Registration No. 33-63417
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 128
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 October 23, 1995 at 2:00 p.m. pursuant to Rule
487.
________________________________
*Previously paid
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 128
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
periodic payment certificates *
58.
59. Financial statements Report of Independent
(Instruction 1(c) to Form S-6) Auditors
Statement of Net
Assets
* Inapplicable, answer negative or not required.
January Effect Short-Term Growth Trust, Series 1
The Trust. The First Trust (registered trademark) Special Situations
Trust, Series 128 is a unit investment trust consisting of a portfolio
containing common stocks issued by companies which, in the opinion
of Dain Bosworth, Incorporated, are positioned to benefit from
the "January Effect" (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. 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, therefore, be done in such
a manner that the original proportionate relationship amongst
the individual issues of the Equity Securities shall be maintained.
Any deposit by the Sponsor of additional Equity Securities will
duplicate, as nearly as is practicable, the original proportionate
relationship established on the Initial Date of Deposit, and not
the actual proportionate relationship on the subsequent date of
deposit, since the actual proportionate relationship may be different
than the original proportionate relationship. Any such difference
may be due to the sale, redemption or liquidation of any Equity
Securities deposited in the Trust on the Initial, or any subsequent,
Date of Deposit. See "What is the First Trust Special Situations
Trust?" and "How May Equity Securities be Removed from the Trust?"
Public Offering Price. The Public Offering Price per Unit of the
Trust during the initial offering period is equal to the aggregate
underlying value of the Equity Securities in the Trust (generally
determined by the closing sale prices of listed Equity Securities
and the ask prices of over-the-counter traded Equity Securities)
plus or minus a pro rata share of cash, if any, in the Capital
and Income Accounts of the Trust, plus a maximum sales charge
of 2.95% (equivalent to 3.040% of the net amount invested). A
pro rata share of accumulated dividends, if any, in the Income
Account is included in the Public Offering Price. The minimum
purchase is $1,000. The sales charge is reduced for sales involving
at least $100,000. See "How is the Public Offering Price Determined?"
Dividend and Capital Distributions. Distributions of dividends
received by the Trust 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 pro
rata share of the Trust's assets, less expenses, in the manner set
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
First Trust (registered trademark)
The date of this Prospectus is October 23, 1995
Page 1
forth under "Rights of Unit Holders-How are Income and Capital
Distributed?" The Sponsor intends to create a separate 1996 Trust
for the January Effect Short-Term Growth Trust (the "1996 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 1996 Trust as selected by the Unit holder. See "Special
Redemption, Liquidation and Investment in the New Trust."
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. 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 New Trust. Unit
holders who hold their Units in book entry form will have the
option of specifying by October 8, 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 1996 Trust, if such Trust is offered. The Sponsor may,
however, stop creating new Units of the 1996 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 1996 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. Rollover Unit holders may purchase
Units of the 1996 Trust at a reduced sales charge. The portfolio
for the 1996 Trust will contain common stock issued by companies
which, in the opinion of Dain Bosworth, Incorporated are positioned
to benefit from the "January Effect." 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 1996 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 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?"
Page 2
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 or the general condition of the stock
market, volatile interest rates or an economic recession. The
Trust is not actively managed and Equity Securities will not be
sold by the Trust to take advantage of market fluctuations or
changes in anticipated rates of appreciation. 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-October 23, 1995
Underwriter: Dain Bosworth, Inc.
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank (National Association)
Evaluator: FT Evaluators 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) $ 145,817
Aggregate Offering Price Evaluation of Equity
Securities per Unit $ 9.7211
Sales Charge 2.95% of the Public Offering Price
per Unit (3.040% of the net amount invested) (2) $ .2955
Public Offering Price per Unit (2) $ 10.0166
Sponsor's Initial Repurchase Price per Unit $ 9.7211
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities) (3) $ 9.7211
CUSIP Number 33718R 187
</TABLE>
First Settlement Date October 26, 1995
Rollover Notification Date October 8, 1996
Special Redemption and Liquidation
Period During the period from October 25,
1996 to November 7, 1996.
Mandatory Termination Date November 8, 1996
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 dur-
ing the primary offering period.
Trustee's Annual Fee $.0116 per Unit outstanding.
Evaluator's Annual Fee $.0030 per Unit outstanding. Evalua-
tions for purposes of sale, purchase
or redemption of Units are made as
of the close of trading (4:00 p.m.
eastern standard time) on the New
York Stock Exchange on each day on
which it is open.
Supervisory Fee (4) Maximum of $.0035 per Unit outstand-
ing annually payable to an affiliate
of the Sponsor.
Estimated Organizational Expenses (5) $.0300 per Unit.
Income Distribution (6) 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) On the Initial Date of Deposit there will be no accumulated
dividends in the Income Account. Anyone ordering Units after such
date will pay a pro rata share of any accumulated dividends in
such Income Account. The Public Offering Price as shown reflects
the value of the Equity Securities at the opening of business
on the Initial Date of Deposit and establishes the original proportionate
relationship amongst the individual securities. No sales to investors
will be executed at this price. Additional Equity Securities will
be deposited during the day of the Initial Date of Deposit which
will be valued as of 4:00 p.m. eastern standard time and sold
to investors at a Public Offering Price per Unit based on this valuation.
(3) See "How May Units be Redeemed?"
(4) In addition, the Sponsor will be reimbursed for bookkeeping
and other administrative expenses currently at a maximum annual
rate of $.0010 per Unit.
(5) The Trust (and therefore Unit holders) will bear all or
a portion of its organizational costs (including costs of preparing
the registration statement, the trust indenture and other closing
documents, registering Units with the Securities and Exchange
Commission and states, the initial audit of 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 expenses will be amortized over a three-month period.
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.
(6) 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
January Effect Short-Term Growth Trust, Series 1
The First Trust Special Situations Trust, Series 128
What is The First Trust Special Situations Trust?
The First Trust Special Situations Trust, Series 128 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.") This Series consists
of an underlying separate unit investment trust designated as:
January Effect Short-Term Growth Trust, Series 1. The Trust was
created under the laws of the State of New York pursuant to a
Trust Agreement (the "Indenture"), dated the Initial Date of Deposit,
with Nike Securities L.P., as Sponsor, The Chase Manhattan Bank
(National Association), as Trustee, First Trust Advisors L.P.,
as Portfolio Supervisor and FT Evaluators L.P., as Evaluator.
On the Initial Date of Deposit, the Sponsor deposited with the
Trustee confirmations of contracts for the purchase of common
stocks issued by companies which, in the opinion of Dain Bosworth,
Incorporated, are positioned to benefit from the "January Effect"
(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 January Effect Short-Term Growth Trust, Series
1 is to provide potential capital appreciation by investing in
common stocks of companies which, in the opinion of the Underwriter,
are positioned to benefit from the "January Effect." The "January
Effect" phenomena is a strategy involving stocks that have been
in bearish trends for a long period of time and are trading at
the lower end of their price ranges. Toward the end of the year,
investors who still own these issues create additional downward
pressure on the stocks when they sell to realize a capital loss
for tax purposes, and there is also selling by institutional investors
who are eliminating the poor-performing issues from their portfolios
before the year-end reporting period. These stocks will typically
bounce back during the first quarter of the new year, as the selling
abates. However, the strategy has gained enough popularity over
the past several years, that the stocks tend to move earlier in
the fall than the traditional January time frame. There is, however,
no assurance that the "January Effect" phenomena will occur or
that the Equity Securities selected for deposit in the Trust will
benefit from such phenomena.
With the deposit of the Equity Securities on the Initial Date
of Deposit, the Sponsor established a percentage relationship
between the amounts of Equity Securities in the Trust's portfolio.
See "What are the Equity Securities Selected for January Effect
Short-Term Growth Trust, Series 1?" 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 relationship and not the actual proportionate
relationship on the subsequent date of deposit, since the actual
proportionate relationship may be different than the original
proportionate relationship. Any such difference may be due to
the sale, redemption or liquidation of any of the Equity Securities
deposited in the Trust on the Initial, or any subsequent, 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
Page 5
the undivided fractional interest represented by each outstanding
Unit of the Trust will increase. However, if additional Units
are issued by the Trust in connection with the deposit of additional
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 fractional undivided interest represented
by each 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 unit investment trusts
of which Nike Securities L.P. is the Sponsor in any calendar year
exceed the actual cost to the Sponsor of supplying such services
in such year. First Trust Advisors L.P. will receive an annual
supervisory fee, which is not to exceed the amount set forth under
"Summary of Essential Information," for providing portfolio supervisory
services for 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 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 unit investment trusts of which Nike Securities L.P. is the
Sponsor in any calendar year exceed the aggregate cost to FT Evaluators
L.P. of supplying such services in such year. The Trustee pays
certain expenses of 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 $.0116 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. 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 states, the initial audit of the Trust's
portfolio and the initial fees and expenses of the Trustee and
any other out-of-pocket expenses, will be paid by the Trust and
amortized over a three-month period. 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
Page 6
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
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. 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 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, 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 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 generally be
treated as capital gain. In general, any such capital gain will
be short-term unless a Unit holder has held his Units for more
than one year.
3. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of 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
long-term if the Unit holder has held his Units for more than
one year (the date on which the Units are acquired (i.e., the
"trade date") is excluded for purposes of determining whether
the Units have been held for more than one year). A Unit holder's
portion of loss, if any, upon the sale or redemption of Units
or the disposition of 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 Units for more than
one year. Unit
Page 7
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 January Effect Short-Term
Growth Trust, Series 1 (the "1996 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 a 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. However, any gains
incurred in connection with such an exchange by a Rollover Unit
holder would be recognized.
Dividends Received Deduction. A Unit holder will be considered
to have received all of the dividends paid on his pro rata portion
of each Equity Security when such dividends are received by the
Trust.
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.
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 him, subject to the following
limitation. 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
Page 8
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 is deemed thereby
to have disposed of his entire pro rata interest in all assets
of the Trust involved including his 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 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
such 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 Units for Units of the 1996 Trust in a taxable transaction,
such 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 Units will generally equal the price
paid by such Unit holder for his 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 on the date the Units are purchased in order
to determine such Unit holder's tax basis for his pro rata portion
of each Equity Security.
Page 9
A Unit holder's tax basis in his Units and his 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 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 income
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 taxes; 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.
In the opinion of Carter, Ledyard & Milburn, Special Counsel to
the Trusts for New York tax matters, under the existing income
tax laws of the State of New York, 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.
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 (including U.S. dollar denominated common
stock of a foreign issuer). See "What are the Equity Securities
Selected for January Effect Short-Term Growth Trust Trust, Series
1?" 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 nor the Trustee 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.
Page 10
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.
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 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
Page 11
of cumulative preferred stock. Preferred stockholders are also
generally entitled to rights on liquidation which are senior to
those of common stockholders.
Since certain of the Equity Securities in the Trust consist of
securities of foreign issuers, 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
Securities. In addition, for the 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 issuers of Equity Securities included in the Trust, the
Sponsor believes that adequate information will be available to
allow the Portfolio Supervisor to provide portfolio surveillance.
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.
What are the Equity Securities Selected for January Effect Short-Term
Growth Trust, Series 1?
The Equity Securities for the Trust were researched and selected
by Dain Bosworth Incorporated's technical analyst, Robert Dickey.
Mr. Dickey has been with Dain Bosworth Incorporated for twenty-two
years, has seven years of research experience, eight years of
options experience and four years of margin account experience.
Mr. Dickey has worked with some of the largest institutional portfolios
in the United States, and is currently identifying and marketing
equity ideas to Dain Bosworth Incorporated's retail and institutional
brokers and clients.
The Underwriter may acquire the Equity Securities for the Sponsor
and would thereby benefit from transaction fees and changes in
the prices of the Equity Securities prior to deposit in the Trust.
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.
Adolph Coors Company, headquartered in Golden, Colorado, operates
through Coors Brewing Company and is a brewer of malt beverages
including ales, premium beers and light beers. The malt beverages
are sold under the name "Coors," "Zima" and "Killian's Irish Brown
Ale" to distributors throughout the U.S. and the District of Columbia.
Airborne Freight Corporation, headquartered in Seattle, Washington,
is an air express company and air freight forwarder that expedites
shipments throughout the world. The company provides door-to-door
express delivery of documents and small packages and acts as a
domestic and international freight forwarder for shipments of
any size. Most of its domestic freight is shipped on the company's
own aircraft.
Burlington Coat Factory Warehouse operates a chain of "off-price"
apparel stores which market a wide range of brand name merchandise
for men, women and children at prices below traditional retail
prices. In addition to outerwear, the company offers a linen department
in most stores. Burlington is headquartered in Burlington, New
Jersey and operates through stores under the "Cohoes," "DeCelle,
Inc." and other names.
Chiquita Brands International is an international marketer, processor
and producer of fresh fruits, and vegetables and prepared foods
under trade names of "Chiquita" and "John Morrell." Products include
bananas, kiwi, melons, pineapples, beverages, fruit-based juices,
margarine, salad dressings and processed meats. The company is
headquartered in Cincinnati, Ohio and markets primarily in North
America, Europe, South America and Japan.
Page 12
Cott Corporation produces and distributes branded and private
label soft drinks, non-alcoholic beverages and various mineral
water brands through its subsidiaries. The company, headquartered
in Ontario, Canada, is the licensed bottler of "RC Cola" and "Diet
Rite" colas throughout Canada and markets private labels for grocery
stores under the "Allan" and "Cott" names.
Digital Microwave Corporation designs, manufactures and markets
advanced, high-performance digital microwave radios and other
communications products and systems. The company is headquartered
in San Jose, California and sells its products to domestic and
foreign customers, including telephone companies, common carriers
and private networks.
Giddings & Lewis, Inc., headquartered in Fond du Lac, Wisconsin,
is a manufacturer of large industrial automated systems, precision
automated machine tools, assembly systems, industrial controls
and related products and equipment. The company's products include
machining centers, lathes and boring, drilling and milling machines,
some of which are computer-controlled. Giddings & Lewis, Inc.
sells to the aerospace, transportation, construction and industrial
equipment industries.
Homestake Mining Company, headquartered in San Francisco, California,
explores for and produces gold and other precious resources. The
company's activities are focused on the Black Hills of South Dakota,
the Hemlo Camp in Ontario and the Kalgoorlie operations in Western
Australia. Homestake Mining Company also has operations in the
McLaughlin Mine (California), the Round Mountain Mine (Nevada),
and several other mines in Montana, Canada, Chile and Mexico.
Mesa Airlines, Inc., headquartered in Farmingham, New Mexico,
is a commuter airline providing scheduled flights to numerous
western and midwestern states. The company operates through several
subsidiaries: Mesa Airlines, Air Midwest, Skyway Airlines, WestAir
Commuter Airlines, Florida Gulf Airlines and Liberty Express.
The airline operates under the names "United Express," "American
West Express" and "USAir Express."
Morton International, Inc., headquartered in Chicago, Illinois,
is involved in the specialty chemical, salt and inflatable restraint
system industries. The company manufactures and markets a wide
range of products for industrial and consumer use worldwide. The
specialty chemicals segment manufactures laminating adhesives,
dyes and coatings. The salt segment manufactures salt for table,
ice control and water conditioning purposes.
NetFRAME Systems, Inc., headquartered in Milpitas, California,
develops, manufactures and markets specialized computer systems
for local and wide area networks worldwide. The systems provide
network file, application and communication server functions.
Nextel Communications, Inc. provides specialized mobile radio
wireless communications services to individual subscribers and
businesses. The company, headquartered in Rutherford, New Jersey,
provides mobile and cellular phone services and paging services
to customers in Los Angeles, San Francisco, New York, Chicago,
Dallas and Houston.
Perrigo Company, headquartered in Allegan, Michigan, is a manufacturer
of over-the-counter pharmaceuticals and personal care products
for the store brand market. Store brand products are sold under
a retailer's own label and compete with nationally advertised
brand name vitamins and personal products. The company operates
through two wholly-owned subsidiaries, L. Perrigo Company and
Perrigo Company of South Carolina.
Rowan Companies, Inc., headquartered in Houston, Texas, provides
contract drilling of onshore, offshore and foreign oil and gas
wells and also provides contract and charted aviation services
to related operations. In addition, the company builds oil rigs
and manufactures heavy mining, timber and construction equipment.
Safety Kleen Corporation provides a variety of environmental control
services to generators of waste solvents and other hazardous and
non-hazardous liquid wastes including auto-service stations, manufacturers
and industries in the cleaning and maintenance of small parts
and equipment. The company is headquartered in Elgin, Illinois
and is also involved in the recovery of oil and other fluids,
re-refining of lubricating oils and the sale of paint refinishing
products.
Page 13
Sybase, Inc. is engaged in the development, marketing and support
of a full line of client/server-based relational database management
software products and services for online applications in networked
computing environments. Sybase, Inc.'s product line includes a
broad range of relational database management system servers,
application development tools and connectivity software. The company
is headquartered in Emeryville, California, and its products are
marketed worldwide.
TJX Companies, Inc., headquartered in Framingham, Massachusetts,
operates a diversified group of off-price apparel chain stores
and a mail-order catalog business. The company's "TJ Maxx" stores
carry brand name men's, women's and children's apparel and accessories,
as well as domestics and giftware. "Hit or Miss" stores carry
women's apparel, "Chadwick's of Boston" is a women's mail-order
catalog and "Winners Apparel Ltd." is an off-price family apparel
store. TJX Companies, Inc. has agreed to buy Marshalls, a rival
discount clothing retailer, from Melville Corporation. The acquisition
is still pending.
Toys "R" Us, Inc., headquartered in Paramus, New Jersey is the
world's largest children's speciality retail chain, selling toys
and children's clothing. The company operates domestic and international
toy stores under the name "Toys "R" Us," and clothing stores under
the "Kids "R" Us" name. The toy stores carry a variety of items
including games, sporting goods, bicycle and wheel goods and electronic
video games.
US Surgical Corporation, headquartered in Norwalk, Connecticut,
develops, manufactures and markets a proprietary line of stapling
devices used in surgical procedures throughout the world. The
products are marketed under the name "Auto Suture" and enable
surgeons to reduce tissue trauma and blood loss while joining
internal tissue or sealing off organs. The company also manufacturers
disposable instruments for use in laparoscopic surgery.
USX-Marathon Group, headquartered in Pittsburgh, Pennsylvania,
is engaged in the exploration, production and transportation of
oil and gas. The company explores for and produces crude oil and
natural gas in areas around the world, and refines and markets
heavy crude oil in the United States.
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 price at which 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.
The Sponsor and the Trustee shall not be liable in any way for
any default, failure or defect in any Security. In the event of
a notice that any 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.
Page 14
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).
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, but
may dispose of Equity Securities only under limited circumstances.
See "How May Equity Securities be Removed from the Trust?"
To the best of the Sponsor's knowledge, there is no litigation
pending as of the Initial Date of Deposit 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.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. During the initial
offering period, the Public Offering Price is based on the aggregate
underlying value of the Equity Securities in the Trust, plus or
minus cash, if any, in the Income and Capital Accounts of the
Trust, plus a sales charge of 2.95% (equivalent to 3.040% of the
net amount invested), divided by the amount of Units of the Trust
outstanding.
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.
The minimum purchase of the Trust is $1,000. The applicable sales
charge of the January Effect Short-Term Growth Trust, Series 1
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
Amount Invested Discount Charge
_______________ ________ ________
$100,000 or more 0.5% 2.45%
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 any
one Underwriter, broker/dealer, bank or other selling agent. Additionally,
Units purchased in the name of the spouse of a purchaser or in
the name of a child of such purchaser under 21 years of age will
be deemed, for the purposes of calculating the applicable sales
charge, to be additional purchases by the purchaser. The reduced
sales charges will also be applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary
account. The purchaser must inform the broker/dealer, bank or
other selling agent of any such combined purchase prior to the
sale in order to obtain the indicated discount. In addition, with
respect to the employees, officers and directors (including their
immediate family members, defined as spouses, children, grandchildren,
parents, grandparents, 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/dealer, bank or other selling agent and
their subsidiaries, the sales charge is reduced by 2.0% of the
Public Offering Price for purchases of Units during the primary
and secondary public offering periods.
Page 15
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.
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.
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.
Page 16
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 1.70% 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 2.95% of the Public Offering Price of the
Units (equivalent to 3.040% 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 by the Sponsor from the Underwriter
and additional concessions available to Underwriters, 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.
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 2.95%) 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 UNITS, HE SHOULD
INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES PRIOR TO MAKING
A TENDER FOR REDEMPTION TO THE TRUSTEE.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the
Trustee. Ownership of Units may be evidenced by registered certificates
executed
Page 17
by the Trustee and the Sponsor. Delivery of certificates representing
Units ordered for purchase is normally made three business days
following such order or shortly thereafter. Certificates are transferable
by presentation and surrender to the Trustee properly endorsed
or accompanied by a written instrument or instruments of transfer.
Certificates to be redeemed must be properly endorsed or accompanied
by a written instrument or instruments of transfer. A Unit holder
must sign exactly as his name appears on the face of the certificate
with signature guaranteed by a participant in the Securities Transfer
Agents Medallion Program ("STAMP") or such other signature guaranty
program in addition to, or in substitution for, STAMP, as may
be accepted by the Trustee. In certain instances the Trustee may
require additional documents such as, but not limited to, trust
instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority. Record ownership
may occur before settlement.
Certificates will be issued in fully registered form, transferable
only on the books of the Trustee in denominations of one Unit
or any multiple thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form.
Only Unit holders who elect to hold Units in uncertificated 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 description of the Trust; the number of Units issued
or transferred; the name, address and taxpayer identification
number, if any, of the new registered owner; a notation of any
liens and restrictions of the issuer and any adverse claims to
which such Units are or may be subject or a statement that there
are no such liens, restrictions or adverse claims; and the date
the transfer was registered. Uncertificated Units are transferable
through the same procedures applicable to Units evidenced by certificates
(described above), except that no certificate need be presented
to the Trustee and no certificate will be issued upon the transfer
unless requested by the Unit holder. A Unit holder may at any
time request the Trustee to issue certificates for Units.
Although no such charge is now made or contemplated, a Unit holder
may be required to pay $2.00 to the Trustee per certificate reissued
or transferred and to pay any governmental charge that may be
imposed in connection with each such transfer or exchange. For
new certificates issued to replace destroyed, stolen or lost certificates,
the Unit holder may be required to furnish indemnity satisfactory
to the Trustee and pay such expenses as the Trustee may incur.
Mutilated certificates must be surrendered to the Trustee for
replacement.
How are Income and Capital Distributed?
The Trustee will distribute any net income received with respect
to any of the securities in the Trust 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 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?"
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,
Page 18
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 Units for redemption, receive (i) the pro rata share of
the amounts realized upon the disposition of Equity Securities,
unless he elects an In-Kind Distribution as described below 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 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. A Unit holder
may, of course, at any time after the Equity Securities are distributed,
sell all or a portion of the shares.
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 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, except that as regards
Units received after 4:00 p.m. eastern standard time, the date
of tender is the next day on which the New York Stock Exchange
is open for trading and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the redemption
price computed on that day. Units so redeemed shall be cancelled.
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
Page 19
in an amount and value of Equity Securities per Unit equal to
the Redemption Price Per Unit as determined as of the evaluation
next following tender. To the extent possible, in-kind distributions
("In-Kind Distributions") shall be made by the Trustee through
the distribution of each of the Equity Securities in book-entry
form to the account of the Unit holder's bank or broker-dealer
at the Depository Trust Company. An In-Kind Distribution will
be reduced by customary transfer and registration charges. The
tendering Unit holder will receive his pro rata number of whole
shares of each of the Equity Securities comprising 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. 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 and diversity of the
Trust will be reduced. Such sales may be required at a time when
Equity Securities would not otherwise be sold and might result
in lower prices than might otherwise be realized.
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 such 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 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
Page 20
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 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
It is expected that 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 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 January Effect Short-Term Growth Trust (the
"1996 Trust") created in conjunction with the termination of this
series of the January Effect Short-Term Growth Trust, if then
registered in the Unit holder's state and being offered, the portfolio
of which will contain the new Equity Securities as of the day
prior to the Date of Deposit of the 1996 Trust. The proceeds of
redemption available on each day will be used to buy 1996 Trust
Units as the proceeds become available at the Public Offering
Price of the 1996 Trust, including a reduced sales charge per Unit.
The Sponsor intends to create 1996 Trust Units as quickly as possible,
dependent upon the availability and reasonably favorable prices
of the Equity Securities included in the 1996 Trust portfolio,
and it is intended that Rollover Unit holders will be given first
priority to purchase the 1996 Trust Units. There can be no
Page 21
assurance, however, as to the exact timing of the creation of
the 1996 Trust Units or the aggregate number of 1996 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 1996 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 1996 Trust
may not be fully invested on the next business day.
Any Rollover Unit holder may thus be redeemed out of the Trust
and become a holder of an entirely different Trust, the 1996 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 1996 Trust Units, the proceeds of the sales
(and any other cash distributed upon redemption) will be invested
in the 1996 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
by the Underwriter 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 1996 Trust
and each subsequent series of the Trust, approximately a year
after that Series' creation.
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 1996 Trust, no cash would be distributed
at that time to pay any taxes. Included in the cash for the Special
Redemption and Liquidation will 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 1996 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
Page 22
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 1996 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 as before. See "How May Units
be Redeemed?" The Sponsor may modify the terms of the 1996 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 standard
time on the same business day and by making payment therefor to
the Unit holder not later than the day on which the Units would
otherwise have been redeemed by the Trustee. Units held by the
Sponsor may be tendered to the Trustee for redemption as any other
Units. In the event the Sponsor does not purchase Units, the Trustee
may sell Units tendered for redemption in the over-the-counter
market, if any, as long as the amount to be received by the Unit
holder is equal to the amount he would have received on redemption
of the Units.
The offering price of any Units acquired by the Sponsor will be
in accord with the Public Offering Price described in the then
effective prospectus describing such Units. Any profit or loss
resulting from the resale or redemption of such Units will belong
to the Sponsor.
How May Equity Securities be Removed from the Trust?
The Portfolio of the Trust is not "managed" by the Sponsor or
the Trustee; their activities described herein are governed solely
by the provisions of the Indenture. The Indenture provides that
the Sponsor may (but need not) direct the Trustee to dispose of
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
Page 23
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.
INFORMATION AS TO UNDERWRITER, SPONSOR, TRUSTEE AND EVALUATOR
Who is the Underwriter?
Dain Bosworth Incorporated is a full-service brokerage and investment
banking firm, based in Minneapolis, with offices throughout the
Midwest, Rocky Mountain and Pacific Northwest regions. Founded
in 1909, Dain Bosworth has nearly 1,900 employees and is one of
the nation's largest regional securities firms.
The mission of Dain Bosworth is to understand and achieve the
investment and capital formation objectives of its clients. The
firm's 920 retail and institutional investment executives make
investment recommendations backed by extensive research. Approximately
60 investment bankers serve corporate and governmental clients.
Dain Bosworth is a subsidiary of Inter-Regional Financial Group,
Inc. (NYSE: IFG), Minneapolis, Minnesota.
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
Page 24
competent jurisdiction for the appointment of a successor. The
resignation or removal of a trustee becomes effective only when
the successor trustee accepts its appointment as such or when
a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which a Trustee shall be a party, shall
be the successor Trustee. The Trustee must be a banking corporation
organized under the laws of the United States or any State and
having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit
holders for taking any action or for refraining from taking any
action in good faith pursuant to the Indenture, or for errors
in judgment, but shall be liable only for their own willful misfeasance,
bad faith, gross negligence (ordinary negligence in the case of
the Trustee) or reckless disregard of their obligations and duties.
The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the 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 FT Evaluators L.P., an Illinois limited partnership
formed in 1994 and an affiliate of the Sponsor. The Evaluator's
address is 1001 Warrenville Road, Lisle, Illinois 60532. The Evaluator
may resign or may be removed by the Sponsor and the Trustee, in
which event the Sponsor and the Trustee are to use their best
efforts to appoint a satisfactory successor. Such resignation
or removal shall become effective upon the acceptance of appointment
by the successor Evaluator. If upon resignation of the Evaluator
no successor has accepted appointment within 30 days after notice
of resignation, the Evaluator may apply to a court of competent
jurisdiction for the appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for
the accuracy thereof. Determinations by the Evaluator under the
Indenture shall be made in good faith upon the basis of the best
information available to it, provided, however, that the Evaluator
shall be under no liability to the Trustee, Sponsor or Unit holders
for errors in judgment. This provision shall not protect the Evaluator
in any case of willful misfeasance, bad faith, gross negligence
or reckless disregard of its obligations and duties.
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment
is (1) to cure any ambiguity or to correct or supplement any provision
of the Indenture which may be defective or inconsistent with any
other provision contained therein, or (2) to make such other provisions
as shall not adversely affect the interest of the Unit holders
(as determined in good faith by the Sponsor and the Trustee).
Page 25
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.
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 address appearing on
the registration books of the Trust maintained by the Trustee.
At least 60 days prior to the Mandatory Termination Date of the
Trust the Trustee will provide written notice thereof to all Unit
holders and will include with such notice a form to enable Unit
holders to elect a distribution of shares of 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 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 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.
Page 26
UNDERWRITING
The Underwriter named below has purchased Units in the following
amount:
<TABLE>
<CAPTION>
Number of
Name Address Units
____ _______ _________
<S> <C> <C>
Underwriter
Dain Bosworth Incorporated Dain Bosworth Plaza, 60 S. 6th Street, 14th Floor, 15,000
Minneapolis, MN 55402-4422 ========
</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?"
The Underwriter has agreed to underwrite additional Units of the
Trust as they become available. The Sponsor will receive from
the Underwriter the difference between the gross sales commission
and the Underwriter concession of 2.0% of the Public Offering
Price per Unit.
From time to time the Sponsor may implement programs under which
Underwriters 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 an Underwriter or
dealer 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 qualifying Underwriters or 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.
Advertisements and other sales material for the Trust may also
show the total returns (price changes plus dividends received,
divided by the maximum public offering price) of each completed
prior series and the total and average annualized return of all
series in the same quarterly cycle, assuming the holder rolled
over at the termination of each prior series. These returns will
reflect all applicable sales charges and expenses.
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 27
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 128
We have audited the accompanying statement of net assets, including
the schedule of investments, of The First Trust Special Situations
Trust, Series 128, comprised of January Effect Short-Term Growth
Trust, Series 1, as of the opening of business on October 23,
1995. 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 October 23, 1995. An audit also includes assessing
the accounting principles used and significant estimates made
by the Sponsor, as well as evaluating the overall presentation
of the 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 128, comprised
of January Effect Short-Term Growth Trust, Series 1, at the opening
of business on October 23, 1995 in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
October 23, 1995
Page 28
Statement of Net Assets
January Effect Short-Term Growth Trust, Series 1
The First Trust Special Situations Trust, Series 128
At the Opening of Business on the Initial Date of Deposit
October 23, 1995
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by purchase
contracts (1) (2) $ 145,817
Organizational costs (3) 24,000
----------
169,817
Less accrued organizational costs (3) (24,000)
----------
Net assets 145,817
==========
Units outstanding 15,000
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (4) $ 150,249
Less sales charge (4) (4,432)
__________
Net assets $ 145,817
==========
</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
costs which will be deferred and amortized over a three-month
period from the Initial Date of Deposit. The estimated organizational
costs are based on 800,000 Units of the Trust expected to be issued.
To the extent the number of Units issued is larger or smaller,
the estimate will vary.
(4) The aggregate cost to investors includes a maximum total
sales charge computed at the rate of 2.95% of the Public Offering
Price (equivalent to 3.040% of the net amount invested assuming
no reduction of sales charge for quantity purchases).
Page 29
Schedule of Investments
January Effect Short-Term Growth Trust, Series 1
The First Trust Special Situations Trust, Series 128
At the Opening of Business on the Initial Date of Deposit
October 23, 1995
<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>
388 ACCOB Adolph Coors Company 4.86% $ 18.250 $ 7,081
302 ABF Airborne Freight Corporation 5.00% 24.125 7,286
693 BCF Burlington Coat Factory Warehouse 4.93% 10.375 7,190
410 CQB Chiquita Brands International 4.95% 17.625 7,226
889 COTTF Cott Corporation (3) 5.07% 8.313 7,390
728 DMIC Digital Microwave Corporation 5.18% 10.375 7,553
422 GIDL Giddings & Lewis, Inc. 4.99% 17.250 7,279
470 HM Homestake Mining Company 4.95% 15.375 7,226
747 MESA Mesa Airlines, Inc. 5.06% 9.875 7,377
237 MII Morton International, Inc. 4.98% 30.625 7,258
1,213 NETF NetFRAME Systems, Inc. 5.09% 6.125 7,430
470 CALL Nextel Communications, Inc. 5.00% 15.500 7,285
549 PRGO Perrigo Company 5.03% 13.375 7,343
1,040 RDC Rowan Companies, Inc. 5.08% 7.125 7,410
477 SK Safety Kleen Corporation 4.95% 15.125 7,215
204 SYBS Sybase, Inc. 4.95% 35.375 7,216
485 TJX TJX Companies, Inc. 4.99% 15.000 7,275
294 TOY Toys "R" Us, Inc. 4.94% 24.500 7,203
293 USS US Surgical Corporation 5.00% 24.875 7,288
386 MRO USX-Marathon Group 5.00% 18.875 7,286
_______ ________
Total Investments 100% $145,817
======= ========
</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 October 23, 1995. The Trust has a mandatory
termination date of November 8, 1996.
(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 $145,817. Cost and loss to Sponsor relating to the Equity
Securities sold to the Trust were $146,102 and $285, respectively.
(3) This Equity Security is a U.S. dollar denominated stock issued
by a Canadian company which trades on the NASDAQ National Market System.
Page 30
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Page 31
<TABLE>
<CAPTION>
CONTENTS:
<S> <C>
Summary of Essential Information:
January Effect Short-Term Growth Trust, Series 1 4
The First Trust Special Situations Trust, Series 128:
What is The First Trust Special Situations Trust? 5
What are the Expenses and Charges? 6
What is the Federal Tax Status of Unit Holders? 7
Why are Investments in the Trust Suitable for
Retirement Plans? 10
Portfolio:
What are Equity Securities? 10
Risk Factors 10
What are the Equity Securities Selected for
January Effect Short-Term Growth Trust, Series 1? 12
What are Some Additional Considerations for
Investors? 14
Public Offering:
How is the Public Offering Price Determined? 15
How are Units Distributed? 16
What are the Sponsor's and Underwriter's Profits? 17
Will There be a Secondary Market? 17
Rights of Unit Holders:
How is Evidence of Ownership Issued and Transferred? 17
How are Income and Capital Distributed? 18
What Reports will Unit Holders Receive? 19
How May Units be Redeemed? 19
Special Redemption, Liquidation and Investment in
a New Trust 21
How May Units be Purchased by the Sponsor? 23
How May Equity Securities be Removed from the Trust? 23
Information as to Underwriter, Sponsor, Trustee and Evaluator:
Who is the Underwriter? 24
Who is the Sponsor? 24
Who is the Trustee? 24
Limitations on Liabilities of Sponsor and Trustee 25
Who is the Evaluator? 25
Other Information:
How May the Indenture be Amended or Terminated? 25
Legal Opinions 26
Experts 26
Underwriting 27
Report of Independent Auditors 28
Statement of Net Assets 29
Schedule of Investments 30
</TABLE>
___________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION
TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET
FORTH IN THE REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO,
WHICH THE FUND HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
January Effect
Short-Term Growth
Trust
Series 1
First Trust (registered trademark)
1001 Warrenville Road
Suite 300
Lisle, IL 60532
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
October 23, 1995
CONTENTS OF REGISTRATION STATEMENT
A. Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Brokers' Fidelity Bond,
in the total amount of $1,000,000, the insurer being
National Union Fire Insurance Company of Pittsburgh.
B. This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
Financial Data Schedule
S-1
SIGNATURES
The Registrant, The First Trust Special Situations Trust,
Series 128, hereby identifies The First Trust Special Situations
Trust, Series 4 Great Lakes Growth and Treasury Trust, Series 1,
The First Trust Special Situations Trust, Series 18 Wisconsin
Growth and Treasury Securities Trust, Series 1 and The First
Trust Combined Series 248, for purposes of the representations
required by Rule 487 and represents the following:
(1) that the portfolio securities deposited in the series
as to the securities of which this Registration Statement is
being filed do not differ materially in type or quality from
those deposited in such previous series;
(2) that, except to the extent necessary to identify the
specific portfolio securities deposited in, and to provide
essential financial information for, the series with respect to
the securities of which this Registration Statement is being
filed, this Registration Statement does not contain disclosures
that differ in any material respect from those contained in the
registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and
(3) that it has complied with Rule 460 under the Securities
Act of 1933.
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The First Trust Special Situations Trust, Series
128, 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
October 23, 1995.
THE FIRST TRUST SPECIAL SITUATIONS
TRUST, SERIES 128
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 ) October 23, 1995
General Partner of )
Nike Securities L.P. )
)
)
) Carlos E. Nardo
) Attorney-in-Fact**
)
)
* The title of the person named herein represents his
capacity in and relationship to Nike Securities L.P.,
Depositor.
** An executed copy of the related power of attorney was
filed with the Securities and Exchange Commission in
connection with the Amendment No. 1 to Form S-6 of The
First Trust Special Situations Trust, Series 18 (File No.
33-42683) and the same is hereby incorporated herein by
this reference.
S-3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated October 23, 1995 in
Amendment No. 1 to the Registration Statement (Form S-6) (File
No. 33-63417) and related Prospectus of The First Trust Special
Situations Trust, Series 128.
ERNST & YOUNG LLP
Chicago, Illinois
October 23, 1995
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF FT EVALUATORS L.P.
The consent of FT Evaluators L.P. to the use of its name in
the Prospectus included in the Registration Statement will be
filed as Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 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 128 among Nike
Securities L.P., as Depositor, The Chase Manhattan Bank
(National Association), as Trustee, FT Evaluators L.P.,
as Evaluator, and First Trust Advisors L.P., as
Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities
L.P., Depositor (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-
6 [File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
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 FT Evaluators L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on
page S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
S-6
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 128
TRUST AGREEMENT
Dated: October 23, 1995
The Trust Agreement among Nike Securities L.P., as
Depositor, The Chase Manhattan Bank (National Association), as
Trustee, FT Evaluators L.P., as Evaluator, and First Trust
Advisors L.P., as Portfolio Supervisor, sets forth certain
provisions in full and incorporates other provisions by reference
to the document entitled "Standard Terms and Conditions of Trust
for The First Trust Special Situations Trust, Series 22 and
certain subsequent Series, Effective November 20, 1991" (herein
called the "Standard Terms and Conditions of Trust"), and such
provisions as are incorporated by reference constitute a single
instrument. All references herein to Articles and Sections are
to Articles and Sections of the Standard Terms and Conditions of
Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II and Part III hereof,
all the provisions contained in the Standard Terms and Conditions
of Trust are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully and
to the same extent as though said provisions had been set forth
in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR JANUARY EFFECT SHORT-TERM GROWTH TRUST, SERIES 1
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit is 15,000 Units.
(2) The initial fractional undivided interest in and
ownership of the Trust represented by each Unit thereof shall be
1/15,000.
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio is as follows on the Initial Date
of Deposit:
4.86% Adolph Coors Company, 5.00% Airborne
Freight Corporation, 4.93% Burlington Coat
Factory Warehouse, 4.95% Chiquita Brands
International, 5.07% Cott Corporation, 5.18%
Digital Microwave Corporation, 4.99%
Giddings & Lewis, Inc., 4.95% Homestake
Mining Company, 5.06% Mesa Airlines, Inc.,
4.98% Morton International, Inc., 5.09%
NetFRAME Systems, Inc., 5.00% Nextel
Communications, Inc., 5.03% Perrigo Company,
5.08% Rowan Companies, Inc., 4.95% Safety
Kleen Corporation, 4.95% Sybase, Inc., 4.99%
TJX Companies, Inc., 4.94% Toys "R" Us,
Inc., 5.00% US Surgical Corporation, 5.00%
USX-Marathon Group.
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 $.0116 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 October
23, 1995.
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.
Distributions are 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.
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 $.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) Securities from the current list
of Securities designated to be sold pursuant to Section 5.02
hereof,or (ii) if no such Securities have been so designated,
such Securities as the Trustee may see fit to sell in its own
discretion, and to apply the proceeds of any such sale in
payment of the amounts payable pursuant to this Section 3.14.
Any moneys payable to the Depositor pursuant to this
Section 3.14 shall be secured by a prior lien on the Trust
Fund except that no such lien shall be prior to any lien in
favor of the Trustee under the provisions of Section 6.04
herein.
P. 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."
Q. The following Section 5.05 shall be added:
"Section 5.05. Rollover of Units. (a) If the
Depositor shall offer a subsequent series of January Effect
Short-Term Growth Trust, Series 1 (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."
R. 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)"
S. 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."
T. Section 1.01(3) shall be amended to read as follows:
"(3) "Evaluator" shall mean FT Evaluators L.P. and its
successors in interest, or any successor evaluator appointed
as hereinafter provided."
U. 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."
V. 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."
W. 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
FT EVALUATORS L.P.,
Evaluator
By Carlos E. Nardo
Senior Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Carlos E. Nardo
Senior Vice President
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
The First Trust Special Situations Trust, Series 128
(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
October 23, 1995
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: The First Trust Special Situations Trust, Series 128
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of The First Trust Special Situations
Trust, Series 128 in connection with the preparation, execution
and delivery of a Trust Agreement dated October 23, 1995 among
Nike Securities L.P., as Depositor, The Chase Manhattan Bank
(National Association), FT Evaluators L.P., as Evaluator and
First Trust Advisors L.P. as Portfolio Supervisor, pursuant to
which the Depositor has delivered to and deposited the Securities
listed in Schedule A to the Trust Agreement with the Trustee and
pursuant to which the Trustee has issued to or on the order of
the Depositor a certificate or certificates representing units of
fractional undivided interest in and ownership of the Fund
created under said Trust Agreement.
In connection therewith, we have examined such pertinent
records and documents and matters of law as we have deemed
necessary in order to enable us to express the opinions
hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. the execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units
in the Fund have been duly authorized; and
2. the certificates evidencing the Units in the Fund when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will
constitute valid and binding obligations of the Fund and the
Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-63471)
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
October 23, 1995
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
The Chase Manhattan Bank
(National Association)
770 Broadway
New York, New York 10003
Re: The First Trust Special Situations Trust, Series 128
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of The First Trust Special Situations Trust, Series 128 (the
"Fund"), in connection with the issuance of units of fractional
undivided interests in the Trusts of said Fund (the "Trusts" and
each a "Trust"), under a Trust Agreement, dated October 23, 1995
(the "Indenture"), among Nike Securities L.P., as Depositor, The
Chase Manhattan Bank (National Association), as Trustee, FT
Evaluators L.P. as Evaluator and First Trust Advisors L.P., as
Portfolio Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents we have deemed pertinent. The opinions
expressed herein assume that the Trusts will be administered, and
investments by the Trusts from proceeds of subsequent deposits,
if any, will be made, in accordance with the terms of the
Indenture. The Trusts 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. Each Trust is not an association taxable as a
corporation for Federal income tax purposes; each Unit holder
will be treated as the owner of a pro rata portion of each of the
assets of a Trust under the Internal Revenue Code of 1986 (the
"Code"); the income of such 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 received by the
Trust.
II. Each Unit holder will have a taxable event when a 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 such 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 such 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 Securities
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
capital gain. In general, any such capital gain will be short
term unless a Unit holder has held his Units for more than one
year.
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 a Trust will generally be considered a capital gain
except in the case of a dealer or a financial institution and
will be generally long-term if the Unit holder has held his Units
for more than one year. A Unit holder's portion of loss, if any,
upon the sale or redemption of Units or the disposition of Equity
Securities held by a Trust will generally be considered a capital
loss (except in the case of a dealer or a financial institution)
and will be generally long-term if the Unit holder has held his
Units for more than one year. Unit holders hould 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 Target Equity Trust, Value Ten
Series or Target Equity Trust, Value Five Series (the "1996
Trusts") 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 a 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. However, any gains
incurred in connection with such an exchange by 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, subject to the
following limitation. It should be noted that as a result of the
Tax Reform Act 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.
The scope of this opinion is expressly limited to the
matters set forth herein, and, except as expressly set forth
above, we express no opinion with respect to any other taxes,
including state or local taxes or collateral tax consequences
with respect to the purchase, ownership and disposition of Units.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-63417)
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
October 23, 1995
The Chase Manhattan Bank
(National Association), as Trustee of
The First Trust Special Situations
Trust, Series 128
770 Broadway - 6th Floor
New York, New York 10003
Attention: Mr. Paul J. Holland
Vice President
Re: The First Trust Special Situations Trust, Series 128
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for The First Trust Special Situations Trust, Series
128 consisting of January Effect Short-Term Growth Trust, Series
1 (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"); FT Evaluators L.P., as Evaluator; First Trust
Advisors L.P., as Portfolio Supervisor and The Chase Manhattan
Bank (National Association), as Trustee (the "Trustee").
Pursuant to the terms of the Indenture, units of fractional
undivided interest in the 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. 33-63417) 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
October 23, 1995
The Chase Manhattan Bank
(National Association), as Trustee of
The First Trust Special Situations
Trust, Series 128
770 Broadway - 6th Floor
New York, New York 10003
Attention: Mr. Paul J. Holland
Vice President
Re: The First Trust Special Situations Trust, Series 128
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"); FT Evaluators L.P., as Evaluator; First Trust
Advisors L.P., as Portfolio Supervisor; and Chase, as Trustee
(the "Trustee"), establishing The First Trust Special Situations
Trust, Series 128, consisting of January Effect Short-Term Growth
Trust, Series 1 (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
FT Evaluators L.P.
1001 Warrenville Road
Lisle, Illinois 60532
October 23, 1995
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 128
Gentlemen:
We have examined the Registration Statement File No. 33-
63417 for the above captioned fund. We hereby consent to the use
in the Registration Statement of the references to FT Evaluators
L.P. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
FT Evaluators L.P.
Carlos E. Nardo
Senior Vice President
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information
extracted from Amendment number 1 to form S-6 and is qualified
in its entirety by reference to such Amendment number 1 to form S-6.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> January Effect Short-Term Growth Trust
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> Other
<FISCAL-YEAR-END> OCT-23-1995
<PERIOD-START> OCT-23-1995
<PERIOD-END> OCT-23-1995
<INVESTMENTS-AT-COST> 145,817
<INVESTMENTS-AT-VALUE> 145,817
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 145,817
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 145,817
<SHARES-COMMON-STOCK> 15,000
<SHARES-COMMON-PRIOR> 15,000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 145,817
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
