (or fractions thereof)
of such open-end fund offered by OppenheimerFunds.
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 Management Corporation 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 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
Page 15
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, a sales charge of 4.25% of the Public Offering Price (which
is equivalent to 4.439% 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 4.5% of the Public
Offering Price (which is equivalent to 4.712% 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 Reinvestment
Income Trust-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
Dollar Amount of Expressed as a
Transaction at Public Percentage of
Offering Price Public Offering Price
_____________________ _____________________
<S> <C>
$100,000-$249,999 0.25%
$250,000-$499,999 0.50%
$500,000-$999,999 0.75%
$1,000,000 or more 1.50%
</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 the Sponsor, dealers and their
affiliates, the sales charge is reduced by 2.0% 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 broker/dealer, banks or others. 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 broker/dealer, banks
or others. For purposes of calculating the applicable sales charge,
except as noted in this section, 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 charge to be additional
purchases by the purchaser. The reduced sales charges will also
be applicable to a trustee or other fiduciary purchasing securities
for a single trust or single fiduciary account.
In addition, a purchaser desiring to purchase during a 12 month
period $1,000,000 or more of a series of The First Trust GNMA
may qualify for a reduced sales charge by signing a nonbinding
Letter of Intent. After signing a Letter of Intent, at the date
total purchases, less redemptions, of units of a 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 broker/dealer, banks or others will make a retroactive
reduction of the sales charge on such units in the amount of 1.5%
(reduced by any
Page 16
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.
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
Page 17
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. A person
will become owner of the Units on the date of settlement provided
payment has been received. 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. 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
broker/dealers, banks or others at prices which represent a concession
or agency commission of $25.00 per 1,000 Units on Series 68 of
the Trust. A concession of 3.0% of the Public Offering Price will
be given to any broker/dealer, bank or other who purchases from
the Sponsor at least 100,000 Units on the Initial Date of Deposit
or 250,000 Units on any other day during the initial offering
period. For secondary market sales, any broker/dealer, banks or
other will receive a concession of 2.75% of the Public Offering
Price. The Sponsor reserves the right to change the amount of
the concession to broker/dealers, banks or 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.
From time to time the Sponsor may implement programs under which
broker/dealers, banks or others 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 Reinvestment Income Trust
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 broker/dealers, banks or others may be
eligible to win other nominal awards for certain sales efforts,
or under which the Sponsor will reallow to any such dealers or
others that sponsor 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
broker/dealers, banks or others 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
Page 18
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.
What are the Profits of the Sponsor?
The Sponsor will receive a gross sales commission equal to 4.25%
of the Public Offering Price (equivalent to 4.439% of the net
amount invested) for Series 68 of the Trust. Although any reduced
sales charge shall be the responsibility of the selling broker/dealers,
banks or others, the Sponsor will reimburse dealers or others
for discounts made available to purchasers as described in "How
is the Public Offering Price Determined?" See "Public Offering-How
are Units Distributed?" for information regarding additional concessions
available to broker/dealers, banks or 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 Note (2) of "Portfolio." During
the initial offering period, broker/dealers, banks or others also
may realize profits or sustain losses from the sale of Units 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 broker/dealers, banks or others.
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
4.5% 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.
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
Page 19
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. 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 last 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 June 30 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 such 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
Page 20
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
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 the last day of such
month. 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
Page 21
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.
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
practical, 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
Page 22
by the Trustee. Units held by the Sponsor may be tendered to the
Trustee for redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be
in accord with the Public Offering Price described in the then
currently effective prospectus describing such Units. Any profit
or loss resulting from the resale or redemption of such Units
will belong to the Sponsor.
How May Securities be Removed from the 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 Reinvestment Income Trust?", 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 Reinvestment Income Trust,
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 dealers. 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 such other provisions
as shall not adversely affect the interest of the Unit holders
(as determined in good
Page 24
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 dealers or others, including the Sponsor. If
a Series of the Trust is liquidated because of the redemption
of unsold Units by the dealers or others, 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, 2044. 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 LLP, 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.
Page 25
The First Trust GNMA Reinvestment Income Trust,
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) 9.00%
Less: Estimated Annual Expense ($2.32) expressed as a percentage .23%
Estimated Net Annual Interest Rate per 1,000 Units 8.77%
Estimated Daily Rate of Net Interest Accrual per 1,000 Units .0244%
Estimated Current Return Based on Public Offering Price (2) 8.29%
Estimated Long-Term Return Based on Public Offering Price (2) 8.23%
Estimated Average Life (3) 13.40 yrs.
CUSIP 337335 780
</TABLE>
Trustee's Annual Fee $0.90 per annum per 1,000 Units outstanding
annually, exclusive of expenses of the Trust,
commencing January 24, 1995.
Income Distributions
Estimated first distribution of $7.31 per 1,000 Units will be
paid on March 31, 1995 to Unit holders of record on March 1, 1995
(The First General Record Date). The estimated first distribution
will consist entirely of interest.
Subsequent distributions will be paid on or shortly after the
last day of each month to holders of record of Units on the first
day of such month.
Principal
During the Reinvestment Period principal will be reinvested subject
to certain exceptions. Principal not reinvested will be distributed
on June 30 and December 31 of each year to all Unit holders of
record on June 1 and December 1, respectively. After the Reinvestment
Period, principal will 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 Current Return is computed by dividing the
Estimated Net Annual Interest Income per 1,000 Units by $1,000
and dividing the result by the Public Offering Price per 1,000
Units. The Estimated Net Annual Interest Rate per Unit will vary
with changes in fees and expenses of the Trustee, Sponsor and
Evaluator and with the principal prepayment, 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 indicated above will be realized in the
future. 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 Current Return and Estimated Long-Term
Return are expected to differ because the calculation of the Estimated
Long-Term Return reflects the date and estimated amount of principal
returned while the Estimated Current Return calculation includes
only the Net Annual Interest Rate and Public Offering Price. Neither
rate reflects the true return to Unit holders which is lower because
neither includes the effect of certain delays in distributions
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.
(3) Estimated Average Life is calculated as described in "What
are Estimated Current Return and Estimated Long-Term Return?"
and takes into consideration the reinvestment of principal during
the life of the Reinvestment Period.
Page 26
Portfolio
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 68
At the Opening of Business on the Initial Date of Deposit-
January 24, 1995
Government National Mortgage Association, Modified Pass-Through
Mortgage-Backed Securities
<TABLE>
<CAPTION>
Cost of Cost of Profit
Principal Coupon Years of Stated Securities to Securities or (Loss) to
Amount Rate Maturity Sponsor (1) to Trust (2) Sponsor
_________ ______ _______________ ___________ ____________ _____________
<S> <C> <C> <C> <C> <C>
$1,964,583 9.00% 2016-2018 $1,987,605 $1,990,982 $3,377
========= ====== =============== =========== ============ =============
</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 January 19, 1995. Interest will
begin accruing to the benefit of Unit holders from January 31,
1995, the First Settlement Date of the Trust. The cost of Securities
to Sponsor and Profit or (Loss) to Sponsor reflects portfolio
hedging gains and losses.
(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 $1,988,526, which
is $2,456 ($1.25 per 1,000 Units; .125% 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 27
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, Series 68
We have audited the accompanying statement of net assets, including
the portfolio, of The First Trust GNMA Reinvestment Income Trust,
Series 68 (the "Trust") as of the opening of business on January
24, 1995. 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 January 24, 1995. 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 Reinvestment Income Trust, Series 68 at
the opening of business on January 24, 1995 in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
January 24, 1995
Page 28
Statement of Net Assets
At the Opening of Business
On the Initial Date of Deposit, January 24, 1995
<TABLE>
<CAPTION>
The First Trust
GNMA
Reinvestment
Income
Trust,
Series 68
_______________
NET ASSETS
<S> <C>
Delivery statements relating to Sponsor's contracts
to purchase Securities (1)(2) $1,990,982
Accrued interest on underlying Securities (2)(4) 11,296
____________
2,002,278
Less distributions payable (4) 11,296
____________
Net assets $1,990,982
============
Outstanding Units of fractional undivided interest 1,964,583
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (3) $2,079,355
Less gross underwriting commissions (3) 88,373
____________
Net assets $1,990,982
============
</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 Reinvestment
Income Trust, Series 68 $2,500,000 $2,003,260 $1,990,982 $11,296 $982
</TABLE>
(3) The aggregate cost to investors (exclusive of accrued interest)
and the aggregate gross underwriting commissions of 4.25% 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 January 31, 1995, the First Settlement Date of the
Trust, for distribution to the Sponsor as the Unit holder of record.
Page 29
DESCRIPTION OF STANDARD & POOR'S RATING*
*As described by Standard & Poor's.
A Standard & Poor's rating on the units of an investment trust
(hereinafter referred to collectively as "units" and "trust")
is a current assessment of creditworthiness with respect to the
investments held by such trust. This assessment takes into consideration
the financial capacity of the issuers and of any guarantors, insurers,
lessees or mortgagors with respect to such investments. The assessment,
however, does not take into account the extent to which trust
expenses or portfolio asset sales for less than the trust's purchase
price will reduce payment to the Unit holder of the interest and
principal required to be paid on the portfolio assets. In addition,
the rating is not a recommendation to purchase, sell, or hold
units, inasmuch as the rating does not comment as to market price
of the units or suitability for a particular investor.
Trusts rated "AAA" are composed exclusively of assets that are
rated "AAA" by Standard & Poor's or, have, in the opinion of Standard
& Poor's, credit characteristics comparable to assets rated "AAA,"
or certain short-term investments. Standard & Poor's defines its
"AAA" rating for such assets as the highest rating assigned by
Standard & Poor's to a debt obligation. Capacity to pay interest
and repay principal is very strong.
Page 30
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Page 31
<TABLE>
<CAPTION>
CONTENTS:
<S> <C>
Summary of Essential Information 3
The First Trust GNMA Reinvestment Income Trust:
What is the First Trust GNMA Reinvestment
Income Trust? 4
Risk Factors 5
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? 13
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? 19
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
The First Trust GNMA Reinvestment Income Trust,
Series 68 26
Portfolio 27
Report of Independent Auditors 28
Statement of Net Assets 29
Description of Standard & Poor's Rating 30
</TABLE>
______________
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.
FIRST TRUST (registered trademark)
GNMA
REINVESTMENT
INCOME TRUST,
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
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
January 24, 1995
MEMORANDUM
RE: THE FIRST TRUST GNMA REINVESTMENT INCOME TRUST, SERIES 71
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 Reinvestment Income Trust, Series 68, which is
the current fund, and The First Trust GNMA Reinvestment Income
Trust, Series 71, 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 68 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 $1,000,000, 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
Financial Data Schedule
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The First Trust GNMA Reinvestment Income Trust,
Series 71, 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
February 14, 1996.
THE FIRST TRUST GNMA REINVESTMENT
INCOME TRUST, SERIES 71
(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 ) February 14, 1996
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 RATINGS GROUP, A DIVISION OF MCGRAW-
HILL, INC.
The consent of Standard & Poor's Ratings Group, A Division
of McGraw-Hill, Inc. 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 LLP
The consent of Ernst & Young LLP 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 71 among Nike Securities
L.P., as Depositor, The Chase Manhattan Bank (National
Association), as Trustee, Securities Evaluation Service,
Inc., as Evaluator, and First Trust Advisors L.P., as
Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership Agreement
of Nike Securities L.P. (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust, Series
18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities L.P.,
Depositor (incorporated by reference to Amendment No. 1 to
Form S-6 [File No. 33-42683] filed on behalf of The First
Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
1.6 Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-43289] 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
