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: FT 257
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
Agents for Service: NIKE SECURITIES L.P.
Attention: James A. Bowen
Suite 300
1001 Warrenville Road
Lisle, Illinois 60532
CHAPMAN & CUTLER
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60606
E. Title of Securities
Being Registered: An indefinite number of
Units pursuant to Rule
24f-2 promulgated under
the Investment Company Act
of 1940, as amended.
F. Approximate Date of Proposed
Sale to the Public: ____ Check if it is
proposed 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.
FT 257
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust Prospectus front cover
(b) Title of securities issued Summary of Essential
Information
2. Name and address of each Information as to
depositor Sponsor, Trustee and
Evaluator
3. Name and address of Information as to
trustee Sponsor, Trustee and
Evaluator
4. Name and address of Underwriting
principal underwriters
5. State of organization The FT Series
of trust
6. Execution and termination The FT Series; Other
of trust agreement Information
7. Changes of name *
8. Fiscal Year *
9. Litigation *
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer Rights of Unit Holders
securities
(b) Cumulative or distributive
securities The FT Series
(c) Redemption Rights of Unit Holders
(d) Conversion, transfer, etc. Rights of Unit Holders
(e) Periodic payment plan
certificates *
(f) Voting rights Rights of Unit Holders;
Other Information
(g) Notice of certificate- Rights of Unit Holders;
holders Other Information
(h) Consents required Rights of Unit Holders;
Other Information
(i) Other provisions The FT Series
11. Types of securities comprising The FT Series
12. Certain information
regarding periodic payment
plan certificates *
13. (a) Load, fees, expenses, etc. Summary of Essential
Information; Public
Offering; The FT Series
(b) Certain information
regarding periodic payment
plan certificates *
(c) Certain percentages Summary of Essential
Information; The FT
Series; Public Offering
(d) Difference in price offered Public Offering
for any class of transactions
to any class or group of
individuals
(e) Certain other load fees, Rights of Unit Holders
expenses, etc. payable by
holders
(f) Certain profits receivable The FT Series
by depositor, principal
underwriters, trustee or
affiliated persons
(g) Ratio of annual charges to
income *
14. Issuance of trust's Rights of Unit Holders
securities
15. Receipt and handling of
payments from purchasers *
16. Acquisition and disposition
of underlying securities The FT Series; Rights of
Unit Holders
17. Withdrawal or redemption The FT Series; Public
Offering; Rights of Unit
Holders
18. (a) Receipt, custody and
disposition of income Rights of Unit Holders
(b) Reinvestment of
distributions Rights of Unit Holders
(c) Reserves or special funds Information as to
Sponsor, Trustee and
Evaluator
(d) Schedule of distributions *
19. Records, accounts and
reports Rights of Unit Holders
20. Certain miscellaneous
provisions of trust
agreement
(a) Amendment Other Information
(b) Termination Other Information
(c) and (d) Trustee, removal and
successor Information as to
Sponsor, Trustee and
Evaluator
(e) and (f) Depositor, removal Information as to
and successor Sponsor, Trustee and
Evaluator
21. Loans to security holders *
22. Limitations on liability The FT Series;
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
26. Fees received by depositor *
27. Business of depositor Information as to
Sponsor, Trustee and
Evaluator
28. Certain information as to *
officials and affiliated
persons of depositor
29. Voting securities of *
depositor
30. Persons controlling *
depositor
31. Payment by depositor for *
certain services rendered
to trust
32. Payment by depositor for *
certain other services
rendered to trust
33. Remuneration of other *
persons for certain
services rendered to trust
34. Remuneration of other *
persons for certain services
rendered to trust
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's
securities by states Public Offering
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;
Underwriting
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) N.A.S.D. membership of Information as to
principal underwriters Sponsor, Trustee and
Evaluator
40. Certain fee received by See Items 13(a) and 13(e)
principal underwriters
41. (a) Business of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) Branch offices of
principal underwriters *
(c) Salesmen of principal
underwriters *
42. Ownership of trust's
securities by certain
persons *
43. Certain brokerage
commissions received
by principal underwriters *
44. (a) Method of valuation Summary of Essential
Information; The FT
Series; Public Offering
(b) Schedule as to offering
price *
(c) Variation in offering Public Offering
price to certain persons
45. Suspension of redemption
rights *
46. (a) Redemption Valuation Rights of Unit Holders
(b) Schedule as to redemption
price *
47. Maintenance of position Public Offering; Rights
in underlying securities 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 FT Series
50. Trustee's lien The FT Series
VI. INFORMATION CONCERNING THE INSURANCE OF HOLDERS OR
SECURITIES
51. Insurance of holders of *
trust's securities
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust The FT Series; Rights
agreement with respect of Unit Holders
to selection or elimination
of underlying securities
(b) Transactions involving
elimination of underlying
securities *
(c) Policy regarding The FT Series; Rights
substitution or elimination of Unit Holders
of underlying securities
(d) Fundamental policy not
otherwise covered *
53. Tax status of Trust The FT Series
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during
last ten years *
55. Certain information regarding
periodic payment plan
certificates
56. Certain information regarding
periodic payment plan
certificates
57. Certain information regarding *
periodic payment plan
certificates
58. Certain information regarding
periodic payment plan
certificates
59. Financial statements Report of Independent
(Instruction 1(b) to Auditors; Statement of
Form S-6) Net Assets
__________________________
* Inapplicable, answer negative or not required.
SUBJECT TO COMPLETION, DATED MAY 13, 1998
Growth & Income REIT Value Trust
The Trust. FT 257 (the "Trust") is a unit investment trust consisting of
a diversified portfolio of common stocks issued by publicly traded
equity real estate investment trusts, known as REITs.
The objective of the Trust is to provide the potential for high current
income and capital appreciation by investing the Trust's portfolio in
common stocks issued by publicly traded equity real estate investment
trusts (the "Securities"). See "Schedule of Investments." The Trust has
a mandatory termination date ("Mandatory Termination Date" or "Trust
Ending Date"), as set forth under "Summary of Essential Information."
There is, of course, no guarantee that the objective of the Trust will
be achieved. Each Unit of the Trust represents an undivided fractional
interest in all the Securities deposited in the Trust.
The Securities deposited in the Trust's portfolio have no fixed maturity
date, and the value of these underlying Securities will fluctuate with
changes in the values of real estate in general, and the common stock of
the issuers in particular. See "Portfolio."
Nike Securities L.P. ("the Sponsor") may, from time to time during a
period of up to approximately 360 days after the date of this Prospectus
(the "Initial Date of Deposit"), create additional Units by depositing
in the Trust additional Securities, contracts to purchase additional
Securities or cash (including a letter of credit) with instructions to
purchase additional Securities. Any deposit by the Sponsor of additional
Securities, contracts to purchase additional Securities, or the purchase
of additional Securities pursuant to a cash deposit, will duplicate, as
nearly as is practicable, the original proportionate relationship
established on the Initial Date of Deposit, not the actual proportionate
relationship on the subsequent date of deposit, since the two may
differ. Any such difference may be due to the sale, redemption or
liquidation of any Securities deposited in the Trust on the Initial, or
any subsequent, Date of Deposit. See "FT 257-What is the FT Series?" and
"Rights of Unit Holders-How May Securities be Removed from the Trust?"
Acquisition of Securities. As of the opening of business on the Initial
Date of Deposit all of the Securities deposited in the Trust were
acquired by the Sponsor in open market purchases on the New York Stock
Exchange.
During the day on the Initial Date of Deposit, it is expected that
additional Securities will be deposited in the Trust by the Sponsor. The
Sponsor will acquire the additional Securities to be deposited in the
Trust during the day on the Initial Date of Deposit from Dain Rauscher
Corporation; McDonald & Company Securities, Inc.; Morgan Keegan &
Company, Incorporated; and Scott & Stringfellow, Inc. (the "Securities
Underwriters"), which are purchasing the Securities in market
transactions or are acting as underwriters to the issuers of the
Securities. With the exception of the market purchases, the acquisition
of the Securities to be deposited in the Trust during the day on the
Initial Date of Deposit by the Securities Underwriters and the Sponsor
is expected to be effected at prices of up to 5% below the current
market value of the Securities due to various factors, including size of
the purchase, expectation of holding period and cost of issuance.
Additional Securities may be acquired by the Trust after the Initial
Date of Deposit in open market purchases. As a result of this structure,
the Sponsor will offer Units of the Trust created on the Initial Date of
Deposit with no sales charge. By virtue of buying the majority of the
Securities at below market prices during the day on the Initial Date of
Deposit, the Sponsor will realize a profit on the deposit of the
Securities
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS 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 THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
First Trust (registered trademark)
1-800-621-9533
The date of this Prospectus is ____________, 1998
Page 1
created on the Initial Date of Deposit of approximately ___% of the
market value of these Securities, less concessions due to the
Underwriter of Units of the Trust, dealers and others. The Securities
Underwriter will realize a profit on the sale of the Securities to the
Sponsor equal to the difference between the Securities Underwriter's
acquisition cost of such Securities and the sale price of the Securities
to the Sponsor (expected to be approximately ___% of the market value of
the Securities). The Securities Underwriters are also the Underwriters
of Units of the Trust. See "Underwriting."
After the Initial Date of Deposit, Securities deposited in the Trust on
any subsequent date(s) of deposit will be acquired at market value in
open market purchases on the New York Stock Exchange. All of the
Securities will be deposited in the Trust based on their market value as
of the respective date(s) of deposit.
Public Offering Price. The Public Offering Price per Unit of the Trust
for Units created on the Initial Date of Deposit is equal to the
aggregate underlying value of the Securities in the Trust (generally
determined by the closing sale prices of listed Securities) plus or
minus a pro rata share of cash, if any, in the Capital and Income
Accounts of the Trust, with no sales charge added. For Units created
subsequent to the Initial Date of Deposit, but during the initial
offering period, the Public Offering Price per Unit of the Trust will be
based upon the aggregate underlying value of the Securities in the Trust
(generally determined by the closing sale prices of listed Securities
and the ask prices of over-the-counter traded Securities) plus or minus
a pro rata share of cash, if any, in the Capital and Income Accounts of
the Trust plus a maximum sales charge of % (equivalent to % of the
net amount invested), divided by the number of Units of the Trust
outstanding. The secondary market Public Offering Price per Unit will be
based upon the aggregate underlying value of the Securities in the Trust
(generally determined by the closing sale prices of listed Securities
and the bid prices of over-the-counter traded Securities) plus or minus
a pro rata share of cash, if any, in the Capital and Income Accounts of
the Trust plus a maximum sales charge of % (equivalent to % of the
net amount invested), subject to reduction beginning ____________,
1999, divided by the number of Units outstanding of the Trust. A pro
rata share of accumulated dividends, if any, in the Income Account is
included in the Public Offering Price. The minimum amount which an
investor may purchase of the Trust is $1,000 ($500 for Individual
Retirement Accounts, Roth Individual Retirement Accounts, Education
Individual Retirement Accounts or other retirement plans). The sales
charge on Units created subsequent to the Initial Date of Deposit is
reduced on a graduated scale for sales involving at least $50,000. See
"Public Offering-How is the Public Offering Price Determined?"
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.
Estimated Net Annual Distributions. The estimated net annual dividend
distributions to Unit holders (based on the most recent quarterly or
semi-annual ordinary dividend declared with respect to the Securities in
the Trust) on the Initial Date of Deposit was $ per Unit. The actual
net annual dividend distributions per Unit will vary with changes in
fees and expenses of the Trust, with changes in dividends received and
with the sale or liquidation of Securities; therefore, there is no
assurance that the net annual dividend distributions will be realized in
the future.
Dividend and Capital Distributions. Distributions of dividends and
capital, if any, received by the Trust will be paid on the Distribution
Date to Unit holders of record on the Record Date, as set forth in the
"Summary of Essential Information." Distributions of funds in the
Capital Account, if any, will be made at least annually in December of
each year. Any distribution of income and/or capital will be net of the
expenses of the Trust. See "FT 257-What is the Federal Tax Status of
Unit Holders?" Any Unit holder may elect to have each distribution of
income or capital on his or her Units automatically reinvested in
additional Units of the Trust without a sales charge. Additionally, upon
termination of the Trust, the Trustee will distribute, upon surrender of
Units for redemption, to each Unit holder his or her pro rata share of
the Trust's assets, less expenses, in the manner set forth under "Rights
of Unit Holders-How are Income and Capital Distributed?"
Secondary Market for Units. While under no obligation to do so, the
Sponsor and Underwriter intend to maintain a market for Units of the
Trust and offer to repurchase such Units at prices which are based on
the aggregate underlying value of Securities in the Trust (generally
determined by the closing sale prices of listed Securities and the bid
prices of over-the-counter traded Securities) plus or minus cash, if
any, in the Capital and Income Accounts of the Trust. If a secondary
Page 2
market is not maintained, a Unit holder may redeem Units through
redemption at prices based upon the aggregate underlying value of the
Securities in the Trust (generally determined by the closing sale prices
of listed Securities and the bid prices of over-the-counter traded
Securities) plus or minus a pro rata share of cash, if any, in the
Capital and Income Accounts of the Trust. A Unit holder tendering 2,500
Units or more for redemption may request a distribution of shares of
Securities (reduced by customary transfer and registration charges) (an
"In-Kind Distribution") in lieu of payment in cash. See "Rights of Unit
Holders-How May Units be Redeemed?"
Termination. Commencing no later than the Mandatory Termination Date,
Securities will begin to be sold as prescribed by the Sponsor. The
Sponsor will determine the manner, timing and execution of the sale of
the Securities. Written notice of any termination of the Trust
specifying the time or times at which Unit holders may surrender their
certificates for cancellation shall be given by The Chase Manhattan Bank
(the "Trustee") to each Unit holder at his or her address appearing on
the registration books of the Trust maintained by the Trustee. At least
60 days prior to the Mandatory Termination Date of the Trust, the
Trustee will provide written notice thereof to all Unit holders and will
include with such notice a form to enable Unit holders to elect a
distribution of shares of Securities (reduced by customary transfer and
registration charges) (an "In-Kind Distribution") if such Unit holder
owns at least 2,500 Units of the Trust, rather than to receive payment
in cash for such Unit holder's pro rata share of the amounts realized
upon the disposition by the Trustee of Securities. To be effective, the
election form, together with surrendered certificates and other
documentation required by the Trustee, must be returned to the Trustee
at least ten business days prior to the Mandatory Termination Date of
the Trust. Unit holders not electing a distribution of shares of
Securities will receive a cash distribution within a reasonable time
after the Trust is terminated. Unit holders of the Trust may utilize
their termination proceeds to acquire units of a subsequently issued
trust which has a similar investment strategy as the Trust, if offered,
at a reduced sales charge. See "Rights of Unit Holders-How are Income
and Capital Distributed?" and "Other Information-How May the Indenture
be Amended or Terminated?"
Risk Factors. An investment in the Trust should be made with an
understanding of the risks associated therewith, including, among other
factors, the possible deterioration of either the financial condition of
the issuers of the Securities or the general condition of the stock
market, changes in the real estate market, vacancy rates and
competition, volatile interest rates or economic recession. In addition,
because certain REITs may be subject to a management fee, an investment
by the Trust in such Securities may result in duplicative expenses. The
Trust's portfolio is not managed and Securities will not be sold by the
Trust regardless of market fluctuations, although some Securities may be
sold under certain limited circumstances. See "Portfolio-What are the
Securities?-Risk Factors."
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities-____________, 1998
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
Underwriters: Dain Rauscher Corporation
McDonald & Company Securities, Inc.
Morgan Keegan & Company, Incorporated
Scott & Stringfellow, Inc.
General Information
Initial Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/
Public Offering Price:
Aggregate Offering Price Evaluation of Securities in Portfolio (2) $
Aggregate Offering Price Evaluation of Securities per Unit $
Sales Charge (3) $
Public Offering Price per Unit (3) $
Sponsor's Initial Repurchase Price per Unit $
Redemption Price per Unit (based on aggregate underlying value of Securities) (4) $
CUSIP Number
Security Code
First Settlement Date ____________, 1998
Mandatory Termination Date ____________, ____
Discretionary Liquidation Amount The Trust may be terminated if the value thereof is less than 40% of the
total value of Securities deposited in the Trust during the initial
offering period.
Trustee's Annual Fee $ per Unit outstanding.
Evaluator's Annual Fee $ per Unit outstanding, payable to an affiliate of the Sponsor.
Evaluations for purposes of sale, purchase or redemption of Units are made
as of the close of trading (generally 4:00 p.m. Eastern time) on the New
York Stock Exchange on each day on which it is open.
Supervisory Fee (5) Maximum of $ per Unit outstanding annually payable to an affiliate of
the Sponsor.
Estimated Annual Amortization of
Organizational and Offering Costs (6) $ per Unit outstanding.
Income Distribution Record Date First day of each March, June, September and December, commencing
____________, 1998.
Income Distribution Date (7) Fifteenth day of each March, June, September and December, commencing
____________, 1998.
______________
<FN>
(1) As of the close of business on the Initial Date of Deposit, the
number of Units of the Trust may be adjusted so that the Public Offering
Price per Unit will equal approximately $10.00. Therefore, to the extent
of any such adjustment, the fractional undivided interest per Unit will
increase or decrease accordingly, from the amounts indicated above.
(2) Each Security listed on a national securities exchange is valued at
the last closing sale price.
(3) On the Initial Date of Deposit there will be no accumulated dividends
in the Income Account. Anyone ordering Units after such date will pay a
pro rata share of any accumulated dividends in such Income Account. The
Public Offering Price as shown reflects the value of the Securities at
the opening of business on the Initial Date of Deposit and establishes
the original proportionate relationship amongst the individual
securities. No sales to investors will be executed at this price.
Additional Units will be created during the day of the Initial Date of
Deposit which will be valued as of 4:00 p.m. Eastern time and sold to
investors at a Public Offering Price per Unit based on this valuation.
No sales charge will be assessed on the purchase of Units created on the
Initial Date of Deposit. For Units created subsequent to the Initial
Date of Deposit the maximum sales charge will be 4% of the Public
Offering Price per Unit (equivalent to % of the net amount invested),
subject to reduction commencing ____________, 1999. Additionally, the
maximum sales charge on Units created subsequent to the Initial Date of
Deposit will be reduced on a graduated scale in the case of quantity
purchases. See "Public Offering-How is the Public Offering Price
Determined?"
(4) See "Rights of Unit Holders-How May Units be Redeemed?"
(5) In addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $.0023 per
Unit.
(6) The Trust (and therefore Unit holders) will bear all or a portion of
its organizational and offering costs (including costs of preparing the
registration statement, the trust indenture and other closing documents,
registering Units with the Securities and Exchange Commission and
states, the initial audit of the Trust portfolio and the initial fees
and expenses of the Trustee but not including the expenses incurred in
the printing of preliminary prospectuses, and expenses incurred in the
preparation and printing of brochures and other advertising materials
and any other selling expenses) as is common for mutual funds. Total
organizational and offering expenses will be charged off over a period
not to exceed ___ years from the Initial Date of Deposit. See "FT 257-
What are the Expenses and Charges?" and "Statement of Net Assets."
Historically, the sponsors of unit investment trusts have paid all the
costs of establishing such trusts.
(7) Distributions from the Capital Account will be made quarterly payable
on the last day of the month to Unit holders of record on the fifteenth
day of such month if the amount available for distribution equals at
least $1.00 per 100 Units. Notwithstanding, distributions of funds in
the Capital Account, if any, will be made in December of each year.
</FN>
Page 4
GROWTH & INCOME REIT VALUE TRUST
FT 257
What is the FT Series?
FT 257 is one of a series of investment companies created by the Sponsor
under the name of The FT Series, all of which are generally similar, but
each of which is separate and is designated by a different series number
(the "Trust"). The FT Series was formerly known as The First Trust
Special Situations Trust Series. This Series consists of an underlying
separate unit investment trust designated as: Growth & Income REIT Value
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, The Chase Manhattan
Bank as Trustee and First Trust Advisors L.P. as Portfolio Supervisor
and Evaluator.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee
confirmations of contracts for the purchase of common stocks issued by
publicly traded equity real estate investment trusts, known as REITs
(the "REIT" or "REITs"). The Trust includes a diversified portfolio of
REITs, together with an irrevocable letter or letters of credit of a
financial institution in an amount at least equal to the purchase price
of such Securities. In exchange for the deposit of Securities or
contracts to purchase Securities in the Trust, the Trustee delivered to
the Sponsor documents evidencing the entire ownership of the Trust.
The objective of the Trust is to provide the potential for high current
income and capital appreciation through an investment in securities
issued by REITs. There is, however, no guarantee that the objective of
the Trust will be achieved. The Trust invests in a well-diversified
portfolio of REITs owning properties across the spectrum of real estate
asset types, including, but not limited to, apartment complexes, factory
outlet centers, hotels, office/industrial properties, super regional
malls, and storage facilities. A REIT is a company that owns, manages,
and develops pools of properties. Investors can enjoy the benefits of a
diversified portfolio managed by real estate professionals, receive
income from rents, and achieve capital appreciation if the properties
are sold at a profit. In addition, REITs are traded on major stock
exchanges, making them more liquid than a direct investment in real
estate. The net dividend yield for the Trust is approximately _____% on
the Initial Date of Deposit. The actual dividend yield achieved by
investors will fluctuate due to various factors, including, but not
limited to, the expenses of the Trust, market fluctuations and the
continuing ability of the Securities to maintain their current levels of
dividend payouts.
In the opinion of the Underwriters, REIT share values are likely to
continue their trend higher, driven by improving real estate values,
good operating results, consolidation and increased demand for REIT
shares. The consolidation wave is expected to continue as steady rental
growth and occupancy gains for most property types should continue
driving earnings upward for well-capitalized REITs. During some
inflationary periods, both real estate values and rents may rise,
benefiting REIT investors. The Underwriters believe that the increasing
demand for REITs is expected to continue to grow in coming years due to
relaxed barriers for pension plan investing, and as institutions trade
in a portion of their $1.3 trillion commercial property ownership. This
demand for REIT shares has the potential, in the opinion of the
Underwriters, to propel share prices higher.
REITs do not pay Federal corporate income tax and often are excluded
from state taxation. This tax-advantaged treatment means there is no
double taxation of income. REITs are required by law to distribute 95%
of taxable earnings in the form of dividends. In addition, a portion of
a REIT's dividend may be treated as a non-taxable return of capital for
tax purposes which reduces the cost basis of Units. This portion of
income, normally taxed at personal income tax rates, may entitle a Unit
holder to more favorable tax treatment as long-term capital gain,
dependent upon the length of the holding period of the Unit. Any such
gain will be deferred until Units are sold.
An investment in REITs offers many advantages. REITs allows investors to
invest in real estate without a large capital commitment. Furthermore,
REITs own portfolios of many properties, providing investors with
diversification within this sector. Many REITs also have the potential
to enhance an investor's capital appreciation through growth of funds
from operations which could provide the basis of consistent dividend
increases over time. In addition, REIT investors should benefit from
management expertise since REIT management teams tend to be market
experts within their specific property or geographic niches. REITs also
provide liquidity (subject to market fluctuations) and daily pricing,
Page 5
which are somewhat more difficult to achieve through a program of direct
real estate investing. Finally, REITs allow investors to participate in
the dynamic and growing real estate industry. Since 1990, the market
capitalization of REITs has increased from approximately $8.7 billion to
$140.5 billion in 1997. See "Portfolio-What are the Securities?-Risk
Factors" for a discussion of the risks inherent in investment in the
Trust.
With the deposit of the Securities on the Initial Date of Deposit, the
Sponsor established a percentage relationship between the amounts of
individual Securities in the Trust's portfolio. From time to time during
a period of up to approximately 360 days after the Initial Date of
Deposit, the Sponsor, pursuant to the Indenture, may create additional
Units by depositing in the Trust additional Securities, contracts to
purchase additional Securities or cash with instructions to purchase
additional Securities. 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 deposit by the Sponsor
of additional Securities, contracts to purchase additional Securities,
or the purchase of additional Securities pursuant to a cash deposit,
will duplicate, as nearly as is practicable, the original proportionate
relationship and not the actual proportionate relationship on the
subsequent date of deposit, since the two may differ. Any such
difference may be due to the sale, redemption or liquidation of any of
the Securities deposited in the Trust on the Initial, or any subsequent,
Date of Deposit. See "Rights of Unit Holders-How May Securities be
Removed from the Trust?" The original percentage relationship of each
Security to the Trust is set forth herein under "Schedule of
Investments." Since the prices of the underlying Securities will
fluctuate daily, the ratio, on a market value basis, will also change
daily. As nearly as is practicable, the portion of Securities
represented by each Unit will not change as a result of the deposit of
additional Securities in the Trust. If the Sponsor deposits cash,
however, existing and new investors may experience a dilution of their
investment and a reduction in their anticipated income because of
fluctuations in the prices of the Securities between the time of the
cash deposit and the purchase of the Securities and because the Trust
will pay the associated brokerage fees.
On the Initial Date of Deposit, each Unit of the Trust represented the
undivided fractional interest in the Securities as set forth under
"Summary of Essential Information." To the extent that Units of the
Trust are redeemed, the aggregate value of the Securities in the Trust
will be reduced and the undivided fractional interest represented by
each outstanding Unit of the Trust will increase. However, if additional
Units are issued by the Trust in connection with the deposit of
additional Securities, contracts to purchase additional Securities, or
cash by the Sponsor, the aggregate value of the Securities in the Trust
will be increased by amounts allocable to additional Units, and the
fractional undivided interest represented by each Unit of the Trust will
be decreased proportionately. See "Rights of Unit Holders-How May Units
be Redeemed?"
What are the Expenses and Charges?
With the exception of brokerage fees discussed above and 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. Certain of the
expenses incurred in establishing the Trust, including the cost of the
initial preparation of documents relating to the Trust, Federal and
state registration fees, the initial fees and expenses of the Trustee,
legal expenses and any other out-of-pocket expenses may be paid by the
Sponsor, and may, in part, be paid by the Trustee.
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. Such fee is based on the number of
Units outstanding in the Trust on January 1 of each year, except for the
year or years in which an initial offering period occurs, in which case
the fee for a month is based on the number of Units outstanding at the
end of such month. In providing such supervisory services, the Portfolio
Supervisor may purchase research services from a variety of sources
which may include underwriters or dealers of the Trust.
Subsequent to the initial offering period, First Trust Advisors L.P.,
the Evaluator and an affiliate of the Sponsor, will receive a fee as
indicated in the "Summary of Essential Information."
The Trustee pays certain expenses of the Trust for which it is
reimbursed by the Trust. The Trustee will receive for its ordinary
Page 6
recurring services to the Trust an annual fee as set forth in "Summary
of Essential Information." Such fee will be based upon the largest
number of Units outstanding in the Trust during the calendar year,
except during the initial offering period, in which case the fee is
calculated based on the largest number of Units outstanding during the
period for which the compensation is paid. For a discussion of the
services performed by the Trustee pursuant to its obligations under the
Indenture, reference is made to the material set forth under "Rights of
Unit Holders."
The Trustee's and the above described fees are payable from the Income
Account of the Trust to the extent funds are available, and then from
the Capital Account of the Trust. Since the Trustee has the use of the
funds being held in the Capital and Income Accounts for payment of
expenses and redemptions and since such Accounts are noninterest-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.
Each of the above mentioned 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. In addition,
with respect to the fees payable to the Sponsor or an affiliate of the
Sponsor for providing bookkeeping and other administrative services,
supervisory services and evaluation services, such individual fees may
exceed the actual costs of providing such services for the Trust, but at
no time will the total amount received for such services rendered to all
unit investment trusts of which Nike Securities L.P. is the Sponsor in
any calendar year exceed the actual cost to the Sponsor or its affiliate
of supplying such services in such year.
Expenses incurred in establishing the Trust, including costs of
preparing the registration statement, the trust indenture and other
closing documents, registering Units with the Securities and Exchange
Commission and states, the initial audit of the Trust portfolio and the
initial fees and expenses of the Trustee and any other out-of-pocket
expenses, will be paid by the Trust and charged off over a period not to
exceed ____ years from the Initial Date of Deposit. The following
additional charges are or may be incurred by the Trust: all legal and
annual auditing expenses of the Trustee incurred by or in connection
with its responsibilities under the Indenture; the expenses and costs of
any action undertaken by the Trustee to protect 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 connection with its acceptance or administration 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 the Trust (no such taxes or
charges are being levied or made or, to the knowledge of the Sponsor,
contemplated). The above expenses and the Trustee's annual fee, when
paid or owing to the Trustee, are secured by a lien on the Trust. In
addition, the Trustee is empowered to sell Securities in the Trust in
order to make funds available to pay all these amounts if funds are not
otherwise available in the Income and Capital Accounts of the Trust.
Since the Securities are all common stocks and the income stream
produced by dividend payments is unpredictable, the Sponsor cannot
provide any assurance that dividends will be sufficient to meet any or
all expenses of the Trust. As described above, if dividends are
insufficient to cover expenses, it is likely that Securities will have
to be sold to meet Trust expenses. These sales may result in capital
gains or losses to Unit holders. See "FT 257-What is the Federal Tax
Status of Unit Holders?"
The Indenture requires the Trust to be audited on an annual basis at the
expense of the Trust by independent auditors selected by the Sponsor. So
long as the Sponsor is making a secondary market for the Units, the
Sponsor is required to bear the cost of such annual audits to the extent
such cost exceeds $0.0050 per Unit. Unit holders of the Trust covered by
an audit may obtain a copy of the audited financial statements upon
request.
What is the Federal Tax Status of Unit Holders?
The following is a general discussion of certain of the federal income
tax consequences of the purchase, ownership and disposition of the
Units. The summary is limited to investors who hold the Units as
"capital assets" (generally, property held for investment) within the
meaning of Section 1221 of the Code. Unit holders should consult their
tax advisers in determining the federal, state, local and any other tax
consequences of the purchase, ownership and disposition of Units in the
Trust. For purposes of the following discussion and opinion, it is
Page 7
assumed that each Security is considered a share in a real estate
investment trust for federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor,
under existing law:
1. The Trust is not an association taxable as a corporation for
federal income tax purposes; each Unit holder will be treated as the
owner of a pro rata portion of each of the assets of the Trust under the
Code; and the income of the Trust will be treated as income of the Unit
holders thereof under the Code. Each Unit holder will be considered to
have received his or her pro rata share of income derived from the Trust
asset when such income is considered to be received by the Trust.
2. Each Unit holder will have a taxable event when the Trust disposes
of a Security (whether by sale, taxable exchange, liquidation,
redemption, or otherwise) or upon the sale or redemption of Units by
such Unit holder. The price a Unit holder pays for his or her Units is
allocated among his or her pro rata portion of each Security held by the
Trust (in proportion to the fair market values thereof on the valuation
date nearest the date the Unit holder purchase his or her Units) in
order to determine his or her tax basis for his or her pro rata portion
of each Security held by the Trust. Unit holders should consult their
own tax advisers with regard to the calculation of basis. For Federal
income tax purposes, a Unit holder's pro rata portion of dividends
(other than capital gains dividends of a REIT, as described below) as
defined by Section 316 of the Code, paid with respect to a Security held
by the Trust is taxable as ordinary income to the extent of such
corporation's current and accumulated "earnings and profits." A Unit
holder's pro rata portion of dividends paid on such Security which
exceeds such current and accumulated earnings and profits will first
reduce a Unit holder's tax basis in such Security, and to the extent
that such dividends exceed a Unit holder's tax basis in such Security
shall generally be treated as capital gain. In general, the holding
period for such capital gain will be determined by the period of time a
Unit holder has held his or her Units. The issuers of the Securities
intend to qualify under special Federal income tax rules as "real estate
investment trusts" (each a "REIT," shares of such issuers held by the
Trust shall be referred to collectively as the "REIT Shares"). Because
Unit holders are deemed to directly own a pro rata portion of the REIT
Shares as discussed above, Unit holders are advised to consult their tax
advisers for information relating to the tax consequences of owning the
REIT Shares. Provided an issuer qualifies as a REIT, certain
distributions by such issuers on the REIT Shares may qualify as "capital
gain dividends," taxable to shareholders (and, accordingly, to the Unit
holders as owners of a pro rata portions of the REIT Shares) as long-
term capital gains, regardless of how long a shareholder has owned such
shares. In addition, distributions of income or capital gains declared
on REIT Shares in October, November or December will be deemed to have
been paid to shareholders (and, accordingly, to the Unit holders as
owners of a pro rata portion of the REIT Shares) on December 31 of the
year they are declared, even when paid by a REIT during the following
January and received by shareholders or Unit holders in such following
year.
3. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Securities held by the Trust,
will generally be considered a capital gain (except in the case of a
dealer or a financial institution). A Unit holder's portion of loss, if
any, upon the sale or redemption of Units or the disposition of
Securities held by the Trust, will generally be considered a capital
loss (except in the case of a dealer or a financial institution). Unit
holders should consult their tax advisers regarding the recognition of
gains and losses for federal income tax purposes, as special rules,
described below, apply to a Unit holder's pro rata portion of the REIT
Shares.
Dividends Received Deduction. Dividends received on the Securities (so
long as such Securities qualify as REIT shares) are not eligible for the
dividends received deduction.
Limitations on Deductibility of Trust Expenses by Unit holders. Each
Unit holder's pro rata share of each expense paid by the Trust is
deductible by the Unit holder to the same extent as if the expense had
been paid directly by such Unit holder. It should be noted that as a
result of the Tax Reform Act of 1986, certain miscellaneous itemized
deductions, such as investment expenses, tax return preparation fees and
employee business expenses will be deductible by an individual only to
the extent they exceed 2% of such individual's adjusted gross income.
Unit holders may be required to treat some or all of the expenses of the
Trust as miscellaneous itemized deductions subject to this limitation.
Page 8
Recognition of Taxable Gain or Loss Upon Disposition of Securities by
the Trust or Disposition of Units. As discussed above, a Unit holder may
recognize taxable gain (or loss) when a Security is disposed of by the
Trust or if the Unit holder disposes of a Unit. However, any loss
realized by a Unit holder with respect to the disposition of his or her
pro rata portion of the REIT Shares, to the extent such Unit holder has
owned his or her Units for less than six months or the Trust has held
the REIT Shares for less than six months, will be treated as long-term
capital loss to the extent of such Unit holder's pro rata portion of any
capital gain dividends received (or deemed to have been received) with
respect to the REIT Shares. The Taxpayer Relief Act of 1997 (the "1997
Act") provides that for taxpayers other than corporations, net capital
gain (which is defined as net long-term capital gain over net short-term
capital loss for the taxable year) is subject to a maximum marginal
stated tax rate of either 28%, 25% or 20%, depending upon the holding
periods of the capital assets and on whether the gain is "unrecaptured
Section 1250 gain." Capital loss is long-term if the holding period for
the asset is more than one year, and is short-term if the holding period
for the asset is one year or less. Generally, capital gains realized
from assets held for more than one year but not more than 18 months are
taxed at a maximum marginal stated tax rate of 28% and capital gains
realized from assets (with certain exclusions) held for more than 18
months are taxed at a maximum marginal stated tax rate of 20% (10% in
the case of certain taxpayers in the lowest tax bracket). Capital gain
realized from assets held more than 18 months that is considered
unrecaptured Section 1250 gain is taxed at a maximum marginal stated
rate of 25%. Further, capital gains realized from assets held for one
year or less are taxed at the same rates as ordinary income. Legislation
is currently pending that provides the appropriate methodology that
should be applied in netting the realized capital gains and losses. Such
legislation is proposed to be effective retroactively for tax years
ending after May 6, 1997. Note, however, that the 1997 Act provides that
the application of the rules described above in the case of pass-through
entities such as the REITs will be prescribed in future Treasury
Regulations. The Internal Revenue Service has released preliminary
guidance which provides that, in general, pass-through entities such as
REITs may designate their capital gain dividends as either a 20% rate
gain distribution, an unrecaptured Section 1250 gain distribution or a
28% rate gain distribution depending on the nature of the gain received
by the pass-through entity. Accordingly, Unit holders should consult
their own tax advisers as to the tax rate applicable to capital gain
dividends.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered
into after April 30, 1993. Unit holders and prospective investors should
consult their tax advisers regarding the potential effect of this
provision on their investment in Units.
If a Unit holder disposes of a Unit, he or she is deemed thereby to have
disposed of his or her entire pro rata interest in all assets of the
Trust including his or her pro rata portion of all the Securities
represented by the Unit. The 1997 Act includes provisions that treat
certain transactions designed to reduce or eliminate risk of loss and
opportunities for gain (e.g., short sales, off-setting notional
principal contracts, futures or forward contracts, or similar
transactions) as constructive sales for purposes of recognition of gain
(but not loss) and for purposes of determining the holding period. Unit
holders should consult their own tax advisers with regard to any such
constructive sale rules.
Special Tax Consequences of In Kind Distributions Upon Termination of
the Trust. A Unit holder may, under certain circumstances, request an In-
Kind Distribution upon the termination of the Trust. See "Other
Information-How May the Indenture be Amended or Terminated?" As
previously discussed, prior to the termination of the Trust, a Unit
holder is considered as owning a pro rata portion of each of the Trust
assets for federal income tax purposes. The receipt of an in-kind
distribution will result in a Unit holder receiving an undivided
interest in whole shares of Securities plus, possibly, cash.
The potential tax consequences that may occur under an in-kind
distribution will depend on whether or not a Unit holder receives cash
in addition to Securities. A "Security" for this purpose is a particular
class of stock issued by a particular REIT. A Unit holder will not
recognize gain or loss if a Unit holder only receives Securities in
exchange for his or her pro rata portion in the Securities held by the
Trust. However, if a Unit holder also receives cash in exchange for a
fractional share of a Security held by the Trust, such Unit holder will
generally recognize gain or loss based upon the difference between the
amount of cash received by the Unit holder and his or her tax basis in
such fractional share of a Security held by the Trust.
Because the Trust will own many Securities, a Unit holder who requests
an In-Kind Distribution will have to analyze the tax consequences with
Page 9
respect to each Security owned by the Trust. If a Unit holder is deemed
to recognize gain or loss on the In-Kind Distribution because cash is
received in addition to Securities, the amount of taxable gain (or loss)
recognized upon such exchange will generally equal the sum of the gain
(or loss) recognized under the rules described above by such Unit holder
with respect to each Security owned by the Trust. Unit holders who
request an In-Kind Distribution are advised to consult their tax
advisers in this regard.
Computation of the Unit Holder's Tax Basis. Initially, a Unit holder's
tax basis in his or her Units will generally equal the price paid by
such Unit holder for his or her Units. The cost of the Units is
allocated among the Securities held in the Trust in accordance with the
proportion of the fair market values of such Securities on the valuation
date nearest the date the Units are purchased in order to determine such
Unit holder's tax basis for his or her pro rata portion of each Security.
A Unit holder's tax basis in his or her Units and his or her pro rata
portion of a Security held by the Trust will be reduced to the extent
dividends paid with respect to such Security are received by the Trust
which are not taxable as ordinary income and are not capital gain
dividends as described above.
General. Each Unit holder will be requested to provide his or her
taxpayer identification number to the Trustee and to certify that the
Unit holder has not been notified by the Internal Revenue Service that
payments to the Unit holder are subject to back-up withholding. If the
proper taxpayer identification number and appropriate certification are
not provided when requested, distributions by the Trust to such Unit
holder (including amounts received upon the redemption of Units) will be
subject to back-up withholding. Distributions by the Trust (other than
those that are not treated as United States source income, if any) will
generally be subject to United States income taxation and withholding in
the case of Units held by non-resident alien individuals, foreign
corporations or other non-United States persons. Such persons should
consult their tax advisers.
At the termination of the Trust, the Trustee will furnish to each Unit
holder a statement containing information relating to the dividends
received by the Trust on the Securities, the gross proceeds received by
the Trust from the disposition of any Security (resulting from
redemption of the sale of any Security) and the fees and expenses paid
by the Trust. The Trustee will also furnish annual information returns
to Unit holders and to the Internal Revenue Service.
Unit holders will be notified annually of the amount of dividends
includable in the Unit holder's gross income and amounts of Trust
expenses which may be claimed as itemized deductions.
The foregoing discussion relates only to United States federal income
taxation of U.S. Unit holders; Unit holders may be subject to state and
local taxation. Unit holders should consult their tax advisers regarding
potential foreign, state and local taxation with respect to the Units,
and foreign investors should consult their tax advisers with respect to
United States tax consequences of ownership of Units.
Investment in the Trust is available for purchase by funds and accounts
of individual investors that are exempt from Federal income taxes such
as Individual Retirement Accounts, Roth Individual Retirement Accounts,
Education Individual Retirement Accounts, Keogh Plans, pension funds and
other tax-deferred retirement plans. (See "FT 257-Are Investments in the
Trust Eligible for Retirement Plans?")
In the opinion of Carter, Ledyard & Milburn, Special Counsel to the
Trust for New York tax matters, under the existing income tax laws of
the State of New York, the Trust is not an association taxable as a
corporation and the income of the Trust will be treated as the income of
the Unit holders thereof.
Are Investments in the Trust Eligible for Retirement Plans?
Units of the Trust are eligible for purchase by Individual Retirement
Accounts, Roth Individual Retirement Accounts, Education 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 advisors
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.
Page 10
PORTFOLIO
What are the Securities?
The Trust consists of different issues of Securities issued by publicly
traded equity real estate investment trusts, known as REITs, and which
are listed on a national securities exchange or The Nasdaq Stock Market
or traded in the over-the-counter market. See "What are the Securities
Selected for the Growth & Income REIT Value Trust?" for a general
description of the companies.
Risk Factors. The Trust consists of such of the Securities listed under
"Schedule of Investments" as may continue to be held from time to time
in the Trust and any additional Securities acquired and held by the
Trust pursuant to the provisions of the Indenture, together with cash
held in the Income and Capital Accounts. Neither the Sponsor nor the
Trustee shall be liable in any way for any failure in any of the
Securities. However, should any contract for the purchase of any of the
Securities initially deposited hereunder fail, the Sponsor will, unless
substantially all of the moneys held in the Trust to cover such purchase
are reinvested in Replacement Securities (as defined under "Portfolio-
What are Some Additional Considerations for Investors?") in accordance
with the Indenture, refund the cash and sales charge attributable to
such failed contract to all Unit holders on the next distribution date.
Because certain of the Securities from time to time may be sold under
certain circumstances described herein, and because the proceeds from
such events will be distributed to Unit holders and will not be
reinvested, no assurance can be given that the Trust will retain for any
length of time its present size and composition. Although the Portfolio
is not managed, the Sponsor may instruct the Trustee to sell Securities
under certain limited circumstances. Pursuant to the Indenture and with
limited exceptions, the Trustee may sell any securities or other
property acquired in exchange for Securities such as those acquired in
connection with a merger or other transaction. If offered such new or
exchanged securities or property, the Trustee shall reject the offer.
However, in the event such securities or property are nonetheless
acquired by the Trust, they may be accepted for deposit in the Trust and
either sold by the Trustee or held in the Trust pursuant to the
direction of the Sponsor (who may rely on the advice of the Portfolio
Supervisor). See "Rights of Unit Holders-How May Securities be Removed
from the Trust?" Securities, however, will not be sold by the Trust to
take advantage of market fluctuations or changes in anticipated rates of
appreciation or depreciation.
Whether or not the Securities are listed on a national securities
exchange, the principal trading market for the Securities may be in the
over-the-counter market. As a result, the existence of a liquid trading
market for the Securities may depend on whether dealers will make a
market in the Securities. There can be no assurance that a market will
be made for any of the Securities, that any market for the Securities
will be maintained or of the liquidity of the Securities in any markets
made. In addition, the Trust may be restricted under the Investment
Company Act of 1940 from selling Securities to the Sponsor. The price at
which the Securities may be sold to meet redemptions and the value of
the Trust will be adversely affected if trading markets for the
Securities are limited or absent.
An investment in Units should be made with an understanding of the risks
which an investment in common stocks entails, including the risk that
the financial condition of the issuers of the Securities or the general
condition of the common stock market may worsen, and the value of the
Securities and therefore the value of the Units may decline. Common
stocks are especially susceptible to general stock market movements and
to volatile increases and decreases of value as market confidence in and
perceptions of the issuers change. These perceptions are based on
unpredictable factors, including expectations regarding government,
economic, monetary and fiscal policies, inflation and interest rates,
economic expansion or contraction, and global or regional political,
economic or banking crises. Shareholders of common stocks of the type
held by the Trust have a right to receive dividends only when and if and
in the amounts declared by the issuer's board of directors, and they
have a right to participate in amounts available for distribution by the
issuer only after all other claims on the issuer have been paid or
provided for. Common stocks do not represent an obligation of the issuer
and, therefore, do not offer any assurance of income or provide the same
degree of protection of capital as do debt securities. The issuance of
additional debt securities or preferred stock will create prior claims
for payment of principal, interest and dividends which could adversely
affect the ability and inclination of the issuer to declare or pay
Page 11
dividends on its common stock or the rights of holders of common stock
with respect to assets of the issuer upon liquidation or bankruptcy. The
value of common stocks is subject to market fluctuations for as long as
the common stocks remain outstanding, and thus the value of the
Securities in the Portfolio may be expected to fluctuate over the life
of the Trust to values higher or lower than those prevailing on the
Initial Date of Deposit.
Holders of common stocks incur more risk than holders of preferred
stocks and debt obligations because common stockholders, as owners of
the entity, have generally inferior rights to receive payments from the
issuer in comparison with the rights of creditors of, or holders of debt
obligations or preferred stocks issued by, the issuer. Cumulative
preferred stock dividends must be paid before common stock dividends,
and any cumulative preferred stock dividend omitted is added to future
dividends payable to the holders of cumulative preferred stock.
Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.
Real Estate Investment Trusts. An investment in the Trust should be made
with an understanding of the risks inherent in an investment in REITs
specifically and in real estate generally (in addition to securities
market risks). REITs are financial vehicles that have as their objective
the pooling of capital from a number of investors in order to
participate directly in real estate ownership or financing. REITs are
generally fully integrated operating companies that have interests in
income-producing real estate. REITs are differentiated by the types of
real estate properties held and the actual geographic location of
properties and fall into two major categories: equity REITs emphasize
direct property investment, holding their invested assets primarily in
the ownership of real estate or other equity interests, while mortgage
REITs concentrate on real estate financing, holding their assets
primarily in mortgages secured by real estate. As of the Initial Date of
Deposit, the Trust contains only equity REITs. REITs obtain capital
funds for investment in underlying real estate assets by selling debt or
equity securities in the public or institutional capital markets or by
bank borrowing. Thus, the returns on common equities of the REITs in
which the Trust invests will be significantly affected by changes in
costs of capital and, particularly in the case of highly "leveraged"
REITs (i.e., those with large amounts of borrowings outstanding), by
changes in the level of interest rates. The objective of an equity REIT
is to purchase income-producing real estate properties in order to
generate high levels of cash flow from rental income and a gradual asset
appreciation, and they typically invest in properties such as office,
retail, industrial, hotel and apartment buildings and healthcare
facilities.
REITs are a creation of the tax law. REITs essentially operate as a
corporation or business trust with the advantage of exemption from
corporate income taxes provided the REIT satisfies the requirements of
Sections 856 through 860 of the Internal Revenue Code. The major tests
for tax-qualified status are that the REIT (i) be managed by one or more
trustees or directors, (ii) issue shares of transferable interest to its
owners, (iii) have at least 100 shareholders, (iv) have no more than 50%
of the shares held by five or fewer individuals, (v) invest
substantially all of its capital in real estate related assets and
derive substantially all of its gross income from real estate related
assets and (vi) distribute at least 95% of its taxable income to its
shareholders each year. If any REIT in the Trust's portfolio should fail
to qualify for such tax status, the related shareholders (including the
Trust) could be adversely affected by the resulting tax consequences.
The underlying value of the Securities and the Trust's ability to make
distributions to Unit holders may be adversely affected by changes in
the national, state and local economic climate and real estate
conditions (such as oversupply of or reduced demand for space and
changes in market rental rates), increasing values and reduced supply of
desirable properties for acquisition, perceptions of prospective tenants
of the safety, convenience and attractiveness of the properties, the
ability of the owner to provide adequate management, maintenance and
insurance, the ability to collect on a timely basis all rents from
tenants, tenant defaults, the cost of complying with the Americans with
Disabilities Act, increased competition from other properties,
obsolescence of properties, changes in the availability, cost and terms
of mortgage funds, the impact of present or future environmental
legislation and compliance with environmental laws, the ongoing need for
capital improvements, particularly in older properties, changes in real
estate tax rates and other operating expenses, regulatory and economic
impediments to raising rents, adverse changes in governmental rules and
fiscal policies, dependency on management skills, civil unrest, acts of
God, including earthquakes and other natural disasters (which may result
in uninsured losses), acts of war, adverse changes in zoning laws, and
other factors which are beyond the control of the issuers of the REITs
in the Trust.
Page 12
The value of the REITs may at times be particularly sensitive to
devaluation in the event of rising interest rates. Equity REITs are less
likely to be affected by interest rate fluctuations than mortgage REITs
and the nature of the underlying assets of an equity REIT may be
considered more tangible than that of a mortgage REIT. Equity REITs are
more likely to be adversely affected by changes in the value of the
underlying property it owns than mortgage REITs.
REITs may concentrate investments in specific geographic areas or in
specific property types, i.e., hotels, shopping malls, residential
complexes and office buildings. The impact of economic conditions on
REITs can also be expected to vary with geographic location and property
type. Investors should be aware the REITs may not be diversified and are
subject to the risks of financing projects. REITs are also subject to
defaults by borrowers, self-liquidation, the market's perception of the
REIT industry generally, and the possibility of failing to qualify for
pass-through of income under the Internal Revenue Code, and to maintain
exemption from the Investment Company Act of 1940. A default by a
borrower or lessee may cause the REIT to experience delays in enforcing
its right as mortgagee or lessor and to incur significant costs related
to protecting its investments. In addition, because real estate
generally is subject to real property taxes, the REITs in the Trust may
be adversely affected by increases or decreases in property tax rates
and assessments or reassessments of the properties underlying the REITs
by taxing authorities. Furthermore, because real estate is relatively
illiquid, the ability of REITs to vary their portfolios in response to
changes in economic and other conditions may be limited and may
adversely affect the value of the Units. There can be no assurance that
any REIT will be able to dispose of its underlying real estate assets
when advantageous or necessary. In an effort to reduce the impact of the
risks discussed above, the Sponsor has selected REITs that are
diversified among various real estate sectors and geographic locations.
REITs generally maintain comprehensive insurance on presently owned and
subsequently acquired real property assets, including liability, fire
and extended coverage. However, certain types of losses may be
uninsurable or not be economically insurable as to which the underlying
properties are at risk in their particular locales. There can be no
assurance that insurance coverage will be sufficient to pay the full
current market value or current replacement cost of any lost investment.
Various factors might make it impracticable to use insurance proceeds to
replace a facility after it has been damaged or destroyed. Under such
circumstances, the insurance proceeds received by a REIT might not be
adequate to restore its economic position with respect to such property.
Under various environmental laws, a current or previous owner or
operator of real property may be liable for the costs of removal or
remediation of hazardous or toxic substances on, under or in such
property. Such laws often impose liability whether or not the owner or
operator caused or knew of the presence of such hazardous or toxic
substances and whether or not the storage of such substances was in
violation of a tenant's lease. In addition, the presence of hazardous or
toxic substances, or the failure to remediate such property properly,
may adversely affect the owner's ability to borrow using such real
property as collateral. No assurance can be given that one or more of
the REITs in the Trust may not be presently liable or potentially liable
for any such costs in connection with real estate assets they presently
own or subsequently acquire while such REITs are held in the Trust.
The Clinton Administration's proposed budget for fiscal 1999 includes
four proposals affecting REITs. These proposals, if enacted, would place
additional restrictions on the structure of certain REITs, limit a REITs
permissible investments, and effect the taxation of "built-in gains."
The Sponsor is unable to predict whether such proposals or future
proposals will be enacted or what impact such proposals or future
proposals, if any, will have on the Securities included in the Trust.
Unit holders will be unable to dispose of any of the Securities in the
Portfolio, as such, and will not be able to vote the Securities. As the
holder of the Securities, the Trustee will have the right to vote all of
the voting stocks in the Trust and will vote such stocks in accordance
with the instructions of the Sponsor.
Dain Rauscher Corporation; McDonald & Company Securities, Inc.; Morgan
Keegan & Company, Incorporated; and Scott & Stringfellow, Inc. (the
"Securities Underwriters") have acted as underwriters to the issuers of
the Securities in the acquisition of the Securities at prices below
market value for deposit in the Trust on the Initial Date of Deposit and
may acquire the Securities for the Sponsor in open market transactions
on subsequent date(s) of deposit and thereby may benefit. The Securities
Underwriters, in their general securities businesses, act as agents or
principals in connection with the purchase and sale of equity
Page 13
securities, including the Securities in the Trust, and may act as market
makers in certain of the Securities. The Securities Underwriters also
from time to time may issue reports on and make recommendations relating
to equity securities, which may include the Securities, and may provide
investment banking services to the issuers of the Securities.
The criteria for inclusion in the Trust were applied to the Securities
immediately prior to the Initial Date of Deposit. Since the Sponsor may
deposit additional Securities, the Sponsor may continue to sell Units of
the Trust even though the dividend income or the capital appreciation
potential of the Securities may have changed and would no longer justify
inclusion in the Trust. In addition, the Sponsor will continue to sell
Units of the Trust even if the Securities Underwriters change a
recommendation relating to a Security.
Investors should also note that the Securities Underwriters, in their
independent capacities as brokers/dealers and as investment advisors to
individuals, mutual funds, employee benefit plans and other institutions
and persons, may distribute information concerning the Securities which
comprise the portfolio to various individuals and entities and may, from
time to time, recommend to or effect on behalf of such individuals,
entities or others, the purchase or sale of one or more of the
Securities which are included in the portfolio. This may have an effect
on the prices of the Securities which is adverse to the interest of the
purchasers of Units of the Trust. Additionally, this may have an impact
on the price paid by the Trust for the Securities as well as the price
received upon redemption of the Units or upon the termination of the
Trust.
What are the Securities Selected for the Growth & Income REIT Value Trust?
, headquartered in
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The Sponsor has obtained the foregoing descriptions from sources it
deems reliable. The Sponsor has not independently verified the provided
information either in terms of accuracy or completeness.
What are Some Additional Considerations for Investors?
Investors should be aware of certain other considerations before making
a decision to invest in the Trust.
The value of the Securities will fluctuate over the life of the Trust
and may be more or less than the price at which they were deposited in
the Trust. The Securities may appreciate or depreciate in value (and may
or may not pay or increase dividends), depending on the full range of
economic and market influences affecting these securities, including the
impact of the Sponsor's purchase and sale of the Securities (especially
during the initial offering period of Units of the Trust) and other
factors.
The Sponsor and the Trustee shall not be liable in any way for any
default, failure or defect in any Security or contract therefore. In the
event of a notice that any Security will not be delivered ("Failed
Contract Obligations") to the Trust, the Sponsor is authorized under the
Indenture to direct the Trustee to acquire other securities
("Replacement Securities"). Any Replacement Security will meet the
criteria established by the Sponsor on the Initial Date of Deposit for
selecting the Securities for the Trust, which may have the effect of
varying the original proportionate relationship amongst the Securities
established on the Initial Date of Deposit. Any Replacement Security
acquired subsequent to 90 days after the Initial Date of Deposit will be
identical to those which were the subject of the failed contract. The
Replacement Securities must be purchased within 20 days after delivery
of the notice of a failed contract, and the purchase price may not
exceed the amount of funds reserved for the purchase of the Failed
Contract Obligations.
If the right of limited substitution described in the preceding
paragraphs is not utilized to acquire Replacement Securities in the
event of a failed contract, the Sponsor will refund the sales charge, if
any, attributable to such Failed Contract Obligations to all Unit
holders of the Trust, and the Trustee will distribute the principal
attributable to such Failed Contract Obligations not more than 120 days
after the date on which the Trustee received a notice from the Sponsor
that a Replacement Security would not be deposited in the Trust. In
addition, Unit holders should be aware that at the time of receipt of
such principal, they may not be able to reinvest such proceeds in other
Page 14
securities at a yield equal to or in excess of the yield which such
proceeds would have earned for Unit holders of the Trust.
The Indenture also authorizes the Sponsor to increase the size of the
Trust and the number of Units thereof by the deposit of additional
Securities, contracts to purchase additional Securities, or cash
(including a letter of credit) with instructions to purchase additional
Securities, in the Trust and the issuance of a corresponding number of
additional Units. If the Sponsor deposits cash, existing and new
investors could experience a dilution of their investments and a
reduction in anticipated income because of fluctuations in the prices of
the Securities between the time of the cash deposit and the actual
purchase of the Securities and because the Trust will pay the brokerage
fees associated therewith.
The Trust consists of the Securities listed under "Schedule of
Investments" (or contracts to purchase such Securities) that may
continue to be held from time to time in the Trust and any additional
Securities acquired and held by the Trust, pursuant to the provisions of
the Indenture (including provisions with respect to deposits into the
Trust of Securities, contracts to purchase Securities, or cash in
connection with the issuance of additional Units).
Like other investment companies, financial and business organizations
and individuals around the world, the Trust could be adversely affected
if the computer systems used by the Sponsor, Evaluator, Portfolio
Supervisor or Trustee or other service providers to the Trust do not
properly process and calculate date-related information and data
involving dates of January 1, 2000 and thereafter. This is commonly
known as the "Year 2000 Problem." The Sponsor, Evaluator, Portfolio
Supervisor and Trustee are taking steps that they believe are reasonably
designed to address the Year 2000 Problem with respect to computer
systems that they use and to obtain reasonable assurances that
comparable steps are being taken by the Trust's other service providers.
At this time, however, there can be no assurance that these steps will
be sufficient to avoid any adverse impact to the Trust.
The Year 2000 Problem is expected to impact corporations, which may
include issuers of the Securities contained in the Trust, to varying
degrees based upon various factors, including, but not limited to, their
industry sector and degree of technological sophistication. The Sponsor
is unable to predict what impact, if any, the Year 2000 Problem will
have on issuers of the Securities contained in the Trust.
Once all of the Securities in the Trust are acquired, the Trustee will
have no power to vary the investments 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 and may dispose of Securities only
under limited circumstances. See "Rights of Unit Holders-How May
Securities be Removed from the Trust?"
To the best of the Sponsor's knowledge, there is no litigation pending
as of the Initial Date of Deposit with respect to any Security which
might reasonably be expected to have a material adverse effect on the
Trust. At any time after the Initial Date of Deposit, litigation may be
instituted on a variety of grounds with respect to the Securities. The
Sponsor is unable to predict whether any such litigation will be
instituted, or if instituted, whether such litigation might have a
material adverse effect on the Trust.
Legislation. At any time after the Initial Date of Deposit, legislation
may be enacted, with respect to the Securities in the Trust or the
issuers of the Securities. Changing approaches to regulation,
particularly with respect to the environment, may have a negative impact
on certain companies represented in the Trust. There can be no assurance
that future legislation, regulation or deregulation will not have a
material adverse effect on the Trust or will not impair the ability of
the issuers of the Securities to achieve their business goals.
PUBLIC OFFERING
How is the Public Offering Price Determined?
The Public Offering Price per Unit for Units created on the Initial Date
of Deposit is based on the aggregate underlying value of the Securities
in the Trust (generally determined by the closing sale prices of listed
Securities), plus or minus cash, if any, in the Income and Capital
Accounts of the Trust, with no sales charge. For Units created
subsequent to the Initial Date of Deposit, but during the initial
offering period, the Public Offering Price per Unit of the Trust will be
Page 15
based upon the aggregate underlying value of the Securities in the Trust
(generally determined by the closing sale prices of listed Securities
and the ask prices of over-the-counter traded Securities) plus or minus
a pro rata share of cash, if any, in the Capital and Income Accounts of
the Trust plus a maximum sales charge of % (equivalent to % of the
net amount invested), divided by the number of Units of the Trust
outstanding.
For secondary market sales after the completion of the initial offering
period, the Public Offering Price is also based on the aggregate
underlying value of the Securities in the Trust (generally determined by
the closing sale prices of listed Securities and the bid price of over-
the-counter traded Securities), plus or minus cash, if any, in the
Income and Capital Accounts of the Trust, plus a maximum sales charge of
% of the Public Offering Price (equivalent to % of the net amount
invested), subject to reduction beginning ____________, 1999, divided by
the number of outstanding Units of the Trust.
The minimum amount which an investor may purchase of the Trust is $1,000
($500 for Individual Retirement Accounts, Roth Individual Retirement
Accounts, Education Individual Retirement Accounts or other retirement
plans). Only whole Units may be purchased. The applicable sales charge
for primary market sales (for Units created subsequent to the Initial
Date of Deposit) and secondary market sales is reduced by a discount as
indicated below for volume purchases (except for sales made pursuant to
a "wrap fee account" or similar arrangements as set forth below):
Maximum
Dollar Amount of Transaction at Sales
Public Offering Price* Discount Charge
_______________________________ ________ _______
$ 50,000 but less than $100,000 0.25% 3.75%
$ 100,000 but less than $150,000 0.50% 3.50%
$ 150,000 but less than $500,000 0.75% 3.25%
$ 500,000 but less than $1,000,000 1.25% 2.75%
$1,000,000 or more 1.75% 2.25%
<FN>
*The breakpoint sales charges are also applied on a Unit basis utilizing
a breakpoint equivalent in the above table of $10 per Unit and will be
applied on whichever basis is more favorable to the investor. The
breakpoints will be adjusted to take into consideration purchase orders
stated in dollars which cannot be completely fulfilled due to the
requirement that only whole Units be issued.
</FN>
Any such reduced sales charge shall be the responsibility of the selling
Underwriters, broker/dealer, bank or other selling agent. The reduced
sales charge structure will apply on all purchases of Units in the Trust
by the same person on any one day from the Underwriters or any one
broker/dealer, bank or other selling agent. Unit holders of the Trust
may utilize their termination proceeds to acquire units of a
subsequently issued Trust which has a similar investment strategy as the
Trust, if offered, at a reduced sales charge. 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 estate or single fiduciary account. The purchaser must
inform the Underwriters, broker/dealer, bank or other selling agent of
any such combined purchase prior to the sale, in order to obtain the
indicated discount. In addition, with respect to the employees, officers
and directors (including their immediate family members, defined as
spouses, children, grandchildren, parents, grandparents, siblings,
mothers-in-law, fathers-in-law, sons-in-law and daughters-in-law, and
trustees, custodians or fiduciaries for the benefit of such persons) of
the Sponsor, Underwriters, broker/dealers, banks or other selling agents
and their subsidiaries can purchase Units of the Trust during the
initial offering period (for Units created subsequent to the Initial
Date of Deposit) or secondary market at the Public Offering Price less
the concession the Sponsor typically allows broker/dealers.
Investors who purchase Units through registered broker/dealers who
charge periodic fees for financial planning, investment advisory or
asset management services or provide such services in connection with
the establishment of an investment account for which a comprehensive
"wrap fee" charge is imposed may purchase Units created on the Initial
Date of Deposit without a sales charge and may purchase during the
initial offering period (for Units created subsequent to the Initial
Date of Deposit) or secondary market at the Public Offering Price, less
the concession the Sponsor typically would allow such broker/dealer. See
"Public Offering Price-How are Units Distributed?"
Page 16
Had the Units of the Trust been available for sale on the business day
prior to the Initial Date of Deposit, the Public Offering Price would
have been as indicated in "Summary of Essential Information." The Public
Offering Price of Units on the date of the Prospectus or during the
initial offering period may vary from the amount stated under "Summary
of Essential Information" in accordance with fluctuations in the prices
of the underlying Securities. During the initial offering period, the
aggregate value of the Units of the Trust shall be determined on the
basis of the aggregate underlying value of the Securities therein plus
or minus cash, if any, in the Income and Capital Accounts of the Trust.
The aggregate underlying value of the Securities will be determined in
the following manner: if the Securities are listed on a national
securities exchange or The Nasdaq Stock Market, this evaluation is
generally based on the closing sale prices on that exchange or that
system (unless it is determined that these prices are inappropriate as a
basis for valuation) or, if there is no closing sale price on that
exchange or system, at the closing ask prices. If the Securities are not
so listed or, if so listed and the principal market therefor is other
than on the exchange, the evaluation shall generally be based on the
current ask prices on the over-the-counter market (unless it is
determined that these prices are inappropriate as a basis for
evaluation). If current ask prices are unavailable, the evaluation is
generally determined (a) on the basis of current ask prices for
comparable securities, (b) by appraising the value of the Securities on
the ask side of the market or (c) by any combination of the above.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the aggregate underlying
value of the Securities therein, plus or minus cash, if any, in the
Income and Capital Accounts of the Trust plus the applicable sales
charge. The aggregate underlying value of the Securities for secondary
market sales is calculated in the same manner as described above for
sales made during the initial offering period with the exception that
bid prices are used instead of ask prices.
Although payment is normally made three business days following the
order for purchase (the "date of settlement"), payment may be made prior
thereto. Cash, if any, made available to the Sponsor prior to the date
of settlement for the purchase of Units may be used in the Sponsor's
business and may be deemed to be a benefit to the Sponsor, subject to
the limitations of the Securities Exchange Act of 1934. Delivery of
Certificates representing Units so ordered will be made three business
days following such order or shortly thereafter. See "Rights of Unit
Holders-How May Units be Redeemed?" for information regarding the
ability to redeem Units ordered for purchase.
How are Units Distributed?
During the initial offering period Units will be distributed to the
public at the then current Public Offering Price. Upon the termination
of the initial offering period, unsold Units created or reacquired
during the initial offering period and Units repurchased in the
secondary market (see "Public Offering-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 the
Underwriters of the Units, dealers and other selling agents at prices
which represent a concession or agency commission of _____% of the
Public Offering Price for sales of Units created on the Initial Date of
Deposit and _____% of the Public Offering Price for primary market sales
of Units created subsequent to the Initial Date of Deposit and secondary
market sales (or 65% of the then current maximum sales charge after
____________, 1999). Effective on each ____________, commencing
____________, 1999, such sales charge will be reduced by 1/2 of 1% to a
minimum sales charge of 3.0%. However, resales of Units of the Trust by
such Underwriters, dealers and other selling agents to the public will
be made at the Public Offering Price described in the Prospectus. The
Sponsor reserves the right to change the amount of the concession or
agency commission from time to time. In addition, the Sponsor has
adopted a policy whereby concessions or agency commissions paid to
dealers or other selling agents will be withheld or reversed if Units
are tendered for redemption or sold within 30 days of the Initial Date
of Deposit. Certain commercial banks may be making Units of the Trust
available to their customers on an agency basis. A portion of the sales
charge paid by these customers is retained by or remitted to the banks
in the amounts indicated above. 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
Page 17
have not indicated that these particular agency transactions are not
permitted under such Act. In Texas and in certain other states, any
banks making Units available must be registered as broker/dealers under
state law.
What are the Sponsor's and Underwriters' Profits?
The Sponsor of the Trust may realize a profit (or sustain a loss) as of
the opening of business on the Initial Date of Deposit resulting from
the difference between the purchase prices of the Securities to the
Sponsor and the cost of such Securities to the Trust, which is based on
the evaluation of the Securities as of the opening of business on the
Initial Date of Deposit. See Note (2) of "Schedule of Investments." In
addition, the Sponsor of the Trust will receive a gross sales commission
on the sale of Units created subsequent to the Initial Date of Deposit
equal to % of the Public Offering Price of the Units (equivalent to
% of the net amount invested), less any reduced sales charge as
described under "Public Offering-How is the Public Offering Price
Determined?" See "Underwriting" for information regarding the receipt of
the excess gross sales commission by the Underwriters from the Sponsor
and additional concessions available to dealers and others. The Sponsor
may also be considered to have realized a profit or to have sustained a
loss, as the case may be, in the amount of any difference between the
cost of the Securities to the Trust (which is based on the Evaluator's
determination of the aggregate offering price of the underlying
Securities of the Trust on subsequent date(s) of deposit and the cost of
such Securities to the Sponsor. By virtue of buying the Securities at
below market prices during the day on the Initial Date of Deposit, the
Sponsor will realize a profit on the deposit of the Securities on the
Initial Date of Deposit of approximately ___% of the market value of the
Securities, less concessions due to dealers and others. The Securities
Underwriters will realize a profit on the sale of the Securities to the
Sponsor equal to the difference between the Securities Underwriters'
acquisition costs on such Securities and the sale price of the
Securities to the Sponsor (expected to be approximately ___% of the
market value of the Securities). During the initial offering period, the
Underwriters, dealers and other selling agents also may realize profits
or sustain losses as a result of fluctuation after the Initial Date of
Deposit in the Public Offering Price received by them upon the sale of Units.
In maintaining a market for the Units, the Sponsor and the Underwriters
will also realize profits or sustain losses in the amount of any
difference between the price at which Units are purchased and the price
at which Units are resold (which price includes a sales charge of %
subject to reduction beginning ____________, 1999) or redeemed. The
secondary market public offering price of Units may be greater or less
than the cost of such Units to the Sponsor or the Underwriters.
Will There be a Secondary Market?
After the initial offering period, although not obligated to do so, the
Sponsor and the Underwriters intend to maintain a market for the Units
and continuously offer to purchase Units at prices, subject to change at
any time, based upon the aggregate underlying value of the Securities in
the Trust plus or minus cash, if any, in the Income and Capital Accounts
of the Trust. 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 or the Underwriters may discontinue
purchases of Units at such prices. IF A UNIT HOLDER WISHES TO DISPOSE OF
HIS OR HER UNITS, HE OR SHE 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 three business days
following such order or shortly thereafter. Certificates are
transferable by presentation and surrender to the Trustee properly
Page 18
endorsed or accompanied by a written instrument or instruments of
transfer. Certificates to be redeemed must be properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unit
holder must sign exactly as his or her name appears on the face of the
certificate with the signature guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other
signature guaranty program in addition to, or in substitution for,
STAMP, as may be accepted by the Trustee. In certain instances, the
Trustee may require additional documents such as, but not limited to,
trust instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority. Record ownership
may occur before settlement.
Certificates will be issued in fully registered form, transferable only
on the books of the Trustee in denominations of one Unit or any multiple
thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form. The
Trustee will maintain an account for each such Unit holder and will
credit each such account with the number of Units purchased by that Unit
holder. Within two business days of the issuance or transfer of Units
held in uncertificated form, the Trustee will send to the registered
owner of Units a written initial transaction statement containing a
description of the 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 issuer
and any adverse claims to which such Units are or may be subject or a
statement that there are no such liens, restrictions or adverse claims;
and the date the transfer was registered. Uncertificated Units are
transferable through the same procedures applicable to Units evidenced
by certificates (described above), except that no certificate need be
presented to the Trustee and no certificate will be issued upon the
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 Income and Capital Distributed?
The Trustee will distribute any net income received with respect to any
of the Securities in the Trust on or about the Income Distribution Dates
to Unit holders of record on the preceding Income Record Date. See
"Summary of Essential Information." Persons who purchase Units will
commence receiving distributions only after such person becomes a record
owner. Notification to the Trustee of the transfer of Units is the
responsibility of the purchaser, but in the normal course of business
such notice is provided by the selling broker/dealer. The pro rata share
of cash in the Capital Account of the Trust will be computed as of the
fifteenth day of each month. Proceeds received on the sale of any
Securities in the Trust, to the extent not used to meet redemptions of
Units or pay expenses, will, however, be distributed on the last day of
each month to Unit holders of record on the fifteenth day of such month
if the amount available for distribution equals at least $1.00 per 100
Units. The Trustee is not required to pay interest on funds held in the
Capital Account of the Trust (but may itself earn interest thereon and
therefore benefit from the use of such funds). Notwithstanding,
distributions of funds in the Capital Account, if any, will be made on
the last day of each December to Unit holders of record as of December
15. See "FT 257-What is the Federal Tax Status of Unit Holders?"
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of any distribution made by
the Trust if the Trustee has not been furnished the Unit holder's tax
identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and
may be recovered by the Unit holder only when filing a tax return. Under
normal circumstances the Trustee obtains the Unit holder's tax
identification number from the selling broker. However, a Unit holder
should examine his or her statements from the Trustee to make sure that
the Trustee has been provided a certified tax identification number in
order to avoid this possible "back-up withholding." In the event the
Trustee has not been previously provided such number, one should be
provided as soon as possible.
Page 19
Within a reasonable time after the Trust is terminated, each Unit holder
will, upon surrender of his or her Units for redemption, receive: (i)
the pro rata share of the amounts realized upon the disposition of
Securities, unless he or she elects an In-Kind Distribution as described
under "Other Information-How May the Indenture be Amended or
Terminated?" and (ii) a pro rata share of any other assets of the Trust,
less expenses of the Trust.
The Trustee will credit to the Income Account of the Trust any dividends
received on the Securities therein. All other receipts (e.g. return of
capital, etc.) are credited to the Capital Account of the Trust.
The Trustee may establish reserves (the "Reserve Account") within the
Trust for state and local taxes, if any, and any governmental charges
payable out of the Trust.
Distribution Reinvestment Option. Any Unit holder may elect to have each
distribution of income or capital on his or her Units automatically
reinvested in additional Units of the Trust. Each person who purchases
Units of the Trust may elect to become a participant in the Distribution
Reinvestment Option by notifying the Trustee of his or her election. The
Distribution Reinvestment Option may not be available in all states. In
order to enable a Unit holder to participate in the Distribution
Reinvestment Option with respect to a particular distribution, they must
notify the Trustee of their election at least 10 days prior to the
Record Date for such distribution. Each subsequent distribution of
income or capital on the participant's Units will be automatically
applied by the Trustee to purchase additional Units of the Trust. IT
SHOULD BE REMEMBERED THAT EVEN IF DISTRIBUTIONS ARE REINVESTED, THEY ARE
STILL TREATED AS DISTRIBUTIONS FOR INCOME TAX PURPOSES.
What Reports will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and the amount
of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per Unit. Within a reasonable period of
time after the end of each calendar year, the Trustee shall furnish to
each person who at any time during the calendar year was a Unit holder
of the Trust the following information in reasonable detail: (1) a
summary of transactions in the Trust for such year; (2) any Securities
sold during the year and the Securities held at the end of such year by
the Trust; (3) the redemption price per Unit based upon a computation
thereof on the 31st day of December of such year (or the last business
day prior thereto); and (4) amounts of income and capital distributed
during such year.
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 in the Trust furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his or her Units by
tendering to the Trustee, at its unit investment trust office in the
City of New York, the certificates representing the Units to be
redeemed, or in the case of uncertificated Units, delivery of a request
for redemption, duly endorsed or accompanied by proper instruments of
transfer with signature guaranteed as explained above (or by providing
satisfactory indemnity, as in connection with lost, stolen or destroyed
certificates), and payment of applicable governmental charges, if any.
No redemption fee will be charged. On the third business day following
such tender, the Unit holder will be entitled to receive in cash an
amount for each Unit equal to the Redemption Price per Unit next
computed after receipt by the Trustee of such tender of Units. The "date
of tender" is deemed to be the date on which Units are received by the
Trustee (if such day is a day on which the New York Stock Exchange is
open for trading), except that as regards Units received after 4:00 p.m.
Eastern time (or as of any earlier closing time on a day on which the
New York Stock Exchange is scheduled in advance to close at such earlier
time), the date of tender is the next day on which the New York Stock
Exchange is open for trading and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the redemption
price computed on that day. Units so redeemed shall be cancelled. If
funds in the Capital Account are insufficient to cover the required cash
distribution to the tendering Unit holder, the Trustee may sell
Securities in the manner described below.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of the principal amount of a
Unit redemption if the Trustee has not been furnished the redeeming Unit
holder's tax identification number in the manner required by such
Page 20
regulations. Any amount so withheld is transmitted to the Internal
Revenue Service and may be recovered by the Unit holder only when filing
a tax return. Under normal circumstances the Trustee obtains the Unit
holder's tax identification number from the selling broker. However, any
time a Unit holder elects to tender Units for redemption, such Unit
holder should make sure that the Trustee has been provided a certified
tax identification number in order to avoid this possible "back-up
withholding." In the event the Trustee has not been previously provided
such number, one must be provided at the time redemption is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of the Trust to the extent that funds are
available for such purpose, or from the Capital Account. All other
amounts paid on redemption shall be withdrawn from the Capital Account
of the Trust.
The Trustee is empowered to sell Securities of the Trust 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.
The Redemption Price per Unit (as well as the secondary market Public
Offering Price) will be determined on the basis of the aggregate
underlying value of the Securities in the Trust plus or minus cash, if
any, in the Income and Capital Accounts of the Trust. The Redemption
Price per Unit is the pro rata share of each Unit determined by the
Trustee by adding: (1) the cash on hand in the Trust other than cash
deposited in the Trust to purchase Securities not applied to the
purchase of such Securities; (2) the aggregate value of the Securities
held in the Trust, as determined by the Evaluator on the basis of the
aggregate underlying value of the Securities in the Trust next computed;
and (3) dividends receivable on the Securities trading ex-dividend as of
the date of computation; and deducting therefrom: (1) amounts
representing any applicable taxes or governmental charges payable out of
the Trust; (2) any amounts owing to the Trustee for its advances; (3) an
amount representing estimated accrued expenses of the Trust, including
but not limited to fees and expenses of the Trustee (including legal and
auditing fees), the Evaluator and supervisory fees, if any; (4) cash
held for distribution to Unit holders of record of the Trust as of the
business day prior to the evaluation being made; and (5) other
liabilities incurred by the Trust; and finally dividing the results of
such computation by the number of Units of the Trust outstanding as of
the date thereof.
The aggregate value of the Securities will be determined in the
following manner: if the Securities are listed on a national securities
exchange or The Nasdaq Stock Market, this evaluation is generally based
on the closing sale prices on that exchange or that system (unless it is
determined that these prices are inappropriate as a basis for valuation)
or, if there is no closing sale price on that exchange, either at the
closing ask prices (during the initial offering period) or at the
closing bid prices (subsequent to the initial offering period). If the
Securities are not so listed or, if so listed and the principal market
therefor is other than on the exchange, the evaluation shall generally
be based on the current ask or bid prices (as appropriate) on the over-
the-counter market (unless these prices are inappropriate as a basis for
evaluation). If current ask or bid prices (as appropriate) are
unavailable, the evaluation is generally determined (a) on the basis of
current ask or bid prices (as appropriate) for comparable securities,
(b) by appraising the value of the Securities on the ask or bid side of
the market (as appropriate) or (c) by any combination of the above.
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 the New
York Stock Exchange is restricted or any emergency exists, as a result
of which disposal or evaluation of the Securities is not reasonably
practicable, or for such other periods as the Securities and Exchange
Commission may by order permit. Under certain extreme circumstances, the
Sponsor may apply to the Securities and Exchange Commission for an order
permitting a full or partial suspension of the right of Unit holders to
redeem their Units. The Trustee is not liable to any person in any way
for any loss or damage which may result from any such suspension or
postponement.
How May Units be Purchased by the Sponsor or Underwriters?
The Trustee shall notify the Sponsor or Underwriters of any tender of
Units for redemption. If the Sponsor's or Underwriters' bids 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 1:00
Page 21
p.m. Eastern time on the same business day and by making payment
therefor to the Unit holder not later than the day on which the Units
would otherwise have been redeemed by the Trustee. Units held by the
Sponsor or Underwriters may be tendered to the Trustee for redemption as
any other Units. In the event the Sponsor or Underwriters do not
purchase Units, the Trustee may sell Units tendered for redemption in
the over-the-counter market, if any, as long as the amount to be
received by the Unit holder is equal to the amount he or she would have
received on redemption of the Units.
The offering price of any Units acquired by the Sponsor or Underwriters
will be in accord with the Public Offering Price described in the then
effective Prospectus describing such Units. Any profit or loss resulting
from the resale or redemption of such Units will belong to the Sponsor
or Underwriters.
How May Securities be Removed from the Trust?
The Portfolio of the Trust is not "managed" by the Sponsor or the
Trustee; their activities described herein are governed solely by the
provisions of the Indenture. The Indenture provides that the Sponsor may
(but need not) direct the Trustee to dispose of a Security in the event
that an issuer defaults in the payment of a dividend that has been
declared, that any action or proceeding has been instituted restraining
the payment of dividends or there exists any legal question or
impediment affecting such Security, that the issuer of the Security has
breached a covenant which would affect the payments of dividends, the
credit standing of the issuer or otherwise impair the sound investment
character of the Security, that the issuer has defaulted on the payment
on any other of its outstanding obligations, or that the price of the
Security has declined to such an extent or other such credit factors
exist so that in the opinion of the Sponsor, the retention of such
Securities would be detrimental to the Trust. Except as stated under
"Portfolio-What are Some Additional Considerations for Investors?" for
Failed Contract Obligations, the acquisition by the Trust of any
securities or other property other than the Securities is prohibited.
Pursuant to the Indenture and with limited exceptions, the Trustee may
sell any securities or other property acquired in exchange for
Securities such as those acquired in connection with a merger or other
transaction. If offered such new or exchanged securities or property,
the Trustee shall reject the offer. However, in the event such
securities or property are nonetheless acquired by the Trust, they may
be accepted for deposit in the Trust and either sold by the Trustee or
held in the Trust pursuant to the direction of the Sponsor (who may rely
on the advice of the Portfolio Supervisor). Proceeds from the sale of
Securities (or any securities or other property received by the Trust in
exchange for Securities) by the Trustee are credited to the Capital
Account of the Trust for distribution to Unit holders or to meet
redemptions. The Trustee may, from time to time, retain and pay
compensation to the Sponsor (or an affiliate of the Sponsor) to act as
agent for the Trust with respect to selling Equity Securities from the
Trust. In acting in such capacity, the Sponsor or its affiliate will be
held subject to the restrictions under the Investment Company Act of
1940, as amended.
The Trustee may also sell Securities designated by the Sponsor, or if
not so directed, in its own discretion, for the purpose of redeeming
Units of the Trust tendered for redemption and the payment of expenses.
The Sponsor, in designating Securities to be sold by the Trustee, will
generally make selections in order to maintain, to the extent
practicable, the proportionate relationship among the number of shares
of individual issues of Securities. To the extent this is not
practicable, the composition and diversity of the Securities may be
altered. The Securities will be sold in either open market transactions
or private transactions (which may include transactions with the issuers
of the Securities). In order to obtain the best price for the Trust, it
may be necessary for the Sponsor to specify minimum amounts (generally
100 shares) in which blocks of Securities are to be sold.
INFORMATION AS TO UNDERWRITERS, SPONSOR, TRUSTEE AND EVALUATOR
Who are the Underwriters?
Dain Rauscher Corporation
Page 22
McDonald & Company Securities, Inc.
Morgan Keegan & Company, Incorporated
Scott & Stringfellow, Inc.
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 FT Series (formerly known as The First Trust Special
Situations Trust), The First Trust Insured Corporate Trust, The First
Trust of Insured Municipal Bonds and The First Trust GNMA. First Trust
introduced the first insured unit investment trust in 1974 and to date
more than $9 billion in First Trust unit investment trusts have been
deposited. The Sponsor's employees include a team of professionals with
many years of experience in the unit investment trust industry. The
Sponsor is a member of the National Association of Securities Dealers,
Inc. and Securities Investor Protection Corporation and has its
principal offices at 1001 Warrenville Road, Lisle, Illinois 60532;
telephone number (630) 241-4141. As of December 31, 1997, the total
partners' capital of Nike Securities L.P. was $11,724,071 (audited).
(This paragraph relates only to the Sponsor and not to the Trust or to
any series thereof or to any other underwriter. The information is
included herein only for the purpose of informing investors as to the
financial responsibility of the Sponsor and its ability to carry out its
contractual obligations. More detailed financial information will be
made available by the Sponsor upon request.)
Who is the Trustee?
The Trustee is The Chase Manhattan Bank, with its principal executive
office located at 270 Park Avenue, New York, New York 10017 and its unit
investment trust office at 4 New York Plaza, 6th floor, New York, New
York 10004-2413. Unit holders who have questions regarding the Trust may
call the Customer Service Help Line at 1-800-682-7520. The Trustee is
subject to supervision 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, 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 the 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
Page 23
liable for depreciation or loss incurred by reason of the sale by the
Trustee of any of the Securities. In the event of the failure of the
Sponsor to act under the Indenture, the Trustee may act thereunder and
shall not be liable for any action taken by it in good faith under the
Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or upon or in
respect of the 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 becomes incapable of acting or becomes 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 First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532. The
Evaluator may resign or may be removed by the Sponsor or 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 an amendment is
(1) to cure any ambiguity or to correct or supplement any provision of
the Indenture which may be defective or inconsistent with any other
provision contained therein, or (2) to make such other provisions as
shall not adversely affect the interest of the Unit holders (as
determined in good faith by the Sponsor and the Trustee).
The Indenture provides that the Trust shall terminate upon the Mandatory
Termination Date indicated herein under "Summary of Essential
Information." The Trust may be liquidated at any time by consent of 100%
of the Unit holders of the Trust or by the Trustee when the value of the
Securities owned by the Trust, as shown by any evaluation, is less than
40% of the total value of Securities deposited in such Trust during the
initial offering period, or in the event that Units of the Trust not yet
sold aggregating more than 60% of the Units of the Trust are tendered
for redemption by the underwriters, including the Sponsor. If the Trust
is liquidated because of the redemption of unsold Units of the Trust by
the Underwriters, the Sponsor will refund to each purchaser of Units of
the Trust the entire sales charge, if any, paid by such purchaser. In
the event of termination, written notice thereof will be sent by the
Trustee to all Unit holders of the Trust. Within a reasonable period
after termination, the Trustee will follow the procedures set forth
under "Rights of Unit Holders-How are Income and Capital Distributed?"
Commencing during the period beginning nine business days prior to, and
no later than, the Mandatory Termination Date, Securities will begin to
be sold in connection with the termination of the Trust. The Sponsor
will determine the manner, timing and execution of the sale of the
Securities. Written notice of any termination of the Trust specifying
Page 24
the time or times at which Unit holders may surrender their certificates
for cancellation shall be given by the Trustee to each Unit holder at
his or her address appearing on the registration books of the Trust
maintained by the Trustee. At least 60 days prior to the Mandatory
Termination Date of the Trust, the Trustee will provide written notice
thereof to all Unit holders and will include with such notice a form to
enable Unit holders to elect a distribution of shares of Securities
(reduced by customary transfer and registration charges), if such Unit
holder owns at least 2,500 Units of the Trust, rather than to receive
payment in cash for such Unit holder's pro rata share of the amounts
realized upon the disposition by the Trustee of Securities. To be
effective, the election form, together with surrendered certificates and
other documentation required by the Trustee, must be returned to the
Trustee at least ten business days prior to the Mandatory Termination
Date of the Trust. Unit holders not electing an In-Kind Distribution
will receive a cash distribution from the sale of the remaining
Securities within a reasonable time after the Trust is terminated.
Regardless of the distribution involved, the Trustee will deduct from
the funds of the Trust any accrued costs, expenses, advances or
indemnities provided by the Indenture, including estimated compensation
of the Trustee and costs of liquidation and any amounts required as a
reserve to provide for payment of any applicable taxes or other
governmental charges. Any sale of Securities in the Trust upon
termination may result in a lower amount than might otherwise be
realized if such sale were not required at such time. In addition, to
the extent that Securities are sold prior to the Mandatory Termination
Date, Unit holders will not benefit from any appreciation they would
have received on the Securities had the Securities not been sold at such
time. The Trustee will then distribute to each Unit holder his or her
pro rata share of the balance of the Income and Capital Accounts.
Legal Opinions
The legality of the Units offered hereby and certain matters relating to
Federal tax law have been passed upon by Chapman and Cutler, 111 West
Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
Carter, Ledyard & Milburn, will act as counsel for the Trustee and as
special New York tax counsel for the Trust.
Experts
The statement of net assets, including the schedule of investments, 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.
UNDERWRITING
The Underwriters named below have purchased Units in the following
amounts:
Number
Name Address of Units
____ _______ ________
UNDERWRITERS
Dain Rauscher Corporation Dain Rauscher Plaza, Dain Rauscher Plaza, 60 S. 6th Street,
14th Floor, Minneapolis, MN 55402-4422
McDonald & Company Securities, Inc. 800 Superior Street, Suite 2100, Cleveland, OH 44114
Morgan Keegan & Company, Incorporated Morgan Keegan Tower, 50 Front Street
Memphis, TN 38103
Scott & Stringfellow, Inc. 909 East Main Street, Richmond, VA 23219
_______
TOTAL
========
On the Initial Date of Deposit, the Underwriters of the Trust became the
owners of the Units of the Trust and entitled to the benefits thereof,
as well as the risks inherent therein.
Units may also be sold to or through dealers and other selling agents
during the initial offering period and in the secondary market at prices
Page 25
representing a concession or agency commission as described in "Public
Offering-How are Units Distributed?"
The Underwriters have agreed to underwrite additional Units of the Trust
as they become available. The Sponsor will receive from the Underwriters
the difference between the gross sales commission and ____% of the
Public Offering Price per Unit.
From time to time the Sponsor may implement programs under which the
dealers of the Trust may receive nominal awards from the Sponsor for
each of their registered representatives who have sold a minimum number
of UIT Units during a specified time period. In addition, at various
times the Sponsor may implement other programs under which the sales
force of the dealers may be eligible to win other nominal awards for
certain sales efforts, or under which the Sponsor will reallow to any
such dealer that sponsors sales contests or recognition programs
conforming to criteria established by the Sponsor, or participates in
sales programs sponsored by 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 the qualifying dealers for
certain services or activities which are primarily intended to result in
sales of Units of the Trust. Such payments are made by the Sponsor out
of its own assets, and not out of the assets of the Trust. These
programs will not change the price Unit holders pay for their Units or
the amount that the Trust will receive from the Units sold.
The Sponsor may from time to time in its advertising and sales materials
compare the then current estimated returns on the Trust and returns over
specified periods on other similar Trusts sponsored by Nike Securities
L.P. with returns on other taxable investments such as the common stocks
comprising the Dow Jones Industrial Average, 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.
Trust performance may be compared to performance on a total return basis
of the Dow Jones Industrial Average, the S&P 500 Composite Price Stock
Index, or performance data from Lipper Analytical Services, Inc. and
Morningstar Publications, Inc. or from publications such as Money, The
New York Times, U.S. News and World Report, Business Week, Forbes or
Fortune. As with other performance data, performance comparisons should
not be considered representative of the Trust's relative performance for
any future period.
Page 26
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
FT 257
We have audited the accompanying statement of net assets, including the
schedule of investments, of FT 257, comprised of Growth & Income REIT
Value Trust, as of the opening of business on ____________, 1998. 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 on ____________,
1998. An audit also includes assessing the accounting principles used
and significant estimates made by the Sponsor, as well as evaluating the
overall presentation of the statement of net assets. We believe that our
audit of the statement of net assets provides a reasonable basis for our
opinion.
In our opinion, the statement of net assets referred to above presents
fairly, in all material respects, the financial position of FT 257,
comprised of Growth & Income REIT Value Trust, at the opening of
business on ____________, 1998 in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
____________, 1998
Page 27
Statement of Net Assets
GROWTH & INCOME REIT VALUE TRUST
FT 257
At the Opening of Business on the
Initial Date of Deposit-____________, 1998
NET ASSETS
Investment in Securities represented by purchase contracts (1) (2) $
Organizational and offering costs (3)
_________
Less accrued organizational and offering costs (3) ( )
_________
Net assets $
=========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (4) $
Less sales charge (4) ( )
_________
Net assets $
=========
<FN>
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Securities listed under "Schedule of
Investments" is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $ issued by The Chase
Manhattan Bank has been deposited with the Trustee as collateral,
covering the monies necessary for the purchase of the Securities
pursuant to purchase contracts for such Securities.
(3) The Trust will bear all or a portion of its estimated organizational
and offering costs which will be deferred and charged off over a period
not to exceed ___ years from the Initial Date of Deposit. The estimated
organizational and offering costs are based on ____________ Units of the
Trust expected to be issued. To the extent the number of Units issued is
larger or smaller, the estimate will vary.
(4) There is no sales charge on Units created on the Initial Date of
Deposit. For Units created subsequent to the Initial Date of Deposit,
the aggregate cost to investors includes a maximum sales charge computed
at the rate of % of the Public Offering Price (equivalent to % of
the net amount invested), assuming no reduction of sales charge as set
forth under "Public Offering-How is the Public Offering Price Determined?"
</FN>
Page 28
Schedule of Investments
GROWTH & INCOME REIT VALUE TRUST
FT 257
At the Opening of Business on the
Initial Date of Deposit-____________, 1998
Approximate
Percentage Market
of Aggregate Value Cost of
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Securities (1) Price (3) Share to Trust (2)
_________ ___________________________________ ___________ ________ ____________
% $ $
%
%
%
%
%
%
______ _______
Total Investments 100% $
====== ========
____________
<FN>
(1) All Securities are represented by regular way contracts to purchase
such Securities for the performance of which an irrevocable letter of
credit has been deposited with the Trustee. The contracts to purchase
Securities were entered into by the Sponsor on ____________, 1998.
(2) The cost of the Securities to the Trust represents the aggregate
underlying value with respect to the Securities acquired (generally
determined by the closing sale prices of the listed Securities and the
ask prices of the over-the-counter traded Securities on the business day
preceding the Initial Date of Deposit). The valuation of the Securities
has been determined by the Evaluator, an affiliate of the Sponsor. The
aggregate underlying value of the Securities on the Initial Date of
Deposit was $ . Cost and loss to Sponsor relating to the Securities
sold to the Trust were $ and $ , respectively.
(3) The portfolio may contain additional Equity Securities each of which
will not exceed approximately ___% of the Aggregate Offering Price.
Although it is not the Sponsor's intention, certain of the Securities
listed above may not be included in the final portfolio. Also, the
percentages of the Aggregate Offering Price for the Securities are
approximate amounts and may vary in the final portfolio.
</FN>
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Page 30
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Page 31
CONTENTS:
Summary of Essential Information 4
Growth & Income REIT Value Trust
FT 257:
What is the FT Series? 5
What are the Expenses and Charges? 6
What is the Federal Tax Status of Unit Holders? 7
Are Investments in the Trust Eligible for
Retirement Plans? 10
Portfolio:
What are the Securities? 11
Risk Factors 11
Real Estate Investment Trusts 12
What are the Securities Selected for the
Growth & Income REIT Value Trust? 14
What are Some Additional Considerations
for Investors? 14
Public Offering:
How is the Public Offering Price Determined? 15
How are Units Distributed? 17
What are the Sponsor's and Underwriters' Profits? 18
Will There be a Secondary Market? 18
Rights of Unit Holders:
How is Evidence of Ownership
Issued and Transferred? 18
How are Income and Capital Distributed? 19
What Reports will Unit Holders Receive? 20
How May Units be Redeemed? 20
How May Units be Purchased by the
Sponsor or Underwriters? 21
How May Securities be Removed from the Trust? 22
Information as to Underwriters, Sponsor,
Trustee and Evaluator:
Who are the Underwriters? 22
Who is the Sponsor? 23
Who is the Trustee? 23
Limitations on Liabilities of Sponsor and Trustee 23
Who is the Evaluator? 24
Other Information:
How May the Indenture be Amended or Terminated? 24
Legal Opinions 25
Experts 25
Underwriting 25
Report of Independent Auditors 27
Statement of Net Assets 28
Notes to Statement of Net Assets 28
Schedule of Investments 29
__________________
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)
GROWTH & INCOME REIT VALUE TRUST
Dain Rauscher Corporation
Dain Rauscher Plaza
60 S. 6th Street, 14th Floor
Minneapolis, MN 55402-4422
McDonald & Company Securities, Inc.
800 Superior Street, Suite 2100
Cleveland, OH 44114
Morgan Keegan & Company Incorporated
Morgan Keegan Tower
50 Front Street
Memphis, TN 38103
Scott & Stringfellow, Inc.
909 East Main Street
Richmond, VA 23219
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
____________, 1998
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 28
MEMORANDUM
Re: FT 257
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 FT
244, which is the current fund, and FT 257, 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 Templeton Growth and Treasury Trust, Series 1
and subsequent series (File No. 811-05903) related also to the
subsequent series of the Fund.
1933 ACT
PROSPECTUS
The only significant changes in the Prospectus from the FT
244 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 Broker's 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, FT 257 has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the Village of Lisle and State of Illinois on May
13, 1998.
FT 257
(Registrant)
By: NIKE SECURITIES L.P.
(Depositor)
By Robert M. Porcellino
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 Director of
Nike Securities May 13, 1998
Corporation, the
General Partner of
Nike Securities L.P. Robert M. Porcellino
Attorney-in-Fact**
David J. Allen Director of Nike
Securities Corporation,
the General Partner
of Nike Securities L.P.
___________________________
* 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 Combined
Series 258 (File No. 33-63483) and the same is hereby
incorporated 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, 3.2, 3.3 and 3.4 of 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.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement is
filed as Exhibit 4.1 to the Registration Statement.
S-3
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 22 and
certain subsequent Series, effective November 20, 1991
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and Nike
Financial Advisory Services L.P. as Portfolio Supervisor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-43693] filed on behalf of The First Trust
Special Situations Trust, Series 22).
1.1.1* Form of Trust Agreement for FT 257 among Nike Securities
L.P., as Depositor, The Chase Manhattan Bank, as Trustee
and First Trust Advisors L.P., as Evaluator and 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).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by
reference).
3.1* Opinion of counsel as to legality of Securities being
registered.
3.2* Opinion of counsel as to Federal income tax status of
Securities being registered.
S-4
3.3* Opinion of counsel as to New York income tax status of
Securities being registered.
3.4* Opinion of counsel as to advancement of funds by Trustee.
4.1* Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on page
S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
33-63483] filed on behalf of The First Trust Combined
Series 258).
___________________________________
* To be filed by amendment.
S-5