Registration No. 333-33520
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 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 423
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 12, 2000 at 2:00 p.m. pursuant to Rule 487.
________________________________
AMERICA'S LEADING BRANDS SELECT PORTFOLIO SERIES
LIFE SCIENCES SELECT PORTFOLIO SERIES
REGIONAL BANK & THRIFT SELECT PORTFOLIO SERIES
AMERICA'S LEADING BRANDS PORTFOLIO, SERIES 7
LIFE SCIENCES PORTFOLIO SERIES
REGIONAL BANK & THRIFT PORTFOLIO, SERIES 3
FT 423
FT 423 is a series of a unit investment trust, the FT Series. FT 423
consists of six separate portfolios listed above (each, a "Trust," and
collectively, the "Trusts"). Each Trust invests in a diversified
portfolio of common stocks ("Securities") issued by companies in the
industry sector or investment focus for which each Trust is named. The
objective of each Trust is to provide above-average capital
appreciation. Each Select Portfolio Series has an expected maturity of
approximately 18 months. Each Portfolio Series has an expected maturity
of approximately five years.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
OF THESE SECURITIES OR PASSED UPON THE 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 12, 2000
Page 1
Table of Contents
Summary of Essential Information 3
Fee Table 5
Report of Independent Auditors 6
Statements of Net Assets 7
Schedules of Investments 9
The FT Series 16
Portfolios 17
Risk Factors 19
Public Offering 20
Distribution of Units 23
The Sponsor's Profits 24
The Secondary Market 24
How We Purchase Units 24
Expenses and Charges 24
Tax Status 25
Retirement Plans 26
Rights of Unit Holders 26
Income and Capital Distributions 27
Redeeming Your Units 28
Removing Securities from a Trust 29
Amending or Terminating the Indenture 30
Information on the Sponsor, Trustee and Evaluator 30
Other Information 31
Page 2
Summary of Essential Information
FT 423
At the Opening of Business on the
Initial Date of Deposit-April 12, 2000
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
America's Regional Bank
Leading Brands Life Sciences & Thrift
Select Portfolio Select Portfolio Select Portfolio
Series Series Series
____________ __________ ________________
<S> <C> <C> <C>
Initial Number of Units (1) 15,086 15,037 15,006
Fractional Undivided Interest
in the Trust per Unit (1) 1/15,086 1/15,037 1/15,006
Public Offering Price:
Aggregate Offering Price Evaluation
of Securities per Unit (2) $ 9.900 $ 9.900 $ 9.900
Maximum Sales Charge of
3.25% of the Public Offering
Price per Unit (3.283% of the net amount invested,
exclusive of the deferred sales charge) (3) $ .325 $ .325 $ .325
Less Deferred Sales Charge per Unit $ (.225) $ (.225) $ (.225)
Public Offering Price per Unit (4) $ 10.000 $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.675 $ 9.675 $ 9.675
Redemption Price per Unit
(based on aggregate underlying value
of Securities less deferred sales charge) (5) $ 9.675 $ 9.675 $ 9.675
Cash CUSIP Number 30265M 165 30265M 199 30265M 223
Reinvestment CUSIP Number 30265M 173 30265M 207 30265M 231
Wrap CUSIP Number 30265M 181 30265M 215 30265M 249
Security Code 58577 58580 58583
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date April 17, 2000
Mandatory Termination Date (6) October 12, 2001
Income Distribution Record Date Fifteenth day of each June and December, commencing June 15, 2000.
Income Distribution Date (7) Last day of each June and December, commencing June 30, 2000.
_____________
<FN>
See "Notes to Summary of Essential Information" on page 4.
</FN>
</TABLE>
Page 3
Summary of Essential Information
FT 423
At the Opening of Business on the Initial Date of Deposit-April 12, 2000
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
America's Regional Bank
Leading Brands Life Sciences & Thrift
Portfolio Portfolio Portfolio
Series 7 Series Series 3
___________ ___________ _____________
<S> <C> <C> <C>
Initial Number of Units (1) 15,086 15,037 15,006
Fractional Undivided Interest in the Trust per Unit (1) 1/15,086 1/15,037 1/15,006
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ 9.900 $ 9.900 $ 9.900
Maximum Sales Charge of
4.50% of the Public Offering Price per Unit (4.545% of the
net amount invested, exclusive of the deferred sales charge) (3) $ .450 $ .450 $ .450
Less Deferred Sales Charge per Unit $ (.350) $ (.350) $ (.350)
Public Offering Price per Unit (4) $ 10.000 $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.550 $ 9.550 $ 9.550
Redemption Price per Unit (based on aggregate underlying value
of Securities less deferred sales charge) (5) $ 9.550 $ 9.550 $ 9.550
Cash CUSIP Number 30265M 256 30265M 280 30265M 314
Reinvestment CUSIP Number 30265M 264 30265M 298 30265M 322
Wrap CUSIP Number 30265M 272 30265M 306 30265M 330
Security Code 58586 58589 58592
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date April 17, 2000
Mandatory Termination Date (6) April 15, 2005
Income Distribution Record Date Fifteenth day of each June and December, commencing June 15, 2000.
Income Distribution Date (7) Last day of each June and December, commencing June 30, 2000.
_____________
<FN>
NOTES TO SUMMARY OF ESSENTIAL INFORMATION
(1) As of the close of business on the Initial Date of Deposit, we may
adjust the number of Units of a Trust so that the Public Offering Price
per Unit will equal approximately $10.00. If we make such an adjustment,
the fractional undivided interest per Unit will vary from the amounts
indicated above.
(2) Each listed Security is valued at its last closing sale price. If a
Security is not listed, or if no closing sale price exists, it is valued
at its closing ask price. Evaluations for purposes of determining the
purchase, sale or redemption price of Units are made as of the close of
trading on the New York Stock Exchange ("NYSE") (generally 4:00 p.m.
Eastern time) on each day on which it is open (the "Evaluation Time").
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Table" and "Public Offering."
(4) The Public Offering Price shown above reflects the value of the
Securities on the business day prior to the Initial Date of Deposit. No
investor will purchase Units at this price. The price you pay for your
Units will be based on their valuation at the Evaluation Time on the
date you purchase your Units. On the Initial Date of Deposit the Public
Offering Price per Unit will not include any accumulated dividends on
the Securities. After this date a pro rata share of any accumulated
dividends on the Securities will be included.
(5) Until the earlier of six months after the Initial Date of Deposit or
the end of the initial offering period, the Sponsor's Initial Repurchase
Price per Unit and the Redemption Price per Unit will include the
estimated organization costs per Unit set forth under "Fee Table." After
such date, the Sponsor's Repurchase Price and Redemption Price per Unit
will not include such estimated organization costs. See "Redeeming Your
Units."
(6) See "Amending or Terminating the Indenture."
(7) Distributions from the Capital Account will be made monthly 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. In any case, we will distribute any funds in the
Capital Account in December of each year.
</FN>
</TABLE>
Page 4
Fee Table
This Fee Table describes the fees and expenses that you may, directly or
indirectly, pay if you buy and hold Units of a Trust. See "Public
Offering" and "Expenses and Charges." Although each Select Portfolio
Series has a term of approximately 18 months, each Portfolio Series has
a term of approximately five years, and each is a unit investment trust
rather than a mutual fund, this information allows you to compare fees.
<TABLE>
<CAPTION>
Select Portfolio Series Portfolio Series
_______________________ ______________
Amount Amount
per Unit per Unit
______ ________
<S> <C> <C> <C> <C>
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Maximum sales charge 3.25% $.325 4.50% $.450
======= ======= ======= =======
Initial sales charge (paid at time of purchase) 1.00%(a) $.100 1.00%(a) $.100
Deferred sales charge (paid in installments or at redemption) 2.25%(b) .225 3.50%(b) .350
Organization Costs
(as a percentage of public offering price)
Estimated organization costs .260%(c) $.0260 .225%(c) $.0225
======= ======= ======= =======
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative and evaluation fees .081% $.0080 .100% $.0098
Creation and development fee .250%(d) .0248 .250%(d) .0245
Trustee's fee and other operating expenses .118%(e) .0117 .152%(e) .0149
______ ______ ______ ______
Total .449% $.0445 .502% $.0492
======= ======= ======= =======
</TABLE>
Example
This example is intended to help you compare the cost of investing in a
Trust with the cost of investing in other investment products. The
example assumes that you invest $10,000 in a Trust for the periods shown
and sell your Units at the end of those periods. The example also
assumes a 5% return on your investment each year and that a Trust's
operating expenses stay the same. Although your actual costs may vary,
based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 18 Months (f) 3 Years 5 Years
______ __________ _______ _______
<S> <C> <C> <C> <C>
Select Portfolio Series $396 $419 $ - $ -
Portfolio Series 523 N.A. 625 737
The example will not differ if you hold rather than sell your Units at
the end of each period.
_____________
<FN>
(a) The initial sales charge is the difference between the maximum sales
charge (3.25% for each Select Portfolio Series and 4.50% for each
Portfolio Series) and any remaining deferred sales charge.
(b) The deferred sales charge is a fixed dollar amount equal to $.225
per Unit for each Select Portfolio Series and $.350 per Unit for each
Portfolio Series which, as a percentage of the Public Offering Price,
will vary over time. The deferred sales charge will be deducted in five
monthly installments commencing November 20, 2000.
(c) Estimated organization costs will be deducted from the assets of a
Trust at the earlier of six months after the Initial Date of Deposit or
the end of the initial offering period.
(d) The creation and development fee compensates the Sponsor for creating
and developing the Trusts. Each Trust accrues this fee daily during the
life of the Trust based on its average net asset value and pays the
Sponsor monthly. In connection with the creation and development fee, in
no event will the Sponsor collect over the life of a Trust more than
.75% for each Select Portfolio Series or more than 2.75% for each
Portfolio Series of a Unit holder's initial investment.
(e) For each Portfolio Series, other operating expenses include the
costs incurred by each Portfolio Series for annually updating such
Trusts' registration statements, but do not include brokerage costs and
other portfolio transaction fees for any of the Trusts. In certain
circumstances the Trusts may incur additional expenses not set forth
above. See "Expenses and Charges."
(f) For each Select Portfolio Series, the example represents the
estimated costs incurred through each Trust's approximate 18-month life.
</FN>
</TABLE>
Page 5
Report of Independent Auditors
The Sponsor, Nike Securities L.P., and Unit Holders
FT 423
We have audited the accompanying statements of net assets, including the
schedules of investments, of FT 423, comprised of the America's Leading
Brands Select Portfolio Series; Life Sciences Select Portfolio Series;
Regional Bank & Thrift Select Portfolio Series; America's Leading Brands
Portfolio, Series 7; Life Sciences Portfolio Series; and Regional Bank &
Thrift Portfolio, Series 3, as of the opening of business on April 12,
2000. These statements of net assets are the responsibility of the
Trusts' Sponsor. Our responsibility is to express an opinion on these
statements of net assets based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
statements of net assets are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statements of net assets. Our procedures included
confirmation of the letter of credit allocated among the Trusts on April
12, 2000. 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 statements of net assets. We
believe that our audit of the statements of net assets provides a
reasonable basis for our opinion.
In our opinion, the statements of net assets referred to above present
fairly, in all material respects, the financial position of FT 423,
comprised of the America's Leading Brands Select Portfolio Series; Life
Sciences Select Portfolio Series; Regional Bank & Thrift Select
Portfolio Series; America's Leading Brands Portfolio, Series 7; Life
Sciences Portfolio Series; and Regional Bank & Thrift Portfolio, Series
3, at the opening of business on April 12, 2000 in conformity with
accounting principles generally accepted in the United States.
ERNST & YOUNG LLP
Chicago, Illinois
April 12, 2000
Page 6
Statements of Net Assets
FT 423
At the Opening of Business on the
Initial Date of Deposit-April 12, 2000
<TABLE>
<CAPTION>
America's Regional Bank
Leading Brands Life Sciences & Thrift
Select Portfolio Select Portfolio Select Portfolio
Series Series Series
__________ ____________ ________________
<S> <C> <C> <C>
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $149,350 $148,873 $148,561
Less liability for reimbursement to Sponsor
for organization costs (3) (392) (391) (390)
Less liability for deferred sales charge (4) (3,394) (3,383) (3,376)
________ ________ ________
Net assets $145,564 $145,099 $144,795
======== ======== ========
Units outstanding 15,086 15,037 15,006
ANALYSIS OF NET ASSETS
Cost to investors (5) $150,859 $150,377 $150,062
Less maximum sales charge (5) (4,903) (4,887) (4,877)
Less estimated reimbursement to Sponsor
for organization costs (3) (392) (391) (390)
________ ________ ________
Net assets $145,564 $145,099 $144,795
======== ======== ========
______________
<FN>
See "Notes to Statements of Net Assets" on page 8.
</FN>
</TABLE>
Page 7
Statements of Net Assets
FT 423
At the Opening of Business on the
Initial Date of Deposit-April 12, 2000
<TABLE>
<CAPTION>
America's Regional Bank
Leading Brands Life Sciences & Thrift
Portfolio Portfolio Portfolio
Series 7 Series Series 3
___________ _________ ____________
<S> <C> <C> <C>
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $149,350 $148,873 $148,561
Less liability for reimbursement to Sponsor for organization costs (3) (339) (338) (338)
Less liability for deferred sales charge (4) (5,280) (5,263) (5,252)
________ ________ ________
Net assets $143,731 $143,272 $142,971
======== ======== ========
Units outstanding 15,086 15,037 15,006
ANALYSIS OF NET ASSETS
Cost to investors (5) $150,859 $150,377 $150,062
Less maximum sales charge (5) (6,789) (6,767) (6,753)
Less estimated reimbursement to Sponsor for organization costs (3) (339) (338) (338)
________ ________ ________
Net assets $143,731 $143,272 $142,971
======== ======== ========
______________
<FN>
NOTES TO STATEMENTS OF NET ASSETS
(1) Aggregate cost of the Securities listed under "Schedule of
Investments" for each Trust is based on their aggregate underlying value.
(2) An irrevocable letter of credit issued by The Chase Manhattan Bank,
of which $1,200,000 will be allocated among each of the six Trusts in FT
423, has been deposited with the Trustee as collateral, covering the
monies necessary for the purchase of the Securities according to their
purchase contracts.
(3) A portion of the Public Offering Price consists of an amount
sufficient to reimburse the Sponsor for all or a portion of the costs of
establishing the Trusts. These costs have been estimated at $.0260 per
Unit for each Select Portfolio Series and $.0225 per Unit for each
Portfolio Series. A payment will be made at the earlier of six months
after the Initial Date of Deposit or the end of the initial offering
period to an account maintained by the Trustee from which the obligation
of the investors to the Sponsor will be satisfied. To the extent that
actual organization costs of a Trust are greater than the estimated
amount, only the estimated organization costs added to the Public
Offering Price will be reimbursed to the Sponsor and deducted from the
assets of such Trust.
(4) Represents the amount of mandatory deferred sales charge
distributions of $.225 per Unit for each Select Portfolio Series, or
$.350 per Unit for each Portfolio Series, payable to us in five equal
monthly installments beginning on November 20, 2000 and on the twentieth
day of each month thereafter (or if such date is not a business day, on
the preceding business day) through March 20, 2001. If you redeem your
Units before March 20, 2001 you will have to pay the remaining amount of
the deferred sales charge applicable to such Units when you redeem them.
(5) The aggregate cost to investors includes a maximum sales charge
(comprised of an initial sales charge and a deferred sales charge)
computed at the rate of 3.25% of the Public Offering Price per Unit for
each Select Portfolio Series (equivalent to 3.283% of the net amount
invested, exclusive of the deferred sales charge) or 4.50% of the Public
Offering Price per Unit for each Portfolio Series (equivalent to 4.545%
of the net amount invested, exclusive of the deferred sales charge),
assuming no reduction of sales charge as set forth under "Public
Offering."
</FN>
</TABLE>
Page 8
Schedule of Investments
America's Leading Brands Select Portfolio Series
FT 423
At the Opening of Business on the
Initial Date of Deposit-April 12, 2000
<TABLE>
<CAPTION>
Percentage Market Cost of
Number Ticker Symbol and of Aggregate Value per Securities to
of Shares Name of Issuer of Securities (1) Offering Price Share the Trust (2)
_________ _____________________________________ _________ ______ _________
<S> <C> <C> <C> <C>
Apparel/Retail
______________
137 GPS The Gap, Inc. 4% $ 43.500 $ 5,960
190 JNY Jones Apparel Group, Inc. 4% 31.063 5,902
Beverages
_________
87 BUD Anheuser-Busch Companies, Inc. 4% 69.000 6,003
163 PEP PepsiCo, Inc. 4% 37.063 6,041
Entertainment
_____________
141 DIS The Walt Disney Company 4% 42.500 5,993
Food
____
126 BFO Bestfoods 4% 47.750 6,017
159 HNZ H.J. Heinz Company 4% 37.250 5,923
124 HSY Hershey Foods Corporation 4% 47.938 5,944
200 KBL Keebler Foods Company 4% 29.688 5,938
346 SLE Sara Lee Corporation 4% 17.000 5,882
Household Products
__________________
161 CLX The Clorox Company 4% 37.313 6,007
95 CL Colgate-Palmolive Company 4% 62.625 5,949
102 KMB Kimberly-Clark Corporation 4% 57.563 5,872
90 PG Procter & Gamble Company 4% 66.438 5,979
Pharmaceuticals
_______________
93 BMY Bristol-Myers Squibb Company 4% 64.250 5,975
77 JNJ Johnson & Johnson 4% 78.250 6,025
149 PFE Pfizer Inc. 4% 40.000 5,960
146 SGP Schering-Plough Corporation 4% 41.938 6,123
Recreation
__________
239 CCL Carnival Corporation 4% 24.813 5,930
139 HDI Harley-Davidson, Inc. 4% 43.688 6,073
Restaurants
___________
159 MCD McDonald's Corporation 4% 37.688 5,992
157 SBUX Starbucks Corporation 4% 37.938 5,956
Technology
__________
108 DELL Dell Computer Corporation 4% 55.438 5,987
45 INTC Intel Corporation 4% 130.750 5,884
Toiletries/Cosmetics
_____________________
154 G The Gillette Company 4% 39.188 6,035
______ ________
Total Investments 100% $149,350
====== ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 14.
</FN>
</TABLE>
Page 9
Schedule of Investments
Life Sciences Select Portfolio Series
FT 423
At the Opening of Business on the
Initial Date of Deposit-April 12, 2000
<TABLE>
<CAPTION>
Percentage Market Cost of
Number Ticker Symbol and of Aggregate Value per Securities to
of Shares Name of Issuer of Securities (1) Offering Price Share the Trust (2)
_________ _____________________________________ _________ ______ _____________
<S> <C> <C> <C> <C>
Biotechnology
____________
83 AMGN Amgen Inc. 3.30% $ 59.125 $ 4,907
94 BGEN Biogen, Inc. 3.35% 53.000 4,982
74 CORR COR Therapeutics, Inc. 3.37% 67.844 5,020
55 CRA Celera Genomics 3.30% 89.250 4,909
108 CHIR Chiron Corporation 3.29% 45.375 4,900
117 ENZN Enzon, Inc. 3.31% 42.125 4,929
110 GENZ Genzyme Corporation (General Division) 3.44% 46.500 5,115
60 HGSI Human Genome Sciences, Inc. 3.23% 80.250 4,815
56 IDPH IDEC Pharmaceuticals Corporation 3.33% 88.438 4,953
90 IMNX Immunex Corporation 3.70% 61.250 5,512
31 MEDI MedImmune, Inc. 3.24% 155.563 4,822
53 PDLI Protein Design Labs, Inc. 3.11% 87.313 4,628
Medical Products
____________
62 ARTC ArthroCare Corporation 3.41% 81.938 5,080
108 CYTC Cytyc Corporation 3.30% 45.563 4,921
78 GDT Guidant Corporation 3.34% 63.750 4,972
64 JNJ Johnson & Johnson 3.36% 78.250 5,008
89 MDT Medtronic, Inc. 3.34% 55.875 4,973
38 MNMD MiniMed Inc. 3.25% 127.438 4,843
144 RMD ResMed Inc. 3.22% 33.250 4,788
74 SYK Stryker Corporation 3.34% 67.250 4,976
69 TECH Techne Corporation 3.29% 71.031 4,901
178 TBA Thermo BioAnalysis Corporation 3.33% 27.875 4,962
Pharmaceuticals
____________
78 BMY Bristol-Myers Squibb Company 3.37% 64.250 5,011
67 INHL Inhale Therapeutic Systems, Inc. 3.22% 71.500 4,791
76 LLY Eli Lilly and Company 3.41% 66.875 5,083
73 MRK Merck & Co., Inc. 3.30% 67.313 4,914
124 PFE Pfizer Inc. 3.33% 40.000 4,960
125 PCOP Pharmacopeia, Inc. 3.32% 39.500 4,938
81 QLTI QLT PhotoTherapeutics Inc. (3) 3.46% 63.500 5,144
122 SGP Schering-Plough Corporation 3.44% 41.938 5,116
_______ ________
Total Investments 100% $148,873
======= ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 14.
</FN>
</TABLE>
Page 10
Schedule of Investments
Regional Bank & Thrift Select Portfolio Series
FT 423
At the Opening of Business on the
Initial Date of Deposit-April 12, 2000
<TABLE>
<CAPTION>
Percentage Market Cost of
Number Ticker Symbol and of Aggregate Value per Securities to
of Shares Name of Issuer of Securities (1) Offering Price Share the Trust (2)
_________ _____________________________________ _________ ______ _____________
<S> <C> <C> <C> <C>
Banks
_____
331 ASO AmSouth Bancorporation 3.36% $ 15.063 $ 4,986
177 BBT BB&T Corporation 3.34% 28.000 4,956
168 CHZ Chittenden Corporation 3.36% 29.688 4,988
149 CYN City National Corporation 3.35% 33.375 4,973
469 CNB The Colonial BancGroup, Inc. 3.39% 10.750 5,042
113 CMA Comerica Incorporated 3.31% 43.563 4,923
124 CBH Commerce Bancorp, Inc. 3.31% 39.688 4,921
163 CBSH Commerce Bancshares, Inc. 3.34% 30.438 4,961
312 CFBX Community First Bankshares, Inc. 3.33% 15.875 4,953
260 CBSS Compass Bancshares, Inc. 3.34% 19.063 4,956
185 CFR Cullen/Frost Bankers, Inc. 3.30% 26.500 4,902
197 FSR Firstar Corporation 3.32% 25.000 4,925
128 FBF Fleet Boston Financial Corporation 3.32% 38.500 4,928
255 HU Hudson United Bancorp 3.34% 19.438 4,957
275 KEY KeyCorp 3.37% 18.188 5,002
11 MTB M&T Bank Corporation 3.39% 458.000 5,038
275 NFB North Fork Bancorporation, Inc. 3.34% 18.063 4,967
157 PFGI Provident Financial Group, Inc. 3.38% 32.000 5,024
85 SIVB Silicon Valley Bancshares 3.20% 55.844 4,747
86 STI SunTrust Banks, Inc. 3.32% 57.313 4,929
216 TCB TCF Financial Corporation 3.34% 23.000 4,968
121 WFC Wells Fargo Company 3.29% 40.438 4,893
110 ZION Zions Bancorporation 3.34% 45.125 4,964
Thrifts
_______
182 ASFC Astoria Financial Corporation 3.38% 27.625 5,028
239 CF Charter One Financial, Inc. 3.32% 20.625 4,929
253 GPT GreenPoint Financial Corp. 3.29% 19.313 4,886
352 PHBK Peoples Heritage Financial Group, Inc. 3.39% 14.313 5,038
704 SVRN Sovereign Bancorp, Inc. 3.33% 7.031 4,950
183 WM Washington Mutual, Inc. 3.31% 26.875 4,918
228 WBST Webster Financial Corporation 3.30% 21.531 4,909
_______ ________
Total Investments 100% $148,561
======= ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 14.
</FN>
</TABLE>
Page 11
Schedule of Investments
America's Leading Brands Portfolio, Series 7
FT 423
At the Opening of Business on the
Initial Date of Deposit-April 12, 2000
<TABLE>
<CAPTION>
Percentage Market Cost of
Number Ticker Symbol and of Aggregate Value per Securities to
of Shares Name of Issuer of Securities (1) Offering Price Share the Trust (2)
_________ _____________________________________ _________ ______ _____________
<S> <C> <C> <C> <C>
Apparel/Retail
______________
137 GPS The Gap, Inc. 4% $ 43.500 $ 5,960
190 JNY Jones Apparel Group, Inc. 4% 31.063 5,902
Beverages
_________
87 BUD Anheuser-Busch Companies, Inc. 4% 69.000 6,003
163 PEP PepsiCo, Inc. 4% 37.063 6,041
Entertainment
_____________
141 DIS The Walt Disney Company 4% 42.500 5,993
Food
____
126 BFO Bestfoods 4% 47.750 6,017
159 HNZ H.J. Heinz Company 4% 37.250 5,923
124 HSY Hershey Foods Corporation 4% 47.938 5,944
200 KBL Keebler Foods Company 4% 29.688 5,938
346 SLE Sara Lee Corporation 4% 17.000 5,882
Household Products
__________________
161 CLX The Clorox Company 4% 37.313 6,007
95 CL Colgate-Palmolive Company 4% 62.625 5,949
102 KMB Kimberly-Clark Corporation 4% 57.563 5,872
90 PG Procter & Gamble Company 4% 66.438 5,979
Pharmaceuticals
_______________
93 BMY Bristol-Myers Squibb Company 4% 64.250 5,975
77 JNJ Johnson & Johnson 4% 78.250 6,025
149 PFE Pfizer Inc. 4% 40.000 5,960
146 SGP Schering-Plough Corporation 4% 41.938 6,123
Recreation
__________
239 CCL Carnival Corporation 4% 24.813 5,930
139 HDI Harley-Davidson, Inc. 4% 43.688 6,073
Restaurants
___________
159 MCD McDonald's Corporation 4% 37.688 5,992
157 SBUX Starbucks Corporation 4% 37.938 5,956
Technology
__________
108 DELL Dell Computer Corporation 4% 55.438 5,987
45 INTC Intel Corporation 4% 130.750 5,884
Toiletries/Cosmetics
_____________________
154 G The Gillette Company 4% 39.188 6,035
______ ________
Total Investments 100% $149,350
====== ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 14.
</FN>
</TABLE>
Page 12
Schedule of Investments
Life Sciences Portfolio Series
FT 423
At the Opening of Business on the
Initial Date of Deposit-April 12, 2000
<TABLE>
<CAPTION>
Percentage Market Cost of
Number Ticker Symbol and of Aggregate Value per Securities to
of Shares Name of Issuer of Securities (1) Offering Price Share the Trust (2)
_________ _____________________________________ _________ ______ _____________
<S> <C> <C> <C> <C>
Biotechnology
____________
83 AMGN Amgen Inc. 3.30% $ 59.125 $ 4,907
94 BGEN Biogen, Inc. 3.35% 53.000 4,982
74 CORR COR Therapeutics, Inc. 3.37% 67.844 5,020
55 CRA Celera Genomics 3.30% 89.250 4,909
108 CHIR Chiron Corporation 3.29% 45.375 4,900
117 ENZN Enzon, Inc. 3.31% 42.125 4,929
110 GENZ Genzyme Corporation (General Division) 3.44% 46.500 5,115
60 HGSI Human Genome Sciences, Inc. 3.23% 80.250 4,815
56 IDPH IDEC Pharmaceuticals Corporation 3.33% 88.438 4,953
90 IMNX Immunex Corporation 3.70% 61.250 5,512
31 MEDI MedImmune, Inc. 3.24% 155.563 4,822
53 PDLI Protein Design Labs, Inc. 3.11% 87.313 4,628
Medical Products
____________
62 ARTC ArthroCare Corporation 3.41% 81.938 5,080
108 CYTC Cytyc Corporation 3.30% 45.563 4,921
78 GDT Guidant Corporation 3.34% 63.750 4,972
64 JNJ Johnson & Johnson 3.36% 78.250 5,008
89 MDT Medtronic, Inc. 3.34% 55.875 4,973
38 MNMD MiniMed Inc. 3.25% 127.438 4,843
144 RMD ResMed Inc. 3.22% 33.250 4,788
74 SYK Stryker Corporation 3.34% 67.250 4,976
69 TECH Techne Corporation 3.29% 71.031 4,901
178 TBA Thermo BioAnalysis Corporation 3.33% 27.875 4,962
Pharmaceuticals
____________
78 BMY Bristol-Myers Squibb Company 3.37% 64.250 5,011
67 INHL Inhale Therapeutic Systems, Inc. 3.22% 71.500 4,791
76 LLY Eli Lilly and Company 3.41% 66.875 5,083
73 MRK Merck & Co., Inc. 3.30% 67.313 4,914
124 PFE Pfizer Inc. 3.33% 40.000 4,960
125 PCOP Pharmacopeia, Inc. 3.32% 39.500 4,938
81 QLTI QLT PhotoTherapeutics Inc. (3) 3.46% 63.500 5,144
122 SGP Schering-Plough Corporation 3.44% 41.938 5,116
_______ ________
Total Investments 100% $148,873
======= ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 14.
</FN>
</TABLE>
Page 13
Schedule of Investments
Regional Bank & Thrift Portfolio, Series 3
FT 423
At the Opening of Business on the
Initial Date of Deposit-April 12, 2000
<TABLE>
<CAPTION>
Percentage Market Cost of
Number Ticker Symbol and of Aggregate Value per Securities to
of Shares Name of Issuer of Securities (1) Offering Price Share the Trust (2)
_________ _____________________________________ _________ ______ _____________
<S> <C> <C> <C> <C>
Banks
_____
331 ASO AmSouth Bancorporation 3.36% $ 15.063 $ 4,986
177 BBT BB&T Corporation 3.34% 28.000 4,956
168 CHZ Chittenden Corporation 3.36% 29.688 4,988
149 CYN City National Corporation 3.35% 33.375 4,973
469 CNB The Colonial BancGroup, Inc. 3.39% 10.750 5,042
113 CMA Comerica Incorporated 3.31% 43.563 4,923
124 CBH Commerce Bancorp, Inc. 3.31% 39.688 4,921
163 CBSH Commerce Bancshares, Inc. 3.34% 30.438 4,961
312 CFBX Community First Bankshares, Inc. 3.33% 15.875 4,953
260 CBSS Compass Bancshares, Inc. 3.34% 19.063 4,956
185 CFR Cullen/Frost Bankers, Inc. 3.30% 26.500 4,902
197 FSR Firstar Corporation 3.32% 25.000 4,925
128 FBF Fleet Boston Financial Corporation 3.32% 38.500 4,928
255 HU Hudson United Bancorp 3.34% 19.438 4,957
275 KEY KeyCorp 3.37% 18.188 5,002
11 MTB M&T Bank Corporation 3.39% 458.000 5,038
275 NFB North Fork Bancorporation, Inc. 3.34% 18.063 4,967
157 PFGI Provident Financial Group, Inc. 3.38% 32.000 5,024
85 SIVB Silicon Valley Bancshares 3.20% 55.844 4,747
86 STI SunTrust Banks, Inc. 3.32% 57.313 4,929
216 TCB TCF Financial Corporation 3.34% 23.000 4,968
121 WFC Wells Fargo Company 3.29% 40.438 4,893
110 ZION Zions Bancorporation 3.34% 45.125 4,964
Thrifts
_______
182 ASFC Astoria Financial Corporation 3.38% 27.625 5,028
239 CF Charter One Financial, Inc. 3.32% 20.625 4,929
253 GPT GreenPoint Financial Corp. 3.29% 19.313 4,886
352 PHBK Peoples Heritage Financial Group, Inc. 3.39% 14.313 5,038
704 SVRN Sovereign Bancorp, Inc. 3.33% 7.031 4,950
183 WM Washington Mutual, Inc. 3.31% 26.875 4,918
228 WBST Webster Financial Corporation 3.30% 21.531 4,909
_______ ________
Total Investments 100% $148,561
======= ========
_______________
<FN>
NOTES TO SCHEDULES OF INVESTMENTS
(1) All Securities are represented by regular way contracts to purchase
such Securities which are backed by an irrevocable letter of credit
deposited with the Trustee. We entered into purchase contracts for the
Securities on April 11, 2000. Each Select Portfolio Series has a
Mandatory Termination Date of October 12, 2001. Each Portfolio Series
has a Mandatory Termination Date of April 15, 2005.
(2) The cost of the Securities to a Trust represents the aggregate
underlying value with respect to the Securities acquired (generally
Page 14
determined by the closing sale prices of the listed Securities and the
ask prices of the over-the-counter traded Securities at the Evaluation
Time on the business day preceding the Initial Date of Deposit). The
valuation of the Securities has been determined by the Evaluator, an
affiliate of ours. The cost of the Securities to us and our loss (which
is the difference between the cost of the Securities to us and the cost
of the Securities to a Trust) are set forth below:
Cost of
Securities Profit
to Sponsor (Loss)
_________ ______
America's Leading Brands Select Portfolio Series $149,447 $ (97)
Life Sciences Select Portfolio Series 149,164 (291)
Regional Bank & Thrift Select Portfolio Series 148,771 (210)
America's Leading Brands Portfolio, Series 7 149,447 (97)
Life Sciences Portfolio Series 149,164 (291)
Regional Bank & Thrift Portfolio, Series 3 148,771 (210)
(3) This Security represents the common stock of a foreign company which
trades directly on a U.S. national securities exchange.
</FN>
</TABLE>
Page 15
The FT Series
The FT Series Defined.
We, Nike Securities L.P. (the "Sponsor"), have created hundreds of
similar yet separate series of a unit investment trust which we have
named the FT Series. The series to which this prospectus relates, FT
423, consists of six separate portfolios set forth below:
- - America's Leading Brands Select Portfolio Series
- - Life Sciences Select Portfolio Series
- - Regional Bank & Thrift Select Portfolio Series
- - America's Leading Brands Portfolio, Series 7
- - Life Sciences Portfolio Series
- - Regional Bank & Thrift Portfolio, Series 3
YOU MAY GET MORE SPECIFIC DETAILS CONCERNING THE NATURE, STRUCTURE AND
RISKS OF THIS PRODUCT IN AN "INFORMATION SUPPLEMENT" BY CALLING THE
TRUSTEE AT 1-800-682-7520.
Mandatory Termination Date.
Each Trust will terminate on the Mandatory Termination Date set forth in
the "Summary of Essential Information" for each Trust. Each Trust was
created under the laws of the State of New York by a Trust Agreement
(the "Indenture") dated the Initial Date of Deposit. This agreement,
entered into among Nike Securities L.P., as Sponsor, The Chase Manhattan
Bank as Trustee and First Trust Advisors L.P. as Portfolio Supervisor
and Evaluator, governs the operation of the Trusts.
How We Created the Trusts.
On the Initial Date of Deposit, we deposited portfolios of common stocks
with the Trustee and in turn, the Trustee delivered documents to us
representing our ownership of the Trusts in the form of units ("Units").
With our deposit of Securities on the Initial Date of Deposit we
established a percentage relationship among the Securities in each
Trust's portfolio, as stated under "Schedule of Investments" for each
Trust. After the Initial Date of Deposit, we may deposit additional
Securities in the Trusts, or cash (including a letter of credit) with
instructions to buy more Securities to create new Units for sale. If we
create additional Units, we will attempt, to the extent practicable, to
maintain the percentage relationship established among the Securities on
the Initial Date of Deposit, and not the percentage relationship
existing on the day we are creating new Units, since the two may differ.
This difference may be due to the sale, redemption or liquidation of any
of the Securities.
Since the prices of the Securities will fluctuate daily, the ratio of
Securities in the Trusts, on a market value basis, will also change
daily. The portion of Securities represented by each Unit will not
change as a result of the deposit of additional Securities or cash in a
Trust. If we deposit cash, you and new investors may experience a
dilution of your investment. This is because prices of Securities will
fluctuate between the time of the cash deposit and the purchase of the
Securities, and because the Trusts pay the associated brokerage fees. To
reduce this dilution, the Trusts will try to buy the Securities as close
to the Evaluation Time and as close to the evaluation price as possible.
An affiliate of the Trustee may receive these brokerage fees or the
Trustee may retain and pay us (or our affiliate) to act as agent for the
Trusts to buy Securities. If we or an affiliate of ours act as agent to
the Trusts, we will be subject to the restrictions under the Investment
Company Act of 1940, as amended.
We cannot guarantee that a Trust will keep its present size and
composition for any length of time. Securities may periodically be sold
under certain circumstances, and the proceeds from these sales will be
used to meet Trust obligations or distributed to Unit holders, but will
not be reinvested. However, Securities will not be sold to take
advantage of market fluctuations or changes in anticipated rates of
appreciation or depreciation, or if they no longer meet the criteria by
which they were selected. You will not be able to dispose of or vote any
of the Securities in the Trusts. As the holder of the Securities, the
Trustee will vote all of the Securities and will do so based on our
instructions.
Neither we nor the Trustee will be liable for a failure in any of the
Securities. However, if a contract for the purchase of any of the
Securities initially deposited in a Trust fails, unless we can purchase
substitute Securities ("Replacement Securities"), we will refund to you
that portion of the purchase price and sales charge resulting from the
failed contract on the next Income Distribution Date. Any Replacement
Security a Trust acquires will be identical to those from the failed
contract.
Page 16
Portfolios
Objectives.
The objective of each Trust is to provide investors with the potential
for above-average capital appreciation through an investment in a
diversified portfolio of common stocks of companies in the sector or
investment focus for which the Trust is named. A diversified portfolio
helps to offset the risks normally associated with such an investment,
although it does not eliminate them entirely. The companies selected for
the Trusts have been researched and evaluated using database screening
techniques, fundamental analysis, and the judgment of the Sponsor's
research analysts. Each Select Portfolio Series has an expected maturity
of approximately 18 months whereas each Portfolio Series has an expected
maturity of approximately five years.
America's Leading Brands Select Portfolio Series and America's Leading
Brands Portfolio, Series 7 each consist of a portfolio of common stocks
of companies in the consumer products industry. Almost every American is
familiar with brand name companies like Walt Disney, Gillette and
McDonald's. They are household names, whose products can be found in
almost every home across the country. This is also increasingly becoming
the case overseas as more markets open in developing countries.
Typically, leading brands companies have large advertising budgets and
strong research and development enabling them to further expand into new
markets. Today's consumer environment is becoming increasingly
competitive, placing a stronger emphasis on establishing a powerful
global brand. In any given year, thousands of new products in all
categories from toothpaste to bleach inundate the marketplace. By
marketing aggressively both domestically and internationally, these blue-
chip companies are able to establish a widely recognized brand name in
an effort to attain market dominance.
Considering that the United States and Canada together make up
approximately 5% of the world's population, it is evident that there are
abundant opportunities for consumer products overseas. Realizing this,
leading companies have been expanding into many untapped foreign markets
where the growth rates in per capita income and spending are forecasted
to outpace those of developed countries over the next decade. The
companies in the America's Leading Brands Portfolios have been chosen
for their financial strength and market dominance, competitive
advantages, skilled management and essential products and services.
Consider the following factors:
- - U.S. consumer goods companies are increasing their foreign advertising
spending. In fact, the top ten companies increased their ad spending
outside the United States a combined $663 million between 1997 and 1998
[Advertising Age].
- - Relaxed trade agreements and improved political climates are opening
more markets for producers of leading brand name products.
- - Generally, consumer goods companies perform well, even during
uncertain economic times, since their products and services typically
remain in demand.
- - Consumer goods companies continue to introduce new products in an
effort to better serve more markets. Nonfood new product introductions
increased from 5,070 products in 1995 to 6,940 products in 1998
[Standard & Poor's Industry Survey].
- - Some 80% of the world's population is in developing countries, which
represents a potential growth opportunity [Standard & Poor's Industry
Survey].
Life Sciences Select Portfolio Series and Life Sciences Portfolio Series
each consist of a portfolio of common stocks of companies in the
healthcare industry. Healthcare currently represents the single largest
sector within the U.S. economy. In 1999, expenditures for the entire
industry were approximately $1.2 trillion and the Health Care Financing
Administration predicts this total will top $2 trillion by 2008.
The healthcare industry has been responsible for several discoveries
that have led to new drugs and products designed to better serve the
ever-growing and aging population. These discoveries have improved the
quality of life, and also the life expectancy of millions. More recent
research relating to areas such as genomics, are providing avenues of
growth never before imagined. Debilitating diseases, previously
untreatable, are now often manageable or even curable.
Medical Products & Supplies. According to the American Hospital
Association (AHA), over half of all surgeries performed in U.S.
community hospitals are done on an outpatient basis. Technological
advances made to medical devices have helped fuel this trend. New
Page 17
devices have been developed that are less invasive, often eliminating
the need for extensive inpatient surgery. We believe that further
advances may also serve to keep costs down and create demand for medical
products, devices and supplies.
Pharmaceuticals. U.S. pharmaceutical companies sold an estimated $134
billion of prescription drugs in 1999, up from approximately $125
billion in 1998. Managed care providers, especially HMOs, encourage the
use of pharmaceuticals because they are regarded as a relatively
inexpensive form of treatment and are less invasive.
Biotechnology. We believe the essence of biotechnology lies in R&D.
Since the first biotech breakthrough in 1982, involving genetically
engineered human insulin, nearly 100 products have come to market.
Recent advances in computer science technology have the potential to
expedite the process of moving medicines through the pipeline.
Consider the following factors:
- - U.S. citizens who are 65 and older represent around 15% of the
nation's total population, but account for approximately one-third of
total healthcare costs [Standard & Poor's Industry Survey]. In light of
the aging baby boomer population, we believe demand for healthcare
products has the potential to remain strong in coming years.
- - U.S. medical equipment manufacturers generate approximately half of
their revenues outside of the United States. As a result, many companies
have begun to relocate production and R&D facilities overseas in order
to reduce costs and better serve foreign markets [Standard & Poor's
Industry Survey].
- - Mergers, acquisitions and partnerships are viewed as an effective
means of achieving growth in the healthcare industry in light of high
research and development costs.
- - A faster FDA approval process coupled with an increase in the length
of patent protection, from 17 to 20 years, are two positive changes
instituted to help pharmaceutical and biotechnology companies grow their
businesses.
Regional Bank & Thrift Select Portfolio Series and Regional Bank &
Thrift Portfolio, Series 3 each consist of a portfolio of common stocks
of regional banks and thrifts.
It wasn't that long ago that the United States was facing a potential
banking crisis that extended all the way from a major bailout of the
savings and loan industry to losses sustained in the junk bond market.
Today, the banking industry is showing greatly improved health. In fact,
there were only three domestic bank failures in 1998, compared to 221 in
1988. A strong economy, relatively low interest rates, and favorable
regulatory changes in interstate banking laws have all contributed to
the healthy banking environment we have today.
In order to compete in this market, banks are placing a greater emphasis
on increasing "top-line" revenues. The need to supplement interest
income with fee income from non-traditional products, like brokerage
services, could inspire some banks to partner with firms that have
securities underwriting capabilities. We believe that consolidation
activity, along with attractive valuations, and improving fundamentals
within the industry, have created a unique opportunity for investors
seeking above-average growth potential.
Industry Consolidation. Thousand of smaller banks try to compete on
equal grounds with the larger banks in terms of pricing and service. Yet
because the larger banks also reach into the smaller communities, small
banks are finding it tougher to compete. As a result of this intense
competition, merger and acquisition activity has increased. With the
recent overturn of the Glass-Steagall Act, companies throughout the
banking industry face fewer regulatory barriers to using consolidation
as a way to compete more effectively, expand market share, and implement
new growth strategies.
Consider the following factors:
- - U.S. commercial bank assets continue to grow. Although the number of
banks has decreased since 1989, assets have grown from $3.3 trillion at
that time, to $5.4 trillion by the end of 1998 [Standard & Poor's
Industry Survey].
- - The banking industry is generally healthy due to a strong economy,
relatively low interest rates, and favorable regulatory changes.
- - With the overturn of the Glass-Steagall Act, firms can now create
"financial supermarkets" that offer traditional banking, insurance
underwriting, securities underwriting, investment brokerage and merchant
banking.
- - Though the number of FDIC-insured banks declined by approximately 16%
from 1994 to 1998, the level of competition in the banking industry has
intensified. Money center and super-regional banks are setting the tone
by moving towards one-stop shopping [Standard & Poor's Industry Survey].
Page 18
You should be aware that predictions stated herein for the above
industries or sectors may not be realized. In addition, the Securities
contained in each Trust are not intended to be representative of the
selected industry or sector as a whole and the performance of each Trust
is expected to differ from that of its comparative industry or sector.
Of course, as with any similar investments, there can be no guarantee
that the objective of the Trusts will be achieved. See "Risk Factors"
for a discussion of the risks of investing in the Trusts.
Risk Factors
Price Volatility. The Trusts invest in common stocks of U.S. and, for
certain Trusts, foreign companies. The value of a Trust's Units will
fluctuate with changes in the value of these common stocks. Common stock
prices fluctuate for several reasons including changes in investors'
perceptions of the financial condition of an issuer or the general
condition of the relevant stock market, or when political or economic
events affecting the issuers occur. In addition, common stock prices may
be particularly sensitive to rising interest rates, as the cost of
capital rises and borrowing costs increase.
Because the Trusts are not managed, the Trustee will not sell stocks in
response to or in anticipation of market fluctuations, as is common in
managed investments. As with any investment, we cannot guarantee that
the performance of any Trust will be positive over any period of time,
especially the relatively short 18-month life of each Select Portfolio
Series, or that you won't lose money. Units of the Trusts are not
deposits of any bank and are not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
Certain of the Securities in certain of the Trusts may be issued by
companies with market capitalizations of less than $1 billion. The share
prices of these small-cap companies are often more volatile than those
of larger companies as a result of several factors common to many such
issuers, including limited trading volumes, products or financial
resources, management inexperience and less publicly available
information.
Dividends. There is no guarantee that the issuers of the Securities will
declare dividends in the future or that if declared they will either
remain at current levels or increase over time.
Consumer Products Industry. Because more than 25% of the America's
Leading Brands Portfolios are invested in consumer products companies,
these Trusts are considered to be concentrated in the consumer products
industry. A portfolio concentrated in a single industry may present more
risks than a portfolio broadly diversified over several industries.
General risks of these companies include cyclicality of revenues and
earnings, changing consumer tastes, extensive competition, product
liability litigation and increased governmental regulation. Generally,
spending on consumer products is affected by the economic health of
consumers. A weak economy and its effect on consumer spending would
adversely affect consumer products companies.
Financial Services Industry. The Regional Bank & Thrift Portfolios are
considered to be concentrated in banks and thrifts. Banks, thrifts and
their holding companies are especially subject to the adverse effects of
economic recession; volatile interest rates; portfolio concentrations in
geographic markets and in commercial and residential real estate loans;
and competition from new entrants in their fields of business. Although
recently-enacted legislation repealed most of the barriers which
separated the banking, insurance and securities industries, these
industries are still extensively regulated at both the federal and state
level and may be adversely affected by increased regulations.
Banks and thrifts face increased competition from nontraditional lending
sources as regulatory changes, such as the recently enacted financial-
services overhaul legislation, permit new entrants to offer various
financial products. Technological advances such as the Internet allow
these nontraditional lending sources to cut overhead and permit the more
efficient use of customer data.
Healthcare Industry. The Life Sciences Portfolios are considered to be
concentrated in healthcare companies involved in medical supplies,
drugs, biotech, managed care and services management. General risks of
such companies involve extensive competition, generic drug sales or the
loss of patent protection, product liability litigation and increased
government regulation. Research and development costs of bringing new
drugs to market are substantial, and there is no guarantee that the
product will ever come to market. Healthcare facility operators may be
affected by the demand for services, efforts by government or insurers
Page 19
to limit rates, restriction of government financial assistance and
competition from other providers.
Legislation/Litigation. From time to time, various legislative
initiatives are proposed in the United States and abroad which may have
a negative impact on certain of the companies represented in the Trusts.
In addition, litigation regarding any of the issuers of the Securities,
or of the industries represented by such issuers may negatively impact
the share prices of these Securities. We cannot predict what impact any
pending or proposed legislation or pending or threatened litigation will
have on the share prices of the Securities.
Foreign Stocks. Certain of the Securities in certain of the Trusts are
issued by foreign companies, which makes the Trusts subject to more
risks than if they invested solely in domestic common stocks. These
Securities are either directly listed on a U.S. securities exchange or
are in the form of American Depositary Receipts ("ADRs") which are
listed on a U.S. securities exchange. Risks of foreign common stocks
include higher brokerage costs; different accounting standards;
expropriation, nationalization or other adverse political or economic
developments; currency devaluations, blockages or transfer restrictions;
restrictions on foreign investments and exchange of securities;
inadequate financial information; and lack of liquidity of certain
foreign markets.
Public Offering
The Public Offering Price.
You may buy Units at the Public Offering Price, the per Unit price of
which is comprised of the following:
- - The aggregate underlying value of the Securities;
- - The amount of any cash in the Income and Capital Accounts;
- - Dividends receivable on Securities; and
- - The total sales charge (which combines an initial upfront sales charge
and a deferred sales charge).
The price you pay for your Units will differ from the amount stated
under "Summary of Essential Information" due to various factors,
including fluctuations in the prices of the Securities and changes in
the value of the Income and/or Capital Accounts.
Although you are not required to pay for your Units until three business
days following your order (the "date of settlement"), you may pay before
then. You will become the owner of Units ("Record Owner") on the date of
settlement if payment has been received. If you pay for your Units
before the date of settlement, we may use your payment during this time
and it may be considered a benefit to us, subject to the limitations of
the Securities Exchange Act of 1934.
Organization Costs. Securities purchased with the portion of the Public
Offering Price intended to be used to reimburse the Sponsor for a
Trust's organization costs (including costs of preparing the
registration statement, the Indenture and other closing documents,
registering Units with the Securities and Exchange Commission ("SEC")
and states, the initial audit of each Trust portfolio, legal fees and
the initial fees and expenses of the Trustee) will be purchased in the
same proportionate relationship as all the Securities contained in a
Trust. Securities will be sold to reimburse the Sponsor for a Trust's
organization costs at the earlier of six months after the Initial Date
of Deposit or the end of the initial offering period (a significantly
shorter time period than the life of the Trusts). During the period
ending with the earlier of six months after the Initial Date of Deposit
or the end of the initial offering period, there may be a decrease in
the value of the Securities. To the extent the proceeds from the sale of
these Securities are insufficient to repay the Sponsor for Trust
organization costs, the Trustee will sell additional Securities to allow
a Trust to fully reimburse the Sponsor. In that event, the net asset
value per Unit of a Trust will be reduced by the amount of additional
Securities sold. Although the dollar amount of the reimbursement due to
the Sponsor will remain fixed and will never exceed the per Unit amount
set forth for a Trust in "Notes to Statements of Net Assets," this will
result in a greater effective cost per Unit to Unit holders for the
reimbursement to the Sponsor. To the extent actual organization costs
are less than the estimated amount, only the actual organization costs
will be deducted from the assets of a Trust. When Securities are sold to
reimburse the Sponsor for organization costs, the Trustee will sell
Securities, to the extent practicable, which will maintain the same
proportionate relationship among the Securities contained in a Trust as
existed prior to such sale.
Page 20
Minimum Purchase.
The minimum amount you can purchase of a Trust is $1,000 worth of Units
($500 if you are purchasing Units for your Individual Retirement Account
or any other qualified retirement plan).
Sales Charges.
The sales charge you will pay has both an initial and a deferred
component. The initial sales charge, which you will pay at the time of
purchase, is initially equal to approximately 1.00% of the Public
Offering Price of a Unit, but will vary with the purchase price of your
Units. When the Public Offering Price exceeds $10.00 per Unit, the
initial sales charge will exceed 1.00% of the Public Offering Price.
This initial sales charge is actually the difference between the maximum
sales charge (3.25% of the Public Offering Price for each Select
Portfolio Series and 4.50% of the Public Offering Price for each
Portfolio Series) and the maximum remaining deferred sales charge
(initially equal to $.225 per Unit for each Select Portfolio Series and
$.350 per Unit for each Portfolio Series). The initial sales charge will
vary from 1.00% with changes in the aggregate underlying value of the
Securities, changes in the Income and Capital Accounts and as deferred
sales charge payments are made.
Monthly Deferred Sales Charge. In addition, five monthly deferred sales
charge payments of $.045 per Unit for each Select Portfolio Series or
$.07 per Unit for each Portfolio Series will be deducted from a Trust's
assets on approximately the 20th day of each month from November 20,
2000 through March 20, 2001. If you buy Units at a price of less than
$10.00 per Unit, the dollar amount of the deferred sales charge will not
change, but the deferred sales charge on a percentage basis will be more
than 2.25% of the Public Offering Price for each Select Portfolio Series
or more than 3.5% of the Public Offering Price for each Portfolio Series.
If you purchase Units after the last deferred sales charge payment has
been assessed, your sales charge will consist of a one-time initial
sales charge of 3.25% of the Public Offering Price per Unit (equivalent
to 3.359% of the net amount invested) for each Select Portfolio Series
and 4.50% of the Public Offering Price per Unit (equivalent to 4.712% of
the net amount invested) for each Portfolio Series. For each Portfolio
Series, the sales charge will be reduced by 1/2 of 1% on each subsequent
April 30, commencing April 30, 2001, to a minimum sales charge of 3.00%.
Discounts for Certain Persons.
If you invest at least $50,000 (except if you are purchasing for a "wrap
fee account" as described below), the maximum sales charge is reduced as
follows for each Select Portfolio Series:
Your maximum
If you invest sales charge
(in thousands):* will be:
_________________ ____________
$50 but less than $100 3.00%
$100 but less than $150 2.75%
$150 but less than $500 2.40%
$500 but less than $1,000 2.25%
$1,000 or more 1.50%
For each Portfolio Series:
Your maximum
If you invest sales charge
(in thousands):* will be:
_________________ ____________
$50 but less than $100 4.25%
$100 but less than $250 4.00%
$250 but less than $500 3.50%
$500 or more 2.50%
* 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.
The reduced sales charge for quantity purchases will apply only to
purchases made by the same person on any one day from any one dealer. To
help you reach the above levels, you can combine the Units you purchase
of the Trusts in this prospectus with any other same day purchases of
other trusts for which we are Principal Underwriter and are currently in
the initial offering period. In addition, we will also consider Units
you purchase in the name of your spouse or child under 21 years of age
to be purchases by you. The reduced sales charges will also apply to a
trustee or other fiduciary purchasing Units for a single trust estate or
single fiduciary account. You must inform your dealer of any combined
Page 21
purchases before the sale in order to be eligible for the reduced sales
charge. Any reduced sales charge is the responsibility of the party
making the sale.
If you own units of any other unit investment trusts sponsored by us you
may use your redemption or termination proceeds from these trusts to
purchase Units of the Trusts subject only to any remaining deferred
sales charge to be collected on Units of the Trusts. Please note that
you will be charged the amount of any remaining deferred sales charge on
units you redeem when you redeem them.
The following persons may purchase Units at the Public Offering Price
less the applicable dealer concession:
- - Employees, officers and directors of the Sponsor, our related
companies, dealers and their affiliates, and vendors providing services
to us.
- - Immediate family members of the above (spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-
in-law, sons-in-law, daughters-in-law, brothers-in-law and sisters-in-
law, and trustees, custodians or fiduciaries for the benefit of such
persons).
If you purchase Units through registered broker/dealers who charge
periodic fees in lieu of commissions or who charge for financial
planning, investment advisory or asset management services or provide
these services as part of an investment account where a comprehensive
"wrap fee" charge is imposed, your Units will only be assessed that
portion of the sales charge retained by the Sponsor, .5% of the Public
Offering Price for each Select Portfolio Series and 1.3% of the Public
Offering Price for each Portfolio Series (1.0% in certain
circumstances). This discount for "wrap fee" purchases is available
whether or not you purchase Units with the Wrap CUSIP. However, if you
purchase Units with the Wrap CUSIP, you should be aware that all
distributions of income and/or capital will be automatically reinvested
into additional Units of your Trust.
You will be charged the deferred sales charge per Unit regardless of any
discounts. However, if you are eligible to receive a discount such that
the maximum sales charge you must pay is less than the applicable
maximum deferred sales charge, you will be credited the difference
between your maximum sales charge and the maximum deferred sales charge
at the time you buy your Units. If you elect to have distributions
reinvested into additional Units of your Trust, in addition to the
reinvestment Units you receive you will also be credited additional
Units with a dollar value at the time of reinvestment sufficient to
cover the amount of any remaining deferred sales charge to be collected
on such reinvestment Units. The dollar value of these additional Units
(as with all Units) will fluctuate over time.
The Value of the Securities.
The Evaluator will appraise the aggregate underlying value of the
Securities in a Trust as of the Evaluation Time on each business day and
will adjust the Public Offering Price of the Units according to this
valuation. This Public Offering Price will be effective for all orders
received before the Evaluation Time on each such day. If we or the
Trustee receive orders for purchases, sales or redemptions after that
time, or on a day which is not a business day, they will be held until
the next determination of price. The term "business day" as used in this
prospectus will exclude Saturdays, Sundays and certain national holidays
on which the NYSE is closed.
The aggregate underlying value of the Securities in a Trust will be
determined as follows: if the Securities are listed on a securities
exchange or The Nasdaq Stock Market, their value is generally based on
the closing sale prices on that exchange or system (unless it is
determined that these prices are not appropriate as a basis for
valuation). However, if there is no closing sale price on that exchange
or system, they are valued based on the closing ask prices. If the
Securities are not so listed, or, if so listed and the principal market
for them is other than on that exchange or system, their value will
generally be based on the current ask prices on the over-the-counter
market (unless it is determined that these prices are not appropriate as
a basis for valuation). If current ask prices are unavailable, the
valuation 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 initial offering period is over, the aggregate underlying
value of the Securities will be determined as set forth above, except
that bid prices are used instead of ask prices when necessary.
Page 22
Distribution of Units
We intend to qualify Units of the Trusts for sale in a number of states.
All Units will be sold at the then current Public Offering Price.
Dealer Concessions.
For each Select Portfolio Series, dealers and other selling agents can
purchase Units at prices which reflect a concession or agency commission
of 2.75% of the Public Offering Price per Unit. However, for Units sold
subject only to any remaining deferred sales charge, the amount will be
reduced to $0.175 per Unit for Units sold subject to the maximum
deferred sales charge or 78% of the then current maximum remaining
deferred sales charge on Units sold subject to less than the maximum
deferred sales charge.
For each Portfolio Series, dealers and other selling agents can purchase
Units at prices which reflect a concession or agency commission of 3.2%
of the Public Offering Price per Unit (or 65% of the maximum sales
charge after April 30, 2001). However, dealers and other selling agents
will receive a concession on the sale of Units subject only to any
remaining deferred sales charge equal to $.22 per Unit on Units sold
subject to the maximum deferred sales charge or 63% of the then current
maximum remaining deferred sales charge on Units sold subject to less
than the maximum deferred sales charge. Dealers and other selling agents
will receive an additional volume concession or agency commission on all
Portfolio Series Units they sell equal to .30% of the Public Offering
Price if they purchase at least $100,000 worth of Units of the Trusts on
the Initial Date of Deposit or $250,000 on any day thereafter or if they
were eligible to receive a similar concession in connection with sales
of similarly structured trusts sponsored by us which are currently in
the initial offering period.
Dealers and other selling agents who sell Units of a Trust during the
initial offering period in the dollar amounts shown below will be
entitled to the following additional sales concessions as a percentage
of the Public Offering Price:
Total Sales per Trust Additional
(in millions): Concession:
_________________ ___________
$1 but less than $10 .20%
$10 or more .30%
Dealers and other selling agents can combine Units of a Select Portfolio
Series and its related Portfolio Series they sell for purposes of
reaching the additional concessions levels set forth in the above table.
For all Trusts, dealers and other selling agents who, during any
consecutive 12-month period, sell at least $2 billion worth of primary
market units of unit investment trusts sponsored by us will receive a
concession of $30,000 in the month following the achievement of this
level. We reserve the right to change the amount of concessions or
agency commissions from time to time. Certain commercial banks may be
making Units of the Trusts available to their customers on an agency
basis. A portion of the sales charge paid by these customers is kept by
or given to the banks in the amounts shown above.
Award Programs.
From time to time we may sponsor programs which provide awards to a
dealer's registered representatives who have sold a minimum number of
Units during a specified time period. We may also pay fees to qualifying
dealers for services or activities which are meant to result in sales of
Units of the Trusts. In addition, we will pay to dealers who sponsor
sales contests or recognition programs that conform to our criteria, or
participate in our sales programs, amounts equal to no more than the
total applicable sales charge on Units sold by such persons during such
programs. We make these payments out of our own assets and not out of
Trust assets. These programs will not change the price you pay for your
Units.
Investment Comparisons.
From time to time we may compare the estimated returns of the Trusts
(which may show performance net of the expenses and charges the Trusts
would have incurred) and returns over specified periods of other similar
trusts we sponsor in our advertising and sales materials, with (1)
returns on other taxable investments such as the common stocks
comprising various market indexes, corporate or U.S. Government bonds,
bank CDs and money market accounts or funds, (2) performance data from
Morningstar Publications, Inc. or (3) information from publications such
as Money, The New York Times, U.S. News and World Report, BusinessWeek,
Forbes or Fortune. The investment characteristics of each Trust differ
from other comparative investments. You should not assume that these
performance comparisons will be representative of a Trust's future
performance.
Page 23
The Sponsor's Profits
We will receive a gross sales commission equal to the maximum sales
charge per Unit of a Trust less any reduced sales charge as stated in
"Public Offering." Also, any difference between our cost to purchase the
Securities and the price at which we sell them to a Trust is considered
a profit or loss (see Note 2 of "Notes to Schedules of Investments").
During the initial offering period, dealers and others may also realize
profits or sustain losses as a result of fluctuations in the Public
Offering Price they receive when they sell the Units.
In maintaining a market for the Units, any difference between the price
at which we purchase Units and the price at which we sell or redeem them
will be a profit or loss to us.
The Secondary Market
Although not obligated, we intend to maintain a market for the Units
after the initial offering period and continuously offer to purchase
Units at prices based on the Redemption Price per Unit.
We will pay all expenses to maintain a secondary market, except the
Evaluator fees, Trustee costs to transfer and record the ownership of
Units and in the case of each Portfolio Series, costs incurred in
annually updating each Portfolio Series' registration statements. We may
discontinue purchases of Units at any time. IF YOU WISH TO DISPOSE OF
YOUR UNITS, YOU SHOULD ASK US FOR THE CURRENT MARKET PRICES BEFORE
MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE. If you sell or redeem
your Units before you have paid the total deferred sales charge on your
Units, you will have to pay the remainder at that time.
How We Purchase Units
The Trustee will notify us of any tender of Units for redemption. If our
bid at that time is equal to or greater than the Redemption Price per
Unit, we may purchase the Units. You will receive your proceeds from the
sale no later than if they were redeemed by the Trustee. We may tender
Units that we hold to the Trustee for redemption as any other Units. If
we elect not to purchase Units, the Trustee may sell tendered Units in
the over-the-counter market, if any. However, the amount you will
receive is the same as you would have received on redemption of the Units.
Expenses and Charges
The estimated annual expenses of each Trust are listed under "Fee
Table." If actual expenses of a Trust exceed the estimate, that Trust
will bear the excess. The Trustee will pay operating expenses of a Trust
from the Income Account of such Trust if funds are available, and then
from the Capital Account. The Income and Capital Accounts are
noninterest-bearing to Unit holders, so the Trustee may earn interest on
these funds, thus benefiting from their use.
As Sponsor, we will be compensated for providing bookkeeping and other
administrative services to the Trusts, and will receive brokerage fees
when a Trust uses us (or an affiliate of ours) as agent in buying or
selling Securities. For each Portfolio Series, legal, typesetting,
electronic filing and regulatory filing fees and expenses associated
with updating those Trusts' registration statements yearly are also now
chargeable to such Trusts. Historically, we paid these fees and
expenses. There are no such fees and expenses that will be charged to
each Select Portfolio Series. First Trust Advisors L.P., an affiliate of
ours, acts as both Portfolio Supervisor and Evaluator to the Trusts and
will receive the fees set forth under "Fee Table" for providing
portfolio supervisory and evaluation services to the Trusts. In
providing portfolio supervisory services, the Portfolio Supervisor may
purchase research services from a number of sources, which may include
underwriters or dealers of the Trusts.
The fees payable to us, First Trust Advisors L.P. and the Trustee are
based on the largest aggregate number of Units of a Trust outstanding at
any time during the calendar year, except during the initial offering
period, in which case these fees are calculated based on the largest
number of Units outstanding during the period for which compensation is
paid. These fees may be adjusted for inflation without Unit holders'
approval, but in no case will the annual fees paid to us or our
affiliates for providing a given service to all unit investment trusts
for which we provide such services be more than the actual cost of
providing such services in such year.
Page 24
As Sponsor, we will receive a fee from each Trust for creating and
developing the Trusts, including determining each Trust's objectives,
policies, composition and size, selecting service providers and
information services and for providing other similar administrative and
ministerial functions. Each Trust pays this "creation and development
fee" as a percentage of that Trust's average daily net asset value
during the life of such Trust. In connection with the creation and
development fee, in no event will the Sponsor collect over the life of a
Trust more than .75% for the Select Portfolio Series or more than 2.75%
for the Portfolio Series of a Unit holder's initial investment. We do
not use this fee to pay distribution expenses or as compensation for
sales efforts.
In addition to a Trust's operating expenses and those fees described
above, each Trust may also incur the following charges:
- - All legal and annual auditing expenses of the Trustee according to its
responsibilities under the Indenture;
- - The expenses and costs incurred by the Trustee to protect a Trust and
your rights and interests;
- - Fees for any extraordinary services the Trustee performed under the
Indenture;
- - Payment for any loss, liability or expense the Trustee incurred
without negligence, bad faith or willful misconduct on its part, in
connection with its acceptance or administration of a Trust;
- - Payment for any loss, liability or expenses we incurred without
negligence, bad faith or willful misconduct in acting as Depositor of a
Trust; and/or
- - All taxes and other government charges imposed upon the Securities or
any part of a Trust.
The above expenses and the Trustee's annual fee are secured by a lien on
the Trusts. Since the Securities are all common stocks and dividend
income is unpredictable, we cannot guarantee that dividends will be
sufficient to meet any or all expenses of the Trusts. If there is not
enough cash in the Income or Capital Account, the Trustee has the power
to sell Securities in a Trust to make cash available to pay these
charges which may result in capital gains or losses to you. See "Tax
Status."
Each Portfolio Series will be audited annually. So long as we are making
a secondary market for Units, we will bear the cost of these annual
audits to the extent the costs exceed $0.0050 per Unit. Otherwise, each
Portfolio Series will pay for the audit. You can request a copy of the
audited financial statements from the Trustee.
Tax Status
This section summarizes some of the main U.S. federal income tax
consequences of owning Units of the Trusts. This section is current as
of the date of this prospectus. Tax laws and interpretations change
frequently, and these summaries do not describe all of the tax
consequences to all taxpayers. For example, these summaries generally do
not describe your situation if you are a non-U.S. person, a
broker/dealer, or other investor with special circumstances. In
addition, this section does not describe your state or foreign taxes. As
with any investment, you should consult your own tax professional about
your particular consequences.
Trust Status.
The Trusts will not be taxed as corporations for federal income tax
purposes. As a Unit owner, you will be treated as the owner of a pro
rata portion of the Securities and other assets held by your Trust, and
as such you will be considered to have received a pro rata share of
income (i.e., dividends and capital gains, if any) from each Security
when such income is considered to be received by your Trust. This is
true even if you elect to have your distributions automatically
reinvested into additional Units. In addition, the income from a Trust
which you must take into account for federal income tax purposes is not
reduced by amounts used to pay Trust expenses (including the deferred
sales charge, if any).
Your Tax Basis and Income or Loss upon Disposition.
If your Trust disposes of Securities, you will generally recognize gain
or loss. If you dispose of your Units or redeem your Units for cash, you
will also generally recognize gain or loss. To determine the amount of
this gain or loss, you must subtract your tax basis in the related
Securities from your share of the total amount received in the
transaction. You can generally determine your initial tax basis in each
Security or other Trust asset by apportioning the cost of your Units
among each Security or other Trust asset ratably according to their
Page 25
value on the date you purchase your Units. In certain circumstances,
however, you may have to adjust your tax basis after you purchase your
Units (for example, in the case of certain dividends that exceed a
corporation's accumulated earnings and profits).
If you are an individual, the maximum marginal federal tax rate for net
capital gain is generally 20% (10% for certain taxpayers in the lowest
tax bracket). Net capital gain equals net long-term capital gain minus
net short-term capital loss for the taxable year. 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. You must exclude the date you purchase your Units to determine the
holding period of your Units. The tax rates for capital gains realized
from assets held for one year or less are generally the same as for
ordinary income. The tax code may, however, treat certain capital gains
as ordinary income in special situations.
In-Kind Distributions.
Under certain circumstances, you may request a distribution of
Securities (an "In-Kind Distribution") when you redeem your Units or at
a Trust's termination. If you request an In-Kind Distribution you will
be responsible for any expenses related to this distribution. By
electing to receive an In-Kind Distribution, you will receive whole
shares of stock plus, possibly, cash.
You will not recognize gain or loss if you only receive Securities in
exchange for your pro rata portion of the Securities held by a Trust.
However, if you also receive cash in exchange for a fractional share of
a Security held by a Trust, you will generally recognize gain or loss
based on the difference between the amount of cash you receive and your
tax basis in such fractional share of the Security.
Limitations on the Deductibility of Trust Expenses.
Generally, for federal income tax purposes, you must take into account
your full pro rata share of a Trust's income, even if some of that
income is used to pay Trust expenses. You may deduct your pro rata share
of each expense paid by a Trust to the same extent as if you directly
paid the expense. You may, however, be required to treat some or all of
the expenses of the Trusts as miscellaneous itemized deductions.
Individuals may only deduct certain miscellaneous itemized deductions to
the extent they exceed 2% of adjusted gross income.
Foreign, State and Local Taxes.
Some distributions by a Trust may be subject to foreign withholding
taxes. Any dividends withheld will nevertheless be treated as income to
you. However, because you are deemed to have paid directly your share of
foreign taxes that have been paid or accrued by a Trust, you may be
entitled to a foreign tax credit or deduction for U.S. tax purposes with
respect to such taxes.
Under the existing income tax laws of the State and City of New York,
the Trusts will not be taxed as corporations, and the income of the
Trusts will be treated as the income of the Unit holders in the same
manner as for federal income tax purposes.
Retirement Plans
You may purchase Units of the Trusts for:
- - Individual Retirement Accounts;
- - Keogh Plans;
- - Pension funds; and
- - Other tax-deferred retirement plans.
Generally, the federal income tax on capital gains and income received
in each of the above plans is deferred until you receive distributions.
These distributions are generally treated as ordinary income but may, in
some cases, be eligible for special averaging or tax-deferred rollover
treatment. Before participating in a plan like this, you should review
the tax laws regarding these plans and consult your attorney or tax
advisor. Brokerage firms and other financial institutions offer these
plans with varying fees and charges.
Rights of Unit Holders
Unit Ownership.
The Trustee will treat as Record Owner of Units persons registered as
such on its books. It is your responsibility to notify the Trustee when
you become Record Owner, but normally your broker/dealer provides this
notice. You may elect to hold your Units in either certificated or
uncertificated form.
Certificated Units. When you purchase your Units you can request that
they be evidenced by certificates, which will be delivered shortly after
your order. Certificates will be issued in fully registered form,
transferable only on the books of the Trustee in denominations of one
Page 26
Unit or any multiple thereof. You can transfer or redeem your
certificated Units by endorsing and surrendering the certificate to the
Trustee, along with a written instrument of transfer. You must sign your
name exactly as it appears on the face of the certificate with your
signature guaranteed by an eligible institution. In certain cases the
Trustee may require additional documentation before they will transfer
or redeem your Units.
You may be required to pay a nominal fee to the Trustee for each
certificate reissued or transferred, and to pay any government charge
that may be imposed for each transfer or exchange. If a certificate gets
lost, stolen or destroyed, you may be required to furnish indemnity to
the Trustee to receive replacement certificates. You must surrender
mutilated certificates to the Trustee for replacement.
Uncertificated Units. You may also choose to hold your Units in
uncertificated form. If you choose this option, the Trustee will
establish an account for you and credit your account with the number of
Units you purchase. Within two business days of the issuance or transfer
of Units held in uncertificated form, the Trustee will send you:
- - A written initial transaction statement containing a description of
the Trust;
- - A list of the number of Units issued or transferred;
- - Your name, address and Taxpayer Identification Number ("TIN");
- - A notation of any liens or restrictions of the issuer and any adverse
claims; and
- - The date the transfer was registered.
Uncertificated Units may be transferred the same way as certificated
Units, except that no certificate needs to be presented to the Trustee.
Also, no certificate will be issued when the transfer takes place unless
you request it. You may at any time request that the Trustee issue
certificates for your Units.
Unit Holder Reports.
In connection with each distribution, the Trustee will provide you with
a statement detailing the per Unit amount of income (if any)
distributed. After the end of each calendar year, the Trustee will
provide you with the following information:
- - A summary of transactions in your Trust for the year;
- - A list of any Securities sold during the year and the Securities held
at the end of that year by your Trust;
- - The Redemption Price per Unit, computed on the 31st day of December of
such year (or the last business day before); and
- - Amounts of income and capital distributed during the year.
You may request from the Trustee copies of the evaluations of the
Securities as prepared by the Evaluator to enable you to comply with
federal and state tax reporting requirements.
Income and Capital Distributions
You will begin receiving distributions on your Units only after you
become a Record Owner. The Trustee will credit dividends received on a
Trust's Securities to the Income Account of such Trust. All other
receipts, such as return of capital, are credited to the Capital Account
of such Trust.
The Trustee will distribute any net income in the Income Account on or
near the Income Distribution Dates to Unit holders of record on the
preceding Income Distribution Record Date. See "Summary of Essential
Information." No income distribution will be paid if accrued expenses of
a Trust exceed amounts in the Income Account on the Income Distribution
Dates. Distribution amounts will vary with changes in a Trust's fees and
expenses, in dividends received and with the sale of Securities. The
Trustee will distribute amounts in the Capital Account, net of amounts
designated to meet redemptions, pay the deferred sales charge or pay
expenses on the last day of each month to Unit holders of record on the
fifteenth day of each month provided the amount equals at least $1.00
per 100 Units. If the Trustee does not have your TIN, it is required to
withhold a certain percentage of your distribution and deliver such
amount to the Internal Revenue Service ("IRS"). You may recover this
amount by giving your TIN to the Trustee, or when you file a tax return.
However, you should check your statements to make sure the Trustee has
your TIN to avoid this "back-up withholding."
We anticipate that there will be enough money in the Capital Account of
a Trust to pay the deferred sales charge. If not, the Trustee may sell
Securities to meet the shortfall.
Within a reasonable time after a Trust is terminated, you will receive
the pro rata share of the money from the sale of the Securities.
Page 27
However, if you are eligible, you may elect to receive an In-Kind
Distribution as described under "Amending or Terminating the Indenture."
You will receive a pro rata share of any other assets remaining in your
Trust after deducting any unpaid expenses.
The Trustee may establish reserves (the "Reserve Account") within a
Trust to cover anticipated state and local taxes or any governmental
charges to be paid out of such Trust.
Distribution Reinvestment Option. You may elect to have each
distribution of income and/or capital reinvested into additional Units
of your Trust by notifying the Trustee at least 10 days before any
Record Date. Distributions on Units identified by the Wrap CUSIP will be
automatically reinvested into additional Units of your Trust. Each later
distribution of income and/or capital on your Units will be reinvested
by the Trustee into additional Units of your Trust. There is no sales
charge on Units acquired through the Distribution Reinvestment Option,
as discussed under "Public Offering." This option may not be available
in all states. PLEASE NOTE THAT EVEN IF YOU REINVEST DISTRIBUTIONS, THEY
ARE STILL CONSIDERED DISTRIBUTIONS FOR INCOME TAX PURPOSES.
Redeeming Your Units
You may redeem all or a portion of your Units at any time by sending the
certificates representing the Units you want to redeem to the Trustee at
its unit investment trust office. If your Units are uncertificated, you
need only deliver a request for redemption to the Trustee. In either
case, the certificates or the redemption request must be properly
endorsed with proper instruments of transfer and signature guarantees as
explained in "Rights of Unit Holders-Unit Ownership" (or by providing
satisfactory indemnity if the certificates were lost, stolen, or
destroyed). No redemption fee will be charged, but you are responsible
for any governmental charges that apply. Three business days after the
day you tender your Units (the "Date of Tender") you will receive cash
in an amount for each Unit equal to the Redemption Price per Unit
calculated at the Evaluation Time on the Date of Tender.
The Date of Tender is considered to be the date on which the Trustee
receives your certificates or redemption request (if such day is a day
the NYSE is open for trading). However, if your certificates or
redemption request are received after 4:00 p.m. Eastern time (or after
any earlier closing time on a day on which the NYSE is scheduled in
advance to close at such earlier time), the Date of Tender is the next
day the NYSE is open for trading.
Any amounts paid on redemption representing income will be withdrawn
from the Income Account if funds are available for that purpose, or from
the Capital Account. All other amounts paid on redemption will be taken
from the Capital Account. The IRS will require the Trustee to withhold a
portion of your redemption proceeds if it does not have your TIN, as
generally discussed under "Income and Capital Distributions."
If you tender 1,000 Units or more for redemption, rather than receiving
cash, you may elect to receive an In-Kind Distribution in an amount
equal to the Redemption Price per Unit by making this request in writing
to the Trustee at the time of tender. However, no In-Kind Distribution
requests submitted during the nine business days prior to a Trust's
Mandatory Termination Date will be honored. Where possible, the Trustee
will make an In-Kind Distribution by distributing each of the Securities
in book-entry form to your bank or broker/dealer account at the
Depository Trust Company. The Trustee will subtract any customary
transfer and registration charges from your In-Kind Distribution. As a
tendering Unit holder, you will receive your pro rata number of whole
shares of the Securities that make up the portfolio, and cash from the
Capital Account equal to the fractional shares to which you are entitled.
The Trustee may sell Securities to make funds available for redemption.
If Securities are sold, the size and diversification of a Trust will be
reduced. These sales may result in lower prices than if the Securities
were sold at a different time.
Your right to redeem Units (and therefore, your right to receive
payment) may be delayed:
- - If the NYSE is closed (other than customary weekend and holiday
closings);
- - If the SEC determines that trading on the NYSE is restricted or that
an emergency exists making sale or evaluation of the Securities not
reasonably practical; or
- - For any other period permitted by SEC order.
The Trustee is not liable to any person for any loss or damage which may
result from such a suspension or postponement.
Page 28
The Redemption Price.
The Redemption Price per Unit is determined by the Trustee by:
adding
1. cash in the Income and Capital Accounts of a Trust not designated to
purchase Securities;
2. the aggregate value of the Securities held in a Trust; and
3. dividends receivable on the Securities trading ex-dividend as of the
date of computation; and
deducting
1. any applicable taxes or governmental charges that need to be paid out
of a Trust;
2. any amounts owed to the Trustee for its advances;
3. estimated accrued expenses of a Trust, if any;
4. cash held for distribution to Unit holders of record of a Trust as of
the business day before the evaluation being made;
5. liquidation costs for foreign Securities, if any; and
6. other liabilities incurred by a Trust; and
dividing
1. the result by the number of outstanding Units of a Trust.
Any remaining deferred sales charge on the Units when you redeem them
will be deducted from your redemption proceeds. In addition, until the
earlier of six months after the Initial Date of Deposit or the end of
the initial offering period, the Redemption Price per Unit will include
estimated organization costs as set forth under "Fee Table."
Removing Securities from a Trust
The portfolios of the Trusts are not managed. However, we may, but are
not required to, direct the Trustee to dispose of a Security in certain
limited circumstances, including situations in which:
- - The issuer of the Security defaults in the payment of a declared
dividend;
- - Any action or proceeding prevents the payment of dividends;
- - There is any legal question or impediment affecting the Security;
- - The issuer of the Security has breached a covenant which would affect
the payment of dividends, the issuer's credit standing, or otherwise
damage the sound investment character of the Security;
- - The issuer has defaulted on the payment of any other of its
outstanding obligations;
- - There has been a public tender offer made for a Security or a merger
or acquisition is announced affecting a Security, and that in our
opinion the sale or tender of the Security is in the best interest of
Unit holders; or
- - The price of the Security has declined to such an extent, or such
other credit factors exist, that in our opinion keeping the Security
would be harmful to a Trust.
Except in the limited instance in which a Trust acquires Replacement
Securities, as described in "The FT Series," a Trust may not acquire any
securities or other property other than the Securities. The Trustee, on
behalf of the Trusts, will reject any offer for new or exchanged
securities or property in exchange for a Security, such as those
acquired in a merger or other transaction. If such exchanged securities
or property are nevertheless acquired by a Trust, at our instruction,
they will either be sold or held in such Trust. In making the
determination as to whether to sell or hold the exchanged securities or
property we may get advice from each Portfolio Supervisor. Any proceeds
received from the sale of Securities, exchanged securities or property
will be credited to the Capital Account for distribution to Unit holders
or to meet redemption requests. The Trustee may retain and pay us or an
affiliate of ours to act as agent for a Trust to facilitate selling
Securities, exchanged securities or property from the Trusts. If we or
our affiliate act in this capacity, we will be held subject to the
restrictions under the Investment Company Act of 1940, as amended.
The Trustee may sell Securities designated by us or, absent our
direction, at its own discretion, in order to meet redemption requests
or pay expenses. In designating Securities to be sold, we will try to
maintain the proportionate relationship among the Securities. If this is
not possible, the composition and diversification of a Trust may be
changed. To get the best price for a Trust we may specify minimum
amounts (generally 100 shares) in which blocks of Securities are to be
sold. We may consider sales of units of unit investment trusts which we
sponsor when we make recommendations to the Trustee as to which
broker/dealers they select to execute a Trust's portfolio transactions,
or when acting as agent for a Trust in acquiring or selling Securities
on behalf of the Trusts.
Page 29
Amending or Terminating the Indenture
Amendments. The Indenture may be amended by us and the Trustee without
your consent:
- - To cure ambiguities;
- - To correct or supplement any defective or inconsistent provision;
- - To make any amendment required by any governmental agency; or
- - To make other changes determined not to be materially adverse to your
best interests (as determined by us and the Trustee).
Termination. As provided by the Indenture, the Trusts will terminate on
the Mandatory Termination Date as stated in the "Summary of Essential
Information" for each Trust. The Trusts may be terminated earlier:
- - Upon the consent of 100% of the Unit holders of a Trust;
- - If the value of the Securities owned by a Trust as shown by any
evaluation is less than the lower of $2,000,000 or 20% of the total
value of Securities deposited in such Trust during the initial offering
period ("Discretionary Liquidation Amount"); or
- - In the event that Units of a Trust not yet sold aggregating more than
60% of the Units of such Trust are tendered for redemption by
underwriters, including the Sponsor.
Prior to termination, the Trustee will send written notice to all Unit
holders which will specify how you should tender your certificates, if
any, to the Trustee. If a Trust is terminated due to this last reason,
we will refund your entire sales charge; however, termination of a Trust
before the Mandatory Termination Date for any other stated reason will
result in all remaining unpaid deferred sales charges on your Units
being deducted from your termination proceeds. For various reasons, a
Trust may be reduced below the Discretionary Liquidation Amount and
could therefore be terminated before the Mandatory Termination Date.
Unless terminated earlier, the Trustee will begin to sell Securities in
connection with the termination of a Trust during the period beginning
nine business days prior to, and no later than, the Mandatory
Termination Date. We will determine the manner and timing of the sale of
Securities. Because the Trustee must sell the Securities within a
relatively short period of time, the sale of Securities as part of the
termination process may result in a lower sales price than might
otherwise be realized if such sale were not required at this time.
If you own at least 1,000 Units of a Trust the Trustee will send you a
form at least 30 days prior to the Mandatory Termination Date which will
enable you to receive an In-Kind Distribution (reduced by customary
transfer and registration charges) rather than the typical cash
distribution. See "Tax Status" for additional information. You must
notify the Trustee at least ten business days prior to the Mandatory
Termination Date if you elect this In-Kind Distribution option. If you
do not elect to participate in the In-Kind Distribution option, you will
receive a cash distribution from the sale of the remaining Securities,
along with your interest in the Income and Capital Accounts, within a
reasonable time after such Trust is terminated. Regardless of the
distribution involved, the Trustee will deduct from the Trusts any
accrued costs, expenses, advances or indemnities provided for by the
Indenture, including estimated compensation of the Trustee and costs of
liquidation and any amounts required as a reserve to pay any taxes or
other governmental charges.
Information on the Sponsor, Trustee and Evaluator
The Sponsor.
We, Nike Securities L.P., specialize in the underwriting, trading and
wholesale distribution of unit investment trusts under the "First Trust"
brand name and other securities. An Illinois limited partnership formed
in 1991, we act as Sponsor for successive series of:
- - The First Trust Combined Series
- - FT Series (formerly known as The First Trust Special Situations Trust)
- - The First Trust Insured Corporate Trust
- - The First Trust of Insured Municipal Bonds
- - The First Trust GNMA
First Trust introduced the first insured unit investment trust in 1974.
To date we have deposited more than $27 billion in First Trust unit
investment trusts. Our employees include a team of professionals with
many years of experience in the unit investment trust industry.
We are a member of the National Association of Securities Dealers, Inc.
Page 30
and Securities Investor Protection Corporation. Our principal offices
are at 1001 Warrenville Road, Lisle, Illinois 60532; telephone number
(630) 241-4141. As of December 31, 1999, the total partners' capital of
Nike Securities L.P. was $19,881,035 (audited).
This information refers only to us and not to the Trusts or to any
series of the Trusts or to any other dealer. We are including this
information only to inform you of our financial responsibility and our
ability to carry out our contractual obligations. We will provide more
detailed financial information on request.
Code of Ethics. The Sponsor and the Trusts have adopted a code of ethics
requiring the Sponsor's employees who have access to information on
Trust transactions to report personal securities transactions. The
purpose of the code is to avoid potential conflicts of interest and to
prevent fraud, deception or misconduct with respect to the Trusts.
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. If you have questions regarding the Trusts, you may
call the Customer Service Help Line at 1-800-682-7520. The Trustee is
supervised by the Superintendent of Banks of the State of New York, the
Federal Deposit Insurance Corporation and the Board of Governors of the
Federal Reserve System.
The Trustee has not participated in selecting the Securities for the
Trusts; it only provides administrative services.
Limitations of Liabilities of Sponsor and Trustee.
Neither we nor the Trustee will be liable for taking any action or for
not taking any action in good faith according to the Indenture. We will
also not be accountable for errors in judgment. We will only be liable
for our own willful misfeasance, bad faith, gross negligence (ordinary
negligence in the Trustee's case) or reckless disregard of our
obligations and duties. The Trustee is not liable for any loss or
depreciation when the Securities are sold. If we fail to act under the
Indenture, the Trustee may do so, and the Trustee will not be liable for
any action it takes in good faith under the Indenture.
The Trustee will not be liable for any taxes or other governmental
charges or interest on the Securities which the Trustee may be required
to pay under any present or future law of the United States or of any
other taxing authority with jurisdiction. Also, the Indenture states
other provisions regarding the liability of the Trustee.
If we do not perform any of our duties under the Indenture or are not
able to act or become bankrupt, or if our affairs are taken over by
public authorities, then the Trustee may:
- - Appoint a successor sponsor, paying them a reasonable rate not more
than that stated by the SEC;
- - Terminate the Indenture and liquidate the Trusts; or
- - Continue to act as Trustee without terminating the Indenture.
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 Trustee, Sponsor and Unit holders may rely on the accuracy of any
evaluation prepared by the Evaluator. The Evaluator will make
determinations in good faith based upon the best available information,
but will not be liable to the Trustee, Sponsor or Unit holders for
errors in judgment.
Other Information
Legal Opinions.
Our counsel is Chapman and Cutler, 111 W. Monroe St., Chicago, Illinois,
60603. They have passed upon the legality of the Units offered hereby
and certain matters relating to federal tax law. Carter, Ledyard &
Milburn acts as the Trustee's counsel, as well as special New York tax
counsel for the Trusts.
Experts.
Ernst & Young LLP, independent auditors, have audited the Trusts'
statements of net assets, including the schedules of investments, at the
opening of business on the Initial Date of Deposit, as set forth in
their report. We've included the Trusts' statements of net assets,
Page 31
including the schedules of investments, in the prospectus and elsewhere
in the registration statement in reliance on Ernst & Young LLP's report,
given on their authority as experts in accounting and auditing.
Supplemental Information.
If you write or call the Trustee, you will receive free of charge
supplemental information about this Series, which has been filed with
the SEC and to which we have referred throughout. This information
states more specific details concerning the nature, structure and risks
of this product.
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Page 35
FIRST TRUST (registered trademark)
AMERICA'S LEADING BRANDS SELECT PORTFOLIO SERIES
LIFE SCIENCES SELECT PORTFOLIO SERIES
REGIONAL BANK & THRIFT SELECT PORTFOLIO SERIES
AMERICA'S LEADING BRANDS PORTFOLIO, SERIES 7
LIFE SCIENCES PORTFOLIO SERIES
REGIONAL BANK & THRIFT PORTFOLIO, SERIES 3
FT 423
Sponsor:
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
24-Hour Pricing Line:
1-800-446-0132
This prospectus contains information relating to the above-mentioned
unit investment trusts, but does not contain all of the information
about this investment company as filed with the Securities and Exchange
Commission in Washington, D.C. under the:
- - Securities Act of 1933 (file no. 333-33520) and
- - Investment Company Act of 1940 (file no. 811-05903)
Information about the Trusts, including their Codes of Ethics, can be
reviewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington D.C. Information regarding the operation of
the Commission's Public Reference Room may be obtained by calling the
Commission at 1-202-942-8090.
Information about the Trusts is available on the EDGAR Database on the
Commission's Internet site at
http://www.sec.gov.
To obtain copies at prescribed rates -
Write: Public Reference Section of the Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0102
e-mail address: [email protected]
April 12, 2000
PLEASE RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE
Page 36
First Trust (registered trademark)
The FT Series
Information Supplement
This Information Supplement provides additional information concerning
the structure, operations and risks of unit investment trusts ("Trusts")
contained in FT 423 not found in the prospectus for the Trusts. This
Information Supplement is not a prospectus and does not include all of
the information that a prospective investor should consider before
investing in a Trust. This Information Supplement should be read in
conjunction with the prospectus for the Trust in which an investor is
considering investing.
This Information Supplement is dated April 12, 2000. Capitalized terms
have been defined in the prospectus.
Table of Contents
Risk Factors
Securities 1
Dividends 1
Foreign Issuers 1
Concentrations
Consumer Products 2
Financial Services 2
Healthcare 4
Portfolios
America's Leading Brands 4
Life Sciences 6
Regional Bank & Thrift 8
Risk Factors
Securities. 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 relevant 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. Both U.S. and foreign
markets have experienced substantial volatility and significant declines
recently as a result of certain or all of these factors.
Dividends. Shareholders of common stocks have rights to receive payments
from the issuers of those common stocks that are generally subordinate
to those of creditors of, or holders of debt obligations or preferred
stocks of, such issuers. 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.
Foreign Issuers. Since certain of the Securities included in certain
Trusts consist of securities of foreign issuers, an investment in the
Trusts involves certain investment risks that are different in some
respects from an investment in a trust which invests entirely in the
securities of domestic issuers. These investment risks include future
political or governmental restrictions which might adversely affect the
payment or receipt of payment of dividends on the relevant Securities,
the possibility that the financial condition of the issuers of the
Securities may become impaired or that the general condition of the
relevant stock market may worsen (both of which would contribute
directly to a decrease in the value of the Securities and thus in the
value of the Units), the limited liquidity and relatively small market
capitalization of the relevant securities market, expropriation or
confiscatory taxation, economic uncertainties and foreign currency
devaluations and fluctuations. In addition, for foreign issuers that are
not subject to the reporting requirements of the Securities Exchange Act
Page 1
of 1934, there may be less publicly available information than is
available from a domestic issuer. Also, foreign issuers are not
necessarily subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those
applicable to domestic issuers. The securities of many foreign issuers
are less liquid and their prices more volatile than securities of
comparable domestic issuers. In addition, fixed brokerage commissions
and other transaction costs on foreign securities exchanges are
generally higher than in the United States and there is generally less
government supervision and regulation of exchanges, brokers and issuers
in foreign countries than there is in the United States. However, due to
the nature of the issuers of the Securities selected for the Trusts, the
Sponsor believes that adequate information will be available to allow
the Supervisor to provide portfolio surveillance for the Trusts.
Securities issued by non-U.S. issuers generally pay dividends in foreign
currencies and are principally traded in foreign currencies. Therefore,
there is a risk that the U.S. dollar value of these securities will vary
with fluctuations in the U.S. dollar foreign exchange rates for the
various Securities.
On the basis of the best information available to the Sponsor at the
present time, none of the Securities in the Trusts are subject to
exchange control restrictions under existing law which would materially
interfere with payment to the Trusts of dividends due on, or proceeds
from the sale of, the Securities. However, there can be no assurance
that exchange control regulations might not be adopted in the future
which might adversely affect payment to the Trusts. The adoption of
exchange control regulations and other legal restrictions could have an
adverse impact on the marketability of international securities in the
Trusts and on the ability of the Trusts to satisfy its obligation to
redeem Units tendered to the Trustee for redemption. In addition,
restrictions on the settlement of transactions on either the purchase or
sale side, or both, could cause delays or increase the costs associated
with the purchase and sale of the foreign Securities and correspondingly
could affect the price of the Units.
Investors should be aware that it may not be possible to buy all
Securities at the same time because of the unavailability of any
Security, and restrictions applicable to the Trusts relating to the
purchase of a Security by reason of the federal securities laws or
otherwise.
Foreign securities generally have not been registered under the
Securities Act of 1933 and may not be exempt from the registration
requirements of such Act. Sales of non-exempt Securities by a Trust in
the United States securities markets are subject to severe restrictions
and may not be practicable. Accordingly, sales of these Securities by
the Trusts will generally be effected only in foreign securities
markets. Although the Sponsor does not believe that the Trusts will
encounter obstacles in disposing of the Securities, investors should
realize that the Securities may be traded in foreign countries where the
securities markets are not as developed or efficient and may not be as
liquid as those in the United States. The value of the Securities will
be adversely affected if trading markets for the Securities are limited
or absent.
Concentrations
Consumer Products. An investment in the America's Leading Brands
Portfolios should be made with an understanding of the problems and
risks inherent in an investment in the consumer products industry in
general. These include the cyclicality of revenues and earnings,
changing consumer demands, regulatory restrictions, product liability
litigation and other litigation resulting from accidents, extensive
competition (including that of low-cost foreign competition), unfunded
pension fund liabilities and employee and retiree benefit costs and
financial deterioration resulting from leveraged buy-outs, takeovers or
acquisitions. In general, expenditures on consumer products will be
affected by the economic health of consumers. A weak economy with its
consequent effect on consumer spending would have an adverse effect on
consumer products companies. Other factors of particular relevance to
the profitability of the industry are the effects of increasing
environmental regulation on packaging and on waste disposal, the
continuing need to conform with foreign regulations governing packaging
and the environment, the outcome of trade negotiations and the effect on
foreign subsidies and tariffs, foreign exchange rates, the price of oil
and its effect on energy costs, inventory cutbacks by retailers,
transportation and distribution costs, health concerns relating to the
consumption of certain products, the effect of demographics on consumer
demand, the availability and cost of raw materials and the ongoing need
to develop new products and to improve productivity.
Financial Services. An investment in Units of the Regional Bank & Thrift
Portfolios should be made with an understanding of the problems and
risks inherent in the bank and financial services sector in general.
Banks, thrifts and their holding companies are especially subject to the
adverse effects of economic recession, volatile interest rates,
portfolio concentrations in geographic markets and in commercial and
residential real estate loans, and competition from new entrants in
their fields of business. Banks and thrifts are highly dependent on net
interest margin. Recently, bank profits have come under pressure as net
interest margins have contracted, but volume gains have been strong in
both commercial and consumer products. There is no certainty that such
conditions will continue. Bank and thrift institutions had received
significant consumer mortgage fee income as a result of activity in
mortgage and refinance markets. As initial home purchasing and
refinancing activity subsided, this income diminished. Economic
conditions in the real estate markets, which have been weak in the past,
Page 2
can have a substantial effect upon banks and thrifts because they
generally have a portion of their assets invested in loans secured by
real estate. Banks, thrifts and their holding companies are subject to
extensive federal regulation and, when such institutions are state-
chartered, to state regulation as well. Such regulations impose strict
capital requirements and limitations on the nature and extent of
business activities that banks and thrifts may pursue. Furthermore, bank
regulators have a wide range of discretion in connection with their
supervisory and enforcement authority and may substantially restrict the
permissible activities of a particular institution if deemed to pose
significant risks to the soundness of such institution or the safety of
the federal deposit insurance fund. Regulatory actions, such as
increases in the minimum capital requirements applicable to banks and
thrifts and increases in deposit insurance premiums required to be paid
by banks and thrifts to the Federal Deposit Insurance Corporation
("FDIC"), can negatively impact earnings and the ability of a company to
pay dividends. Neither federal insurance of deposits nor governmental
regulations, however, insures the solvency or profitability of banks or
their holding companies, or insures against any risk of investment in
the securities issued by such institutions.
The statutory requirements applicable to and regulatory supervision of
banks, thrifts and their holding companies have increased significantly
and have undergone substantial change in recent years. To a great
extent, these changes are embodied in the Financial Institutions Reform,
Recovery and Enforcement Act; enacted in August 1989, the Federal
Deposit Insurance Corporation Improvement Act of 1991, the Resolution
Trust Corporation Refinancing, Restructuring, and Improvement Act of
1991 and the regulations promulgated under these laws. Many of the
regulations promulgated pursuant to these laws have only recently been
finalized and their impact on the business, financial condition and
prospects of the Securities in the Trust's portfolio cannot be predicted
with certainty. The recently enacted Gramm-Leach-Bliley Act repealed
most of the barriers set up by the 1933 Glass-Steagall Act which
separated the banking, insurance and securities industries. Now banks,
insurance companies and securities firms can merge to form one-stop
financial conglomerates marketing a wide range of financial service
products to investors. This legislation will likely result in increased
merger activity and heightened competition among existing and new
participants in the field. Efforts to expand the ability of federal
thrifts to branch on an interstate basis have been initially successful
through promulgation of regulations, and legislation to liberalize
interstate banking has recently been signed into law. Under the
legislation, banks will be able to purchase or establish subsidiary
banks in any state, one year after the legislation's enactment. Since
mid-1997, banks have been allowed to turn existing banks into branches.
Consolidation is likely to continue. The Securities and Exchange
Commission and the Financial Accounting Standards Board require the
expanded use of market value accounting by banks and have imposed rules
requiring market accounting for investment securities held in trading
accounts or available for sale. Adoption of additional such rules may
result in increased volatility in the reported health of the industry,
and mandated regulatory intervention to correct such problems.
Additional legislative and regulatory changes may be forthcoming. For
example, the bank regulatory authorities have proposed substantial
changes to the Community Reinvestment Act and fair lending laws, rules
and regulations, and there can be no certainty as to the effect, if any,
that such changes would have on the Securities in the Trust's portfolio.
In addition, from time to time the deposit insurance system is reviewed
by Congress and federal regulators, and proposed reforms of that system
could, among other things, further restrict the ways in which deposited
moneys can be used by banks or reduce the dollar amount or number of
deposits insured for any depositor. Such reforms could reduce
profitability as investment opportunities available to bank institutions
become more limited and as consumers look for savings vehicles other
than bank deposits. Banks and thrifts face significant competition from
other financial institutions such as mutual funds, credit unions,
mortgage banking companies and insurance companies, and increased
competition may result from legislative broadening of regional and
national interstate banking powers as has been recently enacted. Among
other benefits, the legislation allows banks and bank holding companies
to acquire across previously prohibited state lines and to consolidate
their various bank subsidiaries into one unit. The Sponsor makes no
prediction as to what, if any, manner of bank and thrift regulatory
actions might ultimately be adopted or what ultimate effect such actions
might have on the Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5%
of the outstanding shares of any class of voting securities of a bank or
bank holding company, (2) acquiring control of a bank or another bank
holding company, (3) acquiring all or substantially all the assets of a
bank, or (4) merging or consolidating with another bank holding company,
without first obtaining Federal Reserve Board ("FRB") approval. In
considering an application with respect to any such transaction, the FRB
is required to consider a variety of factors, including the potential
anti-competitive effects of the transaction, the financial condition and
future prospects of the combining and resulting institutions, the
managerial resources of the resulting institution, the convenience and
needs of the communities the combined organization would serve, the
record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the
prospective availability to the FRB of information appropriate to
determine ongoing regulatory compliance with applicable banking laws. In
addition, the federal Change In Bank Control Act and various state laws
impose limitations on the ability of one or more individuals or other
entities to acquire control of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends
by bank holding companies. In the policy statement, the FRB expressed
its view that a bank holding company experiencing earnings weaknesses
Page 3
should not pay cash dividends which exceed its net income or which could
only be funded in ways that would weaken its financial health, such as
by borrowing. The FRB also may impose limitations on the payment of
dividends as a condition to its approval of certain applications,
including applications for approval of mergers and acquisitions. The
Sponsor makes no prediction as to the effect, if any, such laws will
have on the Securities or whether such approvals, if necessary, will be
obtained.
Healthcare. An investment in Units of the Life Sciences Portfolios
should be made with an understanding of the characteristics of the
problems and risks such an investment may entail. Healthcare companies
involved in advanced medical devices and instruments, drugs and biotech,
healthcare/managed care, hospital management/health services and medical
supplies have potential risks unique to their sector of the healthcare
field. These companies are subject to governmental regulation of their
products and services, a factor which could have a significant and
possibly unfavorable effect on the price and availability of such
products or services. Furthermore, such companies face the risk of
increasing competition from new products or services, generic drug
sales, the termination of patent protection for drug or medical supply
products and the risk that technological advances will render their
products obsolete. The research and development costs of bringing a drug
to market are substantial, and include lengthy governmental review
processes with no guarantee that the product will ever come to market.
Many of these companies may have losses and may not offer certain
products for several years. Such companies may also have persistent
losses during a new product's transition from development to production,
and revenue patterns may be erratic. In addition, healthcare facility
operators may be affected by events and conditions including among other
things, demand for services, the ability of the facility to provide the
services required, physicians' confidence in the facility, management
capabilities, competition with other hospitals, efforts by insurers and
governmental agencies to limit rates, legislation establishing state
rate-setting agencies, expenses, government regulation, the cost and
possible unavailability of malpractice insurance and the termination or
restriction of governmental financial assistance, including that
associated with Medicare, Medicaid and other similar third party payor
programs.
As the population of the United States ages, the companies involved in
the healthcare field will continue to search for and develop new drugs,
medical products and medical services through advanced technologies and
diagnostics. On a worldwide basis, such companies are involved in the
development and distributions of drugs, vaccines, medical products and
medical services. These activities may make the healthcare and medical
services sector very attractive for investors seeking the potential for
growth in their investment portfolio. However, there are no assurances
that the Trust's objectives will be met.
Legislative proposals concerning healthcare are proposed in Congress
from time to time. These proposals span a wide range of topics,
including cost and price controls (which might include a freeze on the
prices of prescription drugs), national health insurance, incentives for
competition in the provision of healthcare services, tax incentives and
penalties related to healthcare insurance premiums and promotion of pre-
paid healthcare plans. The Sponsor is unable to predict the effect of
any of these proposals, if enacted, on the issuers of Securities in the
Trust.
Portfolios
Equity Securities Selected for America's Leading Brands Select Portfolio
Series and America's Leading Brands Portfolio, Series 7
Both the America's Leading Brands Select Portfolio Series and the
America's Leading Brands Portfolio, Series 7 contain common stocks of
the following companies:
Apparel/Retail
_____________
The Gap, Inc., headquartered in San Francisco, California, operates
specialty retail stores in the United States, Canada, France, Germany,
Japan and the United Kingdom. The company's stores sell casual apparel,
shoes and other accessories for men, women and children under a variety
of brand names, including "Gap," "GapKids," "babyGap," "Banana Republic"
and "Old Navy."
Jones Apparel Group, Inc., headquartered in Bristol, Pennsylvania,
designs, contracts for the manufacture of, and markets a broad range of
primarily better-priced women's suits, dresses and sportswear. The
company also sells clothing through "Jones" factory outlet stores and
full-price retail stores.
Beverages
_________
Anheuser-Busch Companies, Inc., headquartered in St. Louis, Missouri,
produces and distributes beer under brand names such as "Budweiser,"
"Busch" and "Michelob." The company also manufactures metal beverage
containers, recycles metal and glass beverage containers, and operates
rice milling and barley seed processing plants. The company also owns
and operates theme parks.
PepsiCo, Inc., headquartered in Purchase, New York, markets and
distributes beverages including "Pepsi-Cola," "Diet Pepsi," "Pepsi Max,"
"Mountain Dew," "7UP," "Diet 7UP," "Mirinda," "Slice" and "Tropicana
Pure Premium." The company, which operates internationally, also makes
and distributes ready-to-drink Lipton tea products and snacks, with
"Frito-Lay" representing the North American business.
Page 4
Entertainment
_____________
The Walt Disney Company, headquartered in Burbank, California, operates
as a diversified international entertainment company with operations
consisting of filmed entertainment, theme parks and resorts and consumer
products. Disney also has broadcasting (including Capital Cities/ABC,
Inc.) and publishing operations.
Food
____
Bestfoods, headquartered in Englewood Cliffs, New Jersey, with
subsidiaries, produces a variety of food products, including mayonnaise,
corn oil, margarine, peanut butter, sweet baked goods, breads, pasta,
soups, bouillons and sauces. Bestfoods (formerly CPC International) is
one of the nation's most international food companies, with operations
in more than 60 countries.
H.J. Heinz Company, headquartered in Pittsburgh, Pennsylvania,
manufactures, packages and sells processed food products throughout the
world. The company's products include ketchup, sauces/condiments, pet
food, seafood products, baby food, soups, lower-calorie products, bakery
products, frozen dinners and entrees, and frozen pizza. The company also
provides weight control services.
Hershey Foods Corporation, headquartered in Hershey, Pennsylvania,
manufactures, distributes and sells consumer food products. The company
produces and distributes a line of chocolate and non-chocolate,
confectionery and grocery products in the United States and
internationally.
Keebler Foods Company, headquartered in Elmhurst, Illinois, is the
second largest cookie and cracker manufacturer in the United States. The
company also makes and sells ice cream cones, pie crusts and custom-
baked products for other companies. Keebler markets a majority of its
products under well-recognized brands such as "Keebler," "Cheez-It" and
"Carr's."
Sara Lee Corporation, headquartered in Chicago, Illinois, manufactures,
markets and distributes packaged food, packaged consumer goods, and
household and personal care products throughout the world. The company's
products include "Sara Lee" food items, "Jimmy Dean" packaged meats,
"Coach" leatherware, "Hanes" clothing and hosiery and "Champion"
activewear.
Household Products
__________________
The Clorox Company, headquartered in Oakland, California, manufactures
and sells household products, including the brand names "Armor All,"
"Black Flag," "Brita," "Clorox," "Combat," "Fresh Step," "Glad," "Hidden
Valley," "Jonny Cat," "Kingsford," "Liquid-Plumr," "Pine-Sol," "S.O.S,"
"STP," "Scoop Away" and "Tilex."
Colgate-Palmolive Company, headquartered in New York, New York, is an
international consumer products company. The company's products include
toothpaste, toothbrushes, shampoos, deodorants, bar and liquid soaps,
dishwashing liquid and laundry products, among others. The company's
brand names include "Ajax," "Colgate," "Fab," "Mennen," "Palmolive,"
"Prescription Diet," "Protex," "Science Diet" and "Soupline/Suavitel."
Kimberly-Clark Corporation, headquartered in Dallas, Texas, is an
international company which manufactures and markets tissue products,
personal care and healthcare products, as well as business,
correspondence and technical papers. The company sells its products
under the brand names, "Depend," "Huggies," "Kleenex," "Kotex," "Page"
and "Tecnol."
Procter & Gamble Company, headquartered in Cincinnati, Ohio,
manufactures consumer products worldwide, including detergents, fabric
conditioners and hard surface cleaners; products for personal cleansing,
oral care, digestive health, hair and skin; paper tissue, disposable
diapers, and pharmaceuticals; and shortenings, oils, snacks, baking
mixes, peanut butter, coffee, drinks and citrus products.
Pharmaceuticals
_______________
Bristol-Myers Squibb Company, headquartered in New York, New York,
through divisions and subsidiaries, produces and distributes
pharmaceutical and non-prescription health products, toiletries and
beauty aids, and medical devices.
Johnson & Johnson, headquartered in New Brunswick, New Jersey, makes and
sells pharmaceuticals, personal healthcare products, medical and
surgical equipment, and contact lenses.
Pfizer Inc., headquartered in New York, New York, produces and
distributes anti-infectives, anti-inflammatory agents, cardiovascular
agents, antifungal drugs, central nervous system agents, orthopedic
implants, food science products, animal health products, toiletries,
baby care products, dental rinse and other proprietary health items.
Schering-Plough Corporation, headquartered in Madison, New Jersey,
develops, makes and markets pharmaceutical and healthcare products
worldwide. Products include prescription drugs, animal health products
and over-the-counter foot care and sun care products.
Recreation
__________
Carnival Corporation, headquartered in Miami, Florida, operates one of
the world's largest multiple-night cruise lines under the names
"Carnival Cruise Lines," "Holland America Line," "Windstar Cruises,"
"Cunard Line," "Seabourn Cruise Line," "Costa Crociere SpA" and
"Airtours' Sun Cruises." The company markets sightseeing tours and
operates several "Westmark" hotels.
Page 5
Harley-Davidson, Inc., headquartered in Milwaukee, Wisconsin, designs,
manufactures and sells heavyweight touring and custom motorcycles and
related products and accessories internationally. The company also
provides financing and insurance services for its products.
Restaurants
___________
McDonald's Corporation, headquartered in Oak Brook, Illinois, develops,
franchises, operates and services a worldwide system of quick-service
restaurants under the name "McDonald's." The company's restaurants
prepare, assemble, package and sell a limited menu of moderately-priced
foods including hamburgers, chicken, salads, breakfast foods and
beverages.
Starbucks Corporation, headquartered in Seattle, Washington, buys and
roasts whole bean coffees and sells its own brand of specialty coffee.
The company has retail operations in North America and the Pacific Rim.
The company also produces and sells the bottled "Frappucino" coffee
drink and a line of ice creams.
Technology
__________
Dell Computer Corporation, headquartered in Round Rock, Texas, designs,
develops, makes, sells, services and supports a broad range of computer
systems, including desktops, notebooks and servers compatible with
industry standards under the "Dell" brand name. The company also sells
software, peripheral equipment, and service and support programs.
Intel Corporation, headquartered in Santa Clara, California, designs,
develops, makes and markets advanced microcomputer components and
related products at various levels of integration. Principal components
consist of silicon-based semiconductors etched with complex patterns of
transistors.
Toiletries/Cosmetics
____________________
The Gillette Company, headquartered in Boston, Massachusetts, is a
worldwide manufacturer of grooming products, writing instruments and
correction products, toothbrushes and oral care appliances, and alkaline
batteries.
Equity Securities Selected for Life Sciences Select Portfolio Series and
Life Sciences Portfolio Series
Both the Life Sciences Select Portfolio Series and the Life Sciences
Portfolio Series contain common stocks of the following companies:
Biotechnology
_____________
Amgen Inc., headquartered in Thousand Oaks, California, is a global
biotechnology concern which develops, makes and markets human
therapeutics based on advanced cellular and molecular biology, including
a protein that stimulates red blood cell production and a protein that
stimulates white blood cell production.
Biogen, Inc., headquartered in Cambridge, Massachusetts, develops and
makes pharmaceuticals for human healthcare through genetic engineering.
The company's primary focus is on developing and testing products for
the treatment of multiple sclerosis, inflammatory and respiratory
diseases, kidney diseases and certain viruses and cancers.
COR Therapeutics, Inc., headquartered in South San Francisco,
California, focuses on the development of novel pharmaceutical products
for the treatment and prevention of severe cardiovascular diseases. The
company focuses on the discovery, development and commercialization of
pharmaceutical products to prevent and treat severe cardiovascular
diseases, including arterial thrombosis, a blockage occurring in an
artery; venous thrombosis, a thrombus occurring in a vein; and
restenosis, a renarrowing of the arteries.
Celera Genomics, headquartered in Rockville, Maryland, is a subsidiary
of PE Corporation. The company is involved in the sequencing of the
human genome (and other biologically important model organisms) and
generates, sells and supports genomic information and related
information management and analysis software. The company also
discovers, validates and licenses proprietary gene products, genetic
markets and information concerning genetic variability.
Chiron Corporation, headquartered in Emeryville, California, develops,
produces and sells products related to the diagnosis, prevention and
treatment of human diseases, including certain types of cancer and
cardiovascular and infectious diseases. The company participates in
markets for biopharmaceuticals, blood testing and vaccines.
Enzon, Inc., headquartered in Piscataway, New Jersey, researches,
develops, makes and sells enhanced therapeutics based on the application
of proprietary technologies in the areas of blood substitutes, genetic
diseases and oncology.
Genzyme Corporation (General Division), headquartered in Cambridge,
Massachusetts, develops and markets specialty therapeutic, surgical and
diagnostic products, pharmaceuticals and genetic diagnostic services.
The company also develops, makes and markets biological products for the
treatment of cartilage damage, severe burns, chronic skin ulcers and
neurodegenerative diseases.
Human Genome Sciences, Inc., headquartered in Rockville, Maryland,
researches and develops potential proprietary drug and diagnostic
products based on the discovery and understanding of the medical uses of
genes.
IDEC Pharmaceuticals Corporation, headquartered in San Diego,
California, develops products for the long-term management of immune
Page 6
system cancers and autoimmune and inflammatory diseases. The company's
lead immune system cancer and rheumatoid arthritis products are
genetically engineered to combat disease through the patient's immune
system.
Immunex Corporation, headquartered in Seattle, Washington, discovers,
develops, makes and markets therapeutic products for the treatment of
cancer, infectious diseases and immunological disorders. The company's
products are sold worldwide.
MedImmune, Inc., headquartered in Gaithersburg, Maryland, develops and
markets products for the prevention and treatment of infectious
diseases, autoimmune diseases and cancer. The company's products are
also used in transplantation medicine.
Protein Design Labs, Inc., headquartered in Fremont, California,
develops human and humanized antibodies and other products to treat or
prevent a variety of viral, immune-mediated and inflammatory diseases as
well as certain cancers and cardiovascular conditions.
Medical Products
________________
ArthroCare Corporation, headquartered in Sunnyvale, California, designs,
develops, makes and markets medical devices for use in arthroscopic and
orthopedic procedures. The company's "Coblation"-based tools are
designed to allow surgeons to operate on soft tissue with a high degree
of precision and accuracy, and with minimal damage to surrounding tissues.
Cytyc Corporation, headquartered in Boxborough, Massachusetts, designs,
develops, makes and sells the "ThinPrep" sample preparation system for
the automated preparation of microscope slides of cervical cell
specimens for use in cervical cancer screening, as well as for the
preparation of non-gynecological cell specimens.
Guidant Corporation, headquartered in Indianapolis, Indiana, is a
leading provider of medical devices for use in cardiac rhythm
management, vascular intervention and other forms of minimally invasive
surgery; and implantable pacemaker systems used in the treatment of slow
or irregular arrhythmias. The company develops and markets a broad range
of products used to treat cardiovascular and vascular disease.
Johnson & Johnson, headquartered in New Brunswick, New Jersey, makes and
sells pharmaceuticals, personal healthcare products, medical and
surgical equipment, and contact lenses.
Medtronic, Inc., headquartered in Minneapolis, Minnesota, makes and
sells implantable cardiac pacemakers, implantable and external
defibrillators, heart valves, and other vascular, cardiac and
neurological products.
MiniMed Inc., headquartered in Sylmar, California, develops, makes and
markets medical devices for drug delivery and monitoring patients with
diabetes and other medical conditions. The company's goal is to create a
true artificial pancreas and supports an extensive research and
development program and is developing an implantable insulin pump as
well as a continuous glucose sensor.
ResMed Inc., headquartered in San Diego, California, makes and
distributes medical equipment for the treatment of sleep disordered
breathing related respiratory conditions. The company sells a
comprehensive range of treatment and diagnostic devices.
Stryker Corporation, headquartered in Kalamazoo, Michigan, develops,
makes and markets specialty surgical and medical products, including
orthopedic implants, powered surgical instruments, endoscopic systems
and patient care and handling equipment for the global market; and
provides physical therapy services in the United States.
Techne Corporation, headquartered in Minneapolis, Minnesota, develops
and makes biotechnology products and hematology calibrators and controls.
Thermo BioAnalysis Corporation, headquartered in Santa Fe, New Mexico,
designs, makes and markets instruments and information management
systems for use in biochemical research and production, as well as in
clinical diagnostics. The company's products include life sciences
instrumentation, consumables and information management systems for use
in biochemical research and production, as well as in clinical
diagnostics.
Pharmaceuticals
_______________
Bristol-Myers Squibb Company, headquartered in New York, New York,
through divisions and subsidiaries, produces and distributes
pharmaceutical and non-prescription health products, toiletries and
beauty aids, and medical devices.
Inhale Therapeutic Systems, Inc., headquartered in San Carlos,
California, researches and develops a non-invasive pulmonary drug
delivery system applicable to peptides, proteins and other
macromolecules currently delivered by injection.
Eli Lilly and Company, headquartered in Indianapolis, Indiana, with
subsidiaries, develops, makes and markets pharmaceutical and animal
health products sold in countries around the world. The company also
provides healthcare management services in the United States.
Merck & Co., Inc., headquartered in Whitehouse Station, New Jersey, is a
leading pharmaceutical concern that discovers, develops, makes and
markets a broad range of human and animal health products and services.
The company also administers managed prescription drug programs.
Pfizer Inc., headquartered in New York, New York, produces and
distributes anti-infectives, anti-inflammatory agents, cardiovascular
Page 7
agents, antifungal drugs, central nervous system agents, orthopedic
implants, food science products, animal health products, toiletries,
baby care products, dental rinse and other proprietary health items.
Pharmacopeia, Inc., headquartered in Princeton, New Jersey, is focused on
the screening of large libraries of chemicals for new drug discovery.
The company's drug discovery approach is based on a technology called
Encoded Combinational Library on Polymeric Support, which accelerates
the pace of drug discovery for pharmaceutical and biotechnology
customers.
QLT PhotoTherapeutics Inc., headquartered in Vancouver, British
Columbia, Canada, develops and commercializes proprietary pharmaceutical
products for photodynamic therapy, which uses light-activated drugs for
the treatment of cancer, diseases of the eye and other medical conditions.
Schering-Plough Corporation, headquartered in Madison, New Jersey,
develops, makes and markets pharmaceutical and healthcare products
worldwide. Products include prescription drugs, animal health products
and over-the-counter foot care and sun care products.
Equity Securities Selected for Regional Bank & Thrift Select Portfolio
Series and Regional Bank & Thrift Portfolio, Series 3
Both the Regional Bank & Thrift Select Portfolio Series and the Regional
Bank & Thrift Portfolio, Series 3 contain common stocks of the following
companies:
Banks
_____
AmSouth Bancorporation, headquartered in Birmingham, Alabama, through
wholly-owned AmSouth Bank, operates a retail and commercial banking and
trust business through offices in four states. Operations are divided
into three segments: consumer banking, commercial banking and capital
management, which offer trust, investment management and corporate
trustee services.
BB&T Corporation, headquartered in Winston-Salem, North Carolina,
through subsidiaries, conducts a general banking business in four states
and Washington, D.C.; offers lease financing to commercial businesses
and municipal governments; and reinsures and underwrites certain credit
life and credit accident and health insurance policies.
Chittenden Corporation, headquartered in Burlington, Vermont, through
subsidiaries, conducts a general commercial banking business in Vermont
and Massachusetts. The company offers a broad range of financial
products and services, including deposit accounts and services;
commercial, consumer and public sector loans; and investment and trust
services to businesses, individuals and the public sector.
City National Corporation, headquartered in Beverly Hills, California, a
holding company for City National Bank, serves professional and business
borrowers and associated individuals with commercial banking and
fiduciary needs.
The Colonial BancGroup, Inc., headquartered in Montgomery, Alabama,
conducts a general commercial banking business through offices in six
states and operates a retail and wholesale mortgage banking business.
The company, through its wholly-owned banking subsidiary, Colonial Bank,
conducts a general commercial banking business in its respective service
areas.
Comerica Incorporated, headquartered in Detroit, Michigan, conducts a
general commercial banking business primarily in four states. Business
conducted includes corporate, consumer and private banking,
institutional trust and investment management, international finance and
trade services.
Commerce Bancorp, Inc., headquartered in Cherry Hill, New Jersey,
operates a banking business through branch offices serving New Jersey
and Pennsylvania. The company's wholly-owned banking subsidiaries
provide retail and commercial banking services and products.
Commerce Bancshares, Inc., headquartered in Kansas City, Missouri,
conducts a banking business in three states; underwrites credit life and
credit accident and health insurance; sells property and casualty
insurance, and provides mortgage banking and real estate services.
Community First Bankshares, Inc., headquartered in Fargo, North Dakota,
through subsidiaries, conducts a banking business in nine states. The
company also offers trust and insurance services. The company also owns
and operates insurance agencies which sell property and casualty
insurance and make some sales of other types of insurance, such as life,
accident and crop hail insurance.
Compass Bancshares, Inc., headquartered in Birmingham, Alabama, through
subsidiaries, conducts a general commercial banking business through
offices in four states.
Cullen/Frost Bankers, Inc., headquartered in San Antonio, Texas,
conducts a banking business through offices across Texas. The company
also operates a general insurance agency and provides discount brokerage
services.
Firstar Corporation, headquartered in Milwaukee, Wisconsin, is the
holding company for Firstar Bank. The company offers banking, trust,
investment, insurance and securities brokerage services. The company
also operates a consumer finance company and an investment advisory firm.
Fleet Boston Financial Corporation, headquartered in Boston,
Massachusetts, conducts a general commercial banking and trust business
through a network of branch offices, ATMs and telephone banking centers.
The company also provides other activities related to banking and finance.
Page 8
Hudson United Bancorp, headquartered in Mahwah, New Jersey, is a multi-
state bank holding company which conducts a general banking business
through branches in New Jersey, Connecticut and New York.
KeyCorp, headquartered in Cleveland, Ohio, through subsidiaries,
conducts a commercial and retail banking business through numerous full-
service banking offices in various states. The company also provides
trust, personal financial cash management, investment banking,
securities brokerage and international banking services.
M&T Bank Corporation, headquartered in Buffalo, New York, conducts a
commercial banking business through offices mainly in New York,
Pennsylvania and The Bahamas. The company is a bank holding company that
operates through two wholly-owned bank subsidiaries: Manufacturers and
Traders Trust Co. (M&T Bank) and M&T Bank, National Association (M&T
Bank, N.A.).
North Fork Bancorporation, Inc., headquartered in Melville, New York, is
the holding company of North Fork Bank and Superior Savings of New
England. The company operates a full-service retail and commercial
banking business through numerous branch locations in New York and also
provides broker-dealer services to financial institutions, individual
investors and traders.
Provident Financial Group, Inc., headquartered in Cincinnati, Ohio,
conducts a banking and trust business through offices in three states;
provides trust, custodial, asset management and securities brokerage;
and also conducts equipment leasing.
Silicon Valley Bancshares, headquartered in Santa Clara, California,
through wholly-owned Silicon Valley Bank, operates a general banking
business through offices in ten states. The company is the holding
company for Silicon Valley Bank which is a full-service commercial bank.
SunTrust Banks, Inc., headquartered in Atlanta, Georgia, through
subsidiaries, operates a banking business, based in the southeastern
United States. The company's primary businesses include traditional
deposit and credit services as well as trust and investment services.
TCF Financial Corporation, headquartered in Minneapolis, Minnesota,
operates a national banking business through offices in five states. The
company also originates, sells and services residential mortgage loans;
sells annuities and mutual fund products; provides insurance, mainly
credit-related insurance; and makes consumer finance loans.
Wells Fargo Company, headquartered in San Francisco, California,
operates a general banking business in a number of states and operates
mortgage banking offices throughout the United States. The company also
provides consumer finance services throughout the United States and in
Canada, the Caribbean, Central America and Guam; and offers various
other financial services.
Zions Bancorporation, headquartered in Salt Lake City, Utah, conducts a
banking business through offices in seven states. The company also
underwrites insurance; operates an insurance brokerage business; and
provides innovative financing solutions for small businesses nationwide.
Thrifts
_______
Astoria Financial Corporation, headquartered in Lake Success, New York,
through wholly-owned Astoria Federal Savings and Loan Association,
conducts a savings and loan business through numerous offices in
Brooklyn, Chenango, Nassau, Otsego, Queens, Suffolk and Westchester
counties in New York.
Charter One Financial, Inc., headquartered in Cleveland, Ohio, through
wholly-owned Charter One Bank, F.S.B., operates a banking business
through numerous full-service banking offices in Ohio, Massachusetts,
Michigan, New York and Vermont. The company also operates loan
production offices in several states.
GreenPoint Financial Corp., headquartered in New York, New York,
conducts a savings bank business through branches in the New York City
metropolitan area. The company also offers lending programs, development
opportunities and mortgage banking.
Peoples Heritage Financial Group, Inc., headquartered in Portland,
Maine, conducts a general banking business through offices in four
states. The company also leases equipment and provides financial
planning and securities brokerage activities.
Sovereign Bancorp, Inc., headquartered in Wyomissing, Pennsylvania,
conducts a banking business through banking offices serving the eastern
Pennsylvania, northern Delaware and New Jersey areas.
Washington Mutual, Inc., headquartered in Seattle, Washington, through
subsidiaries, provides financial services to individuals and small to
mid-sized businesses, including accepting deposits from the general
public and making residential and other loans. The company's operations
are conducted through offices throughout the United States.
Webster Financial Corporation, headquartered in Waterbury, Connecticut,
through wholly-owned Webster Bank, provides consumer, mortgage and
commercial banking services to individuals and businesses through
banking offices and commercial banking centers in Connecticut. The
company also provides insurance, trust and investment management services.
We have obtained the foregoing descriptions from sources we deem
reliable. We have not independently verified the provided information
either in terms of accuracy or completeness.
Page 9
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 Prospectus
The signatures
Exhibits
S-1
SIGNATURES
The Registrant, FT 423, hereby identifies The First Trust
Special Situations Trust, Series 4; The First Trust Special
Situations Trust, Series 18; The First Trust Special Situations
Trust, Series 69; The First Trust Special Situations Trust,
Series 108; The First Trust Special Situations Trust, Series 119;
The First Trust Special Situations Trust, Series 190; FT 286; The
First Trust Combined Series 272; and FT 412 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 423, 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 12, 2000.
FT 423
By NIKE SECURITIES L.P.
Depositor
By Robert M. Porcellino
Senior 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
David J. Allen Sole Director )
of Nike Securities )
Corporation, the ) April 12, 2000
General Partner of )
Nike Securities L.P. )
)
)
) Robert M. Porcellino
) Attorney-in-Fact**
)
)
* The title of the person named herein represents his
capacity in and relationship to Nike Securities L.P.,
Depositor.
** An executed copy of the related power of attorney
was filed with the Securities and Exchange Commission in
connection with the Amendment No. 1 to Form S-6 of The
First Trust Combined Series 258 (File No. 33-63483) and
the same is hereby incorporated herein by this reference.
S-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 12, 2000 in
Amendment No. 1 to the Registration Statement (Form S-6) (File
No. 333-33520) and related Prospectus of FT 423.
ERNST & YOUNG LLP
Chicago, Illinois
April 12, 2000
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 FT 423 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
2.2 Copy of Code of Ethics (incorporated by reference to
Amendment No. 1 to form S-6 [File No. 333-31176] filed on behalf
of FT 415).
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
MEMORANDUM
FT 423
File No. 333-33520
The Prospectus and the Indenture filed with Amendment No. 1
of the Registration Statement on Form S-6 have been revised to
reflect information regarding the execution of the Indenture and
the deposit of Securities on April 12, 2000 and to set forth
certain statistical data based thereon. In addition, there are a
number of other changes described below.
THE PROSPECTUS
Cover Page The date of the Trust has been added.
Page 3 The following information for the Trust appears:
The Aggregate Value of Securities initially
deposited has been added.
The initial number of units of the Trust
Sales charge
The Public Offering Price per Unit as of the
business day before the Initial Date of Deposit
The Mandatory Termination Date has been added.
Page 6 The Report of Independent Auditors has been
completed.
Pages 7-8 The Statement of Net Assets has been completed.
Pages 9-15 The Schedule of Investments has been completed.
THE TRUST AGREEMENT AND STANDARD TERMS AND CONDITIONS OF TRUST
The Trust Agreement has been conformed to reflect
the execution thereof.
CHAPMAN AND CUTLER
April 12, 2000
FT 423
TRUST AGREEMENT
Dated: April 12, 2000
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 AMERICA'S LEADING BRANDS SELECT PORTFOLIO SERIES
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
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 in the amount of $.0030 per Unit, 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 Evaluator provides services during less than the whole of
such year). 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 in the amount of $.0095 per Unit, 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 Portfolio Supervisors compensation as referred to
in Section 3.13 of the Standard Terms and Conditions of Trust
shall be an annual fee in the amount of $.0035 per Unit.
J. The Initial Date of Deposit for the Trust is April 12,
2000.
K. 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.
L. The Depositors compensation for providing bookkeeping
and other administrative services as described in Section 3.14 of
the Standard Terms and Conditions of Trust shall be an annual fee
in the amount of $.0033 per Unit.
M. The minimum number of Units a Unit holder must redeem
in order to be eligible for an in-kind distribution of Securities
pursuant to Section 5.02 shall be 1,000 Units of the Trust.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR LIFE SCIENCES SELECT PORTFOLIO SERIES
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
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 in the amount of $.0030 per Unit, 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 Evaluator provides services during less than the whole of
such year). 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 in the amount of $.0095 per Unit, 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 Portfolio Supervisors compensation as referred to
in Section 3.13 of the Standard Terms and Conditions of Trust
shall be an annual fee in the amount of $.0035 per Unit.
J. The Initial Date of Deposit for the Trust is April 12,
2000.
K. 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.
L. The Depositors compensation for providing bookkeeping
and other administrative services as described in Section 3.14 of
the Standard Terms and Conditions of Trust shall be an annual fee
in the amount of $.0015 per Unit.
M. The minimum number of Units a Unit holder must redeem
in order to be eligible for an in-kind distribution of Securities
pursuant to Section 5.02 shall be 1,000 Units of the Trust.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR REGIONAL BANK & THRIFT SELECT PORTFOLIO SERIES
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
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 in the amount of $.0030 per Unit, 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 Evaluator provides services during less than the whole of
such year). 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 in the amount of $.0095 per Unit, 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 Portfolio Supervisors compensation as referred to
in Section 3.13 of the Standard Terms and Conditions of Trust
shall be an annual fee in the amount of $.0035 per Unit.
J. The Initial Date of Deposit for the Trust is April 12,
2000.
K. 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.
L. The Depositors compensation for providing bookkeeping
and other administrative services as described in Section 3.14 of
the Standard Terms and Conditions of Trust shall be an annual fee
in the amount of $.0015 per Unit.
M. The minimum number of Units a Unit holder must redeem
in order to be eligible for an in-kind distribution of Securities
pursuant to Section 5.02 shall be 1,000 Units of the Trust.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR AMERICA'S LEADING BRANDS PORTFOLIO, SERIES 7
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
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 in the amount of $.0030 per Unit, 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 Evaluator provides services during less than the whole of
such year). 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 in the amount of $.0095 per Unit, 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 Portfolio Supervisors compensation as referred to
in Section 3.13 of the Standard Terms and Conditions of Trust
shall be an annual fee in the amount of $.0035 per Unit.
J. The Initial Date of Deposit for the Trust is April 12,
2000.
K. 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.
L. The Depositors compensation for providing bookkeeping
and other administrative services as described in Section 3.14 of
the Standard Terms and Conditions of Trust shall be an annual fee
in the amount of $.0033 per Unit.
M. The minimum number of Units a Unit holder must redeem
in order to be eligible for an in-kind distribution of Securities
pursuant to Section 5.02 shall be 1,000 Units of the Trust.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR LIFE SCIENCES PORTFOLIO SERIES
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
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 in the amount of $.0030 per Unit, 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 Evaluator provides services during less than the whole of
such year). 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 in the amount of $.0095 per Unit, 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 Portfolio Supervisors compensation as referred to
in Section 3.13 of the Standard Terms and Conditions of Trust
shall be an annual fee in the amount of $.0035 per Unit.
J. The Initial Date of Deposit for the Trust is April 12,
2000.
K. 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.
L. The Depositors compensation for providing bookkeeping
and other administrative services as described in Section 3.14 of
the Standard Terms and Conditions of Trust shall be an annual fee
in the amount of $.0033 per Unit.
M. The minimum number of Units a Unit holder must redeem
in order to be eligible for an in-kind distribution of Securities
pursuant to Section 5.02 shall be 1,000 Units of the Trust.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR REGIONAL BANK & THRIFT PORTFOLIO, SERIES 3
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
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 in the amount of $.0030 per Unit, 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 Evaluator provides services during less than the whole of
such year). 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 in the amount of $.0095 per Unit, 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 Portfolio Supervisors compensation as referred to
in Section 3.13 of the Standard Terms and Conditions of Trust
shall be an annual fee in the amount of $.0035 per Unit.
J. The Initial Date of Deposit for the Trust is April 12,
2000.
K. 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.
L. The Depositors compensation for providing bookkeeping
and other administrative services as described in Section 3.14 of
the Standard Terms and Conditions of Trust shall be an annual fee
in the amount of $.0015 per Unit.
M. The minimum number of Units a Unit holder must redeem
in order to be eligible for an in-kind distribution of Securities
pursuant to Section 5.02 shall be 1,000 Units of the Trust.
PART III
A. 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 the FT
Series to which this Trust Agreement relates.
B. Notwithstanding anything to the contrary in the
Prospectus, parties to the trust agreement are hereby advised:
The Trusts are not sponsored, endorsed, sold or
promoted by Dow Jones & Company, Inc. ("Dow Jones"). Dow
Jones makes no representation or warranty, express or
implied, to the owners of the Trusts or any member of the
public regarding the advisability of investing in securities
generally or in the Trusts particularly. Dow Jones' only
relationship to the Sponsor is the licensing of certain
trademarks, trade names and service marks of Dow Jones and
of the Dow Jones Industrial AverageSM , which is determined,
composed and calculated by Dow Jones without regard to the
Sponsor or the Trusts. Dow Jones has no obligation to take
the needs of the Sponsor or the owners of the Trusts into
consideration in determining, composing or calculating to
Dow Jones Industrial AverageSM. Dow Jones is not
responsible for and has not participated in the
determination of the timing of, prices at, or quantities of
the Trusts to be issued or in the determination or
calculation of the equation by which the Trusts are to be
converted into cash. Dow Jones has no obligation or
liability in connection with the administration, marketing
or trading of the Trusts.
DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE
COMPLETENESS OF THE DOW JONES INDUSTRIAL AVERAGESM OR ANY
DATA INCLUDED THEREIN AND DOW JONES SHALL HAVE NO LIABILITY
FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. DOW
JONES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS
TO BE OBTAINED BY THE SPONSOR, OWNERS OF THE TRUSTS, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE DOW JONES
INDUSTRIAL AVERAGESM OR ANY DATA INCLUDED THEREIN. DOW
JONES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE DOW JONES
INDUSTRIAL AVERAGESM OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW JONES
HAVE ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT,
PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED
OF THE POSSIBILITY THEREOF.
C. The term "Principal Account" as set forth in the
Standard Terms and Conditions of Trust shall be replaced with the
term "Capital Account."
D. 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.
E. 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."
F. 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."
G. Section 1.01(26) shall be added to read as follows:
"(26) The term "Rollover Unit holder" shall be defined
as set forth in Section 5.05, herein."
H. Section 1.01(27) shall be added to read as follows:
"(27) If the Prospectus for a Trust contemplates the
rollover of Units as set forth in Section 5.05 herein, the
term "Rollover Notification Date" shall be defined as set
forth in the Prospectus under "Summary of Essential
Information."
I. Section 1.01(28) shall be added to read as follows:
"(28) If the Prospectus for a Trust contemplates the
rollover of Units as set forth in Section 5.05 herein, the
term "Rollover Distribution" shall be defined as set forth
in Section 5.05, herein."
J. Section 1.01(29) shall be added to read as follows:
"(29) If the Prospectus for a Trust contemplates the
rollover of Units as set forth in Section 5.05 herein, the
term "Distribution Agent" shall refer to the Trustee acting
in its capacity as distribution agent pursuant to
Section 5.05 herein."
K. Section 1.01(30) shall be added to read as follows:
"(30) If the Prospectus for a Trust contemplates the
rollover of Units as set forth in Section 5.05 herein, the
term "Special Redemption and Liquidation Period" shall be as
set forth in the Prospectus under "Summary of Essential
Information."
L. 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, 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. Cash represented by a foreign currency shall
be replicated in such currency or, if the Trustee has
entered into a contract for the conversion thereof, in U.S.
dollars in an amount replicating the dollars to be received
on such conversion."
M. 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."
N. Section 2.01(c) of the Standard Terms and Conditions of
Trust is hereby amended by adding the following at the conclusion
thereof:
"If any Contract Obligation requires settlement in
a foreign currency, in connection with the deposit of such
Contract Obligation the Depositor will deposit with the
Trustee either an amount of such currency sufficient to
settle the contract or a foreign exchange contract in such
amount which settles concurrently with the settlement of the
Contract Obligation and cash or a Letter of Credit in U.S.
dollars sufficient to perform such foreign exchange
contact."
O. 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."
P. 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. Subject to reimbursement
as hereinafter provided, the cost of organizing the Trust
and the sale of the Trust Units shall be borne by the
Depositor, provided, however, that the liability on the part
of the Depositor under this section shall not include any
fees or other expenses incurred in connection with the
administration of the Trust subsequent to the deposit
referred to in Section 2.01. At the conclusion of the
period of time during which a Trusts organization expenses
will be included in the Public Offering Price of Units (the
"Organization Expense Period"), as set forth in the
Prospectus for a Trust (as certified by the Depositor to the
Trustee), the Trustee shall withdraw from the Account or
Accounts specified in the Prospectus or, if no Account is
therein specified, from the Capital Account, and pay to the
Depositor the Depositor's reimbursable expenses of
organizing the Trust in an amount certified to the Trustee
by the Depositor. In no event shall the amount paid by the
Trustee to the Depositor for the Depositors reimbursable
expenses of organizing the Trust exceed the estimated per
Unit amount of organization costs set forth in the
Prospectus for the Trust multiplied by the number of Units
of the Trust outstanding at the conclusion of the
Organization Expense Period; nor shall the Depositor be
entitled to or request reimbursement for expenses of
organizing the Trust incurred after the conclusion of the
Organization Expense Period. If the cash balance of the
Capital Account is insufficient to make such withdrawal, the
Trustee shall, as directed by the Depositor, sell Securities
identified by the Depositor, or distribute to the Depositor
Securities having a value, as determined under Section 4.01
as of the date of distribution, sufficient for such
reimbursement. Securities sold or distributed to the
Depositor to reimburse the Depositor pursuant to this
Section shall be sold or distributed by the Trustee, to
extent practicable, in the percentage ratio then existing.
The reimbursement provided for in this section shall be for
the account of the Unit holders of record at the conclusion
of the Organization Expense Period. Any assets deposited
with the Trustee in respect of the expenses reimbursable
under this Section 3.01 shall be held and administered as
assets of the Trust for all purposes hereunder. The
Depositor shall deliver to the Trustee any cash identified
in the Statement of Net Assets of the Trust included in the
Prospectus not later than the expiration of the Delivery
Period and the Depositors obligation to make such delivery
shall be secured by the letter of credit deposited pursuant
to Section 2.01. Any cash which the Depositor has
identified as to be used for reimbursement of expenses
pursuant to this Section 3.01 shall be held by the Trustee,
without interest, and reserved for such purpose and,
accordingly, prior to the conclusion of the Organization
Expense Period, shall not be subject to distribution or,
unless the Depositor otherwise directs, used for payment of
redemptions in excess of the per Unit amount payable
pursuant to the next sentence. If a Unit holder redeems
Units prior to the conclusion of the Organization Expense
Period, the Trustee shall pay to the Unit holder, in
addition to the Redemption Value of the tendered Units,
unless otherwise directed by the Depositor, an amount equal
to the estimated per Unit cost of organizing the Trust set
forth in the Prospectus, or such lower revision thereof most
recently communicated to the Trustee by the Depositor
pursuant to Section 5.01, multiplied by the number of Units
tendered for redemption; to the extent the cash on hand in
the Trust is insufficient for such payment, the Trustee
shall have the power to sell Securities in accordance with
Section 5.02. As used herein, the Depositor's reimbursable
expenses of organizing the Trust shall include the cost of
the initial preparation and typesetting of the registration
statement, prospectuses (including preliminary
prospectuses), the indenture, and other documents relating
to the Trust, SEC and state blue sky registration fees, the
cost 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."
Q. 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."
R. 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 for a Trust, 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."
S. 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."
T. 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."
U. 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 Income 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."
V. Section 3.07 of the Standard Terms and Conditions of
Trust is amended to delete the word and at the end of Section
3.07(f) and replace Section 3.01(g) with the following:
"(g) that such sale is required due to Units tendered for
redemption;
(h) that the sale of Securities is necessary or advisable
in order to maintain the qualification of the Trust as a
"regulated investment company" in the case of a Trust which has
elected to qualify as such; and
(i) that there has been a public tender offer made for a
Security or a merger or acquisition is announced affecting a
Security, and that in the opinion of the Sponsor the sale or
tender of the Security is in the best interest of the Unit
holders."
W. 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 provide to all Unit holders of such Trust
notices of such acquisition in the Trustee's annual report
unless prior notice is directed by the Depositor."
X. 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 the per Unit amount set forth in
Part II of the Trust Agreement, 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 Portfolio Supervisor provides services during less than
the whole of such year). Such fee may exceed the actual
cost of providing such portfolio supervision services for
the Trust, but at no time will the total amount received for
portfolio supervision 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 Portfolio
Supervisor of supplying such services in such year."
Y. 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
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 the per Unit amount set forth in Part II of the Trust
Agreement, 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 Depositor
provides services during less than the whole of such year).
Such fee may exceed the actual cost of providing such
bookkeeping and administrative services for the Trust, but
at not time will the total amount received for bookkeeping
and administrative 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 Depositor of
supplying such services in such year. 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."
Z. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraph
which shall be entitled Section 3.15:
"Section 3.15. Deferred Sales Charge. If the
prospectus related to the Trust specifies a deferred sales
charge, the Trustee shall, on the dates specified in and as
permitted by such Prospectus (the "Deferred Sales Charge
Payment Dates"), withdraw from the Capital Account, an
amount per Unit specified in such Prospectus and credit such
amount to a special non-Trust account designated by the
Depositor out of which the deferred sales charge will be
distributed to or on the order of the Depositor on such
Deferred Sales Charge Payment Dates (the "Deferred Sales
Charge Account"). If the balance in the Capital Account is
insufficient to make such withdrawal, the Trustee shall, as
directed by the Depositor, advance funds in an amount
required to fund the proposed withdrawal and be entitled to
reimbursement of such advance upon the deposit of additional
monies in the Capital Account, and/or sell Securities and
credit the proceeds thereof to the Deferred Sales Charge
Account, provided, however, that the aggregate amount
advanced by the Trustee at any time for payment of the
deferred sales charge shall not exceed $15,000. Such
direction shall, if the Trustee is directed to sell a
Security, identify the Security to be sold and include
instructions as to the execution of such sale. In the
absence of such direction by the Depositor, the Trustee
shall sell Securities sufficient to pay the deferred sales
charge (and any unreimbursed advance then outstanding) in
full, and shall select Securities to be sold in such manner
as will maintain (to the extent practicable) the relative
proportion of number of shares of each Security then held.
The proceeds of such sales, less any amounts paid to the
Trustee in reimbursement of its advances, shall be credited
to the Deferred Sales Charge Account. If a Unit holder
redeems Units prior to full payment of the deferred sales
charge, the Trustee shall, if so provided in the related
Prospectus and, except for situations in which the Trust
Fund Evaluation determined as provided in Section 5.01
hereof has been reduced by the amount of any unpaid accrued
deferred sales charge, on the Redemption Date, withhold from
the Redemption Price payable to such Unit holder an amount
equal to the unpaid portion of the deferred sales charge and
distribute such amount to the Deferred Sales Charge Account.
If the Trust is terminated for reasons other than that set
forth in Section 6.01(g), the Trustee shall, if so provided
in the related Prospectus on the termination of the Trust,
withhold from the proceeds payable to Unit holders an amount
equal to the unpaid portion of the deferred sales charge and
distribute such amount to the Deferred Sales Charge Account.
If the Trust is terminated pursuant to Section 6.01(g), the
Trustee shall not withhold from the proceeds payable to Unit
holders any amounts of unpaid deferred sales charges. If
pursuant to Section 5.02 hereof, the Depositor shall
purchase a Unit tendered for redemption prior to the payment
in full of the deferred sales charge due on the tendered
Unit, the Depositor shall pay to the Unit holder the amount
specified under Section 5.02, which amount, except for
situations in which the Trust Fund Evaluation determined as
provided in Section 5.01 hereof has been reduced by the
amount of any unpaid accrued deferred sales charge, shall be
reduced by the unpaid portion of the deferred sales charge.
All advances made by the Trustee pursuant to this Section
shall be secured by a lien on the Trust prior to the
interest of the Unit holders. If the related Prospectus
provides that the deferred sales charge shall accrue on a
daily basis, the "unpaid portion of the deferred sales
charge" as used in this paragraph shall mean the accrued and
unpaid deferred sales charge as of the date of redemption or
termination, as appropriate. The Depositor represents that
the price paid by any Unit holder for Units acquired through
reinvestment of Trust distributions will be reduced by the
aggregate amount of unpaid deferred sales charge at the time
of the purchase to off set any subsequent collection by the
Depositor of deferred sales charge in respect of the Units
so acquired."
AA. Notwithstanding anything to the contrary in Sections
3.15 and 4.05 of the Standard Terms and Conditions of Trust, so
long as Nike Securities L.P. is acting as Depositor, the Trustee
shall have no power to remove the Portfolio Supervisor.
BB. The following Section 3.16 shall be added:
Section 3.16. Creation and Development Fee. If the
prospectus related to the Trust specifies a creation and
development fee, the Trustee shall, on such date or dates set
forth in the Prospectus for a Trust withdraw from the Capital
Account, an amount equal to either the accrued and unpaid
creation and development fee as of such date (for Trusts in which
the applicable Prospectus provides that the creation and
development accrue on a daily basis) or the entire creation and
development fee (for Trusts in which the applicable Prospectus
provides that the creation and development fee be assessed at the
conclusion of the primary offering period, as certified by the
Depositor to the Trustee) and credit such amount to a special non-
Trust account designated by the Depositor out of which the
creation and development fee will be distributed to the Depositor
(the "Creation and Development Account"). For Trusts in which
the applicable Prospectus provides for daily accrual of the
creation and development fee, the creation and development fee
will accrue on a daily basis at an annual rate as set forth in
such Prospectus for the Trust based on a percentage of the
average daily net asset value of the Trust. For Trusts in which
the applicable Prospectus provides that the entire creation and
development fee will be assessed at the conclusion of the primary
offering period, the reimbursement provided for in this section
shall be for the account of Unit holders of record at the
conclusion of the primary offering period and shall have no
effect on the net asset value of Trust Units prior to such date.
If the balance in the Capital Account is insufficient to make
such withdrawal, the Trustee shall, as directed by the Depositor,
advance funds in an amount required to fund the proposed
withdrawal and be entitled to reimbursement of such advance upon
the deposit of additional monies in the Capital Account, and/or
sell Securities and credit the proceeds thereof to the Creation
and Development Account, provided, however, that the aggregate
amount advanced by the Trustee at any time for payment of the
creation and development fee shall not exceed $15,000. Such
direction shall, if the Trustee is directed to sell a Security,
identify the Security to be sold and include instructions as to
the execution of such sale. In the absence of such direction by
the Depositor, the Trustee shall sell Securities sufficient to
pay the creation and development fee (and any unreimbursed
advance then outstanding) in full, and shall select Securities to
be sold in such manner as will maintain (to the extent
practicable) the relative proportion of number of shares of each
Security then held. The proceeds of such sales, less any amounts
paid to the Trustee in reimbursement of its advances, shall be
credited to the Creation and Development Account. If the Trust is
terminated pursuant to Section 6.01(g), the Depositor agrees to
reimburse Unitholders for any amounts of the Creation and
Development Fee collected by the Depositor to which it is not
entitled. All advances made by the Trustee pursuant to this
Section shall be secured by a lien on the Trust prior to the
interest of Unit holders. Notwithstanding the foregoing, the
Depositor shall not receive any amount of Creation and
Development Fee which exceeds the maximum amount per Unit stated
in the Prospectus. For Trusts in which the applicable Prospectus
provides for daily accrual of the creation and development fee,
the Depositor shall notify the Trustee, not later than ten
business days prior to the date on which the Depositor
anticipates that the maximum amount of the creation and
development fee the Depositor may receive has been accrued and
shall also notify the Trustee as of the date when the maximum
amount of the creation and development fee has been accrued. The
Trustee shall have no responsibility or liability for damages or
loss resulting from any error in the information in the preceding
sentence. The Depositor agrees to reimburse the Trust and any
Unit holder any amount of Creation and Development Fee it
receives which exceeds the amount which the Depositor may receive
under applicable laws, regulations and rules."
CC. Article III of the Standard Terms and Conditions of
Trust is hereby amended by adding the following new Section 3.17:
"Section 3.17. Foreign Currency Exchange. Unless the
Depositor shall otherwise direct, whenever funds are
received by the Trustee in foreign currency, upon the
receipt thereof or, if such funds are to be received in
respect of a sale of Securities, concurrently with the
contract of the sale for the Security (in the latter case
the foreign exchange contract to have a settlement date
coincident with the relevant contract of sale for the
Security), the Trustee shall enter into a foreign exchange
contract for the conversion of such funds to U.S. dollars
pursuant to the instruction of the Depositor. The Trustee
shall have no liability for any loss or depreciation
resulting from action taken pursuant to such instruction."
DD. Article IV, Section 4.01 of the Standard Terms and
Conditions of Trust is hereby amended in the following manner:
1. Section 4.01(b) is hereby amended by deleting that
portion of the first sentence appearing after the colon and
the entire second sentence and replacing them in their
entirety with the following:
"if the Securities are listed on a national
or foreign securities exchange or The Nasdaq Stock
Market, such Evaluation shall generally be based
on the closing sale price on the exchange or
system which is the principal market therefor,
which shall be deemed to be the New York Stock
Exchange if the Securities are listed thereon
(unless the Evaluator deems such price
inappropriate as a basis for evaluation), or if
there is no closing sale price on such 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 an
exchange, the evaluation shall generally be based
on the current ask price 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) any combination of
the above. If such prices are in a currency other
than U.S. dollars, the Evaluation of such Security
shall be converted to U.S. dollars based on
current offering side exchange rates, unless the
Security is in the form of an American Depositary
Share or Receipt, in which case the Evaluations
shall be based upon the U.S. dollar prices in the
market for American Depositary Shares or Receipts
(unless the Evaluator deems such prices
inappropriate as a basis for valuation). As used
herein, the closing sale price is deemed to mean
the most recent closing sale price on the relevant
securities exchange immediately prior to the
Evaluation time."
2. Section 4.01(c) is hereby deleted and
replaced in its entirety with the following:
"(c) After the initial offering period and
both during and after the initial offering period,
for purposes of the Trust Fund Evaluations
required by Section 5.01 in determining Redemption
Value and Unit Value, Evaluation of the Securities
shall be made in the manner described in Section
4.01(b), on the basis of current bid prices for
Zero Coupon Obligations (if any),the bid side
value of the relevant currency exchange rate
expressed in U.S. dollars and, except in those
cases in which the Equity Securities are listed on
a national or foreign securities exchange or The
Nasdaq Stock Market and the closing sale prices
are utilized, on the basis of the current bid
prices of the Equity Securities. In addition, the
Evaluator shall reduce the Evaluation of each
Security by the amount of any liquidation costs
(other than brokerage costs incurred on any
national securities exchange) and any capital
gains or other taxes which would be incurred by
the Trust upon the sale of such Security, such
taxes being computed as if the Security were sold
on the date of the Evaluation."
EE. The first sentence of Section 4.03. shall be amended to
read as follows:
"As compensation for providing evaluation services under
this Indenture, the Evaluator shall receive, in arrears, against
a statement or statements therefor submitted to the Trustee
monthly or annually an aggregate annual fee equal to the amount
specified as compensation for the Evaluator in the Trust
Agreement, 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 Evaluator provides services during less than the whole
of such year). 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 invoice therefor
from the Evaluator, upon which, as to the cost incurred by the
Evaluator of providing services hereunder the Trustee may rely,
and shall be charged against the Income and/or Capital Accounts,
in accordance with Section 3.05."
FF. Section 5.01 is hereby amended to add the following at
the conclusion of the first paragraph thereof:
"Amounts receivable by the Trust in a foreign currency
shall be reported to the Evaluator who shall convert the
same to U.S. dollars based on current exchange rates, in the
same manner as provided in Section 4.01(b) or 4.01(c), as
applicable, for the conversion of the valuation of foreign
Equity Securities, and the Evaluator shall report such
conversion with each Evaluation made pursuant to Section
4.01."
GG. Section 5.01 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The second sentence of the first paragraph of Section
5.01 shall be amended by deleting the phrase "and (iii)" and
adding the following "(iii) amounts representing unpaid accrued
organization costs, (iv) if the Prospectus for a Trust provides
that the creation and development fee, if any, accrue on a daily
basis, amounts representing unpaid accrued creation and
development fees, (v) if the Prospectus for a Trust provides that
the deferred sales charge shall accrue on a daily basis, amounts
representing unpaid accrued deferred sales charge, and (vi)"; and
(ii) The following text shall immediately precede the last
sentence of the first paragraph of Section 5.01:
"Prior to the payment to the Depositor of its
reimbursable organization costs to be made at the
conclusion of the Organization Expense Period in
accordance with Section 3.01, for purposes of
determining the Trust Fund Evaluation under this
Section 5.01, the Trustee shall rely upon the amounts
representing unpaid accrued organization costs in the
estimated amount per Unit set forth in the Prospectus
until such time as the Depositor notifies the Trustee
in writing of a revised estimated amount per Unit
representing unpaid accrued organization costs. Upon
receipt of such notice, the Trustee shall use this
revised estimated amount per Unit representing unpaid
accrued organization costs in determining the Trust
Fund Evaluation but such revision of the estimated
expenses shall not effect calculations made prior
thereto and no adjustment shall be made in respect
thereof."
HH. 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
of a Trust, Unit holders of a Trust who redeem that minimum
number of Units of a Trust set forth in Part II of the Trust
Agreement may 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 Principal
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, 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."
II. The following Section 5.05 shall be added:
"Section 5.05. Rollover of Units. (a) If the
Depositor shall offer a subsequent series of the Trusts,
(the "New Series"), the Trustee shall, at the Depositor's
sole cost and expense, include in the notice sent to Unit
holders specified in Section 8.02 a form of election whereby
Unit holders, whose redemption distribution would be in an
amount sufficient to purchase at least one Unit of the New
Series, may elect to have their Unit(s) redeemed in kind in
the manner provided in Section 5.02, the Securities included
in the redemption distribution sold, and the cash proceeds
applied by the Distribution Agent to purchase Units of a New
Series, all as hereinafter provided. The Trustee shall
honor properly completed election forms returned to the
Trustee, accompanied by any Certificate evidencing Units
tendered for redemption or a properly completed redemption
request with respect to uncertificated Units, by its close
of business on the Rollover Notification Date. The notice
and form of election to be sent to Unit holders in respect
of any redemption and purchase of Units of a New Series as
provided in this section shall be in such form and shall be
sent at such time or times as the Depositor shall direct the
Trustee in writing and the Trustee shall have no
responsibility therefor. The Distributions Agent acts
solely as disbursing agent in connection with purchases of
Units pursuant to this Section and nothing herein shall be
deemed to constitute the Distribution Agent a broker in such
transactions
All Units so tendered by a Unit holder (a "Rollover
Unit holder") shall be redeemed and cancelled during the
Special Redemption and Liquidation Period on such date or
dates specified by Depositor. Subject to payment by such
Rollover Unit holder of any tax or other governmental
charges which may be imposed thereon, such redemption is to
be made in kind pursuant to Section 5.02 by distribution of
cash and/or Securities to the Distribution Agent on the
redemption date equal to the net asset value (determined on
the basis of the Trust Fund Evaluation as of the redemption
date in accordance with Section 4.01) multiplied by the
number of Units being redeemed (herein called the "Rollover
Distribution"). Any Securities that are made part of the
Rollover Distribution shall be valued for purposes of the
redemption distribution as of the redemption date.
All Securities included in a Unit holder's Rollover
Distribution shall be sold by the Distribution Agent during
the Special Redemption and Liquidation Period specified in
the Prospectus pursuant to the Depositor's direction, and
the Distribution Agent shall, unless directed otherwise by
the Depositor, employ the Depositor as broker in connection
with such sales. For such brokerage services, the Depositor
shall be entitled to compensation at its customary rates,
provided however, that its compensation shall not exceed the
amount authorized by applicable securities laws and
regulations. The Depositor shall direct that sales be made
in accordance with the guidelines set forth in the
Prospectus under the heading "Special Redemption,
Liquidation and Investment in a New Trust." Should the
Depositor fail to provide direction, the Distribution Agent
shall sell the Securities in the manner provided in the
prospectus. The Distribution Agent shall have no
responsibility for any loss or depreciation incurred by
reason of any sale made pursuant to this Section.
Upon completion of all sales of Securities included in
the Rollover Unit holder's Rollover Distribution, the
Distribution Agent shall, as agent for such Rollover Unit
holder, enter into a contract with the Depositor to purchase
from the Depositor Units of a New Series (if any), at the
Depositor's public offering price for such Units on such
day, and at such reduced sales charge as shall be described
in the prospectus for such Trust. Such contract shall
provide for purchase of the maximum number of Units of a New
Series whose purchase price is equal to or less than the
cash proceeds held by the Distribution Agent for the Unit
holder on such day (including therein the proceeds
anticipated to be received in respect of Securities traded
on such day net of all brokerage fees, governmental charges
and any other expenses incurred in connection with such
sale), to the extent Units are available for purchase from
the Depositor. In the event a sale of Securities included
in the Rollover Unit holder's redemption distribution shall
not be consummated in accordance with its terms, the
Distribution Agent shall apply the cash proceeds held for
such Unit holder as of the settlement date for the purchase
of Units of a New Series to purchase the maximum number of
Units which such cash balance will permit, and the Depositor
agrees that the settlement date for Units whose purchase was
not consummated as a result of insufficient funds will be
extended until cash proceeds from the Rollover Distribution
are available in a sufficient amount to settle such
purchase. If the Unit holder's Rollover Distribution will
produce insufficient cash proceeds to purchase all of the
Units of a New Series contracted for, the Depositor agrees
that the contract shall be rescinded with respect to the
Units as to which there was a cash shortfall without any
liability to the Rollover Unit holder or the Distribution
Agent. Any cash balance remaining after such purchase shall
be distributed within a reasonable time to the Rollover Unit
holder by check mailed to the address of such Unit holder on
the registration books of the Trustee. Units of a New Series
will be uncertificated unless and until the Rollover Unit
holder requests a certificate. Any cash held by the
Distribution Agent shall be held in a non-interest bearing
account which will be of benefit to the Distribution Agent
in accordance with normal banking procedures. Neither the
Trustee nor the Distribution Agent shall have any
responsibility or liability for 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.
(b) Notwithstanding the foregoing, the Depositor may,
in its discretion at any time, decide not to offer any new
Trust Series in the future, and if so, this Section 5.05
concerning the Rollover of Units shall be inoperative.
(c) The Distribution Agent shall receive no fees for
performing its duties hereunder. The Distribution Agent
shall, however, be entitled to receive indemnification and
reimbursement from the Trust for any and all expenses and
disbursements to the same extent as the Trustee is permitted
reimbursement hereunder."
JJ. Paragraph (e) of Section 6.01 of Article VI of the
Standard Terms and Conditions of Trust is amended to read as
follows:
"(e) (I) Subject to the provisions of subparagraphs
(II) and (III) of this paragraph, the Trustee may employ
agents, sub-custodians, attorneys, accountants and auditors
and shall not be answerable for the default or misconduct of
any such agents, sub-custodians, attorneys, accountants or
auditors if such agents, sub-custodians, attorneys,
accountants or auditors shall have been selected with
reasonable care. The Trustee shall be fully protected in
respect of any action under this Indenture taken or suffered
in good faith by the Trustee in accordance with the opinion
of counsel, which may be counsel to the Depositor acceptable
to the Trustee, provided, however, that this disclaimer of
liability shall not (i) excuse the Trustee from the
responsibilities specified in subparagraph II below or
(ii) limit the obligation of the Trustee to indemnify the
Trust under subparagraph III below. The fees and expenses
charged by such agents, sub-custodians, attorneys,
accountants or auditors shall constitute an expense of the
Trust reimbursable from the Income and Capital Accounts of
the affected Trust as set forth in section 6.04 hereof.
(II) The Trustee may place and maintain in the care of
an eligible foreign custodian (which is employed by the
Trustee as a sub-custodian as contemplated by subparagraph
(I) of this paragraph (e) and which may be an affiliate or
subsidiary of the Trustee or any other entity in which the
Trustee may have an ownership Income) the Trust's foreign
securities, cash and cash equivalents in amounts reasonably
necessary to effect the Trust's foreign securities
transactions, provided that the Trustee hereby agrees to
perform all the duties assigned by rule 17f-5 as now in
effect or as it may be amended in the future, to the boards
of management investment companies. The Trustee's duties
under the preceding sentence will not be delegated.
As used in this subparagraph (II),
(1) "foreign securities" include: securities
issued and sold primarily outside the United States by a
foreign government, a national of any foreign country or a
corporation or other organization incorporated or organized
under the laws of any foreign country and securities issued
or guaranteed by the government of the United States or by
any state or any political subdivision thereof or by any
agency thereof or by any entity organized under the laws of
the United States or of any state thereof which have been
issued and sold primarily outside the United States.
(2) "eligible foreign custodian" means
(a) The following securities depositories and
clearing agencies which operate transnational systems for
the central handling of securities or equivalent book
entries which, by appropriate exemptive order issued by the
Securities and Exchange Commission, have been qualified as
eligible foreign custodians for the Trust but only for so
long as such exemptive order continues in effect: Morgan
Guaranty Trust Company of New York, Brussels, Belgium, in
its capacity as operator of the Euroclear System
("Euroclear"), and Cedel Bank S.A. ("CEDEL").
(b) Any other entity that shall have been
qualified as an eligible foreign custodian for the foreign
securities of the Trust by the Securities and Exchange
Commission by exemptive order, rule or other appropriate
action, commencing on such date as it shall have been so
qualified but only for so long as such exemptive order, rule
or other appropriate action continues in effect.
(III) The Trustee will indemnify and hold the
Trust harmless from and against any loss occurring as a
result of an eligible foreign custodian's willful
misfeasance, reckless disregard, bad faith, or gross
negligence in performing custodial duties."
KK. 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 the lower of $2,000,000 or 20% of the total value of
Securities deposited in such Trust during the initial
offering period, or (ii)"
LL. Section 6.01(i) of the Standard Terms and Conditions of
Trust shall be deleted in its entirety and replaced with the
following:
"(i) No payment to a Depositor or to any principal
underwriter (as defined in the Investment Company Act of 1940)
for the Trust or to any affiliated person (as so defined) or
agent of a Depositor or such underwriter shall be allowed the
Trustee as an expense except (a) for payment of such reasonable
amounts as the Securities and Exchange Commission may prescribe
as compensation for performing bookkeeping and other
administrative services of a character normally performed by the
Trustee, and (b) such other amounts permitted under the
Investment Company Act of 1940."
MM. The third paragraph of Section 6.02 of the Standard
Terms and Conditions of Trust shall be deleted in its entirety
and replaced with the following:
"If provided for in the Prospectus for a Trust, the Trustee
shall pay, or reimburse to the Depositor, the expenses related to
the updating of the Trusts registration statement, to the extent
of legal fees, typesetting fees, electronic filing expenses and
regulatory filing fees. Such expenses shall be paid from the
Income Account, or to the extent funds are not available in such
Account, from the Capital Account, against an invoice or invoices
therefor presented to the Trustee by the Depositor. By
presenting such invoice or invoices, the Depositor shall be
deemed to certify, upon which certification the Trustee is
authorized conclusively to rely, that the amounts claimed therein
are properly payable pursuant to this paragraph. The Depositor
shall provide the Trustee, from time to time as requested, an
estimate of the amount of such expenses, which the Trustee shall
use for the purpose of estimating the accrual of Trust expenses.
The amount paid by the Trust pursuant to this paragraph in each
year shall be separately identified in the annual statement
provided to Unit holders. The Depositor shall assure that the
Prospectus for the Trust contains such disclosure as shall be
necessary to permit payment by the Trust of the expenses
contemplated by this paragraph under applicable laws and
regulations.
The provisions of this paragraph shall not limit the
authority of the Trustee to pay, or reimburse to the Depositor or
others, such other or additional expenses as may be determined to
be payable from the Trust as provided in Section 6.02 of the
Standard Terms and Conditions of Trust."
NN. The first sentence of the second paragraph of Section
6.04 shall be amended to include the phrase "license fees, if
any," immediately after the reference to legal and auditing
expenses.
OO. The third sentence of paragraph (a) of Section 6.05 of
the Standard Terms and Conditions of Trust shall be replaced in
its entirety by the following:
"The Depositor may remove the Trustee at any time with or
without cause and appoint a successor Trustee by written
instrument or instruments delivered not less than sixty days
prior to the effective date of such removal and appointment to
the Trustee so removed and to the successor Trustee."
PP. 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
Senior Vice President
THE CHASE MANHATTAN BANK,
Trustee
By Rosalia Raviele
Vice President
[SEAL]
ATTEST:
Joan Currie
Assistant Treasurer
FIRST TRUST ADVISORS L.P.,
Evaluator
By Robert M. Porcellino
Senior Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Robert M. Porcellino
Senior Vice President
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
FT 423
(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 12, 2000
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: FT 423
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of FT 423 in connection with the
preparation, execution and delivery of a Trust Agreement dated
April 12, 2000 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. 333-33520)
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 12, 2000
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 423
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of FT 423 (the "Fund"), in connection with the issuance of units
of fractional undivided interest in certain of the Trusts of said
Fund (the "Trust"), under a Trust Agreement, dated April 12, 2000
(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 Trusts will be administered, and
investments by a Trust from proceeds of subsequent deposits, if
any, will be made, in accordance with the terms of the Indenture.
Each Trust holds Equity Securities as such term is defined in the
Prospectus. For purposes of the following discussion and
opinion, it is assumed that each Equity Security is equity 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. Each 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; under Subpart E,
Subchapter J of Chapter 1 of the Code, income of a 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 a Trust.
II. The price a Unit holder pays for his Units, generally
including sales charges, is allocated among his pro rata portion
of each Equity Security held by a 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 Equity Security
held by a 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 an Equity 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 Equity Security which exceeds such current
and accumulated earnings and profits will first reduce a Unit
holder's tax basis in such Equity Security, and to the extent
that such dividends exceed a Unit holder's tax basis in such
Equity Security shall be treated as gain from the sale or
exchange of property.
III. Gain or loss will be recognized to a Unit holder
(subject to various nonrecognition provisions under the Code)
upon redemption or sale of his Units, except to the extent an in
kind distribution of stock is received by such Unit holder from a
Trust as discussed below. 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
Equity Security which is not taxable as ordinary income.
IV. If the Trustee disposes of a Trust asset (whether by
sale, taxable exchange, liquidation, redemption, payment on
maturity or otherwise) gain or loss will be recognized to the
Unit holder (subject to various nonrecognition provisions under
the Code) and the amount thereof will be measured by comparing
the Unit holder's aliquot share of the total proceeds from the
transaction with his basis for his fractional interest in the
asset disposed of. Such basis is ascertained by apportioning the
tax basis for his Units (as of the date on which his Units were
acquired) among each of a Trust's assets (as of the date on which
his Units were acquired) ratably according to their values as of
the valuation date nearest the date on which he purchased such
Units. A Unit holder's basis in his Units and of his fractional
interest in each Trust asset must be reduced, but not below zero,
by the Unit holder's pro rata portion of dividends with respect
to each Equity Security which is not taxable as ordinary income.
V. Under the Indenture, under certain circumstances, a
Unit holder tendering Units for redemption may request an in kind
distribution of Equity Securities upon the redemption of Units or
upon the termination of a Trust. As previously discussed, prior
to the redemption of Units or the termination of a Trust, a Unit
holder is considered as owning a pro rata portion of each of a
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 Equity Security owned by a Trust will depend
upon whether or not a Unit holder receives cash in addition to
Equity Securities. An "Equity 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 Equity Securities in exchange for his or her pro rata
portion of the Equity Securities held by a Trust. However, if a
Unit holder also receives cash in exchange for a fractional share
of an Equity Security held by a 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 an Equity Security held by
a 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 Equity Security
owned by a Trust.
A domestic corporation owning Units in a Trust may be
eligible for the 70% dividends received deduction pursuant to
Section 243(a) of the Code with respect to such Unit holder's pro
rata portion of dividends received by such Trust (to the extent
such dividends are taxable as ordinary income, as discussed
above, and are attributable to domestic corporations), subject to
the limitations imposed by Sections 246 and 246A of the Code.
To the extent dividends received by a Trust are attributable
to foreign corporations, a corporation that owns Units will not
be entitled to the dividends received deduction with respect to
its pro rata portion of such dividends since the dividends
received deduction is generally available only with respect to
dividends paid by domestic corporations.
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 a 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 an Equity Security is either
sold by a 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
nonrecognition provisions of the Code.
It should be noted that payments to a Trust of dividends on
Equity Securities that are attributable to foreign corporations
may be subject to foreign withholding taxes and Unit holders
should consult their tax advisers regarding the potential tax
consequences relating to the payment of any such withholding
taxes by a Trust. Any dividends withheld as a result thereof
will nevertheless be treated as income to the Unit holders.
Because under the grantor trust rules, an investor is deemed to
have paid directly his share of foreign taxes that have been paid
or accrued, if any, an investor may be entitled to a foreign tax
credit or deduction for United States tax purposes with respect
to such taxes. The Taxpayer Relief Act of 1997 imposes a required
holding period for such credits.
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. 333-33520)
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 12, 2000
The Chase Manhattan Bank, as Trustee of
FT 423
4 New York Plaza, 6th Floor
New York, New York 10004-3113
Attention: Mr. Thomas Porazzo
Vice President
Re: FT 423
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 423 (each, a "Trust"), which will be established under a
certain Standard Terms and Conditions of Trust dated November 20,
1991, and a related Trust Agreement dated as of today
(collectively, 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 Manhattan 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 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.
We consent to the filing of this opinion as an exhibit to
the Registration Statement (No. 333-33520) 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 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 12, 2000
The Chase Manhattan Bank, as Trustee of
FT 423
4 New York Plaza, 6th Floor
New York, New York 10004-3113
Attention: Mr. Thomas Porazzo
Vice President
Re: FT 423
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
423 (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 cause the Units to be transferred on the
registration books of the Trust to, and registered in, such other
names, and in such denominations, as the Depositor may order, and
may deliver, unless the Indenture provides that the Units will be
uncertificated, Certificates evidencing such ownership.
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 12, 2000
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: FT 423
Gentlemen:
We have examined the Registration Statement File No. 333-
32310 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
Senior Vice President