First Investors Special Situations
Growth & Treasury Securities Trust, Series 1
The Trust. First Investors Special Situations Growth & Treasury
Securities Trust, Series 1 (the "Trust") is a unit investment
trust consisting of a portfolio of "zero coupon" U.S. Treasury
bonds and shares of First Investors Special Situations Series
("Special Situations" or "Series"), a separate designated series
of First Investors Series Fund (the "Fund"). The Fund is an open-end
diversified management investment company, commonly known as a
mutual fund.
The objective of the Trust is to protect Unit holders' capital
by investing a portion of the Trust's portfolio in "zero coupon"
U.S. Treasury bonds ("Treasury Obligations") and to provide for
potential capital appreciation by investing a portion of the Trust's
portfolio in shares of Special Situations. Collectively the Treasury
Obligations and the Special Situations shares are referred to
herein as the "Securities." Special Situations' investment objective
is to seek long-term growth of capital. Special Situations invests
principally in common stocks of companies with small to medium
market capitalization which the Series' investment adviser, First
Investors Management Company, Inc. ("FIMCO" or "Adviser"), considers
to be undervalued or less well known in the current marketplace
and to have potential for capital growth. The majority of such
common stocks are listed on the domestic securities exchanges
or are traded in the over-the-counter market. Special Situations
may also invest in other common stocks, preferred stocks, convertible
securities issued by such companies and common stock of companies
located outside the United States. See "What is Special Situations'
Investment Objectives and Policies?" and "Description of Certain
Securities, Other Investment Policies and Risk Factors." The Treasury
Obligations evidence the right to receive a fixed payment at a
future date from the U.S. Government and are backed by the full
faith and credit of the U.S. Government. The guarantee of the
U.S. Government does not apply to the market value of the Treasury
Obligations or the Units of the Trust, whose net asset value will
fluctuate and, prior to maturity, may be worth more or less than
a purchaser's acquisition cost. This Trust is intended to achieve
its objective over the life of the Trust and as such is best suited
for those investors capable of holding Units to maturity. There
is, of course, no guarantee that the objective of the Trust will
be achieved. See "Portfolio."
The Trust has a mandatory termination date ("Mandatory Termination
Date" or "Trust Ending Date") as set forth under "Summary of Essential
Information."
Each Unit of the Trust represents an undivided fractional interest
in all the Securities deposited in the Trust. The Trust has been
organized so that purchasers of Units should receive, at the termination
of the Trust, an amount per Unit at least equal to $10.00 (which
is equal to the per Unit value upon maturity of the Treasury Obligations),
even if the Trust never paid a dividend and the value of the Special
Situations shares were to decrease to zero, which the Sponsor
considers highly unlikely. This feature of the Trust provides
Unit holders who purchase Units at a price of $10.00 or less per
Unit with total principal protection, including any sales charges
paid, although they might forego any earnings on the amount invested.
To the extent that Units are purchased at a price less than $10.00
per Unit, this feature may also provide a potential for capital
appreciation. As a result of the volatile nature of the market
for zero coupon U.S. Treasury bonds, Units sold or redeemed prior
to maturity will fluctuate in price and the underlying Treasury
Obligations may be valued at a price greater or less than their
value as of the Initial Date of Deposit. UNIT HOLDERS DISPOSING
OF THEIR UNITS PRIOR TO THE MATURITY OF THE TRUST MAY RECEIVE
MORE OR LESS THAN $10.00 PER UNIT, DEPENDING ON MARKET CONDITIONS
ON THE DATE UNITS ARE SOLD OR REDEEMED.
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 Investors Corporation
The date of this Prospectus is June 27, 1994
Page 1
The Treasury Obligations deposited in the Trust on the Initial
Date of Deposit will mature on August 15, 2005 (the "Treasury
Obligations Maturity Date"). The Treasury Obligations in the Trust
have a maturity value equal to or greater than the aggregate Public
Offering Price (which includes the sales charge) of the Units
of the Trust on the Initial Date of Deposit. The Special Situations
shares deposited in the Trust's portfolio have no fixed maturity
date and the net asset value of the shares will fluctuate. See
"Portfolio."
The Sponsor may, from time to time during a period of approximately
360 days after the Initial Date of Deposit, also deposit additional
Securities in the Trust, provided it maintains the original percentage
relationship between the Treasury Obligations and Special Situations
shares in the Trust's portfolio. Such deposits of additional Securities
will, therefore, be done in such a manner that the maturity value
of each Unit should always be an amount at least equal to $10.00,
plus the then net asset value of the Special Situations shares
represented by each Unit. See "What is First Investors Special
Situations Growth & Treasury Securities Trust?" and "How May Securities
be Removed from the Trust?" The Trust will automatically terminate
shortly after the maturity of the Treasury Obligations deposited
therein.
Public Offering Price. The Public Offering Price per Unit of the
Trust during the initial offering period is equal to a pro rata
share of the offering prices of the Treasury Obligations and the
net asset value of the Special Situations shares in the Trust
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 6.0% (equivalent to 6.383% of the net amount invested). The
secondary market Public Offering Price per Unit will be based
upon a pro rata share of the bid prices of the Treasury Obligations
and the net asset value of the Special Situations shares in the
Trust 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
6.0% (equivalent to 6.383% of the net amount invested). The minimum
purchase is 200 Units. The sales charge is reduced on a graduated
scale for sales involving at least 2,500 Units. See "How is the
Public Offering Price Determined?"
Income and Capital Gains Distributions. Distributions, if any,
of net income, other than amortized discount, will be made at
least annually. Distributions of realized capital gains, if any,
received by the Trust, will be made whenever Special Situations
makes such a distribution. Any distribution of income and/or capital
gains will be net of the expenses of the Trust. INCOME WITH RESPECT
TO THE ACCRUAL OF ORIGINAL ISSUE DISCOUNT ON THE TREASURY OBLIGATIONS
WILL NOT BE DISTRIBUTED CURRENTLY, ALTHOUGH UNIT HOLDERS WILL
BE SUBJECT TO FEDERAL INCOME TAX AT ORDINARY INCOME RATES AS IF
A DISTRIBUTION HAD OCCURRED. See "What is the Federal Tax Status
of Unit Holders?" Additionally, upon termination of the Trust,
the Trustee will distribute, upon surrender of Units for redemption,
to each Unit holder his or her pro rata share of the Trust's assets,
less expenses, in the manner set forth under "Rights of Unit Holders-How
are Income and Capital Distributed?"
Reinvestment. Each Unit holder will, unless he or she elects to
receive cash payments, have distributions of principal (including,
if elected by Unit holders, the proceeds received upon the maturity
of the Treasury Obligations in the Trust at termination), capital
gains, if any, and income earned by the Trust, automatically invested
in shares of Special Situations (if Units are registered in the
Unit holder's state of residence) in the name of the Unit holder.
Such distributions (including, if elected by Unit holders, the
proceeds received upon the maturity of the Treasury Obligations
in the Trust at termination) will be reinvested without a sales
charge to the Unit Holder on each applicable distribution date.
See "Rights of Unit Holders-How Can Distributions to Unit Holders
be Reinvested?"
Secondary Market for Units. After the initial offering period,
while under no obligation to do so, the Sponsor may maintain a
market for Units of the Trust and offer to resell such Units at
prices which are based on the aggregate bid side evaluation of
the Treasury Obligations and the aggregate net asset value of
Special Situations shares in the Trust 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 6.0% (equivalent to 6.383%
of the net amount invested). If a secondary market is maintained
during the initial offering period, the prices at which Units
will be repurchased will be based upon the aggregate offering
side evaluation of the Treasury Obligations and the aggregate
net asset value of the Special Situations shares in the Trust.
If a secondary market is not maintained,
Page 2
a Unit holder may redeem Units through redemption at prices based
upon the aggregate bid price of the Treasury Obligations plus
the aggregate net asset value of the Special Situations shares
in the Trust plus or minus a pro rata share of cash, if any, in
the Capital and Income Accounts of the Trust. See "Rights of Unit
Holders-How May Units be Redeemed?"
Page 3
Summary of Essential Information
As of the Close of Business on June 24, 1994,
the Business Day Immediately Preceding the Initial
Date of Deposit of the Securities-June 27, 1994
Underwriter: First Investors Corporation
Sponsor: Nike Securities L.P.
Trustee: The Bank of New York
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
General Information
<S> <C>
Aggregate Maturity Value of Treasury Obligations Initially Deposited $100,000
Aggregate Number of Shares of Special Situations Initially Deposited 2,840
Initial Number of Units 10,000
Fractional Undivided Interest in the Trust per Unit 1/10,000
Public Offering Price per Unit
Aggregate Offering Price Evaluation of Securities in Portfolio (1) $ 89,867
Aggregate Offering Price Evaluation of Securities per Unit $ 8.9867
Sales Charge 6.0% (6.383% of the net amount invested) $ .5736
Public Offering Price per Unit (2) $ 9.5603
Sponsor's Initial Repurchase Price per Unit $ 8.9867
Redemption Price per Unit (based on bid price evaluation of underlying
Treasury Obligations and net asset value of Special Situations shares)
$.6064 less than Public Offering Price per Unit;
$.0328 less than Sponsor's Initial Repurchase Price per Unit (3) $ 8.9539
</TABLE>
CUSIP Number 320619 109
First Settlement Date July 5, 1994
Treasury Obligations Maturity Date August 15, 2005
Mandatory Termination Date August 15, 2005
Trustee's Annual Fee $0.0085 per Unit outstanding.
Evaluator's Annual Fee $0.0020 per $10.00 principal amount
of Treasury Obligations. Evaluations
for purposes of sale, purchase
or redemption of Units are made as of
the close of regular trading (generally
4:00 p.m., Eastern time) on the New York
Stock Exchange ("NYSE") on each day on
which the NYSE is open.
Supervisory Fee Maximum of $0.0015 per Unit outstanding
annually payable to an affiliate of the
Sponsor.
Record Date As soon as practicable after Special
Situations' ex-dividend date.
Distribution Date As soon as practicable after Special
Situations' distribution date.
[FN]
________________
(1) The shares of Special Situations are valued at their net
asset value. The Treasury Obligations are valued at their
aggregate offering side evaluation.
(2) The Public Offering Price as shown reflects the value of
the Securities at the close of business on the business day prior
to 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 Securities will be
deposited during the day of the Initial Date of Deposit which
will be valued as of 4:00 p.m. Eastern time and sold to investors
at a Public Offering Price per Unit based on this valuation.
(3) See "How May Units be Redeemed?"
Page 4
First Investors Special Situations
Growth & Treasury Securities Trust, Series 1
What is First Investors Special Situations Growth & Treasury Securities
Trust?
The First Investors Special Situations Growth & Treasury Securities
Trust, Series 1 is one of a series of investment companies created
by the Sponsor under the name of First Investors Special Situations
Growth & Treasury Securities 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 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 Bank of New York, as Trustee, and First
Trust Advisors L.P., as Portfolio Supervisor and Evaluator.
On the Initial Date of Deposit, the Sponsor deposited with the
Trustee confirmations of contracts for the purchase of the Securities
in the Trust together with an irrevocable letter or letters of
credit of a financial institution in an amount at least equal
to the purchase price of such Securities. In exchange for the
deposit of Securities or contracts to purchase Securities in the
Trust, the Trustee delivered to the Sponsor documents evidencing
the entire ownership of the Trust.
The objective of the Trust is to protect Unit holders' capital
by investing a portion of the Trust's portfolio in "zero coupon"
U.S. Treasury bonds ("Treasury Obligations") and to provide for
potential capital appreciation by investing a portion of the Trust's
portfolio in shares of First Investors Special Situations Series
("Special Situations" or "Series"), a separate designated series
of First Investors Series Fund (the "Fund"). The Fund is an open-end
diversified management company. Special Situations' investment
objective is to seek long-term growth of capital. The Treasury
Obligations evidence the right to receive a fixed payment at a
future date from the U.S. Government and are backed by the full
faith and credit of the U.S. Government. The guarantee of the
U.S. Government does not apply to the market value of the Treasury
Obligations or the Units of the Trust, whose net asset value will
fluctuate and, prior to maturity, may be more or less than a Unit
holder's acquisition cost. Collectively, the Treasury Obligations
and Special Situations shares in the Trust are referred to herein
as the "Securities." There is, of course, no guarantee that the
objective of the Trust will be achieved.
With the deposit of the Securities on the Initial Date of Deposit,
the Sponsor established a percentage relationship between the
principal amounts of Treasury Obligations and Special Situations
shares in the Trust's portfolio. From time to time following the
Initial Date of Deposit the Sponsor, pursuant to the Indenture,
may deposit additional Securities in 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 additional Securities deposited in the
Trust will maintain, as nearly as is practicable, the original
percentage relationship between the Treasury Obligations and Special
Situations shares initially established for the Trust. Such deposits
of additional Securities will, therefore, be done in such a manner
that the maturity value of each Unit should always be an amount
at least equal to $10.00, plus the then current net asset value
of the Special Situations shares represented by each Unit. Any
deposit by the Sponsor of additional Securities will duplicate,
as nearly as is practicable, the original percentage relationship
and not the actual percentage relationship on the subsequent date
of deposit, since the actual percentage relationship may be different
than the original percentage relationship. This difference may
be due to the sale, redemption or liquidation of any of the Securities
deposited in the Trust on the Initial, or any subsequent, Date
of Deposit. See "How May Securities be Removed from the Trust?"
On a cost basis to the Trust, the original percentage relationship
on the Initial Date of Deposit was approximately 48.87% Treasury
Obligations and 51.13% Special Situations shares. Since the prices
of the Special Situations shares and Treasury Obligations will
fluctuate daily, the ratio, on a market value basis, will also
change daily. The maturity value of the Treasury Obligations and
the portion of Special Situations shares represented by each Unit
will not change as a result of the deposit of additional Securities
in the Trust.
Page 5
On the Initial Date of Deposit, each Unit of the Trust represented
the undivided fractional interest in the Securities deposited
in the Trust set forth under "Summary of Essential Information."
The Trust has been organized so that purchasers of Units should
receive, at the termination of the Trust, an amount per Unit at
least equal to $10.00 per Unit (which is equal to the per Unit
value upon maturity of the Treasury Obligations), even if the
Special Situations shares never paid a dividend and the value
of Special Situations shares in the Trust were to decrease to
zero, which the Sponsor considers highly unlikely. Furthermore,
the Sponsor will take such steps in connection with the deposit
of additional Securities in the Trust as are necessary to maintain
a maturity value of the Units of the Trust at least equal to $10.00
per Unit. The receipt of only $10.00 per Unit upon the termination
of the Trust (an event which the Sponsor believes is unlikely)
represents a substantial loss on a present value basis. At current
interest rates, the present value of receiving $10.00 per Unit
as of the termination of the Trust would be approximately $4.39
per Unit (the present value is indicated by the amount per Unit
which is invested in Treasury Obligations). Furthermore, the $10.00
per Unit in no respect protects investors against diminution in
the purchasing power of their investment due to inflation (although
expectations concerning inflation are a component in determining
prevailing interest rates, which in turn determine present values).
If inflation were to occur at the rate of 5% per annum during
the period ending at the termination of the Trust, the present
dollar value of $10.00 per Unit at the termination of the Trust
would be approximately $5.74 per Unit. To the extent that Units
of the Trust are redeemed, the aggregate value of the Securities
in the Trust will be reduced and the undivided fractional interest
represented by each outstanding Unit of the Trust will increase.
However, if additional Units are issued by the Trust in connection
with the deposit of additional Securities by the Sponsor, the
aggregate value of the Securities in the Trust will be increased
by amounts allocable to additional Units, and the fractional undivided
interest represented by each Unit of the Trust will be decreased
proportionately. See "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?
At no cost to the Trust, the Sponsor has borne all the expenses
of creating and establishing the Trust, including the cost of
the initial preparation, printing and execution of the Indenture
for the Units, legal and accounting expenses, expenses of the
Trustee and other out-of-pocket expenses. The Sponsor will not
receive any fees in connection with its activities relating to
the Trust. However, First Trust Advisors L.P., an affiliate of
the Sponsor, will receive an annual supervisory fee, which is
not to exceed the amount set forth under "Summary of Essential
Information," for providing portfolio supervisory services for
the Trust. Such fee is based on the number of Units outstanding
in the Trust on January 1 of each year except during 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. The 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 of First Trust Advisors L.P. of supplying such services in
such year.
Subsequent to the initial offering period, the Evaluator will
receive a fee as indicated in the "Summary of Essential Information."
No fee is paid to the Evaluator with respect to the Special Situations
shares in the Trust. 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 and for
all normal expenses of the Trustee incurred by or in connection
with its responsibilities under the Indenture, an annual fee computed
at $0.0085 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 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." Rule 12b-1 fees imposed on shares of Special
Situations held in the Trust, are rebated to the Trust, deposited
in the Income Account and are used to pay expenses of the Trust.
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
Page 6
in the Capital and Income Accounts for payment of expenses and
redemptions and since such Accounts are non-interest 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.
The following additional charges are or may be incurred by the
Trust: all legal and annual auditing expenses of the Trustee incurred
by or in connection with its responsibilities under the Indenture;
the expenses and costs of any action undertaken by the Trustee
to protect the Trust and the rights and interests of the Unit
holders; fees of the Trustee for any extraordinary services performed
under the Indenture; indemnification of the Trustee for any loss,
liability or expense incurred by it without negligence, bad faith
or willful misconduct on its part, arising out of or in connection
with its acceptance or administration of the Trust; indemnification
of the Sponsor for any loss, liability or expense incurred without
gross negligence, bad faith or willful misconduct in acting as
depositor of the Trust; all taxes and other government charges
imposed upon the Securities or any part of the Trust (no such
taxes or charges are being levied or made or, to the knowledge
of the Sponsor, contemplated). The above expenses and the Trustee's
annual fee, when paid or owing to the Trustee, are secured by
a lien on the Trust. In addition, the Trustee is empowered to
sell Securities in the Trust in order to make funds available
to pay all these amounts if funds are not otherwise available
in the Income and Capital Accounts of the Trust except that the
Trustee shall not sell Treasury Obligations to pay Trust expenses.
Since the Special Situations shares consist primarily of common
stock and the income stream produced by dividends is unpredictable,
the Sponsor cannot provide any assurance that dividends will be
sufficient to meet any or all expenses of the Trust. As discussed
above, if dividends are insufficient to cover expenses, it is
likely that Special Situations shares 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?"
The Indenture requires the Trust to be audited on an annual basis
at the expense of the Trust by independent auditors selected by
the Sponsor. So long as the Sponsor is making a secondary market
for the Units, the Sponsor is required to bear the cost of such
annual audits to the extent such cost exceeds $0.005 per Unit.
Unit holders of the Trust covered by an audit may obtain a copy
of the audited financial statements upon request.
What is the Federal Tax Status of Unit Holders?
The following is a general discussion of certain of the Federal
income tax consequences of the purchase, ownership and disposition
of the Units. The summary is limited to investors who hold the
Units as "capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Internal Revenue Code
of 1986, as amended (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, 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 the assets of the Trust
under the Code; the income of the Trust will be treated as income
of the Unit holders thereof under the Code; and each Unit holder
will be considered to have received his or her pro rata share
of income derived from each Trust asset when such income is received
by the Trust.
2. Each Unit holder will have a taxable event when the Trust
disposes of a Security (whether by sale, exchange, redemption,
or payment at maturity) or upon the sale or redemption of Units
by such Unit holder. The price a Unit holder pays for his or her
Units, including sales charges, is allocated among his or her
pro rata portion of each Security held by the Trust (in proportion
to the fair market values thereof on the date the Unit holder
purchases his or her Units) in order to determine his or her initial
cost for his or her pro rata portion of each Security held by
the Trust. The Treasury Obligations held by
Page 7
the Trust are treated as stripped bonds and will in all likelihood
be treated as bonds issued at an original issue discount as of
the date a Unit holder purchases his or her Units. Because the
Treasury Obligations represent interests in "stripped" U.S. Treasury
bonds, a Unit holder's initial cost for his or her pro rata portion
of each Treasury Obligation held by the Trust shall be treated
as its "purchase price" by the Unit holder. Original issue discount
is effectively treated as interest for Federal income tax purposes
and the amount of original issue discount in this case is generally
the difference between the bond's purchase price and its stated
redemption price at maturity. A Unit holder will be required to
include in gross income for each taxable year the sum of his or
her daily portions of original issue discount attributable to
the Treasury Obligations held by the Trust as such original issue
discount accrues and will in general be subject to Federal income
tax with respect to the total amount of such original issue discount
that accrues for such year even though the income is not distributed
to the Unit holders during such year to the extent it is not less
than a "de minimis" amount as determined under a Temporary Regulation
issued on December 28, 1992 relating to stripped bonds. To the
extent the amount of such discount is less than the respective
"de minimis" amount, such discount shall be treated as zero. In
general, original issue discount accrues daily under a constant
interest rate method which takes into account the semi-annual
compounding of accrued interest. In the case of the Treasury Obligations,
this method will generally result in an increasing amount of income
to the Unit holders each year. Unit holders should consult their
tax advisers regarding the Federal income tax consequences and
accretion of original issue discount under the stripped bond rules.
3. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Securities held by the
Trust will generally be considered a capital gain except in the
case of a dealer or a financial institution and, in general, will
be long-term if the Unit holder has held his or her Units for
more than one year. A Unit holder's portion of loss, if any, upon
the sale or redemption of Units or the disposition of Securities
held by the Trust will generally be considered a capital loss
except in the case of a dealer or a financial institution and
will be long-term if the Unit holder has held his or her Units
for more than one year. Unit holders should consult their tax
advisers regarding the recognition of such capital gains and losses
for Federal income tax purposes.
4. The Code provides that "miscellaneous itemized deductions"
are allowable only to the extent that they exceed two percent
of an individual taxpayer's adjusted gross income. Miscellaneous
itemized deductions subject to this limitation under present law
include a Unit holder's pro rata share of expenses paid by the
Trust, including fees of the Trustee and the Evaluator but not
including expenses incurred by Special Situations, the shares
of which are held by the Trust.
Because Unit holders are deemed to directly own a pro rata portion
of the Special Situations shares as discussed above, Unit holders
are advised to read the discussion of tax consequences set forth
in the current prospectus for Special Situations. Distributions
declared by Special Situations on the Special Situations shares
in October, November or December that are held by the Trust and
paid during the following January will be treated as having been
received by Unit holders on December 31 in the year such distributions
were declared. Long-term capital gains distributions on the Special
Situations shares are taxable to the Unit holders as long-term
capital gains regardless of how long a person has been a Unit
holder. If a Unit holder holds his or her Units for six months
or less or if the Trust holds shares of Special Situations for
six months or less, any loss incurred by a Unit holder related
to the disposition of Special Situations shares will be treated
as a long-term capital loss to the extent of any long-term capital
gains distributions received (or deemed to have been received)
with respect to such shares. For taxpayers other than corporations,
net capital gains are subject to a maximum marginal tax rate of
28 percent.
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. Because some or all capital gains
are taxed at a comparatively lower rate under the Tax Act, the
Tax Act includes a provision that recharacterizes capital gains
as ordinary income in the case of certain financial transactions
that are "conversion transactions" effective
Page 8
for transactions entered into after April 30, 1993. Unit holders
and prospective investors should consult with their tax advisers
regarding the potential effect of this provision on their investment
in Units.
Special Situations may elect to pass through to its shareholders
the foreign income and similar taxes paid by Special Situations
in order to enable such shareholders to take a credit (or deduction)
for foreign income taxes paid by Special Situations. If such an
election is made, Unit holders of the Trust, because they are
deemed to own a pro rata portion of the Special Situations shares
held by the Trust, as described above, must include in their gross
income, for Federal income tax purposes, both their portion of
dividends received by the Trust from Special Situations, and also
their portion of the amount which Special Situations deems to
be the Trust's portion of foreign income taxes paid with respect
to, or withheld from, dividends, interest or other income of Special
Situations from its foreign investments. Unit holders may then
subtract from their Federal income tax the amount of such taxes
withheld, or else treat such foreign taxes as deductions from
gross income; however, as in the case of investors receiving income
directly from foreign sources, the above described tax credit
or deduction is subject to certain limitations. Unit holders should
consult their tax advisers regarding this election and its consequences
to them.
General. Each Unit holder will be requested to provide its 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 (accrual of original issue
discount on the Treasury Obligations may not be subject to Federal
taxation or withholding provided certain requirements are met).
Such persons should consult their tax advisers.
Unit holders will be notified annually of the amounts of original
issue discount, income and long-term capital gains distributions
includable in the Unit holder's gross income and the amount of
Trust expenses which may be claimed as itemized deductions.
Distributions of income, long-term capital gains and accrual of
original issue discount may also be subject to state and local
taxes. Foreign investors may be subject to different Federal income
tax consequences than those described above. Investors should
consult their tax advisers for specific information on the tax
consequences of particular types of distributions.
Unit holders desiring to purchase Units for tax-deferred plans
and IRAs should consult their broker for details on establishing
such accounts. Units may also be purchased by persons who already
have self-directed plans established. See "Why are Investments
in the Trust Suitable for Retirement Plans?"
In the opinion of Tanner Propp & Farber, Special Counsel to the
Trust for New York tax matters, under the existing income tax
laws of the State of New York, the Trust is not an association
taxable as a corporation and the income of the Trust will be treated
as the income of the Unit holders thereof.
Why are Investments in the Trust Suitable for Retirement Plans?
Units of the Trust may be well suited for purchase by Individual
Retirement Accounts, 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.
Page 9
PORTFOLIO
What are Treasury Obligations?
The Treasury Obligations deposited in the Trust consist of U.S.
Treasury bonds which have been stripped of their unmatured interest
coupons. The Treasury Obligations evidence the right to receive
a fixed payment at a future date from the U.S. Government, and
are backed by the full faith and credit of the U.S. Government.
Treasury Obligations are purchased at a deep discount because
the buyer obtains only the right to a fixed payment at a fixed
date in the future and does not receive any periodic interest
payments. The effect of owning deep discount bonds which do not
make current interest payments (such as the Treasury Obligations)
is that a fixed yield is earned not only on the original investment
but also, in effect, on all earnings during the life of the discount
obligation. This implicit reinvestment of earnings at the same
rate eliminates the risk of being unable to reinvest the income
on such obligations at a rate as high as the implicit yield on
the discount obligation, but at the same time eliminates the holder's
ability to reinvest at higher rates in the future. For this reason,
the Treasury Obligations are subject to substantially greater
price fluctuations during periods of changing interest rates than
are securities of comparable quality which make regular interest
payments. The effect of being able to acquire the Treasury Obligations
at a lower price is to permit more of the Trust's portfolio to
be invested in shares of Special Situations.
What is First Investors Special Situations Series?
The portfolio of the Trust also contains shares of First Investors
Special Situations Series.
Organization. First Investors Series Fund is a Massachusetts business
trust organized on September 23, 1988 which contains five series,
including Special Situations Series. The Fund's Board of Trustees
has authority to issue an unlimited number of shares of beneficial
interest of separate series, no par value, of the Fund. Prior
to February 15, 1990, the name of the Fund was First Investors
Fund. Shares of Special Situations Series have equal dividend,
voting, liquidation and redemption rights with all other shares
of that Series. In the event of establishment of classes, each
class of the Series shall represent interests in the assets of
that Series and shall have identical voting, dividend, liquidation
and other rights and the same terms and conditions as any other
class of that Series, except that expenses allocated to a class
of the Series may be borne solely by that class and a class of
the Series may have exclusive voting rights with respect to matters
affecting only that class. The Fund does not hold annual shareholder
meetings. If requested to do so by the holders of at least 10%
of the Fund's outstanding shares, the Board of Trustees will call
a special meeting of shareholders for any purpose, including the
removal of Trustees.
Custodian. The Bank of New York, 48 Wall Street, New York, NY
10286, is a custodian of the securities and cash of the Series.
Transfer Agent. Administrative Data Management Corp., 10 Woodbridge
Center Drive, Woodbridge, NJ 07095-1198, an affiliate of FIMCO
and First Investors Corporation ("FIC"), acts as transfer and
dividend disbursing agent for the Series and as redemption agent
for regular redemptions. The Transfer Agent's telephone number
is 1-800-423-4026.
Share Certificates. The Series does not issue share certificates
unless requested in writing to do so. Ownership of shares of the
Series is recorded on a stock register by the Transfer Agent and
shareholders have the same rights of ownership with respect to
such shares as if certificates had been issued.
Confirmations and Statements. You will receive confirmations of
purchases and redemptions of shares of the Series. Statements
of shares owned will be sent to you following a transaction in
the account, including payment of a dividend or capital gain distribution
in additional shares or cash.
Shareholder Inquiries. Shareholder inquiries regarding Special
Situations can be made by calling Shareholder Services at 1-800-423-4026.
Page 10
Fee Table. The following table is intended to assist investors
in understanding the expenses associated with investing in the
Series.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price){ 6.25%
Exchange Fee (1) $0
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Total Fund
Management 12b-1 Other Operating
Series of the Fund Fees (2) Fees Expenses Expenses (3)
__________________ __________ _____ ________ ____________
<S> <C> <C> <C> <C>
Special Situations Series{{ 0.75%* 0.30% 0.58% 1.63%*
</TABLE>
[FN]
____________________
* Net of waiver.
(1) For exchanges into a Series, the $5.00 exchange fee will
be assumed by that Series for a minimum period ending December
31, 1994. The Series reserves the right to change or suspend this
privilege after December 31, 1994. A sales charge differential
may be imposed on exchanges into the Series from certain First
Investors Funds. See "How to Exchange Shares" in the Prospectus.
(2) Management Fees for the Series have been restated to reflect
the maximum advisory fees that may be paid in 1994. FIMCO will
waive 0.25% of Management Fees for the Series for a minimum period
ending December 31, 1994. If not waived, Management Fees for the
Series would be 1.00%.
(3) If certain Management Fees were not waived, Total Fund Operating
Expenses for Special Situations Series would be 1.88%.
{ There is no sales load payable upon the purchase of the Special
Situations shares deposited in the Trust. However, the maximum
sales charge on the Units, and therefore indirectly on the Special
Situations shares is 6.0% during the initial offering period and
6.0% in the secondary market.
{{ Effectively, there are no 12b-1 fees on Special Situations
shares held in the Trust. However, Unit holders who acquire shares
of Special Situations through reinvestment of dividends or other
distributions or through reinvestment at the Trust's termination
will begin to incur 12b-1 fees at such time as shares are acquired.
For a more complete description of the various costs and expenses,
see "How to Buy Shares", "How to Redeem Shares", "Management"
and "Distribution Plan" in the Special Situations Prospectus.
Due to the imposition of 12b-1 fees, it is possible that long-term
shareholders of a Series may pay more in total sales charges than
the economic equivalent of the maximum front-end sales charge
permitted by the rules of the National Association of Securities
Dealers, Inc.
The example below is based on expense data for the Series' fiscal
year ended December 31, 1993, except that certain Operating Expenses
have been restated to reflect expenses expected to be incurred
in fiscal 1994, as noted above:
EXAMPLE:
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
One Year Three Years Five Years Ten Years
________ ___________ __________ _________
<S> <C> <C> <C> <C>
Special Situations Series $78 $111 $146 $249
</TABLE>
The expenses in the Example should not be considered a representation
by the Series of past or future expenses. Actual expenses in future
years may be greater or less than those shown.
Page 11
Financial Highlights. The following table sets forth the Special
Situations Series' per share operating performance data for a
share of beneficial interest outstanding, total return, ratios
to average net assets and other supplemental data for each period
indicated. The table has been derived from financial statements
which are covered by another independent certified public accountants'
report appearing in the Funds' Statement of Additional Information
("SAI"). This information should be read in conjunction with the
Financial Statements and Notes thereto for the Series, which also
appear in the SAI, available at no charge upon request to the
Series.
<TABLE>
<CAPTION>
9/18/90* - Year Ended December 31
Per Share Data 12/31/90 1991 1992 1993
________ ________ ________ ________
<S> <C> <C> <C> <C>
Net Asset Value - Beginning of Period $9.31 $9.58 $13.99 $15.62
======== ======== ======== ========
Income from Investment Operations:
Net Investment Income (Loss){ .09 .10 - (.08)
Net Realized and Unrealized Gain
(Loss) on investments .27 4.74 2.41 3.29
________ ________ ________ ________
Total from Investment Operations .36 4.84 2.41 3.21
======== ======== ======== ========
Less Distributions From:
Net Investment Income .09 .10 - -
Net Realized Gain on Investments - .33 .78 .83
________ ________ ________ ________
Total Distributions .09 .43 .78 .83
======== ======== ======== ========
Net Asset Value - End of Period $9.58 $13.99 $15.62 $18.00
======== ======== ======== ========
Total Return[] 13.58%(a) 50.47% 17.26% 20.52%
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C>
Net Assets-End of Period (in thousands) 1,321 9,183 25,814 59,148
Ratio of Expenses to Average Net Assets{ - - 1.06% 1.55%
Ratio of Net Investment Income to
Average Net Assets{ 3.93%(a) 1.44% (.05)% (.63)%
Ratio of Expenses to Average Net Assets Before
Expenses Waived or Assumed 2.74%(a) 2.31% 1.92% 1.89%
Ratio of Net Investment Income to Average Net
Assets Before Expenses Waived or Assumed 1.19%(a) (.87)% (.91)% (.96)%
Portfolio Turnover Rate 0% 86% 88% 71%
</TABLE>
[FN]
* Commencement of operations.
[] Calculated without sales charge.
{ Net of expenses waived or assumed by the investment adviser.
(a) Annualized.
What is Special Situations' Investment Objective and Policies?
Special Situations seeks long-term growth of capital. The Series
seeks to achieve its objective by investing, under normal market
conditions, at least 65% of its total assets in the common stock
of companies with small to medium market capitalization that the
Adviser considers to be undervalued or less well known in the
current marketplace and to have potential for capital growth.
The Series may invest up to 35% of its total assets in other common
stock, in preferred stock that is convertible into common stock
issued by U.S. corporations, and in the common stock of companies
located outside the United States.
Special Situations seeks to invest in the common stock of companies
that are undervalued in the current market in relation to fundamental
economic values such as earnings, sales, cash flow and tangible
book value; that are early in their corporate development (i.e.,
before they become widely recognized and well
Page 12
known and while their reputations and track records are still
emerging); or that offer the possibility of greater earnings because
of revitalized management, new products or structural changes
in the economy. Such companies primarily are those with small
to medium market capitalization, which the Series considers to
be up to $1 billion. The Adviser believes that, over time, these
securities are more likely to appreciate in price than securities
whose market prices have already reached their perceived economic
value. In addition, the Series intends to diversify its holdings
among as many companies and industries as the Adviser deems appropriate.
Companies that are early in their corporate development may be
dependent on relatively few products or services, may lack adequate
capital reserves, may be dependent on one or two management individuals
and may have less of a track record or historical pattern of performance.
In addition, there may be less information available as to the
issuers and their securities may not be well known to the general
public and may not yet have wide institutional ownership. Thus,
the investment risk is higher than that normally associated with
larger, older or better-known companies.
Investments in securities of companies with small to medium market
capitalization are generally considered to offer greater opportunity
for appreciation and to involve greater risk of depreciation than
securities of companies with larger market capitalization. Because
the securities of most companies with small to medium market capitalization
are not as broadly traded as those of companies with larger market
capitalization, these securities are often subject to wider and
more abrupt fluctuations in market price. In the past, there have
been prolonged periods when these securities have substantially
underperformed or outperformed the securities of the larger capitalization
companies. In addition, smaller capitalization companies generally
have fewer assets available to cushion an unforeseen adverse occurrence
and thus such an occurrence may have a disproportionately negative
impact on these companies.
The majority of Special Situations' investments are expected to
be securities listed on the NYSE or other national securities
exchanges, or securities that have an established over-the-counter
("OTC") market, although the depth and liquidity of the OTC market
may vary from time to time and from security to security.
Special Situations may invest up to 15% of its total assets in
common stocks issued by foreign companies which are traded on
a recognized domestic or foreign securities exchange. In addition
to the fundamental analysis of companies and their industries
which it performs for U.S. issuers, the Adviser evaluates the
economic and political climate of the country in which the company
is located and the principal securities markets in which such
securities are traded. Although the foreign stocks in which the
Series invests are primarily denominated in foreign currencies,
the Series also may invest in American Depositary Receipts ("ADRs").
The Series' Adviser does not attempt to time actively either short-term
market trends or short-term currency trends in any market.
The Series may invest up to 5% of its total assets in the securities
of other registered investment companies. Such investments will
probably involve additional advisory or distribution fees. The
Series may borrow money for temporary or emergency purposes in
amounts not exceeding 5% of its total assets. The Series also
may enter into repurchase agreements and engage in short sales
"against the box."
In any period of market weakness or of uncertain market or economic
conditions, the Series may establish a temporary defensive position
to preserve capital by having all or part of its assets invested
in short-term fixed income securities or retained in cash or cash
equivalents, including bank certificates of deposit, bankers'
acceptances, obligations issued or guaranteed as to principal
and interest by the U.S. Government, its agencies or instrumentalities
("U.S. Government Obligations") and commercial paper issued by
domestic corporations. See the SAI for a description of these
securities.
The Series' net asset value fluctuates based mainly upon changes
in the value of its portfolio securities. The Series' investment
objective and certain investment limitations set forth in the
SAI are fundamental policies that may not be changed without shareholder
approval. There can be no assurance that the Series will achieve
its investment objective.
Page 13
Description of Certain Securities, Other Investment Policies and
Risk Factors
American Depositary Receipts. ADRs are receipts typically issued
by a U.S. bank or trust company evidencing ownership of the underlying
securities of foreign issuers, and other forms of depository receipts
for securities of foreign issuers. Generally, ADRs, in registered
form, are denominated in U.S. dollars and are designed for use
in the U.S. securities markets. Thus, these securities are not
denominated in the same currency as the securities into which
they may be converted. ADRs are considered to be foreign securities
by the Series and are treated as such for purposes of certain
investment limitation calculations.
Convertible Securities. A convertible security is a bond, debenture,
note, preferred stock or other security that may be converted
into or exchanged for a prescribed amount of common stock of the
same or a different issuer within a particular period of time
at a specified price or formula. A convertible security entitles
the holder to receive interest paid or accrued on debt or dividends
paid on preferred stock until the convertible security matures
or is redeemed, converted or exchanged. Convertible securities
have unique investment characteristics in that they generally
(1) have higher yields than common stocks, but lower yields than
comparable non-convertible securities, (2) are less subject to
fluctuation in value than the underlying stock because they have
fixed income characteristics, and (3) provide the potential for
capital appreciation if the market price of the underlying common
stock increases. See the SAI for more information on convertible
securities.
Foreign Securities-Risk Factors. Investments in foreign markets
involve special risks and considerations which are in addition
to the usual risks inherent in domestic investments. These include
the following: there may be less publicly available information
about foreign companies comparable to the reports and ratings
that are published about companies in the United States; foreign
companies are not generally subject to uniform accounting, auditing
and financial reporting standards and requirements comparable
to those applicable to U.S. companies; some foreign stock markets
have substantially less volume than U.S. markets, and securities
of some foreign companies are less liquid and more volatile than
securities of comparable U.S. companies; there may be less government
supervision and regulation of foreign stock exchanges, brokers
and listed companies than exist in the United States; and there
may be the possibility of expropriation or confiscatory taxation,
political or social instability or diplomatic developments which
could affect assets of the Series held in foreign countries.
Money Market Instruments. Investments in commercial paper are
limited to obligations rated Prime-1 by Moody's Investors Service,
Inc. or A-1 by Standard & Poor's Corporation. Commercial paper
includes notes, drafts, or similar instruments payable on demand
or having a maturity at the time of issuance not exceeding nine
months, exclusive of days of grace or any renewal thereof. Investments
in certificates of deposit will be made only with domestic institutions
with assets in excess of $500 million. See the SAI for more information
regarding money market instruments and Appendix A to the SAI for
a description of commercial paper ratings.
Preferred Stock. A preferred stock is a blend of the characteristics
of a bond and common stock. It can offer the higher yield of a
bond and has priority over common stock in equity ownership, but
does not have the seniority of a bond and, unlike common stock,
its participation in the issuer's growth may be limited. Preferred
stock has preference over common stock in the receipt of dividends
and in any residual assets after payment to creditors should the
issuer be dissolved. Although the dividend is set at a fixed annual
rate, in some circumstances it can be changed or omitted by the
issuer.
Repurchase Agreements. Repurchase agreements are transactions
in which the Series purchases securities from a bank or recognized
securities dealer and simultaneously commits to resell the securities
to the bank or dealer at an agreed-upon date and price reflecting
a market rate of interest unrelated to the coupon rate or maturity
of the purchased securities. The Series' risk is limited to the
ability of the seller to repurchase the securities at the agreed-upon
price upon the delivery date. See the SAI for more information
regarding repurchase agreements.
Page 14
Restricted and Illiquid Securities. The Series may invest up to
10% of its net assets in illiquid securities, including (1) securities
that are illiquid due to the absence of a readily available market
or due to legal or contractual restrictions on resale and (2)
repurchase agreements maturing in more than seven days. However,
illiquid securities for purposes of this limitation do not include
securities eligible for resale under Rule 144A under the Securities
Act of 1933, as amended (the "1933 Act"), which the Fund's Board
of Trustees or the Adviser has determined are liquid under Board-approved
guidelines. The Series may invest up to 5% of its total assets
in Rule 144A securities. See the SAI for more information regarding
restricted and illiquid securities.
U.S. Government Obligations. Securities issued or guaranteed as
to principal and interest by the U.S. Government include (1) U.S.
Treasury obligations which differ only in their interest rates,
maturities and time of issuance as follows: U.S. Treasury bills
(maturities of one year or less), U.S. Treasury notes (maturities
of one to ten years) and U.S. Treasury bonds (generally maturities
of greater than ten years), and (2) obligations issued or guaranteed
by U.S. Government agencies and instrumentalities that are backed
by the full faith and credit of the United States, such as securities
issued by the Federal Housing Administration, Government National
Mortgage Association, the Department of Housing and Urban Development,
the Export-Import Bank, the General Services Administration and
the Maritime Administration and certain securities issued by the
Farmers Home Administration and the Small Business Administration.
The range of maturities of U.S. Government Obligations is usually
three months to thirty years. For additional information concerning
these and other investment policies of the Series, see the SAI.
Who is the Management of Special Situations?
Board of Trustees. The Fund's Board of Trustees, as part of its
overall management responsibility, oversees various organizations
responsible for the Series' day-to-day management.
Adviser. First Investors Management Company, Inc. ("FIMCO") supervises
and manages the Series' investments, determines the Series' portfolio
transactions and supervises all aspects of the Series' operations.
The Adviser is a New York corporation located at 95 Wall Street,
New York, NY 10005. The Adviser presently acts as investment adviser
to 14 mutual funds. First Investors Consolidated Corporation ("FICC")
owns all of the voting common stock of the Adviser and all of
the outstanding stock of FIC and the Transfer Agent. Mrs. Julie
W. Grayson (through shares to be received pursuant to probate
proceedings) owns approximately 38.3% and Mr. Glenn O. Head (or
members of his family) owns approximately 38.6% of the voting
stock of FICC and, therefore, jointly control the Adviser.
As compensation for its services, the Adviser receives an annual
fee from the Series, which is payable monthly. For the fiscal
year ended December 31, 1993, the advisory fee was 0.75% of average
daily net assets, net of waiver.
The Series bears all expenses of its operations other than those
incurred by the Adviser or the Series' Underwriter under the terms
of its advisory or underwriting agreements. Series expenses include,
but are not limited to: the advisory fee; shareholder servicing
fees and expenses; custodian fees and expenses; legal and auditing
fees; expenses of communicating to existing shareholders, including
preparing, printing and mailing prospectuses and shareholder reports
to such shareholders; and proxy and annual meeting expenses.
Portfolio Manager. Patricia D. Poitra has been Portfolio Manager
for Special Situations Series since its inception in 1990. Ms.
Poitra joined FIMCO in 1985 as a Senior Equity Analyst focusing
on small-to-medium capitalization companies. Ms. Poitra also is
Portfolio Manager for the Discovery Series of First Investors
Life Series Fund.
Brokerage. The Series may allocate brokerage commissions to broker-dealers
in consideration of Series share distribution, but only when execution
and price are comparable to that offered by other broker-dealers.
See the SAI for more information on allocation of portfolio brokerage.
Underwriter. The Fund has entered into an Underwriting Agreement
with FIC, 95 Wall Street, New York, NY 10005, pursuant to which
FIC acts as the Series' Underwriter ("Series Underwriter"). The
Underwriter receives
Page 15
all sales charges in connection with the sale of the Series' shares
and may receive payments under a plan of distribution. See "How
to Buy Shares" and "Distribution Plan" in the Series' Prospectus.
In June 1992, the Underwriter of the Trust, FIC, entered into
a settlement with the Securities and Exchange Commission ("SEC")
to resolve allegations by the SEC that certain of FIC's sales
representatives had made misrepresentations concerning the risks
of investing in two high yield bond funds, First Investors Fund
For Income, Inc. and First Investors High Yield Fund, Inc. ("High
Yield Funds"), and had sold these Funds to investors for whom
they were not suitable. Without admitting or denying the SEC's
allegations, FIC: (a) consented to the entry of a final judgment
enjoining it from violating Section 10(b) of the Securities Exchange
Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the
1933 Act; (b) agreed to the entry of an administrative order censuring
it and requiring it to comply with undertakings to improve its
policies and procedures with regard to sales, training, supervision
and compliance; and (c) agreed to pay $24.7 million to certain
investors who purchased shares of the High Yield Funds from in
or about November 1984 to in or about November 1990.
FIC, FIMCO and/or certain affiliated entities and persons have
entered into settlements with regulators in 29 states to resolve
allegations, similar to those made by the SEC, concerning sales
of the High Yield Funds. In October 1993, as part of settlements
with Maine, Massachusetts, New York, Virginia and Washington,
FIC, FIMCO and certain affiliated entities and persons agreed,
without admitting any of the allegations, (a) to be enjoined from
violating certain provisions of the state securities laws, (b)
to engage in remedial measures designed to ensure that proper
sales practices are observed in the future, and (c) to pay $7.5
million, in addition to the $24.7 million previously paid by FIC
in connection with the SEC settlement, to investors in the High
Yield Funds. In addition, as part of those settlements, several
FIC executives, including Glenn O. Head, who is an officer and
director of the Underwriter, agreed to be suspended and enjoined
temporarily from associating with any broker-dealer in a supervisory
capacity in certain of the states. On December 8, 1993, several
present and former FIC executives, including Mr. Head, also agreed,
without admitting or denying the allegations, to temporary SEC
suspensions from associating with broker-dealers and in some cases
other regulated entities in a supervisory capacity.
Distribution Plan. Pursuant to an Amended and Restated Plan of
Distribution ("12b-1 Plan"), the Series is authorized to pay the
Series' Underwriter a fee at the annual rate of 0.30% of such
Series' average daily net assets as compensation for the Underwriter's
activities relating to the distribution of Series shares ("distribution
fees") and the servicing and maintenance of existing Series shareholder
accounts ("service fees"). Distribution fees will be paid for
activities relating to the distribution of the Series' shares,
including costs of printing and dissemination of sales material
or literature, prospectuses and reports used in connection with
the sale of Series shares. Service fees will be paid for the ongoing
maintenance and servicing of existing shareholder accounts, including
payments to registered representatives who provide shareholder
liaison services to their customers who are shareholders of the
Series, provided they meet certain criteria.
Payments made to the Series' Underwriter under the 12b-1 Plan
will represent compensation for distribution and service activities,
not reimbursement for specific expenses incurred. Thus, even if
the expenses of the Series' Underwriter exceed its distribution
and/or service fees for the Series, the Series will not be obligated
to pay more than those fees, and if the Underwriter's expenses
are less than those fees, it will retain the full fees and realize
a profit. The Series will pay the distribution and service fees
until the Underwriting Agreement or the 12b-1 Plan is terminated
or not renewed. In that event, the expenses of the Series' Underwriter
in excess of distribution and service fees received or accrued
through the termination date will be the Underwriter's sole responsibility
and not obligations of the Series. The distribution and service
fees paid to the Series' Underwriter by the Series will not be
used for expenses of any other series of the Fund.
Page 16
Situations through reinvestment of dividends or other distributions
or through reinvestment at the Trust's termination will begin
to incur Rule 12b-1 fees at such time as shares are acquired.
THE RULE 12B-1 FEES IMPOSED ON SHARES HELD IN THE TRUST ARE REBATED
TO THE TRUST AND ARE USED TO REDUCE EXPENSES OF THE TRUST RESULTING
IN INCREASED DISTRIBUTIONS TO UNIT HOLDERS. UNIT HOLDERS WHO ACQUIRE
SHARES OF SPECIAL SITUATIONS THROUGH REINVESTMENT OF DIVIDENDS
OR OTHER DISTRIBUTIONS OR THROUGH REINVESTMENT AT THE TRUST'S
TERMINATION WILL BEGIN TO INCUR RULE 12B-1 FEES AT SUCH TIME AS
SHARES ARE ACQUIRED.
Determination of Net Asset Value. The net asset value of shares
of the Series is determined as of the close of regular trading
on the NYSE (generally 4:00 P.M., New York City time) on each
day the NYSE is open for trading, and at such other times as the
Board of Trustees deems necessary, by dividing the market value
of the securities held by the Series, plus any cash and other
assets, less all liabilities, by the number of shares outstanding.
If there is no available market value, securities will be valued
at their fair value as determined in good faith pursuant to procedures
adopted by the Board of Trustees. The NYSE currently observes
the following holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day.
Dividends and Other Distributions. Dividends from net investment
income are generally declared annually by Special Situations Series
and are paid in additional shares of the Series at the net asset
value (without sales charge) generally determined as of the close
of business on the business day immediately following the record
date of the dividend. Net investment income includes interest
and dividends, earned discount and other income earned on portfolio
securities less expenses.
The Series also distributes substantially all of its net capital
gain (the excess of net long-term capital gain over net short-term
capital loss) and net short-term capital gain, if any, after deducting
any available capital loss carryovers, and any net realized gains
from foreign currency transactions, with its regular dividend
at the end of the year. Distributions are paid in additional shares
of the Series at the net asset value (without sales charge) generally
determined as of the close of business on the business day immediately
following the record date of the distribution. The Series may
make an additional distribution if necessary to avoid a Federal
excise tax on certain undistributed income and capital gain.
Performance Information. For purposes of advertising, the Series'
performance may be calculated based on average annual total return
and total return. Each of these figures reflects past performance
and does not necessarily indicate future results. Average annual
total return shows the average annual percentage change in an
assumed $1,000 investment. It reflects the hypothetical annually
compounded return that would have produced the same total return
if the Series' performance had been constant over the entire period.
Because average annual total return tends to smooth out variations
in the Series' return, you should recognize that it is not the
same as actual year-by-year results. Average annual total return
includes the effect of paying the maximum sales charge and payment
of dividends and other distributions in additional shares. Total
return is computed using the same calculations as average annual
total return. However, the rate expressed is the percentage change
from the initial $1,000 invested to the value of the investment
at the end of the stated period.
Each of the above performance calculations may be based on investment
at reduced sales charge levels or at net asset value. Any quotation
of performance figures not reflecting the maximum sales charge
will be greater than if the maximum sales charge were used. Additional
performance information is contained in the Fund's Annual Report
which may be obtained without charge by contacting the Fund at
1-800-423-4026.
What are Some Additional Considerations for Investors?
Investors should be aware of certain other considerations before
making a decision to invest in the Trust described herein.
The Sponsor has obtained an exemptive order of the SEC to enable
it to deposit Special Situations shares purchased for deposit
in the Trust. Under the terms of the exemptive order, the Sponsor
has agreed to take certain steps to ensure that investment in
Special Situations shares is equitable to all parties and particularly
that the interests of the Unit holders are protected. Special
Situations has agreed to waive any sales charge on shares sold
to the Trust. Furthermore, First Trust Advisors L.P. has agreed
to waive its usual fee for acting as Evaluator of the Trust's
portfolio with respect to that portion of the portfolio comprised
of Special Situations shares, since information with respect to
the price of Special Situations' shares is readily available to
it. In addition, the Indenture requires the Trustee to vote all
shares of Special Situations held in the
Page 17
Trust in the same manner and ratio on all proposals as the vote
of owners of Special Situations shares not held by the Trust.
The value of Special Situations' shares, like the value of the
Treasury Obligations, 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. Special Situations' shares may appreciate or depreciate
in value (or pay dividends or other distributions) depending on
the full range of economic and market influences affecting the
securities in which it is invested and the success of Special
Situations' Adviser in anticipating or taking advantage of such
opportunities as they may occur. However, the Sponsor believes
that, upon termination of the Trust, even if the Special Situations
shares deposited in the Trust are worthless, an event which the
Sponsor considers highly unlikely, the Treasury Obligations will
provide sufficient principal to at least equal $10.00 per Unit
(which is equal to the per Unit value upon maturity of the Treasury
Obligations) for those individuals purchasing on the Initial Date
of Deposit (or any other Date when the value of the Units is $10.00
or less). This feature of the Trust provides Unit holders with
principal protection, although they might forego any earnings
on the amount invested. To the extent that Units are purchased
at a price less than $10.00 per Unit, this feature may also provide
a potential for capital appreciation.
Unless a Unit holder purchases Units of the Trust on the Initial
Date of Deposit (or another date when the value of the Units is
$10.00 or less), total distributions, including distributions
made upon termination of the Trust, may be less than the amount
paid for a Unit.
The Sponsor, Adviser, Underwriter, Fund and the Trustee shall
not be liable in any way for any default, failure or defect in
any Security. In the event of a notice that any Treasury Obligation
will not be delivered ("Failed Treasury Obligations") to the Trust,
the Sponsor is authorized under the Indenture to direct the Trustee
to acquire other Treasury Obligations ("Replacement Treasury Obligations").
Any Replacement Treasury Obligation deposited in the Trust will
have the same maturity value and, as closely as can be reasonably
acquired by the Sponsor, the same maturity date. The Replacement
Treasury Obligations must be purchased within 30 days after the
deposit of the Failed Treasury Obligations and the purchase price
may not exceed the amount of funds reserved for the purchase of
the Failed Treasury Obligations.
If the right of limited substitution described in the preceding
paragraphs is not utilized to acquire Replacement Treasury Obligations
in the event of a failed contract, the Sponsor will refund the
sales charge attributable to such Failed Treasury Obligations
to all Unit holders of the Trust and the Trustee will distribute
the principal cash attributable to such Failed Treasury Obligations
not more than 120 days after the date on which the Trustee received
a notice from the Sponsor that a Replacement Treasury Obligation
would not be deposited in the Trust. In addition, Unit holders
should be aware that, at the time of receipt of such principal,
they may not be able to reinvest such proceeds in other securities
at a yield equal to or in excess of the yield which such proceeds
would have earned for Unit holders of the Trust.
The Indenture also authorizes the Sponsor to increase the size
of the Trust and the number of Units thereof by the deposit of
additional Securities in the Trust and the issuance of a corresponding
number of additional Units.
The Trust consists of the 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
Securities acquired and held by the Trust pursuant to the provisions
of the Indenture (including provisions with respect to deposits
into the Trust of Securities in connection with the issuance of
additional Units).
Once all of the Securities in the Trust are acquired, the Trustee
will have no power to vary the investments of the Trust, i.e.,
the Trustee will have no managerial power to take advantage of
market variations to improve a Unit holder's investment but may
dispose of Securities only under limited circumstances. See "How
May Securities be Removed from the Trust?" Of course, the portfolio
of Special Situations will be changing as the Adviser attempts
to achieve Special Situations' objective.
To the best of the Sponsor's knowledge, there is no litigation
pending as of the Initial Date of Deposit in respect of any Security
which might reasonably be expected to have a material adverse
effect on the Trust. At any time after the Initial Date of Deposit,
litigation may be instituted on a variety of grounds with respect
to the
Page 18
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
of the offering side evaluation of the Treasury Obligations in
the Trust and the net asset value of the Special Situations shares
in the Trust, plus or minus cash, if any, in the Capital and Income
Accounts held or owned by the Trust, plus a sales charge of 6.0%
(equivalent to 6.383% 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 of the offering side evaluation of the
Treasury Obligations and the net asset value of the Special Situations
shares in the Trust divided by the amount of Units of the Trust
outstanding. For secondary market sales after the completion of
the initial offering period, the Public Offering Price is based
on the aggregate bid side evaluation of the Treasury Obligations
and the net asset value of the Special Situations shares in the
Trust, plus or minus cash, if any, in the Capital and Income Accounts
held or owned by the Trust, plus a maximum sales charge of 6.0%
of the Public Offering Price (equivalent to 6.383% of the net
amount invested) divided by the number of outstanding Units of
the Trust.
The minimum purchase in the Trust is 200 Units. The applicable
sales charge is reduced by a discount as indicated below for volume
purchases:
<TABLE>
<CAPTION>
Percent of Percent of
Offering Net Amount
Number of Units Price Invested
_______________ _________ __________
<S> <C> <C>
2,500 but less than 5,000 5.50% 5.82%
5,000 but less than 10,000 5.25% 5.54%
10,000 but less than 25,000 4.25% 4.44%
25,000 but less than 50,000 3.25% 3.36%
50,000 but less than 75,000 2.25% 2.30%
100,000 or more 1.25% 1.27%
</TABLE>
Any such reduced sales charge shall be the responsibility of FIC.
The reduced sales charge structure will apply on all purchases
of Units in the Trust by the same person on any one day from the
Underwriter. Additionally, Units purchased in the name of the
spouse of a purchaser or in the name of a child of such purchaser
under 21 years of age will be deemed, for the purposes of calculating
the applicable sales charge, to be additional purchases by the
purchaser. The reduced sales charges will also be applicable to
a trustee or other fiduciary purchasing securities for a single
trust estate or single fiduciary account. The purchaser must inform
the Underwriter of any such combined purchase prior to the sale
in order to obtain the indicated discount. With respect to the
employees, officers and directors (including their immediate families
and trustees, custodians or a fiduciary for the benefit of such
person) of the Sponsor, Underwriter and their subsidiaries, the
sales charge is reduced by 4.6% of the Public Offering Price for
purchases of Units during the initial and secondary offering periods.
Had the Units of the Trust been available for sale on the business
day immediately 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
this prospectus or during the initial offering period may vary
from the amount stated under "Summary of Essential Information"
in accordance with fluctuations in the prices of the underlying
Securities. During the initial offering period, the aggregate
value of the Units of the Trust shall be determined (a) on the
basis of the offering prices of the Treasury Obligations and the
net asset value of the Special Situations shares therein plus
or minus a pro rata share of cash, if any, in the Capital and
Income Accounts of the Trust, (b) if offering prices are not available
for the Treasury Obligations, on the basis of
Page 19
offering prices for comparable securities, (c) by determining
the value of the Treasury Obligations on the offer side of the
market by appraisal, or (d) by any combination of the above.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the bid price per
Unit of the Treasury Obligations and the net asset value of the
Special Situations shares therein plus or minus a pro rata share
of cash, if any, in the Capital and Income Accounts of the Trust
plus the applicable sales charge.
The offering price of the Treasury Obligations in the Trust may
be expected to be greater than the bid price of the Treasury Obligations
by less than 2%.
Although payment is normally made five business days following
the order for purchase, payment may be made prior thereto. Cash,
if any, made available to the Sponsor prior to the date of settlement
for the purchase of Units may be used in the Sponsor's business
and may be deemed to be a benefit to the Sponsor, subject to the
limitations of the Securities Exchange Act of 1934. Delivery of
Units so ordered will be made five business days following such
order or shortly thereafter. See "Rights of Unit Holders-How May
Units be Redeemed?" for information regarding the ability to redeem
Units ordered for purchase.
How are Units Distributed?
During the initial offering period (i) for Units issued on the
Initial Date of Deposit and (ii) for additional Units issued after
such date, as additional Securities are deposited by the Sponsor,
Units will be distributed to the public at the then current Public
Offering Price. The initial offering period may be up to approximately
360 days. During such period, the Sponsor intends to deposit additional
Securities in the Trust and create additional Units. Units reacquired
by the Sponsor or the Underwriter during the initial offering
period (at prices based upon the aggregate offering price of the
Treasury Obligations and the aggregate net asset value of the
Special Situations shares plus or minus a pro rata share of cash,
if any, in the Capital and Income Accounts of the Trust) may be
resold at the then current Public Offering Price. Upon the termination
of the initial offering period, unsold Units created or reacquired
during the initial offering period will be sold or resold at the
then current Public Offering Price.
Upon completion of the initial offering, Units repurchased in
the secondary market (see "Will There be a Secondary Market?")
may be offered by this prospectus at the secondary market public
offering price determined in the manner described above.
It is the intention of the Sponsor to qualify Units of the Trust
for sale in a number of states. Sales in both the primary and
secondary markets will be made to dealers and others at prices
which represent a concession or agency commission of 4.0% of the
Public Offering Price. 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 this prospectus. The Sponsor reserves
the right to change the amount of the concession or agency commission
from time to time. Certain commercial banks are making Units of
the Trust available to their customers on an agency basis. A portion
of the sales charge paid by these customers is retained by or
remitted to the banks in the amounts indicated above. Under the
Glass-Steagall Act, banks are prohibited from underwriting Trust
Units; however, the Glass-Steagall Act does permit certain agency
transactions and the banking regulators have not indicated that
these particular agency transactions are not permitted under such
Act. In Texas and in certain other states, any banks making Units
available must be registered as broker/dealers under state law.
What are the Sponsor's Profits?
The Underwriter of the Trust will receive a gross sales commission
equal to 6.0% of the Public Offering Price of the Units (equivalent
to 6.383% 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 the Underwriter. In addition, the Sponsor may be
considered to have realized a profit or the Sponsor may be considered
to have sustained a loss, as the case may be, in the amount of
any difference between the cost of the Treasury Obligations to
the Trust (which is based on the Evaluator's determination of
the aggregate offering price of the underlying Treasury
Page 20
Obligations of such Trust on the Initial Date of Deposit) and
the cost of such Treasury Obligations to the Sponsor. See Note
(2) of "Schedule of Investments." During the initial offering
period, the Underwriter may also 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.
The Sponsor will deposit all shares of Special Situations at net
asset value, i.e., without a sales charge, and so will not receive
any profit from the deposit of Special Situations shares.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between
the price at which Units are purchased and the price at which
Units are resold (which price includes a sales charge of 6.0%)
or redeemed. The secondary market public offering price of Units
may be greater or less than the cost of such Units to the Sponsor.
Will There be a Secondary Market?
After the initial offering period, although not obligated to do
so, the Sponsor and the Underwriter intend to maintain a market
for the Units and continuously to offer to purchase Units at prices,
subject to change at any time, based upon the aggregate bid price
of the Treasury Obligations in the portfolio of the Trust and
the net asset value of the Special Situations shares in the Trust
plus or minus cash, if any, in the Capital and Income Accounts
of the Trust. All expenses incurred in maintaining a secondary
market, other than the fees of the Evaluator, the supervisory
and audit expenses and the costs of the Trustee in transferring
and recording the ownership of Units, will be borne by the Sponsor.
If the supply of Units exceeds demand, or for some other business
reason, the Sponsor may discontinue purchases of Units at such
prices. IF A UNIT HOLDER WISHES TO DISPOSE OF HIS OR HER UNITS,
HE OR SHE SHOULD INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES
PRIOR TO MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units
that person or entity who is registered as such owner on the books
of the Trustee. Unit holders will hold their Units in uncertificated
form. The Trustee will maintain an account for each such Unit
holder and will credit each such account with the number of Units
purchased by that Unit holder. Within two business days of the
issuance or transfer of Units held in uncertificated form, the
Trustee will send to the registered owner of Units a written initial
transaction statement containing a description of 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 by surrender to the Trustee accompanied by a
written instrument or instruments of transfer. Units to be redeemed
must be accompanied by a written instrument or instruments of
transfer. A Unit holder must sign exactly as his or her name appears
on the books of the Trustee with the signature guaranteed by a
participant in the Securities Transfer Agents Medallion Program
("STAMP") or such other signature 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.
How are Income and Capital Distributed?
The Trustee will distribute any net income (other than accreted
interest) received with respect to any of the Securities in the
Trust on or about the Distribution Dates to Unit holders of record
on the preceding Record Date. See "Summary of Essential Information."
Proceeds received from rebated Rule 12b-1 fees or on the sale
of any Securities in the Trust, to the extent not used to meet
redemptions of Units or pay expenses, will be distributed at least
annually on each Distribution Date to Unit holders of record on
the preceding Record Date. Income with respect to the original
issue discount on the Treasury Obligations in the
Page 21
Trust, will not be distributed currently, although Unit holders
will be subject to Federal income tax as if a distribution had
occurred. See "What is the Federal Tax Status of Unit Holders?"
The Record Date and Distribution Date were established so as to
occur shortly after the record date and the payment dates of Special
Situations. Special Situations normally pays dividends on its
net investment income annually. Net realized capital gains, if
any, will be distributed at least annually.
Within a reasonable time after the Trust is terminated, each Unit
holder will, upon surrender of his or her Units for redemption,
receive: (i) the number of shares of Special Situations attributable
to his or her Units, which will be distributed "in kind" directly
to his or her account, rather than redeemed, (ii) a pro rata share
of the amounts realized upon the disposition of the Treasury Obligations
and (iii) a pro rata share of any other assets of the Trust, less
expenses of the Trust, subject to the limitation that Treasury
Obligations may not be sold to pay for Trust expenses. Not less
than 60 days prior to the termination of the Trust, Unit holders
will be offered the option of having the proceeds from the disposition
of the Treasury Obligations in the Trust invested on the date
such proceeds become available to the Trust, in additional shares
of Special Situations at net asset value. Such shares will not
be subject to a sales charge or a contingent deferred sales load
but such shares will incur Rule 12b-1 fees as do all other shares
held directly by investors in Special Situations. Unless a Unit
holder indicates that he or she wishes to reinvest such amounts,
they will be paid in cash, as indicated above. A Unit holder may,
of course, at any time after the Special Situations shares are
distributed to his or her account, instruct Special Situations
to redeem all or a portion of the shares in his or her account.
Shares of Special Situations, as more fully described in its prospectus,
will be redeemed at the then current net asset value. If within
180 days after the termination of the Trust a registered owner
of Units has not surrendered the Units, the Trustee shall liquidate
the shares of Special Situations held for such Unit holder and
hold the funds to which such Unit holder is entitled until such
Units are surrendered.
The Trustee will credit to the Income Account of the Trust any
dividends, distributions or rebated Rule 12b-1 fees received on
the Special Situations shares therein. All other receipts (e.g.,
return of principal, capital gains, 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.
How Can Distributions to Unit Holders be Reinvested?
Each Unit holder of the Trust will have distributions of principal,
capital gains, if any, or income automatically invested in Special
Situations shares (if Units are properly registered in the name
of the Unit holder) deposited at such share's net asset value
next computed, unless he or she indicates at the time of purchase,
or subsequently notifies the Trustee in writing, that he or she
wishes to receive cash payments. Shares of Special Situations
obtained through reinvestment will not be subject to a sales charge,
although such shares will incur Rule 12b-1 fees as do all other
shares held directly by investors in Special Situations. Reinvestment
by the Trust in Special Situations shares will normally be made
as of the distribution date of the Trust after the Trustee deducts
therefrom the expenses of the Trust.
Additional information with respect to the investment objective
and policies of Special Situations is contained in its prospectus
and SAI, which can be obtained from FIC.
Unit holders who are receiving distributions in cash may elect
to participate in the automatic reinvestment feature, subject
to meeting certain suitability requirements, by filing with the
Trustee an election to have such distributions reinvested without
a sales charge. Such election must be received by the Trustee
at least ten days prior to the Record Date applicable to any distribution
in order to be in effect for such Record Date. Any such election
shall remain in effect until a subsequent notice is received by
the Trustee.
Exchange Privilege. Subject to the following limitations, shares
held in a Unit holder's reinvestment account in Special Situations
may be exchanged for shares of any other series of the Fund or
for certain other funds in the First Investors Group of Funds
without paying a sales charge. No exchanges will be accepted into
or from First Investors Special Bond Fund, Inc., First Investors
Life Series Fund, First Investors U.S. Government Plus Fund or
Executive Investors Trust. Exchanges can only be made into accounts
registered
Page 22
to identical owners. If your exchange is into a new account, it
must meet the minimum investment and other requirements of the
fund into which the exchange is being made. Additionally, the
fund must be available for sale in the state where you reside.
A $5.00 exchange fee is charged for each exchange. However, currently
this fee is being voluntarily borne by the fund into which you
are making the exchange, which could add to that fund's expenses.
Each fund in the First Investors Group of Funds reserves the right
to change or suspend this policy in the future. Before exchanging
Series shares for shares of another fund, you should read the
prospectus of the fund into which the exchange is to be made.
You may obtain prospectuses and information with respect to which
funds qualify for the exchange privilege free of charge by calling
Shareholder Services at 1-800-423-4026. Exchange requests may
be made in writing or by telephone (for shares held on deposit
only) if telephone privileges were elected on your application.
Exchanges should be made for investment purposes only. A pattern
of frequent exchanges may be contrary to the best interests of
the Series' other shareholders. Accordingly, the Series has the
right, at its sole discretion, to limit the amount of an exchange,
reject any exchange, or, upon 60 days' notice, materially modify
or discontinue the exchange privilege. The Series will consider
all relevant factors in determining whether a particular frequency
of exchanges is contrary to the best interests of the Series and
its other shareholders. Any such restriction will be made by the
Series on a prospective basis only, upon notice to the shareholder
not later than ten days following such shareholder's most recent
exchange. See the Series' prospectus for further information regarding
the Exchange Privilege.
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
time after the end of each calendar year, the Trustee will furnish
to each person who at any time during the calendar year was a
Unit holder of the Trust the following information in reasonable
detail: (1) a summary of transactions in the Trust for such year;
(2) any Securities sold during the year and the Securities held
at the end of such year by the Trust; (3) the redemption price
per Unit based upon a computation thereof on the 31st day of December
of such year (or the last business day prior thereto); and (4)
amounts of income and capital gains distributed during such year.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his or her Units
by tender to the Trustee at its corporate trust office in the
City of New York of a request for redemption, duly endorsed or
accompanied by proper instruments of transfer with signature guaranteed
as explained above, and payment of applicable governmental charges,
if any. No redemption fee will be charged. On the seventh calendar
day following such tender, or if the seventh calendar day is not
a business day, on the first business day prior thereto, 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 day 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
time, the date of tender is the next day on which the NYSE 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 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 Securities of the Trust in order
to make funds available for redemption. To the extent that Securities
are sold, the size and diversity of the Trust will be reduced.
Such sales may be required at a time when Securities would not
otherwise be sold and might result in lower prices than might
otherwise be realized. Shares of Special Situations will be sold
to meet redemptions of Units before Treasury Obligations, although
Treasury Obligations may be sold if the Trust is assured of retaining
a sufficient principal amount of Treasury Obligations to provide
funds upon maturity of the Trust at least equal to $10.00 per
Unit.
Page 23
The redemption price per Unit (as well as the secondary market
Public Offering Price) will be determined on the basis of the
bid price of the Treasury Obligations and the net asset value
of the Special Situations shares in the Trust, plus or minus cash,
if any, in the Capital and Income Accounts of the Trust, while
the Public Offering Price per Unit during the initial offering
period will be determined on the basis of the offering price of
such Treasury Obligations, as of the close of trading on the NYSE
on the date any such determination is made and the net asset value
of the Special Situations shares in the Trust, plus or minus cash,
if any, in the Capital and Income Accounts. On the Initial Date
of Deposit, the Public Offering Price per Unit (which is based
on the offering prices of the Treasury Obligations and the net
asset value of the Special Situations shares and includes the
sales charge) exceeded the Unit value at which Units could have
been redeemed (based upon the current bid prices of the Treasury
Obligations and the net asset value of the Special Situations
shares in the Trust) by the amount shown under "Summary of Essential
Information." The Redemption Price per Unit is the pro rata share
of each Unit determined by the Trustee by adding: (1) the cash
on hand in the Trust other than cash deposited in the Trust to
purchase Securities not applied to the purchase of such Securities;
(2) the aggregate value of the Securities (including "when issued"
contracts, if any) held in the Trust, as determined by the Evaluator
on the basis of bid prices of the Treasury Obligations and the
net asset value of the Special Situations shares next computed;
and (3) dividends or other distributions receivable on Special
Situations shares trading ex-dividend as of the date of computation
and amounts accrued, if any, for rebated Rule 12b-1 fees; and
deducting therefrom: (1) amounts representing any applicable taxes
or governmental charges payable out of the Trust; (2) an amount
representing estimated accrued expenses of the Trust, including
but not limited to fees and expenses of the Trustee (including
legal and auditing fees), the Evaluator, the Supervisor and counsel
fees, if any; (3) cash held for distribution to Unit holders of
record of the Trust as of the business day prior to the evaluation
being made; and (4) other liabilities incurred by the Trust; and
finally dividing the results of such computation by the number
of Units of the Trust outstanding as of the date thereof.
The right of redemption may be suspended and payment postponed
for any period during which the NYSE is closed (other than for
customary weekend and holiday closings) or during which the SEC
determines that trading on the NYSE 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
SEC may by order permit. Under certain extreme circumstances,
the Sponsor may apply to the SEC for an order permitting a full
or partial suspension of the right of Unit holders to redeem their
Units. The Trustee is not liable to any person in any way for
any loss or damage which may result from any such suspension or
postponement.
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase
such Units by notifying the Trustee before 1:00 p.m. Eastern time
on the same business day and by making payment therefor to the
Unit holder not later than the day on which the Units would otherwise
have been redeemed by the Trustee. Units held by the Sponsor may
be tendered to the Trustee for redemption as any other Units.
In the event the Sponsor does not purchase Units, the Trustee
may sell Units tendered for redemption in the over-the-counter
market, if any, as long as the amount to be received by the Unit
holder is equal to the amount he or she would have received on
redemption of the Units.
The offering price of any Units acquired by the Sponsor will be
in accord with the Public Offering Price described in the then
effective prospectus describing such Units. Any profit or loss
resulting from the resale or redemption of such Units will belong
to the Sponsor.
How May Securities be Removed from the Trust?
The portfolio of the Trust is not "managed" by the Sponsor or
the Trustee; their activities described herein are governed solely
by the provisions of the Indenture. The Indenture provides that
the Sponsor may (but need not) direct the Trustee to dispose of
a Security in the unlikely event that an issuer of a Security
defaults in the payment of dividends or interest or there exist
certain other materially adverse conditions described in the Indenture.
Page 24
The Trustee may also sell Securities designated by the Sponsor,
or if not so directed, in its own discretion, for the purpose
of redeeming Units of the Trust tendered for redemption and the
payment of expenses; provided, however, that in the case of Securities
sold to meet redemption requests, Treasury Obligations may only
be sold if the Trust is assured of retaining a sufficient principal
amount of Treasury Obligations to provide funds upon maturity
of the Trust at least equal to $10.00 per Unit. Treasury Obligations
may not be sold to meet Trust expenses.
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in
1991, acts as Sponsor for successive series of The First Trust
Combined Series, The First Trust Special Situations Trust, The
First Trust Insured Corporate Trust, The First Trust of Insured
Municipal Bonds and The First Trust GNMA. First Trust introduced
the first insured unit investment trust in 1974 and to date more
than $8 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, 1993,
the total partners' capital of Nike Securities L.P. was $12,743,032
(audited). (This paragraph relates only to the Sponsor and not
to the Trust or to any series thereof or to any other Underwriter.
The information is included herein only for the purpose of informing
investors as to the financial responsibility of the Sponsor and
its ability to carry out its contractual obligations. More detailed
financial information will be made available by the Sponsor upon
request.)
Who is the Trustee?
The Trustee is The Bank of New York, a trust company organized
under the laws of New York. The Bank of New York has its offices
at 101 Barclay Street, New York, New York 10286, (800) 221-7668.
The Bank of New York is subject to supervision and examination
by the Superintendent of Banks of the State of New York and the
Board of Governors of the Federal Reserve System, and its deposits
are insured by the Federal Deposit Insurance Corporation to the
extent permitted by law.
The Trustee, whose duties are ministerial in nature, has not participated
in the selection of the Securities. For information relating to
the responsibilities of the Trustee under the Indenture, reference
is made to the material set forth under "Rights of Unit Holders."
The Trustee and any successor Trustee may resign by executing
an instrument in writing and filing the same with the Sponsor
and mailing a copy of a notice of resignation to all Unit holders.
Upon receipt of such notice, the Sponsor is obligated to appoint
a successor Trustee promptly. If the Trustee becomes incapable
of acting or becomes bankrupt or its affairs are taken over by
public authorities, the Sponsor may remove the Trustee and appoint
a successor as provided in the Indenture. If upon resignation
of the Trustee no successor has accepted the appointment within
30 days after notification, the retiring Trustee may apply to
a court of competent jurisdiction for the appointment of a successor.
The resignation or removal of the 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 the 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
Page 25
liable only for their own willful misfeasance, bad faith, gross
negligence (ordinary negligence in the case of the Trustee) or
reckless disregard of their obligations and duties. The Trustee
shall not be liable for depreciation or loss incurred by reason
of the sale by the Trustee of any of the Securities. In the event
of the failure of the Sponsor to act under the Indenture, the
Trustee may act thereunder and shall not be liable for any action
taken by it in good faith under the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or
upon or in respect of the Trust which the Trustee may be required
to pay under any present or future law of the United States of
America or of any other taxing authority having jurisdiction.
In addition, the Indenture contains other customary provisions
limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or become incapable of acting or become 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 SEC, or (b) terminate the Indenture and liquidate the Trust
as provided herein, or (c) continue to act as Trustee without
terminating the Indenture.
Who is the Evaluator?
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois
60532. The Evaluator may resign or may be removed by the Sponsor
and the Trustee, in which event the Sponsor and the Trustee are
to use their best efforts to appoint a satisfactory successor.
Such resignation or removal shall become effective upon the acceptance
of appointment by the successor Evaluator. If upon resignation
of the Evaluator no successor has accepted appointment within
30 days after notice of resignation, the Evaluator may apply to
a court of competent jurisdiction for the appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for
the accuracy thereof. Determinations by the Evaluator under the
Indenture shall be made in good faith upon the basis of the best
information available to it, provided, however, that the Evaluator
shall be under no liability to the Trustee, Sponsor or Unit holders
for errors in judgment. This provision shall not protect the Evaluator
in any case of willful misfeasance, bad faith, gross negligence
or reckless disregard of its obligations and duties.
OTHER INFORMATION
How May the Indenture Be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment
is (1) to cure any ambiguity or to correct or supplement any provision
of the Indenture which may be defective or inconsistent with any
other provision contained therein, or (2) to make such other provisions
as shall not adversely affect the interest of the Unit holders
(as determined in good faith by the Sponsor and the Trustee).
The Indenture provides that the Trust shall terminate upon the
maturity, redemption or other disposition of the last of the Treasury
Obligations held in the Trust but in no event beyond 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 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 Principal Distributed?"
Page 26
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. Tanner Propp & Farber 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, independent auditors, as set
forth in their report thereon appearing elsewhere herein and in
the Registration Statement, and is included in reliance upon such
report given upon the authority of such firm as experts in accounting
and auditing.
UNDERWRITING
The Underwriter named below has purchased Units in the following
amount:
<TABLE>
<CAPTION>
Name Address Units
____ _______ _____
<S> <C> <C>
First Investors Corporation 95 Wall Street, New York, NY 10005 10,000
======
</TABLE>
On the Initial Date of Deposit, the Underwriter of the Trust became
the owner of the Units of the Trust and is 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 this 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 concession
and 4.6% of the Public Offering Price of the Units, which is retained
by the Underwriter. The Sponsor reserves the right to change the
amount received by the Underwriter.
Underwriters, dealers and others who, in a single month, purchase
from the Sponsor Units of any Series of The First Trust GNMA,
The First Trust of Insured Municipal Bonds, The First Trust Combined
Series, The Advantage Growth and Treasury Securities Trust, The
First Trust Special Situations Trust or any other unit investment
trust of which Nike Securities L.P. is the Sponsor (the "UIT Units"),
which sale of UIT Units are in the following aggregate dollar
amounts, will receive additional concessions as indicated in the
following table:
<TABLE>
<CAPTION>
Aggregate Monthly Dollar Amount Additional Concession
of UIT Units Sold (per $1,000 sold)
_______________________________ _____________________
<S> <C>
$ 1,000,000 - $2,499,999 $0.50
$ 2,500,000 - $4,999,999 $1.00
$ 5,000,000 - $7,499,999 $1.50
$ 7,500,000 - $9,999,999 $2.00
$10,000,000 or more $2.50
</TABLE>
Aggregate Monthly Dollar Amount of UIT Units Sold is based on
settled trades for a month (including sales of UIT Units to the
Sponsor in the secondary market which are resold), net of redemptions.
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 the Sponsor, an amount
not exceeding
Page 27
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 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.
Trust performance may be compared to performance on the same basis
(with distributions reinvested) 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 Magazine, The New York
Times, U.S. News and World Report, Business Week, Forbes Magazine
or Fortune Magazine. As with other performance data, performance
comparisons should not be considered representative of the Trust's
relative performance for any future period.
Page 28
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
FIRST INVESTORS SPECIAL SITUATIONS GROWTH & TREASURY SECURITIES
TRUST, SERIES 1
We have audited the accompanying statement of net assets, including
the schedule of investments, of First Investors Special Situations
Growth & Treasury Securities Trust, Series 1 as of the opening
of business on June 27, 1994. 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 at the opening of business on June 27, 1994. 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 First Investors Special Situations Growth & Treasury Securities
Trust, Series 1 at the opening of business on June 27, 1994, in
conformity with generally accepted accounting principles.
ERNST & YOUNG
Chicago, Illinois
June 27, 1994
Page 29
Statement of Net Assets
FIRST INVESTORS SPECIAL SITUATIONS
GROWTH & TREASURY SECURITIES TRUST, SERIES 1
At the Opening of Business on June 27, 1994
the Initial Date of Deposit
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Securities represented by purchase contracts (1) (2) $89,867
==========
Units outstanding 10,000
==========
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (3) $95,603
Less sales charge (3) (5,736)
__________
Net assets $89,867
==========
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) The aggregate cost of the Securities listed under "Schedule
of Investments" is based on the offering side evaluations of the
Treasury Obligations and the net asset value of the Special Situations
shares.
(2) An irrevocable letter of credit totaling $150,000, issued
by Bankers Trust Company, has been deposited with the Trustee
which is sufficient for the purchase of the Securities pursuant
to contracts for the purchase of such Securities.
(3) The aggregate cost to investors includes a sales charge computed
at the rate of 6.0% of the Public Offering Price (equivalent to
6.383% of the net amount invested), assuming no reduction of sales
charge for quantity purchases.
Page 30
Schedule of Investments
FIRST INVESTORS SPECIAL SITUATIONS
GROWTH & TREASURY SECURITIES TRUST, SERIES 1
At the Opening of Business on June 27, 1994
the Initial Date of Deposit
<TABLE>
<CAPTION>
PORTFOLIO
Percentage of Cost of
Maturity Aggregate Securities
Value Name of Issuer and Title of Security (1) Offering Price to Trust (2)
________ ________________________________________ ______________ ____________
<C> <S> <C> <C>
"Zero Coupon" U.S. Treasury bonds
$100,000 maturing on August 15, 2005 48.87% $43,916
Number of
Shares
_________
2,840 First Investors Series Fund, Special Situations
Series 51.13% 45,951
________ ________
Total Investments 100% $89,867
======== ========
</TABLE>
[FN]
____________________
(1) The Treasury Obligations have been purchased at a discount
from their par value because there is no stated interest income
thereon (such securities are often referred to as U.S. Treasury
zero coupon bonds). Over the life of the Treasury Obligations
the value increases, so that upon maturity the holders will receive
100% of the principal amount thereof.
Shares of First Investors Special Situations Series ("Special
Situations") have been valued at their net asset value as of the
opening of business on the Initial Date of Deposit.
All Securities are represented by regular way contracts to purchase
such Securities for the performance of which an irrevocable letter
of credit has been deposited with the Trustee. The contracts to
purchase the Securities were entered into by the Sponsor on June
24 and 27, 1994.
(2) The cost of the Securities to the Trust represents the offering
side evaluation as determined by First Trust Advisors L.P., the
Evaluator, (an affiliate of the Sponsor) with respect to the Treasury
Obligations and the net asset value with respect to the Special
Situations shares acquired. The offering side evaluation of the
Treasury Obligations is greater than the bid side evaluation of
such Treasury Obligations which is the basis on which the Redemption
Price per Unit will be determined after the initial offering period.
The aggregate value, based on the bid side evaluation of the Treasury
Obligations and the net asset value of the Special Situations
shares on the Initial Date of Deposit, was $89,539. Cost and profit
to the Sponsor relating to the purchase of the Treasury Obligations
were $43,588 and $328, respectively. Cost and profit to the Sponsor
relating to the Special Situations shares were $45,951 and $0,
respectively.
Page 31
<TABLE>
<CAPTION>
CONTENTS:
<S> <C>
Summary of Essential Information 4
First Investors Special Situations Growth & Treasury
Securities Trust, Series 1
What is First Investors Special Situations Growth
& Treasury Securities 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? 9
Portfolio:
What are Treasury Obligations? 10
What is First Investors Special Situations Series? 10
What is Special Situations' Investment Objective
and Policies? 12
Description of Certain Securities, Other
Investment Policies and Risk Factors 14
Who is the Management of Special
Situations? 15
What are Some Additional Considerations
for Investors? 17
Public Offering:
How is the Public Offering Price Determined? 19
How are Units Distributed? 20
What are the Sponsor's Profits? 20
Will There be a Secondary Market? 21
Rights of Unit Holders:
How is Evidence of Ownership Issued
and Transferred? 21
How are Income and Capital Distributed? 21
How Can Distributions to Unit Holders
be Reinvested? 22
What Reports Will Unit Holders Receive? 23
How May Units be Redeemed? 23
How May Units be Purchased by the Sponsor? 24
How May Securities be Removed from the Trust? 24
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 25
Who is the Trustee? 25
Limitations on Liabilities of Sponsor and Trustee 25
Who is the Evaluator? 26
Other Information:
How May the Indenture Be Amended
or Terminated? 26
Legal Opinions 27
Experts 27
Underwriting 27
Report of Independent Auditors 29
Statement of Net Assets 30
Schedule of Investments 31
</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 TRUST HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, AND TO WHICH REFERENCE IS HEREBY MADE.
First Investors
Corporation
First Investors
Special Situations
Growth & Treasury
Securities Trust
Series 1
First Investors Corporation
95 Wall Street
New York, New York 10005
Trustee:
The Bank of New York
101 Barclay Street
New York, New York 10286
1-800-221-7668
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
June 27, 1994
Page 32
