Registration No. 333-48691
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2 to Form S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES
OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust:
FT 243
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agents for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
E. Title of Securities Being Registered:
An indefinite number of Units pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as
amended
F. Approximate date of proposed sale to public:
As soon as practicable after the effective date of the
Registration Statement.
|XXX|Check box if it is proposed that this filing will become
effective on April 21, 1998 at 2:00 p.m. pursuant to Rule
487.
________________________________
FT 243
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
Form N-8B-2 Item Number Form S-6 Heading in Prospectus
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust Prospectus front cover
(b) Title of securities issued Summary of Essential
Information
2. Name and address of each depositor Information as to
Sponsor, Trustee and
Evaluator
3. Name and address of trustee Information as to
Sponsor, Trustee and
Evaluator
4. Name and address of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
5. State of organization of trust The FT Series
6. Execution and termination of Other Information
trust agreement
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 Public Offering
securities
(b) Cumulative or distributive The FT Series
securities
(c) Redemption Rights of Unitholders
(d) Conversion, transfer, etc. Rights of Unitholders
(e) Periodic payment plan *
(f) Voting rights Rights of Unitholders
(g) Notice of certificateholders Other Information
(h) Consents required Rights of Unitholders;
Other Information
(i) Other provisions The FT Series
11. Types of securities comprising The FT Series
units Schedule of
Investments
12. Certain information regarding
periodic payment certificates *
13. (a) Load, fees, expenses, etc. Summary of Essential
Information; Public
Offering; The FT
Series
(b) Certain information regarding
periodic payment certificates *
(c) Certain percentages Summary of Essential
Information; The FT
Series; Public
Offering
(d) Certain other fees, etc.
payable by holders Rights of Units
Holders
(e) Certain profits receivable
by depositor, principal,
underwriters, trustee or The FT Series
affiliated persons
(f) Ratio of annual charges *
to income
14. Issuance of trust's securities Rights of Unit Holders
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 Rights of Unit Holders
disposition of income
(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 Information as
and successor to Sponsor, Trustee
and Evaluator
(e) and (f) Depositor, removal Information as
and successor to 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 employees of
depositor 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 Public Offering
securities by states
36. Suspension of sales of trust's
securities *
37. Revocation of authority to *
distribute
38. (a) Method of distribution Public Offering
(b) Underwriting agreements Public Offering
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as
underwriters to Sponsor, Trustee
and Evaluator
(b) N.A.S.D. membership of
principal underwriters Information as to
Sponsor, Trustee and
Evaluator
40. Certain fees received by See Items 13(a) and
principal underwriters 13(e)
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 in Public Offering;
underlying securities Rights
of Unit Holders
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of Information as
trustee to 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 OF
SECURITIES
51. Insurance of holders of
trust's securities *
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust The FT Series;
agreement with respect to Rights of Unit Holders
selection or elimination of
underlying securities
(b) Transactions involving
elimination of underlying *
securities
(c) Policy regarding substitution The FT Series;
or elimination of underlying Rights of Unit Holders
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.
56.
57. Certain information regarding
periodic payment certificates *
58.
59. Financial statements Report of Independent
(Instruction 1(c) to Form S-6) Auditors
Statement of Net
Assets
* Inapplicable, answer negative or not required.
REIT Value Trust, Series 2
The Trust. FT 243 (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 for potential capital
appreciation and increasing dividend income by investing the Trust's
portfolio in common stocks issued by publicly traded equity real estate
investment trusts, which Nike Securities L.P. (the "Sponsor") believes
have the potential for outstanding financial performance and capital
appreciation (the "Securities"). See "Schedule of Investments." The
Trust will not, however, invest in REITs which are designated as
"stapled" or "paired share" REITs. 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 243-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 A.G. Edwards &
Sons, Inc. (the "Securities Underwriter"), which is purchasing the
Securities in market transactions or is acting as sole underwriter to
the issuers of the Securities. With the exception of market purchases,
the acquisition of the Securities to be deposited in the Trust during
the day on the Initial Date of Deposit by A.G. Edwards & Sons, Inc. and
the Sponsor is expected to be effected at prices approximately 5.0%
below the current market value of the Securities due to various factors,
including size of the purchase, expectation of holding period and cost
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.
First Trust (registered trademark)
1-800-621-9533
The date of this Prospectus is April 21, 1998
Page 1
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 created on the Initial Date of Deposit of approximately
4.0% of the market value of these Securities, less concessions due to the
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 1.0% of the market value of the Securities).
After the Initial Date of Deposit, Securities deposited in the Trust on
any subsequent date(s) of deposit will be acquired 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)
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 4.0%
(equivalent to 4.167% 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
4.0% (equivalent to 4.167% of the net amount invested), subject to
reduction beginning May 1, 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 $.6009 per Unit, taking
into account certain fee waivers during the first year of the Trust. The
actual net annual dividend distributions per Unit will vary with changes
in fees and expenses of the Trust (including the level of fee waivers),
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. See "Summary of
Essential Information."
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 243-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 intends 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
Page 2
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 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. 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-April 21, 1998
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
General Information
<S> <C>
Initial Number of Units (1) 14,996
Fractional Undivided Interest in the Trust per Unit (1) 1/14,996
Public Offering Price:
Aggregate Offering Price Evaluation of Securities in Portfolio (2) $ 149,965
Aggregate Offering Price Evaluation of Securities per Unit $ 10.000
Sales Charge (3) $ 0.000
Public Offering Price per Unit (3) $ 10.000
Sponsor's Initial Repurchase Price per Unit $ 10.000
Redemption Price per Unit (based on aggregate underlying value of Securities) (4) $ 10.000
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Cash CUSIP Number 30264N 167
Reinvestment CUSIP Number 30264N 175
Security Code 55364
First Settlement Date April 24, 1998
Mandatory Termination Date April 30, 2002
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 $.0096 per Unit outstanding.
Evaluator's Annual Fee $.0030 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 .0035 per Unit outstanding annually payable to an affiliate of
the Sponsor.
Estimated Annual Amortization of
Organizational and Offering Costs (6) $.0032 per Unit outstanding.
Income Distribution Record Date Fifteenth day of each March, June, September and December, commencing June
15, 1998.
Income Distribution Date (7) Last day of each March, June, September and December, commencing
June 30, 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 4.0% of the Public
Offering Price per Unit (equivalent to 4.167% of the net amount
invested), subject to reduction commencing May 1, 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) The Sponsor will also be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $.0028 per
Unit. In addition, Unit holders will be assessed an annual amount of
$.0039 per Unit for auditing and miscellaneous expenses. During the
first year, the Sponsor and its affiliate have agreed to waive their
fees and pay audit expenses so that Trust expenses will not exceed
$.0135 per Unit. After the first year, estimated total annual expenses
assessed to Unit holders are expected to be $.0260 per Unit. The
Sponsor, although not committed to, may waive additional fees during the
life of the Trust. To the extent fees are not waived, estimated net
annual dividend distributions to Unit holders will be lower.
(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 four years from the Initial Date of Deposit. See "FT 243-
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>
</TABLE>
Page 4
REIT VALUE TRUST, SERIES 2
FT 243
What is the FT Series?
FT 243 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: REIT Value Trust, Series
2. 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 for potential capital
appreciation and increasing dividend income 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, defined portfolio of high quality equity REITs which own
many properties, which may include multi-family, office/industrial,
recreation, shopping centers, apartment complexes, hotels, healthcare
facilities and self-storage properties. A REIT is an entity that
combines the capital of many investors to acquire real estate. Investors
can enjoy the benefits of a diversified real estate portfolio managed by
real estate professionals, receive income from rents and achieve capital
appreciation if properties are sold at a profit. In addition, REITs are
traded on major stock exchanges, making them liquid. The Sponsor
believes that the selected REITs offer the potential for attractive
returns and stable 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 a distribution,
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 holding period of the Unit. Any such gain will be deferred
until Units are sold.
An investment in REITs offers many advantages. Many REITs have the
potential to enhance an investor's capital appreciation through growth
in funds from operations, which the Sponsor believes could provide the
basis of consistent dividend increases over time. From December 31, 1982
through December 31, 1997, equity REITs, as measured by The National
Association of Real Estate Trusts Index ("NAREIT Index"), have had an
annual average total return of 14.99%, as compared with the annual
average annual total return of 17.52% and 16.15% for the S&P 500 Index
and the S&P Utilities Index, respectively. In addition, REIT investors
could benefit from management expertise since REIT management teams tend
to be market experts within their specific property or geographic
niches. REITs provide liquidity which is more difficult to achieve
through a program of direct real estate investing. An investment in
REITs allows 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.
REITs can also provide income to investors in the form of consistent
dividends. The average dividend yield of equity REITs, as measured by
the NAREIT Index, of 5.48% as of December 31, 1997, although less, is
comparable with the yield on the 30-year Treasury Bond, which was 5.92%
as of December 31, 1997. The past performance of the equity REITs set
forth above is not representative of the expected performance of the
Trust, which will contain a less diversified portfolio of REIT
securities. In addition, past performance is no guarantee of future
results. An investment in equity REITs provides only commercial real
estate industry exposure which is characterized by a relative lack of
diversification as compared to an investment in all of the common stocks
which comprise the S&P 500 Index, and REITs are subject to increased
market risk compared to an investment in U.S. Government Bonds, which
are guaranteed by the U.S. Government as to the timely payment of
Page 5
principal and interest. 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. To minimize this effect, the
Trust will try to purchase the Securities as close to the evaluation
time or as close to the evaluation price as possible.
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 each 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
recurring services to the Trust an annual fee as set forth in "Summary
of Essential Information." Such fee will be based upon the largest
Page 6
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 four 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 243-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
assumed that each Security is considered a share in a real estate
investment trust for federal income tax purposes.
Page 7
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 (except to the extent an "In-Kind" distribution of
stocks is received by such Unit holder as described below). 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. In addition, special
rules, as 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
corporate 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.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by
the Trust or Disposition of Units. As discussed above, a Unit holder may
Page 8
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 gain or loss is long-term if the holding
period for the asset is more than one year, and is short-term if the
holding period for the asset is one year or less. 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 for more than 18 months that is
considered unrecaptured Section 1250 gain is taxed at a maximum marginal
stated tax 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
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.
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 foreign,
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 243-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.
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
Page 10
Selected for the REIT Value Trust, Series 2?" 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
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
Page 11
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.
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 properties it owns, or is acquiring, than mortgage REITs.
REITs may concentrate investments in specific geographic areas or in
specific property types, i.e., hotels, shopping malls, residential
Page 12
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 year 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.
A.G. Edwards & Sons, Inc. has acted as sole underwriter 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. A.G. Edwards &
Sons, Inc., in its general securities business, acts as agent or
principal in connection with the purchase and sale of equity securities,
including the Securities in the Trust, and may act as a market maker in
certain of the Securities. A.G. Edwards & Sons, Inc. 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 A.G. Edwards & Sons, Inc. changes a
recommendation relating to a Security.
Page 13
Investors should also note that A.G. Edwards & Sons, Inc., in its
independent capacity as a broker/dealer and as an investment advisor 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 REIT Value Trust, Series 2?
Duke Realty Investments, Inc., headquartered in Indianapolis, Indiana,
owns and manages a diversified portfolio of industrial, office and
retail properties in several states.
Equity Residential Properties Trust, headquartered in Chicago, Illinois,
is a self-administered real estate investment trust which acquires,
owns and operates multifamily residential properties.
Franchise Finance Corporation of America, headquartered in Scottsdale,
Arizona, provides real estate financing to the chain restaurant industry
and holds interests in restaurant properties operated by restaurant
operators in restaurant chains.
Great Lakes REIT, Inc., headquartered in Oak Brook, Illinois, operates
as a fully integrated, self-administered and self-managed real estate
company, focusing on the acquisition, renovation, ownership and
operation of suburban office properties located within metropolitan
Chicago.
Hospitality Properties Trust, headquartered in Newton, Massachusetts,
acquires, owns and leases hotel properties, including "Courtyard by
Marriott," "Residence Inn" by "Marriott," and "Wyndham Garden" hotels in
several states.
Kilroy Realty Corporation, headquartered in El Segundo, California, is a
self-managed real estate investment trust which owns office and
industrial properties in Arizona, California and Washington.
Kimco Realty Corporation, headquartered in New Hyde Park, New York,
operates neighborhood and community shopping centers and regional malls
located in 30 states. The company also holds interests in retail store
leases and provides management services for shopping centers owned by
affiliated entities and various real estate joint ventures.
The Macerich Company, headquartered in Santa Monica, California, through
The Macerich Partnership, L.P. and its management companies, owns and
operates regional shopping centers and community shopping centers in the
United States.
Security Capital Industrial Trust, headquartered in Aurora, Colorado,
owns, acquires, develops, markets and operates distribution facilities
and develops master-planned distribution parks.
The Sponsor has obtained the foregoing company 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
Page 14
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
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).
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?"
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.
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
Page 15
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
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 4.0% (equivalent to 4.167% 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
4.0% of the Public Offering Price (equivalent to 4.167% of the net
amount invested), subject to reduction beginning May 1, 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 maximum amount which an
investor (including purchases in the name of a spouse of an investor or
in the name of a child of such investor under 21 years of age) may
purchase of the Trust is $10,000,000. 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):
<TABLE>
<CAPTION>
Maximum
Dollar Amount of Transaction at Sales
Public Offering Price* Discount Charge
______________________________ ________ _______
<S> <C> <C>
$ 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>
</TABLE>
Any such reduced sales charge shall be the responsibility of the selling
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 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
Page 16
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 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 and 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 Units 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-How are Units Distributed?"
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 dealers and
Page 17
other selling agents at prices which represent a concession or agency
commission of 3.0% of the Public Offering Price for sales of Units
created on the Initial Date of Deposit and 3.0% 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 May 1, 1999). Effective on each May
1, commencing May 1, 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 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 on Units created on the Initial Date of
Deposit will be withheld or reversed if such Units are tendered for
redemption or sold within 30 days after such Units are sold to investors.
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 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. In
addition, dealers and other selling agents who sell at least $20,000 on
the Initial Date of Deposit will receive an additional volume concession
or agency commission of .25%; and those who sell at least $20,000,000 on
the Initial Date of Deposit will receive an additional volume concession
or agency commission of .05%.
The Sponsor in its discretion may from time to time pursuant to
objective criteria established by the Sponsor pay fees to 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 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.
Information on percentage changes in the dollar value of Units, on the
basis of changes in Unit price may be included from time to time in
advertisements, sales literature, reports and other information
furnished to current or prospective Unit holders. No provision is made
for any income taxes payable.
Past performance may not be indicative of future results. The Trust's
portfolio is not managed. Unit price and return fluctuate with the value
of the common stocks in the Trust's portfolio, so there may be a gain or
loss when Units are sold.
Trust performance may be compared to performance on a total return basis
with the Dow Jones Industrial Average, the S&P 500 Composite Stock Price
Index, the NAREIT Index, other market indices 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.
What are the Sponsor's 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
Page 18
on the sale of Units created subsequent to the Initial Date of Deposit
equal to 4.0% of the Public Offering Price of the Units (equivalent to
4.167% of the net amount invested), less any reduced sales charge as
described under "Public Offering-How is the Public Offering Price
Determined?" See "Public Offering-How are Units Distributed?" for
information regarding the receipt of 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 4.0% of the market value of the Securities, less
concessions due to dealers and others. The Securities Underwriter, who
also acts as a dealer of Units of the Trust, will realize a profit on
the sale of the Securities to the Sponsor equal to the difference
between the Securities Underwriter's acquisition cost on such Securities
and the sale price of the Securities to the Sponsor (expected to be
approximately 1.0% of the market value of the Securities). During the
initial offering period, 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 the
dealers and other selling agents upon the sale of Units.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between the
price at which Units are purchased and the price at which Units are
resold (which price includes a sales charge of 4.0% subject to reduction
beginning May 1, 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.
Will There be a Secondary Market?
After the initial offering period, although not obligated to do so, the
Sponsor intends 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 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
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
Page 19
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 243-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.
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 is eligible for and 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
Page 20
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
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
Page 21
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?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that time
equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before 1:00 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 may be tendered to the Trustee
for redemption as any other Units. In the event the Sponsor does 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 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.
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
Page 22
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 SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in 1991,
acts as Sponsor for successive series of The First Trust Combined
Series, the 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.)
Page 23
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
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.
Page 24
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
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
Page 25
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.
Page 26
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
FT 243
We have audited the accompanying statement of net assets, including the
schedule of investments, of FT 243, comprised of REIT Value Trust,
Series 2, as of the opening of business on April 21, 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 April 21, 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 243,
comprised of REIT Value Trust, Series 2, at the opening of business on
April 21, 1998 in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
April 21, 1998
Page 27
Statement of Net Assets
REIT VALUE TRUST, SERIES 2
FT 243
At the Opening of Business on the
Initial Date of Deposit-April 21, 1998
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Securities represented by purchase contracts (1) (2) $ 149,965
Organizational and offering costs (3) 275,200
_________
425,165
Less accrued organizational and offering costs (3) (275,200)
_________
Net assets $ 149,965
=========
Units outstanding 14,996
ANALYSIS OF NET ASSETS
Cost to investors (4) $ 149,965
Less sales charge (4) (0)
_________
Net assets $ 149,965
=========
<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 $200,000 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 four years from the Initial Date of Deposit. The estimated
organizational and offering costs are based on 21,500,000 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 4.0% of the Public Offering Price (equivalent to 4.167%
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>
</TABLE>
Page 28
Schedule of Investments
REIT VALUE TRUST, SERIES 2
FT 243
At the Opening of Business on the
Initial Date of Deposit-April 21, 1998
<TABLE>
<CAPTION>
Percentage Market
of Aggregate Value Cost of
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Securities (1) Price Share to Trust (2)
_________ ________________________________ ___________ ______ ____________
<S> <C> <C> <C> <C>
571 DRE Duke Realty Investments, Inc. 9.30% $24.438 $ 13,954
280 EQR Equity Residential Properties Trust 9.30% 49.813 13,948
626 FFA Franchise Finance Corporation of America 11.63% 27.875 17,450
826 GL Great Lakes REIT, Inc. 10.47% 19.000 15,694
944 HPT Hospitality Properties Trust 20.93% 33.250 31,388
507 KRC Kilroy Realty Corporation 9.30% 27.500 13,942
386 KIM Kimco Realty Corporation 9.30% 36.125 13,944
552 MAC The Macerich Company 10.47% 28.438 15,698
539 SCN Security Capital Industrial Trust 9.30% 25.875 13,947
______ _________
Total Investments 100% $149,965
====== =========
____________
<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 April 21, 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 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 $149,965. Cost and loss to Sponsor relating to the
Securities sold to the Trust were $150,267 and $302, respectively.
</FN>
</TABLE>
Page 29
This page is intentionally left blank.
Page 30
This page is intentionally left blank.
Page 31
CONTENTS:
Summary of Essential Information 4
REIT Value Trust, Series 2
FT 243:
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? 10
Risk Factors 11
Real Estate Investment Trusts 12
What are the Securities Selected for the
REIT Value Trust, Series 2? 14
What are Some Additional Considerations
for Investors? 14
Public Offering:
How is the Public Offering Price Determined? 16
How are Units Distributed? 17
What are the Sponsor's Profits? 18
Will There be a Secondary Market? 19
Rights of Unit Holders:
How is Evidence of Ownership
Issued and Transferred? 19
How are Income and Capital Distributed? 20
What Reports will Unit Holders Receive? 21
How May Units be Redeemed? 21
How May Units be Purchased by the Sponsor? 22
How May Securities be Removed from the Trust? 22
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 23
Who is the Trustee? 24
Limitations on Liabilities of Sponsor and Trustee 24
Who is the Evaluator? 24
Other Information:
How May the Indenture be Amended or Terminated? 25
Legal Opinions 25
Experts 26
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 TRUST
HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940,
AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
REIT VALUE TRUST, SERIES 2
NIKE SECURITIES L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
April 21, 1998
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 32
CONTENTS OF REGISTRATION STATEMENT
A. Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Brokers' Fidelity Bond,
in the total amount of $1,000,000, the insurer being
National Union Fire Insurance Company of Pittsburgh.
B. This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
Financial Data Schedule
S-1
SIGNATURES
The Registrant, FT 243, hereby identifies The First Trust
Special Situations Trust, Series 4 Great Lakes Growth and
Treasury Trust, Series 1; The First Trust Special Situations
Trust, Series 18 Wisconsin Growth and Treasury Securities Trust,
Series 1; The First Trust Special Situations Trust, Series 69
Target Equity Trust Value Ten Series; The First Trust Special
Situations Trust, Series 108; The First Trust Special Situations
Trust, Series 119 Target 5 Trust, Series 2 and Target 10 Trust,
Series 8; and The First Trust Special Situations Trust, Series
190 Biotechnology Growth Trust, Series 3 for purposes of the
representations required by Rule 487 and represents the
following:
(1) that the portfolio securities deposited in the series
as to the securities of which this Registration Statement is
being filed do not differ materially in type or quality from
those deposited in such previous series;
(2) that, except to the extent necessary to identify the
specific portfolio securities deposited in, and to provide
essential financial information for, the series with respect to
the securities of which this Registration Statement is being
filed, this Registration Statement does not contain disclosures
that differ in any material respect from those contained in the
registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and
(3) that it has complied with Rule 460 under the Securities
Act of 1933.
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, FT 243, has duly caused this Amendment to
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Village of Lisle
and State of Illinois on April 21, 1998.
FT 243
By NIKE SECURITIES L.P.
Depositor
By Robert M. Porcellino
Vice President
S-2
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below by the following person in the capacity and on the date
indicated:
NAME TITLE* DATE
Robert D. Van Kampen Director )
of Nike Securities )
Corporation, the ) April 21, 1998
General Partner of )
Nike Securities L.P.)
)
David J. Allen Director of Nike )
Securities ) Robert M. Porcellino
Corporation, the ) Attorney-in-Fact**
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.,
Depositor.
** An executed copy of the related power of attorney
was filed with the Securities and Exchange Commission in
connection with the Amendment No. 1 to Form S-6 of The
First Trust Combined Series 258 (File No. 33-63483) and
the same is hereby incorporated herein by this reference.
S-3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated April 21, 1998 in
Amendment No. 2 to the Registration Statement (Form S-6) (File
No. 333-48691) and related Prospectus of FT 243.
ERNST & YOUNG LLP
Chicago, Illinois
April 21, 1998
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement
will be filed as Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 22 and
certain subsequent Series, effective November 20, 1991
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and First Trust
Advisors L.P. as Portfolio Supervisor (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
43693] filed on behalf of The First Trust Special
Situations Trust, Series 22).
1.1.1 Form of Trust Agreement for Series 243 among Nike
Securities L.P., as Depositor, The Chase Manhattan Bank,
as Trustee, First Trust Advisors L.P., as Evaluator, and
First Trust Advisors L.P., as Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities
L.P., Depositor (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-
6 [File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
1.6 Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42755] filed on
behalf of The First Trust Special Situations Trust,
Series 19).
2.1 Copy of Certificate of Ownership (included in Exhibit
1.1 filed herewith on page 2 and incorporated herein by
reference).
S-5
3.1 Opinion of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal income tax status of
securities being registered.
3.3 Opinion of counsel as to New York income tax status of
securities being registered.
3.4 Opinion of counsel as to advancement of funds by
Trustee.
4.1 Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on
page S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
63483] filed on behalf of The First Trust Combined
Series 258).
S-6
FT 243
TRUST AGREEMENT
Dated: April 21, 1998
The Trust Agreement among Nike Securities L.P., as Depositor, The
Chase Manhattan Bank, as Trustee and First Trust Advisors L.P.,
as Evaluator and Portfolio Supervisor, sets forth certain
provisions in full and incorporates other provisions by reference
to the document entitled "Standard Terms and Conditions of Trust
for The First Trust Special Situations Trust, Series 22 and
certain subsequent Series, Effective November 20, 1991" (herein
called the "Standard Terms and Conditions of Trust"), and such
provisions as are incorporated by reference constitute a single
instrument. All references herein to Articles and Sections are
to Articles and Sections of the Standard Terms and Conditions of
Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II and Part III hereof,
all the provisions contained in the Standard Terms and Conditions
of Trust are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully and
to the same extent as though said provisions had been set forth
in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR REIT VALUE TRUST, SERIES 2
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
for the sale of Units dated the date hereof (the "Prospectus")
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee as set forth in the Prospectus under "Summary of
Essential Information," calculated based on the largest number of
Units outstanding during each period in respect of which a
payment is made pursuant to Section 3.05, payable on a
Distribution Date. Such fee may exceed the actual cost of
providing such evaluation services for the Trust, but at no time
will the total amount received for evaluation services rendered
to unit investment trusts of which Nike Securities L.P. is the
sponsor in any calendar year exceed the aggregate cost to the
Evaluator of supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee as set forth in the Prospectus under "Summary of
Essential Information," calculated based on the largest number of
Units outstanding during the calendar year except during the
initial offering period as determined in Section 4.01 of this
Indenture, in which case the fee is calculated based on the
largest number of units outstanding during the period for which
the compensation is paid (such annual fee to be pro rated for any
calendar year in which the Trustee provides services during less
than the whole of such year). However, in no event, except as
may otherwise be provided in the Standard Terms and Conditions of
Trust, shall the Trustee receive compensation in any one year
from any Trust of less than $2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is April 21,
1998.
J. The minimum amount of Securities to be sold by the
Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
PART III
A. The term "Principal Account" as set forth in the
Standard Terms and Conditions of Trust shall be replaced with the
term "Capital Account."
B. Notwithstanding anything to the contrary in the
Standard Terms and Conditions of Trust, references to subsequent
Series established after the date of effectiveness of the First
Trust Special Situations Trust, Series 24 shall include FT 243.
C. Section 1.01(2) shall be amended to read as follows:
"(2) "Trustee" shall mean The Chase Manhattan Bank, or
any successor trustee appointed as hereinafter provided."
All references to United States Trust Company of New York in
the Standard Terms and Conditions of Trust shall be amended to
refer to The Chase Manhattan Bank. Any notice, demand, direction
or instruction to be given to the Trustee shall be in writing and
shall be duly given if delivered to the Unit Investment Trust
Offices of the Trustee, 4 New York Plaza, 6th Floor, New York,
New York 10004-2413.
D. Section 1.01(3) shall be amended to read as follows:
"(3) "Evaluator" shall mean First Trust Advisors L.P.
and its successors in interest, or any successor evaluator
appointed as hereinafter provided."
E. Section 1.01(4) shall be amended to read as follows:
"(4) "Portfolio Supervisor" shall mean First Trust
Advisors L.P. and its successors in interest, or any
successor portfolio supervisor appointed as hereinafter
provided."
F. Paragraph (b) of Section 2.01 shall be restated in its
entirety as follows:
(b)(1)From time to time following the Initial Date of
Deposit, the Depositor is hereby authorized, in its
discretion, to assign, convey to and deposit with the
Trustee (i) additional Securities, duly endorsed in blank or
accompanied by all necessary instruments of assignment and
transfer in proper form, (ii) Contract Obligations relating
to such additional Securities, accompanied by cash and/or
Letter(s) of Credit as specified in paragraph (c) of this
Section 2.01, and/or (iii) cash (or a Letter of Credit in
lieu of cash) with instructions to purchase additional
Securities, in an amount equal to the portion of the Unit
Value of the Units created by such deposit attributable to
the Securities to be purchased pursuant to such
instructions. Except as provided in the following
subparagraphs (2), (3) and (4) the Depositor, in each case,
shall ensure that each deposit of additional Securities
pursuant to this Section shall maintain, as nearly as
practicable, the Percentage Ratio. Each such deposit of
additional Securities shall be made pursuant to a Notice of
Deposit of Additional Securities delivered by the Depositor
to the Trustee. Instructions to purchase additional
Securities shall be in writing, and shall specify the name
of the Security, CUSIP number, if any, aggregate amount,
price or price range and date to be purchased. When
requested by the Trustee, the Depositor shall act as broker
to execute purchases in accordance with such instructions;
the Depositor shall be entitled to compensation therefor in
accordance with applicable law and regulations. The Trustee
shall have no liability for any loss or depreciation
resulting from any purchase made pursuant to the Depositor's
instructions or made by the Depositor as broker.
(2) Additional Securities (or Contract Obligations
therefor) may, at the Depositor's discretion, be deposited
or purchased in round lots. If the amount of the deposit is
insufficient to acquire round lots of each Security to be
acquired, the additional Securities shall be deposited or
purchased in the order of the Security in the Trust most
under-represented immediately before the deposit with
respect to the Percentage Ratio.
(3) If at the time of a deposit of additional
Securities, Securities of an issue deposited on the Initial
Date of Deposit (or of an issue of Replacement Securities
acquired to replace an issue deposited on the Initial Date
of Deposit) are unavailable, cannot be purchased at
reasonable prices or their purchase is prohibited or
restricted by applicable law, regulation or policies, the
Depositor may (i) deposit, or instruct the Trustee to
purchase, in lieu thereof, another issue of Securities or
Replacement Securities or (ii) deposit cash or a letter of
credit in an amount equal to the valuation of the issue of
Securities whose acquisition is not feasible with
instructions to acquire such Securities of such issue when
they become available.
(4) Any contrary authorization in the preceding
subparagraphs (1) through (3) notwithstanding, deposits of
additional Securities made after the 90-day period
immediately following the Initial Date of Deposit (except
for deposits made to replace Failed Contract Obligations if
such deposits occur within 20 days from the date of a
failure occurring within such initial 90-day period) shall
maintain exactly the Percentage Ratio existing immediately
prior to such deposit.
(5) In connection with and at the time of any deposit
of additional Securities pursuant to this Section 2.01(b),
the Depositor shall exactly replicate Cash (as defined
below) received or receivable by the Trust as of the date of
such deposit. For purposes of this paragraph, "Cash" means,
as to the Capital Account, cash or other property (other
than Securities) on hand in the Capital Account or
receivable and to be credited to the Capital Account as of
the date of the deposit (other than amounts to be
distributed solely to persons other than holders of Units
created by the deposit) and, as to the Income Account, cash
or other property (other than Securities) received by the
Trust as of the date of the deposit or receivable by the
Trust in respect of a record date for a payment on a
Security which has occurred or will occur before the Trust
will be the holder of record of a Security, reduced by the
amount of any cash or other property received or receivable
on any Security allocable (in accordance with the Trustee's
calculations of distributions from the Income Account
pursuant to Section 3.05) to a distribution made or to be
made in respect of a Record Date occurring prior to the
deposit. Such replication will be made on the basis of a
fraction, the numerator of which is the number of Units
created by the deposit and the denominator of which is the
number of Units which are outstanding immediately prior to
the deposit.
G. The following shall be added immediately following the
first sentence of paragraph (c) of Section 2.01:
"The Trustee may allow the Depositor to substitute for any
Letter(s) of Credit deposited with the Trustee in connection with
the deposits described in Section 2.01(a) and (b) cash in an
amount sufficient to satisfy the obligations to which the
Letter(s) of Credit relates. Any substituted Letter(s) of Credit
shall be released by the Trustee."
H. Section 2.03(a) of the Standard Terms and Conditions of
Trust shall be amended by adding the following sentence after the
first sentence of such section:
"The number of Units may be increased through a split
of the Units or decreased through a reverse split thereof,
as directed in writing by the Depositor, at any time when
the Depositor is the only beneficial holder of Units, which
revised number of Units shall be recorded by the Trustee on
its books. The Trustee shall be entitled to rely on the
Depositor's direction as certification that no person other
than the Depositor has a beneficial interest in the Units
and the Trustee shall have no liability to any person for
action taken pursuant to such direction."
I. Section 3.01 of the Standard Terms and Conditions of
Trust shall be replaced in its entirety with the following:
"Section 3.01. Initial Cost. The expenses incurred in
establishing a Trust, including the cost of the preparation
and typesetting of the registration statement, prospectuses
(including preliminary prospectuses), the indenture and
other documents relating to the Trust, printing of
Certificates, Securities and Exchange Commission and state
blue sky registration fees, the costs of the initial
valuation of the portfolio and audit of the Trust, the
initial fees and expenses of the Trustee, and legal and
other out-of-pocket expenses related thereto, but not
including the expenses incurred in the printing of
preliminary prospectuses and prospectuses, expenses incurred
in the preparation and printing of brochures and other
advertising materials and any other selling expenses, to the
extent not borne by the Depositor, shall be borne by the
Trust. To the extent the funds in the Income and Capital
Accounts of the Trust shall be insufficient to pay the
expenses borne by the Trust specified in this Section 3.01,
the Trustee shall advance out of its own funds and cause to
be deposited and credited to the Income Account such amount
as may be required to permit payment of such expenses. The
Trustee shall be reimbursed for such advance on each Record
Date from funds on hand in the Income Account or, to the
extent funds are not available in such Account, from the
Capital Account, in the amount deemed to have accrued as of
such Record Date as provided in the following sentence (less
prior payments on account of such advances, if any), and the
provisions of Section 6.04 with respect to the reimbursement
of disbursements for Trust expenses, including, without
limitation, the lien in favor of the Trustee therefor and
the authority to sell Securities as needed to fund such
reimbursement, shall apply to the payment of expenses and
the amounts advanced pursuant to this Section. For the
purposes of the preceding sentence and the addition provided
in clause (4) of the first sentence of Section 5.01, the
expenses borne by the Trust pursuant to this Section shall
be deemed to have been paid on the date of the Trust
Agreement and to accrue at a daily rate over the time period
specified for their amortization provided in the Prospectus;
provided, however, that nothing herein shall be deemed to
prevent, and the Trustee shall be entitled to, full
reimbursement for any advances made pursuant to this Section
no later than the termination of the Trust. For purposes of
calculating the accrual of organizational expenses under
this Section 3.01, the Trustee shall rely on the written
estimates of such expenses provided by the Depositor
pursuant to Section 5.01."
J. The second paragraph of Section 3.02 of the Standard
Terms and Conditions is hereby deleted and replaced with the
following sentence:
"Any non-cash distributions (other than a non-taxable
distribution of the shares of the distributing corporation
which shall be retained by a Trust) received by a Trust
shall be dealt with in the manner described at Section 3.11,
herein, and shall be retained or disposed of by such Trust
according to those provisions. The proceeds of any
disposition shall be credited to the Income Account of a
Trust. Neither the Trustee nor the Depositor shall be
liable or responsible in any way for depreciation or loss
incurred by reason of any such sale."
K. Section 3.05 of Article III of the Standard Terms and
Conditions of Trust is hereby amended to include the following
subsection:
"Section 3.05.I.(e) deduct from the Interest Account
or, to the extent funds are not available in such Account,
from the Capital Account and pay to the Depositor the amount
that it is entitled to receive pursuant to Section 3.14.
L. Section 3.05.II(a) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (a) On each Distribution Date, the Trustee shall
distribute to each Unit holder of record at the close of
business on the Record Date immediately preceding such
Distribution Date an amount per Unit equal to such Unit
holder's Income Distribution (as defined below), plus such
Unit holder's pro rata share of the balance of the Capital
Account (except for monies on deposit therein required to
purchase Contract Obligations) computed as of the close of
business on such Record Date after deduction of any amounts
provided in Subsection I, provided, however, that the
Trustee shall not be required to make a distribution from
the Capital Account unless the amount available for
distribution shall equal $1.00 per 100 Units.
Each Trust shall provide the following distribution
elections: (1) distributions to be made by check mailed to
the post office address of the Unit holder as it appears on
the registration books of the Trustee, or (2) if provided
for in the Prospectus, the following reinvestment option:
The Trustee will, for any Unit holder who provides
the Trustee written instruction, properly executed and
in form satisfactory to the Trustee, received by the
Trustee no later than its close of business 10 business
days prior to a Record Date (the "Reinvestment Notice
Date"), reinvest such Unit holder's distribution from
the Income and Capital Accounts in Units of the Trust,
purchased from the Depositor, to the extent the
Depositor shall make Units available for such purchase,
at the Depositor's offering price as of the third
business day prior to the following Distribution Date,
and at such reduced sales charge as may be described in
the prospectus for the Trusts. If, for any reason, the
Depositor does not have Units of the Trust available
for purchase, the Trustee shall distribute such Unit
holder's distribution from the Income and Capital
Accounts in the manner provided in clause (1) of the
preceding paragraph. The Trustee shall be entitled to
rely on a written instruction received as of the
Reinvestment Notice Date and shall not be affected by
any subsequent notice to the contrary. The Trustee
shall have no responsibility for any loss or
depreciation resulting from any reinvestment made in
accordance with this paragraph, or for any failure to
make such reinvestment in the event the Depositor does
not make Units available for purchase.
Any Unit holder who does not effectively elect
reinvestment in Units of their respective Trust pursuant to
the preceding paragraph shall receive a cash distribution in
the manner provided in clause (1) of the second preceding
paragraph."
M. Section 3.05.II(b) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (b) For purposes of this Section 3.05, the Unit
holder's Income Distribution shall be equal to such Unit
holder's pro rata share of the cash balance in the Income
Account computed as of the close of business on the Record
Date immediately preceding such Income Distribution after
deduction of (i) the fees and expenses then deductible
pursuant to Section 3.05.I. and (ii) the Trustee's estimate
of other expenses properly chargeable to the Income Account
pursuant to the Indenture which have accrued, as of such
Record Date, or are otherwise properly attributable to the
period to which such Income Distribution relates."
N. Paragraph (c) of Subsection II of Section 3.05 of the
Standard Terms and Conditions of Trust is hereby amended to read
as follows:
"On each Distribution Date the Trustee shall distribute
to each Unit holder of record at the close of business on
the Record Date immediately preceding such Distribution Date
an amount per Unit equal to such Unit holder's pro rata
share of the balance of the Capital Account (except for
monies on deposit therein required to purchase Contract
Obligations) computed as of the close of business on such
Record Date after deduction of any amounts provided in
Subsection I."
O. Section 3.11 of the Standard Terms and Conditions of
Trust is hereby deleted in its entirety and replaced with the
following language:
"Section 3.11. Notice to Depositor.
In the event that the Trustee shall have been notified
at any time of any action to be taken or proposed to be
taken by at least a legally required number of holders of
any Securities deposited in a Trust, the Trustee shall take
such action or omit from taking any action, as appropriate,
so as to insure that the Securities are voted as closely as
possible in the same manner and the same general proportion
as are the Securities held by owners other than such Trust.
In the event that an offer by the issuer of any of the
Securities or any other party shall be made to issue new
securities, or to exchange securities, for Trust Securities,
the Trustee shall reject such offer. However, should any
issuance, exchange or substitution be effected
notwithstanding such rejection or without an initial offer,
any securities, cash and/or property received shall be
deposited hereunder and shall be promptly sold, if
securities or property, by the Trustee pursuant to the
Depositor's direction, unless the Depositor advises the
Trustee to keep such securities or property. The Depositor
may rely on the Portfolio Supervisor in so advising the
Trustee. The cash received in such exchange and cash
proceeds of any such sales shall be distributed to Unit
holders on the next distribution date in the manner set
forth in Section 3.05 regarding distributions from the
Capital Account. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by
reason of any such sale.
Neither the Depositor nor the Trustee shall be liable
to any person for any action or failure to take action
pursuant to the terms of this Section 3.11.
Whenever new securities or property is received and
retained by a Trust pursuant to this Section 3.11, the
Trustee shall, within five days thereafter, mail to all Unit
holders of such Trust notices of such acquisition unless
legal counsel for such Trust determines that such notice is
not required by The Investment Company Act of 1940, as
amended."
P. Section 3.12 (a) of the Standard Terms and Conditions
of Trust shall be replaced with the following:
(a) The New Securities shall be either (i) the identical
Securities which were the subject of the Failed Contract
Obligation, (ii) such of the remaining Securities (or any
combination thereof) as originally selected for deposit in
that Series of the Trust which were not the subject of the
Failed Contract Obligation or (iii) securities which meet
the criteria established by the Depositor on the Initial
Date of Deposit for selecting securities for the Trust.
Q. The first sentence of Section 3.13. shall be amended to
read as follows:
"As compensation for providing supervisory portfolio
services under this Indenture, the Portfolio Supervisor
shall receive, in arrears, against a statement or statements
therefor submitted to the Trustee monthly or annually an
aggregate annual fee in an amount which shall not exceed
$0.0035 per Unit outstanding as of January 1 of such year
except for a Trust during the year or years in which an
initial offering period as determined in Section 4.01 of
this Indenture occurs, in which case the fee for a month is
based on the number of Units outstanding at the end of such
month (such annual fee to be pro rated for any calendar year
in which the Portfolio Supervisor provides services during
less than the whole of such year), but in no event shall
such compensation when combined with all compensation
received from other series of the Trust for providing such
supervisory services in any calendar year exceed the
aggregate cost to the Portfolio Supervisor for the cost of
providing such services."
R. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraphs
which shall be entitled Section 3.14.:
"Section 3.14. Bookkeeping and Administrative Expenses.
As compensation for providing bookkeeping and other
administrative services of a character described in Section
26(a)(2)(C) of the Investment Company Act of 1940 to the
extent such services are in addition to, and do not
duplicate, the services to be provided hereunder by the
Trustee or the Portfolio Supervisor, the Depositor shall
receive against a statement or statements therefor submitted
to the Trustee monthly or annually an aggregate annual fee
in an amount as set forth in the Prospectus times the number
of Units outstanding as of January 1 of such year except for
a year or years in which an initial offering period as
determined by Section 4.01 of this Indenture occurs, in
which case the fee for a month is based on the number of
Units outstanding at the end of such month (such annual fee
to be pro rated for any calendar year in which the Depositor
provides service during less than the whole of such year),
but in no event shall such compensation when combined with
all compensation received from other unit investment trusts
for which the Depositor hereunder is acting as Depositor for
providing such bookkeeping and administrative services in
any calendar year exceed the aggregate cost to the Depositor
providing services to such unit investment trusts. Such
compensation may, from time to time, be adjusted provided
that the total adjustment upward does not, at the time of
such adjustment, exceed the percentage of the total
increase, after the date hereof, in consumer prices for
services as measured by the United States Department of
Labor Consumer Price Index entitled "All Services Less Rent
of Shelter" or similar index, if such index should no longer
be published. The consent or concurrence of any Unit holder
hereunder shall not be required for any such adjustment or
increase. Such compensation shall be paid by the Trustee,
upon receipt of an invoice therefor from the Depositor, upon
which, as to the cost incurred by the Depositor of providing
services hereunder the Trustee may rely, and shall be
charged against the Income and Capital Accounts on or before
the Distribution Date following the Monthly Record Date on
which such period terminates. The Trustee shall have no
liability to any Certificateholder or other person for any
payment made in good faith pursuant to this Section.
If the cash balance in the Income and Capital Accounts
shall be insufficient to provide for amounts payable
pursuant to this Section 3.14, the Trustee shall have the
power to sell (i) Securities from the current list of
Securities designated to be sold pursuant to Section 5.02
hereof, or (ii) if no such Securities have been so
designated, such Securities as the Trustee may see fit to
sell in its own discretion, and to apply the proceeds of any
such sale in payment of the amounts payable pursuant to this
Section 3.14.
Any moneys payable to the Depositor pursuant to this
Section 3.14 shall be secured by a prior lien on the Trust
Fund except that no such lien shall be prior to any lien in
favor of the Trustee under the provisions of Section 6.04
herein.
S. Section 5.01 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The first sentence of the first paragraph of
Section 5.01 shall be amended by deleting the phrase
"together with all other assets of the Trust" at the end of
such sentence and adding the following at the conclusion
thereof: ", plus (4) amounts representing organizational
expenses paid from the Trust less amounts representing
accrued organizational expenses of the Trust, plus (5) all
other assets of the Trust."
(ii) The following shall be added at the end of the
first paragraph of Section 5.01:
Until the Depositor has informed the Trustee that
there will be no further deposits of Additional
Securities pursuant to section 2.01(b), the Depositor
shall provide the Trustee with written estimates of (i)
the total organizational expenses to be borne by the
Trust pursuant to Section 3.01 and (ii) the total
number of Units to be issued in connection with the
initial deposit and all anticipated deposits of
additional Securities. For purposes of calculating the
Trust Fund Evaluation and Unit Value, the Trustee shall
treat all such anticipated expenses as having been paid
and all liabilities therefor as having been incurred,
and all Units as having been issued, in each case on
the date of the Trust Agreement, and, in connection
with each such calculation, shall take into account a
pro rata portion of such expense and liability based on
the actual number of Units issued as of the date of
such calculation. In the event the Trustee is informed
by the Depositor of a revision in its estimate of total
expenses or total Units and upon the conclusion of the
deposit of additional Securities, the Trustee shall
base calculations made thereafter on such revised
estimates or actual expenses, respectively, but such
adjustment shall not affect calculations made prior
thereto and no adjustment shall be made in respect
thereof.
T. The first sentence of the first paragraph of Section
5.02 of the Standard Terms and Conditions of Trust shall be
replaced with the following:
Any Certificate evidencing a Unit or Units tendered for
redemption by a Unit holder or his duly authorized attorney
to the Trustee at its unit investment trust office in the
City of New York, or any Unit in uncertificated form
tendered by means of an appropriate request for redemption
in form approved by the Trustee shall be paid by the Trustee
on the third business day following the day on which tender
for redemption is made in proper form (being herein called
the Settlement Date).
U. The reference in the first sentence of the third
paragraph of Section 5.02 of the Standard Terms and Conditions of
Trust to seven calendar days shall be replaced with the phrase
three business days.
V. Section 5.02 of the Standard Terms and Conditions of
Trust is amended by adding the following after the second
paragraph of such section:
"Notwithstanding anything herein to the contrary, in
the event that any tender of Units pursuant to this Section
5.02 would result in the disposition by the Trustee of less
than a whole Security, the Trustee shall distribute cash in
lieu thereof and sell such Securities as directed by the
Sponsors as required to make such cash available.
Subject to the restrictions set forth in the
Prospectus, Unit holders may redeem 2,500 Units or more of a
Trust and request a distribution in kind of (i) such Unit
holder's pro rata portion of each of the Securities in such
Trust, in whole shares, and (ii) cash equal to such Unit
holder's pro rata portion of the Income and Capital Accounts
as follows: (x) a pro rata portion of the net proceeds of
sale of the Securities representing any fractional shares
included in such Unit holder's pro rata share of the
Securities and (y) such other cash as may properly be
included in such Unit holder's pro rata share of the sum of
the cash balances of the Income and Capital Accounts in an
amount equal to the Unit Value determined on the basis of a
Trust Fund Evaluation made in accordance with Section 5.01
determined by the Trustee on the date of tender less amounts
determined in clauses (i) and (ii)(x) of this Section.
Subject to Section 5.05 with respect to Rollover Unit
holders, if applicable, to the extent possible,
distributions of Securities pursuant to an in kind
redemption of Units shall be made by the Trustee through the
distribution of each of the Securities in book-entry form to
the account of the Unit holder's bank or broker-dealer at
the Depository Trust Company. Any distribution in kind will
be reduced by customary transfer and registration charges."
W. Paragraph (g) of Section 6.01 of the Standard Terms and
Conditions of Trust is hereby amended by inserting the following
after the first word thereof:
"(i) the value of any Trust as shown by an evaluation
by the Trustee pursuant to Section 5.01 hereof shall be less
than 40% of the total value of Securities deposited in such
Trust during the initial offering period, or (ii)"
X. Section 8.02 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The fourth sentence of the second paragraph shall
be deleted and replaced with the following:
"The Trustee will honor duly executed requests for in-
kind distributions received (accompanied by the electing
Unit holder's Certificate, if issued) by the close of
business ten business days prior to the Mandatory
Termination Date."
(ii) The first sentence of the fourth paragraph shall
be deleted and replaced with the following:
"Commencing no earlier than the business day following
that date on which Unit holders must submit to the Trustee
notice of their request to receive an in-kind distribution
of Securities at termination, the Trustee will liquidate the
Securities not segregated for in-kind distributions during
such period and in such daily amounts as the Depositor shall
direct."
IN WITNESS WHEREOF, Nike Securities L.P., The Chase
Manhattan Bank and First Trust Advisors L.P. have each caused
this Trust Agreement to be executed and the respective corporate
seal to be hereto affixed and attested (if applicable) by
authorized officers; all as of the day, month and year first
above written.
NIKE SECURITIES L.P.,
Depositor
By Robert M. Porcellino
Vice President
THE CHASE MANHATTAN BANK,
Trustee
By Rosalia A. Raviele
Vice President
[SEAL]
ATTEST:
Joan Currie
Assistant Treasurer
FIRST TRUST ADVISORS L.P.,
Evaluator
By Robert M. Porcellino
Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Robert M. Porcellino
Vice President
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
FT 243
(Note: Incorporated herein and made a part hereof for the
Trust is the "Schedule of Investments" for the Trust as set forth
in the Prospectus.)
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
April 21, 1998
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: FT 243
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of FT 243 in connection with the
preparation, execution and delivery of a Trust Agreement dated
April 21, 1998 among Nike Securities L.P., as Depositor, The
Chase Manhattan Bank, as Trustee and First Trust Advisors L.P. as
Evaluator and Portfolio Supervisor, pursuant to which the
Depositor has delivered to and deposited the Securities listed in
Schedule A to the Trust Agreement with the Trustee and pursuant
to which the Trustee has issued to or on the order of the
Depositor a certificate or certificates representing units of
fractional undivided interest in and ownership of the Fund
created under said Trust Agreement.
In connection therewith, we have examined such pertinent
records and documents and matters of law as we have deemed
necessary in order to enable us to express the opinions
hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. the execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units
in the Fund have been duly authorized; and
2. the certificates evidencing the Units in the Fund when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will
constitute valid and binding obligations of the Fund and the
Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 333-48691)
relating to the Units referred to above, to the use of our name
and to the reference to our firm in said Registration Statement
and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EFF:erg
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
April 21, 1998
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
The Chase Manhattan Bank
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Re: FT 243
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of FT 243 (the "Fund"), in connection with the issuance of units
of fractional undivided interests in the Trust of said Fund (the
"Trust"), under a Trust Agreement, dated April 21, 1998 (the
"Indenture"), among Nike Securities L.P., as Depositor, The Chase
Manhattan Bank, as Trustee and First Trust Advisors L.P., as
Evaluator and Portfolio Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents we have deemed pertinent. The opinions
expressed herein assume that the Trust will be administered, and
investments by the Trust from proceeds of subsequent deposits, if
any, will be made, in accordance with the terms of the Indenture.
The Trust holds Securities as such term is defined in the
Prospectus. For purposes of the following discussion and
opinion, it is assumed that each Security is equity for federal
income tax purposes and represent shares in an entity treated as
a real estate investment trust for federal income tax purposes.
Based upon the foregoing and upon an investigation of such
matters of law as we consider to be applicable, we are of the
opinion that, under existing United States federal income tax
law:
I. 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 Internal Revenue Code of 1986 (the
"Code") in the proportion that the number of Units held by him
bears to the total number of Units outstanding; the income of the
Trust will be treated as income of the Unit holders in the
proportion described above; and an item of Trust income will have
the same character in the hands of a Unit holder as it would have
in the hands of the Trustee. Each Unit holder will be considered
to have received his pro rata share of income derived from each
Trust asset when such income is considered to be received by the
Trust.
II. The price a Unit holder pays for his Units, generally
including sales charges, is allocated among his pro rata portion
of each Security held by the Trust (in proportion to the fair
market values thereof on the valuation date closest to the date
the Unit holder purchases his Units) in order to determine his
tax basis for his pro rata portion of each Security held by the
Trust. For Federal income tax purposes, a Unit holder's pro rata
portion of distributions of cash or property by a corporation
with respect to a Security ("dividends" as defined by Section 316
of the Code) 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 be treated as gain from the sale or
exchange of property. In general, any such gain will be short
term unless a Unit holder has held his Units for more than one
year. All of the issuers of the Securities intent to qualify
under special Federal income tax rules as "real estate investment
trusts" (a "REIT," shares of such issuer held by the Trust shall
be referred to 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 such issuer qualifies as a
REIT, certain distributions by such issuer 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
portion of the REIT Shares) as long-term capital gain, 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 the 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 the REIT
during the following January and received by shareholders or Unit
holders in such following year.
III. Gain or loss will be recognized to a Unit holder
(subject to various nonrecognition provisions under the Code)
when the Trust disposes of a Security (whether by sale, exchange,
liquidation, redemption, or otherwise) or upon redemption or sale
of Units by such Unit holder, except to the extent an in kind
distribution of stock is received by such Unit holder from the
Trust as discussed below. 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 financial
institution and will generally be long-term if the Unit holder
has held his Units for more than one year. Such gain or loss is
measured by comparing the proceeds of such redemption or sale
with the adjusted basis of his Units. Before adjustment, such
basis would normally be cost if the Unit holder had acquired his
Units by purchase. Such basis will be reduced, but not below
zero, by the Unit holder's pro rata portion of dividends with
respect to each Security which is not taxable as ordinary income.
However, any loss realized by a Unit holder with respect to the
disposition of his pro rata portion of the REIT Shares, to the
extent such Unit holder has owned his 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 the Unit holder's pro rata portion of any capital gain
dividends received (or deemed to have been received) with respect
to the REIT Shares.
IV. Under the Indenture, under certain circumstances, a
Unit holder tendering Units for redemption may request an in kind
distribution of Securities upon the redemption of Units or upon
the termination of the Trust. As previously discussed, prior to
the redemption of Units or the termination of the Trust, a Unit
holder is considered as owning a pro rata portion of each of the
Trust's assets. The receipt of an in kind distribution will
result in a Unit holder receiving an undivided interest in whole
shares of stock and possibly cash. The potential federal income
tax consequences which may occur under an in kind distribution
with respect to each Security owned by the Trust will depend upon
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 corporation. 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 tax basis in such fractional
share of a Security held by the Trust. The total amount of
taxable gains (or losses) recognized upon such redemption will
generally equal the sum of the gain (or loss) recognized under
the rules described above by the redeeming Unit holder with
respect to each Security owned by the Trust.
Dividends received by Unit holders on the REIT Shares are
not eligible for the dividends received deduction.
Section 67 of the Code provides that 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.
A Unit holder will recognize taxable gain (or loss) when all
or part of the pro rata interest in a Security is either sold by
the Trust or redeemed or when a Unit holder disposes of his Units
in a taxable transaction, in each case for an amount greater (or
less) than his tax basis therefor, subject to various non-
recognition provisions of the Code.
Any gain or loss recognized on a sale or exchange will,
under current law, generally be capital gain or loss.
The scope of this opinion is expressly limited to the
matters set forth herein, and, except as expressly set forth
above, we express no opinion with respect to any other taxes,
including foreign, state or local taxes or collateral tax
consequences with respect to the purchase, ownership and
disposition of Units.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 333-48691)
relating to the Units referred to above and to the use of our
name and to the reference to our firm in said Registration
Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
EFF/erg
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
April 21, 1998
The Chase Manhattan Bank, as Trustee of
FT 243
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Attention: Mr. Thomas Porrazzo
Vice President
Re: FT 243
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for the unit investment trust or trusts included in
FT 243 (each, a "Trust"), which will be established under
certain Standard Terms and Conditions of Trust dated November 20,
1991, and a related Trust Agreement dated as of today (collect-
ively, the "Indenture") among Nike Securities L.P., as Depositor
(the "Depositor"), First Trust Advisors L.P., as Evaluator, First
Trust Advisors L.P., as Portfolio Supervisor, and The Chase Man-
hattan Bank, as Trustee (the "Trustee"). Pursuant to the terms
of the Indenture, units of fractional undivided interest in the
Trust (the "Units") will be issued in the aggregate number set
forth in the Indenture.
We have examined and are familiar with originals or
certified copies, or copies otherwise identified to our
satisfaction, of such documents as we have deemed necessary or
appropriate for the purpose of this opinion. In giving this
opinion, we have relied upon the two opinions, each dated today
and addressed to the Trustee, of Chapman and Cutler, counsel for
the Depositor, with respect to the matters of law set forth
therein.
Based upon the foregoing, we are of the opinion that:
1. The Trust will not constitute an association taxable as
a corporation under New York law, and accordingly will not be
subject to the New York State franchise tax or the New York City
general corporation tax.
2. Under the income tax laws of the State and City of New
York, the income of the Trust will be considered the income of
the holders of the Units.
We consent to the filing of this opinion as an exhibit to
the Registration Statement (No. 333-48691) filed with the
Securities and Exchange Commission with respect to the
registration of the sale of the Units and to the references to
our name under the captions "What is the Federal Tax Status of
Unit-holders?" and "Legal Opinions" in such Registration
Statement and the preliminary prospectus included therein.
Very truly yours,
CARTER, LEDYARD & MILBURN
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
April 21, 1998
The Chase Manhattan Bank, as Trustee of
FT 243
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Attention: Mr. Thomas Porrazzo
Vice President
Re: FT 243
Dear Sirs:
We are acting as counsel for The Chase Manhattan Bank
("Chase") in connection with the execution and delivery of a
Trust Agreement (the "Trust Agreement") dated today's date (which
Trust Agreement incorporates by reference, certain Standard Terms
and Conditions of Trust dated November 20, 1991, and the same are
collectively referred to herein as the "Indenture") among Nike
Securities L.P., as Depositor (the "Depositor"), First Trust
Advisors L.P., as Evaluator; First Trust Advisors L.P., as
Portfolio Supervisor; and Chase, as Trustee (the "Trustee"),
establishing the unit investment trust or trusts included in FT
243(each, a "Trust"), and the confirmation by Chase, as Trustee
under the Indenture, that it has registered on the registration
books of the Trust the ownership by the Depositor of a number
of units constituting the entire interest in the Trust (such
aggregate units being herein called "Units"), each of which
represents an undivided interest in the respective Trust which
consists of common stocks (including, confirmations of contracts
for the purchase of certain stocks not delivered and cash, cash
equivalents or an irrevocable letter of credit or a combination
thereof, in the amount required for such purchase upon the
receipt of such stocks), such stocks being defined in the
Indenture as Securities and referenced in the Schedule to the
Indenture.
We have examined the Indenture, a specimen of the
certificates to be issued thereunder (the "Certificates"), the
Closing Memorandum dated today's date, and such other documents
as we have deemed necessary in order to render this opinion.
Based on the foregoing, we are of the opinion that:
1. Chase is a duly organized and existing corporation
having the powers of a trust company under the laws of the State
of New York.
2. The Trust Agreement has been duly executed and
delivered by Chase and, assuming due execution and delivery by
the other parties thereto, constitutes the valid and legally
binding obligation of Chase.
3. The Certificates are in proper form for execution and
delivery by Chase, as Trustee.
4. Chase, as Trustee, has registered on the registration
books of the Trust the ownership of the Units by the Depositor.
Upon receipt of confirmation of the effectiveness of the
registration statement for the sale of the Units filed with the
Securities and Exchange Commission under the Securities Act of
1933, the Trustee may deliver Certificates for such Units, in
such names and denominations as the Depositor may request, to or
upon the order of the Depositor, as provided in the Closing
Memorandum.
5. Chase, as Trustee, may lawfully advance to the Trust
amounts as may be necessary to provide periodic interest
distributions of approximately equal amounts, and be reimbursed,
without interest, for any such advances from funds in the
interest account, as provided in the Indenture.
In rendering the foregoing opinion, we have not considered,
among other things, whether the Securities have been duly
authorized and delivered.
Very truly yours,
CARTER, LEDYARD & MILBURN
First Trust Advisors L.P.
1001 Warrenville Road
Lisle, Illinois 60532
April 21, 1998
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: FT 243
Gentlemen:
We have examined the Registration Statement File No.
333-48691 for the above captioned fund. We hereby consent to the
use in the Registration Statement of the references to First
Trust Advisors L.P. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
First Trust Advisors L.P.
Robert M. Porcellino
Vice President
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted
from Amendment number 1 to form S-6 and is qualified in its entirety by
reference to such Amendment number 1 to form S-6.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> REIT Value Trust, Series 2
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> Other
<FISCAL-YEAR-END> APR-21-1998
<PERIOD-START> APR-21-1998
<PERIOD-END> APR-21-1998
<INVESTMENTS-AT-COST> 149,965
<INVESTMENTS-AT-VALUE> 149,965
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 149,965
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 149,965
<SHARES-COMMON-STOCK> 14,996
<SHARES-COMMON-PRIOR> 14,996
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 149,965
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
