Registration No. 33-61727
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 3 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:
The First Trust Special Situations Trust, Series 123
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
NIKE SECURITIES L.P.
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agent 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 and Amount 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. Proposed Maximum Aggregate Offering Price to the Public of
the Securities Being Registered:
Indefinite
G. Amount of Filing Fee (as required by Rule 24f-2):
$500.00*
H. Approximate date of proposed sale to public:
|XXX|Check box if it is proposed that this filing will become
effective on September 7, 1995 at 2:00 p.m. pursuant to Rule
487.
*Previously paid
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 123
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust Prospectus front cover
(b) Title of securities issued Summary of Essential
Information
2. Name and address of each depositor Information as to
Sponsor, Trustee and
Evaluator
3. Name and address of trustee Information as to
Sponsor, Trustee and
Evaluator
4. Name and address of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
5. State of organization of trust The First Trust
Special Situations
Trust
6. Execution and termination of Other Information
trust agreement
7. Changes of name *
8. Fiscal year *
9. Litigation *
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer Public Offering
securities
(b) Cumulative or distributive The First Trust
securities Special Situations
Trust
(c) Redemption Rights of Unitholders
(d) Conversion, transfer, etc. Rights of Unitholders
(e) Periodic payment plan *
(f) Voting rights Rights of Unitholders
(g) Notice of certificateholders Other Information
(h) Consents required Rights of Unitholders;
Other Information
(i) Other provisions The First Trust
Special Situations
Trust
11. Types of securities comprising The First Trust
units Special
Situations Trust
Schedule of
Investments
12. Certain information regarding
periodic payment certificates *
13. (a) Load, fees, expenses, etc. Summary of Essential
Information; Public
Offering; The First
Trust Special
Situations Trust
(b) Certain information regarding
periodic payment certificates *
(c) Certain percentages Summary of Essential
Information; The
First Trust Special
Situations Trust;
Public Offering
(d) Certain other fees, etc.
payable by holders Rights of Units
Holders
(e) Certain profits receivable
by depositor, principal,
underwriters, trustee or The First Trust
affiliated persons Special
Situations Trust
(f) Ratio of annual charges *
to income
14. Issuance of trust's securities Rights of Unit Holders
15. Receipt and handling of payments
from purchasers *
16. Acquisition and disposition of
underlying securities The First Trust
Special Situations
Trust; Rights of Unit
Holders;
17. Withdrawal or redemption The First Trust
Special Situations
Trust; Public
Offering; Rights of
Unit Holders
18. (a) Receipt, custody and Rights of Unit Holders
disposition of income
(b) Reinvestment of distributions Rights of Unit Holders
(c) Reserves or special funds Information as to
Sponsor, Trustee and
Evaluator
(d) Schedule of distributions *
19. Records, accounts and reports Rights of Unit Holders
20. Certain miscellaneous provisions
of trust agreement
(a) Amendment Other Information
(b) Termination Other Information
(c) and (d) Trustee, removal Information as
and successor to Sponsor, Trustee
and Evaluator
(e) and (f) Depositor, removal Information as
and successor to Sponsor, Trustee
and Evaluator
21. Loans to security holders *
22. Limitations on liability The First Trust
Special Situations
Trust;
Information as to
Sponsor, Trustee
and Evaluator
23. Bonding arrangements Contents of
Registration
Statement
24. Other material provisions *
of trust agreement
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor Information as to
Sponsor, Trustee and
Evaluator
26. Fees received by depositor *
27. Business of depositor Information as to
Sponsor, Trustee and
Evaluator
28. Certain information as to
officials and affiliated *
persons of depositor
29. Voting securities of depositor *
30. Persons controlling depositor *
31. Payment by depositor for certain
services rendered to trust *
32. Payment by depositor for certain
other services rendered to trust *
33. Remuneration of employees of
depositor for certain services
rendered to trust *
34. Remuneration of other persons
for certain services rendered *
to trust
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's Public Offering
securities by states
36. Suspension of sales of trust's
securities *
37. Revocation of authority to *
distribute
38. (a) Method of distribution Public Offering
(b) Underwriting agreements Public Offering
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as
underwriters to Sponsor, Trustee
and Evaluator
(b) N.A.S.D. membership of
principal underwriters Information as to
Sponsor, Trustee and
Evaluator
40. Certain fees received by See Items 13(a) and
principal underwriters 13(e)
41. (a) Business of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) Branch offices of
principal underwriters *
(c) Salesmen of principal *
underwriters
42. Ownership of trust's securities
by certain persons *
43. Certain brokerage commissions
received by principal *
underwriters
44. (a) Method of valuation Summary of Essential
Information; The
First Trust Special
Situations Trust,
Public Offering
(b) Schedule as to offering *
price
(c) Variation in offering Public Offering
price to certain persons
45. Suspension of redemption rights *
46. (a) Redemption valuation Rights of Unit Holders
(b) Schedule as to redemption *
price
47. Maintenance of position in Public Offering;
underlying securities Rights
of Unit Holders
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of Information as
trustee to Sponsor, Trustee
and Evaluator
49. Fees and expenses of trustee The First Trust
Special Situations
Trust
50. Trustee's lien The First Trust
Special Situations
Trust
VI. INFORMATION CONCERNING THE INSURANCE OF HOLDERS OF
SECURITIES
51. Insurance of holders of
trust's ecurities *
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust The First Trust
agreement with respect to Special
selection or elimination of Situations Trust;
underlying securities Rights of Unit Holders
(b) Transactions involving
elimination of underlying *
securities
(c) Policy regarding substitution The First Trust
or elimination of underlying Special
securities Situations Trust;
Rights of Unit Holders
(d) Fundamental policy not
otherwise covered *
53. Tax status of Trust The First Trust
Special Situations
Trust
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during *
last ten years
55.
56.
57. Certain information regarding
period payment certificates *
58.
59. Financial statements Report of Independent
(Instruction 1(c) to Statement of Net
Assets
Form S-6 Auditors
* Inapplicable, answer negative or not required.
American Financial Institutions Growth Trust, Series 1
American Technology Growth Trust, Series 1
American Technology Growth & Treasury Securities Trust,
Series 2
The Trusts. The First Trust (registered trademark) Special Situations
Trust, Series 123 consists of the underlying separate unit investment
trusts set forth above. The various trusts are sometimes collectively
referred to herein as the "Trusts." The American Financial Institutions
Growth Trust, Series 1 and the American Technology Growth Trust,
Series 1 are sometimes collectively referred to herein as the
"Growth Trusts." The American Technology Growth & Treasury Trust,
Series 2 is sometimes individually referred to herein as the "Growth
& Treasury Trust."
The American Financial Institutions Growth Trust, Series 1 is
a unit investment trust consisting of a portfolio containing common
stocks issued by national and regional financial institutions
which are incorporated or headquartered in the United States.
The American Technology Growth Trust, Series 1 is a unit investment
trust consisting of a portfolio containing common stocks issued
by companies in the computer and technology industry with superior
historical financial performance.
The American Technology Growth & Treasury Trust, Series 2 is a
unit investment trust consisting of a portfolio containing zero
coupon U.S. Treasury bonds and common stocks issued by companies
in the computer and technology industry with superior historical
performance.
The objective of the American Financial Institutions Growth Trust,
Series 1 is to provide for potential capital appreciation and
dividend income by investing such Trust's portfolio in common
stocks ("Equity Securities"). The objective of the American Technology
Growth Trust, Series 1 is to provide for potential capital appreciation
by investing such Trust's portfolio in common stocks ("Equity
Securities"). The objective of the American Technology Growth
& Treasury Trust, Series 2 is to protect Unit holders' capital
and provide potential capital appreciation by investing a portion
of its portfolio in zero coupon U.S. Treasury bonds ("Treasury
Obligations") and the remainder of the Trust's portfolio in common
stocks ("Equity Securities"). Collectively, the Treasury Obligations
and the Equity Securities are referred to herein as the "Securities."
The Treasury Obligations evidence the right to receive a fixed
payment at a future date from the U.S. Government and are backed
by the full faith and credit of the U.S. Government. The guarantee
of the U.S. Government does not apply to the market value of the
Treasury Obligations or the Units of the Growth & Treasury Trust,
whose net asset value will fluctuate and, prior to maturity, may
be worth more or less than a purchaser's acquisition cost. The
Growth & Treasury Trust is intended to achieve its objective over
the life of the Trust and as such, is best suited for those investors
capable of holding such Units to maturity.
See "Schedule of Investments" for each Trust. There is, of course,
no guarantee that the objective of each Trust will be achieved.
Each Trust has a mandatory termination date (the "Mandatory Termination
Date" or "Trust Ending Date") as set forth under "Summary of Essential
Information."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
First Trust (registered trademark)
The date of this Prospectus is September 7, 1995
Page 1
Each Unit of a Trust represents an undivided fractional interest
in all the Securities deposited in such Trust. The Growth & Treasury
Trust has been organized so that purchasers of Units should receive,
at the termination of the Trust, an amount per Unit at least equal
to $10.00 (which is equal to the per Unit value upon maturity
of the Treasury Obligations), even if such Trust never paid a
dividend and the value of the Equity Securities were to decrease
to zero, which the Sponsor considers highly unlikely. This feature
of the Growth & Treasury Trust provides Unit holders who purchase
Units at a price of $10.00 or less per Unit with total principal
protection, including any sales charges paid, although they might
forego any earnings on the amount invested. To the extent that
Units are purchased at a price less than $10.00 per Unit, this
feature may also provide a potential for capital appreciation.
As a result of the volatile nature of the market for zero coupon
U.S. Treasury bonds, Units sold or redeemed prior to maturity
will fluctuate in price and the underlying Treasury Obligations
may be valued at a price greater or less than their value as of
the Initial Date of Deposit. UNIT HOLDERS DISPOSING OF THEIR UNITS
PRIOR TO THE MATURITY OF THE GROWTH & TREASURY TRUST MAY RECEIVE
MORE OR LESS THAN $10.00 PER UNIT, DEPENDING ON MARKET CONDITIONS
ON THE DATE UNITS ARE SOLD OR REDEEMED.
The Treasury Obligations deposited in the Growth & Treasury Trust
on the Initial Date of Deposit will mature on November 15, 2007
(the "Treasury Obligations Maturity Date"). The Treasury Obligations
in the Growth & Treasury Trust have a maturity value equal to
or greater than the aggregate Public Offering Price (which includes
the sales charge) of the Units of the Trust on the Initial Date
of Deposit. The Equity Securities deposited in a Trust's portfolio
have no fixed maturity date and the value of these underlying
Equity Securities will fluctuate with changes in the values of
stocks in general and with changes in the conditions and performance
of the specific Equity Securities owned by such Trust. See "Portfolio."
With respect to the Growth Trusts, the Sponsor may, from time
to time during a period of up to approximately 360 days after
the Initial Date of Deposit, deposit additional Equity Securities
in a Trust. Such deposits of additional Equity Securities will,
therefore, be done in such a manner that the original proportionate
relationship amongst the individual issues of the Equity Securities
shall be maintained. Any deposit by the Sponsor of additional
Equity Securities will duplicate, as nearly as is practicable,
the original proportionate relationship established on the Initial
Date of Deposit, and not the actual proportionate relationship
on the subsequent date of deposit, since the actual proportionate
relationship may be different than the original proportionate
relationship. Any difference may be due to the sale, redemption
or liquidation of any Equity Securities deposited in a Trust on
the Initial, or any subsequent, Date of Deposit. See "What is
The First Trust Special Situations Trust?" and "How May Securities
be Removed from a Trust?"
With respect to the Growth & Treasury Trust, the Sponsor may,
from time to time during a period of up to approximately 360 days
after the Initial Date of Deposit, deposit additional Securities
in the Trust, provided it maintains the original percentage relationship
between the Treasury Obligations and Equity Securities in the
Trust's portfolio. Such deposits of additional Securities will,
therefore, be done in such a manner that the maturity value of
each Unit should always be an amount at least equal to $10.00,
and that the original proportionate relationship amongst the individual
issues of the Equity Securities in the Trust shall be maintained.
Any deposit by the Sponsor of additional Securities will duplicate,
as nearly as is practicable, the original proportionate relationship
established on the Initial Date of Deposit, and not the actual
proportionate relationship on the subsequent date of deposit,
since the actual proportionate relationship may be different than
the original proportionate relationship. Any such difference may
be due to the sale, redemption or liquidation of any Securities
deposited in the Trust on the Initial, or any subsequent, Date
of Deposit. See "What is the First Trust Special Situations Trust?"
and "How May Securities be Removed from a Trust?"
Public Offering Price. With respect to the Growth Trusts, the
Public Offering Price per Unit of a Trust during the initial offering
period is equal to the aggregate underlying value of the Equity
Securities in such Trust (generally determined by the closing
sale prices of listed Equity Securities and the ask prices of
over-the-counter traded Equity Securities) plus or minus a pro
rata share of cash, if any, in the Capital and Income Accounts
of such Trust, plus a maximum sales charge of 4.9% (equivalent
to 5.152% of the net amount invested). The secondary market Public
Offering Price per Unit will be based upon the aggregate
Page 2
underlying value of the Equity Securities in a Trust (generally
determined by the closing sale prices of listed Equity Securities
and the bid prices of over-the-counter traded Equity Securities)
plus or minus a pro rata share of cash, if any, in the Capital
and Income Accounts of such Trust plus a maximum sales charge
of 4.9% (equivalent to 5.152% of the net amount invested), subject
to reduction beginning October 1, 1996.
With respect to the Growth & Treasury Trust, the Public Offering
Price per Unit of the Trust during the initial offering period
is equal to a pro rata share of the offering prices of the Treasury
Obligations and the aggregate underlying value of the Equity Securities
in the Trust (generally determined by the closing sale prices
of listed Equity Securities and the ask prices of over-the-counter
traded Equity Securities) plus or minus a pro rata share of cash,
if any, in the Capital and Income Accounts of the Trust, plus
a maximum sales charge of 5.5% (equivalent to 5.820% of the net
amount invested). A pro rata share of accumulated dividends, if
any, in the Income Account is included in the Public Offering
Price. The secondary market Public Offering Price per Unit will
be based upon a pro rata share of the bid prices of the Treasury
Obligations and the aggregate underlying value of the Equity Securities
in the Trust (generally determined by the closing sale prices
of listed Equity Securities and the bid prices of over-the-counter
traded Equity Securities) plus or minus a pro rata share of cash,
if any, in the Capital and Income Accounts of the Trust plus a
maximum sales charge of 5.5% (equivalent to 5.820% of the net
amount invested), subject to a reduction beginning October 1, 1996.
The minimum purchase for each Trust is $1,000. The sales charge
for each Trust is reduced on a graduated scale for sales involving
at least 5,000 Units with respect to the Growth Trusts and 10,000
Units with respect to the Growth & Treasury Trust. See "How is
the Public Offering Price Determined?"
Dividend and Capital Distributions. Distributions of dividends
and capital, if any, received by a Trust will be paid in cash
on the Distribution Date to Unit holders of record on the Record
Date as set forth in the "Summary of Essential Information." Distributions
of funds in the Capital Account, if any, will be made at least
annually in December of each year. Any distribution of income
and/or capital will be net of the expenses of a Trust. Income
with respect to the accrual of original issue discount on the
Treasury Obligations in the Growth & Treasury Trust will not be
distributed currently, although Unit holders of the Growth & Treasury
Trust will be subject to income tax at ordinary income rates as
if a distribution had occurred. INCOME WITH RESPECT TO THE ACCRUAL
OF ORIGINAL ISSUE DISCOUNT ON THE TREASURY OBLIGATIONS IN THE
GROWTH & TREASURY TRUST WILL NOT BE DISTRIBUTED CURRENTLY, ALTHOUGH
UNIT HOLDERS OF THE GROWTH & TREASURY TRUST WILL BE SUBJECT TO
INCOME TAX AT ORDINARY INCOME RATES AS IF A DISTRIBUTION HAD OCCURRED.
See "What is the Federal Tax Status of Unit Holders?" Additionally,
upon termination of a Trust, the Trustee will distribute, upon
surrender of Units for redemption, to each Unit holder his pro
rata share of such Trust's assets, less expenses, in the manner
set forth under "Rights of Unit Holders-How are Income and Capital
Distributed?"
Secondary Market for Units. After the initial offering period,
while under no obligation to do so, the Sponsor may maintain a
market for Units of a Trust and offer to repurchase such Units,
in the case of the Growth Trusts, at prices which are based on
the aggregate underlying value of Equity Securities in a Trust
(generally determined by the closing sale prices of listed Equity
Securities and the bid prices of over-the-counter traded Equity
Securities) plus or minus cash, if any, in the Capital and Income
Accounts of such Trust; in the case of the Growth & Treasury Trust,
at prices which are based on the aggregate bid side evaluation
of the Treasury Obligations and the aggregate underlying value
of Equity Securities in the Trust (generally determined by the
closing sale prices of listed Equity Securities and the bid prices
of over-the-counter traded Equity Securities) plus or minus cash,
if any, in the Capital and Income Accounts of the Trust. In the
case of the Growth Trusts, if a secondary market is maintained
during the initial offering period, the prices at which Units
will be repurchased will be based upon the aggregate underlying
value of the Equity Securities in a Trust (generally determined
by the closing sale prices of listed Equity Securities and the
ask prices of over-the-counter traded Equity Securities) plus
or minus cash, if any, in the Capital and Income Accounts of such
Trust. If a secondary market is maintained during the initial
offering period, in the case of the Growth & Treasury Trust, the
prices at which Units will be repurchased will be based upon the
aggregate offering side evaluation of the Treasury Obligations
and the aggregate underlying value of the Equity Securities in
the Trust (generally determined by the closing sale prices of
listed Equity Securities and the ask prices of over-the-counter
traded Equity Securities) plus or minus cash, if any, in the Capital
Page 3
and Income Accounts of the Trust. In the case of the Growth Trusts,
if a secondary market is not maintained, a Unit holder may redeem
Units through redemption at prices based upon the aggregate underlying
value of the Equity Securities in a Trust (generally determined
by the closing sale prices of listed Equity Securities and the
bid prices of over-the-counter traded Equity Securities) plus
or minus a pro rata share of cash, if any, in the Capital and
Income Accounts of such Trust. If a secondary market is not maintained,
a Unit holder may redeem Units of the Growth & Treasury Trust
through redemption at prices based upon the aggregate bid price
of the Treasury Obligations plus the aggregate underlying value
of the Equity Securities in the Trust (generally determined by
the closing sale prices of listed Equity Securities and the bid
prices of over-the-counter traded Equity Securities) plus or minus
a pro rata share of cash, if any, in the Capital and Income Accounts
of the Trust. With respect to the Growth Trusts, a Unit holder
tendering 2,500 Units of a Trust or more for redemption may request
a distribution of shares of Equity Securities (reduced by customary
transfer and registration charges) in lieu of payment in cash.
See "How May Units be Redeemed?"
Termination. Commencing on the Mandatory Termination Date for
the Growth Trusts and on the Treasury Obligations Maturity Date
for the Growth & Treasury Trust, Equity Securities will begin
to be sold in connection with the termination of each Trust. The
Sponsor will determine the manner, timing and execution of the
sale of the Equity Securities. Written notice of any termination
of each Trust specifying the time or times at which Unit holders
may surrender their certificates for cancellation shall be given
by the Trustee to each Unit holder at his address appearing on
the registration books of such Trust maintained by the Trustee.
At least 60 days prior to the Mandatory Termination Date for the
Growth Trusts and at least 60 days prior to the Treasury Obligations
Maturity Date for the Growth & Treasury Trust, the Trustee will
provide written notice thereof to all Unit holders and will include
with such notice a form to enable Unit holders to elect a distribution
of shares of Equity Securities (reduced by customary transfer
and registration charges) if such Unit holder owns at least 2,500
Units of a Trust, rather than to receive payment in cash for such
Unit holder's pro rata share of the amounts realized upon the
disposition by the Trustee of Equity Securities. All Unit holders
of the Growth & Treasury Trust will receive their pro rata portion
of the Treasury Obligations in cash upon the termination of the
Trust. To be effective, the election form, together with surrendered
certificates and other documentation required by the Trustee,
must be returned to the Trustee at least five business days prior
to the Mandatory Termination Date for the Growth Trusts and at
least five business days prior to the Treasury Obligations Maturity
Date for the Growth & Treasury Trust. Unit holders not electing
a distribution of shares of Equity Securities will receive a cash
distribution from the sale of the remaining Securities within
a reasonable time after a Trust is terminated. See "Rights of
Unit Holders-How are Income and Capital Distributed?"
Risk Factors. An investment in a Trust should be made with an
understanding of the risks associated therewith, including, among
other factors, the possible deterioration of either the financial
condition of the issuers of the Equity Securities which make up
a Trust or the general condition of the stock market, volatile
interest rates, economic recession and potential increased regulation
on the banking or communications industries. The Trusts are not
actively managed and Equity Securities will not be sold by the
Trusts to take advantage of market fluctuations or changes in
anticipated rates of appreciation. See "What are Equity Securities?-Risk
Factors."
Page 4
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities-September 7, 1995
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank (National Association)
Evaluator: FT Evaluators L.P.
<TABLE>
<CAPTION>
American Financial Institutions Growth Trust, Series 1
General Information
<S> <C>
Initial Number of Units 15,000
Fractional Undivided Interest in the Trust per Unit 1/15,000
Public Offering Price:
Aggregate Offering Price Evaluation of Securities in Portfolio (1) $141,498
Aggregate Offering Price Evaluation of Securities per Unit $ 9.4332
Sales Charge of 4.9% of the Public Offering Price per Unit,
(5.152% of the net amount invested) $ .4860
Public Offering Price per Unit (2) $ 9.9192
Sponsor's Initial Repurchase Price per Unit $ 9.4332
Redemption Price per Unit (based on aggregate underlying value
of Equity Securities) ($.4860 less than Public Offering
Price per Unit) (3) $ 9.4332
</TABLE>
CUSIP Number 33718R 138
First Settlement Date September 12, 1995
Mandatory Termination Date October 1, 2002
Discretionary Liquidation Amount The Trust may be terminated
if the value thereof is less
than the lower of $2,000,000 or
20% of the total value of Equity
Securities deposited in the Trust
during the primary offering period.
Trustee's Annual Fee $.0094 per Unit outstanding.
Evaluator's Annual Fee $0.0030 per Unit outstanding.
Evaluations for purposes of sale,
purchase or redemption of Units are
made as of the close of trading (4:00
p.m. eastern standard time) on the
New York Stock Exchange on each day
on which it is open.
Supervisory Fee (4) Maximum of $0.0035 per Unit out-
standing annually payable to an
affiliate of the Sponsor.
Estimated Organizational Expenses (5) $.0030 per Unit.
Income Distribution Record Date Fifteenth day of each March,
June, September and December,
commencing December 15, 1995.
Income Distribution Date (6) Last day of each March,
June, September and December,
commencing December 31, 1995.
[FN]
________________
(1) Each Equity Security listed on a national securities exchange
or the NASDAQ National Market System is valued at the last closing
sale price, or if no such price exists or if the Equity Security
is not so listed, at the closing ask price thereof.
(2) On the Initial Date of Deposit there will be no accumulated
dividends in the Income Account. Anyone ordering Units after such
date will pay a pro rata share of any accumulated dividends in
such Income Account. The Public Offering Price as shown reflects
the value of the Equity Securities at the opening of business
on the Initial Date of Deposit and establishes the original proportionate
relationship amongst the individual securities. No sales to investors
will be executed at this price. Additional Equity Securities will
be deposited during the day of the Initial Date of Deposit which
will be valued as of 4:00 p.m. eastern standard time and sold
to investors at a Public Offering Price per Unit based on this
valuation.
(3) See "How May Units be Redeemed?"
(4) In addition, the Sponsor will also be reimbursed for bookkeeping
and other administrative expenses currently at a maximum annual
rate of $0.0028 per Unit.
(5) The Trust (and therefore Unit holders) will bear all or
a portion of its organizational costs (including costs of preparing
the registration statement, the trust indenture and other closing
documents, registering Units with the Securities and Exchange
Commission and states, the initial audit of each Trust portfolio
and the initial fees and expenses of the Trustee but not including
the expenses incurred in the printing of preliminary and final
prospectuses, and expenses incurred in the preparation and printing
of brochures and other advertising materials and any other selling
expenses) as is common for mutual funds. Total organizational
expenses will be amortized over a five-year period. See "What
are the Expenses and Charges?" and "Statements of Net Assets."
Historically, the sponsors of unit investment trusts have paid
all the costs of establishing such trusts.
(6) Distributions from the Capital Account, if any, 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 $0.01 per Unit. Notwithstanding,
distributions of funds in the Capital Account, if any, will be
made in December of each year.
Page 5
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities-September 7, 1995
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank (National Association)
Evaluator: FT Evaluators L.P.
<TABLE>
<CAPTION>
American Technology Growth Trust, Series 1
General Information
<S> <C>
Initial Number of Units 15,000
Fractional Undivided Interest in the Trust per Unit 1/15,000
Public Offering Price:
Aggregate Offering Price Evaluation of Securities in Portfolio (1) $ 140,394
Aggregate Offering Price Evaluation of Securities per Unit $ 9.3596
Sales Charge of 4.9% of the Public Offering Price per Unit,
(5.152% of the net amount invested) $ .4823
Public Offering Price per Unit (2) $ 9.8419
Sponsor's Initial Repurchase Price per Unit $ 9.3596
Redemption Price per Unit (based on aggregate underlying value
of Equity Securities) ($.4823 less than Public Offering Price per Unit) (3) $ 9.3596
</TABLE>
CUSIP Number 33718R 146
First Settlement Date September 12, 1995
Mandatory Termination Date October 1, 2002
Discretionary Liquidation Amount The Trust may be terminated
if the value thereof is less
than the lower of $2,000,000 or
20% of the total value of Equity
Securities deposited in the Trust
during the primary offering period.
Trustee's Annual Fee $.0095 per Unit outstanding.
Evaluator's Annual Fee $0.0030 per Unit outstanding.
Evaluations for purposes of sale,
purchase or redemption of Units are
made as of the close of trading (4:00
p.m. eastern standard time) on the
New York Stock Exchange on each day
on which it is open.
Supervisory Fee (4) Maximum of $0.0035 per Unit out-
standing annually payable to an
affiliate of the Sponsor.
Estimated Organizational Expenses (5) $.0030 per Unit.
Income Distribution Record Date Fifteenth day of each December,
commencing December 15, 1995.
Income Distribution Date (6) Last day of each December, commencing
December 31, 1995.
[FN]
________________
(1) Each Equity Security listed on a national securities exchange
or the NASDAQ National Market System is valued at the last closing
sale price, or if no such price exists or if the Equity Security
is not so listed, at the closing ask price thereof.
(2) On the Initial Date of Deposit there will be no accumulated
dividends in the Income Account. Anyone ordering Units after such
date will pay a pro rata share of any accumulated dividends in
such Income Account. The Public Offering Price as shown reflects
the value of the Equity Securities at the opening of business
on the Initial Date of Deposit and establishes the original proportionate
relationship amongst the individual securities. No sales to investors
will be executed at this price. Additional Equity Securities will
be deposited during the day of the Initial Date of Deposit which
will be valued as of 4:00 p.m. eastern standard time and sold
to investors at a Public Offering Price per Unit based on this
valuation.
(3) See "How May Units be Redeemed?"
(4) In addition, the Sponsor will also be reimbursed for bookkeeping
and other administrative expenses currently at a maximum annual
rate of $0.0028 per Unit.
(5) The Trust (and therefore Unit holders) will bear all or
a portion of its organizational costs (including costs of preparing
the registration statement, the trust indenture and other closing
documents, registering Units with the Securities and Exchange
Commission and states, the initial audit of each Trust portfolio
and the initial fees and expenses of the Trustee but not including
the expenses incurred in the printing of preliminary and final
prospectuses, and expenses incurred in the preparation and printing
of brochures and other advertising materials and any other selling
expenses) as is common for mutual funds. Total organizational
expenses will be amortized over a five-year period. See "What
are the Expenses and Charges?" and "Statements of Net Assets."
Historically, the sponsors of unit investment trusts have paid
all the costs of establishing such trusts.
(6) Distributions from the Capital Account, if any, 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 $0.01 per Unit. Notwithstanding,
distributions of funds in the Capital Account, if any, will be
made in December of each year.
Page 6
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities-September 7, 1995
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank (National Association)
Evaluator: FT Evaluators L.P.
<TABLE>
<CAPTION>
American Technology Growth & Treasury Securities Trust, Series 2
General Information
<S> <C>
Aggregate Maturity Value of Treasury Obligations Initially Deposited $ 150,000
Initial Number of Units 15,000
Fractional Undivided Interest in the Trust per Unit 1/15,000
Public Offering Price:
Aggregate Offering Price Evaluation of Securities in Portfolio (1) $ 134,144
Aggregate Offering Price Evaluation of Securities per Unit $ 8.9429
Sales Charge of 5.5% of the Public Offering Price per Unit,
(5.820% of the net amount invested) $ .5205
Public Offering Price per Unit (2) $ 9.4634
Sponsor's Initial Repurchase Price per Unit $ 8.9429
Redemption Price per Unit (based on bid price evaluation of underlying
Treasury Obligations and aggregate underlying value of Equity Securities)
($.5367 less than Public Offering Price per Unit;
$.0162 less than Sponsor's Initial Repurchase Price per Unit) (3) $ 8.9267
</TABLE>
CUSIP Number 33718R 153
First Settlement Date September 12, 1995
Treasury Obligations Maturity Date November 15, 2007
Mandatory Termination Date November 15, 2007
Trustee's Annual Fee $.0095 per Unit outstanding.
Evaluator's Annual Fee $0.0030 per Unit outstanding.
Evaluations for purposes of sale,
purchase or redemption of Units are
made as of the close of trading (4:00
p.m. eastern standard time) on the
New York Stock Exchange on each day
on which it is open.
Supervisory Fee (4) Maximum of $0.0035 per Unit out-
standing annually payable to an
affiliate of the Sponsor.
Estimated Organizational Expenses (5) $.0030 per Unit.
Income Distribution Record Date Fifteenth day of each December,
commencing December 15, 1995.
Income Distribution Date (6) Last day of each December, commencing
December 31, 1995.
[FN]
________________
(1) Each Equity Security listed on a national securities exchange
or the NASDAQ National Market System is valued at the last closing
sale price, or if no such price exists or if the Equity Security
is not so listed, at the closing ask price thereof. The Treasury
Obligations are valued at their aggregate offering side evaluation.
(2) On the Initial Date of Deposit there will be no accumulated
dividends in the Income Account. Anyone ordering Units after such
date will pay a pro rata share of any accumulated dividends in
such Income Account. The Public Offering Price as shown reflects
the value of the Equity Securities at the opening of business
on the Initial Date of Deposit and establishes the original proportionate
relationship amongst the individual securities. No sales to investors
will be executed at this price. Additional Equity Securities will
be deposited during the day of the Initial Date of Deposit which
will be valued as of 4:00 p.m. eastern standard time and sold
to investors at a Public Offering Price per Unit based on this
valuation.
(3) See "How May Units be Redeemed?"
(4) In addition, the Sponsor will also be reimbursed for bookkeeping
and other administrative expenses currently at a maximum annual
rate of $0.0028 per Unit.
(5) The Trust (and therefore Unit holders) will bear all or
a portion of its organizational costs (including costs of preparing
the registration statement, the trust indenture and other closing
documents, registering Units with the Securities and Exchange
Commission and states, the initial audit of each Trust portfolio
and the initial fees and expenses of the Trustee but not including
the expenses incurred in the printing of preliminary and final
prospectuses, and expenses incurred in the preparation and printing
of brochures and other advertising materials and any other selling
expenses) as is common for mutual funds. Total organizational
expenses will be amortized over a five-year period. See "What
are the Expenses and Charges?" and "Statements of Net Assets."
Historically, the sponsors of unit investment trusts have paid
all the costs of establishing such trusts.
(6) Distributions from the Capital Account, if any, 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 $0.01 per Unit. Notwithstanding,
distributions of funds in the Capital Account, if any, will be
made in December of each year.
Page 7
American Financial Institutions Growth Trust, Series 1
American Technology Growth Trust, Series 1
American Technology Growth & Treasury Securities
Trust, Series 2
The First Trust Special Situations Trust, Series 123
What is The First Trust Special Situations Trust?
The First Trust Special Situations Trust, Series 123 is one of
a series of investment companies created by the Sponsor under
the name of The First Trust Special Situations Trust, all of which
are generally similar but each of which is separate and is designated
by a different series number. This Series consists of underlying
separate unit investment trusts designated as: American Financial
Institutions Growth Trust, Series 1, American Technology Growth
Trust, Series 1 and American Technology Growth & Treasury Trust,
Series 2 (collectively, the "Trusts," and each individually, a
"Trust"). The American Financial Institutions Growth Trust, Series
1 and the American Technology Growth Trust, Series 1 are sometimes
collectively referred to herein as the "Growth Trusts." The American
Technology Growth & Treasury Trust, Series 2 is sometimes individually
referred to herein as the "Growth & Treasury Trust." The Series
was created under the laws of the State of New York pursuant to
a Trust Agreement (the "Indenture"), dated the Initial Date of
Deposit, with Nike Securities L.P., as Sponsor, The Chase Manhattan
Bank (National Association), as Trustee, First Trust Advisors
L.P., as Portfolio Supervisor and FT Evaluators L.P., as Evaluator.
On the Initial Date of Deposit, the Sponsor deposited with the
Trustee confirmations of contracts for the purchase of zero coupon
U.S. Treasury bonds and common stocks (in the case of the Growth
Trusts, only confirmations of contracts for the purchase of common
stocks), together with an irrevocable letter or letters of credit
of a financial institution in an amount at least equal to the
purchase price of such securities. In exchange for the deposit
of securities or contracts to purchase securities in a Trust,
the Trustee delivered to the Sponsor documents evidencing the
entire ownership of such Trust.
The objective of the American Financial Institutions Growth Trust,
Series 1 is to provide for potential capital appreciation and
dividend income through an investment in equity securities issued
by national and regional financial institutions which are incorporated
or headquartered in the United States. The Trust seeks to provide
above-average capital appreciation potential from improving fundamentals
and continuing takeover activity in the banking industry. There
is, of course, no guarantee that the objectives of the Trust will
be achieved.
The objective of the American Technology Growth Trust, Series
1 is to provide for potential capital appreciation through an
investment in equity securities issued by companies in the computer
and technology industry with superior historical financial performance.
The Sponsor of the Trust believes that technology is the industry
of the future. The advancements in technology and the huge demand
for the products created by these and future advancements both
here and abroad make for a compelling investment opportunity.
Technology is one of the few sectors that offers an opportunity
to invest in companies that promise both extraordinary growth
and value. Above-average risk and volatility in shares of technology
stocks are more than offset, the Sponsor believes, by above-average
returns. It is the opinion of the Sponsor that the technology
stocks selected for this Trust are priced attractively, relative
to their potential earning prospects, despite the impressive returns
for some of the selections in the last year. See "What are Equity
Securities?" There is, of course, no guarantee that the objectives
of the Trust will be achieved.
The objective of the American Technology Growth & Treasury Trust,
Series 2 is to protect Unit holders' capital and provide potential
capital appreciation by investing a portion of its portfolio in
zero coupon U.S. Treasury bonds ("Treasury Obligations") and the
remainder of the Trust's portfolio in common stocks issued by
companies in the computer and technology industry with superior
historical performance ("Equity Securities"). Collectively, the
Treasury Obligations and the Equity Securities are referred to
herein as the "Securities." See "Schedule of Investments" for
the Growth & Treasury Trust. The Growth & Treasury Trust has a
Mandatory
Page 8
Termination Date as set forth under "Summary of Essential Information."
The Treasury Obligations evidence the right to receive a fixed
payment at a future date from the U.S. Government and are backed
by the full faith and credit of the U.S. Government. The guarantee
of the U.S. Government does not apply to the market value of the
Treasury Obligations or the Units of the Trust, whose net asset
values will fluctuate and, prior to maturity, may be worth more
or less than a purchaser's acquisition cost. There is, of course,
no guarantee that the objective of the Growth & Treasury Trust
will be achieved.
With respect to the Growth Trusts, with the deposit of the Securities
on the Initial Date of Deposit, the Sponsor established a percentage
relationship between the Equity Securities in each Trust's portfolio.
With the deposit of the Securities in the Growth & Treasury Trust
on the Initial Date of Deposit, the Sponsor established a percentage
relationship between the principal amounts of Treasury Obligations
and Equity Securities in the Trust's portfolio. From time to time
following the Initial Date of Deposit, the Sponsor, pursuant to
the Indenture, may deposit additional Securities in a Trust and
Units may be continuously offered for sale to the public by means
of this Prospectus, resulting in a potential increase in the outstanding
number of Units of a Trust. Any additional Equity Securities deposited
in a Growth Trust will maintain, as nearly as is practicable,
the original proportionate relationship of the Equity Securities
in the Trust's portfolio. Any additional Securities deposited
in the Growth & Treasury Trust will maintain, as nearly as is
practicable, the original proportionate relationship of the Treasury
Obligations and Equity Securities in such Trust's portfolio. Such
deposits of additional Securities in the Growth & Treasury Trust
will, therefore, be done in such a manner that the maturity value
of the Treasury Obligations represented by each Unit should always
be an amount at least equal to $10.00, and that the original proportionate
relationship amongst the individual issues of the Equity Securities
shall be maintained. Any deposit by the Sponsor of additional
Securities in a Trust will duplicate, as nearly as is practicable,
the original proportionate relationship and not the actual proportionate
relationship on the subsequent date of deposit, since the actual
proportionate relationship may be different than the original
proportionate relationship. Any such difference may be due to
the sale, redemption or liquidation of any of the Securities deposited
in a Trust on the Initial, or any subsequent, Date of Deposit.
See "How May Securities be Removed from a Trust?" On a cost basis
to the Growth & Treasury Trust, the original percentage relationship
on the Initial Date of Deposit was approximately 51.04% Treasury
Obligations and approximately 48.96% Equity Securities. The original
percentage relationship of each Equity Security in the Trusts
is set forth herein under "Schedule of Investments" for each Trust.
Since the prices of the underlying Equity Securities in each Growth
Trust will fluctuate daily, the ratio, on a market value basis,
will also change daily. Likewise, the prices of the underlying
Treasury Obligations and Equity Securities in the Growth & Treasury
Trust will fluctuate daily and the ratio, on a market value basis,
will also change daily. The portion of Equity Securities represented
by each Unit of a Growth Trust will not change as a result of
the deposit of additional Equity Securities in such Growth Trust.
The maturity value of the Treasury Obligations and the portion
of Equity Securities represented by each Unit of the Growth &
Treasury Trust will not change as a result of the deposit of additional
Securities in the Growth & Treasury Trust.
On the Initial Date of Deposit, each Unit of a Trust represented
the undivided fractional interest in the Securities deposited
in such Trust set forth under "Summary of Essential Information."
The Growth & Treasury Trust has been organized so that purchasers
of Units should receive, at the termination of the Trust, an amount
per Unit at least equal to $10.00 per Unit (which is equal to
the per Unit value upon maturity of the Treasury Obligations),
even if the Equity Securities never paid a dividend and the value
of the Equity Securities in the Trust were to decrease to zero,
which the Sponsor considers highly unlikely. Furthermore, the
Sponsor will take such steps in connection with the deposit of
additional Securities in the Growth & Treasury Trust as are necessary
to maintain a maturity value of the Units of the Trust at least
equal to $10.00 per Unit. The receipt of only $10.00 per Unit
upon the termination of the Growth & Treasury Trust (an event
which the Sponsor believes is unlikely) represents a substantial
loss on a present value basis. At current interest rates, the
present value of receiving $10.00 per Unit as of the termination
of the Growth & Treasury Trust would be approximately $4.56 per
Unit (the present value is indicated by the amount per Unit which
is invested in Treasury Obligations). Furthermore, the $10.00
per Unit in no respect protects investors against diminution in
the purchasing power of their investment due to inflation (although
expectations concerning inflation are a
Page 9
component in determining prevailing interest rates, which in turn
determine present values). If inflation were to occur at the rate
of 5% per annum during the period ending at the termination of
the Growth & Treasury Trust, the present dollar value of $10.00
per Unit at the termination of the Trust would be approximately
$5.45 per Unit. To the extent that Units of a Trust are redeemed,
the aggregate value of the Securities in such Trust will be reduced
and the undivided fractional interest represented by each outstanding
Unit of the Trust will increase. However, if additional Units
are issued by a Trust in connection with the deposit of additional
Securities by the Sponsor, the aggregate value of the Securities
in such Trust will be increased by amounts allocable to additional
Units, and the fractional undivided interest represented by each
Unit of such Trust will be decreased proportionately. See "How
May Units be Redeemed?" The Trusts each have a Mandatory Termination
Date as set forth herein under "Summary of Essential Information."
What are the Expenses and Charges?
With the exception of bookkeeping and other administrative services
provided to each Trust, for which the Sponsor will be reimbursed
in amounts as set forth under "Summary of Essential Information,"
the Sponsor will not receive any fees in connection with its activities
relating to each Trust. Such bookkeeping and administrative charges
may be increased without approval of the Unit holders by amounts
not exceeding proportionate increases under the category "All
Services Less Rent of Shelter" in the Consumer Price Index published
by the United States Department of Labor. The fees payable to
the Sponsor for such services may exceed the actual costs of providing
such services for these Trusts, but at no time will the total
amount received for such services rendered to unit investment
trusts of which Nike Securities L.P. is the Sponsor in any calendar
year exceed the actual cost to the Sponsor of supplying such services
in such year. First Trust Advisors L.P. will receive an annual
supervisory fee, which is not to exceed the amount set forth under
"Summary of Essential Information," for providing portfolio supervisory
services for each Trust. Such fee is based on the number of Units
outstanding in a Trust on January 1 of each year except for the
year or years in which an initial offering period occurs in which
case the fee for a month is based on the number of Units outstanding
at the end of such month. This fee may exceed the actual costs
of providing such supervisory services for these Trusts, but at
no time will the total amount received for portfolio supervisory
services rendered to unit investment trusts of which Nike Securities
L.P. is the Sponsor in any calendar year exceed the aggregate
cost to First Trust Advisors L.P. of supplying such services in such year.
Subsequent to the initial offering period, the Evaluator, an affiliate
of the Sponsor, will receive a fee as indicated in the "Summary
of Essential Information." The fee may exceed the actual costs
of providing such evaluation services for these Trusts, 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 FT Evaluators L.P. of supplying such services in such year.
The Trustee pays certain expenses of each Trust for which it is
reimbursed by such Trust. The Trustee will receive for its ordinary
recurring services to each Trust an annual fee as indicated in "Summary
of Essential Information" for each Trust. Such fee will be based upon the
largest aggregate number of Units of such Trust outstanding at any time
during the year. For a discussion of the services performed by
the Trustee pursuant to its obligations under the Indenture, reference
is made to the material set forth under "Rights of Unit Holders."
The Trustee's and Evaluator's fees are payable from the Income
Account of a Trust to the extent funds are available and then
from the Capital Account of a Trust. Since the Trustee has the
use of the funds being held in the Capital and Income Accounts
for payment of expenses and redemptions and since such Accounts
are noninterest-bearing to Unit holders, the Trustee benefits
thereby. Part of the Trustee's compensation for its services to
a Trust is expected to result from the use of these funds. Both
fees may be increased without approval of the Unit holders by
amounts not exceeding proportionate increases under the category
"All Services Less Rent of Shelter" in the Consumer Price Index
published by the United States Department of Labor.
Expenses incurred in establishing each Trust, including costs
of preparing the registration statement, the trust indenture and
other closing documents, registering Units with the Securities
and Exchange Commission and states, the initial audit of each
Trust portfolio and the initial fees and expenses of the Trustee and
Page 10
any other out-of-pocket expenses, will be paid by such Trust and
amortized over a five-year period. The following additional charges
are or may be incurred by a Trust: all legal and annual auditing
expenses of the Trustee incurred by or in connection with its
responsibilities under the Indenture; the expenses and costs of
any action undertaken by the Trustee to protect such Trust and
the rights and interests of the Unit holders; fees of the Trustee
for any extraordinary services performed under the Indenture;
indemnification of the Trustee for any loss, liability or expense
incurred by it without negligence, bad faith or willful misconduct
on its part, arising out of or in connection with its acceptance
or administration of such Trust; indemnification of the Sponsor
for any loss, liability or expense incurred without gross negligence,
bad faith or willful misconduct in acting as Depositor of such
Trust; all taxes and other government charges imposed upon the
Securities or any part of such Trust (no such taxes or charges
are being levied or made or, to the knowledge of the Sponsor,
contemplated). The above expenses and the Trustee's annual fee,
when paid or owing to the Trustee, are secured by a lien on each
Trust. In addition, the Trustee is empowered to sell Securities
in a Trust in order to make funds available to pay all these amounts
if funds are not otherwise available in the Income and Capital
Accounts of such Trust except that the Trustee shall not sell
Treasury Obligations to pay Growth & Treasury Trust expenses.
Since the Equity Securities are all common stocks and the income
stream produced by dividend payments is unpredictable, the Sponsor
cannot provide any assurance that dividends will be sufficient
to meet any or all expenses of a Trust. As described above, if
dividends are insufficient to cover expenses, it is likely that
Equity Securities will have to be sold to meet such Trust's expenses.
These sales may result in capital gains or losses to Unit holders.
See "What is the Federal Tax Status of Unit Holders?"
The Indenture requires each Trust to be audited on an annual basis
at the expense of such Trust by independent auditors selected
by the Sponsor. So long as the Sponsor is making a secondary market
for the Units of a Trust, the Sponsor is required to bear the
cost of such annual audit to the extent such cost exceeds $0.0050
per Unit for such Trust. Unit holders of a Trust covered by an
audit may obtain a copy of the audited financial statements upon request.
What is the Federal Tax Status of Unit Holders?
The following is a general discussion of certain of the Federal
income tax consequences of the purchase, ownership and disposition
of the Units. The summary is limited to investors who hold the
Units as "capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Internal Revenue Code
of 1986 (the "Code"). Unit holders should consult their tax advisers
in determining the Federal, state, local and any other tax consequences
of the purchase, ownership and disposition of Units in the Trusts.
In the opinion of Chapman and Cutler, special counsel for the
Sponsor, under existing law:
1. 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 the assets of a Trust under
the Code; and the income of each Trust will be treated as income
of the Unit holders thereof under the Code. Each Unit holder will
be considered to have received his pro rata share of income derived
from each Trust asset when such income is received by a Trust.
2. Each Unit holder will have a taxable event when a Trust disposes
of an Equity Security (whether by sale, exchange, redemption,
or payment at maturity) or upon the sale or redemption of Units
by such Unit holder. The price a Unit holder pays for his Units,
including sales charges, is allocated among his pro rata portion
of each Security held by a Trust (in proportion to the fair market
values thereof on the date the Unit holder purchases his Units)
in order to determine his initial cost for his pro rata portion
of each Security held by such Trust. The Treasury Obligations
held by the Growth & Treasury Trust are treated as stripped bonds
and may be treated as bonds issued at an original issue discount
as of the date a Unit holder purchases his Units. Because the
Treasury Obligations represent interests in "stripped" U.S. Treasury
bonds, a Unit holder's initial cost for his pro rata portion of
each Treasury Obligation held by the Growth & Treasury Trust shall
be treated as its "purchase price" by the Unit holder. Original
issue discount is effectively treated as interest for Federal income
Page 11
tax purposes and the amount of original issue discount in this
case is generally the difference between the bond's purchase price
and its stated redemption price at maturity. A Unit holder of
the Growth & Treasury Trust will be required to include in gross
income for each taxable year the sum of his daily portions of
original issue discount attributable to the Treasury Obligations
held by the Trust as such original issue discount accrues and
will in general be subject to Federal income tax with respect
to the total amount of such original issue discount that accrues
for such year even though the income is not distributed to the
Unit holders during such year to the extent it is not less than
a "de minimis" amount as determined under a Treasury Regulation
issued on December 28, 1992 relating to stripped bonds. To the
extent the amount of such discount is less than the respective
"de minimis" amount, such discount shall be treated as zero. In
general, original issue discount accrues daily under a constant
interest rate method which takes into account the semi-annual
compounding of accrued interest. In the case of the Treasury Obligations,
this method will generally result in an increasing amount of income
to the Unit holders of the Growth & Treasury Trust each year.
Unit holders of the Growth & Treasury Trust should consult their
tax advisers regarding the Federal income tax consequences and
accretion of original issue discount under the stripped bond rules.
For Federal income tax purposes, a Unit holder's pro rata portion
of dividends, as defined by Section 316 of the Code, paid by a
corporation with respect to an Equity Security held by a Trust
are 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
exceed 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 generally be treated as capital
gain. In general, any such capital gain will be short-term unless
a Unit holder has held his Units for more than one year.
3. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Securities held by a
Trust will generally be considered a capital gain except in the
case of a dealer or a financial institution and, in general, will
be long-term if the Unit holder has held his Units for more than
one year (the date on which the Units are acquired (i.e., the
trade date) is excluded for purposes of determining whether the
Units have been held for more than one year). A Unit holder's
portion of loss, if any, upon the sale or redemption of Units
or the disposition of Securities held by a Trust will generally
be considered a capital loss except in the case of a dealer or
a financial institution and will be long-term if the Unit holder
has held his Units for more than one year. Unit holders should
consult their tax advisers regarding the recognition of such capital
gains and losses for Federal income tax purposes.
4. The Code provides that "miscellaneous itemized deductions"
are allowable only to the extent that they exceed two percent
of an individual taxpayer's adjusted gross income. Miscellaneous
itemized deductions subject to this limitation under present law
include a Unit holder's pro rata share of expenses paid by a Trust,
including fees of the Trustee and the Evaluator.
Dividends Received Deduction. A corporation that owns Units will
generally be entitled to a 70% dividends received deduction with
respect to such Unit holder's pro rata portion of dividends received
by a Trust (to the extent such dividends are taxable as ordinary
income, as discussed above) in the same manner as if such corporation
directly owned the Equity Securities paying such dividends (other
than corporate shareholders, such as "S" corporations, which are
not eligible for the deduction because of their special characteristics
and other than for purposes of special taxes such as the accumulated
earnings tax and the personal holding corporation tax). However,
a corporation owning Units should be aware that Sections 246 and
246A of the Code impose additional limitations on the eligibility
of dividends for the 70% dividends received deduction. These limitations
include a requirement that stock (and therefore Units) must generally
be held at least 46 days (as determined under Section 246(c) of
the Code). Final regulations have been recently issued which address
special rules that must be considered in determining whether the
46-day holding requirement is met. Moreover, the allowable percentage
of the deduction will be reduced from 70% if
Page 12
a corporate Unit holder owns certain stock (or Units) the financing
of which is directly attributable to indebtedness incurred by
such corporation. It should be noted that various legislative
proposals that would affect the dividends received deduction have
been introduced. Unit holders should consult with their tax advisers
with respect to the limitations on and possible modifications
to the dividends received deduction.
Recognition of Taxable Gain or Loss Upon Disposition of Securities
by a Trust or Disposition of Units. As discussed above, a Unit
holder may recognize taxable gain (or loss) when an Equity Security
is disposed of by a Trust or if the Unit holder disposes of a
Unit. For taxpayers other than corporations, net capital gains
are subject to a maximum marginal tax rate of 28%. However, it
should be noted that legislative proposals are introduced from
time to time that affect tax rates and could affect relative differences
at which ordinary income and capital gains are taxed.
The Revenue Reconciliation Act of 1993 (the "Tax Act") raised
tax rates on ordinary income while capital gains remain subject
to a 28% maximum stated rate for taxpayers other than corporations.
Because some or all capital gains are taxed at a comparatively
lower rate under the Tax Act, the Tax Act includes a provision
that recharacterizes capital gains as ordinary income in the case
of certain financial transactions that are "conversion transactions"
effective for transactions entered into after April 30, 1993.
Unit holders and prospective investors should consult with their
tax advisers regarding the potential effect of this provision
on their investment in Units.
Special Tax Consequences of In-Kind Distributions Upon Redemption
of Units (for the Growth Trusts) or Termination of a Trust. As
discussed in "Rights of Unit Holders-How are Income and Capital
Distributed?", under certain circumstances a Unit holder who owns
at least 2,500 Units Units of a Trust may request an In-Kind Distribution
upon the redemption of Units or the termination of a Growth Trust
and only upon the termination of the Growth & Treasury Trust.
The Unit holder requesting an In-Kind Distribution will be liable
for expenses related thereto (the "Distribution Expenses") and
the amount of such In-Kind Distribution will be reduced by the
amount of the Distribution Expenses. See "Rights of Unit Holders-How
are Income and Capital Distributed?" Treasury Obligations held
by the Growth & Treasury Trust will not be distributed to a Unit
holder as part of an In-Kind Distribution. The tax consequences
relating to the sale of Treasury Obligations are discussed above.
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 the Trust assets for Federal income
tax purposes. The receipt of an In-Kind Distribution upon the
redemption of Units (for the Growth Trusts) or the termination
of a Trust would be deemed an exchange of such Unit holder's pro
rata portion of each of the shares of stock and other assets held
by such Trust in exchange for an undivided interest in whole shares
of stock plus, possibly, cash.
There are generally three different potential tax consequences
which may occur under an In-Kind Distribution with respect to
each Security owned by a Trust. A "Security" for this purpose
is a particular class of stock issued by a particular corporation
(and does not include Treasury Obligations in the Growth & Treasury
Trust). If the Unit holder receives only whole shares of a Security
in exchange for his or her pro rata portion in each share of such
Security held by a Trust, there is no taxable gain or loss recognized
upon such deemed exchange pursuant to Section 1036 of the Code.
If the Unit holder receives whole shares of a particular Security
plus cash in lieu of a fractional share of such Security, and
if the fair market value of the Unit holder's pro rata portion
of the shares of such Security exceeds his tax basis in his pro
rata portion of such Security, taxable gain would be recognized
in an amount not to exceed the amount of such cash received, pursuant
to Section 1031(b) of the Code. No taxable loss would be recognized
upon such an exchange pursuant to Section 1031(c) of the Code,
whether or not cash is received in lieu of a fractional share.
Under either of these circumstances, special rules will be applied
under Section 1031(d) of the Code to determine the Unit holder's
tax basis in the shares of such particular Security which he receives
as part of the In-Kind Distribution. Finally, if a Unit holder's
pro rata interest in a Security does not equal a whole share,
he may receive entirely cash in exchange for his pro rata portion
of a particular Security. In such case, taxable gain or loss is
measured by comparing the amount of cash received by the Unit
holder with his tax basis in such Security.
Page 13
Because each Trust will own many Securities, a Unit holder who
requests an In-Kind Distribution will have to analyze the tax
consequences with respect to each Security owned by such Trust.
In analyzing the tax consequences with respect to each Security,
such Unit holder must allocate the Distribution Expenses among
the Securities (the "Allocable Expenses"). The Allocable Expenses
will reduce the amount realized with respect to each Security
so that the fair market value of the shares of such Security received
(if any) and cash received in lieu thereof (as a result of any
fractional shares) by such Unit holder should equal the amount
realized for purposes of determining the applicable tax consequences
in connection with an In-Kind Distribution. A Unit holder's tax
basis in shares of such Security received will be increased by
the Allocable Expenses relating to such Security. The amount of
taxable gain (or loss) recognized upon such exchange will generally
equal the sum of the gain (or loss) recognized under the rules
described above by such Unit holder with respect to each Security
owned by a Trust. Unit holders who request an In-Kind Distribution
are advised to consult their tax advisers in this regard.
General. Each Unit holder will be requested to provide the Unit
holder's taxpayer identification number to the Trustee and to
certify that the Unit holder has not been notified that payments
to the Unit holder are subject to back-up withholding. If the
proper taxpayer identification number and appropriate certification
are not provided when requested, distributions by a Trust to such
Unit holder (including amounts received upon the redemption of
Units) will be subject to back-up withholding. Distributions by
a Trust will generally be subject to United States income taxation
and withholding in the case of Units held by non-resident alien
individuals, foreign corporations or other non-United States persons
(accrual of original issue discount on the Treasury Obligations
in the Growth & Treasury Trust may not be subject to taxation
or withholding provided certain requirements are met). Such persons
should consult their tax advisers.
Unit holders will be notified annually of the amounts of original
issue discount (in the case of the Growth & Treasury Trust) and
income dividends includable in the Unit holder's gross income
and amounts of Trust expenses which may be claimed as itemized
deductions.
Dividend income, long-term capital gains and accrual of original
issue discount (in the case of the Growth & Treasury Trust) may
also be subject to state and local taxes. Investors should consult
their tax advisers for specific information on the tax consequences
of particular types of distributions.
Unit holders desiring to purchase Units for tax-deferred plans
and IRAs should consult their broker for details on establishing
such accounts. Units may also be purchased by persons who already
have self-directed plans established. See "Why are Investments
in the Trusts Suitable for Retirement Plans?"
In the opinion of Carter, Ledyard & Milburn, Special Counsel to
the Trusts for New York tax matters, under the existing income
tax laws of the State of New York, each Trust is not an association
taxable as a corporation and the income of such Trust will be
treated as the income of the Unit holders thereof.
Why are Investments in the Trusts Suitable for Retirement Plans?
Units of the Trusts may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other tax-deferred
retirement plans. Generally, the Federal income tax relating to
capital gains and income received in each of the foregoing plans
is deferred until distributions are received. Distributions from
such plans are generally treated as ordinary income but may, in
some cases, be eligible for special averaging or tax-deferred
rollover treatment. Investors considering participation in any
such plan should review specific tax laws related thereto and
should consult their attorneys or tax advisers with respect to
the establishment and maintenance of any such plan. Such plans
are offered by brokerage firms and other financial institutions.
Fees and charges with respect to such plans may vary.
PORTFOLIOS
What are Treasury Obligations?
The Treasury Obligations deposited in the Growth & Treasury Trust
consist of U.S. Treasury bonds which have been stripped of their
unmatured interest coupons. The Treasury Obligations evidence
the right to receive a fixed payment at a future date from the
U.S. Government, and are backed by the full faith and credit of
the U.S. Government. Treasury Obligations are purchased at a deep
discount because the buyer obtains
Page 14
only the right to a fixed payment at a fixed date in the future
and does not receive any periodic interest payments. The effect
of owning deep discount bonds which do not make current interest
payments (such as the Treasury Obligations) is that a fixed yield
is earned not only on the original investment, but also, in effect,
on all earnings during the life of the discount obligation. This
implicit reinvestment of earnings at the same rate eliminates
the risk of being unable to reinvest the income on such obligations
at a rate as high as the implicit yield on the discount obligation,
but at the same time eliminates the holder's ability to reinvest
at higher rates in the future. For this reason, the Treasury Obligations
are subject to substantially greater price fluctuations during
periods of changing interest rates than are securities of comparable
quality which make regular interest payments. The effect of being
able to acquire the Treasury Obligations at a lower price is to
permit more of the Growth & Treasury Trust's portfolio to be invested
in Equity Securities.
What are Equity Securities?
The Trusts consist of different issues of Equity Securities, all
of which are listed on a national securities exchange, the NASDAQ
National Market System or are traded in the over-the-counter market.
The Equity Securities of the American Financial Institutions Growth
Trust, Series 1 consist of common stocks issued by national and
regional financial institutions incorporated or headquartered
in the United States. The stocks chosen for the Trust were selected
based upon, but not limited to, asset quality, earnings growth,
franchise strength, low valuations, potential acquisition value
and sound balance sheets.
The Equity Securities of the American Technology Growth Trust,
Series 1 and American Technology Growth & Treasury Securities
Trust, Series 2 consist of common stocks issued by well-established
companies in the computer and technology industry. The Trusts
purposely avoid small market capitalization stocks, newly issued
stocks and stocks with little or no earnings to help reduce excessively
high risk. The companies selected for the Trusts all have market
capitalizations of at least $500 million and have been publicly
traded for approximately two years or more. In general, the companies
chosen have above-average growth prospects for both sales and
earnings, established market shares for their products, lower-than-average
debt and pay little or no dividends.
See "What are the Equity Securities Selected for American Financial
Institutions Growth Trust, Series 1?" and "What are the Equity
Securities Selected for American Technology Growth Trust, Series
1 and American Technology Growth & Treasury Securities Trust,
Series 2?" for a general description of the companies.
Risk Factors. An investment in Units of the Trusts should be made
with an understanding of the risks such an investment may entail.
The American Financial Institutions Growth Trust, Series 1 concentrates
its Equity Securities in the financial industry and, as a result,
the value of the Units of the Trust may be susceptible to factors
affecting the financial industry. 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, 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
Page 15
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 Equity Securities
in the Trust's portfolio cannot be predicted with certainty. Periodic
efforts by recent Administrations to introduce legislation broadening
the ability of banks to compete with new products have not been
successful, but if enacted could lead to more failures as a result
of increased competition and added risks. Failure to enact such
legislation, on the other hand, may lead to declining earnings
and an inability to compete with unregulated financial institutions.
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. Starting in
mid-1997, banks would be allowed to turn existing banks into branches,
though states could pass laws to permit interstate branch banking
before then. Consolidation is likely to continue in both cases.
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. In late 1993
the United States Treasury Department proposed a restructuring
of the banks regulatory agencies which, if implemented, may adversely
affect certain of the Equity Securities in the Trust's portfolio.
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 Equity 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
Page 16
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
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 Equity Securities or whether
such approvals, if necessary, will be obtained.
The American Technology Growth Trust, Series 1 and the American
Technology Growth & Treasury Securities Trust, Series 2 concentrate
their Equity Securities in the technology industry and, as a result,
the value of the Units of each Trust may be susceptible to factors
affecting the technology industry.
The market for high-technology products is characterized by rapidly
changing technology, rapid product obsolescence, cyclical market
patterns, evolving industry standards and frequent new product
introductions. The success of the issuers of the Equity Securities
depends in substantial part on the timely and successful introduction
of new products. An unexpected change in one of more of the technologies
affecting an issuer's products or in the market for products based
on a particular technology could have a material adverse affect
on an issuer's operating results. Furthermore, there can be no
assurance that the issuers of the Equity Securities will be able
to respond timely to compete in the rapidly developing marketplace.
Based on trading history of common stock, factors such as announcements
of new products or development of new technologies and general
conditions of the industry have caused and are likely to cause
the market price of high-technology common stocks to fluctuate
substantially. In addition, technology company stocks have experienced
extreme price and volume fluctuations that often have been unrelated
to the operating performance of such companies. This market volatility
may adversely affect the market price of the Equity Securities
and therefore the ability of a Unit holder to redeem Units a price
equal to or greater than the original price paid for such Units.
Some key components of certain products of technology issuers
are currently available only from single sources. There can be
no assurance that in the future suppliers will be able to meet
the demand for components in a timely and cost effective manner.
Accordingly, an issuer's operating results and customer relationships
could be adversely affected by either an increase in price for,
or an interruption or reduction in supply of, any key components.
Additionally, many technology issuers are characterized by a highly
concentrated customer base consisting of a limited number of large
customers who may require product vendors to comply with rigorous
industry standards. Any failure to comply with such standards
may result in a significant loss or reduction of sales. Because
many products and technologies of technology companies are incorporated
into other related products, such companies are often highly dependent
on the performance of the personal computer, electronics and telecommunications
industries. There can be no assurance that these customers will
place additional orders, or that an issuer of Equity Securities
will obtain orders of similar magnitude as past orders from other
customers. Similarly, the success of certain technology companies
Page 17
is tied to a relatively small concentration of products or technologies.
Accordingly, a decline in demand of such products, technologies
or from such customers could have a material adverse impact on
issuers of the Equity Securities.
Many technology companies rely on a combination of patents, copyrights,
trademarks and trade secret laws to establish and protect their
proprietary rights in their products and technologies. There can
be no assurance that the steps taken by the issuers of the Equity
Securities to protect their proprietary rights will be adequate
to prevent misappropriation of their technology or that competitors
will not independently develop technologies that are substantially
equivalent or superior to such issuers' technology.
Each Trust consists of such Securities listed under "Schedule
of Investments" for each Trust as may continue to be held from
time to time in such Trust and any additional Securities acquired
and held by the Trusts pursuant to the provisions of the Trust
Agreements together with cash held in the Income and Capital Accounts.
Neither the Sponsor nor the Trustee shall be liable in any way
for any failure in any of the Securities. However, should any
contract for the purchase of any of the Securities initially deposited
hereunder fail, the Sponsor will, unless substantially all of
the moneys held in a Trust to cover such purchase are reinvested
in substitute Securities in accordance with the Trust Agreement,
refund the cash and sales charge attributable to such failed contract
to all Unit holders on the next distribution date.
Because certain of the Equity Securities from time to time may
be sold under certain circumstances described herein, and because
the proceeds from such events will be distributed to Unit holders
and will not be reinvested, no assurance can be given that a Trust
will retain for any length of time its present size and composition.
Although each Portfolio is not managed, the Sponsor may instruct
the Trustee to sell Equity Securities under certain limited circumstances.
Pursuant to the Indenture and with limited exceptions, the Trustee
may sell any securities or other property acquired in exchange
for Equity Securities such as those acquired in connection with
a merger or other transaction. If offered such new or exchanged
securities or property, the Trustee shall reject the offer. However,
in the event such securities or property are nonetheless acquired
by a Trust, they may be accepted for deposit in such Trust and
either sold by the Trustee or held in such Trust pursuant to the
direction of the Sponsor (who may rely on the advice of the Portfolio
Supervisor). See "How May Securities be Removed from a Trust?"
Equity Securities, however, will not be sold by a Trust to take
advantage of market fluctuations or changes in anticipated rates
of appreciation or depreciation.
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 Equity
Securities or the general condition of the common stock market
may worsen and the value of the Equity Securities and therefore
the value of the Units may decline. Common stocks are especially
susceptible to general stock market movements and to volatile
increases and decreases of value as market confidence in and perceptions
of the issuers change. These perceptions are based on unpredictable
factors including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic
expansion or contraction, and global or regional political, economic
or banking crises. Shareholders of common stocks 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. Shareholders
of common stocks of the type held by each Trust have a right to
receive dividends only when and if, and in the amounts, declared
by the issuer's board of directors and have a right to participate
in amounts available for distribution by the issuer only after
all other claims on the issuer have been paid or provided for.
Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the
same degree of protection of capital as do debt securities. The
issuance of additional debt securities or preferred stock will
create prior claims for payment of principal, interest and dividends
which could adversely affect the ability and inclination of the
issuer to declare or pay dividends on its common stock or the
rights of holders of common stock with respect to assets of the
issuer upon liquidation or bankruptcy. The value of common stocks
is subject to market fluctuations for as long as the common stocks
remain outstanding, and thus the value of the Equity Securities
in each Portfolio may be expected
Page 18
to fluctuate over the life of such Trust to values higher or lower
than those prevailing on the Initial Date of Deposit.
Holders of common stocks incur more risk than holders of preferred
stocks and debt obligations because common stockholders, as owners
of the entity, have generally inferior rights to receive payments
from the issuer in comparison with the rights of creditors of,
or holders of debt obligations or preferred stocks issued by,
the issuer. Cumulative preferred stock dividends must be paid
before common stock dividends and any cumulative preferred stock
dividend omitted is added to future dividends payable to the holders
of cumulative preferred stock. Preferred stockholders are also
generally entitled to rights on liquidation which are senior to
those of common stockholders.
Whether or not the Equity Securities are listed on a national
securities exchange, the principal trading market for the Equity
Securities may be in the over-the-counter market. As a result,
the existence of a liquid trading market for the Equity Securities
may depend on whether dealers will make a market in the Equity
Securities. There can be no assurance that a market will be made
for any of the Equity Securities, that any market for the Equity
Securities will be maintained or of the liquidity of the Equity
Securities in any markets made. In addition, a Trust may be restricted
under the Investment Company Act of 1940 from selling Equity Securities
to the Sponsor. The price at which the Equity Securities may be
sold to meet redemptions, and the value of each Trust, will be
adversely affected if trading markets for the Equity Securities
are limited or absent.
Unit holders will be unable to dispose of any of the Equity Securities
in each Portfolio, as such, and will not be able to vote the Equity
Securities. As the holder of the Equity Securities, the Trustee
will have the right to vote all of the voting stocks in the Trusts
and will vote such stocks in accordance with the instructions
of the Sponsor.
What are the Equity Securities Selected for American Financial
Institutions Growth Trust, Series 1?
National
BankAmerica Corporation, through its subsidiaries, Bank of America
and SeaFirst Corporation, provides retail and wholesale banking
services in the western United States and other select markets.
BankAmerica's commercial banking group focuses on commercial banking
services for middle market customers, while the world group serves
large corporate and institutional customers worldwide. BankAmerica
Corporation is headquartered in San Francisco, California.
Citicorp, Inc., the parent of Citibank, provides a broad range
of financial services. The company's operations include commercial,
mortgage and investment banking, trust services, consumer finance
and credit card services. Headquartered in New York, New York,
Citicorp's clients include individuals, businesses, institutions
and governments on a global basis.
MBNA Corporation, through its subsidiary MBNA America Bank N.A.,
is one of the country's largest consumer lenders through the issuance
of premium and standard credit cards. MBNA America Bank N.A. markets
its cards through a network of professional, fraternal, educational
and other special interest groups and membership associations,
as well as financial institutions. MBNA Corporation also provides
retail deposit and loan services to its customers, and card transaction
processing for a number of other financial institutions. MBNA
Corporation is headquartered in Newark, Delaware.
Northeast
North Side Savings Bank, headquartered in Floral Park, New York,
is a chartered bank operating through offices in the Bronx, Queens,
Nassau and Suffolk counties. The bank offers commercial and consumer
loans, mortgage loans, savings and checking accounts and other
financial services.
Republic New York Corporation is a bank holding company for Republic
National Bank of New York and Republic Bank for Savings. The company
has also established Safra Republic Holdings S.A., a Luxembourg
holding company. Republic New York Corporation is headquartered
in New York, New York and has numerous branches in the New York
City area and overseas.
Page 19
UJB Financial Corporation is a bank holding company whose subsidiary
banks attract deposits and offer real estate, commercial and installment
loans. The company's subsidiaries offer trust, discount brokerage,
commercial finance and credit life insurance services. UJB Financial
Corporation is headquartered in Princeton, New Jersey, and serves
customers in New Jersey and eastern Pennsylvania.
Midwest
Banc One Corporation, headquartered in Columbus, Ohio, operates
offices throughout the United States through its banking subsidiaries.
The bank offers depository and lending services to individual
and commercial customers. Banc One Corporation provides data processing,
venture capital investment and merchant banking, trust services,
brokerage services, investment management, equipment leasing and
insurance through its other subsidiaries. The bank's operations
are concentrated in the Midwest.
Boatmen's Bancshares, Inc., headquartered in St. Louis, Missouri,
is among the largest bank holding companies in the United States.
It also ranks among the nation's largest providers of trust services.
Boatmen's Bancshares, Inc. is a holding company for a trust company,
a mortgage company, a life insurance company and an insurance agency.
Charter One Financial, Inc., headquartered in Cleveland, Ohio,
is a holding company for Charter One Bank, a Federal savings bank
in Ohio which operates branches throughout the greater Cleveland
area, Akron, Canton, Portsmouth, Toledo and Youngstown. In addition,
the company operates loan offices in Columbus, Ohio, and Ashland, Kentucky.
First Financial Corporation, headquartered in Stevens Point, Wisconsin,
is a savings and loan holding company which serves Wisconsin and
Illinois. The company's subsidiary banks attract deposits and
offer residential mortgage, consumer, home equity and education loans.
First of America Bank Corporation, headquartered in Kalamazoo,
Michigan, is a multi-state bank holding company. The company's
subsidiary banks attract deposits and offer real estate mortgage,
consumer, commercial and agricultural loans. First of America
Bank Corporation serves Michigan, Indiana and Illinois.
KeyCorp, headquartered in Cleveland, Ohio, is a national banking
franchise of banking subsidiaries with significant operations
in the Midwest. Retail, commercial and investment management and
trust services are the company's three primary lines of business.
KeyCorp also owns non-bank subsidiaries providing trust, leasing,
credit, life insurance, data processing, mortgage banking and
investment services.
Mercantile Bancorporation is a bank holding company headquartered
in St. Louis, Missouri, with banks throughout Missouri and western
Illinois. Mercantile Bank of St. Louis is the largest of numerous
banks under the Mercantile name located throughout the State of Missouri.
Mississippi Valley Bancshares, Inc., headquartered in St. Louis,
Missouri, is the holding company for Southwest Bank of St. Louis.
The bank operates through offices in the St. Louis metropolitan
area and offers savings and checking accounts, various loans and
other financial services.
National City Corporation is headquartered in Cleveland, Ohio
and through its banking subsidiaries, the company offers a wide
range of banking and financial services throughout the States
of Ohio, Kentucky and southern Indiana. In addition to its general
commercial banking operations, the company offers trust, mortgage
banking, public finance, merchant banking, venture capital, insurance
and other financial services.
Norwest Corporation, headquartered in Minneapolis, Minnesota,
is one of the nation's larger superregional bank holding companies
providing banking, mortgage, insurance, investment and other financial
services. The company has offices in all 50 states and all 10
Canadian provinces, including significant Midwest operations.
Roosevelt Financial Group, Inc., based in Chesterfield, Missouri,
is a bank holding company for Roosevelt Savings Bank. The bank
has full service offices in the metropolitan St. Louis area, Hannibal
and Springfield, Missouri.
TCF Financial Corporation, through wholly-owned TCF Bank Savings
FSB, conducts a savings and loan business through branches located
in Minnesota, Illinois, Wisconsin and Iowa. Through other subsidiaries,
Page 20
the company also provides mortgage, consumer finance and insurance
and title insurance services. The company is headquartered in
Minneapolis, Minnesota.
Southeast
Barnett Banks, Inc., headquartered in Jacksonville, Florida, operates
banking offices in Florida and Georgia. Barnett Banks, Inc. commands
the leading market share in Florida. Its banks are complemented
by non-banking affiliates providing support services and specialized
financial services.
First Tennessee National Corporation, headquartered in Memphis,
Tennessee, is a bank holding company. The company's subsidiary
banks attract deposits and offer construction, real estate mortgage,
commercial and consumer loans.
First Virginia Banks, Inc., headquartered in Falls Church, Virginia,
is a bank holding company with operations in Virginia, Maryland
and Tennessee. Its greatest concentration of offices is in the
suburbs of Washington, D.C. The company's subsidiary banks attract
deposits and offer a broad range of lending and other financial services.
Leader Financial Corporation, headquartered in Memphis, Tennessee,
is the holding company for Leader Federal Bank for Savings. The
Bank operates through retail branch offices in Memphis, Nashville,
and upper eastern Tennessee. The Bank's wholly-owned subsidiary,
the Mortgage Company, provides mortgage banking services to markets
in Memphis and Nashville, Tennessee, and Omaha, Nebraska.
Regions Financial Corporation, headquartered in Birmingham, Alabama,
is the holding company for First Alabama Bank and has affiliates
in Tennessee, Louisiana and Georgia. First Alabama Bank provides
commercial banking services such as loans and deposit services,
and through its real estate financial subsidiary, provides mortgage
banking services.
Southtrust Corporation, is a regional bank holding company headquartered
in Birmingham, Alabama. The company has subsidiary banks, as well
as bank-related affiliates located in the States of Alabama, Florida,
Georgia, North Carolina, South Carolina, and Tennessee. Through
its subsidiary banks and affiliates, the company offers general
banking services, as well as mortgage banking, credit life and
securities brokerage to commercial and retail customers.
Union Planters Corporation is a bank holding company headquartered
in Memphis, Tennessee, with banking and broker/dealer services.
The company conducts its operations through banking affiliates
located in Alabama, Arkansas, Kentucky, Mississippi, and Tennessee.
Union Planters National Bank, a provider of commercial bankings
services in Tennessee, is the company's largest subsidiary.
Southwest
Southwest Bancorp, Inc. is a bank holding company headquartered
in Stillwater, Oklahoma. The bank attracts deposits from the public
and extends credit in the form of commercial and consumer loans
through its sole subsidiary, Stillwater National Bank and Trust
Company. The bank has several branches located in Stillwater,
Tulsa, Oklahoma City and Chickasha, Oklahoma.
West
City National Corporation owns and operates City National Bank.
The bank operates throughout Los Angeles, Orange and San Diego
counties in California. While offering standard banking services
to the public, City National Corporation has been focusing on
expanding its presence in serving small- and medium-sized businesses,
as well as offering banking to professional and regular business
borrowers. City National Corporation is headquartered in Beverly
Hills, California.
First Interstate Bancorp is a bank holding company with headquarters
in Los Angeles, California. The subsidiaries conduct retail banking
operations in the western states, concentrating on California,
Washington and Texas. The company's banks attract deposits and
provide lending services, mainly to small, middle-market and selected
large corporations.
First Security Corporation, headquartered in Salt Lake City, Utah,
is a bank holding company. The company's subsidiary banks attract
deposits and offer residential real estate, commercial, agricultural
and consumer loans. The banks serve Utah, Idaho, Oregon, Wyoming,
Nevada and New Mexico.
Page 21
Washington Mutual, Inc. is the largest thrift operating in the
state of Washington and the fourth largest in terms of assets
in the nation at the end of 1994. Washington Mutual Inc. is headquartered
in Seattle, Washington and operates savings branches and loan
offices in Washington State, Oregon and Idaho. The bank offers
a full line of financial services to the general public in accepting
deposits and making residential, consumer and commercial loans.
The thrift is expanding its operations into additional surrounding
states such as Utah, and also operates several subsidiaries such
as investment management, securities brokerage, life insurance
and benefits consulting services.
What are the Equity Securities Selected for American Technology
Growth Trust, Series 1 and American Technology Growth & Treasury
Securities Trust, Series 2?
Computer Networking
3Com Corporation is headquartered in Santa Clara, California,
where it designs, produces and markets a broad range of ISO 9000-compliant
global data networking solutions. 3Com Corporation's products
include routers, hubs, switches and adapters for Ethernet, Token
Ring, FDDI and ATM networks.
Cabletron Systems, Inc., based in Rochester, New Hampshire, develops
and manufactures a range of local area network (LAN) and wide
area network (WAN) connectivity hardware and software. Major products
include Multi Media Access Centers (MMACs), repeaters, bridges,
cable assemblies and test equipment. MMACs, also called smart
hubs, are used to simplify network installations, resolve problems
and facilitate modifications.
Cisco Systems, Inc. is engaged in the development, manufacturing,
marketing and support of multi-protocol inter-networking systems
that enable the construction of large-scale computer networks.
The company's main products are routers with concurrent bridging
and terminal services. Cisco Systems, Inc., with its headquarters
in San Jose, California, sells its products internationally to
system integrators. The products are then resold, mainly to government
customers.
Desktop Computers & File Servers
Compaq Computer Corporation is headquartered in Houston, Texas.
Compaq Computer Corporation designs, develops, manufactures and
markets personal computers for business and professional users.
Company products include portable and desktop personal computers
that are IBM compatible and run virtually all standardized software
applications.
Dell Computer Corporation, headquartered in Austin, Texas, designs
and manufactures personal computers compatible with IBM computers.
The company sells its products to businesses, individuals, government
agencies and academic institutions. The company markets its products
internationally.
Silicon Graphics, Inc., headquartered in Mountain View, California,
designs, manufactures, markets and services a family of visual
processing computer systems that are used mainly by engineers,
scientists and other related professionals. The computer systems
are used to develop, analyze and simulate complex 3-D objects
and phenomena. MIPS Technologies, Inc., the company's subsidiary,
designs and licenses RISC processor technology for computer systems.
Sun Microsystems, Inc. is a supplier of client/server computing
solutions, which feature networked workstations and servers that
store, process and distribute information. The workstations are
primarily designed for the engineering, scientific, commercial
and technical markets. The company, headquartered in Mountain
View, California, conducts business worldwide.
Enterprise & Client/Server Software
BMC Software, Inc., headquartered in Sugar Land, Texas, develops,
markets and supports software products to enhance IBM's primary
mainframe computer data base management and data communication
systems. The company's primary target market is the "Fortune 500"
industrial corporations and similar sized organizations worldwide.
Computer Associates International, Inc., headquartered in Islandia,
New York, designs and markets standardized computer software products
which are used on mini and microcomputers, including IBM, DG and DEC.
Page 22
Oracle Systems Corporation designs, develops, markets and supports
software products with a variety of uses, including database management,
applications development, decision support, end-user applications
and office automation. Oracle Systems Corporation's primary product,
the Oracle Relational Database Management System, runs on a broad
range of mainframes, minicomputers, microcomputers and personal
computers. The company is based in Redwood City, California.
Enterprise Computers
Hewlett-Packard Company, headquartered in Palo Alto, California,
designs, manufactures and services electronic measurement, analysis
and computation instruments. The company produces computers, calculators,
workstations, video displays, printers, disc and tape drives,
medical diagnostic and monitoring devices and mass spectrometers.
Hewlett-Packard Company sells its products in the United States
and other countries.
International Business Machines Corporation, headquartered in
Armonk, New York, is a large manufacturer of mainframe computers
and other information processing equipment and services. The company
is a supplier of micro and personal computers, software and networking
products, and peripheral equipment. Products are sold or leased
for use in business, government, science, space, education, medicine
and other areas on a worldwide basis.
Information Highway Equipment
DSC Communications Corporation designs, develops, manufactures,
and markets digital switching, transmission, access and private
network system products for the worldwide telecommunications marketplace.
DSC products includes Airspan, a wireless access system using
digital radio technology to deliver voice, data, fax and ISDN
services. The company is based in Plano, Texas.
Personal Productivity Software
Adobe Systems, Inc., headquartered in Mountain View, California,
is a leading developer and marketer of computer software used
to create, display, print and communicate electronic documents.
Significant products include Acrobat, software that allows users
to view documents across different applications and operating
systems and Postscript, an industry standard computer language
used to transmit pages of varying complexity to printers.
Microsoft Corporation, based out of Redmond, Washington, is the
world's leading developer of personal computer software. System
software and language products include "MS-DOS," "Windows," "XENIX"
and "Lan Manager."
Semiconductor Equipment
Applied Materials, Inc. is headquartered in Santa Clara, California,
where it develops, manufactures, sells and services semiconductor
wafer fabrication equipment worldwide. The company's product line
includes deposition, etching and ion implantation systems. Applied
Materials, Inc. has an equity interest in Applied Komatsu Technology,
Inc., a producer of thin-film transistor fabrication systems for
flat-panel displays.
Lam Research Corporation, based in Fremont, California, is a developer
and manufacturer of products used in the fabrication of semiconductors.
Products include chemical vapor deposition (CVD) systems and dry
etching equipment.
Novellus Systems, Inc., headquartered in San Jose, California,
manufactures, markets, and services advanced automated wafer fabrication
systems for the semiconductor manufacturing industry. Products
include chemical vapor deposition (CVD) systems.
Ultratech Stepper, Inc. is a leading supplier of photolithographic
steppers used to manufacture semiconductors and thin film heads
for disk drives. Ultratech Stepper is headquartered in San Jose, California.
Semiconductors
Adaptec, Inc., headquartered in Milpitas, California, is a supplier
of high-performance microcomputer input/output products including
proprietary "VLSI" circuits, personal computer and small computer
system interface-based controller and host controller boards and
a family of small computer systems. In addition, the
Page 23
company is a supplier of integrated circuits to peripheral manufacturers
for use in intelligent, high-performance peripherals.
Advanced Micro Devices, Inc., known as AMD, designs, develops
manufactures and markets integrated circuits for use in telecommunications,
networking and other computer related functions. AMD focuses on
three primary markets: processors for computers, input/output-networking
and embedded processor products, and nonvolatile (non-erasable)
memory devices. Advanced Micro Devices is headquartered in Sunnyvale,
California and markets its products worldwide.
Atmel Corporation, headquartered in San Jose, California, designs,
manufactures and markets a large range of high performance, low
power requirement non-volatile memory and logic devices. The chips
are used in items as diverse as missile navigation systems to
TV remote controls. Atmel's primary research and development focus
has been on the development of products that enhance the portability
of electronic products. By using less power, the products enable
manufacturers to decrease the size and weight of products ranging
from laptop computers to cellular phones.
Intel Corporation designs and manufactures computer components
and software. The company produces microprocessors, peripherals,
microcontrollers, microcommunications products, microcomputer
modules and systems and software for computer operating systems.
Intel Corporation sells its products internationally and is headquartered
in Santa Clara, California.
Linear Technology Corporation is headquartered in Milpitas, California,
where it manufactures linear integrated circuits. The company's
products include operational and instrumentation amplifiers, voltage
and switching regulators, voltage references, monolithic switched-capacitor
filters, high-frequency and high-current voltage converters and
other circuits. The company sells its products to original equipment
manufacturers (OEMs) in the United States and other countries.
Micron Technology, Inc., headquartered in Boise, Idaho, is one
of the leading manufacturers of computer memory chips in the world.
Microns three main products are DRAMs (dynamic random access memory),
SRAMs (static random access memory), and VRAMs (video random access
memory). Micron also operates subsidiaries in custom manufacturing
and system construction. Recently through an acquisition, Micron
has started production of PCs for office and home use.
Motorola, Inc. manufactures and sells a diverse line of electronic
equipment and components including communications systems, semiconductors,
information systems, electronic engine controls and computer systems.
Motorola is headquartered in Schaumburg, Illinois.
Texas Instruments, Inc., headquartered in Dallas, Texas, is one
of the oldest and largest semiconductor suppliers in the world,
having purchased a license in 1952 to manufacture transistors.
The company also produces electrical and electrical components,
defense electronics, software and calculators. Texas Instruments,
Inc. has a semiconductor and chip development joint venture with
Cannon, Hewlett Packard and the Singapore Economic Development
Board for the manufacturing of four-megabit DRAM (Dynamic Random
Access Memory) chips worldwide. The company also has a partnership
with Hitachi to develop a 256-megabit DRAM chip. In 1994 Texas
Instruments, Inc. and Hitachi formed a joint venture to build
a chip manufacturing facility in Richardson, Texas. The company
is also currently developing the DMD (Digital Micromirror Device),
which will enhance image quality for large-screen theater and
IDTV and HDTV televisions.
Xilinx, Inc., headquartered in San Jose, California, is a supplier
of CMOs programmable logic devices and field programmable gate
arrays. The company's logic products are off-the-shelf integrated
circuits that can be programmed by the user to perform the exact
logic function desired. Xilinix, Inc. markets these devices worldwide.
Storage
EMC Corporation, headquartered in Hopkinton, Massachusetts, is
a technological leader in the development, manufacturing and marketing
of information storage systems for large computer mainframes and
networks. EMC products feature a technology called RAID (redundant
arrays of inexpensive disks) using smaller less expensive hard
disks linked together to build cheaper and faster data retrieval
systems. EMC is
Page 24
expanding its business through developments in the client/server
and UNIX markets as well as remaining a supplier to original equipment
manufacturers for large computer systems.
Quantum Corporation, headquartered in Milpitas, California, designs
and sells storage products for a broad range of computer platforms,
serving original equipment manufacturers and distribution customers
worldwide. Storage products are installed in personal computers,
workstations and notebook computers.
What are Some Additional Considerations for Investors?
Investors should be aware of certain other considerations before
making a decision to invest in the Trusts.
The value of the Equity Securities, like the value of the Treasury
Obligations, will fluctuate over the life of a Trust and may be
more or less than the price at which they were deposited in such
Trust. The Equity Securities may appreciate or depreciate in value
(or pay dividends) depending on the full range of economic and
market influences affecting these securities. However, the Sponsor
believes that, upon termination of the Growth & Treasury Trust,
even if the Equity Securities deposited in the Growth & Treasury
Trust are worthless, an event which the Sponsor considers highly
unlikely, the Treasury Obligations will provide sufficient principal
to at least equal $10.00 per Unit (which is equal to the per Unit
value upon maturity of the Treasury Obligations). This feature
of the Growth & Treasury Trust provides Unit holders with principal
protection, although they might forego any earnings on the amount
invested. To the extent that Units are purchased at a price less
than $10.00 per Unit, this feature may also provide a potential
for capital appreciation.
Unless a Unit holder purchases Units of the Growth & Treasury
Trust on the Initial Date of Deposit (or another date when the
value of the Units is $10.00 or less), total distributions, including
distributions made upon termination of the Growth & Treasury Trust,
may be less than the amount paid for a Unit.
The Sponsor and the Trustee shall not be liable in any way for
any default, failure or defect in any Security. In the event of
a notice that any Treasury Obligations or Equity Securities will
not be delivered ("Failed Contract Obligations") to a Trust, the
Sponsor is authorized under the Indenture to direct the Trustee
to acquire other Treasury Obligations (in the case of the Growth
& Treasury Trust) or Equity Securities ("Replacement Securities").
Any Replacement Security deposited in a Trust will, in the case
of Treasury Obligations in the Growth & Treasury Trust, have the
same maturity value and, as closely as can be reasonably acquired
by the Sponsor, the same maturity date or, in the case of Equity
Securities, be identical to those which were the subject of the
failed contract. The Replacement Securities must be purchased
within 20 days after delivery of the notice of a failed contract
and the purchase price may not exceed the amount of funds reserved
for the purchase of the Failed Contract Obligations.
If the right of limited substitution described in the preceding
paragraph is not utilized to acquire Replacement Securities in
the event of a failed contract, the Sponsor will refund the sales
charge attributable to such Failed Contract Obligations to all
Unit holders of a Trust and the Trustee will distribute the principal
attributable to such Failed Contract Obligations not more than
120 days after the date on which the Trustee received a notice
from the Sponsor that a Replacement Security would not be deposited
in such Trust. In addition, Unit holders should be aware that,
at the time of receipt of such principal, they may not be able
to reinvest such proceeds in other securities at a yield equal
to or in excess of the yield which such proceeds would have earned
for Unit holders of such Trust.
The Indenture also authorizes the Sponsor to increase the size
of each Trust and the number of Units thereof by the deposit of
additional Securities in such Trust and the issuance of a corresponding
number of additional Units.
Each Trust consists of the Securities listed under "Schedule of
Investments" for each Trust (or contracts to purchase such Securities)
as may continue to be held from time to time in such Trust and
any additional Securities acquired and held by such Trust pursuant
to the provisions of the Indenture (including provisions with
respect to deposits into such Trust of Securities in connection
with the issuance of additional Units).
Once all of the Securities in each Trust are acquired, the Trustee
will have no power to vary the investments of the Trust, i.e.,
the Trustee will have no managerial power to take advantage of
market variations to
Page 25
improve a Unit holder's investment, but may dispose of Securities
only under limited circumstances. See "How May Securities be Removed
from a Trust?"
To the best of the Sponsor's knowledge, there is no litigation
pending as of the Initial Date of Deposit in respect of any Security
which might reasonably be expected to have a material adverse
effect on a Trust. At any time after the Initial Date of Deposit,
litigation may be instituted on a variety of grounds with respect
to the Securities. The Sponsor is unable to predict whether any
such litigation will be instituted, or if instituted, whether
such litigation might have a material adverse effect on the Trusts.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. During the initial
offering period, with respect to each Growth Trust, the Public
Offering Price is based on the aggregate underlying value of the
Equity Securities in the Trust, plus or minus cash, if any, in
the Income and Capital Accounts of the Trust, plus a sales charge
of 4.9% (equivalent to 5.152% of the net amount invested) divided
by the number of Units of the Trust outstanding.
During the initial offering period, with respect to the Growth
& Treasury Trust, the Public Offering Price is based on the aggregate
of the offering side evaluation of the Treasury Obligations in
the Trust and the aggregate underlying value of the Equity Securities
in the Trust, plus or minus cash, if any, in the Income and Capital
Accounts of the Trust, plus a sales charge of 5.5% (equivalent
to 5.820% of the net amount invested) divided by the number of
Units of the Trust outstanding.
During the initial offering period, with respect to each Growth
Trust, the Sponsor's Repurchase Price is based on the aggregate
underlying value of the Equity Securities in the Trust, plus or
minus cash, if any, in the Income and Capital Accounts of the
Trust divided by the number of Units of the Trust outstanding.
For secondary market sales after the completion of the initial
offering period, the Public Offering Price is also based on the
aggregate underlying value of the Equity Securities in the Trust,
plus or minus cash, if any, in the Income and Capital Accounts
of the Trust, plus a maximum sales charge of 4.9% of the Public
Offering Price (equivalent to 5.152% of the net amount invested),
subject to reduction beginning October 1, 1996, divided by the
number of outstanding Units of the Trust.
During the initial offering period, with respect to the Growth
& Treasury Trust, the Sponsor's Repurchase Price is based on the
aggregate of the offering side evaluation of the Treasury Obligations
in the Trust and the aggregate underlying value of the Equity
Securities in the Trust, plus or minus cash, if any, in the Income
and Capital Accounts of the Trust divided by the number of Units
of the Trust outstanding. For secondary market sales after the
completion of the initial offering period, the Public Offering
Price is based on the aggregate bid side evaluation of the Treasury
Obligations in the Trust and the aggregate underlying value of
the Equity Securities in each Trust, plus or minus cash, if any,
in the Income and Capital Accounts of the Trust, plus a maximum
sales charge of 5.5% of the Public Offering Price (equivalent
to 5.820% of the net amount invested), subject to reduction beginning
October 1, 1996, divided by the number of outstanding Units of such Trust.
The minimum purchase of each Growth Trust is $1,000. The applicable
sales charge is reduced by a discount as indicated below for volume
purchases with respect to each Growth Trust (except for sales
made pursuant to a "wrap fee account" or similar arrangements
as set forth below):
Primary and Secondary
_____________________
Percent of Percent of
Offering Net Amount
Number of Units Price Invested
_______________ _________ __________
5,000 but less than 10,000 0.25% 0.2506%
10,000 but less than 25,000 0.50% 0.5025%
25,000 but less than 50,000 1.00% 1.0101%
50,000 or more 2.00% 2.0408%
Page 26
The minimum purchase of the Growth & Treasury Trust is $1,000.
The applicable sales charge is reduced by a discount as indicated
below for volume purchases with respect to the Growth & Treasury
Trust (except for sales made pursuant to a "wrap fee account"
or similar arrangements as set forth below):
Primary and Secondary
_____________________
Percent of Percent of
Offering Net Amount
Number of Units Price Invested
_______________ _________ __________
10,000 but less than 50,000 0.60% 0.6036%
50,000 but less than 100,000 1.30% 1.3171%
100,000 or more 2.10% 2.1450%
Any such reduced sales charge shall be the responsibility of the
selling broker/dealer, bank or other selling agent. An investor may
aggregate purchases of Units of either of the Growth Trusts and the
Growth & Treasury Trust for purposes of qualifying for volume purchase
discounts listed above. The aggregate amount of Units of each Trust
purchased will be used to determine the applicable sales charge to be
imposed on the purchase of Units of each Trust. The reduced
sales charge structure will apply on all purchases of Units in
a Trust by the same person on any one day from any one broker/dealer,
bank or other selling agent. Additionally, Units purchased in
the name of the spouse of a purchaser or in the name of a child
of such purchaser under 21 years of age will be deemed, for the
purposes of calculating the applicable sales charge, to be additional
purchases by the purchaser. The reduced sales charges will also
be applicable to a trustee or other fiduciary purchasing securities
for a single trust estate or single fiduciary account. The purchaser
must inform the broker/dealer, bank or other selling agent of
any such combined purchase prior to the sale in order to obtain
the indicated discount. In addition, with respect to the employees,
officers and directors (including their immediate family members,
defined as spouses, children, grandchildren, parents, grandparents,
mothers-in-law, fathers-in-law, sons-in-law and daughters-in-law,
and trustees, custodians or fiduciaries for the benefit of such
persons) of the Sponsor, broker/dealers, banks or other selling
agents and their affiliates, the sales charge is reduced by 2.0%
of the Public Offering Price for purchases of Units during the
primary and secondary public offering periods.
Units may be purchased in the primary or secondary market at the
Public Offering Price less the concession the Sponsor typically
allows to dealers and other selling agents for purchases (see
"Public Offering-How are Units Distributed?") by investors who
purchase Units through registered investment advisers, certified
financial planners or registered broker-dealers who in each case
either charge periodic fees for financial planning, investment
advisory or asset management services, or provide such services
in connection with the establishment of an investment account
for which a comprehensive "wrap fee" charge is imposed.
Had the Units of the Trusts been available for sale on the business
day prior to the Initial Date of Deposit, the Public Offering
Price for each Trust would have been as indicated in "Summary
of Essential Information." The Public Offering Price of Units
on the date of the prospectus or during the initial offering period
may vary from the amount stated under "Summary of Essential Information"
in accordance with fluctuations in the prices of the underlying
Securities. During the initial offering period, the aggregate
value of the Units of each Trust shall be determined (a) on the
basis of the offering prices of the Treasury Obligations (if any)
and the aggregate underlying value of the Equity Securities therein
plus or minus cash, if any, in the Income and Capital Accounts
of such Trust, (b) if offering prices are not available for the
Treasury Obligations (if any), on the basis of offering prices
for comparable securities, (c) by determining the value of the
Treasury Obligations (if any) on the offer side of the market
by appraisal, or (d) by any combination of the above. The aggregate
underlying value of the Equity Securities will be determined in
the following manner: If the Equity Securities are listed on a
national securities exchange or the NASDAQ National Market System,
this evaluation is generally based on the closing sale prices
on that exchange or that system (unless it is determined that
these prices are inappropriate as a basis for valuation) or, if
there is no closing sale price on that exchange or system, at
the closing ask prices. If the Equity Securities are not so listed
or, if so listed and the principal market therefor is other than
on the exchange, the evaluation shall generally be based on the
current ask 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
Page 27
of current ask prices for comparable securities, (b) by appraising
the value of the Equity Securities on the ask side of the market
or (c) by any combination of the above.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the bid price per
Unit of the Treasury Obligations in each Trust (if any) and the
aggregate underlying value of the Equity Securities therein, plus
or minus cash, if any, in the Income and Capital Accounts of each
Trust plus the applicable sales charge. The offering price of
the Treasury Obligations in the Growth & Treasury Trust may be
expected to be greater than the bid price of the Treasury Obligations
by less than 2%.
Although payment is normally made three business days following
the order for purchase (the date of settlement), payment may be
made prior thereto. A person will become owner of the Units on
the date of settlement provided payment has been received. Cash,
if any, made available to the Sponsor prior to the date of settlement
for the purchase of Units may be used in the Sponsor's business
and may be deemed to be a benefit to the Sponsor, subject to the
limitations of the Securities Exchange Act of 1934. Delivery of
Certificates representing Units so ordered will be made three
business days following such order or shortly thereafter. See
"Rights of Unit Holders-How may Units be Redeemed?" for information
regarding the ability to redeem Units ordered for purchase.
How are Units Distributed?
During the initial offering period (i) for Units issued on the
Initial Date of Deposit and (ii) for additional Units issued after
such date as additional Securities are deposited by the Sponsor,
Units will be distributed to the public at the then current Public
Offering Price. The initial offering period may be up to approximately
360 days. During such period, the Sponsor may deposit additional
Securities in a Trust and create additional Units. Units reacquired
by the Sponsor during the initial offering period (at prices based
upon aggregate offering price of the Treasury Obligations (if
any) and the aggregate underlying value of the Equity Securities
in a Trust plus or minus a pro rata share of cash, if any, in
the Income and Capital Accounts of such Trust) may be resold at
the then current Public Offering Price. Upon the termination of
the initial offering period, unsold Units created or reacquired
during the initial offering period will be sold or resold at the
then current Public Offering Price.
Upon completion of the initial offering, Units repurchased in
the secondary market (see "Will There be a Secondary Market?")
may be offered by this prospectus at the secondary market public
offering price determined in the manner described above.
It is the intention of the Sponsor to qualify Units of each Trust
for sale in a number of states. With respect to each Growth Trust,
sales initially will be made to dealers and others at prices which
represent a concession or agency commission of 3.2% of the Public
Offering Price, and, for secondary market sales, 3.2% of the Public
Offering Price (or 65% of the then current maximum sales charge
after October 1, 1996). With respect to the Growth & Treasury
Trust, sales initially will be made to dealers and others at prices
which represent a concession or agency commission of 3.6% of the
Public Offering Price, and, for secondary market sales, 3.6% of
the Public Offering Price (or 65% of the then current maximum
sales charge after October 1, 1996). Volume concessions or agency
commissions of an additional 0.40% of the Public Offering Price
will be given to any broker/dealer or bank, who purchases from
the Sponsor at least $100,000 of a Trust on the Initial Date of
Deposit, $250,000 on any other day thereafter or $100,000 of the
First Trust of Insured Municipal Bonds, Series 235. Volume concessions
or agency commissions of an additional 0.55% of the Public Offering
Price for each Growth Trust and 0.60% of the Public Offering Price
for the Growth & Treasury Trust will be given to any broker/dealer
or bank, who purchases from the Sponsor at least $1,000,000 of
a Growth Trust or the Growth & Treasury Trust on the Initial Date
of Deposit. The Sponsor reserves the right to change the amount
of the concession or agency commission from time to time. Effective
on each October 1, commencing October 1, 1996, the sales charge
of each Growth Trust and the Growth & Treasury Trust will be reduced
by 1/2 of 1% to a minimum sales charge of 3.0% and 3.5%, respectively.
However, resales of Units of the Trusts by such broker/dealers,
banks and other selling agents to the public will be made at the
Public Offering Price described in the prospectus. The Sponsor
reserves the right to change the amount of the concession or agency
commission from time to time. Certain commercial banks may be
making Units of
Page 28
a Trust available to their customers on an agency basis. A portion
of the sales charge paid by these customers is retained by or
remitted to the banks in the amounts indicated in the second preceding
sentence. Under the Glass-Steagall Act, banks are prohibited from
underwriting Units of the Trusts; however, the Glass-Steagall
Act does permit certain agency transactions and the banking regulators
have not indicated that these particular agency transactions are
not permitted under such Act. In Texas and in certain other states,
any banks making Units available must be registered as broker/dealers
under state law.
From time to time the Sponsor may implement programs under which
broker/dealers, banks or other selling agents of a Trust may receive
nominal awards from the Sponsor for each of their registered representatives
who have sold a minimum number of UIT Units during a specified
time period. In addition, at various times the Sponsor may implement
other programs under which the sales force of a broker/dealer,
bank or other selling agent may be eligible to win other nominal
awards for certain sales efforts, or under which the Sponsor will
reallow to any such broker/dealer, bank or other selling agent
that sponsors sales contests or recognition programs conforming
to criteria established by the Sponsor, or participates in sales
programs sponsored by the Sponsor, an amount not exceeding the
total applicable sales charges on the sales generated by such
person at the public offering price during such programs. Also,
the Sponsor in its discretion may from time to time pursuant to
objective criteria established by the Sponsor pay fees to qualifying
broker/dealers, banks or other selling agents for certain services
or activities which are primarily intended to result in sales
of Units of a Trust. Such payments are made by the Sponsor out
of its own assets, and not out of the assets of a Trust. These
programs will not change the price Unit holders pay for their
Units or the amount that a Trust will receive from the Units sold.
The Sponsor may from time to time in its advertising and sales
materials compare the then current estimated returns on a Trust
and returns over specified periods on other similar Trusts sponsored
by Nike Securities L.P. with returns on other taxable investments
such as corporate or U.S. Government bonds, bank CDs and money
market accounts or money market funds, each of which has investment
characteristics that may differ from those of the Trust. U.S.
Government bonds, for example, are backed by the full faith and
credit of the U.S. Government and bank CDs and money market accounts
are insured by an agency of the federal government. Money market
accounts and money market funds provide stability of principal,
but pay interest at rates that vary with the condition of the
short-term debt market. The investment characteristics of each
Trust are described more fully elsewhere in this Prospectus.
Each Trust's performance may be compared to performance on a total
return basis of the Dow Jones Industrial Average, the S&P 500
Composite Price Stock Index, or performance data from Lipper Analytical
Services, Inc. and Morningstar Publications, Inc. or from publications
such as Money, The New York Times, U.S. News and World Report,
Business Week, Forbes or Fortune. As with other performance data,
performance comparisons should not be considered representative
of each Trust's relative performance for any future period.
What are the Sponsor's Profits?
With respect to the Growth Trusts, the Sponsor of the Trust will
receive a gross sales commission equal to 4.9% of the Public Offering
Price of the Units (equivalent to 5.152% of the net amount invested),
less any reduced sales charge for quantity purchases as described
under "Public Offering-How is the Public Offering Price Determined?"
With respect to the Growth and Treasury Trust, the Sponsor of
the Trust will receive a gross sales commission equal to 5.5%
of the Public Offering Price of the Units (equivalent to 5.820%
of the net amount invested), less any reduced sales charge for
quantity purchases as described under "Public Offering-How is
the Public Offering Price Determined?" See "Public Offering-How
are Units Distributed?" for information regarding the receipt
of additional concessions available to broker/dealers, banks and
other selling agents. In addition, the Sponsor may be considered
to have realized a profit or to have sustained a loss, as the
case may be, in the amount of any difference between the cost
of the Securities to a Trust (which is based on the Evaluator's
determination of the aggregate offering price of the underlying
Securities of a Trust on the Initial Date of Deposit as well as
on subsequent deposits) and the cost of such Securities to the
Sponsor. See Note (2) of "Schedule of Investments" for each Trust.
During the initial offering period, the
Page 29
broker/dealers, banks and other selling agents also may realize
profits or sustain losses as a result of fluctuations after the
Initial Date of Deposit in the Public Offering Price received
by such dealers and others upon the sale of Units.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between
the price at which Units are purchased and the price at which
Units are resold (which price includes a sales charge of 4.9%
and 5.5% with respect to the Growth Trusts and the Growth & Treasury
Trust, respectively, subject to reduction beginning October 1,
1996) or redeemed. The secondary market public offering price
of Units may be greater or less than the cost of such Units to the
Sponsor.
Will There be a Secondary Market?
After the initial offering period, although it is not obligated
to do so, the Sponsor intends to maintain a market for the Units
and continuously offer to purchase Units at prices, subject to
change at any time, based upon the aggregate bid price of the
Treasury Obligations (if any) in a Trust and the aggregate underlying
value of the Equity Securities in a Trust plus or minus cash,
if any, in the Income and Capital Accounts of such Trust. All
expenses incurred in maintaining a secondary market, other than
the fees of the Evaluator and the costs of the Trustee in transferring
and recording the ownership of Units, will be borne by the Sponsor.
If the supply of Units exceeds demand, or for some other business
reason, the Sponsor may discontinue purchases of Units at such
prices. IF A UNIT HOLDER WISHES TO DISPOSE OF HIS UNITS, HE SHOULD
INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES PRIOR TO MAKING
A TENDER FOR REDEMPTION TO THE TRUSTEE.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the
Trustee. Ownership of Units may be evidenced by registered certificates
executed by the Trustee and the Sponsor. Delivery of certificates
representing Units ordered for purchase is normally made three
business days following such order or shortly thereafter. Certificates
are transferable by presentation and surrender to the Trustee
properly endorsed or accompanied by a written instrument or instruments
of transfer. Certificates to be redeemed must be properly endorsed
or accompanied by a written instrument or instruments of transfer.
A Unit holder must sign exactly as his name appears on the face
of the certificate with the signature guaranteed by a participant
in the Securities Transfer Agents Medallion Program ("STAMP")
or such other signature guaranty program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee. In
certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of
death, appointments as executor or administrator or certificates
of corporate authority. Record ownership may occur before settlement.
Certificates will be issued in fully registered form, transferable
only on the books of the Trustee in denominations of one Unit
or any multiple thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form.
The Trustee will maintain an account for each such Unit holder
and will credit each such account with the number of Units purchased
by that Unit holder. Within two business days of the issuance
or transfer of Units held in uncertificated form, the Trustee
will send to the registered owner of Units a written initial transaction
statement containing a description of a Trust; the number of Units
issued or transferred; the name, address and taxpayer identification
number, if any, of the new registered owner; a notation of any
liens and restrictions of the issuer and any adverse claims to
which such Units are or may be subject or a statement that there
are no such liens, restrictions or adverse claims; and the date
the transfer was registered. Uncertificated Units are transferable
through the same procedures applicable to Units evidenced by certificates
(described above), except that no certificate need be presented
to the Trustee and no certificate will be issued upon the transfer
unless requested by the Unit holder. A Unit holder may at any
time request the Trustee to issue certificates for Units.
Although no such charge is now made or contemplated, a Unit holder
may be required to pay $2.00 to the Trustee per certificate reissued
or transferred and to pay any governmental charge that may be
imposed in connection with each such transfer or exchange. For
new certificates issued to replace destroyed, stolen
Page 30
or lost certificates, the Unit holder may be required to furnish
indemnity satisfactory to the Trustee and pay such expenses as
the Trustee may incur. Mutilated certificates must be surrendered
to the Trustee for replacement.
How are Income and Capital Distributed?
The Trustee will distribute any net income (other than accreted
interest on the Treasury Obligations in the case of the Growth
& Treasury Trust) received with respect to any of the Securities
in a Trust on or about the Income Distribution Dates to Unit holders
of record on the preceding Income Record Date. See "Summary of
Essential Information." Because dividends are not received by
a Trust at a constant rate throughout the year, such distributions
to Unit holders may be more or less than the amount credited to
the Income Account as of the Record Date. Notification to the
Trustee of the transfer of Units is the responsibility of the
purchaser, but in the normal course of business such notice is
provided by the selling broker-dealer. The pro rata share of cash
in the Capital Account of each Trust will be computed as of the
fifteenth day of each month. Proceeds received on the sale of
any Securities in a Trust, to the extent not used to meet redemptions
of Units or pay expenses, will, however, be distributed on the
last day of each month to Unit holders of record on the fifteenth
day of each month if the amount available for distribution equals
at least $0.01 per Unit. The Trustee is not required to pay interest
on funds held in the Capital Account of a Trust (but may itself
earn interest thereon and therefore benefit from the use of such
funds). Notwithstanding, distributions of funds in the Capital
Account, if any, will be made on the last day of each December
to Unit holders of record as of December 15. Income with respect
to the original issue discount on the Treasury Obligations in
a Trust (if any) will not be distributed currently, although Unit
holders will be subject to Federal income tax as if a distribution
had occurred. See "What is the Federal Tax Status of Unit Holders?"
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a specified percentage of any
distribution made by a Trust if the Trustee has not been furnished
the Unit holder's tax identification number in the manner required
by such regulations. Any amount so withheld is transmitted to
the Internal Revenue Service and may be recovered by the Unit
holder only when filing a tax return. Under normal circumstances
the Trustee obtains the Unit holder's tax identification number
from the selling broker. However, a Unit holder should examine
his or her statements from the Trustee to make sure that the Trustee
has been provided a certified tax identification number in order
to avoid this possible "back-up withholding." In the event the
Trustee has not been previously provided such number, one should
be provided as soon as possible.
Within a reasonable time after each Trust is terminated, each
Unit holder of a Trust will, upon surrender of his Units for redemption,
receive: (i) the pro rata share of the amounts realized upon the
disposition of Equity Securities, unless he elects an In-Kind
Distribution as described below, (ii) a pro rata share of the
amounts realized upon the disposition of the Treasury Obligations
(if any) and (iii) a pro rata share of any other assets of a Trust,
less expenses of such Trust, subject to the limitation that Treasury
Obligations in a Growth & Treasury Trust may not be sold to pay
for Trust expenses. Not less than 60 days prior to the Mandatory
Termination Date for the Growth Trusts and not less than 60 days
prior to the Treasury Obligations Maturity Date for the Growth
& Treasury Trust, the Trustee will provide written notice thereof
to all Unit holders and will include with such notice a form to
enable Unit holders to elect a distribution of shares of Equity
Securities (an "In-Kind Distribution"), if such Unit holder owns
at least 2,500 Units Units of a Trust, rather than to receive
payment in cash for such Unit holder's pro rata share of the amounts
realized upon the disposition by the Trustee of Equity Securities.
An In-Kind Distribution will be reduced by customary transfer
and registration charges. To be effective, the election form,
together with surrendered certificates and other documentation
required by the Trustee, must be returned to the Trustee at least
five business days prior to the Mandatory Termination Date for
the Growth Trusts and at least five business days prior to the
Treasury Obligations Maturity Date for the Growth & Treasury Trust.
Not less than 60 days prior to the termination of a Trust, those
Unit holders owning at least 2,500 Units Units will be offered
the option of having the proceeds from the Equity Securities distributed
"In-Kind," or they will be paid in cash, as indicated above. A
Unit holder may, of course, at any time after the Equity Securities
are distributed, sell all or a portion of the shares.
Page 31
The Trustee will credit to the Income Account of each Trust any
dividends received on the Equity Securities therein. All other
receipts (e.g., return of capital, etc.) are credited to the Capital
Account of each Trust.
The Trustee may establish reserves (the "Reserve Account") within
each Trust for state and local taxes, if any, and any governmental
charges payable out of each Trust.
What Reports will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and
the amount of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per Unit. Within a reasonable
period of time after the end of each calendar year, the Trustee
shall furnish to each person who at any time during the calendar
year was a Unit holder of a Trust the following information in
reasonable detail: (1) a summary of transactions in such Trust
for such year; (2) any Securities sold during the year and the
Securities held at the end of such year by such Trust; (3) the
redemption price per Unit based upon a computation thereof on
the 31st day of December of such year (or the last business day
prior thereto); and (4) amounts of income and capital distributed
during such year.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Securities in a Trust furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his Units by tender
to the Trustee at its corporate trust office in the City of New
York of the certificates representing the Units to be redeemed,
or in the case of uncertificated Units, delivery of a request
for redemption, duly endorsed or accompanied by proper instruments
of transfer with the signature guaranteed as explained above (or
by providing satisfactory indemnity, as in connection with lost,
stolen or destroyed certificates), and payment of applicable governmental
charges, if any. No redemption fee will be charged. On the third
business day following such tender, the Unit holder will be entitled
to receive in cash an amount for each Unit equal to the Redemption
Price per Unit next computed after receipt by the Trustee of such
tender of Units. The "date of tender" is deemed to be the date
on which Units are received by the Trustee, except that as regards
Units received after 4:00 p.m. eastern standard time, the date
of tender is the next day on which the New York Stock Exchange
is open for trading and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the redemption
price computed on that day. Units so redeemed shall be cancelled.
With respect to each Growth Trust, any Unit holder tendering 2,500
Units of a Trust or more for redemption may request by written
notice submitted at the time of tender from the Trustee in lieu
of a cash redemption a distribution of shares of Equity Securities
in an amount and value of Equity Securities per Unit equal to
the Redemption Price Per Unit as determined as of the evaluation
next following tender. To the extent possible, In-Kind distributions
("In-Kind Distributions") shall be made by the Trustee through
the distribution of each of the Equity Securities in book-entry
form to the account of the Unit holder's bank or broker-dealer
at the Depository Trust Company. An In-Kind Distribution will
be reduced by customary transfer and registration charges. The
tendering Unit holder will receive his pro rata number of whole
shares of each of the Equity Securities comprising the portfolio
and cash from the Capital Account equal to the fractional shares
to which the tendering Unit holder is entitled. The Trustee may
adjust the number of shares of any issue of Equity Securities
included in a Unit holder's In-Kind Distribution to facilitate
the distribution of whole shares, such adjustment to be made on
the basis of the value of Equity Securities on the date of tender.
If funds in the Capital Account are insufficient to cover the
required cash distribution to the tendering Unit holder, the Trustee
may sell Equity Securities in the manner described above.
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a specified percentage of the
principal amount of a Unit redemption if the Trustee has not been
furnished the redeeming Unit holder's tax identification number
in the manner required by such regulations. Any amount so withheld
is transmitted to the Internal Revenue Service and may be recovered
by the Unit holder only when filing a tax return. Under normal
circumstances, the Trustee obtains the Unit holder's tax identification
number from the selling broker. However, any time a Unit holder
elects to tender Units for redemption, such Unit
Page 32
holder should make sure that the Trustee has been provided a certified
tax identification number in order to avoid this possible "back-up
withholding." In the event the Trustee has not been previously
provided such number, one must be provided at the time redemption
is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of each Trust to the extent that funds
are available for such purpose. All other amounts paid on redemption
shall be withdrawn from the Capital Account of each Trust.
The Trustee is empowered to sell Securities of each Trust in order
to make funds available for redemption. To the extent that Equity
Securities are sold, the size and diversity of each Trust will
be reduced. Such sales may be required at a time when Equity Securities
would not otherwise be sold and might result in lower prices than
might otherwise be realized. With respect to the Growth & Treasury
Trust, Equity Securities will be sold to meet redemptions of Units
before Treasury Obligations, although Treasury Obligations may
be sold if the Growth & Treasury Trust is assured of retaining
a sufficient principal amount of Treasury Obligations to provide
funds upon maturity of such Trust at least equal to $10.00 per Unit.
The Redemption Price per Unit (as well as the secondary market
Public Offering Price) will be determined on the basis of the
bid price of the Treasury Obligations (if any) and the aggregate
underlying value of the Equity Securities in each Trust plus or
minus cash, if any, in the Income and Capital Accounts of such
Trust, while the Public Offering Price per Unit during the initial
offering period will be determined on the basis of the offering
price of such Treasury Obligations (if any), as of the close of
trading on the New York Stock Exchange on the date any such determination
is made and the aggregate underlying value of the Equity Securities
in each Trust, plus or minus cash, if any, in the Income and Capital
Accounts of each Trust. On the Initial Date of Deposit the Public
Offering Price per Unit (which is based on the OFFERING prices
of the Treasury Obligations (if any) and the aggregate underlying
value of the Equity Securities in each Trust and includes the
sales charge) exceeded the Unit value at which Units could have
been redeemed (based upon the current BID prices of the Treasury
Obligations (if any) and the aggregate underlying value of the
Equity Securities in each Trust) by the amount shown under "Summary
of Essential Information." The Redemption Price per Unit of each
Trust is the pro rata share of each Unit determined by the Trustee
by adding: (1) the cash on hand in the Trust other than cash deposited
in the Trust to purchase Securities not applied to the purchase
of such Securities; (2) the aggregate value of the Securities
(including "when issued" contracts, if any) held in the Trust,
as determined by the Evaluator on the basis of bid prices of the
Treasury Obligations (if any) and the aggregate underlying value
of the Equity Securities in each Trust next computed; and (3)
dividends receivable on the Equity Securities trading ex-dividend
as of the date of computation; and deducting therefrom: (1) amounts
representing any applicable taxes or governmental charges payable
out of the Trust; (2) an amount representing estimated accrued
expenses of the Trust, including but not limited to fees and expenses
of the Trustee (including legal and auditing fees), the Evaluator
and supervisory fees, if any; (3) cash held for distribution to
Unit holders of record of the Trust as of the business day prior
to the evaluation being made; and (4) other liabilities incurred
by the Trust; and finally dividing the results of such computation
by the number of Units of the Trust outstanding as of the date thereof.
The aggregate value of the Equity Securities will be determined
in the following manner: if the Equity Securities are listed on
a national securities exchange or the NASDAQ National Market System,
this evaluation is generally based on the closing sale prices
on that exchange or that system (unless it is determined that
these prices are inappropriate as a basis for valuation) or, if
there is no closing sale price on that exchange or system, at
the closing bid prices. If the Equity Securities are not so listed
or, if so listed and the principal market therefor is other than
on the exchange, the evaluation shall generally be based on the
current bid price on the over-the-counter market (unless these
prices are inappropriate as a basis for evaluation). If current
bid prices are unavailable, the evaluation is generally determined
(a) on the basis of current bid prices for comparable securities,
(b) by appraising the value of the Equity Securities on the bid
side of the market or (c) by any combination of the above.
The right of redemption may be suspended and payment postponed
for any period during which the New York Stock Exchange is closed,
other than for customary weekend and holiday closings, or during which
Page 33
the Securities and Exchange Commission determines that trading
on the New York Stock Exchange is restricted or any emergency
exists, as a result of which disposal or evaluation of the Securities
is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit. Under
certain extreme circumstances, the Sponsor may apply to the Securities
and Exchange Commission for an order permitting a full or partial
suspension of the right of Unit holders to redeem their Units.
The Trustee is not liable to any person in any way for any loss
or damage which may result from any such suspension or postponement.
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase
such Units by notifying the Trustee before 1:00 p.m. eastern standard
time on the same business day and by making payment therefor to
the Unit holder not later than the day on which the Units would
otherwise have been redeemed by the Trustee. Units held by the
Sponsor may be tendered to the Trustee for redemption as any other
Units. In the event the Sponsor does not purchase Units, the Trustee
may sell Units tendered for redemption in the over-the-counter
market, if any, as long as the amount to be received by the Unit
holder is equal to the amount he would have received on redemption
of the Units.
The offering price of any Units acquired by the Sponsor will be
in accord with the Public Offering Price described in the then
effective prospectus describing such Units. Any profit or loss
resulting from the resale or redemption of such Units will belong
to the Sponsor.
How May Securities be Removed from a Trust?
The Portfolio of each Trust is not "managed" by the Sponsor or
the Trustee; their activities described herein are governed solely
by the provisions of the Indenture. The Indenture provides that
the Sponsor may (but need not) direct the Trustee to dispose of
an Equity Security in the event that an issuer defaults in the
payment of a dividend that has been declared, that any action
or proceeding has been instituted restraining the payment of dividends
or there exists any legal question or impediment affecting such
Equity Security, that the issuer of the Equity Security has breached
a covenant which would affect the payments of dividends, the credit
standing of the issuer or otherwise impair the sound investment
character of the Equity Security, that the issuer has defaulted
on the payment on any other of its outstanding obligations, that
the price of the Equity Security has declined to such an extent
or other such credit factors exist so that in the opinion of the
Sponsor, the retention of such Equity Securities would be detrimental
to a Trust. Treasury Obligations in the Growth & Treasury Trust
may be sold by the Trustee only pursuant to the liquidation of
such Trust or to meet redemption requests. Except as stated under
"Portfolio-What are Some Additional Considerations for Investors?"
for Failed Contract Obligations, the acquisition by a Trust of
any securities other than the Securities is prohibited. Pursuant
to the Indenture and with limited exceptions, the Trustee may
sell any securities or other property acquired in exchange for
Equity Securities such as those acquired in connection with a
merger or other transaction. If offered such new or exchanged
securities or property, the Trustee shall reject the offer. However,
in the event such securities or property are nonetheless acquired
by a Trust, they may be accepted for deposit in the Trust and
either sold by the Trustee or held in the Trust pursuant to the
direction of the Sponsor (who may rely on the advice of the Portfolio
Supervisor). Proceeds from the sale of Securities by the Trustee
are credited to the Capital Account of a Trust for distribution
to Unit holders or to meet redemptions.
The Trustee may also sell Securities designated by the Sponsor,
or if not so directed, in its own discretion, for the purpose
of redeeming Units of a Trust tendered for redemption and the
payment of expenses; provided, however, for the Growth & Treasury
Trust, that in the case of Securities sold to meet redemption
requests, Treasury Obligations may only be sold if the Growth
& Treasury Trust is assured of retaining a sufficient principal
amount of Treasury Obligations to provide funds upon maturity
of the Trust at least equal to $10.00 per Unit. Treasury Obligations
may not be sold by the Trustee to meet Growth & Treasury Trust expenses.
Page 34
The Sponsor, in designating Equity Securities to be sold by the
Trustee, will generally make selections in order to maintain,
to the extent practicable, the proportionate relationship among
the number of shares of individual issues of Equity Securities.
To the extent this is not practicable, the composition and diversity
of the Equity Securities may be altered. In order to obtain the
best price for a Trust, it may be necessary for the Sponsor to
specify minimum amounts (generally 100 shares) in which blocks
of Equity Securities are to be sold.
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in
1991, acts as Sponsor for successive series of The First Trust
Combined Series, The First Trust Special Situations Trust, The
First Trust Insured Corporate Trust, The First Trust of Insured
Municipal Bonds, The First Trust GNMA, Templeton Growth and Treasury
Trust, Templeton Foreign Fund & U.S. Treasury Securities Trust
and The Advantage Growth and Treasury Securities Trust. First
Trust introduced the first insured unit investment trust in 1974
and to date more than $9 billion in First Trust unit investment
trusts have been deposited. The Sponsor's employees include a
team of professionals with many years of experience in the unit
investment trust industry. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and Securities Investor
Protection Corporation and has its principal offices at 1001 Warrenville
Road, Lisle, Illinois 60532; telephone number (708) 241-4141.
As of December 31, 1994 the total partners' capital of Nike Securities
L.P. was $10,863,058 (audited). (This paragraph relates only to
the Sponsor and not to the Trusts or to any series thereof or
to any other Underwriter. The information is included herein only
for the purpose of informing investors as to the financial responsibility
of the Sponsor and its ability to carry out its contractual obligations.
More detailed financial information will be made available by
the Sponsor upon request.)
Who is the Trustee?
The Trustee is The Chase Manhattan Bank (National Association),
a national banking association with its principal executive office
located at 1 Chase Manhattan Plaza, New York, New York 10081 and
its unit investment trust office at 770 Broadway, New York, New
York 10003. Unit holders who have questions regarding the Trusts
may call the Customer Service Help Line at 1-800-682-7520. The
Trustee is subject to supervision by the Comptroller of the Currency,
the Federal Deposit Insurance Corporation and the Board of Governors
of the Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not participated
in the selection of the Securities. For information relating to
the responsibilities of the Trustee under the Indenture, reference
is made to the material set forth under "Rights of Unit Holders."
The Trustee and any successor trustee may resign by executing
an instrument in writing and filing the same with the Sponsor
and mailing a copy of a notice of resignation to all Unit holders.
Upon receipt of such notice, the Sponsor is obligated to appoint
a successor trustee promptly. If the Trustee becomes incapable
of acting or becomes bankrupt or its affairs are taken over by
public authorities, the Sponsor may remove the Trustee and appoint
a successor as provided in the Indenture. If upon resignation
of a trustee no successor has accepted the appointment within
30 days after notification, the retiring trustee may apply to
a court of competent jurisdiction for the appointment of a successor.
The resignation or removal of a trustee becomes effective only
when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which a Trustee shall be a party, shall
be the successor Trustee. The Trustee must be a banking corporation
organized under the laws of the United States or any State and
having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
Page 35
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit
holders for taking any action or for refraining from taking any
action in good faith pursuant to the Indenture, or for errors
in judgment, but shall be liable only for their own willful misfeasance,
bad faith, gross negligence (ordinary negligence in the case of
the Trustee) or reckless disregard of their obligations and duties.
The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Securities.
In the event of the failure of the Sponsor to act under the Indenture,
the Trustee may act thereunder and shall not be liable for any
action taken by it in good faith under the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or
upon or in respect of a Trust which the Trustee may be required
to pay under any present or future law of the United States of
America or of any other taxing authority having jurisdiction.
In addition, the Indenture contains other customary provisions
limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or becomes incapable of acting or becomes bankrupt or
its affairs are taken over by public authorities, then the Trustee
may (a) appoint a successor Sponsor at rates of compensation deemed
by the Trustee to be reasonable and not exceeding amounts prescribed
by the Securities and Exchange Commission, or (b) terminate the
Indenture and liquidate the Trusts as provided herein, or (c)
continue to act as Trustee without terminating the Indenture.
Who is the Evaluator?
The Evaluator is FT Evaluators L.P., an Illinois limited partnership
formed in 1994 and an affiliate of the Sponsor. The Evaluator's
address is 1001 Warrenville Road, Lisle, Illinois 60532. The Evaluator
may resign or may be removed by the Sponsor and the Trustee, in
which event the Sponsor and the Trustee are to use their best
efforts to appoint a satisfactory successor. Such resignation
or removal shall become effective upon the acceptance of appointment
by the successor Evaluator. If upon resignation of the Evaluator
no successor has accepted appointment within 30 days after notice
of resignation, the Evaluator may apply to a court of competent
jurisdiction for the appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for
the accuracy thereof. Determinations by the Evaluator under the
Indenture shall be made in good faith upon the basis of the best
information available to it, provided, however, that the Evaluator
shall be under no liability to the Trustee, Sponsor or Unit holders
for errors in judgment. This provision shall not protect the Evaluator
in any case of willful misfeasance, bad faith, gross negligence
or reckless disregard of its obligations and duties.
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment
is (1) to cure any ambiguity or to correct or supplement any provision
of the Indenture which may be defective or inconsistent with any
other provision contained therein, or (2) to make such other provisions
as shall not adversely affect the interest of the Unit holders
(as determined in good faith by the Sponsor and the Trustee).
The Indenture for the Growth Trust provides that it shall terminate
upon the Mandatory Termination Date indicated herein under "Summary
of Essential Information." The Indenture provides that the Growth
& Treasury Trust shall terminate upon the maturity, redemption
or other disposition of the last of the Treasury Obligations held
in such Trust, but in no event beyond the Mandatory Termination
Date indicated herein under "Summary of Essential Information."
A Trust may be liquidated at any time by consent of 100% of the
Unit holders of the Trust or, in the case of a Growth Trust, by
the Trustee when the value of the Equity Securities owned by the
Trust as shown by any evaluation, is less than the lower of $2,000,000
or 20% of the total value of Equity Securities deposited in such
Trust during the primary offering period, or by the Trustee in
the event that Units of a Trust not yet sold aggregating more
than 60% of the Units of the Trust are tendered for redemption
Page 36
by the Underwriter, including the Sponsor. If a Trust is liquidated
because of the redemption of unsold Units of the Trust by the
Underwriter, the Sponsor will refund to each purchaser of Units
of the Trust the entire sales charge paid by such purchaser. In
the event of termination, written notice thereof will be sent
by the Trustee to all Unit holders of a Trust. Within a reasonable
period after termination, the Trustee will follow the procedures
set forth under "How are Income and Capital Distributed?"
Commencing on the Mandatory Termination Date for each Growth Trust
and on the Treasury Obligations Maturity Date for the Growth &
Treasury Trust, Equity Securities will begin to be sold in connection
with the termination of each Trust. The Sponsor will determine
the manner, timing and execution of the sale of the Equity Securities.
Written notice of any termination of a Trust specifying the time
or times at which Unit holders may surrender their certificates
for cancellation shall be given by the Trustee to each Unit holder
at his address appearing on the registration books of the Trust
maintained by the Trustee. At least 60 days prior to the Mandatory
Termination Date for each Growth Trust and 60 days prior to the
Treasury Obligations Maturity Date for the Growth & Treasury Trust,
the Trustee will provide written notice thereof to all Unit holders
and will include with such notice a form to enable Unit holders
to elect a distribution of shares of Equity Securities (reduced
by customary transfer and registration charges), if such Unit
holder owns at least 2,500 Units of a Trust, rather than to receive
payment in cash for such Unit holder's pro rata share of the amounts
realized upon the disposition by the Trustee of Equity Securities.
All Unit holders of the Growth & Treasury Trust will receive their
pro rata portion of the Treasury Obligations in cash upon the
termination of the Growth & Treasury Trust. To be effective, the
election form, together with surrendered certificates and other
documentation required by the Trustee, must be returned to the
Trustee at least five business days prior to the Mandatory Termination
Date for a Growth Trust and at least five business days prior
to the Treasury Obligations Maturity Date for the Growth & Treasury
Trust. Unit holders not electing a distribution of shares of Equity
Securities will receive a cash distribution from the sale of the
remaining Securities within a reasonable time after the Trusts
are terminated. Regardless of the distribution involved, the Trustee
will deduct from the funds of each Trust any accrued costs, expenses,
advances or indemnities provided by the Trust Agreement, including
estimated compensation of the Trustee and costs of liquidation
and any amounts required as a reserve to provide for payment of
any applicable taxes or other governmental charges. Any sale of
Securities in a Trust upon termination may result in a lower amount
than might otherwise be realized if such sale were not required
at such time. The Trustee will then distribute to each Unit holder
his pro rata share of the balance of the Income and Capital Accounts.
Legal Opinions
The legality of the Units offered hereby and certain matters relating
to Federal tax law have been passed upon by Chapman and Cutler,
111 West Monroe Street, Chicago, Illinois 60603, as counsel for
the Sponsor. Carter, Ledyard & Milburn, will act as counsel for
the Trustee and as special New York tax counsel for the Trusts.
Experts
The statements of net assets, including the schedules of investments,
of the Trusts at the opening of business on the Initial Date of
Deposit appearing in this Prospectus and Registration Statement
have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon appearing elsewhere herein
and in the Registration Statement, and are included in reliance
upon such report given upon the authority of such firm as experts
in accounting and auditing.
Page 37
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 123
We have audited the accompanying statements of net assets, including
the schedules of investments, of The First Trust Special Situations
Trust, Series 123, comprised of American Financial Institutions
Growth Trust, Series 1, American Technology Growth Trust, Series
1 and American Technology Growth & Treasury Securities Trust,
Series 2 as of the opening of business on September 7, 1995. 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 generally accepted auditing
standards. 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 letters of credit held by the Trustee and
deposited in the Trusts on September 7, 1995. An audit also includes
assessing the accounting principles used and significant estimates
made by the Sponsor, as well as evaluating the overall presentation
of the 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 The First Trust Special Situations Trust, Series 123, comprised
of American Financial Institutions Growth Trust, Series 1, American
Technology Growth Trust, Series 1 and American Technology Growth
& Treasury Securities Trust, Series 2 at the opening of business
on September 7, 1995 in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
September 7, 1995
Page 38
Statement of Net Assets
American Financial Institutions Growth Trust, Series 1
The First Trust Special Situations Trust, Series 123
At the Opening of Business on the Initial Date of Deposit
September 7, 1995
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by
purchase contracts (1) (2) $ 141,498
Organizational costs (3) 30,000
__________
171,498
Less accrued organizational costs (3) 30,000
__________
Net assets $ 141,498
==========
Units outstanding 15,000
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (4) $ 148,789
Less sales charge (4) (7,291)
__________
Net assets $ 141,498
==========
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule
of Investments" for American Financial Institutions Growth Trust,
Series 1 is based on the aggregate underlying value of the Equity
Securities.
(2) An irrevocable letter of credit totaling $200,000 issued
by Bankers Trust Company has been deposited with the Trustee as
collateral covering the monies necessary for the purchase of the
Equity Securities in the American Financial Institutions Growth
Trust, Series 1 pursuant to contracts for the purchase of such
Equity Securities.
(3) The Trust will bear all or a portion of its estimated organizational
costs which will be deferred and amortized over a five-year period
from the Initial Date of Deposit. The estimated organizational
costs are based on 2,000,000 Units of the Trust expected to be
issued. To the extent the number of Units issued is larger or
smaller, the estimate will vary.
(4) The aggregate cost to investors includes a sales charge computed
at the rate of 4.9% of the Public Offering Price (equivalent to
5.152% of the net amount invested), assuming no reduction of sales
charge for quantity purchases.
Page 39
Statement of Net Assets
American Technology Growth Trust, Series 1
The First Trust Special Situations Trust, Series 123
At the Opening of Business on the Initial Date of Deposit
September 7, 1995
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by
purchase contracts (1) (2) $ 140,394
Organizational costs (3) 30,000
__________
170,394
Less accrued organizational costs (3) 30,000
__________
Net assets $ 140,394
==========
Units outstanding 15,000
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (4) $ 147,628
Less sales charge (4) (7,234)
__________
Net assets $ 140,394
==========
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule
of Investments" for American Technology Growth Trust, Series 1
is based on the aggregate underlying value of the Equity Securities.
(2) An irrevocable letter of credit totaling $200,000 issued
by Bankers Trust Company has been deposited with the Trustee as
collateral covering the monies necessary for the purchase of the
Equity Securities in the American Technology Growth Trust, Series
1 pursuant to contracts for the purchase of such Equity Securities.
(3) The Trust will bear all or a portion of its estimated organizational
costs which will be deferred and amortized over a five-year period
from the Initial Date of Deposit. The estimated organizational
costs are based on 2,000,000 Units of the Trust expected to be
issued. To the extent the number of Units issued is larger or
smaller, the estimate will vary.
(4) The aggregate cost to investors includes a sales charge computed
at the rate of 4.9% of the Public Offering Price (equivalent to
5.152% of the net amount invested), assuming no reduction of sales
charge for quantity purchases.
Page 40
Statement of Net Assets
American Technology Growth & Treasury Securities Trust, Series 2
The First Trust Special Situations Trust, Series 123
At the Opening of Business on the Initial Date of Deposit
September 7, 1995
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Securities represented by
purchase contracts (1) (2) $ 134,144
Organizational costs (3) 30,000
_________
164,144
Less accrued organizational costs (3) 30,000
_________
Net assets $ 134,144
=========
Units outstanding 15,000
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (4) $ 141,951
Less sales charge (4) (7,807)
_________
Net assets $ 134,144
=========
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Securities listed under "Schedule of
Investments" for American Technology Growth & Treasury Securities
Trust, Series 2 is based on the offering side evaluations of the
Treasury Obligations and the aggregate underlying value of the
Equity Securities.
(2) An irrevocable letter of credit totaling $200,000 issued
by Bankers Trust Company has been deposited with the Trustee as
collateral covering the monies necessary for the purchase of the
Securities in the American Technology Growth & Treasury Securities
Trust, Series 2 pursuant to contracts for the purchase of such
Securities.
(3) The Trust will bear all or a portion of its estimated organizational
costs which will be deferred and amortized over a five-year period
from the Initial Date of Deposit. The estimated organizational
costs are based on 2,000,000 Units of the Trust expected to be
issued. To the extent the number of Units issued is larger or
smaller, the estimate will vary.
(4) The aggregate cost to investors includes a sales charge computed
at the rate of 5.5% of the Public Offering Price (equivalent to
5.820% of the net amount invested), assuming no reduction of sales
charge for quantity purchases.
Page 41
Schedule of Investments
American Financial Institutions Growth Trust, Series 1
The First Trust Special Situations Trust, Series 123
At the Opening of Business on the Initial Date of Deposit
September 7, 1995
<TABLE>
<CAPTION>
Cost of
Percentage of Market Equity
Number Ticker Symbol and Aggregate Value Securities
of Shares Name of Issuer of Security (1) Offering Price per Share to Trust (2)
_________ ______________________________ ______________ _________ ____________
<C> <S> <C> <C> <C>
National
85 BAC BankAmerica Corporation 3.43% $ 57.125 $ 4,856
73 CCI Citicorp, Inc. 3.46% 67.125 4,900
136 KRB MBNA Corporation 3.42% 35.625 4,845
Northeast
164 NSBK North Side Savings Bank 3.45% 29.750 4,879
86 RNB Republic New York Corporation 3.51% 57.750 4,967
138 UJB UJB Financial Corporation 3.44% 35.250 4,864
Midwest
142 ONE Banc One Corporation 3.46% 34.500 4,899
131 BOAT Boatmen's Bancshares, Inc. 3.44% 37.125 4,863
164 COFI Charter One Financial, Inc. 3.48% 30.000 4,920
233 FFHC First Financial Corporation 3.38% 20.500 4,777
110 FOA First of America Bank Corporation 3.41% 43.875 4,826
155 KEY KeyCorp 3.45% 31.500 4,882
107 MTL Mercantile Bancorporation 3.47% 45.875 4,909
93 MVBI Mississippi Valley Bancshares, Inc. 1.74% 26.500 2,465
164 NCC National City Corporation 3.45% 29.750 4,879
158 NOB Norwest Corporation 3.43% 30.750 4,858
267 RFED Roosevelt Financial Group, Inc. 3.44% 18.250 4,873
87 TCB TCF Financial Corporation 3.45% 56.125 4,883
Southeast
84 BBI Barnett Banks, Inc. 3.46% 58.250 4,893
92 FTEN First Tennessee National Corporation 3.46% 53.250 4,899
116 FVB First Virginia Banks, Inc. 3.46% 42.250 4,901
139 LFCT Leader Financial Corporation 3.46% 35.250 4,900
122 RGBK Regions Financial Corporation 3.45% 40.000 4,880
182 SOTR Southtrust Corporation 3.46% 26.875 4,891
158 UPC Union Planters Corporation 3.43% 30.750 4,859
Southwest
151 OKSB Southwest Bancorp, Inc. 1.74% 16.250 2,454
West
336 CYN City National Corporation 3.44% 14.500 4,872
50 I First Interstate Bancorp 3.42% 96.750 4,837
147 FSCO First Security Corporation 3.43% 33.000 4,851
190 WAMU Washington Mutual, Inc. 3.48% 25.875 4,916
________ __________
Total Investments 100% $141,498
======== ==========
</TABLE>
Page 42
[FN]
(1) All Equity Securities are represented by regular way contracts
to purchase such Equity Securities for the performance of which
an irrevocable letter of credit has been deposited with the Trustee.
The contracts to purchase Equity Securities were entered into
by the Sponsor on September 6, 1995.
(2) The cost of the Equity Securities to the Trust represents
the aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the closing sale prices of the
listed Equity Securities and the ask prices of the over-the-counter
traded Equity Securities on the business day preceding the Initial
Date of Deposit). The valuation of the Equity Securities has been
determined by the Evaluator, an affiliate of the Sponsor. The
aggregate underlying value of the Equity Securities on the Initial
Date of Deposit was $141,498. Cost and loss to Sponsor relating
to the Equity Securities sold to the Trust were $141,499 and $1,
respectively.
Page 43
Schedule of Investments
American Technology Growth Trust, Series 1
The First Trust Special Situations Trust, Series 123
At the Opening of Business on the Initial Date of Deposit
September 7, 1995
<TABLE>
<CAPTION>
Cost of
Percentage of Market Equity
Number Ticker Symbol and Aggregate Value Securities
of Shares Name of Issuer of Security (1) Offering Price per Share to Trust (2)
_________ ______________________________ ______________ _________ ____________
<C> <S> <C> <C> <C>
Computer Networking
118 COMS 3Com Corporation 3.38% $ 40.250 $ 4,750
84 CS Cabletron Systems, Inc. 3.37% 56.375 4,735
68 CSCO Cisco Systems, Inc. 3.37% 69.625 4,735
Desktop Computers & File Servers
94 CPQ Compaq Computer Corporation 3.40% 50.750 4,770
56 DELL Dell Computer Corporation 3.40% 85.250 4,774
113 SGI Silicon Graphics, Inc. 3.39% 42.125 4,760
79 SUNW Sun Microsystems, Inc. 3.29% 58.375 4,612
Enterprise & Client/Server Software
105 BMCS BMC Software, Inc. 3.33% 44.500 4,672
100 CA Computer Associates International, Inc. 3.34% 46.875 4,688
107 ORCL Oracle Systems Corporation 3.32% 43.625 4,668
Enterprise Computers
56 HWP Hewlett-Packard Company 3.31% 83.000 4,648
46 IBM International Business
Machines Corporation 3.30% 100.625 4,629
Information Highway Equipment
84 DIGI DSC Communications Corporation 3.45% 57.625 4,841
Personal Productivity Software
88 ADBE Adobe Systems, Inc. 3.26% 52.000 4,576
49 MSFT Microsoft Corporation 3.26% 93.500 4,581
Semiconductor Equipment
42 AMAT Applied Materials, Inc. 3.33% 111.250 4,672
74 LRCX Lam Research Corporation 3.34% 63.375 4,690
58 NVLS Novellus Systems, Inc. 3.18% 77.000 4,466
107 UTEK Ultratech Stepper, Inc. 3.33% 43.750 4,681
Semiconductors
103 ADPT Adaptec, Inc. 3.36% 45.750 4,712
135 AMD Advanced Micro Devices, Inc. 3.38% 35.125 4,742
137 ATML Atmel Corporation 3.38% 34.625 4,744
73 INTC Intel Corporation 3.26% 62.625 4,572
112 LLTC Linear Technology Corporation 3.31% 41.500 4,648
55 MU Micron Technology, Inc. 3.42% 87.250 4,799
60 MOT Motorola, Inc. 3.33% 77.875 4,672
59 TXN Texas Instruments, Inc. 3.30% 78.625 4,639
93 XLNX Xilinx, Inc. 3.31% 50.000 4,650
Storage
226 EMC EMC Corporation 3.34% 20.750 4,689
185 QNTM Quantum Corporation 3.26% 24.750 4,579
________ __________
Total Investments 100% $140,394
======== ==========
</TABLE>
Page 44
[FN]
(1) All Equity Securities are represented by regular way contracts
to purchase such Equity Securities for the performance of which
an irrevocable letter of credit has been deposited with the Trustee.
The contracts to purchase Equity Securities were entered into
by the Sponsor on September 6, 1995.
(2) The cost of the Equity Securities to the Trust represents
the aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the closing sale prices of the
listed Equity Securities and the ask prices of the over-the-counter
traded Equity Securities on the business day preceding the Initial
Date of Deposit). The valuation of the Equity Securities has been
determined by the Evaluator, an affiliate of the Sponsor. The
aggregate underlying value of the Equity Securities on the Initial
Date of Deposit was $140,394. Cost and loss to Sponsor relating
to the Equity Securities sold to the Trust were $140,849 and $455,
respectively.
Page 45
Schedule of Investments
American Technology Growth & Treasury Securities Trust, Series 2
The First Trust Special Situations Trust, Series 123
At the Opening of Business on the Initial Date of Deposit
September 7, 1995
<TABLE>
<CAPTION>
Percentage of Market Value Cost
Aggregate per Share of
Maturity Offering of Equity Securities
Value Name of Issuer and Title of Security (1) Price Securities to Trust (2)
________ _______________________________________ ______________ __________ ___________
<C> <S> <C> <C> <C>
$150,000 Zero coupon U.S. Treasury bonds 51.04% $ 68,466
maturing November 15, 2007
Number Ticker Symbol and
of Shares Name of Issuer of Equity Securities (1)
_________ _______________________________________
Computer Networking
55 COMS 3Com Corporation 1.65% $ 40.250 2,214
39 CS Cabletron Systems, Inc. 1.64% 56.375 2,199
32 CSCO Cisco Systems, Inc. 1.66% 69.625 2,228
Desktop Computers & File Servers
44 CPQ Compaq Computer Corporation 1.66% 50.750 2,233
26 DELL Dell Computer Corporation 1.65% 85.250 2,217
53 SGI Silicon Graphics, Inc. 1.66% 42.125 2,233
37 SUNW Sun Microsystems, Inc. 1.61% 58.375 2,160
Enterprise & Client/Server Software
49 BMCS BMC Software, Inc. 1.63% 44.500 2,180
47 CA Computer Associates International, Inc. 1.64% 46.875 2,203
50 ORCL Oracle Systems Corporation 1.63% 43.625 2,181
Enterprise Computers
26 HWP Hewlett-Packard Company 1.61% 83.000 2,158
22 IBM International Business
Machines Corporation 1.65% 100.625 2,214
Information Highway Equipment
39 DIGI DSC Communications Corporation 1.68% 57.625 2,247
Personal Productivity Software
41 ADBE Adobe Systems, Inc. 1.59% 52.000 2,132
23 MSFT Microsoft Corporation 1.60% 93.500 2,151
Semiconductor Equipment
20 AMAT Applied Materials, Inc. 1.66% 111.250 2,225
35 LRCX Lam Research Corporation 1.65% 63.375 2,218
27 NVLS Novellus Systems, Inc. 1.55% 77.000 2,079
50 UTEK Ultratech Stepper, Inc. 1.63% 43.750 2,187
Semiconductors
48 ADPT Adaptec, Inc. 1.64% 45.750 2,196
63 AMD Advanced Micro Devices, Inc. 1.65% 35.125 2,213
64 ATML Atmel Corporation 1.65% 34.625 2,216
34 INTC Intel Corporation 1.59% 62.625 2,129
52 LLTC Linear Technology Corporation 1.61% 41.500 2,158
26 MU Micron Technology, Inc. 1.69% 87.250 2,269
28 MOT Motorola, Inc. 1.63% 77.875 2,180
</TABLE>
Page 46
Schedule of Investments (cont.)
American Technology Growth & Treasury Securities Trust, Series 2
The First Trust Special Situations Trust, Series 123
At the Opening of Business on the Initial Date of Deposit
September 7, 1995
<TABLE>
<CAPTION>
Percentage of Market Value
Aggregate per Share Cost of
Number Ticker Symbol and Offering of Equity Securities
of Shares Name of Issuer of Equity Securities (1) Price Securities to Trust (2)
________ _______________________________________ _____________ ____________ ____________
<C> <S> <C> <C> <C>
Semiconductors (cont.)
28 TXN Texas Instruments, Inc. 1.64% $ 78.625 $ 2,201
43 XLNX Xilinx, Inc. 1.60% 50.000 2,150
Storage
105 EMC EMC Corporation 1.62% 20.750 2,179
86 QNTM Quantum Corporation 1.59% 24.750 2,128
_______ __________
Total Equity Securities 48.96% $ 65,678
======= ==========
Total Investments 100% $ 134,144
======= ==========
</TABLE>
[FN]
______________
(1) The Treasury Obligations were purchased at a discount from
their par value because there is no stated interest income thereon
(such securities are often referred to as zero coupon U.S. Treasury
bonds). Over the life of the Treasury Obligations the value increases,
so that upon maturity the holders will receive 100% of the principal
amount thereof. All Securities are represented by regular way
contracts to purchase such Securities for the performance of which
an irrevocable letter of credit has been deposited with the Trustee.
The contracts to purchase Securities were entered into by the
Sponsor on September 6, 1995.
(2) The cost of the Securities to the Trust represents the the
offering side evaluation as determined by the Evaluator, an affiliate
of the Sponsor, with respect to the Treasury Obligations and the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the closing sale prices of the
listed Equity Securities and the ask prices of the over-the-counter
traded Equity Securities on the business day preceding the Initial
Date of Deposit). The offering side evaluation of the Treasury
Obligations is greater than the bid side evaluation of such Treasury
Obligations which is the basis on which the Redemption Price per
Unit will be determined after the initial offering period. The
aggregate value, based on the bid side evaluation of the Treasury
Obligations and the aggregate underlying value of the Equity Securities
on the Initial Date of Deposit, was $133,901. Cost and profit
to the Sponsor relating to the Treasury Obligations sold to the
Trust were $68,466 and $0, respectively. Cost and loss to Sponsor
relating to the Equity Securities sold to the Trust were $65,931
and $253, respectively.
Page 47
<TABLE>
<CAPTION>
CONTENTS:
<S> <C>
Summary of Essential Information
American Financial Institutions Growth Trust, Series 1 5
American Technology Growth Trust, Series 1 6
American Technology Growth & Treasury Trust, Series 2 7
The First Trust Special Situations Trust, Series 123:
What is The First Trust Special Situations Trust? 8
What are the Expenses and Charges? 10
What is the Federal Tax Status of Unit Holders? 11
Why are Investments in the Trusts Suitable for
Retirement Plans? 14
Portfolios:
What are Treasury Obligations? 14
What are Equity Securities? 15
Risk Factors 15
What are the Equity Securities Selected for
American Financial Institutions Growth
Trust, Series 1? 19
What are the Equity Securities Selected for
American Technology Growth Trust, Series 1 and
American Technology Growth & Treasury Securities
Trust, Series 2? 22
What are Some Additional Considerations for
Investors? 25
Public Offering:
How is the Public Offering Price Determined? 26
How are Units Distributed? 28
What are the Sponsor's Profits? 29
Will There be a Secondary Market? 30
Rights of Unit Holders:
How is Evidence of Ownership Issued and
Transferred? 30
How are Income and Capital Distributed? 31
What Reports will Unit Holders Receive? 32
How May Units be Redeemed? 32
How May Units be Purchased by the Sponsor? 34
How May Securities be Removed from a Trust? 34
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 35
Who is the Trustee? 35
Limitations on Liabilities of Sponsor and Trustee 36
Who is the Evaluator? 36
Other Information:
How May the Indenture be Amended or Terminated? 36
Legal Opinions 37
Experts 37
Report of Independent Auditors 38
Statements of Net Assets:
American Financial Institutions Growth Trust, Series 1 39
American Technology Growth Trust, Series 1 40
American Technology Growth & Treasury Securities
Trust, Series 2 41
Schedules of Investments:
American Financial Institutions Growth Trust, Series 1 42
American Technology Growth Trust, Series 1 44
American Technology Growth & Treasury Securities
Trust, Series 2 46
</TABLE>
________________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION
TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET
FORTH IN THE REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO,
WHICH THE FUND HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
American Financial
Institutions Growth
Trust
Series 1
American
Technology Growth
Trust
Series 1
American
Technology Growth
& Treasury
Securities Trust
Series 2
FIRST TRUST (registered trademark)
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-708-241-4141
Trustee:
The Chase Manhattan Bank
(National Association)
770 Broadway
New York, New York 10003
1-800-682-7520
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
September 7, 1995
CONTENTS OF REGISTRATION STATEMENT
A. BONDING ARRANGEMENTS OF DEPOSITOR:
Nike Securities L.P. is covered by a Brokers' Fidelity Bond,
in the total amount of $1,000,000, the insurer being
National Union Fire Insurance Company of Pittsburgh.
B. THIS REGISTRATION STATEMENT ON FORM S-6 COMPRISES
THE FOLLOWING PAPERS AND DOCUMENTS:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
Financial Data Schedule
S-1
SIGNATURES
The Registrant, The First Trust Special Situations Trust,
Series 123, hereby identifies The First Trust Special Situations
Trust, Series 4 Great Lakes Growth and Treasury Trust, Series 1,
The First Trust Special Situations Trust, Series 18 Wisconsin
Growth and Treasury Securities Trust, Series 1 and The First
Trust Combined Series 248, 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, The First Trust Special Situations Trust, Series
123, 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
September 7, 1995.
THE FIRST TRUST SPECIAL SITUATIONS
TRUST, SERIES 123
By NIKE SECURITIES L.P.
Depositor
By Carlos E. Nardo
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
Robert D. Van Kampen Sole Director )
of Nike Securities )
Corporation, the ) September 7, 1995
General Partner of )
Nike Securities L.P. )
)
)
) Carlos E. Nardo
) Attorney-in-Fact**
)
)
* The title of the person named herein represents his
capacity in and relationship to Nike Securities L.P.,
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 Special Situations Trust, Series 18 (File No.
33-42683) 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 September 7, 1995 in
Amendment No. 3 to the Registration Statement (Form S-6) (File
No. 33-61727) and related Prospectus of The First Trust Special
Situations Trust, Series 123.
ERNST & YOUNG LLP
Chicago, Illinois
September 7, 1995
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 FT EVALUATORS L.P.
The consent of FT Evaluators 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 18 and
subsequent Series effective October 15, 1991 among Nike
Securities L.P., as Depositor, United States Trust
Company of New York as Trustee, Securities Evaluation
Service, Inc., as Evaluator, and Nike Financial Advisory
Services L.P. as Portfolio Supervisor (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18) and Form of Standard Terms
and Conditions of Trust for The First Trust Special
Situations Trust, Series 22 and certain subsequent
Series, effective November 20, 1991 among Nike
Securities L.P., as Depositor, United States Trust
Company of New York as Trustee, Securities Evaluation
Service, Inc., as Evaluator, and Nike Financial Advisory
Services L.P. as Portfolio Supervisor (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
43693] filed on behalf of The First Trust Special
Situations Trust, Series 22).
1.1.1 Form of Trust Agreement for Series 123 among Nike
Securities L.P., as Depositor, The Chase Manhattan Bank
(National Association), as Trustee, FT Evaluators 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).
S-5
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).
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 FT Evaluators 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-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
S-6
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 123
TRUST AGREEMENT
Dated: September 7, 1995
This Trust Agreement among Nike Securities L.P., as
Depositor, The Chase Manhattan Bank (National Association),
as Trustee, FT Evaluators L.P., as Evaluator, and First
Trust Advisors L.P., as 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 18 and subsequent Series, Effective October
15, 1991" for the document entitled American Technology
Growth & Treasury Securities Trust, Series 2 and "Standard
Terms and Conditions of Trust for The First Trust Special
Situations Trust, Series 22 and subsequent Series, Effective
November 20, 1991" for American Financial Institutions
Growth Trust, Series 1 and American Technology Growth Trust,
Series 1 (herein collectively 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 tough said
provisions had been set forth in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST FOR
AMERICAN TECHNOLOGY GROWTH & TREASURY SECURITIES TRUST,
SERIES 2
The following special terms and conditions are hereby
agreed to:
A. The Securities initially deposited in the
Trust pursuant to Section 2.01 of the Standard Terms
and Conditions of Trust are set forth in the Schedules
hereto.
B. (1) The aggregate number of Units
outstanding for the Trust on the Initial Date of
Deposit is 15,000 Units.
(2) The initial fractional undivided
interest in and ownership of the Trust represented by
each Unit thereof shall be 1/15,000.
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 is as follows on the
Initial Date of Deposit:
1.65% 3Com Corporation, 1.64% Cabletron Systems,
Inc., 1.66% Cisco Systems, Inc., 1.66% Compaq
Computer Corporation, 1.65% Dell Computer
Corporation, 1.66% Silicon Graphics, Inc., 1.61%
Sun Microsystems, Inc., 1.63% BMC Software, Inc.,
1.64% Computer Associates International, Inc.,
1.63% Oracle Systems Corporation, 1.61% Hewlett-
Packard Company, 1.65% International Business
Machines Corporation, 1.68% DSC Communications
Corporation, 1.59% Adobe Systems, Inc., 1.60%
Microsoft Corporation, 1.66% Applied Materials,
Inc., 1.65% Lam Research Corporation, 1.55%
Novellus Systems, Inc., 1.63% Ultratech Stepper,
Inc., 1.64% Adaptec, Inc., 1.65% Advanced Micro
Devices, Inc., 1.65% Atmel Corporation, 1.59%
Intel Corporation, 1.61% Linear Technology
Corporation, 1.69% Micron Technology, Inc., 1.63%
Motorola, Inc., 1.64% Texas Instruments, Inc.,
1.60% Xilinx, Inc., 1.62% EMC Corporation, 1.59%
Quantum Corporation.
D. The Record Dates shall be as set forth in the
Prospectus under "Summary of Essential Information."
E. The Distribution Dates shall be as set forth
in the Prospectus under "Summary of Essential
Information."
F. The Mandatory Termination Date for the Trust
shall be November 15, 2007.
G. The Treasury Obligations Maturity Date for
the Trust shall be November 15, 2007.
H. The Evaluator's compensation as referred to
in Section 4.03 of the Standard Terms and Conditions of
Trust shall be an annual fee of $0.003 per Unit
calculated on the largest number of Units outstanding
during each period in respect of which a payment is
made pursuant to Section 3.05, payable on a
Distribution Date.
I. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of
Trust shall be an annual fee of $.0095 per Unit,
calculated on the largest number of Units outstanding
during each period in respect of which a payment is
made pursuant to Section 3.05. However, in no event,
except as may be 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.
J. The Initial Date of Deposit for the Trust is
September 7, 1995.
K. The minimum amount of Equity Securities to be
sold by the Trustee pursuant to Section 5.02 of the
Indenture for the redemption of Units shall be 100
shares.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST FOR
AMERICAN TECHNOLOGY GROWTH TRUST, SERIES 1
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 is 15,000 Units.
(2) The initial fractional undivided
interest in and ownership of the Trust represented by
each Unit thereof shall be 1/15,000.
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 is as follows on the
Initial Date of Deposit:
3.38% 3Com Corporation, 3.37% Cabletron Systems,
Inc., 3.37% Cisco Systems, Inc., 3.40% Compaq
Computer Corporation, 3.40% Dell Computer
Corporation, 3.39% Silicon Graphics, Inc., 3.29%
Sun Microsystems, Inc., 3.33% BMC Software, Inc.,
3.34% Computer Associates International, Inc.,
3.32% Oracle Systems Corporation, 3.31% Hewlett-
Packard Company, 3.30% International Business
Machines Corporation, 3.45% DSC Communications
Corporation, 3.26% Adobe Systems, Inc., 3.26%
Microsoft Corporation, 3.33% Applied Materials,
Inc., 3.34% Lam Research Corporation, 3.18%
Novellus Systems, Inc., 3.33% Ultratech Stepper,
Inc., 3.36% Adaptec, Inc., 3.38% Advanced Micro
Devices, Inc., 3.38% Atmel Corporation, 3.26%
Intel Corporation, 3.31% Linear Technology
Corporation, 3.42% Micron Technology, Inc., 3.33%
Motorola, Inc., 3.30% Texas Instruments, Inc.,
3.31% Xilinx, Inc., 3.34% EMC Corporation, 3.26%
Quantum Corporation.
D. The Record Dates shall be as set forth in the
Prospectus under "Summary of Essential Information."
E. The Distribution Dates shall be as set forth
in the Prospectus under "Summary of Essential
Information."
F. The Mandatory Termination Date for the Trust
shall be October 1, 2002.
H. The Evaluator's compensation as referred to
in Section 4.03 of the Standard Terms and Conditions of
Trust shall be an annual fee of $0.003 per Unit
calculated on the largest number of Units outstanding
during each period in respect of which a payment is
made pursuant to Section 3.05, payable on a
Distribution Date.
I. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of
Trust shall be an annual fee of $.0095 per Unit,
calculated on the largest number of Units outstanding
during each period in respect of which a payment is
made pursuant to Section 3.05. However, in no event,
except as may be 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.
J. The Initial Date of Deposit for the Trust is
September 7, 1995.
K. The minimum amount of Equity Securities to be
sold by the Trustee pursuant to Section 5.02 of the
Indenture for the redemption of Units shall be 100
shares.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST FOR
AMERICAN FINANCIAL INSTITUTIONS GROWTH TRUST, SERIES 1
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 is 15,000 Units.
(2) The initial fractional undivided
interest in and ownership of the Trust represented by
each Unit thereof shall be 1/15,000.
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 is as follows on the
Initial Date of Deposit:
3.43% BankAmerica Corporation, 3.46% Citicorp,
Inc., 3.42% MBNA Corporation, 3.45% North Side
Savings Bank, 3.51% Republic New York
Corporation, 3.44% UJB Financial Corporation,
3.46% Banc One Corporation, 3.44% Boatmen's
Bancshares, Inc., 3.48% Charter One Financial,
Inc., 3.38% First Financial Corporation, 3.41%
First of America Bank Corporation, 3.45% KeyCorp,
3.47% Mercantile Bancorporation, 1.74%
Mississippi Valley Bancshares, Inc., 3.45%
National City Corporation, 3.43% Norwest
Corporation, 3.44% Roosevelt Financial Group,
Inc., 3.45% TCF Financial Corporation, 3.46%
Barnett Banks, Inc., 3.46% First Tennessee
National Corporation, 3.46% First Virginia Banks,
Inc., 3.46% Leader Financial Corporation, 3.45%
Regions Financial Corporation, 3.46% Southtrust
Corporation, 3.43% Union Planters Corporation,
1.74% Soutwest Bancorp, Inc., 3.44% City National
Corporation, 3.42% First Interstate Bancorp,
3.43% First Security Corporation, 3.48% Washington
Mutual, Inc.
D. The Record Dates shall be as set forth in the
Prospectus under "Summary of Essential Information."
E. The Distribution Dates shall be as set forth
in the Prospectus under "Summary of Essential
Information."
F. The Mandatory Termination Date for the Trust
shall be October 1, 2002.
H. The Evaluator's compensation as referred to
in Section 4.03 of the Standard Terms and Conditions of
Trust shall be an annual fee of $0.003 per Unit
calculated on the largest number of Units outstanding
during each period in respect of which a payment is
made pursuant to Section 3.05, payable on a
Distribution Date.
I. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of
Trust shall be an annual fee of $.0094 per Unit,
calculated on the largest number of Units outstanding
during each period in respect of which a payment is
made pursuant to Section 3.05. However, in no event,
except as may be 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.
J. The Initial Date of Deposit for the Trust is
September 7, 1995.
K. The minimum amount of Equity Securities to be
sold by the Trustee pursuant to Section 5.02 of the
Indenture for the redemption of Units shall be 100
shares.
PART III FOR AMERICAN TECHNOLOGY GROWTH & TREASURY
SECURITIES TRUST, SERIES 2
A. Section 1.01(2) shall be amended to read as
follows:
"(2) "Trustee" shall mean The Chase Manhattan Bank
(National Association), 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 (National
Association).
B. The term "Capital Account" as set forth in the
Prospectus shall be deemed to refer to the "Principal
Account."
C. Paragraph (b) of Section 2.01 of the Standard
Terms and Conditions of Trust is amended by substituting the
following sentences for the third and fourth sentences of
such paragraph:
"The Trustee shall not accept any deposit pursuant
to this Section 2.01(b) unless the Depositor and
Trustee have each determined that the maturity value of
the Zero Coupon Obligations included in the deposit,
divided by the number of Units created by reason of the
deposit, shall equal $1.00; written certifications of
such determinations shall be executed by the Depositor
and Trustee and preserved in the Trust records with a
copy of each such written certification to Standard &
Poor's Corporation so long as Units of the Trust are
rated by them. The Depositor shall, at its expense,
cause independent public accountants to review the
Trust's holdings (i) at such time as the Depositor
determines no further deposits shall be made pursuant
to this paragraph and (ii), if earlier, as of the 90th
day following the initial deposit, for the purpose of
certifying whether the face value of the Zero Coupon
Obligations then held by the Trust divided by the Units
then outstanding equals $1.00. A copy of each written
report from the independent public accountants based on
their review will be provided to Standard & Poor's
Corporation so long as Units of the Trust are rated by
them."
D. The last sentence of the first paragraph of
Section 5.02 of the Standard Terms and Conditions of Trust
is amended by substituting "4:00 p.m. Eastern time" for
"12:00 p.m in the City of New York."
E. The second paragraph of Section 5.02 of the
Standard Terms and Conditions of Trust is amended by
substituting the following sentence for the third sentence
of the second paragraph of such Section:
"If such available funds shall be insufficient,
the Trustee shall sell such Securities as have been
designated on the current list for such purpose by the
Portfolio Supervisor, as hereinafter in this Section
5.02 provided, in amounts as the Trustee in its
discretion shall deem advisable or necessary in order
to fund the Principal Account for purposes of such
redemption, provided however, that Zero Coupon
Obligations may not be sold unless the Depositor and
Trustee, which may rely on the advice of the Portfolio
Supervisor, have determined that the face value of the
Zero Coupon Obligations remaining after such proposed
sale, divided by the number of Units outstanding after
the tendered Units are redeemed, shall equal or exceed
$1.00; a written certification as to such
determination shall be executed by the Depositor and
Trustee and preserved in the Trust records with a copy
of each such written certification to Standard & Poor's
Corporation so long as Units of the Trust are rated by
them. Within 90 days of the fiscal year end of the
Trust, the Depositor shall obtain, at its expense, an
annual written certification from the independent
public accountants as to such determination which will
also be provided to Standard & Poor's Corporation so
long as Units of the Trust are rated by them."
F. The third sentence of the seventh paragraph of
Section 5.02 of the Standard Terms and Conditions of Trust
is amended by deleting "a certification from the independent
public accountants to the effect described in the second
paragraph of this Section 5.02" and in its place inserting
"a certification from the Depositor and Trustee to the
effect described in the second paragraph of this Section
5.02."
G. Paragraph (a) of subsection II of Section 3.05 of
the Standard Terms and Conditions of Trust is hereby amended
to substitute the following sentence for the first sentence
of such paragraph:
"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 Principal 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 with respect to
distributions other than the distribution occurring in
the month of December of each year, the Trustee shall
not be required to make a distribution from the
Principal Account unless the amount available for
distribution shall equal $1.00 per 1000 Units in the
case of Units initially offered at approximately $1.00
per Unit, or, $1.00 per 100 Units in the case of Units
initially offered at approximately $10.00 per Unit."
H.For purposes of this Trust, all references in the
Standard Terms and Conditions of Trust including provisions
thereof amended hereby to "1.00 per Unit" shall be amended
to read "10.00 per Unit" and all references to "per 1,000
Units" shall be amended to read "per 100 Units."
I.Section 3.12 of the Standard Terms and Conditions of
Trust is hereby deleted in its entirety and replaced with
the following language:
"Section 3.12. 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 Zero
Coupon Obligation, if any, (including but not limited
to the making of any demand, direction, request, giving
of any notice, consent or waiver or the voting with
respect to any amendment or supplement to any
indenture, resolution, agreement or other instrument
under or pursuant to which the Zero Coupon Obligations,
if any, have been issued) the Trustee shall promptly
notify the Depositor and shall thereupon take such
action or refrain from taking any action as the
Depositor shall in writing direct; provided, however,
that if the Depositor shall not within five Business
Days of the giving of such notice to the Depositor
direct the Trustee to take or refrain from taking any
action, the Trustee shall take such action as it, in
its sole discretion, shall deem advisable.
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 Equity 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 Equity Securities are voted as closely as
possible in the same manner and the same general
proportion as are the Equity Securities held by owners
other than the 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 exchange or substitution be
effected notwithstanding such rejection or without an
initial offer, any Securities, cash and/or property
received in exchange 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 Principal
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 3.12 other
than failure to notify the Depositor.
Whenever new securities or property is received
and retained by the Trust pursuant to this Section
3.12, the Trustee shall, within 5 days thereafter, mail
to all Unit holders of the Trust notices of such
acquisition unless legal counsel for the Trust
determines that such notice is not required by The
Investment Company Act of 1940, as amended."
J. 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."
K. Article III of the Standard Terms and Conditions
of Trust is hereby amended by inserting the following
paragraphs which shall be entitled Section 3.16.:
"Section 3.16. Bookkeeping and Administrative
Expenses. As compensation for providing bookkeeping
and other administrative services of a character
described in Section 26(a)(2)(C) of the Investment
Company Act of 1940 to the extent such services are in
addition to, and do not duplicate, the services to be
provided hereunder by the Trustee or the Portfolio
Supervisor, the Depositor shall receive against a
statement or statements therefor submitted to the
Trustee monthly or annually an aggregate annual fee in
an amount which shall not exceed that dollar amount set
forth in the Prospectus times the number of Units
outstanding as of January 1 of such year except for a
year or years in which an initial offering period as
determined by Section 4.01 of this Indenture occurs, in
which case the fee for a month is based on the number
of Units outstanding at the end of such month (such
annual fee to be pro rated for any calendar year in
which the Depositor provides service during less than
the whole of such year), but in no event shall such
compensation when combined with all compensation
received from other unit investment trusts for which
the Depositor hereunder is acting as Depositor for
providing such bookkeeping and administrative services
in any calendar year exceed the aggregate cost to the
Depositor providing services to such unit investment
trusts. Such compensation may, from time to time, be
adjusted provided that the total adjustment upward does
not, at the time of such adjustment, exceed the
percentage of the total increase, after the date
hereof, in consumer prices for services as measured by
the United States Department of Labor Consumer Price
Index entitled "All Services Less Rent of Shelter" or
similar index, if such index should no longer be
published. The consent or concurrence of any Unit
holder hereunder shall not be required for any such
adjustment or increase. Such compensation shall be
paid by the Trustee, upon receipt of 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 Principal 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 Principal
Accounts shall be insufficient to provide for amounts
payable pursuant to this Section 3.16, 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 3.16,
provided, however, that Zero Coupon Obligations may not
be sold to pay for amounts payable pursuant to this
Section 3.16.
Any moneys payable to the Depositor pursuant to
this Section 3.16 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.
L. Section 1.01(3) shall be amended to read as
follows:
"(3) "Evaluator" shall mean FT Evaluators L.P. and
its successors in interest, or any successor evaluator
appointed as hereinafter provided."
M. The first sentence of Section 3.14. shall be
amended to read as follows:
"Subject to Section 3.15 hereof, as compensation
for providing supervisory portfolio services under this
Indenture, the Portfolio Supervisor shall receive, in
arrears, against a statement or statements therefor
submitted to the Trustee monthly or annually an
aggregate annual fee in an amount which shall not
exceed the amount set forth under "Summary of Essential
Information-Supervisory Fee" in the Prospectus times
the number of Units outstanding as of January 1 of such
year except for a Trust during the year or years in
which an initial offering period as determined in
Section 4.01 of this Indenture occurs, in which case
the fee for a month is based on the number of Units
outstanding at the end of such month (such annual fee
to be pro rated for any calendar year in which the
Portfolio Supervisor provides services during less than
the whole of such year), but in no event shall such
compensation when combined with all compensation
received from other series of the Trust for providing
such supervisory services in any calendar year exceed
the aggregate cost to the Portfolio Supervisor for
providing such services.
N. Section 3.01 of the Standard Terms and Conditions
of Trust shall be replaced in its entirety with the
following:
"Section 3.01. Initial Cost. The expenses
incurred in establishing a Trust, including the cost of
the preparation and typesetting of the registration
statement, prospectuses (including preliminary
prospectuses), the indenture and other documents
relating to the Trust, printing of Certificates,
Securities and Exchange Commission and state blue sky
registration fees, the costs of the initial valuation
of the portfolio and audit of the Trust, the initial
fees and expenses of the Trustee, and legal and other
out-of-pocket expenses related thereto, but not
including the expenses incurred in the printing of
preliminary prospectuses and prospectuses, expenses
incurred in the preparation and printing of brochures
and other advertising materials and any other selling
expenses, to the extent not borne by the Depositor,
shall be borne by the Trust. To the extent the funds
in the Income and Principal Accounts of the Trust shall
be insufficient to pay the expenses borne by the Trust
specified in this Section 3.01, the Trustee shall
advance out of its own funds and cause to be deposited
and credited to the Income Account such amount as may
be required to permit payment of such expenses. The
Trustee shall be reimbursed for such advance on each
Record Date from funds on hand in the Income Account
or, to the extent funds are not available in such
Account, from the Principal Account, in the amount
deemed to have accrued as of such Record Date as
provided in the following sentence (less prior payments
on account of such advances, if any), and the
provisions of Section 6.04 with respect to the
reimbursement of disbursements for Trust expenses,
including, without limitation, the lien in favor of the
Trustee therefor and the authority to sell Securities
as needed to fund such reimbursement, shall apply to
the payment of expenses and the amounts advanced
pursuant to this Section. For the purposes of the
preceding sentence and the addition provided in clause
(4) of the first sentence of Section 5.01, the expenses
borne by the Trust pursuant to this Section shall be
deemed to have been paid on the date of the Trust
Agreement and to accrue at a daily rate over the time
period specified for their amortization provided in the
Prospectus; provided, however, that nothing herein
shall be deemed to prevent, and the Trustee shall be
entitled to, full reimbursement for any advances made
pursuant to this Section no later than the termination
of the Trust. For purposes of calculating the accrual
of organizational expenses under this Section 3.01, the
Trustee shall rely on the written estimates of such
expenses provided by the Depositor pursuant to Section
5.01."
O. 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 adding the following
at the conclusion thereof: ", plus (4) amounts
representing organizational expenses paid from the
Trust less amounts representing accrued organizational
expenses of the Trust, plus (5) all other assets of the
Trust"
(ii) The following shall be added at the end of
the first paragraph of Section 5.01:
Until the Depositor has informed the Trustee
that there will be no further deposits of
Additional Securities pursuant to section 2.01(b),
the Depositor shall provide the Trustee with
written estimates of (i) the total organizational
expenses to be borne by the Trust pursuant to
Section 3.01 and (ii) the total number of Units to
be issued in connection with the initial deposit
and all anticipated deposits of additional
Securities. For purposes of calculating the Trust
Fund Evaluation and Unit Value, the Trustee shall
treat all such anticipated expenses as having been
paid and all liabilities therefor as having been
incurred, and all Units as having been issued, in
each case on the date of the Trust Agreement, and,
in connection with each such calculation, shall
take into account a pro rata portion of such
expense and liability based on the actual number
of Units issued as of the date of such
calculation. In the event the Trustee is informed
by the Depositor of a revision in its estimate of
total expenses or total Units and upon the
conclusion of the deposit of additional
Securities, the Trustee shall base calculations
made thereafter on such revised estimates or
actual expenses, respectively, but such adjustment
shall not affect calculations made prior thereto
and no adjustment shall be made in respect
thereof.
P. For purposes of this Trust, Units of the Trust
will not be rated by Standard & Poor's Ratings Services and
any reference to such rating or any requirement that
information be forwarded to Standard & Poor's Ratings
Services in the Standard Terms and Conditions of Trust shall
be inapplicable.
Q. For purposes of this Trust, any reference in the
Standard Terms and Conditions of Trust to "140%" shall be
replaced with "110%" in relation to the amount of cash or a
Letter of Credit needed to acquire Treasury Obligations.
R. The second paragraph of Section 3.02 of the
Standard Terms and Conditions of Trust 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 the Trust)
received by the Trust shall be dealt with in the manner
described at Section 3.12, herein, and shall by
retained or disposed of by the Trust according to those
provisions. The proceeds of any disposition shall be
credited to the Income Account of the 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."
S. The title of Section 3.15 of the Standard Terms
and Conditions of Trust shall be replaced with "Abatement of
Compensation of the Trustee, Evaluator, Portfolio Supervisor
and Sponsor," and sub-section (v) of the first sentence of
such Section 3.15 shall be amended by inserting the
following immediately after the phrase "Portfolio
Supervisor":
", the Sponsor for Bookkeeping and Administrative
Expenses"
PART III FOR AMERICAN TECHNOLOGY GROWTH TRUST, SERIES 1
AND AMERICAN FINANCIAL INSTITUTIONS GROWTH TRUST, SERIES 1
A. Section 1.01(2) shall be amended to read as
follows:
"(2) "Trustee" shall mean The Chase Manhattan Bank
(National Association), 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 (National
Association).
B. The term "Capital Account" as set forth in the
Prospectus shall be deemed to refer to the "Principal
Account."
C. 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 principal amount of Securities
deposited in such Trust, or (ii)"
D. 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
Principal 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 with respect to distributions
other than the distribution occurring in the month of
December of each year, the Trustee shall not be
required to make a distribution from the Principal
Account unless the amount available for distribution
shall equal $1.00 per 1000 Units in the case of Units
initially offered at approximately $1.00 per Unit, or,
$1.00 per 100 Units in the case of Units initially
offered at approximately $10.00 per Unit."
E.For purposes of this Trust, all references in the
Standard Terms and Conditions of Trust including provisions
thereof amended hereby to "$1.00 per Unit" shall be amended
to read "$10.00 per Unit" and all references to "per 1,000
Units" shall be amended to read "per 100 Units."
F.Section 5.02 of the Standard Terms and Conditions of
Trust is amended by adding the following new paragraph after
the second paragraph of such section:
"In lieu of a cash redemption, Unit holders
tendering 2,500 Units or more for redemption may
request from the Trustee by written notice submitted at
the time of tender an in kind distribution of shares of
Securities, to the extent of whole shares. To the
extent possible, in kind distributions of Securities
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. An in kind distribution
will be reduced by all expenses in connection with
customary transfer and registration charges. The
tendering Unit holder will receive his pro rata number
of whole shares of each of the Securities comprising
the portfolio and cash from the Principal Account equal
to the fractional shares to which the tendering Unit
holder is entitled. The Trustee may, but shall not be
required to, adjust the number of shares of any issue
of Securities included in a Unit holder's in kind
distribution to facilitate the distribution of whole
shares, such adjustment to be made on the basis of the
value of Securities on the date of tender. If funds in
the Principal Account are insufficient to cover the
required cash distribution to the tendering Unit
holder, the Trustee may sell Securities in the manner
described in this Section 5.02."
G. Section 8.02 of the Standard Terms and Conditions
of Trust shall be amended to delete the reference to
"100,000 Units" and substitute "2,500 Units" in the third
sentence of the second paragraph thereof.
H. The first paragraph of 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 Principal 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 with
respect to distributions other than the distribution
occurring in the month of December of each year, the
Trustee shall not be required to make a distribution
from the Principal Account unless the amount available
for distribution shall equal $1.00 per 100 Units."
I. Section 3.05.II(b) of the Standard Terms and
Conditions of Trust is hereby amended to read in its
entirety as follows:
"(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."
J. 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 the
equity securities (the "Equity Securities") (including
but not limited to the making of any demand, direction,
request, giving of any notice, consent or waiver or the
voting with respect to any amendment or supplement to
any indenture, resolution, agreement or other
instrument under or pursuant to which the Contract
Obligations, if any, have been issued) the Trustee
shall promptly notify the Depositor and shall thereupon
take such action or refrain from taking any action as
the Depositor shall in writing direct; provided,
however, that if the Depositor shall not within five
Business Days of the giving of such notice to the
Depositor direct the Trustee to take or refrain from
taking any action, the Trustee shall take such action
as it, in its sole discretion, shall deem advisable.
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 Equity 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 Equity Securities are voted as closely as
possible in the same manner and the same general
proportion as are the Equity Securities held by owners
other than the 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 exchange or substitution be
effected notwithstanding such rejection or without an
initial offer, any Securities, cash and/or property
received in exchange 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 Principal
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 other
than failure to notify the Depositor.
Whenever new securities or property is received
and retained by the Trust pursuant to this Section
3.11, the Trustee shall, within 5 days thereafter, mail
to all Unit holders of the Trust notices of such
acquisition unless legal counsel for the Trust
determines that such notice is not required by The
Investment Company Act of 1940, as amended."
K. 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."
L. Section 1.01(3) shall be amended to read as
follows:
"(3) "Evaluator" shall mean FT Evaluators L.P. and
its successors in interest, or any successor evaluator
appointed as hereinafter provided."
M. Article III of the Standard Terms and Conditions
of Trust is hereby amended by inserting the following
paragraphs which shall be entitled Section 3.14.:
"Section 3.14. Bookkeeping and Administrative
Expenses. As compensation for providing bookkeeping
and other administrative services of a character
described in Section 26(a)(2)(C) of the Investment Company Act
of 1940 to the extent such services are in addition to,
and do not duplicate, the services to be provided
hereunder by the Trustee or the Portfolio Supervisor,
the Depositor shall receive against a statement or
statements therefor submitted to the Trustee monthly or
annually an aggregate annual fee in an amount which
shall not exceed that dollar amount set forth in the
Prospectus times the number of Units outstanding as of
January 1 of such year except for a year or years in
which an initial offering period as determined by
Section 4.01 of this Indenture occurs, in which case
the fee for a month is based on the number of Units
outstanding at the end of such month (such annual fee
to be pro rated for any calendar year in which the
Depositor provides service during less than the whole
of such year), but in no event shall such compensation
when combined with all compensation received from other
unit investment trusts for which the Depositor
hereunder is acting as Depositor for providing such
bookkeeping and administrative services in any calendar
year exceed the aggregate cost to the Depositor
providing services to such unit investment trusts.
Such compensation may, from time to time, be adjusted
provided that the total adjustment upward does not, at
the time of such adjustment, exceed the percentage of
the total increase, after the date hereof, in consumer
prices for services as measured by the United States
Department of Labor Consumer Price Index entitled "All
Services Less Rent of Shelter" or similar index, if
such index should no longer be published. The consent
or concurrence of any Unit holder hereunder shall not
be required for any such adjustment or increase. Such
compensation shall be paid by the Trustee, upon receipt
of 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 Principal 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 Principal
Accounts shall be insufficient to provide for amounts
payable pursuant to this Section 3.14, the Trustee
shall have the power to sell (i) Bonds 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.
N. The first sentence of Section 3.13. shall be
amended to read as follows:
"As compensation for providing supervisory
portfolio services under this Indenture, the Portfolio
Supervisor shall receive, in arrears, against a
statement or statements therefor submitted to the
Trustee monthly or annually an aggregate annual fee in
an amount which shall not exceed the amount set forth
under "Summary of Essential Information-Supervisory
Fee" in the Prospectus times the number of Units
outstanding as of January 1 of such year except for a
Trust during the year or years in which an initial
offering period as determined in Section 4.01 of this
Indenture occurs, in which case the fee for a month is
based on the number of Units outstanding at the end of
such month (such annual fee to be pro rated for any
calendar year in which the Portfolio Supervisor
provides services during less than the whole of such
year), but in no event shall such compensation when
combined with all compensation received from other
series of the Trust for providing such supervisory
services in any calendar year exceed the aggregate cost
to the Portfolio Supervisor for providing such
services.
O. Section 3.01 of the Standard Terms and Conditions
of Trust shall be replaced in its entirety with the
following:
"Section 3.01. Initial Cost. The expenses
incurred in establishing a Trust, including the cost of
the preparation and typesetting of the registration
statement, prospectuses (including preliminary
prospectuses), the indenture and other documents
relating to the Trust, printing of Certificates,
Securities and Exchange Commission and state blue sky
registration fees, the costs of the initial valuation
of the portfolio and audit of the Trust, the initial
fees and expenses of the Trustee, and legal and other
out-of-pocket expenses related thereto, but not
including the expenses incurred in the printing of
preliminary prospectuses and prospectuses, expenses
incurred in the preparation and printing of brochures
and other advertising materials and any other selling
expenses, to the extent not borne by the Depositor,
shall be borne by the Trust. To the extent the funds
in the Income and Principal Accounts of the Trust shall
be insufficient to pay the expenses borne by the Trust
specified in this Section 3.01, the Trustee shall
advance out of its own funds and cause to be deposited
and credited to the Income Account such amount as may
be required to permit payment of such expenses. The
Trustee shall be reimbursed for such advance on each
Record Date from funds on hand in the Income Account
or, to the extent funds are not available in such
Account, from the Principal Account, in the amount
deemed to have accrued as of such Record Date as
provided in the following sentence (less prior payments
on account of such advances, if any), and the
provisions of Section 6.04 with respect to the
reimbursement of disbursements for Trust expenses,
including, without limitation, the lien in favor of the
Trustee therefor and the authority to sell Securities
as needed to fund such reimbursement, shall apply to
the payment of expenses and the amounts advanced
pursuant to this Section. For the purposes of the
preceding sentence and the addition provided in clause
(4) of the first sentence of Section 5.01, the expenses
borne by the Trust pursuant to this Section shall be
deemed to have been paid on the date of the Trust
Agreement and to accrue at a daily rate over the time
period specified for their amortization provided in the
Prospectus; provided, however, that nothing herein
shall be deemed to prevent, and the Trustee shall be
entitled to, full reimbursement for any advances made
pursuant to this Section no later than the termination
of the Trust. For purposes of calculating the accrual
of organizational expenses under this Section 3.01, the
Trustee shall rely on the written estimates of such
expenses provided by the Depositor pursuant to Section
5.01."
P. 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 adding the following
at the conclusion thereof: ", plus (4) amounts
representing organizational expenses paid from the
Trust less amounts representing accrued organizational
expenses of the Trust, plus (5) all other assets of the
Trust"
(ii) The following shall be added at the end of
the first paragraph of Section 5.01:
Until the Depositor has informed the Trustee
that there will be no further deposits of
Additional Securities pursuant to section 2.01(b),
the Depositor shall provide the Trustee with
written estimates of (i) the total organizational
expenses to be borne by the Trust pursuant to
Section 3.01 and (ii) the total number of Units to
be issued in connection with the initial deposit
and all anticipated deposits of additional
Securities. For purposes of calculating the Trust
Fund Evaluation and Unit Value, the Trustee shall
treat all such anticipated expenses as having been
paid and all liabilities therefor as having been
incurred, and all Units as having been issued, in
each case on the date of the Trust Agreement, and,
in connection with each such calculation, shall
take into account a pro rata portion of such
expense and liability based on the actual number
of Units issued as of the date of such
calculation. In the event the Trustee is informed
by the Depositor of a revision in its estimate of
total expenses or total Units and upon the
conclusion of the deposit of additional
Securities, the Trustee shall base calculations
made thereafter on such revised estimates or
actual expenses, respectively, but such adjustment
shall not affect calculations made prior thereto
and no adjustment shall be made in respect
thereof.
Q. The second paragraph of Section 3.02 of the
Standard Terms and Conditions of Trust 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 the Trust)
received by the Trust shall be dealt with in the manner
described at Section 3.11, herein, and shall by
retained or disposed of by the Trust according to those
provisions. The proceeds of any disposition shall be
credited to the Income Account of the 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. The title of Section 3.15 of the Standard Terms
and Conditions of Trust shall be replaced with "Abatement of
Compensation of the Trustee, Evaluator, Portfolio Supervisor
and Sponsor," and sub-section (v) of the first sentence of
such Section 3.15 shall be amended by inserting the
following immediately after the phrase "Portfolio
Supervisor":
", the Sponsor for Bookkeeping and Administrative
Expenses"
IN WITNESS WHEREOF, Nike Securities L.P., The Chase
Manhattan Bank (National Association), FT Evaluators L.P.
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 Carlos E. Nardo
Senior Vice President
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
Trustee
(SEAL) By Thomas Porrazzo
Vice President
Attest:
Rosalia A. Raviele
Second Vice President
FT EVALUATORS L.P., Evaluator
By Carlos E. Nardo
Senior Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Carlos E. Nardo
Senior Vice President
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
The First Trust Special Situations Trust, Series 123
(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
September 7, 1995
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: The First Trust Special Situations Trust, Series 123
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of The First Trust Special Situations
Trust, Series 123 in connection with the preparation, execution
and delivery of a Trust Agreement dated September 7, 1995 among
Nike Securities L.P., as Depositor, The Chase Manhattan Bank
(National Association), as Trustee, FT Evaluators L.P., as
Evaluator, and First Trust Advisors L.P., as 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. 33-61727)
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:jln
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
September 7, 1995
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
The Chase Manhattan Bank
(National Association)
770 Broadway
New York, New York 10003
Re: The First Trust Special Situations Trust, Series 123
Gentlemen:
We have acted as counsel for Nike Securities L.P.,
Depositor of The First Trust Special Situations Trust,
Series 123 (the "Fund"), in connection with the issuance of
units of fractional undivided interests in the Trust of said
Fund (the "Trust"), under a Trust Agreement, dated September
7, 1995 (the "Indenture"), between Nike Securities L.P., as
Depositor, The Chase Manhattan Bank (National Association),
as Trustee, FT Evaluators L.P., as Evaluator and First Trust
Advisors L.P., as Portfolio Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with
the Securities and Exchange Commission, the Indenture and
such other instruments and documents we have deemed
pertinent. The opinions expressed herein assume that the
Trust will be administered, and investments by the Trust
from proceeds of subsequent deposits, if any, will be made,
in accordance with the terms of the Indenture. The Trust
holds both Treasury Obligations and Equity Securities
(collectively, the "Securities") as such terms are defined
in the Prospectus.
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 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 the assets of a Trust under the Internal
Revenue Code of 1986 (the "Code"); the income of a
Trust will be treated as income of the Unit holders
thereof under the Code; and an item of income each
Trust will have the same character in the hands of a
Unit holder as it would have in the hands of each
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 received by the Trust.
II. Each Unit holder will have a taxable event
when a Trust disposes of a Security (whether by sale,
exchange, redemption, or payment at maturity) or upon
the sale or redemption of Units by such Unit holder.
The price a Unit holder pays for his Units, including
sales charges, is allocated among his pro rata portion
of each Security held by a Trust (in proportion to the
fair market values thereof on the date the Unit holder
purchases his Units) in order to determine his initial
cost for his pro rata portion of each Security held by
a Trust. The Treasury Obligations are treated as bonds
that were originally issued at an original issue
discount. Because the Treasury Obligations represent
interest in "stripped" U.S. Treasury bonds, a Unit
holder's initial cost for his pro rata portion of each
Treasury Obligation held by the Growth and Treasury
Trust (determined at the time he acquires his Units, in
the manner described above) shall be treated as its
"purchase price" by the Unit holder. Under the special
rules relating to stripped bonds, original issue
discount is effectively treated as interest for Federal
income tax purposes and the amount of original issue
discount in this case is generally the difference
between the bond's purchase price and its stated
redemption price at maturity. A Unit holder will be
required to include in gross income for each taxable
year the sum of his daily portions of original issue
discount attributable to the Treasury Obligations held
by the Growth and Treasury Trust as such original issue
discount accrues and will in general be subject to
Federal income tax with respect to the total amount of
such original issue discount that accrues for such year
even though the income is not distributed to the Unit
holders during such year to the extent it is greater
than or equal to a "de minimis" amount determined under
a Treasury Regulation (the "Regulation") issued on
December 28, 1992 as described below. To the extent
the amount of such discount is less than the respective
"de minimis" amount, such discount shall be treated as
zero. In general, original issue discount accrues
daily under a constant interest rate method which takes
into account the semi-annual compounding of accrued
interest. In the case of the Treasury Obligations,
this method will generally result in an increasing
amount of income to the Unit holders each year. For
Federal income tax purposes, a Unit holder's pro rata
portion of dividends as defined by Section 316 of the
Code paid by a corporation are 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 which exceed such current
and accumulated earnings and profits will first reduce
a Unit holder's tax basis in such Security (and
accordingly his basis in his Units), and to the extent
that such dividends exceed a Unit holder's tax basis in
such Security shall be treated as capital gain. In
general, any such capital gain will be short term
unless a Unit holder has held his units for more thatn
one year.
III. A Unit holder's portion of gain, if any, upon
the sale or redemption of Units or the disposition of
Securities held by a Trust will generally be considered
a capital gain except in the case of a dealer or a
financial institution and will be generally long-term
if the Unit holder has held his Units for more than one
year. A Unit holder's portion of loss, if any, upon
the sale or redemption of Units or the disposition of
Securities held by a Trust will generally be considered
a capital loss except in the case of a dealer or a
financial institution and will be generally long-term
if the Unit holder has held his Units for more than one
year.
IV. The Code provides that "miscellaneous
itemized deductions" are allowable only to the extent
that they exceed two percent of an individual
taxpayer's adjusted gross income. Miscellaneous
itemized deductions subject to this limitation under
present law include a Unit holder's pro rata share of
expenses paid by a Trust, including fees of the Trustee
and the Evaluator.
The Code provides a complex set of rules governing the
accrual of original issue discount, including special rules
relating to "stripped" debt instruments such as the Treasury
Obligations. These rules provide that original issue
discount generally accrues on the basis of a constant
compound interest rate. Special rules apply if the purchase
price of a Treasury Obligation exceeds its original issue
price plus the amount of original issue discount which would
have previously accrued, based upon its issue price (its
"adjusted issue price"). Similarly, these special rules
would apply to a Unit holder if the tax basis of his pro
rata portion of a Treasury Obligation issued with original
issue discount exceeds his pro rata portion of its adjusted
issue price. The application of these rules will also vary
depending on the value of the Treasury Obligations on the
date a Unit holder acquires his Units, and the price a Unit
holder pays for his Units. In addition, as discussed above,
the Regulation provides that the amount of original issue
discount on a stripped bond is considered zero if the actual
amount of original issue discount on such stripped bond as
determined under Section 1286 of the Code is less than a "de
minimis" amount, which, the Regulation provides, is the
product of (i) 0.25 percent of the stated redemption price
at maturity and (ii) the number of full years from the date
the stripped bond is purchased (determined separately for
each new purchaser thereof) to the final maturity date of
the bond.
For taxable years beginning after December 31, 1986 and
before January 1, 1996, certain corporations may be subject
to the environmental tax (the "Superfund Tax") imposed by
Section 59A of the Code. Income received from, and gains
recognized from the disposition of, a Security by the Trust
will be included in the computation of the Superfund Tax by
such corporations holding Units in the Trust.
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 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. 33-61727)
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/jln
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
September 7, 1995
The Chase Manhattan Bank
(National Association), as Trustee of
The First Trust Special
Situations Trust, Series 123
American Financial Institutions
Growth Trust, Series 1
American Technology Growth
Trust, Series 1
American Technology Growth
& Treasury Securities Trust,
Series 2
770 Broadway - 6th Floor
New York, New York 10003
Attention: Mr. Paul J. Holland
Vice President
Re: The First Trust Special Situations Trust, Series 123
American Financial Institutions Growth Trust, Series 1
American Technology Growth Trust, Series 1
American Technology Growth & Treasury Securities Trust,
Series 2
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for The First Trust Special Situations Trust, Series
123,consisting of American Financial Institutions Growth Trust,
Series 1, American Technology Growth Trust, Series 1 (the "Growth
Trusts"), and American Technology Growth & Treasury Securities
Trust, Series 2 (collectively, the "Trusts"), which will be
established under certain Standard Terms and Conditions of Trust
dated November 20, 1991 and October 15, 1991, and a related Trust
Agreement dated as of today (collectively, the "Indenture"),
among Nike Securities L.P., as Depositor (the "Depositor"); FT
Evaluators L.P., as Evaluator; First Trust Advisors L.P., as
Portfolio Supervisor and The Chase Manhattan Bank (National
Association), as Trustee (the "Trustee"). Pursuant to the terms
of the Indenture, units of fractional undivided interest in the
Trusts (the "Units") will be issued in the aggregate number set
forth in the Indenture.
We have examined and are familiar with originals or certified
copies, or copies otherwise identified to our satisfaction, of
such documents as we have deemed necessary or appropriate for the
purpose of this opinion. In giving this opinion, we have relied
upon the two opinions, each dated today and addressed to the
Trustee, of Chapman and Cutler, counsel for the Depositor, with
respect to the matters of law set forth therein.
Based upon the foregoing, we are of the opinion that:
1. The Trusts will not constitute associations taxable as
corporations under New York law, and accordingly will not be
subject to the New York State franchise tax or the New York City
general corporation tax.
2. Under the income tax laws of the State and City of New York,
the income of the Trusts will be considered the income of the
holders of the Units.
We consent to the filing of this opinion as an exhibit to the
Registration Statement (No. 33-61727) filed with the Securities
and Exchange Commission with respect to the registration of the
sale of the Units and to the references to our name under the
captions "What is the Federal Tax Status of Unit Holders?" and
"Legal Opinions" in such Registration Statement and the
preliminary prospectus included therein.
Very truly yours,
Carter, Ledyard & Milburn
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
September 7, 1995
The Chase Manhattan Bank
(National Association), as Trustee of
The First Trust Special Situations
Trust, Series 123
American Financial Institutions
Growth Trust, Series 1
American Technology Growth
Trust, Series 1
American Technology Growth
& Treasury Securities Trust,
Series 2
770 Broadway - 6th Floor
New York, New York 10003
Attention: Mr. Paul J. Holland
Vice President
Re: The First Trust Special Situations Trust, Series 123
American Financial Institutions Growth Trust, Series 1
American Technology Growth Trust, Series 1
American Technology Growth & Treasury Securities Trust,
Series 2
Dear Sirs:
We are acting as counsel for The Chase Manhattan Bank
(National Association) ("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 October 15, 1991, and the same are collectively
referred to herein as the "Indenture") among Nike Securities
L.P., as Depositor (the "Depositor"), FT Evaluators L.P., as
Evaluator; First Trust Advisors L.P., as Portfolio Supervisor;
and Chase, as Trustee (the "Trustee"), establishing The First
Trust Special Situations Trust, Series 123, consisting of
American Financial Institutions Growth Trust, Series 1, American
Technology Growth Trust, Series 1 (the "Growth Trusts"), and
American Technology Growth & Treasury Securities Trust, Series 2
(the "Growth & Treasury Trust")(collectively, the "Trusts"), and
the execution by Chase, as Trustee under the Indenture, of a
certificate or certificates evidencing ownership of units (such
certificate or certificates and such aggregate units being herein
called "Certificates" and "Units"), each of which represents an
undivided interest in the respective Trust which as to the Growth
Trusts, consists of common stocks and, as to the Growth &
Treasury Trust, consists of "zero coupon" U.S. Treasury Bonds and
common stocks (including, confirmations of contracts for the
purchase of certain stocks and bonds 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 and bonds), such stocks and bonds being
defined in the Indenture as Securities and listed in the Schedule
to the Indenture.
We have examined the Indenture, the Closing Memorandum dated
today's date, a specimen Certificate, 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 national banking
association authorized to exercise trust powers.
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 duly executed and delivered to
or upon the order of the Depositor a Certificate or Certificates
evidencing ownership of the Units, registered in the name of the
Depositor. Upon receipt of confirmation of the effectiveness of
the registration statement for the sale of the Units filed with
the Securities and Exchange Commission under the Securities Act
of 1933, the Trustee may deliver such other Certificates, in such
names and denominations as the Depositor may request, to or upon
the order of the Depositor as provided in the Closing Memorandum.
5. Chase, as Trustee, may lawfully advance to the Trust
amounts as may be necessary to provide periodic interest
distributions of approximately equal amounts, and be reimbursed,
without interest, for any such advances from funds in the
interest account, as provided in the Indenture.
In rendering the foregoing opinion, we have not considered,
among other things, whether the Securities have been duly
authorized and delivered.
Very truly yours,
CARTER, LEDYARD & MILBURN
FT Evaluators L.P.
1001 Warrenville Road
Lisle, Illinois 60532
September 7, 1995
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 123
Gentlemen:
We have examined the Registration Statement File No. 33-
61727 for the above captioned fund. We hereby consent to the use
in the Registration Statement of the references to FT Evaluators
L.P. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
FT Evaluators L.P.
Carlos E. Nardo
Senior Vice President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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