Registration No. 33-65315
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to Form S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES
OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust:
The First Trust Special Situations Trust, Series 135
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agents for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
E. Title 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:
As soon as practicable after the effective date of the
Registration Statement.
|XXX|Check box if it is proposed that this filing will become
effective on January 11, 1996 at 2:00 p.m. pursuant to Rule
487.
________________________________
*Previously paid
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 135
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 Form S-6) Auditors; Statement of
Net Assets
* Inapplicable, answer negative or not required.
ECONOMIC OUTLOOK GROWTH TRUST, SERIES 1996
The Trust. The First Trust (registered trademark) Special Situations
Trust, Series 135 (Economic Outlook Growth Trust, Series 1996) is a unit
investment trust consisting of a portfolio containing common stocks
issued by companies which are considered to have the potential for
capital appreciation (the "Equity Securities").
The objective of the Trust is to provide potential capital appreciation
by investing the Trust's portfolio in common stocks. See "Schedule of
Investments." The Trust has a mandatory termination date (the "Mandatory
Termination Date" or "Trust Ending Date") of approximately one year from
the date of this Prospectus as set forth under "Summary of Essential
Information." There is, of course, no guarantee that the objective of
the Trust will be achieved.
Each Unit of the Trust represents an undivided fractional interest in
all the Equity Securities deposited in the Trust. The Equity Securities
deposited in the 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 but may decline more than or not
increase as much as stocks in general. See "Portfolio."
The Sponsor may, from time to time after the Initial Date of Deposit,
deposit additional Equity Securities in the Trust. Such deposits of
additional Equity Securities will be done in such a manner that the
original proportionate relationship among the number of shares of 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 share
relationship established on the Initial Date of Deposit, and not the
actual proportionate share relationship on the subsequent date of
deposit, because the latter share relationship may be different than the
original proportionate share relationship. Any such difference may be
due to the sale, redemption or liquidation of any of the Equity
Securities deposited in the Trust on the Initial, or any subsequent,
Date of Deposit. Moreover, because of fluctuations in the price of the
Equity Securities, the proportionate value relationship among the Equity
Securities on any subsequent date of deposit will probably be different
from that established on the Initial Date of Deposit. See "What is the
First Trust Special Situations Trust?" and "How May Equity Securities be
Removed from the Trust?"
Public Offering Price. The Public Offering Price per Unit of the
Economic Outlook Growth Trust, Series 1996 is equal to the aggregate
underlying value of the Equity Securities in the Trust (generally
determined by the closing sale prices of the 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 an initial sales charge for the Trust equal
to the difference between the maximum sales charge for the Trust (2.90%
of the Public Offering Price) and the maximum remaining deferred sales
charge (initially $0.195 per Unit). Commencing March 29, 1996, and on
the last business day of each month thereafter, through December 31,
1996, a deferred sales charge of $0.0195 will be assessed per Unit.
Units purchased subsequent to the initial deferred sales charge payment
will be subject to the initial sales charge and the remaining deferred
sales charge payments. The deferred sales charge will be paid from funds
in the Capital Account, if sufficient, or from the periodic sale of
Equity Securities. The total maximum sales charge assessed to Unit
holders on a per Unit basis will be 2.90% of the Public Offering Price
(equivalent to 2.928% of the net amount invested, exclusive of the
deferred sales charge). A pro rata share of accumulated dividends, if
any, in the Income Account is included in the Public Offering Price. The
minimum amount which an investor may purchase in the Trust is $1,000
($250 for an Individual Retirement Account or other retirement plans).
The sales charge for the Trust is reduced on a graduated scale for sales
involving at least 5,000 Units. See "How is the Public Offering Price
Determined?"
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.
Robert W. Baird & Co. Incorporated
The date of this Prospectus is January 11, 1996
Page 1
Dividend and Capital Distributions. Distributions of dividends received
by the Trust, if any, will be made as part of the final liquidation
distribution. Distributions of funds in the Capital Account, if any,
will be made as part of the final liquidation distribution, and in
certain circumstances, earlier. Any distribution of income and/or
capital will be net of the expenses of the Trust. See "What is the
Federal Tax Status of Unit Holders?" Additionally, upon termination of
the Trust, the Trustee will distribute, upon surrender of Units for
redemption, to each remaining Unit holder his or her pro rata share of
the Trust's assets, less expenses, in the manner set forth under "Rights
of Unit Holders-How are Income and Capital Distributed?" The Sponsor
intends to create a separate 1997 series of the Economic Outlook Growth
Trust (the "1997 Trust") in conjunction with the termination of this
series of the Trust. Unit holders who elect to become Rollover Unit
holders will not receive the final liquidation distribution, but will
receive units in the 1997 Trust. See "Special Redemption, Liquidation
and Investment in a New Trust." However, there is no assurance that the
1997 Trust will be offered.
Secondary Market for Units. While under no obligation to do so, the
Sponsor and the Underwriter intend to maintain a market for Units of the
Trust and offer to repurchase such Units at prices which are based on
the aggregate underlying value of 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. 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 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. Units sold or tendered for
redemption prior to such time as the entire deferred sales charge on
such Units has been collected will be assessed the amount of the
remaining deferred sales charge at the time of sale or redemption. A
Unit holder tendering 2,500 or more Units of the Trust 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?"
Special Redemption, Liquidation and Investment in a New Trust. Unit
holders who hold their Units in book entry form may be given the option
of specifying by December 31, 1996 (the "Rollover Notification Date") to
have all of their Units redeemed in-kind on the Rollover Notification
Date and the distributed Equity Securities sold by the Trustee, in its
capacity as Distribution Agent, during the Special Redemption and
Liquidation Period. (Unit holders so electing are referred to herein as
"Rollover Unit holders.") The Distribution Agent will appoint the
Sponsor as its agent to determine the manner, timing and execution of
sales of underlying Equity Securities. The proceeds of the redemption
will then be invested in Units of the 1997 Trust, if such Trust is
offered. The Sponsor may, however, stop creating new Units of the 1997
Trust at any time in its sole discretion without regard to whether all
the proceeds to be invested have been invested. Cash which has not been
invested on behalf of the Rollover Unit holders in the 1997 Trust will
be distributed at the end of the Special Redemption and Liquidation
Period. However, the Sponsor anticipates that sufficient Units can be
created, although moneys in the Trust may not be fully invested on the
next business day. If the 1997 Trust is offered, each Rollover Unit
holder may elect to use their redemption proceeds to purchase Units of
the 1997 Trust at a reduced sales charge. Units purchased other than
with redemption proceeds will be subject to the full sales charge. The
portfolio for the 1997 Trust, if offered, will contain common stock
issued by companies which are considered to have the potential for
capital appreciation for the year 1997. Rollover Unit holders will
receive credit for the amount of dividends in the Income Account of the
Trust which will be included in the reinvestment in Units of the 1997
Trust. The exchange option described above is subject to modification,
termination or suspension.
Termination. The Trust will terminate approximately one year after the
Initial Date of Deposit regardless of market conditions at that time.
Commencing on the Mandatory Termination Date, Equity Securities will
begin to be sold in connection with the termination of the Trust. The
Sponsor will determine the manner, timing and execution of the sale of
the Equity Securities. Written notice of any termination of the Trust
specifying the time or times at which Unit holders may surrender their
certificates for cancellation shall be given by the Trustee to each Unit
holder at his or her address appearing on the registration books of the
Page 2
Trust maintained by the Trustee. At least 30 days prior to the Mandatory
Termination Date of the Trust, the Trustee will provide written notice
thereof to all Unit holders and will include with such notice a form to
enable Unit holders to elect a distribution of shares of Equity
Securities (reduced by customary transfer and registration charges) if
such Unit holder owns at least 2,500 Units of the Trust, rather than to
receive payment in cash for such Unit holder's pro rata share of the
amounts realized upon the disposition by the Trustee of Equity
Securities. To be effective, the election form, together with
surrendered certificates and other documentation required by the
Trustee, must be returned to the Trustee at least five business days
prior to the Mandatory Termination Date of the Trust. Unit holders not
electing the "Rollover Option" or a distribution of shares of the Equity
Securities will receive a cash distribution within a reasonable time
after the Trust is terminated. See "Rights of Unit Holders-How are
Income and Capital Distributed?"
Risk Factors. An investment in the Trust should be made with an
understanding of the risks associated therewith, including, among other
factors, the possible deterioration of either the financial condition of
the issuers of the Equity Securities or the general condition of the
stock market, changes in interest rates or an economic recession. The
Trust's portfolio is not managed and Equity Securities will not be sold
by the Trust regardless of market fluctuations, although some Equity
Securities may be sold under certain limited circumstances. Finally, the
results of ownership of Units will differ from the results of ownership
of the underlying Equity Securities of the Trust for various reasons,
including the timing of the purchase and sale (or redemption) of Units
of the Trust, sales charges and expenses of the Trust and taxes. See
"What are Equity Securities?-Risk Factors."
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-January 11, 1996
Underwriter: Robert W. Baird & Co. Incorporated
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank (National Association)
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
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 Equity Securities in Portfolio (1) $148,029
Aggregate Offering Price Evaluation of Equity Securities perUnit $ 9.8686
Maximum Sales Charge 2.90% of the Public Offering Price
per Unit (2.928% of the net amount invested, exclusive of the
deferred sales charge) (2) $ .2889
Less Deferred Sales Charge per Unit $ (.1950)
Public Offering Price per Unit (2) $ 9.9625
Sponsor's Initial Repurchase Price per Unit $ 9.6736
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less the deferred sales charge) (3) $ 9.6736
</TABLE>
CUSIP Number 33718R 278
First Settlement Date January 17, 1996
Rollover Notification Date December 31, 1996
Special Redemption and Liquidation
Period During the period from January
1, 1997 to January 31, 1997.
Mandatory Termination Date January 31, 1997
Discretionary Liquidation Amount A Trust may be terminated if the
value of the Equity Securities
is less than the lower of
$2,000,000 or 20% of the total
value of Equity Securities
deposited in a Trust during the
primary offering period.
Trustee's Annual Fee (4) $.0110 per Unit outstanding.
Evaluator's Annual Fee $.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
time) on the New York Stock
Exchange on each day on which it
is open.
Supervisory Fee (5) Maximum of $.0035 per Unit
outstanding annually payable to
an affiliate of the Sponsor.
Estimated Organizational and Offering
Expenses (6) $.0300 per Unit.
Income Distribution (7) Distributions of dividends
received by the Trust will be
made as part of the final
liquidation distribution.
[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 the Equity Security is not so listed at
the closing ask price thereof.
(2) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. The initial sales charge applies to all Units and
represents an amount equal to the difference between the maximum sales
charge for the Trust of 2.90% of the Public Offering Price and the
amount of the maximum remaining deferred sales charge (initially $.1950
per Unit). Subsequent to the Initial Date of Deposit, the amount of the
initial sales charge will vary with changes in the aggregate underlying
value of the Equity Securities underlying the Trust. In addition to the
initial sales charge, Unit holders of the Trust will pay a deferred
sales charge of $0.0195 per Unit per month commencing March 29, 1996 and
on the last business day of each month thereafter through December 31,
1996. Units purchased subsequent to the initial deferred sales charge
payment will be subject to the initial sales charge and the remaining
deferred sales charge payments. These deferred sales charge payments
will be paid from funds in the Capital Account, if sufficient, or from
the periodic sale of Equity Securities. See "Fee Table" and "Public
Offering" for additional information. 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 share relationship among the individual Equity 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 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 no event shall the Trustee receive compensation of less than
$2,000 for such annual compensation.
(5) In addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $.0010 per
Unit.
(6) The Trust (and therefore Unit holders) will bear all or a portion of
its organizational and offering costs (including costs of preparing the
registration statement, the trust indenture and other closing documents,
registering Units with the Securities and Exchange Commission and
states, the initial audit of the Trust portfolio, legal fees 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 and offering expenses will be charged
off over a period not to exceed one year. See "What are the Expenses and
Charges?" and "Statement of Net Assets." Historically, the sponsors of
unit investment trusts have paid all the costs of establishing such
trusts.
(7) If the 1997 Trust is offered, at the Rollover Notification Date for
Rollover Unit holders or upon termination of the Trust for other Unit
holders, amounts in the Income Account (which consist of dividends on
the Equity Securities) will be included in amounts distributed to or on
behalf of Unit holders. Distributions from the Capital Account will be
made monthly payable on the last day of the month to Unit holders of
record on the fifteenth day of such month if the amount available for
distribution equals at least $0.01 per Unit. Notwithstanding,
distributions of funds in the Capital Account, if any, will be made as
part of the final liquidation distribution.
Page 4
FEE TABLE
This Fee Table is intended to help you to understand the costs and
expenses that you will bear directly or indirectly. See "Public
Offering" and "What are the Expenses and Charges?" Although the Trust
has a term of only approximately one year and is a unit investment trust
rather than a mutual fund, this information is presented to permit a
comparison of fees, assuming the principal amount and distributions are
rolled over each year into a new Trust subject only to the deferred
sales charge.
<TABLE>
<CAPTION>
Amount
per Unit
________
<S> <C> <C>
Unit holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of the Public Offering Price) 0.94%(a) $0.094
Deferred sales charge per year
(as a percentage of original purchase price) 1.96%(b) 0.195
________ ______
2.90% $0.289
======== ======
Maximum Sales Charge per year imposed on
Reinvested Dividends 1.96%(c) 0.195
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee .112% $.0110
Portfolio supervision, bookkeeping, administrative,
evaluation fees, organizational and offering expenses .380% .0375
Other operating expenses .022% .0022
______ ______
Total .514% $.0507
====== ======
</TABLE>
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years(d) 5 Years(d) 10 Years(d)
______ __________ __________ __________
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming the Economic Outlook Growth Trust,
Series 1996 estimated operating expense ratio of .514%
and a 5% annual return on the investment throughout
the periods $ 34 $ 43 $ 52 $ 80
</TABLE>
The example assumes reinvestment of all dividends and distributions and
utilizes a 5% annual rate of return as mandated by Securities and
Exchange Commission regulations applicable to mutual funds. For purposes
of the example, the deferred sales charge imposed on reinvestment of
dividends is not reflected until the year following payment of the
dividend; the cumulative expenses would be higher if sales charges on
reinvested dividends were reflected in the year of reinvestment. The
example should not be considered a representation of past or future
expenses or annual rate of return; the actual expenses and annual rate
of return may be more or less than those assumed for purposes of the
example.
[FN]
_____________________
(a) The Initial Sales Charge is actually the difference between the
maximum total sales charge of 2.90% and the maximum remaining deferred
sales charge (initially $.1950 per Unit) and would exceed .94% if the
Public Offering Price exceeds $9.9625 per Unit.
(b) The actual fee is $0.0195 per month per Unit, irrespective of
purchase or redemption price deducted in each of the ten months during
the period from March 29, 1996 to December 31, 1996. If the Unit price
exceeds $9.9625 per Unit, the deferred sales charge will be less than
1.96%. If the Unit price is less than $9.9625 per Unit, the deferred
sales charge will exceed 1.96%. Units purchased subsequent to the
initial deferred sales charge payment will be subject to only the
Initial Sales Charge and the remaining deferred sales charge payments.
(c) Reinvested Dividends will be subject only to the deferred sales
charge remaining at the time of reinvestment. See "How are Income and
Capital Distributed?"
(d) Although the Trust has a term of only one year and is a unit
investment trust rather than a mutual fund, this information is
presented to permit a comparison of fees, assuming the principal amount
and distributions are rolled over each year into a new Trust subject
only to the deferred sales charge.
Page 5
Economic Outlook Growth Trust, Series 1996
The First Trust Special Situations Trust, Series 135
What is The First Trust Special Situations Trust?
The First Trust Special Situations Trust, Series 135 (Economic Outlook
Growth Trust, Series 1996) 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 (the
"Trust.") The Trust is a unit investment trust 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,
and First Trust Advisors L.P. as Portfolio Supervisor and Evaluator.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee
confirmations of contracts for the purchase of common stocks issued by
companies which are considered to have the potential for capital
appreciation (the "Equity Securities"), 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 Equity Securities. In exchange
for the deposit of securities or contracts to purchase securities in the
Trust, the Trustee delivered to the Sponsor documents evidencing the
entire ownership of the Trust.
The objective of the Economic Outlook Growth Trust, Series 1996 is to
provide potential capital appreciation by investing in common stocks of
companies which are considered to have the potential for capital
appreciation. Each of the Equity Securities chosen by the Underwriter
has been selected to do well in a period of slow economic growth and
difficult corporate earnings comparisons, which the Underwriter believes
will be the prevailing market during the next twelve months. To achieve
the Trust's objective, the Underwriter has identified four sectors which
it believes should do well in such an economic environment: health care;
business services; telecommunications equipment and services; and
interest-sensitive stocks. The Underwriter selected companies within
these sectors which it believes should do well over the next twelve
months based upon such companies reputation as being higher quality,
well-established companies with stable demand, strong finances and a
history of doing well in previous economic slowdowns. There is, of
course, no guarantee that the objective of the Trust will be achieved.
With the deposit of the Equity Securities on the Initial Date of
Deposit, the Sponsor established a percentage relationship between the
number of shares of Equity Securities in the Trust's portfolio. See
"What are the Equity Securities Selected for Economic Outlook Growth
Trust, Series 1996?" From time to time following the Initial Date of
Deposit, the Sponsor, pursuant to the Indenture, may deposit additional
Equity Securities in the Trust and Units may be continuously offered for
sale to the public by means of this Prospectus, resulting in a potential
increase in the outstanding number of Units of the Trust. Any deposit by
the Sponsor of additional Equity Securities will duplicate, as nearly as
is practicable, the original proportionate share relationship (subject
to appropriate adjustment in the event of stock splits, stock dividends
and the like) and not the actual proportionate share relationship on the
subsequent date of deposit, because the latter relationship may be
different than the original proportionate share relationship. Any such
difference may be due to the sale, redemption or liquidation of any of
the Equity Securities deposited in the Trust on the Initial, or any
subsequent, Date of Deposit. Moreover, because of fluctuations in the
price of the Equity Securities, the proportionate value relationship
among the Equity Securities on any subsequent Date of Deposit will
probably be different from that established on the Initial Date of
Deposit. See "How May Equity Securities be Removed from the Trust?" The
original percentage relationship of each Equity Security to the Trust is
set forth herein under "Schedule of Investments" for the Trust. Since
the prices of the underlying Equity Securities will fluctuate daily, the
ratio, on a market value basis, will also change daily. The portion of
Equity Securities represented by each Unit will not change as a result
of the deposit of additional Equity Securities in the Trust.
On the Initial Date of Deposit, each Unit of the Trust represented the
undivided fractional interest in the Equity Securities deposited in the
Trust set forth under "Summary of Essential Information." To the extent
that Units of the Trust are redeemed, the aggregate value of the Equity
Securities in the Trust will be reduced and the undivided fractional
Page 6
interest represented by each outstanding Unit of the Trust will be
increased proportionately. However, if additional Units are issued by
the Trust in connection with the deposit of additional Equity Securities
by the Sponsor, the aggregate value of the Equity Securities in the
Trust will be increased by amounts allocable to additional Units, and
the undivided fractional interest represented by each outstanding Unit
of the Trust will be decreased proportionately. See "How May Units be
Redeemed?" The Trust has 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 the Trust, for which the Sponsor will be reimbursed in
amounts as set forth under "Summary of Essential Information," the
Sponsor will not receive any fees in connection with its activities
relating to the Trust. 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 the
Trust, but at no time will the total amount received for such services
rendered to all unit investment trusts of which Nike Securities L.P. is
the Sponsor in any calendar year exceed the aggregate cost to the
Sponsor of supplying such services in such year. First Trust Advisors
L.P., an affiliate of the Sponsor, will receive an annual supervisory
fee, which is not to exceed the amount set forth under "Summary of
Essential Information," for providing portfolio supervisory services for
the Trust. Such fee is based on the number of Units outstanding in the
Trust on January 1 of each year except for the year or years in which an
initial offering period occurs in which case the fee for a month is
based on the number of Units outstanding at the end of such month. This
fee may exceed the actual costs of providing such supervisory services
for the Trust, but at no time will the total amount received for
portfolio supervisory services rendered to all 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 the Trust, but at no time will the total
amount received for evaluation services rendered to all 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. The Trustee pays certain expenses of the Trust
for which it is reimbursed by the Trust. The Trustee will receive for
its ordinary recurring services to the Trust an annual fee computed at
$.0110 per annum per Unit in the Trust outstanding based upon the
largest aggregate number of Units of the Trust outstanding at any time
during the calendar year, however, in no event shall the Trustee's fees
be less than $2,000. 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 the Trust to the extent funds are available and then from the Capital
Account of the Trust. Since the Trustee has the use of the funds being
held in the Capital and Income Accounts for payment of expenses and
redemptions and since such Accounts are noninterest-bearing to Unit
holders, the Trustee benefits thereby. Part of the Trustee's
compensation for its services to the Trust is expected to result from
the use of these funds. 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 the Trust, including costs of
preparing the registration statement, the trust indenture and other
closing documents, registering Units with the Securities and Exchange
Commission and registering or qualifying the Units with the states, the
initial audit of the Trust's portfolio, legal fees, the initial fees and
expenses of the Trustee and any other out-of-pocket expenses, will be
paid by the Trust and charged off over a period not to exceed one year.
Page 7
The following additional charges are or may be incurred by the Trust:
all legal expenses of the Trustee incurred by or in connection with its
responsibilities under the Indenture; the expenses and costs of any
action undertaken by the Trustee to protect the Trust and the rights and
interests of the Unit holders; fees of the Trustee for any extraordinary
services performed under the Indenture; indemnification of the Trustee
for any loss, liability or expense incurred by it without negligence,
bad faith or willful misconduct on its part, arising out of or in
connection with its acceptance or administration of the Trust;
indemnification of the Sponsor for any loss, liability or expense
incurred without gross negligence, bad faith or willful misconduct in
acting as Depositor of the Trust; all taxes and other government charges
imposed upon the Securities or any part of the Trust (no such taxes or
charges are being levied or made or, to the knowledge of the Sponsor,
contemplated). The above expenses and the Trustee's annual fee, when
paid or owing to the Trustee, are secured by a lien on the Trust. In
addition, the Trustee is empowered to sell Equity Securities in the
Trust in order to make funds available to pay all these amounts if funds
are not otherwise available in the Income and Capital Accounts of the
Trust. Since the Equity Securities are all common stocks and the income
stream produced by dividend payments, if any, is unpredictable, the
Sponsor cannot provide any assurance that dividends will be sufficient
to meet any or all expenses of the Trust. As described above, if
dividends are insufficient to cover expenses, it is likely that Equity
Securities will have to be sold to meet Trust expenses. These sales may
result in capital gains or losses to Unit holders and may tend to reduce
gains or increase the losses which are ultimately received by the Unit
holders from investing in the Trust. See "What is the Federal Tax Status
of Unit Holders?"
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 Trust.
In the opinion of Chapman and Cutler, special counsel for the Sponsor,
under existing law:
1. The Trust is not an association taxable as a corporation for
Federal income tax purposes; each Unit holder will be treated as the
owner of a pro rata portion of each of the assets of the Trust under the
Code; and the income of the Trust will be treated as income of the Unit
holders thereof under the Code. Each Unit holder will be considered to
have received his or her pro rata share of the income derived from each
Equity Security when such income is received by the Trust.
2. Each Unit holder will have a taxable event when the Trust disposes
of an Equity Security (whether by sale, taxable exchange, liquidation,
redemption, or otherwise) or upon the sale or redemption of Units by the
Unit holder. The price a Unit holder pays for his or her Units is
allocated among his or her pro rata portion of each Equity Security held
by the Trust (in proportion to the fair market values thereof on the
date the Unit holder purchases his or her Units) in order to determine
his or her tax basis for his or her pro rata portion of each Equity
Security held by the Trust. 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
the Trust is taxable as ordinary income to the extent of such
corporation's current and accumulated "earnings and profits." A Unit
holder's pro rata portion of dividends paid on such Equity Security
which exceeds such current and accumulated earnings and profits will
first reduce a Unit holder's tax basis in such Equity Security, and to
the extent that such dividends exceed a Unit holder's tax basis in such
Equity Security shall generally be treated as capital gain. In general,
any such capital gain will be short-term unless a Unit holder has held
his or her 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 Equity Securities held by the
Trust will generally be considered a capital gain except in the case of
Page 8
a dealer or a financial institution and will be long-term if the Unit
holder has held his or her 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 Equity Securities held by the
Trust will generally be considered a capital loss (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 or her Units for more than one year.
Unit holders should consult their tax advisers regarding the recognition
of gains and losses for Federal income tax purposes. In particular, a
Rollover Unit holder should be aware that a Rollover Unit holder's loss,
if any, incurred in connection with the exchange of Units for Units in
the next new series of the Economic Outlook Growth Trust (the "1997
Trust") will generally be disallowed with respect to the disposition of
any Equity Securities pursuant to such exchange to the extent that such
Unit holder is considered the owner of substantially identical
securities under the wash sale provisions of the Code taking into
account such Unit holder's deemed ownership of the securities underlying
the Units in the 1997 Trust in the manner described above, if such
substantially identical securities are acquired within a period
beginning 30 days before and ending 30 days after such disposition.
However, any gains incurred in connection with such an exchange by a
Rollover Unit holder would be recognized.
4. Generally, the tax basis of a Unit holder includes sales charges,
and such charges are not deductible. A portion of the sales charge for
the Trust is deferred. It is possible that for federal income tax
purposes a portion of the deferred sales charge may be treated as
interest which would be deductible by a Unit holder subject to
limitations on the deduction of investment interest. In such case, the
non-interest portion of the Deferred Sales Charge would be added to the
Unit holder's tax basis in his or her Units. The deferred sales charge
could cause the Unit holder's Units to be considered to be debt-financed
under Section 246A of the Code which would result in a small reduction
of the dividends-received deduction. In any case, the income (or
proceeds from redemption) a Unit holder must take into account for
federal income tax purposes is not reduced by amounts deducted to pay
the Deferred Sales Charge. Unit holders should consult their own tax
advisers as to the income tax consequences of the deferred sales charge.
Dividends Received Deduction. A Unit holder will be considered to have
received all of the dividends paid on his or her pro rata portion of
each Equity Security when such dividends are received by the Trust
regardless of whether such dividends are used to pay a portion of the
Deferred Sales Charge. Unit holders will be taxed in this manner
regardless of whether such distributions from the Trust are actually
received by the Unit holder.
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 the 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 Unit holders, 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 recently been issued which address special rules
that must be considered in determining whether the 46-day holding period
requirement is met. Moreover, the allowable percentage of the deduction
will be reduced from 70% if 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.
Page 9
Limitations on Deductibility of Trust Expenses by Unit holders. Each
Unit holder's pro rata share of each expense paid by the Trust is
deductible by the Unit holder to the same extent as though the expense
had been paid directly by such Unit holder. It should be noted that as a
result of the Tax Reform Act of 1986, certain miscellaneous itemized
deductions, such as investment expenses, tax return preparation fees and
employee business expenses will be deductible by an individual only to
the extent they exceed 2% of such individual's adjusted gross income.
Unit holders may be required to treat some or all of the expenses of the
Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by
the Trust or Disposition of Units. As discussed above, a Unit holder may
recognize taxable gain (or loss) when an Equity Security is disposed of
by the Trust or if the Unit holder disposes of a Unit (although losses
incurred by Rollover Unit holders may be subject to disallowance, as
discussed above). For taxpayers other than corporations, net capital
gains are subject to a maximum stated 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.
If the Unit holder disposes of a Unit, he or she is deemed thereby to
have disposed of his or her entire pro rata interest in all assets of
the Trust involved including his or her pro rata portion of all the
Equity Securities represented by the Unit.
Special Tax Consequences of In-Kind Distributions Upon Redemption of
Units, Termination of the Trust and Investment in a New 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 of the Trust may request an In-Kind Distribution upon
the redemption of Units or the termination of the 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?" As
previously discussed, prior to the redemption of Units or the
termination of the Trust, a Unit holder is considered as owning a pro
rata portion of each of the Trust's assets for Federal income tax
purposes. The receipt of an In-Kind Distribution will result in a Unit
holder receiving an undivided interest in whole shares of stock plus,
possibly, cash.
The potential tax consequences that may occur under an In-Kind
Distribution will depend on whether or not a Unit holder receives cash
in addition to Equity Securities. An "Equity Security" for this purpose
is a particular class of stock issued by a particular corporation. A
Unit holder will not recognize gain or loss if a Unit holder only
receives Equity Securities in exchange for his or her pro rata portion
in the Equity Securities held by the Trust. However, if a Unit holder
also receives cash in exchange for a fractional share of an Equity
Security held by the Trust, such Unit holder will generally recognize
gain or loss based upon the difference between the amount of cash
received by the Unit holder and his or her tax basis in such fractional
share of an Equity Security held by the Trust.
Because the Trust will own many Equity Securities, a Unit holder who
requests an In-Kind Distribution will have to analyze the tax
consequences with respect to each Equity Security owned by the Trust.
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 Equity Security
owned by the Trust. Unit holders who request an In-Kind Distribution are
advised to consult their tax advisers in this regard.
As discussed in "Rights of Unit Holders-Special Redemption, Liquidation
and Investment in a New Trust," a Unit holder may elect to become a
Rollover Unit holder. To the extent a Rollover Unit holder exchanges his
or her Units for Units of the 1996 Trust in a taxable transaction, such
Page 10
Unit holder will recognize gains, if any, but generally will not be
entitled to a deduction for any losses recognized upon the disposition
of any Equity Securities pursuant to such exchange to the extent that
such Unit holder is considered the owner of substantially identical
securities under the wash sale provisions of the Code taking into
account such Unit holder's deemed ownership of the securities underlying
the Units in such 1996 Trust in the manner described above, if such
substantially identical securities were acquired within a period
beginning 30 days before and ending 30 days after such disposition under
the wash sale provisions contained in Section 1091 of the Code. In the
event a loss is disallowed under the wash sale provisions, special rules
contained in Section 1091(d) of the Code apply to determine the Unit
holder's tax basis in the securities acquired. Rollover Unit holders are
advised to consult their tax advisers.
Computation of the Unit holder's Tax Basis. Initially, a Unit holder's
tax basis in his or her Units will generally equal the price paid by
such Unit holder for his or her Units. The cost of the Units is
allocated among the Equity Securities held in the Trust in accordance
with the proportion of the fair market values of such Equity Securities
as of the valuation date nearest the date the Units are purchased in
order to determine such Unit holder's tax basis for his or her pro rata
portion of each Equity Security.
A Unit holder's tax basis in his or her Units and his or her pro rata
portion of an Equity Security held by the Trust will be reduced to the
extent dividends paid with respect to such Equity Security are received
by the Trust which are not taxable as ordinary income as described above.
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 by the Internal Revenue Service that
payments to the Unit holder are subject to back-up withholding. If the
proper taxpayer identification number and appropriate certification are
not provided when requested, distributions by the Trust to such Unit
holder (including amounts received upon the redemption of Units) will be
subject to back-up withholding. Distributions by the Trust will
generally be subject to United States income taxation and withholding in
the case of Units held by non-resident alien individuals, foreign
corporations or other non-United States persons. Such persons should
consult their tax advisers.
Unit holders will be notified annually of the amounts of dividends
includable in the Unit holder's gross income and amounts of Trust
expenses which may be claimed as itemized deductions.
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?"
The foregoing discussion relates only to United States Federal income
taxation of Unit holders; Unit holders may be subject to state and local
taxation in other jurisdictions. Unit holders should consult their tax
advisers regarding potential state or local taxation with respect to the
Units, and foreign investors should consult their tax advisers with
respect to United States tax consequences of ownership of Units.
In the opinion of Carter, Ledyard & Milburn, Special Counsel to the
Trust for New York tax matters, under the existing income tax laws of
the State of New York, the Trust is not an association taxable as a
corporation and the income of the Trust will be treated as the income of
the Unit holders thereof.
Why are Investments in the Trust Suitable for Retirement Plans?
Units of the Trust may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other tax-deferred
retirement plans. Generally, the Federal income tax relating to capital
gains and income received in each of the foregoing plans is deferred
until distributions are received. Distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible
for special averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax
laws related thereto and should consult their attorneys or tax advisers
with respect to the establishment and maintenance of any such plan. Such
plans are offered by brokerage firms and other financial institutions.
Fees and charges with respect to such plans may vary. Accordingly,
investors considering investing through a retirement plan should
consider doing so with funds already in such plan.
Page 11
PORTFOLIO
What are Equity Securities?
The Trust consists of different issues of Equity Securities which are
listed on the New York Stock Exchange or other national securities
exchanges, the NASDAQ National Market System or traded in the over-the-
counter market. See "What are the Equity Securities Selected for
Economic Outlook Growth Trust, Series 1996?" for a general description
of the companies.
Risk Factors. The Trust consists of such of the Equity Securities listed
under "Schedule of Investments" as may continue to be held from time to
time in the Trust and any additional Equity Securities acquired and held
by the Trust pursuant to the provisions of the Trust Agreement together
with cash held in the Income and Capital Accounts. Due to the short
duration of the Trust, there is no guarantee that the Trust's objective
will be achieved or that the Trust will provide for capital appreciation
in excess of the Trust's expenses. Neither the Sponsor, the Trustee nor
the Underwriter shall be liable in any way for any failure in any of the
Equity Securities. However, should any contract for the purchase of any
of the Equity Securities initially deposited hereunder fail, the Sponsor
will, unless substantially all of the moneys held in the Trust to cover
such purchase are reinvested in substitute Equity 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.
Healthcare. A large percentage of the Equity Securities included in the
Trust is issued by companies engaged in the healthcare industry. The
healthcare sector has historically provided investors with significant
growth opportunities. One of the industries included in the sector is
health care and medical services companies. Such companies develop,
manufacture and sell prescription and over-the-counter drugs. In
addition, they are well known for the vast amounts of money they spend
on world-class research and development. In short, such companies work
to improve the quality of life for millions of people and are vital to
the nation's health and well-being.
As the population of the United States ages, the companies involved in
the health care and medical services field will continue to search for
and develop new drugs through advanced technologies and diagnostics. On
a worldwide basis, such companies are involved in the development and
distribution of drugs and vaccines. These activities may make the
health care and medical services sector very attractive for investors
seeking the potential for growth in their investment portfolio. However,
there are no assurances that the Trust's objectives will be met.
Legislative proposals concerning health care are under consideration by
the Clinton Administration. These proposals span a wide range of topics,
including cost and price controls (which might include a freeze on the
prices of prescription drugs), national health insurance, incentives for
competition in the provision of health care services, tax incentives and
penalties related to health care insurance premiums and promotion of pre-
paid health care plans. The Sponsor is unable to predict the effect of
any of these proposals, if enacted, on the issuers of Equity Securities
in the Trust.
Telecommunications. A large percentage of Equity Securities
included in the Trust is issued by companies engaged in the
telecommunications industry. The market for high-technology
telecommunications products and services 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 and services. 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
Page 12
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.
The telecommunications industry is subject to governmental regulation
and the products and services of telecommunications companies may be
subject to rapid obsolescence. These factors could affect the value of a
Trust's Units. Telephone companies in the United States, for example,
are subject to both state and federal regulations affecting permitted
rates of returns and the kinds of services that may be offered. Certain
types of companies represented in the Trust's portfolio are engaged in
fierce competition for a share of the market of their products. As a
result, competitive pressures are intense and the stocks are subject to
rapid price volatility.
Many telecommunications 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.
One of the Equity Securities in the Trust is of a foreign issuer, and
therefore, an investment in the Trust involves some investment risks
that are different in some respects from an investment in a trust that
invests entirely in securities of domestic issuers. Those investment
risks include future political and governmental restrictions which might
adversely affect the payment or receipt of payment of dividends on the
relevant Equity Security, currency exchange rate fluctuations, exchange
control policies, and the limited liquidity and small market
capitalization of such foreign countries' securities markets. In
addition, for foreign issuers that are not subject to the reporting
requirements of the Securities Exchange Act of 1934, there may be less
publicly available information than is available from a domestic issuer.
Also, foreign issuers are not necessarily subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to domestic issuers. However, due to the
nature of the issuer of the Equity Security included in the Trust, the
Sponsor believes that adequate information will be available to allow
the Portfolio Supervisor to provide portfolio surveillance.
The security of the foreign issuer in the Trust is in ADR form. ADRs
evidence American Depositary Receipts which represent common stock
deposited with a custodian in a depositary. American Depositary Shares,
and receipts therefor (ADRs), are issued by an American bank or trust
company to evidence ownership of underlying securities issued by a
foreign corporation. These instruments may not necessarily be
denominated in the same currency as the securities into which they may
be converted. For purposes of the discussion herein, the term ADR
generally includes American Depositary Shares.
ADRs may be sponsored or unsponsored. In an unsponsored facility, the
depositary initiates and arranges the facility at the request of market
makers and acts as agent for the ADR holder, while the company itself is
not involved in the transaction. In a sponsored facility, the issuing
company initiates the facility and agrees to pay certain administrative
and shareholder-related expenses. Sponsored facilities use a single
depositary and entail a contractual relationship between the issuer, the
shareholder and the depositary; unsponsored facilities involve several
depositaries with no contractual relationship to the company. The
depositary bank that issues an ADR generally charges a fee, based on the
price of the ADR, upon issuance and cancellation of the ADR. This fee
would be in addition to the brokerage commissions paid upon the
acquisition or surrender of the security. In addition, the depositary
bank incurs expenses in connection with the conversion of dividends or
other cash distributions paid in local currency into U.S. dollars and
such expenses are deducted from the amount of the dividend or
distribution paid to holders, resulting in a lower payout per underlying
shares represented by the ADR than would be the case if the underlying
share were held directly. Certain tax considerations, including tax rate
differentials and withholding requirements, arising from applications of
the tax laws of one nation to nationals of another and from certain
practices in the ADR market may also exist with respect to certain ADRs.
In varying degrees, any or all of these factors may affect the value of
the ADR compared with the value of the underlying shares in the local
market. In addition, the rights of holders of ADRs may be different than
those of holders of the underlying shares, and the market for ADRs may
be less liquid than that for the underlying shares. ADRs are registered
securities pursuant to the Securities Act of 1933 and may be subject to
the reporting requirements of the Securities Exchange Act of 1934.
Page 13
For the Equity Security that is an ADR, currency fluctuations will
affect the U.S. dollar equivalent of the local currency price of the
underlying domestic share and, as a result, are likely to affect the
value of the ADRs and consequently the value of the Equity Security. The
foreign issuers of securities that are ADRs may pay dividends in foreign
currencies which must be converted into dollars. Most foreign currencies
have fluctuated widely in value against the United States dollar for
many reasons, including supply and demand of the respective currency,
the soundness of the world economy and the strength of the respective
economy as compared to the economies of the United States and other
countries. Therefore, for any securities of issuers (whether or not they
are in ADR form) whose earnings are stated in foreign currencies, or
which pay dividends in foreign currencies or which are traded in foreign
currencies, there is a risk that their United States dollar value will
vary with fluctuations in the United States dollar foreign exchange
rates for the relevant currencies.
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 the Trust will retain for any
length of time its present size and composition. Although the Portfolio
is not managed, the Sponsor may instruct the Trustee to sell 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 the Trust, they may be accepted for
deposit in the Trust and either sold by the Trustee or held in the Trust
pursuant to the direction of the Sponsor (who may rely on the advice of
the Portfolio Supervisor). See "How May Equity Securities be Removed
from the Trust?" Equity Securities, however, will not be sold by the
Trust to take advantage of market fluctuations or changes in anticipated
rates of appreciation or depreciation. In fact, no Equity Security will
be sold prior to termination of the Trust (except on a pro rata basis
with the sale of all other Equity Securities to satisfy redemption
requests or to pay expenses and in certain other limited circumstances)
even if the Underwriter comes to believe that such Equity Security no
longer has the potential for capital appreciation, or issues a "sell"
recommendation with respect to such Equity Security.
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, the 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 the Trust,
will be adversely affected if trading markets for the Equity Securities
are limited or absent.
An investment in Units should be made with an understanding of the risks
which an investment in common stocks entails, including the risk that
the financial condition of the issuers of the 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 the Trust have a right
to receive dividends only when and if, and in the amounts, declared by
the issuer's board of directors and 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
Page 14
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 the Portfolio may be expected to fluctuate over the life of the Trust
to values higher or lower than those prevailing on the Initial Date of
Deposit.
Holders of common stocks incur more risk than holders of preferred
stocks and debt obligations because common stockholders, as owners of
the entity, have generally inferior rights to receive payments from the
issuer in comparison with the rights of creditors of, or holders of debt
obligations or preferred stocks issued by, the issuer. Cumulative
preferred stock dividends must be paid before common stock dividends and
any cumulative preferred stock dividend omitted is added to future
dividends payable to the holders of cumulative preferred stock.
Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.
Unit holders will be unable to dispose of any of the Equity Securities
in the 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 Trust and will
vote such stocks in accordance with the instructions of the Sponsor.
The Underwriter has acquired or will acquire the Equity Securities for
the Sponsor and thereby benefits from transaction fees. The Underwriter
in its general securities business acts as agent or principal in
connection with the purchase and sale of equity securities, including
the Equity Securities in the Trust, and may act as a market maker in
certain of the Equity Securities. The Underwriter also from time to time
may issue reports on and make recommendations relating to equity
securities, which may include the Equity Securities.
What are the Equity Securities Selected for Economic Outlook Growth
Trust, Series 1996?
ADC Telecommunications, Inc., headquartered in Minneapolis, Minnesota,
develops, manufactures and markets a variety of transmission and
networking systems for data, voice and video networks. The company
provides coaxial, fiber optic and twisted-pair network products. ADC
Telecommunications also operates international business units in
Australia, Belgium, Canada, England, Mexico, Singapore and Venezuela.
AT&T Corporation, headquartered in New York, New York, provides
products, services and systems for the movement and management of
information. The company also provides voice, data and image
telecommunications services, including domestic and international long
distance telecommunications services. In addition, the company also
markets AT&T products, systems and services in the United States and
abroad. AT&T Corporation has announced that it will split into three publicly
traded companies subject to regulatory approval. The company will divide
into a telephone company, a communications equipment manufacturer and a
maker of mainframe computers and automated teller machines.
Allergan, Inc., headquartered in Irvine, California, is a global health
care company which develops, manufactures and markets specialty
therapeutic products for skin and eye care and neuromuscular disorders.
Analysts International Corporation, headquartered in Minneapolis,
Minnesota, provides contract programming and related software services
to users and manufacturers of computers. The company's services include
analysis and design, custom programming, systems, software-related
consulting and specialized software-related educational courses.
Andrew Corporation, headquartered in Orland Park, Illinois, is a
multinational manufacturer and supplier of specialized antennae and
transmission lines used in telecommunications systems. In addition, the
company supplies specialized antennae, radar and communication
reconnaissance systems for the military and defense markets. Andrew
Corporation also supplies products and services for the
interconnectivity needs of computer networks.
Page 15
Biomet, Inc. designs, manufactures and markets surgical implants,
orthopedic support devices and operating room supplies. Headquartered in
Warsaw, Indiana, the company has manufacturing facilities in the United
States and Great Britain.
Career Horizons, Inc., headquartered in Woodbury, New York, provides
temporary personnel to businesses, service organizations, individuals,
hospitals and home care patients. The company also provides financial
and support services to associated temporary personnel firms.
Cincinnati Bell, Inc., headquartered in Cincinnati, Ohio, provides
products and telecommunications services to customers in southwestern
Ohio, northern Kentucky and Indiana. The company's services include
discount long distance services, data processing and systems consulting,
database services, information management, marketing and market
research. The company also provides telecommunication equipment supply
and repair services.
DPL, Inc., based in Dayton, Ohio, operates through its subsidiary, The
Dayton Power and Light Company. The company supplies electricity and
natural gas to numerous counties in Ohio. The company's largest
industrial customer group is the electrical and electronic machinery
industry.
Danka Business Systems PLC (ADR), headquartered in London, England,
operates through its subsidiary, Danka Industries, Inc., which
distributes and services office equipment, including copiers and
facsimile machines which are distributed throughout the United States.
Copy Products, Inc., another subsidiary, sells, leases, rents, and
services automated office equipment and related parts.
FIserv, Inc., headquartered in Brookfield, Wisconsin, is a provider
of data processing and management systems. The company uses a
computerized account processing and information management system that
serves banks, credit unions, financial institutions and savings
institutions internationally. FIserve, Inc. also licenses its products
for use in Africa, Asia and the Middle East.
Interim Services, headquartered in Fort Lauderdale, Florida, provides
temporary personnel to the business and healthcare industries. The
company offers health aids, home companions, licensed nurses, therapists
and physicians, and clerical, secretarial and light industrial
personnel. Interim Services operates through a network of approximately
689 franchises, company-owned or licensed offices in 46 states.
Keane, Inc., headquartered in Boston, Massachusetts, provides
computer software project management, design and applications
development services for large corporations and hospitals. The company
develops and markets "KeaMed Hospital Systems," a line of financial,
patient care and clinical software products used by hospitals. The
information services division provides programmers, analysts, and
project managers to help with operations.
KeyCorp, headquartered in Cleveland, Ohio, is a national banking
franchise of banking subsidiaries with significant operations in the
midwestern United States. 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.
Lunar Corporation, headquartered in Madison, Wisconsin, develops,
manufactures and markets products for the diagnosis, monitoring and
treatment of osteoporosis and other metabolic bone diseases. The company
is developing a drug for the treatment of osteoporosis and also develops
and sells bone densitometers. Sales are worldwide to hospitals,
pharmaceutical companies and medical institutions.
Mylan Laboratories, Inc., headquartered in Pittsburgh, Pennsylvania,
manufactures a broad line of generic pharmaceutical products. Products
are made in tablet, capsule and powder dosage forms and include anti-
anxiety, antidepressant, antihistamine and anti-inflammatory drugs.
Mylan Laboratories, Inc. jointly owns Somerset Pharmaceuticals (with
Circa Pharmaceuticals) which markets Eldepryl, a treatment for
Parkinson's disease. Mylan Laboratories, Inc. currently has alliances
with Eli Lilly & Co. and Roche Holdings Ltd. to manufacture and market
generic drugs.
Patterson Dental Company, headquartered in Mendota Heights, Minnesota,
is a distributor of dental equipment to dentists, dental laboratories
and institutions. Products include hand instruments, dental lights,
sterilization products, x-ray film, dental chairs and intraoral cameras.
The company also provides related services such as dental office design,
equipment financing programs and dental equipment installation and repair.
Page 16
Pfizer, Inc., a large, worldwide firm headquartered in New York, New
York, develops, manufactures and sells technology-intensive products in
4 segments: Health Care (accounting for most of revenues) including
pharmaceuticals, medical devices and surgical equipment; Animal Health;
Food Science and Consumer Products. The company's products include
"Zoloft" antidepressant, "Zithromax" antibiotic, "Norvasc" and
"Procardia" cardiovascular drugs and "Diflucan" antifungal infection
drug.
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.
Tellabs, Inc., headquartered in Lisle, Illinois, designs, assembles,
markets and services voice and data networking products. These products
are used by providers of telecommunication services in private and
public voice data networks worldwide. These products include data
communications systems, network access systems and digital systems.
Customers include regional Bell companies, independent telephone
companies, government agencies and businesses.
Wisconsin Energy Corporation, an electric utility holding company
headquartered in Milwaukee, Wisconsin, provides electricity to
Milwaukee, northern Wisconsin and Michigan's upper peninsula. The
company also distributes natural gas and supplies steam service.
What are Some Additional Considerations for Investors?
Investors should be aware of certain other considerations before making
a decision to invest in the Trust.
The value of the Equity Securities will fluctuate over the life of the
Trust and may be more or less than the value at the time they were
deposited in the 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, including the
impact of the Sponsor's purchase and sale of the Equity Securities
(especially during the primary offering period of Units of the Trust and
during the Special Redemption and Liquidation Period) and other factors.
Neither the Sponsor, the Trustee nor the Underwriter shall be liable in
any way for any default, failure or defect in any Equity Security. In
the event of a notice that any Equity Security will not be delivered
("Failed Contract Obligations") to the Trust, the Sponsor is authorized
under the Indenture to direct the Trustee to acquire other Equity
Securities ("Replacement Securities"). Any Replacement Security will be
identical to those which were the subject of the failed contract. The
Replacement Securities must be purchased within 20 days after delivery
of the notice of a failed contract and the purchase price may not exceed
the amount of funds reserved for the purchase of the Failed Contract
Obligations.
If the right of limited substitution described in the preceding
paragraphs is not utilized to acquire Replacement Securities in the
event of a failed contract, the Sponsor will refund the sales charge
attributable to such Failed Contract Obligations to all Unit holders of
the Trust and the Trustee will distribute the principal attributable to
such Failed Contract Obligations not more than 120 days after the date
on which the Trustee received a notice from the Sponsor that a
Replacement Security would not be deposited in the Trust. In addition,
Unit holders should be aware that, at the time of receipt of such
principal, they may not be able to reinvest such proceeds in other
securities at a yield equal to or in excess of the yield which such
proceeds would have earned for Unit holders of the Trust.
The Indenture also authorizes the Sponsor to increase the size of the
Trust and the number of Units thereof by the deposit of additional
Equity Securities in the Trust and the issuance of a corresponding
number of additional Units.
The Trust consists of the Equity Securities listed under "Schedule of
Investments" (or contracts to purchase such Securities) as may continue
to be held from time to time in the Trust and any additional Equity
Securities acquired and held by the Trust pursuant to the provisions of
the Indenture (including provisions with respect to deposits into the
Trust of Equity Securities in connection with the issuance of additional
Units).
Page 17
Investors should also consider the fact that as a unit investment trust,
the Trust differs from a mutual fund in that in most cases a mutual fund
has a portfolio manager whose responsibility is to decide on asset
allocations (as between cash, equity securities and debt securities),
whether to purchase, sell or hold existing securities in the portfolio,
as well as how to resolve other investment questions. By contrast, once
all of the Equity Securities in the Trust are acquired, the Trustee will
have no power to vary the investments of the Trust, i.e., the Trustee
will have no managerial power to take advantage of market variations to
improve a Unit holder's investment, and may dispose of Equity Securities
only under limited circumstances. See "How May Equity Securities be
Removed from the Trust?" and "What are Equity Securities?-Risk Factors."
To the best of the Sponsor's knowledge, there is no litigation pending
as of the Initial Date of Deposit in respect of any Equity Security
which might reasonably be expected to have a material adverse effect on
the Trust. At any time after the Initial Date of Deposit, litigation may
be instituted on a variety of grounds with respect to the Equity
Securities. The Sponsor is unable to predict whether any such litigation
will be instituted, or if instituted, whether such litigation might have
a material adverse effect on the Trust.
Legislation. From time to time Congress considers proposals to reduce
the rate of the dividends-received deductions. Enactment into law of a
proposal to reduce the rate would adversely affect the after-tax return
to investors who can take advantage of the deduction. Unit holders are
urged to consult their own tax advisers. Further, at any time after the
Initial Date of Deposit, legislation may be enacted, with respect to the
Equity Securities in the Trust or the issuers of the Equity Securities.
Changing approaches to regulation, particularly with respect to the
environment, may have a negative impact on certain companies represented
in the Trust. There can be no assurance that future legislation,
regulation or deregulation will not have a material adverse effect on
the Trust or will not impair the ability of the issuers of the Equity
Securities to achieve their business goals.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price, which is based on the
aggregate underlying value of the Equity Securities in the Economic
Outlook Growth Trust, Series 1996 (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
Income and Capital Accounts of such Trust, plus an initial sales charge
with respect to the Trust equal to the difference between the maximum
sales charge for the Trust (2.90% of the Public Offering Price) and the
maximum remaining deferred sales charge (initially $.1950 per Unit for
the Trust) divided by the amount of Units of the Trust outstanding.
Commencing March 29, 1996, and on the last business day of each month
thereafter, through December 31, 1996, Unit holders will be assessed a
deferred sales charge of $0.0195 per Unit per month. Units purchased
subsequent to the initial deferred sales charge payment will be subject
to the initial sales charge and the remaining deferred sales charge
payments. The deferred sales charge will be paid from funds in the
Capital Account, if sufficient, or from the periodic sale of Equity
Securities. The total maximum sales charge assessed to Unit holders on a
per Unit basis will be 2.90% of the Public Offering Price (equivalent to
2.928% of the net amount invested, exclusive of the deferred sales
charge).
During the initial offering period, 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 an
initial sales charge (equal to the difference between the maximum sales
charge for the Trust (2.90% of the Public Offering Price), and the
maximum remaining deferred sales charge) and the remaining deferred
sales charge payments, divided by the number of outstanding Units of the
Trust.
Page 18
The minimum amount an investor may purchase in the Trust is $1,000 ($250
for an Individual Retirement Account or other retirement plans). The
applicable sales charge of the Economic Outlook Growth Trust, Series
1996 for primary market sales is reduced by a discount as indicated
below for volume purchases as a percentage of the Public Offering Price
(except for sales made pursuant to a "wrap fee account" or similar
arrangements as set forth below):
Sales
Number of Units Discount Charge
_______________ ________ ______
5,000 but less than 10,000 0.30% 2.60%
10,000 but less than 15,000 0.65% 2.25%
15,000 or more 0.95% 1.95%
Any such reduced sales charge shall be the responsibility of the selling
Underwriter, broker/dealer, bank or other selling agent. The reduced
sales charge structure will apply on all purchases of Units in the Trust
by the same person on any one day from the Underwriter, or any
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 Underwriter, broker/dealer, bank or other selling agent of
any such combined purchase prior to the sale in order to obtain the
indicated discount. In addition, with respect to the employees, officers
and directors (including their immediate family members, defined as
spouses, children, grandchildren, parents, grandparents, siblings,
mothers-in-law, fathers-in-law, sons-in-law and daughters-in-law, and
trustees, custodians or fiduciaries for the benefit of such persons) of
the Sponsor and the Underwriter, broker/dealers, banks or other selling
agents and their subsidiaries will be subject only to the deferred
portion of the sales charge as described above 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 Trust been available for sale on the business day
prior to the Initial Date of Deposit, the Public Offering Price would
have been as indicated in "Summary of Essential Information." The Public
Offering Price of Units on the date of the prospectus or during the
initial offering period may vary from the amount stated under "Summary
of Essential Information" in accordance with fluctuations in the prices
of the underlying Equity Securities. During the initial offering period,
the aggregate value of the Units of the Trust shall be determined on the
basis of the aggregate underlying value of the Equity Securities therein
plus or minus cash, if any, in the Income and Capital Accounts of the
Trust. 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 prices on the over-the-counter
market (unless it is determined that these prices are inappropriate as a
basis for evaluation). If current ask prices are unavailable, the
evaluation is generally determined (a) on the basis of current ask
prices for comparable securities, (b) by appraising the value of the
Equity Securities on the ask side of the market or (c) by any
combination of the above.
Page 19
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the aggregate underlying
value of the Equity Securities therein, plus or minus cash, if any, in
the Income and Capital Accounts of the Trust plus the applicable sales
charge. The calculation of the aggregate underlying value of the Equity
Securities for secondary market sales is determined in the same manner
as described above for sales made during the initial offering period
with the exception that bid prices are used instead of ask prices.
Although payment is normally made three business days following the
order for purchase (the "date of settlement"), payment may be made prior
thereto. A person will become owner of 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 Equity Securities are deposited by the Sponsor, Units will be
distributed to the public at the then current Public Offering Price.
During such period, the Sponsor may deposit additional Equity Securities
in a Trust and create additional Units. Units reacquired by the Sponsor
during the initial offering period (at prices based upon the aggregate
underlying value of the Equity Securities in the Trust plus or minus a
pro rata share of cash, if any in the Income and Capital Accounts of the
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 the Trust for
sale in a number of states. Sales will be made to dealers and others at
prices which represent a concession or agency commission of 1.8% of the
Public Offering Price for primary and secondary market sales. However,
resales of Units of the Trust by such dealers and others to the public
will be made at the Public Offering Price described in the prospectus.
The Sponsor reserves the right to change the amount of the concession or
agency commission from time to time. In the event the Sponsor
reacquires, or the Trustee redeems, Units from brokers, dealers and
others while a market is being maintained for such Units, such entities
agree to repay immediately to the Sponsor any such concession or agency
commission relating to such reacquired Units. Certain commercial banks
may be making Units of the Trusts available to their customers on an
agency basis. A portion of the sales charge paid by these customers is
retained by or remitted to the banks in the amounts indicated above.
Under the Glass-Steagall Act, banks are prohibited from underwriting
Trust Units; however, the Glass-Steagall Act does permit certain agency
transactions and the banking regulators have not indicated that these
particular agency transactions are not permitted under such Act. In
Texas and in certain other states, any banks making Units available must
be registered as broker/dealers under state law.
What are the Sponsor's and Underwriter's Profits?
The Underwriter of the Trust will receive a gross sales commission equal
to a maximum of 2.90% of the Public Offering Price of the Units
(equivalent to 2.928% 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 "Underwriting" for
information regarding the receipt of the excess gross sales commissions
Page 20
by the Sponsor from the Underwriter and additional concessions available
to the Underwriter, dealers 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 Equity Securities to the Trust (which is based on the
Evaluator's determination of the aggregate offering price of the
underlying Equity Securities of such Trust on the Initial Date of
Deposit as well as on subsequent deposits) and the cost of such Equity
Securities to the Sponsor. See "Underwriting" and Note (2) of "Schedule
of Investments." During the initial offering period, the Underwriter may
realize profits or sustain losses as a result of fluctuations after the
Date of Deposit in the Public Offering Price received by the Underwriter
upon the sale of Units held in the Underwriter's inventory.
In maintaining a market for the Units, the Sponsor and Underwriter 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 2.90%) or
redeemed. The secondary market public offering price of Units may be
greater or less than the cost of such Units to the Sponsor and
Underwriter.
Will There be a Secondary Market?
After the initial offering period, although it is not obligated to do
so, the Sponsor and Underwriter intend to maintain a market for the
Units and continuously offer to purchase Units at prices, subject to
change at any time, based upon the aggregate underlying value of the
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 OR HER
UNITS, HE OR SHE SHOULD INQUIRE OF THE SPONSOR OR THE UNDERWRITER AS TO
CURRENT MARKET PRICES PRIOR TO MAKING A TENDER FOR REDEMPTION TO THE
TRUSTEE. Units sold or tendered for redemption prior to such time as the
entire deferred sales charge on such Units has been collected will be
assessed the amount of the remaining deferred sales charge at the time
of sale or redemption.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee.
Ownership of Units may be evidenced by registered certificates executed
by the Trustee and the Sponsor. Delivery of certificates representing
Units ordered for purchase is normally made three business days
following such order or shortly thereafter. Certificates are
transferable by presentation and surrender to the Trustee properly
endorsed or accompanied by a written instrument or instruments of
transfer. Certificates to be redeemed must be properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unit
holder must sign exactly as his or her name appears on the face of the
certificate with 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 (book
entry) form. ONLY UNIT HOLDERS WHO ELECT TO HOLD UNITS IN UNCERTIFICATED
(BOOK ENTRY) FORM ARE ELIGIBLE TO PARTICIPATE AS A ROLLOVER UNIT HOLDER.
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
Page 21
description of the Trust; the number of Units issued or transferred; the
name, address and taxpayer identification number, if any, of the new
registered owner; a notation of any liens and restrictions of the issuer
and any adverse claims to which such Units are or may be subject or a
statement that there are no such liens, restrictions or adverse claims;
and the date the transfer was registered. Uncertificated (book entry)
Units are transferable through the same procedures applicable to Units
evidenced by certificates (described above), except that no certificate
need be presented to the Trustee and no certificate will be issued upon
the transfer unless requested by the Unit holder. A Unit holder may at
any time request the Trustee to issue certificates for Units.
Although no such charge is now made or contemplated, a Unit holder may
be required to pay $2.00 to the Trustee per certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or exchange. For new certificates
issued to replace destroyed, stolen or lost certificates, the Unit
holder may be required to furnish indemnity satisfactory to the Trustee
and pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
How are Income and Capital Distributed?
The Trustee will distribute any net income received with respect to any
of the securities in the Trust as part of the final liquidation
distribution. See "Summary of Essential Information." Persons who
purchase Units will commence receiving distributions only after such
person becomes a Record Owner. Notification to the Trustee of the
transfer of Units is the responsibility of the purchaser, but in the
normal course of business such notice is provided by the selling broker-
dealer. Proceeds received on the sale of any Equity Securities in the
Trust, to the extent not used to meet redemptions of Units, pay the
deferred sales charge 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 as part of the final liquidation distribution, and in
certain circumstances, earlier. See "What is the Federal Tax Status of
Unit Holders?"
It is anticipated that the deferred sales charge will be collected from
the Capital Account and that amounts in the Capital Account will be
sufficient to cover the cost of the deferred sales charge. However, to
the extent that amounts in the Capital Account are insufficient to
satisfy the then current deferred sales charge obligation, Equity
Securities may be sold to meet such shortfall. Distributions of amounts
necessary to pay the deferred portion of the sales charge will be made
to an account designated by the Sponsor for purposes of satisfying Unit
holders' deferred sales charge obligations.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of any distribution made by
the Trust if the Trustee has not been furnished the Unit holder's tax
identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and
may be recovered by the Unit holder under certain circumstances by
contacting the Trustee, otherwise the amount may be recoverable only
when filing a tax return. Under normal circumstances the Trustee obtains
the Unit holder's tax identification number from the selling broker.
However, a Unit holder should examine his or her statements from the
Trustee to make sure that the Trustee has been provided a certified tax
identification number in order to avoid this possible "back-up
withholding." In the event the Trustee has not been previously provided
such number, one should be provided as soon as possible.
Within a reasonable time after the Trust is terminated, each Unit holder
who is not a Rollover Unit holder will, upon surrender of his or her
Units for redemption, receive (i) the pro rata share of the amounts
realized upon the disposition of Equity Securities, unless he or she
elects an In-Kind Distribution as described below and (ii) a pro rata
share of any other assets of the Trust, less expenses of such Trust. Not
less than 30 days prior to the Mandatory Termination Date of the Trust
the Trustee will provide written notice thereof to all Unit holders and
Page 22
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 of the Trust, rather than
to receive payment in cash for such Unit holder's pro rata share of the
amounts realized upon the disposition by the Trustee of 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 of the Trust. Unit holders
requesting an In-Kind Distribution will receive cash in lieu of
fractional shares of the Equity Securities. A Unit holder receiving an
In-Kind Distribution may, of course, at any time after the Equity
Securities are distributed to him or her by the Trust, sell all or a
portion of the Equity Securities.
The Trustee will credit to the Income Account of the 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 the Trust.
The Trustee may establish reserves (the "Reserve Account") within the
Trust for state and local taxes, if any, and any governmental charges
payable out of the Trust.
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 Equity Securities
sold during the year and the Equity 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 the Trust furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his or her Units by tender
to the Trustee at its corporate trust office in the City of New York of
the certificates representing the Units to be redeemed, or in the case
of uncertificated Units, delivery of a request for redemption, duly
endorsed or accompanied by proper instruments of transfer with signature
guaranteed as explained above (or by providing satisfactory indemnity,
as in connection with lost, stolen or destroyed certificates), and
payment of applicable governmental charges, if any. No redemption fee
will be charged. On the third business day following such tender, the
Unit holder will be entitled to receive in cash an amount for each Unit
equal to the Redemption Price per Unit next computed after receipt by
the Trustee of such tender of Units. The "date of tender" is deemed to
be the date on which Units are received by the Trustee (if such day is a
day in which the New York Stock Exchange is open for trading), except
that as regards Units received after 4:00 p.m. Eastern 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.
Any Unit holder tendering 2,500 Units or more of the Trust 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 or her pro rata number of whole shares of each of the
Page 23
Equity Securities comprising a 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
holder should make sure that the Trustee has been provided a certified
tax identification number in order to avoid this possible "back-up
withholding." In the event the Trustee has not been previously provided
such number, one must be provided at the time redemption is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of the Trust to the extent that funds are
available for such purpose, or from the Capital Account. All other
amounts paid on redemption shall be withdrawn from the Capital Account
of the Trust.
The Trustee is empowered to sell Equity Securities of the Trust in order
to make funds available for redemption. To the extent that Equity
Securities are sold, the size of the Trust will be and the diversity of
the Trust may 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.
The Redemption Price per Unit and the Public Offering Price per Unit
(which includes the sales charge) during the initial offering period (as
well as the secondary market Public Offering Price) will be determined
on the basis of 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. The Redemption Price per Unit is the pro rata
share of each Unit determined by the Trustee by adding: (1) the cash on
hand in the Trust other than cash deposited in the Trust to purchase
Equity Securities not applied to the purchase of such Equity Securities;
(2) the aggregate value of the Equity Securities (including "when
issued" contracts, if any) held in the Trust, as determined by the
Evaluator on the basis of the aggregate underlying value of the Equity
Securities in the 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) any amounts owing
to the Trustee for its advances; (3) an amount representing estimated
accrued expenses of the Trust, including but not limited to fees and
expenses of the Trustee (including legal fees), the Evaluator and
supervisory fees, if any; (4) cash held for distribution to Unit holders
of record of the Trust as of the business day prior to the evaluation
being made; and (5) other liabilities incurred by the Trust; and finally
dividing the results of such computation by the number of Units of the
Trust outstanding as of the date thereof. The Redemption Price per Unit
will be assessed the amount, if any, of the remaining deferred sales
charge at the time of redemption.
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 therefore is other than on the exchange, the evaluation shall
generally be based on the current bid prices 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 the
Securities and Exchange Commission determines that trading on the New
York Stock Exchange is restricted or any emergency exists, as a result
Page 24
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.
Special Redemption, Liquidation and Investment in a New Trust
If the 1997 Trust is offered to investors, a special redemption and
liquidation will be made of all Units of the Trust held by any Unit
holder (a "Rollover Unit holder") who affirmatively notifies the Trustee
in writing that he or she so desires by the Rollover Notification Date
specified in the "Summary of Essential Information."
All Units of Rollover Unit holders will be redeemed In-Kind during the
Special Redemption and Liquidation Period and the underlying Equity
Securities will be distributed to the Distribution Agent on behalf of
the Rollover Unit holders. During the Special Redemption and Liquidation
Period (as set forth in "Summary of Essential Information"), the
Distribution Agent will be required to sell all of the underlying Equity
Securities on behalf of Rollover Unit holders. The sales proceeds will
be net of brokerage fees, governmental charges or any expenses involved
in the sales.
The Distribution Agent will engage the Sponsor as its agent to sell the
distributed Equity Securities. The Sponsor will attempt to sell the
Equity Securities as quickly as is practicable during the Special
Redemption and Liquidation Period. The Sponsor does not anticipate that
the period will be longer than ten business days, and it could be as
short as one day, given that the Equity Securities are usually highly
liquid. The liquidity of any Equity Security depends on the daily
trading volume of the Equity Security and the amount that the Sponsor
has available for sale on any particular day.
It is expected (but not required) that the Sponsor will generally follow
the following guidelines in selling the Equity Securities: for highly
liquid Equity Securities, the Sponsor will generally sell Equity
Securities on the first day of the Special Redemption and Liquidation
Period; for less liquid Equity Securities, on each of the first two days
of the Special Redemption and Liquidation Period, the Sponsor will
generally sell any amount of any underlying Equity Securities at a price
no less than 1/2 of one point under the closing sale price of those
Equity Securities on the preceding day. Thereafter, the Sponsor intends
to sell without any price restrictions at least a portion of the
remaining underlying Equity Securities, the numerator of which is one
and the denominator of which is the total number of days remaining
(including that day) in the Special Redemption and Liquidation Period.
The Rollover Unit holders' proceeds will be invested in the next new
series of the Economic Outlook Growth Trust (the "1997 Trust") created
in conjunction with the termination of this series of the Economic
Outlook Growth Trust, if then registered in the Unit holder's state and
being offered, the portfolio of which is expected to contain equity
securities. The proceeds of redemption available on each day will be
used to buy 1997 Trust Units as the proceeds become available at the
Public Offering Price of the 1997 Trust, including a reduced sales
charge per Unit. Units purchased other than with redemption proceeds
will be subject to the full sales charge.
The Sponsor intends to create 1997 Trust Units as quickly as possible,
dependent upon the availability and reasonably favorable prices of the
equity securities included in the 1997 Trust portfolio, and it is
intended that Rollover Unit holders will be given first priority to
purchase the 1997 Trust Units. There can be no assurance, however, that
the 1997 Trust will be created, or if created, as to the exact timing of
the creation of the 1997 Trust Units or the aggregate number of 1997
Trust Units which the Sponsor will create. The Sponsor may, in its sole
discretion, stop creating new Units (whether permanently or temporarily)
at any time it chooses, regardless of whether all proceeds of the
Special Redemption and Liquidation have been invested on behalf of
Rollover Unit holders. Cash which has not been invested on behalf of the
Rollover Unit holders in 1997 Trust Units will be distributed within a
reasonable time after such occurrence. However, since the Sponsor can
create Units, the Sponsor anticipates that sufficient Units can be
created, although moneys in the 1997 Trust may not be fully invested on
the next business day.
Page 25
Any Rollover Unit holder may thus be redeemed out of the Trust and
become a holder of an entirely different Trust, the 1997 Trust, with a
different portfolio of equity securities. The Rollover Unit holders'
Units will be redeemed In-Kind and the distributed Equity Securities
shall be sold during the Special Redemption and Liquidation Period. In
accordance with the Rollover Unit holders' offer to purchase the 1997
Trust Units, the proceeds of the sales (and any other cash distributed
upon redemption) will be invested in the 1997 Trust, at the public
offering price, including a reduced sales charge per Unit.
This process of redemption, liquidation, and investment in a new Trust
is intended to allow for the fact that the portfolios selected are
chosen on the basis of growth and income potential only for a year, at
which point a new portfolio is chosen. It is contemplated that a similar
process of redemption, liquidation and investment in a new trust will be
available for the 1997 Trust and each subsequent series of the Trust,
approximately a year after that Series' creation. However, there is no
assurance that any such subsequent series of the Trust will be offered.
The Sponsor believes that the gradual redemption, liquidation and
investment in the Trust will help mitigate any negative market price
consequences stemming from the trading of large volumes of securities
and of the underlying Equity Securities in the Trust in a short,
publicized period of time. The above procedures may, however, be
insufficient or unsuccessful in avoiding such price consequences. In
fact, market price trends may make it advantageous to sell or buy more
quickly or more slowly than permitted by these procedures. Rollover Unit
holders could then receive a less favorable average Unit price than if
they bought all their Units of the Trust on any given day of the period.
It should also be noted that Rollover Unit holders may realize taxable
capital gains on the Special Redemption and Liquidation but, in certain
unlikely circumstances, will not be entitled to a deduction for certain
capital losses and, due to the procedures for investing in the 1997
Trust, no cash would be distributed at that time to pay any taxes.
Included in the cash for the Special Redemption and Liquidation may be
an amount of cash attributable to the distribution of dividend income;
accordingly, Rollover Unit holders also will not have cash distributed
to pay any taxes. See "What is the Federal Tax Status of Unit holders?"
In addition, during this period a Unit holder will be at risk to the
extent that Equity Securities are not sold and will not have the benefit
of any stock appreciation to the extent that moneys have not been
invested; for this reason, the Sponsor will be inclined to sell and
purchase the Equity Securities in as short a period as they can without
materially adversely affecting the price of the Equity Securities.
Unit holders who do not inform the Distribution Agent that they wish to
have their Units so redeemed and liquidated ("Remaining Unit holders")
will continue to hold Units of the Trust as described in this Prospectus
until the Trust is terminated or until the Mandatory Termination Date
listed in the Summary of Essential Information, whichever occurs first.
These Remaining Unit holders will not realize capital gains or losses
due to the Special Redemption and Liquidation, and will not be charged
any additional sales charge. If a large percentage of Unit holders
become Rollover Unit holders, the aggregate size of the Trust will be
sharply reduced. As a consequence, expenses, if any, in excess of the
amount to be borne by the Trustee would constitute a higher percentage
amount per Unit than prior to the Special Redemption, Liquidation and
Investment in the 1997 Trust. The Trust might also be reduced below the
Discretionary Liquidation Amount listed in the Summary of Essential
Information because of the lesser number of Units in the Trust, and
possibly also due to a value reduction, however temporary, in Units
caused by the Sponsor's sales of Equity Securities; if so, the Sponsor
could then choose to liquidate the Trust without the consent of the
remaining Unit holders. See "How May the Indenture be Amended or
Terminated?" The Equity Securities remaining in the Trust after the
Special Redemption and Liquidation Period will be sold by the Sponsor as
quickly as possible without, in its judgment, materially adversely
affecting the market price of the Equity Securities.
The Sponsor may for any reason, in its sole discretion, decide not to
sponsor the 1997 Trust or any subsequent series of the Trust, without
penalty or incurring liability to any Unit holder. If the Sponsor so
decides, the Sponsor shall notify the Unit holders before the Special
Redemption and Liquidation Period would have commenced. All Unit holders
will then be remaining Unit holders, with rights to ordinary redemption
Page 26
as before. See "How May Units be Redeemed?" The Sponsor may modify the
terms of the 1997 Trust or any subsequent series of the Trust. The
Sponsor may also modify, suspend or terminate the Rollover Option upon
notice to the Unit holders of such amendment at least 60 days prior to
the effective date of such amendment.
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that time
equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before 1:00 p.m. Eastern time on the same
business day and by making payment therefor to the Unit holder not later
than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee
for redemption as any other Units. In the event the Sponsor does not
purchase Units, the Trustee may sell Units tendered for redemption in
the over-the-counter market, if any, as long as the amount to be
received by the Unit holder is equal to the amount he or she would have
received on redemption of the Units.
The offering price of any Units acquired by the Sponsor will be in
accord with the Public Offering Price described in the then effective
prospectus describing such Units. Any profit or loss resulting from the
resale or redemption of such Units will belong to the Sponsor.
How May Equity Securities be Removed from the Trust?
The Portfolio of the Trust is not "managed" by the Sponsor, the Trustee
or the Underwriter. Their respective 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 the Trust. Except as stated under "Portfolio-
What are Some Additional Considerations for Investors?" for Failed
Obligations, the acquisition by the Trust of any securities or other
property other than the Equity 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 the Trust, they may be accepted for
deposit in the Trust and either sold by the Trustee or held in the Trust
pursuant to the direction of the Sponsor (who may rely on the advice of
the Portfolio Supervisor). Proceeds from the sale of Equity Securities
by the Trustee are credited to the Capital Account of the Trust for
distribution to Unit holders or to meet redemptions.
The Trustee may also sell Equity 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.
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 the 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.
Page 27
INFORMATION AS TO UNDERWRITER, SPONSOR, TRUSTEE AND EVALUATOR
Who is the Underwriter?
Robert W. Baird & Co. Incorporated, headquartered in Milwaukee, is one
of the oldest and largest investment banking firms in the United States.
Baird serves the investment community as broker, asset manager, equity
research specialist, investment banker and public finance specialist.
The firm has 57 offices in 10 states.
Baird is part of the Northwestern Mutual Life Insurance Company family
of companies. It is a member of the New York Stock Exchange and other
principal exchanges, the National Association of Securities Dealers, Inc.
and Securities Investors Protection Corporation.
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 Equity Securities. For information
relating to the responsibilities of the Trustee under the Indenture,
reference is made to the material set forth under "Rights of Unit
Holders."
The Trustee and any successor trustee may resign by executing an
instrument in writing and filing the same with the Sponsor and mailing a
copy of a notice of resignation to all Unit holders. Upon receipt of
such notice, the Sponsor is obligated to appoint a successor trustee
promptly. If the Trustee becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, the Sponsor may
remove the Trustee and appoint a successor as provided in the Indenture.
If upon resignation of a trustee no successor has accepted the
appointment within 30 days after notification, the retiring trustee may
apply to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of a trustee becomes effective
only when the successor trustee accepts its appointment as such or when
a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or
consolidation to which a Trustee shall be a party, shall be the
successor Trustee. The Trustee must be a banking corporation organized
under the laws of the United States or any State and having at all times
an aggregate capital, surplus and undivided profits of not less than
$5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit holders
for taking any action or for refraining from taking any action in good
faith pursuant to the Indenture, or for errors in judgment, but shall be
liable only for their own willful misfeasance, bad faith, gross
Page 28
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 Equity 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 Equity 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 Trust as provided herein, or (c) continue to act as
Trustee without terminating the Indenture.
Who is the Evaluator?
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532. The
Evaluator may resign or may be removed by the Sponsor 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 provides that the Trust shall terminate upon the Mandatory
Termination Date indicated herein under "Summary of Essential
Information." The Trust may be liquidated at any time by consent of 100%
of the Unit holders of the Trust or by the Trustee when the value of the
Equity Securities owned by such 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 the Trust during the primary offering period, or
in the event that Units of the Trust not yet sold aggregating more than
60% of the Units of the Trust are tendered for redemption by the
Underwriter, including the Sponsor. If the 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 the Trust. Within a reasonable period after termination, the Trustee
will follow the procedures set forth under "How are Income and Capital
Distributed?" Also, because of the Special Redemption and Liquidation in
a New Trust, there is a possibility that the Trust may be reduced below
the Discretionary Liquidation Amount and that the Trust could therefore
be terminated at that time before the Mandatory Termination Date of the
Trust.
Page 29
Commencing on the Mandatory Termination Date, Equity Securities will
begin to be sold in connection with the termination of the Trust. The
Sponsor will determine the manner, timing and execution of the sale of
the Equity Securities. Written notice of any termination of the Trust
specifying the time or times at which Unit holders may surrender their
certificates for cancellation shall be given by the Trustee to each Unit
holder at his or her address appearing on the registration books of the
Trust maintained by the Trustee. At least 30 days prior to the Mandatory
Termination Date of the Trust the Trustee will provide written notice
thereof to all Unit holders and will include with such notice a form to
enable Unit holders to elect a distribution of shares of Equity
Securities (reduced by customary transfer and registration charges), if
such Unit holder owns at least 2,500 Units of the Trust, rather than to
receive payment in cash for such Unit holder's pro rata share of the
amounts realized upon the disposition by the Trustee of Equity
Securities. To be effective, the election form, together with
surrendered certificates and other documentation required by the
Trustee, must be returned to the Trustee at least five business days
prior to the Mandatory Termination Date of the Trust. Qualifying Unit
holders requesting an In-Kind Distribution will receive cash in lieu of
fractional shares of the Equity Securities. Unit holders not electing a
distribution of shares of Equity Securities and who do not elect the
Rollover Option will receive a cash distribution from the sale of the
remaining Equity Securities within a reasonable time after the Trust is
terminated. Regardless of the distribution involved, the Trustee will
deduct from the funds of the Trust any accrued costs, expenses, advances
or indemnities provided by the 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 Equity Securities in the Trust
upon termination may result in a lower amount than might otherwise be
realized if such sale were not required at such time. The Trustee will
then distribute to each Unit holder his or her pro rata share of the
balance of the Income and Capital Accounts.
Legal Opinions
The legality of the Units offered hereby and certain matters relating to
Federal tax law have been passed upon by Chapman and Cutler, 111 West
Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
Carter, Ledyard & Milburn, will act as counsel for the Trustee and as
special New York tax counsel for the Trust.
Experts
The statement of net assets, including the schedule of investments, of
the Trust at the opening of business on the Initial Date of Deposit
appearing in this Prospectus and Registration Statement has been audited
by Ernst & Young LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein and in the Registration Statement,
and is included in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
UNDERWRITING
The Underwriter named below has purchased Units in the following amount:
<TABLE>
<CAPTION>
Number
Name Address of Units
____ _______ ________
<S> <C> <C>
Underwriter
Robert W. Baird & Co. Incorporated Firstar Center, 777 East Wisconsin Avenue, 15,000
Milwaukee, WI 53202 ======
</TABLE>
On the Initial Date of Deposit, the Underwriter of the Trust became the
owner of the Units of the Trust and entitled to the benefits thereof, as
well as the risks inherent therein.
The Underwriter Agreement provides that a public offering of the Units
of the Trust will be made at the Public Offering Price described in the
Prospectus. Units may also be sold to or through dealers and others
during the initial offering period and in the secondary market at prices
representing a concession or agency commission as described in "Public
Offering-How are Units Distributed?"
Page 30
The Underwriter has agreed to underwrite additional Units of the Trust
as they become available. The Sponsor will receive from the Underwriter
.90% of the Public Offering Price per Unit.
From time to time the Sponsor may implement programs under which the
Underwriter and dealers of the Trust may receive nominal awards from the
Sponsor for each of their registered representatives who have sold a
minimum number of UIT Units during a specified time period. In addition,
at various times the Sponsor may implement other programs under which
the sales force of the Underwriter or dealers may be eligible to win
other nominal awards for certain sales efforts, or under which the
Sponsor will reallow to any such Underwriter or dealer that sponsors
sales contests or recognition programs conforming to criteria
established by the Sponsor, or participates in sales programs sponsored
by Sponsor, an amount not exceeding the total applicable sales charges
on the sales generated by such person at the public offering price
during such programs. Also, the Sponsor in its discretion may from time
to time pursuant to objective criteria established by the Sponsor pay
fees to the Underwriter or qualifying dealers for certain services or
activities which are primarily intended to result in sales of Units of
the Trust. Such payments are made by the Sponsor out of its own assets,
and not out of the assets of the Trust. These programs will not change
the price Unit holders pay for their Units or the amount that the Trust
will receive from the Units sold.
The Sponsor may from time to time in its advertising and sales materials
compare the then current estimated returns on the Trust and returns over
specified periods on other similar Trusts sponsored by Nike Securities
L.P. with returns on other taxable investments such as the common stocks
comprising the Dow Jones Industrial Average, corporate or U.S.
Government bonds, bank CDs and money market accounts or money market
funds, each of which has investment characteristics that may differ from
those of the Trust. U.S. Government bonds, for example, are backed by
the full faith and credit of the U.S. Government and bank CDs and money
market accounts are insured by an agency of the federal government.
Money market accounts and money market funds provide stability of
principal, but pay interest at rates that vary with the condition of the
short-term debt market. The investment characteristics of the Trust are
described more fully elsewhere in this Prospectus.
Information on percentage changes in the dollar value of Units, on the
basis of changes in Unit price may be included from time to time in
advertisements, sales literature, reports and other information
furnished to current or prospective Unit holders. Total return figures
are not averaged, and may not reflect deduction of the sales charge,
which would decrease the return. Average annualized return figures
reflect deduction of the maximum sales charge. No provision is made for
any income taxes payable.
Past performance may not be indicative of future results. The Trust's
portfolio is not managed. Unit price and return fluctuate with the value
of the common stocks in the Trust's portfolio, so there may be a gain or
loss when Units are sold.
Trust performance may be compared to performance on a total return basis
of the Dow Jones Industrial Average, the S&P 500 Composite Price Stock
Index, or performance data from Lipper Analytical Services, Inc. and
Morningstar Publications, Inc. or from publications such as Money, The
New York Times, U.S. News and World Report, Business Week, Forbes or
Fortune. As with other performance data, performance comparisons should
not be considered representative of the Trust's relative performance for
any future period.
Page 31
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 135
We have audited the accompanying statement of net assets, including the
schedule of investments, of The First Trust Special Situations Trust,
Series 135, comprised of Economic Outlook Growth Trust, Series 1996, as
of the opening of business on January 11, 1996. This statement of net
assets is the responsibility of the Trust's Sponsor. Our responsibility
is to express an opinion on this statement of net assets based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of net assets is
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the statement
of net assets. Our procedures included confirmation of the letter of
credit held by the Trustee and deposited in the Trust on January 11,
1996. An audit also includes assessing the accounting principles used
and significant estimates made by the Sponsor, as well as evaluating the
overall presentation of the statement of net assets. We believe that our
audit of the statement of net assets provides a reasonable basis for our
opinion.
In our opinion, the statement of net assets referred to above presents
fairly, in all material respects, the financial position of The First
Trust Special Situations Trust, Series 135, comprised of Economic
Outlook Growth Trust, Series 1996, at the opening of business on January
11, 1996 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
January 11, 1996
Page 32
Statement of Net Assets
Economic Outlook Growth Trust, Series 1996
The First Trust Special Situations Trust, Series 135
At the Opening of Business on the Initial Date of Deposit
January 11, 1996
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by purchase contracts (1) (2) $148,029
Organizational and offering costs (3) 30,000
________
178,029
Less accrued organizational and offering costs (3) (30,000)
Less liability for deferred sales charge (4) (2,925)
________
Net assets 145,104
========
Units outstanding 15,000
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (5) $149,438
Less sales charge (5) (4,334)
________
Net assets $145,104
========
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule of
Investments" is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $200,000 issued by Bankers
Trust Company has been deposited with the Trustee as collateral,
covering the monies necessary for the purchase of the Equity Securities
pursuant to purchase contracts for such Equity Securities.
(3) The Trust will bear all or a portion of its estimated organizational
and offering costs which will be deferred and charged off over a period
not to exceed one year from the Initial Date of Deposit. The estimated
organizational and offering costs are based on 1,000,000 Units of the
Trust expected to be issued. To the extent the number of Units issued is
larger or smaller, the estimate will vary.
(4) Represents the amount of mandatory distributions from the Trust
($.1950 per Unit), payable to the Sponsor in ten equal monthly
installments beginning on March 29, 1996, and on the last business day
of each month thereafter through December 31, 1996. If Units are
redeemed prior to December 31, 1996, the remaining amount of the
deferred sales charge applicable to such Units will be payable at the
time of redemption.
(5) The aggregate cost to investors includes a maximum total sales charge
computed at the rate of 2.90% of the Public Offering Price (equivalent
to 2.928% of the net amount invested, exclusive of the deferred sales
charge) assuming no reduction of sales charge for quantity purchases.
Page 33
Schedule of Investments
Economic Outlook Growth Trust, Series 1996
The First Trust Special Situations Trust, Series 135
At the Opening of Business on the Initial Date of Deposit
January 11, 1996
<TABLE>
<CAPTION>
Market Cost of
Number Percentage Value Equity
of Ticker Symbol and of Aggregate per Securities
Shares Name of Issuer of Equity Securities (1) Offering Price Share to Trust (2)
______ _______________________________________ _____________ ______ ___________
<C> <S> <C> <C> <C>
238 ADCT ADC Telecommunications, Inc. 4.78% $29.750 $ 7,081
108 T AT&T Corporation 4.73% 64.875 7,007
223 AGN Allergan, Inc. 4.78% 31.750 7,080
238 ANLY Analysts International Corporation 4.78% 29.750 7,081
202 ANDW Andrew Corporation 4.74% 34.750 7,020
382 BMET Biomet, Inc. 4.74% 18.375 7,019
201 CARH Career Horizons, Inc. 4.79% 35.250 7,085
210 CSN Cincinnati Bell, Inc. 4.77% 33.625 7,061
282 DPL DPL, Inc. 4.76% 25.000 7,050
201 DANKY Danka Business Systems PLC (ADR) 4.72% 34.750 6,985
260 FISV FIserv, Inc. 4.79% 27.250 7,085
201 INTM Interim Services 4.79% 35.250 7,085
323 KEA Keane, Inc. 4.80% 22.000 7,106
210 KEY KeyCorp 4.81% 33.875 7,114
230 LUNR Lunar Corporation 4.78% 30.750 7,072
327 MYL Mylan Laboratories, Inc. 4.61% 20.875 6,826
277 PDCO Patterson Dental Company 4.73% 25.250 6,994
112 PFE Pfizer, Inc. 4.76% 62.875 7,042
275 SOTR Southtrust Corporation 4.78% 25.750 7,081
210 TLAB Tellabs, Inc. 4.82% 34.000 7,140
230 WEC Wisconsin Energy Corporation 4.74% 30.500 7,015
______ _________
Total Investments 100% $ 148,029
====== =========
</TABLE>
[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
purchase contracts for the Equity Securities were entered into by the
Sponsor on January 10, 1996. The Trust has a mandatory termination date
of January 31, 1997.
(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 listed
Equity Securities and the ask prices of 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 $148,029.
Cost and loss to Sponsor relating to the Equity Securities sold to the
Trust were $148,076 and $47, respectively.
Page 34
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Page 35
<TABLE>
<CAPTION>
CONTENTS:
<S> <C>
Summary of Essential Information:
Economic Outlook Growth Trust, Series 1996 4
The First Trust Special Situations Trust, Series 135:
What is The First Trust Special Situations Trust? 6
What are the Expenses and Charges? 7
What is the Federal Tax Status of Unit Holders? 8
Why are Investments in the Trust Suitable for
Retirement Plans? 11
Portfolio:
What are Equity Securities? 12
Risk Factors 12
What are the Equity Securities Selected for
Economic Outlook Growth Trust, Series 1996? 15
What are Some Additional Considerations for
Investors? 17
Public Offering:
How is the Public Offering Price Determined? 18
How are Units Distributed? 20
What are the Sponsor's and Underwriter's Profits? 20
Will There be a Secondary Market? 21
Rights of Unit Holders:
How is Evidence of Ownership Issued
and Transferred? 21
How are Income and Capital Distributed? 22
What Reports will Unit Holders Receive? 23
How May Units be Redeemed? 23
Special Redemption, Liquidation and Investment in
a New Trust 25
How May Units be Purchased by the Sponsor? 27
How May Equity Securities be
Removed from the Trust? 27
Information as to Underwriter, Sponsor, Trustee and Evaluator:
Who is the Underwriter? 28
Who is the Sponsor? 28
Who is the Trustee? 28
Limitations on Liabilities of Sponsor and Trustee 29
Who is the Evaluator? 29
Other Information:
How May the Indenture be Amended or Terminated? 29
Legal Opinions 30
Experts 30
Underwriting 30
Report of Independent Auditors 32
Statement of Net Assets 33
Schedule of Investments 34
</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.
BAIRD
Economic Outlook Growth Trust
Series 1996
Robert W. Baird & Co.
Incorporated
777 East Wisconsin Ave.
Milwaukee, WI 53202
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
January 11, 1996
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 135, hereby identifies The First Trust Special Situations
Trust, Series 4 Great Lakes Growth and Treasury Trust, Series 1,
The First Trust Special Situations Trust, Series 18 Wisconsin
Growth and Treasury Securities Trust, Series 1, The First Trust
Special Situations Trust, Series 119 Target 5 Trust Series 2 and
Target 10 Trust, Series 8 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
135, 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
January 11, 1996.
THE FIRST TRUST SPECIAL SITUATIONS
TRUST, SERIES 135
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 ) January 11, 1996
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 January 11, 1996, in
Amendment No. 1 to the Registration Statement (Form S-6) (File
No. 33-65315) and related Prospectus of The First Trust Special
Situations Trust, Series 135.
ERNST & YOUNG LLP
Chicago, Illinois
January 11, 1996
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement
will be filed as Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 22 and
certain subsequent Series, effective November 20, 1991
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and First Trust
Advisors L.P. as Portfolio Supervisor (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
43693] filed on behalf of The First Trust Special
Situations Trust, Series 22).
1.1.1 Form of Trust Agreement for Series 135 among Nike
Securities L.P., as Depositor, The Chase Manhattan Bank
(National Association), as Trustee and First Trust
Advisors L.P., as Evaluator and Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities
L.P., Depositor (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-
6 [File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
1.6 Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42755] filed on
behalf of The First Trust Special Situations Trust,
Series 19).
2.1 Copy of Certificate of Ownership (included in Exhibit
1.1 filed herewith on page 2 and incorporated herein by
reference).
S-5
3.1 Opinion of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal income tax status of
securities being registered.
3.3 Opinion of counsel as to New York income tax status of
securities being registered.
3.4 Opinion of counsel as to advancement of funds by
Trustee.
4.1 Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on
page S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
S-6
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 135
TRUST AGREEMENT
Dated: January 11, 1996
The Trust Agreement among Nike Securities L.P., as
Depositor, The Chase Manhattan Bank (National Association), as
Trustee and First Trust Advisors L.P., as Evaluator and Portfolio
Supervisor, sets forth certain provisions in full and
incorporates other provisions by reference to the document
entitled "Standard Terms and Conditions of Trust for The First
Trust Special Situations Trust, Series 22 and certain subsequent
Series, Effective November 20, 1991" (herein called the "Standard
Terms and Conditions of Trust"), and such provisions as are
incorporated by reference constitute a single instrument. All
references herein to Articles and Sections are to Articles and
Sections of the Standard Terms and Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II and Part III hereof,
all the provisions contained in the Standard Terms and Conditions
of Trust are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully and
to the same extent as though said provisions had been set forth
in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
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:
4.78% ADC Telecommunications, 4.73% AT&T
Corporation, 4.78% Allergan, Inc., 4.78%
Analysts International Corporation, 4.74%
Andrew Corporation, 4.74% Biomet, Inc.,
4.79% Career Horizons, Inc., 4.77%
Cincinnati Bell, Inc., 4.76% DPL, Inc.,
4.72% Danka Business Systems PLC (ADR),
4.79% Flserv, Inc., 4.79% Interim Services,
4.80% Keane, Inc.,4.81% KeyCorp, 4.78%
Lunar Corporation, 4.61% Mylan Laboratories,
Inc., 4.73% Patterson Dental Company, 4.76%
Pfizer, Inc., 4.78% Southtrust Corporation,
4.82% Tellabs, Inc., 4.74% Wisconsin Energy
Corporation.
D. The Record Date shall be as set forth in the prospectus
for the sale of Units dated the date hereof (the "Prospectus")
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee of $0.003 per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee of $.0110 per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05. However, in
no event, except as may otherwise be provided in the Standard
Terms and Conditions of Trust, shall the Trustee receive
compensation in any one year from any Trust of less than $2,000
for such annual compensation.
I. The Initial Date of Deposit for the Trust is January
11, 1996.
J. 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
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. Section 1.01(26) shall be added to read as follows:
"(26) The term "Rollover Unit holder" shall be defined
as set forth in Section 5.05, herein."
C. Section 1.01(27) shall be added to read as follows:
"(27) The "Rollover Notification Date" shall be
defined as set forth in the Prospectus under "Summary of
Essential Information."
D. Section 1.01(28) shall be added to read as follows:
"(28) The term "Rollover Distribution" shall be
defined as set forth in Section 5.05, herein."
E. Section 1.01(29) shall be added to read as follows:
"(29) The term "Distribution Agent" shall refer to the
Trustee acting in its capacity as distribution agent
pursuant to Section 5.02 herein."
F. Section 1.01(30) shall be added to read as follows:
"(30) The term "Special Redemption and Liquidation
Period" shall be as set forth in the Prospectus under
"Summary of Essential Information."
G. The term "Capital Account" as set forth in the
Prospectus shall be deemed to refer to the "Principal Account."
H. The following sentence shall be substituted for the
second sentence of paragraph (b) of Section 2.01:
The Depositor, in each case, shall ensure that each
deposit of additional Securities pursuant to this Section
shall be, as nearly as is practicable, in the identical
ratio as the Percentage Ratio for such Securities as is
specified in the Trust Agreement for each Trust (provided,
however, that any deposit of additional securities made
subsequent to the 90-day period following the first deposit
of securities in a Trust shall exactly replicate such
Percentage Ratio), and the Depositor shall ensure that such
Securities are identical to those deposited on the Initial
Date of Deposit.
I. The second paragraph of Section 3.02 of the Standard
Terms and Conditions is hereby deleted and replaced with the
following sentence:
"Any non-cash distributions (other than a non-taxable
distribution of the shares of the distributing corporation
which shall be retained by a Trust) received by a Trust
shall be dealt with in the manner described at Section 3.11,
herein, and shall be retained or disposed of by such Trust
according to those provisions. The proceeds of any
disposition shall be credited to the Income Account of a
Trust. Neither the Trustee nor the Depositor shall be
liable or responsible in any way for depreciation or loss
incurred by reason of any such sale."
J. 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."
K. 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 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.
Each Trust shall provide the following distribution
elections: (1) distributions to be made by check mailed to
the post office address of the Unit holder as it appears on
the registration books of the Trustee, or (2) the following
reinvestment option:
The Trustee will, for any Unit holder who provides
the Trustee written instruction, properly executed and
in form satisfactory to the Trustee, received by the
Trustee no later than its close of business 10 business
days prior to a Record Date (the "Reinvestment Notice
Date"), reinvest such Unit holder's distribution from
the Income and Capital Accounts in Units of the Trust,
purchased from the Depositor, to the extent the
Depositor shall make Units available for such purchase,
at the Depositor's offering price as of the fifth
business day prior to the following Distribution Date,
and at such reduced sales charge as may be described in
the prospectus for the Trusts. If, for any reason, the
Depositor does not have Units of the Trust available
for purchase, the Trustee shall distribute such Unit
holder's distribution from the Income and Capital
Accounts in the manner provided in clause (1) of the
preceding paragraph. The Trustee shall be entitled to
rely on a written instruction received as of the
Reinvestment Notice Date and shall not be affected by
any subsequent notice to the contrary. The Trustee
shall have no responsibility for any loss or
depreciation resulting from any reinvestment made in
accordance with this paragraph, or for any failure to
make such reinvestment in the event the Depositor does
not make Units available for purchase.
Any Unit holder who does not effectively elect
reinvestment in Units of their respective Trust pursuant to
the preceding paragraph shall receive a cash distribution in
the manner provided in clause (1) of the second preceding
paragraph."
L. Section 3.05.II(b) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (b) For purposes of this Section 3.05, the Unit
holder's Income Distribution shall be equal to such Unit
holder's pro rata share of the cash balance in the Income
Account computed as of the close of business on the Record
Date immediately preceding such Income Distribution after
deduction of (i) the fees and expenses then deductible
pursuant to Section 3.05.I. and (ii) the Trustee's estimate
of other expenses properly chargeable to the Income Account
pursuant to the Indenture which have accrued, as of such
Record Date, or are otherwise properly attributable to the
period to which such Income Distribution relates."
M. Section 3.11 of the Standard Terms and Conditions of
Trust is hereby deleted in its entirety and replaced with the
following language:
"Section 3.11. Notice to Depositor.
In the event that the Trustee shall have been notified
at any time of any action to be taken or proposed to be
taken by at least a legally required number of holders of
any Securities deposited in a Trust, the Trustee shall take
such action or omit from taking any action, as appropriate,
so as to insure that the Securities are voted as closely as
possible in the same manner and the same general proportion
as are the Securities held by owners other than such Trust.
In the event that an offer by the issuer of any of the
Securities or any other party shall be made to issue new
securities, or to exchange securities, for Trust Securities,
the Trustee shall reject such offer. However, should any
issuance, exchange or substitution be effected
notwithstanding such rejection or without an initial offer,
any securities, cash and/or property received shall be
deposited hereunder and shall be promptly sold, if
securities or property, by the Trustee pursuant to the
Depositor's direction, unless the Depositor advises the
Trustee to keep such securities or property. The Depositor
may rely on the Portfolio Supervisor in so advising the
Trustee. The cash received in such exchange and cash
proceeds of any such sales shall be distributed to Unit
holders on the next distribution date in the manner set
forth in Section 3.05 regarding distributions from the
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.
Whenever new securities or property is received and
retained by a Trust pursuant to this Section 3.11, the
Trustee shall, within five days thereafter, mail to all Unit
holders of such Trust notices of such acquisition unless
legal counsel for such Trust determines that such notice is
not required by The Investment Company Act of 1940, as
amended."
N. Section 3.05 of Article III of the Standard Terms and
Conditions of Trust is hereby amended to include the following
subsection:
"Section 3.05.I.(e) deduct from the Interest Account
or, to the extent funds are not available in such Account,
from the Principal Account and pay to the Depositor the
amount that it is entitled to receive pursuant to Section
3.14.
O. 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 $0.0010 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 Interest 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 Interest 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
Bonds designated to be sold pursuant to Section 5.02 hereof,
or (ii) if no such Bonds have been so designated, such Bonds
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.
P. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraph
which shall be entitled Section 3.15:
"Section 3.15. Deferred Sales Charge. If the
prospectus related to the Trust specifies a deferred sales
charge, the Trustee shall, on the dates specified in and as
permitted by such Prospectus, withdraw from the Capital
Account, an amount per Unit specified in such Prospectus and
credit such amount to a special non-Trust account designated
by the Depositor out of which the deferred sales charge will
be distributed to the Depositor (the "Deferred Sales Charge
Account"). If the balance in the Capital Account is
insufficient to make such withdrawal, the Trustee shall, as
directed by the Depositor, advance funds in an amount
required to fund the proposed withdrawal and be entitled to
reimbursement of such advance upon the deposit of additional
monies in the Capital Account, and/or sell Securities and
credit the proceeds thereof to the Deferred Sales Charge
Account, provided, however, that the aggregate amount
advanced by the Trustee at any time for payment of the
deferred sales charge shall not exceed $15,000. Such
direction shall, if the Trustee is directed to sell a
Security, identify the Security to be sold and include
instructions as to the execution of such sale. If a Unit
holder redeems Units prior to full payment of the deferred
sales charge, the Trustee shall, if so provided in the
related Prospectus, on the Redemption Date, withhold from
the Redemption Price payable to such Unit holder an amount
equal to the unpaid portion of the deferred sales charge and
distribute such amount to the Deferred Sales Charge Account.
If pursuant to Section 5.02 hereof, the Depositor shall
purchase a Unit tendered for redemption prior to the payment
in full of the deferred sales charge due on the tendered
Unit, the Depositor shall pay to the Unit holder the amount
specified under Section 5.02 less the unpaid portion of the
deferred sales charge. All advances made by the Trustee
pursuant to this Section shall be secured by a lien on the
Trust prior to the interest of the Unit holders."
Q. Section 5.02 of the Standard Terms and Conditions of
Trust is amended by adding the following after the second
paragraph of such section:
"Notwithstanding anything herein to the contrary, in
the event that any tender of Units pursuant to this Section
5.02 would result in the disposition by the Trustee of less
than a whole Security, the Trustee shall distribute cash in
lieu thereof and sell such Securities as directed by the
Sponsors as required to make such cash available.
Unit holders may redeem 2,500 Units or more of a Trust
and request a distribution in kind of (i) such Unit holder's
pro rata portion of each of the Securities in such Trust, in
whole shares, and (ii) cash equal to such Unit holder's
pro rata portion of the Income and Principal Accounts as
follows: (x) a pro rata portion of the net proceeds of sale
of the Securities representing any fractional shares
included in such Unit holder's pro rata share of the
Securities and (y) such other cash as may properly be
included in such Unit holder's pro rata share of the sum of
the cash balances of the Income and Principal Accounts in an
amount equal to the Unit Value determined on the basis of a
Trust Fund Evaluation made in accordance with Section 5.01
determined by the Trustee on the date of tender less amounts
determined in clauses (i) and (ii)(x) of this Section.
Subject to Section 5.05 with respect to Rollover Unit
holders, to the extent possible, distributions of Securities
pursuant to an in kind redemption of Units shall be made by
the Trustee through the distribution of each of the
Securities in book-entry form to the account of the Unit
holder's bank or broker-dealer at the Depository Trust
Company. Any distribution in kind will be reduced by
customary transfer and registration charges."
R. The following Section 5.05 shall be added:
"Section 5.05. Rollover of Units. (a) If the
Depositor shall offer a subsequent series of Target Equity
Trust, Value Ten, Series 9 or Target Equity Trust, Value
Five Series 3 (individually, each a "New Series" and
collectively, the "New Series"), the Trustee shall, at the
Depositor's sole cost and expense, include in the notice
sent to Unit holders specified in Section 8.02 a form of
election whereby Unit holders, whose redemption distribution
would be in an amount sufficient to purchase at least one
Unit of the New Series, may elect to have their Units(s)
redeemed in kind in the manner provided in Section 5.02, the
Securities included in the redemption distribution sold, and
the cash proceeds applied by the Distribution Agent to
purchase Units of a New Series, all as hereinafter provided.
The Trustee shall honor properly completed election forms
returned to the Trustee, accompanied by any Certificate
evidencing Units tendered for redemption or a properly
completed redemption request with respect to uncertificated
Units, by its close of business on the Rollover Notification
Date.
All Units so tendered by a Unit holder (a "Rollover
Unit holder") shall be redeemed and cancelled on the
Rollover Notification Date. Subject to payment by such
Rollover Unit holder of any tax or other governmental
charges which may be imposed thereon, such redemption is to
be made in kind pursuant to Section 5.02 by distribution of
cash and/or Securities to the Distribution Agent on the
Rollover Notification Date of the net asset value
(determined on the basis of the Trust Fund Evaluation as of
the Rollover Notification Date in accordance with
Section 4.01) multiplied by the number of Units being
redeemed (herein called the "Rollover Distribution"). Any
Securities that are made part of the Rollover Distribution
shall be valued for purposes of the redemption distribution
as of the Rollover Notification Date.
All Securities included in a Unit holder's Rollover
Distribution shall be sold by the Distribution Agent during
the Special Redemption and Liquidation Period specified in
the Prospectus pursuant to the Depositor's direction, and
the Distribution Agent shall employ the Depositor as broker
in connection with such sales. For such brokerage services,
the Depositor shall be entitled to compensation at its
customary rates, provided however, that its compensation
shall not exceed the amount authorized by applicable
Securities laws and regulations. The Depositor shall direct
that sales be made in accordance with the guidelines set
forth in the Prospectus under the heading "Special
Redemption, Liquidation and Investment in New Trust."
Should the Depositor fail to provide direction, the
Distribution Agent shall sell the Securities in the manner
provided in the prospectus for " less liquid Equity
Securities." The Distribution Agent shall have no
responsibility for any loss or depreciation incurred by
reason of any sale made pursuant to this Section.
Upon each trade date for sales of Securities included
in the Rollover Unit holder's Rollover Distribution, the
Distribution Agent shall, as agent for such Rollover Unit
holder, enter into a contract with the Depositor to purchase
from the Depositor Units of a New Series (if any), at the
Depositor's public offering price for such Units on such
day, and at such reduced sales charge as shall be described
in the prospectus for such Trust. Such contract shall
provide for purchase of the maximum number of Units of a New
Series whose purchase price is equal to or less than the
cash proceeds held by the Distribution Agent for the Unit
holder on such day (including therein the proceeds
anticipated to be received in respect of Securities traded
on such day net of all brokerage fees, governmental charges
and any other expenses incurred in connection with such
sale), to the extent Units are available for purchase from
the Depositor. In the event a sale of Securities included
in the Rollover Unit holder's redemption distribution shall
not be consummated in accordance with its terms, the
Distribution Agent shall apply the cash proceeds held for
such Unit holder as of the settlement date for the purchase
of Units of a New Series to purchase the maximum number of
units which such cash balance will permit, and the Depositor
agrees that the settlement date for Units whose purchase was
not consummated as a result of insufficient funds will be
extended until cash proceeds from the Rollover Distribution
are available in a sufficient amount to settle such
purchase. If the Unit holder's Rollover Distribution will
produce insufficient cash proceeds to purchase all of the
Units of a New Series contracted for, the Depositor agrees
that the contract shall be rescinded with respect to the
Units as to which there was a cash shortfall without any
liability to the Rollover Unit holder or the Distribution
Agent. Any cash balance remaining after such purchase shall
be distributed within a reasonable time to the Rollover Unit
holder by check mailed to the address of such Unit holder on
the registration books of the Trustee. Units of a New Series
will be uncertificated unless and until the Rollover Unit
holder requests a certificate. Any cash held by the
Distribution Agent shall be held in a non-interest bearing
account which will be of benefit to the Distribution Agent
in accordance with normal banking procedures. Neither the
Trustee nor the Distribution Agent shall have any
responsibility or liability for loss or depreciation
resulting from any reinvestment made in accordance with this
paragraph, or for any failure to make such reinvestment in
the event the Depositor does not make Units available for
purchase.
(b) Notwithstanding the foregoing, the Depositor may,
in their discretion at any time, decide not to offer Trust
Series in the future, and if so, this Section 5.05
concerning the Rollover of Units shall be inoperative.
(c) The Distribution Agent shall receive no fees for
performing its duties hereunder. The Distribution Agent
shall, however, be entitled to receive reimbursement from
the Trust for any and all expenses and disbursements to the
same extent as the Trustee is permitted reimbursement
hereunder."
S. 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)"
T. 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."
U. Section 1.01(3) shall be amended to read as follows:
"(3) "Evaluator" shall mean First Trust Advisors L.P.
and its successors in interest, or any successor evaluator
appointed as hereinafter provided."
V. The first sentence of Section 3.13. shall be amended to
read as follows:
"As compensation for providing supervisory portfolio
services under this Indenture, the Portfolio Supervisor
shall receive, in arrears, against a statement or statements
therefor submitted to the Trustee monthly or annually an
aggregate annual fee in an amount which shall not exceed
$0.0035 per Unit outstanding as of January 1 of such year
except for a Trust during the year or years in which an
initial offering period as determined in Section 4.01 of
this Indenture occurs, in which case the fee for a month is
based on the number of Units outstanding at the end of such
month (such annual fee to be pro rated for any calendar year
in which the Portfolio Supervisor provides services during
less than the whole of such year), but in no event shall
such compensation when combined with all compensation
received from other series of the Trust for providing such
supervisory services in any calendar year exceed the
aggregate cost to the Portfolio Supervisor for the cost of
providing such services."
W. 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."
X. 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.
IN WITNESS WHEREOF, Nike Securities L.P., The Chase
Manhattan Bank (National Association) 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
By Thomas Porrazzo
Vice President
[SEAL]
ATTEST:
Rosalia A. Raviele
Second Vice President
FIRST TRUST ADVISORS 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 135
(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
January 11, 1996
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: The First Trust Special Situations Trust, Series 135
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of The First Trust Special Situations
Trust, Series 135 in connection with the preparation, execution
and delivery of a Trust Agreement dated January 11, 1996 among
Nike Securities L.P., as Depositor, The Chase Manhattan Bank
(National Association), as Trustee and First Trust Advisors L.P.,
as Evaluator and Portfolio Supervisor, pursuant to which the
Depositor has delivered to and deposited the Securities listed in
Schedule A to the Trust Agreement with the Trustee and pursuant
to which the Trustee has issued to or on the order of the
Depositor a certificate or certificates representing units of
fractional undivided interest in and ownership of the Fund
created under said Trust Agreement.
In connection therewith, we have examined such pertinent
records and documents and matters of law as we have deemed
necessary in order to enable us to express the opinions
hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. the execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units
in the Fund have been duly authorized; and
2. the certificates evidencing the Units in the Fund when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will
constitute valid and binding obligations of the Fund and the
Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-65315)
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
January 11, 1996
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 135
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of The First Trust Special Situations Trust, Series 135 (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 January 11, 1996 (the
"Indenture"), among Nike Securities L.P., as Depositor, The Chase
Manhattan Bank (National Association), as Trustee and First Trust
Advisors L.P., as Evaluator and Portfolio Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents we have deemed pertinent. The opinions
expressed herein assume that the Trust will be administered, and
investments by the Trust from proceeds of subsequent deposits, if
any, will be made, in accordance with the terms of the Indenture.
The Trust holds Equity Securities as such term is 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. The Trust is not an association taxable as a
corporation for Federal income tax purposes; each Unit holder
will be treated as the owner of a pro rata portion of each of the
assets of the Trust under the Internal Revenue Code of 1986 (the
"Code"); the income of the Trust will be treated as income of the
Unit holders thereof under the Code; and an item of Trust income
will have the same character in the hands of a Unit holder as it
would have in the hands of the Trustee. Each Unit holder will be
considered to have received his pro rata share of income derived
from each Trust asset when such income is considered to be
received by the Trust.
II. Each Unit holder will have a taxable event when the
Trust disposes of an Equity Security (whether by sale, exchange,
liquidation, redemption, or otherwise) or upon the sale or
redemption of Units by such Unit holder. The price a Unit holder
pays for his Units is allocated among his pro rata portion of
each Equity Security held by the Trust (in proportion to the fair
market values thereof on the date the Unit holder purchases his
Units) in order to determine his tax basis for his pro rata
portion of each Equity Security held by the Trust. 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 the Trust
is taxable as ordinary income to the extent of such corporation's
current and accumulated "earnings and profits." A Unit holder's
pro rata portion of dividends paid on such Equity Security which
exceeds such current and accumulated earnings and profits will
first reduce a Unit holder's tax basis in such Equity Security,
and to the extent that such dividends exceed a Unit holder's tax
basis in such Equity Security shall be treated as gain. In
general, any such capital gain will be short term unless a Unit
holder has held his Units for more than one year.
III. A Unit holder's portion of gain, if any, upon the sale
or redemption of Units or the disposition of Equity Securities
held by the 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 the 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.
Unit holders should consult their tax advisers regarding the
recognition of gains and losses for federal income tax purposes.
In particular, a Rollover Unit holder should be aware that a
Rollover Unit holder's loss, if any, incurred in connection with
the exchange of Units for Units in the next new series of the
Economic Outlook Growth Trust (the "1997 Trust") will generally
be disallowed with respect to the disposition of any Equity
Securities pursuant to such exchange to the extent that such Unit
holder is considered the owner of substantially identical
securities under the wash sale provisions of the Code taking into
account such Unit holder's deemed ownership of securities
underlying the Units in the 1997 Trust in the manner described
above, if such substantially identical securities were acquired
within a period beginning 30 days before and ending 30 days after
such disposition. However, any gains incurred in connection with
such an exchange be a Rollover Unit holder would be recognized.
Each Unit holder's pro rata share of each expense paid by
the Trust is deductible by the Unit holder to the same extent as
though the expense had been paid directly by him. It should be
noted that as a result of the Tax Reform Act of 1986, certain
miscellaneous itemized deductions, such as investment expenses,
tax return preparation fees an employee business expenses will be
deductible by an individual only to the extent they exceed 2% of
such individuals' adjusted gross income. Unit holders may be
required to treat some or all of the expenses of the Trust as
miscellaneous itemized deductions subject to this limitation.
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, United States tax consequences to
non-U.S. Unit holders 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. 33-65315)
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
January 11, 1996
The Chase Manhattan Bank
(National Association), as Trustee of
The First Trust Special Situations
Trust, Series 135
770 Broadway - 6th Floor
New York, New York 10003
Attention: Mr. Paul J. Holland
Vice President
Re: The First Trust Special Situations Trust, Series 135
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for The First Trust Special Situations Trust, Series
135 consisting of Economic Outlook Growth Trust, Series 1996 (the
"Trust"), which will be established under a Standard Terms and
Conditions of Trust dated November 20, 1991, and a related Trust
Agreement dated as of today (collectively, the "Indenture"),
among Nike Securities L.P., as Depositor (the "Depositor"); First
Trust Advisors L.P., as Evaluator and 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 Trust (the "Units") will be
issued in the aggregate number set forth in the Indenture.
We have examined and are familiar with originals or
certified copies, or copies otherwise identified to our
satisfaction, of such documents as we have deemed necessary or
appropriate for the purpose of this opinion. In giving this
opinion, we have relied upon the two opinions, each dated today
and addressed to the Trustee, of Chapman and Cutler, counsel for
the Depositor, with respect to the matters of law set forth
therein.
Based upon the foregoing, we are of the opinion that:
1. The Trust will not constitute an association taxable as
a corporation under New York law, and accordingly will not be
subject to the New York State franchise tax or the New York City
general corporation tax.
2. Under the income tax laws of the State and City of New
York, the income of the Trust will be considered the income of
the holders of the Units.
We consent to the filing of this opinion as an exhibit to
the Registration Statement (No. 33-65315) 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
January 11, 1996
The Chase Manhattan Bank
(National Association), as Trustee of
The First Trust Special Situations
Trust, Series 135
770 Broadway - 6th Floor
New York, New York 10003
Attention: Mr. Paul J. Holland
Vice President
Re: The First Trust Special Situations Trust, Series 135
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 incorporateds by reference
certain Standard Terms and Conditions of Trust dated November 20,
1991, and the same are collectively referred to herein as the
"Indenture") among Nike Securities L.P., as Depositor (the
"Depositor"); First Trust Advisors L.P., as Evaluator and
Portfolio Supervisor; and Chase, as Trustee (the "Trustee"),
establishing The First Trust Special Situations Trust, Series
135, consisting of Economic Outlook Growth Trust, Series 1996
(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 consists of 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
First Trust Advisors L.P.
Suite 300
1001 Warrenville Road
Lisle, Illinois 60532
January 11, 1996
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 135
Gentlemen:
We have examined the Registration Statement File No. 33-
65315 for the above captioned fund. We hereby consent to the use
in the Registration Statement of the references to First Trust
Advisors L.P. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
First Trust Advisors L.P.
Carlos E. Nardo
Senior Vice President
<TABLE> <S> <C>
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<LEGEND> This schedule contains summary financial information extracted
from Amendment number 1 to form S-6 and is qualified in its entirety by
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