Registration No. 33-54199
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
A. EXACT NAME OF TRUST:
FIRST INVESTORS SPECIAL SITUATIONS GROWTH & TREASURY SECURITIES
TRUST, SERIES 1
B. NAME OF DEPOSITOR: NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
NIKE SECURITIES L.P.
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agent for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
E. Title and Amount of Securities Being Registered:
An indefinite number of Units pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended
F. Proposed Maximum Aggregate Offering Price to the Public of
the
Securities Being Registered:
Indefinite
G. Amount of Filing Fee (as required by Rule 24f-2):
$500.00 (previously paid)
H. Approximate date of proposed sale to public:
As soon as practicable after the effective date of the
Registration Statement.
____________________________
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
FIRST INVESTORS SPECIAL SITUATIONS GROWTH & TREASURY SECURITIES
TRUST, SERIES 1
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust Prospectus front cover
(b) Title of securities issued Summary of Essential
Information
2. Name and address of each Information as to
depositor Sponsor, Trustee and
Evaluator
3. Name and address of Information as to
trustee Sponsor, Trustee and
Evaluator
4. Name and address of Information as to
principal underwriters Sponsor, Trustee and
Evaluator
5. State of organization First Investors Special
of trust Situations Growth &
Treasury Securities Trust
6. Execution and termination Other information
of trust agreement
7. Changes of name *
8. Fiscal Year *
9. Litigation *
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer Public Offering
securities
(b) Cumulative or distributive First Investors Special
securities Situations Growth &
Treasury Securities Trust
(c) Redemption Rights of Unitholders
(d) Conversion, transfer, etc. Rights of Unitholders
(e) Periodic payment plan *
(f) Voting rights Rights of Unitholders
(g) Notice of certificate- Other Information
holders
(h) Consents required Rights of Unitholders;
Other Information
(i) Other provisions First Investors Special
Situations Growth &
Treasury Securities Trust
11. Types of securities comprising First Investors Special
units Situations Growth &
Treasury Securities Trust
12. Certain information
regarding periodic payment
certificates *
13. (a) Load, fees, expenses, etc. Summary of Essential
Information; Public
Offering; First Investors
Special Situations Growth
& Treasury Securities
Trust
(b) Certain information
regarding periodic payment
certificates *
(c) Certain percentages Summary of Essential
Information; First
Investors Special
Situations Growth &
Treasury Securities
Trust; Public Offering
(d) Certain other fees, etc. Rights of Unitholders
payable by holders
(e) Certain profits receivable First Investors Special
by depositor, principal Situations Growth &
underwriters, trustee or Treasury Securities
affiliated persons Trust
(f) Ratio of annual charges to
income *
14. Issuance of trust's Rights of Unitholders
securities
15. Receipt and handling of
payments from purchasers *
16. Acquisition and disposition First Investors Special
of underlying securities Situations Growth &
Treasury Securities
Trust; Rights of
Unitholders
17. Withdrawal or redemption First Investors Special
Situations Growth &
Treasury Securities
Trust; Public Offering;
Rights of Unitholders
18. (a) Receipt, custody and
disposition of income Rights of Unitholders
(b) Reinvestment of
distributions Rights of Unitholders
(c) Reserves or special funds Information as to
Sponsor, Trustee and
Evaluator
(d) Schedule of distributions *
19. Records, accounts and
reports Rights of Unitholders
20. Certain miscellaneous
provisions of trust
agreement
(a) Amendment Other Information
(b) Termination Other Information
(c) and (d) Trustee, removal and
successor Information as to
Sponsor, Trustee and
Evaluator
(e) and (f) Depositor, removal Information as to
and successor Sponsor, Trustee and
Evaluator
21. Loans to security holders *
22. Limitations on liability First Investors Special
Situations Growth &
Treasury Securities
Trust; Information as to
Sponsor, Trustee and
Evaluator
23. Bonding arrangements Contents of Registration
Statement
24. Other material provisions
of trust agreement *
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor Information as to
Sponsor, Trustee and
Evaluator
26. Fees received by depositor *
27. Business of depositor Information as to
Sponsor, Trustee and
Evaluator
28. Certain information as to *
officials and affiliated
persons of depositor
29. Voting securities of *
depositor
30. Persons controlling *
depositor
31. Payment by depositor for *
certain services rendered
to trust
32. Payment by depositor for *
certain other services rendered to trust
33. Remuneration of other *
persons for certain
services rendered to trust
34. Remuneration of other *
persons for certain services
rendered to trust
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's
securities by states Public Offering
36. Suspension of sales of
trust's securities *
37. Revocation of authority
to distribute *
38. (a) Method of distribution Public Offering
(b) Underwriting agreements Public Offering;
Underwriting
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) N.A.S.D. membership of Information as to
principal underwriters Sponsor, Trustee and
Evaluator
40. Certain fee received by See Items 13(a) and 13(e)
principal underwriters
41. (a) Business of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) Branch offices of
principal underwriters *
(c) Salesmen of principal
underwriters *
42. Ownership of trust's
securities by certain
persons *
43. Certain brokerage
commissions received
by principal underwriters *
44. (a) Method of valuation Summary of Essential
Information; First
Investors Special
Situations Growth &
Treasury Securities
Trust; Public Offering
(b) Schedule as to offering
price *
(c) Variation in offering Public Offering
price to certain persons
45. Suspension of redemption
rights *
46. (a) Redemption Valuation Rights of Unitholders
(b) Schedule as to redemption
price *
47. Maintenance of position Public Offering; Rights
in underlying securities of Unitholders
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation Information as to
of trustee Sponsor, Trustee and
Evaluator
49. Fees and expenses of trustee First Investors Special
Situations Growth &
Treasury Securities Trust
50. Trustee's lien First Investors Special
Situations Growth &
Treasury Securities Trust
VI. INFORMATION CONCERNING THE INSURANCE OF HOLDERS OR
SECURITIES
51. Insurance of holders of *
trust's securities
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust First Investors Special
agreement with respect Situations Growth &
to selection or elimination Treasury Securities
of underlying securities Trust; Rights of
Unitholders
(b) Transactions involving
elimination of underlying
securities *
(c) Policy regarding First Investors Special
substitution or elimination Situations Growth &
of underlying securities Treasury Securities
Trust; Rights of
Unitholders
(d) Fundamental policy not
otherwise covered *
53. Tax status of Trust First Investors Special
Situations Growth &
Treasury Securities Trust
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during
last ten years *
55.
56.
57. Certain information regarding *
periodic payment plan
certificates
58.
59. Financial statements Report of Independent
(Instruction 1(c) to Auditors; Statement of
Form S-6) Net Assets
__________________________
* Inapplicable, answer negative or not required.
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 $2,000. 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.
<TABLE>
<CAPTION>
Shareholder Transaction Expenses
<S> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price){ 6.25%
Exchange Fee (1) $0
</TABLE>
<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(as a percentage of average net assets)
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.
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.
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
Page 16
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 Securities
and Exchange Commission ("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 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
Page 17
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 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 $2,000. The applicable sales
charge is reduced by a discount as indicated below for volume
purchases:
Page 18
<TABLE>
<CAPTION>
Sales Charge
Primary and Secondary
_______________________________
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 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
Page 19
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 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.
Page 20
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 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
Page 21
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 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.
Page 22
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.
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
Page 23
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.
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
Page 24
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 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
Page 25
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?"
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
Page 26
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 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 27
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 28
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 29
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 30
This page is intentionally left blank.
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? 18
How are Units Distributed? 19
What are the Sponsor's Profits? 20
Will There be a Secondary Market? 20
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? 24
Who is the Trustee? 25
Limitations on Liabilities of Sponsor and Trustee 25
Who is the Evaluator? 25
Other Information:
How May the Indenture Be Amended
or Terminated? 26
Legal Opinions 26
Experts 26
Underwriting 26
Report of Independent Auditors 28
Statement of Net Assets 29
Schedule of Investments 30
</TABLE>
_______________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION
TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET
FORTH IN THE REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO,
WHICH THE 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
CONTENTS OF REGISTRATION STATEMENT
A. Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Brokers' Fidelity
Bond, in the total amountof $1,000,000, the insurer
being National Union Fire Insurance Company of
Pittsburgh.
B.This Registration Statement on Form S-6 comprises the following
papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, First Investors Special Situations Growth &
Treasury Securities Trust, Series 1, has duly caused this
Amendment to Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the Village of
Lisle and State of Illinois on June 27, 1994.
FIRST INVESTORS SPECIAL SITUATIONS
GROWTH & TREASURY SECURITIES TRUST,
SERIES 1
By: NIKE SECURITIES L.P.
Depositor
By Carlos E. Nardo
Senior Vice President
S-2
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below by the following person in the capacity and on the date
indicated:
NAME TITLE* DATE
Robert D. Van Kampen Sole Director )
of Nike Securities )
Corporation, the ) June 27, 1994
General Partner of )
Nike Securities L.P. )
)
) Carlos E. Nardo
)Attorney-in-Fact**
)
)
)
* The title of the person named herein represents his
capacity in and relationship to Nike Securities L.P.,
Depositor.
** An executed copy of the related power of attorney was
filed with the Securities and Exchange Commission in
connection with the Amendment No. 1 to Form S-6 of The
First Trust Special Situations Trust, Series 18 (File No.
33-42683) and the same is hereby incorporated herein by
this reference.
S-3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated June 27, 1994 in
Amendment No. 1 to the Registration Statement (Form S-6) (File
No. 33-54199) and related Prospectus of First Investors Special
Situations Growth & Treasury Securities Trust, Series 1.
ERNST & YOUNG
Chicago, Illinois
June 27, 1994
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement
will be filed as Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for First
Trust Special Situations Trust, Series 1 and subsequent
Series effective June 27, 1994 among Nike Securities
L.P., as Depositor, The Bank of New York as Trustee,
First Trust Advisors L.P., as Evaluator, and First Trust
Advisors L.P. as Portfolio Supervisor.
1.1.1 Form of Trust Agreement for Series 1 among Nike
Securities L.P., as Depositor, The Bank of New York, as
Trustee, First Trust Advisors L.P., as Evaluator, and
First Trust Advisors L.P., as Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities L.P.,
Depositor (incorporated by reference to Amendment No. 1
to Form S-6 [File No. 33-42683] filed on behalf of The
First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
1.6 Master Agreement Among Underwriters.
3.1 Opinion of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal income tax status of
securities being registered.
3.3 Opinion of counsel as to New York income tax status of
securities being registered.
S-5
3.4 Opinion of counsel as to advancement of funds by Trustee.
4.1 Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on page
S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
S-6
STANDARD TERMS AND CONDITIONS OF TRUST
FOR
FIRST INVESTORS SPECIAL SITUATIONS GROWTH & TREASURY SECURITIES
TRUST, SERIES 1
(AND SUBSEQUENT SERIES)
EFFECTIVE: JUNE 27, 1994
BETWEEN
NIKE SECURITIES L.P.
DEPOSITOR
THE BANK OF NEW YORK
TRUSTEE
FIRST TRUST ADVISORS L.P.
EVALUATOR
FIRST TRUST ADVISORS L.P.
PORTFOLIO SUPERVISOR
TABLE OF CONTENTS
Preamble 1
ARTICLE I DEFINITIONS 2
ARTICLE II DEPOSIT OF SECURITIES; ACCEPTANCE OF TRUST;
SEPARATE TRUSTS 5
Section 2.01. Deposit of Securities 5
Section 2.02. Acceptance of Trust 7
Section 2.03. Issuance of Units 7
Section 2.04. Letter of Credit 8
Section 2.05. Separate Trusts 8
ARTICLE III ADMINISTRATION OF FUND 8
Section 3.01. Initial Cost 8
Section 3.02. Income Account 9
Section 3.03. Capital Account 9
Section 3.04. Reserve Account 9
Section 3.05. Deductions and Distributions 9
Section 3.06. Distribution Statements 12
Section 3.07. Sale of Securities 14
Section 3.08. Counsel 15
Section 3.09. Notice and Sale by Trustee 15
Section 3.10. Trustee not Required to Amortize 15
Section 3.11. Liability of Depositor 16
Section 3.12. Notice to Depositor 16
Section 3.13. Replacement Securities 16
Section 3.14. Portfolio Supervisor 18
Section 3.15. Abatement of Compensation of the Trustee,
Evaluator and Portfolio Supervisor 19
ARTICLE IV EVALUATION OF SECURITIES; EVALUATOR 19
Section 4.01. Evaluation by Evaluator 19
Section 4.02. Information for Unit Holders 20
Section 4.03. Compensation of Evaluator 20
Section 4.04. Liability of Evaluator 20
Section 4.05. Resignation and Removal of Evaluator;
Successor. 20
ARTICLE V EVALUATION, REDEMPTION, PURCHASE OR TRANSFER
OF Units 22
Section 5.01. Trust Evaluation 22
Section 5.02. Redemptions by Trustee; Purchases by
Depositor 23
Section 5.03. Transfer of Units 27
ARTICLE VI TRUSTEE 27
Section 6.01. General Definition of Trustee's Liabilities,
Rights and Duties 27
Section 6.02. Books, Records and Reports 30
Section 6.03. Indenture and List of Securities on File 31
Section 6.04. Compensation 31
Section 6.05. Removal and Resignation of Trustee; Successor
33
Section 6.06. Qualifications of Trustee 34
ARTICLE VII RIGHTS OF UNIT HOLDERS 34
Section 7.01. Beneficiaries of Trust 34
Section 7.02. Rights, Terms and Conditions 34
ARTICLE VIII ADDITIONAL COVENANTS; MISCELLANEOUS
PROVISIONS 35
Section 8.01. Amendments 35
Section 8.02. Termination 36
Section 8.03. Construction 37
Section 8.04. Registration of Units 37
Section 8.05. Written Notice 38
Section 8.06. Severability 38
Section 8.07. Dissolution of Depositor Not to Terminate 38
STANDARD TERMS AND CONDITIONS OF TRUST
FOR
FIRST INVESTORS SPECIAL SITUATIONS GROWTH & TREASURY SECURITIES
TRUST, SERIES 1
(and subsequent Series)
Effective: June 27, 1994
These Standard Terms and Conditions of Trust effective June
27, 1994 are executed between Nike Securities L.P., as Depositor,
The Bank of New York, as Trustee, First Trust Advisors L.P., as
Evaluator and First Trust Advisors L.P., as Portfolio Supervisor.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
Preamble
INTRODUCTION
These Standard Terms and Conditions of Trust, effective June
27, 1994, shall be applicable to First Investors Special
Situations Growth & Treasury Securities Trust, Series 1 and all
subsequent Series established after the date of effectiveness
hereof, as provided in this paragraph. For First Investors
Special Situations Growth & Treasury Securities Trust, Series 1
and all subsequent Series established after the date of
effectiveness hereof to which these Standard Terms and Conditions
of Trust, effective June 27, 1994, are to be applicable, the
Depositor, the Trustee, the Evaluator and the Portfolio
Supervisor shall execute a Trust Agreement, incorporating by
reference these Standard Terms and Conditions of Trust, effective
June 27, 1994, and designating any exclusion from or exception to
such incorporation by reference for the purposes of that Series
or variation of the terms hereof for the purposes of that Series
and specifying for that Series and for each Trust in such Series
(i) the Securities deposited in trust, (ii) the number of Units
delivered by the Trustee on the Initial Date of Deposit in
exchange for the Securities pursuant to Section 2.03, (iii) the
fractional undivided interest represented by each Unit, (iv) the
Percentage Ratio, (v) the Record Dates, (vi) the Distribution
Dates, (vii) the Mandatory Termination Date, (viii) the
Evaluator's compensation, (ix) the Trustee's compensation and
(x) the Initial Date of Deposit.
WHEREAS, Units of the Trust will be held in uncertificated
form and evidence of such ownership will be recorded on the
registration books of the Trustee:
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the Depositor, the Trustee,
the Evaluator and the Portfolio Supervisor agree as follows:
.
ARTICLE I
DEFINITIONS
Section 1.01. Whenever used in this Indenture the
following words and phrases, unless the context clearly indicates
otherwise, shall have the following meanings:
(1) "Depositor" shall mean Nike Securities L.P. and
its successors in interest, or any successor depositor appointed
as hereinafter provided.
(2) "Trustee" shall mean The Bank of New York, or any
successor trustee appointed as hereinafter provided.
(3) "Evaluator" shall mean First Trust Advisors L.P.
and its successors in interest, or any successor evaluator
appointed as hereinafter provided.
(4) "Portfolio Supervisor" shall mean First Trust
Advisors L.P. and its successors in interest, or any successor
Portfolio Supervisor appointed as hereinafter provided.
(5) "Business Day" shall mean any day on which the
New York Stock Exchange is open.
(6) "Contract Obligations" shall mean Securities which
are to be acquired by the Trust pursuant to purchase contracts
which have been assigned to the Trustee.
(7) "Distribution Date" shall have the meaning
assigned to it in the Trust Agreement.
(8) "Indenture" shall mean these Standard Terms and
Conditions of Trust as originally executed or, if amended as
hereinafter provided, as so amended, together with the Trust
Agreement creating a particular series of the Fund.
(9) "Initial Date of Deposit" shall have the meaning
assigned to it in the Trust Agreement.
(10) "Letter of Credit" shall mean an irrevocable
letter or letters of credit of a financial institution deposited
by the Depositor with the Trustee on the Initial Date of Deposit
in an amount at least equal to the purchase price of the
Securities.
(11) "Mutual Fund" shall mean any open-end diversified
management investment company deposited in a Trust as specified
in the Trust Agreement thereof.
(12) "Notice of Deposit of Additional Securities" shall
mean an amendment or supplement to the Indenture pursuant to
Section 2.01(b) for the purpose of depositing additional
securities in the Trust Fund and issuing additional Units.
(13) "Percentage Ratio" shall mean, for each Trust
which will issue additional Units pursuant to Section 2.03
hereof, the percentage relationship existing on the Initial Date
of Deposit between (1) the maturity value per Unit of the Zero
Coupon Obligations and (2) the number of Mutual Fund shares per
Unit. Such Percentage Ratio shall be calculated and included in
each Trust Agreement and each Notice of Deposit of Additional
Securities.
(14) "Prospectus" shall mean the prospectus relating to
the Trust Fund filed with the Securities and Exchange Commission
pursuant to Rule 497(b) under the Securities Act of 1933, as
amended, and dated the date of the Trust Agreement.
(15) "Record Date" shall have the meaning assigned to
it in the Trust Agreement.
(16) "Reinvestment Program" shall mean the program for
reinvestment of principal, income and capital gains payments
payable to a Unit holder, in additional shares of the Mutual Fund
in such Trust Fund.
(17) "Replacement Security" shall have the meaning
assigned to it in Section 3.13 hereof.
(18) "Restricted Securities" shall mean those
Securities that cannot be sold publicly by the Trustee without
registration under the Securities Act of 1933, as amended.
(19) "Securities" shall mean Zero Coupon Obligations
and Mutual Fund shares deposited in the Trust Fund, which
Securities are listed in Schedule A to the Trust Agreement or are
Securities deposited in the Trust Fund pursuant to
Section 2.01(b) hereof, and Replacement Securities acquired
pursuant to Section 3.13 hereof, as may from time to time to be
construed to be held as part of the Trust Fund.
(20) "Trust Fund" or "Fund" shall mean the collective
Trusts created by the Trust Agreement, which shall consist of
Securities held pursuant and subject to the Indenture, together
with all undistributed income or other amounts received or
accrued thereon, any undistributed cash held in the Income and
Capital Accounts or otherwise realized from the sale, redemption,
liquidation or maturity thereof. Such amounts as may be on
deposit in the Reserve Account as hereinafter established shall
be excluded from the Trust Fund.
(21) "Trust" or "Trusts" shall mean the separate trust
or trusts created by the Trust Agreement, the Securities
constituting the portfolio which is listed in Schedule A attached
to the Trust Agreement.
(22) "Trust Agreement" shall mean the Trust Agreement
for the particular series of the Fund into which these Standard
Terms and Conditions of Trust are incorporated.
(23) "Unit" shall mean each Unit of fractional
undivided interest in and ownership of the Trust which shall be
initially equal to the fraction specified in the Trust Agreement,
the denominator of which fraction shall be (1) increased by the
number of any additional Units issued pursuant to Section 2.03
hereof and (2) decreased by the number of any Units redeemed as
provided in Section 5.02 hereof. Whenever reference is made
herein to the "interest" of a Unit holder in the Trust or in the
Income and Capital Accounts, it shall mean such fractional
undivided interest represented by the number of Units held of
record by such Unit holder.
(24) "Unit holder" shall mean the registered holder of
any Unit, whether or not in certificated form, as recorded on the
registration books of the Trustee.
(25) "Zero Coupon Obligations" shall mean any zero
coupon bonds, i.e., obligations which accrue but do not pay
income currently, are sold at a discount from principal value and
represent an obligation to receive the principal value thereof at
a future date, issued by the U.S. government, which are deposited
in a Trust Fund. Only Zero Coupon Obligations which, if
certificated, are or may be registered and held by the Trustee in
book entry form on the registration books of a bank or clearing
house authorized to have custody of assets of a unit investment
trust pursuant to the Investment Company Act of 1940 shall be
eligible for deposit in any Trust Fund.
(26) Words importing singular number shall include the
plural number in each case and vice versa, and words importing
persons shall include corporations and associations, as well as
natural persons.
(27) The words "herein", "hereby", "herewith",
"hereof", "hereinafter", "hereunder", "hereinabove", "hereafter",
"heretofore" and similar words or phrases of reference and
association shall refer to this Indenture in its entirety.
ARTICLE II DEPOSIT OF SECURITIES; ACCEPTANCE OF TRUST;
SEPARATE TRUSTS
Section 2.01. Deposit of Securities. (a) The
Depositor, on the date of the Trust Agreement, has deposited with
the Trustee in trust the Securities listed in Schedule A to the
Trust Agreement in bearer form or duly endorsed in blank or
accompanied by all necessary instruments of assignment and
transfer in proper form or Contract Obligations relating to such
Securities to be held, managed and applied by the Trustee as
herein provided. The Depositor shall deliver the Securities
listed on said Schedule A to the Trustee which were not actually
delivered concurrently with the execution and delivery of the
Trust Agreement and which were represented by Contract
Obligations within 10 calendar days after said execution and
delivery (the "Delivery Period"). If a contract to buy such
Securities between the Depositor and seller is terminated by the
seller thereof for any reason beyond the control of the
Depositor, or if for any other reason the Securities are not
delivered to the Trust by the end of the Delivery Period, the
Trustee shall immediately draw on the Letter of Credit, if any,
in its entirety, apply the monies in accordance with
Section 2.01(d), and the Depositor shall forthwith take the
remedial action specified in Section 3.13. If the Depositor does
not take the action specified in Section 3.13 within 10 calendar
days of the end of the Delivery Period, the Trustee shall
forthwith take the action specified in Section 3.13. The Trustee
has received a letter from independent public accountants
verifying the computations that Unit holders will receive $10.00
per Unit upon the Mandatory Termination Date.
(b) From time to time following the Initial Date of
Deposit, the Depositor is hereby authorized, in its discretion,
to assign, convey to and deposit with the Trustee additional
Securities, duly endorsed in blank or accompanied by all
necessary instruments of assignment and transfer in proper form
(or Contract Obligations relating to such Securities), to be
held, managed and applied by the Trustee as herein provided.
Such deposit of additional Securities shall be made, in each
case, pursuant to a Notice of Deposit of Additional Securities
from the Depositor to the Trustee with a copy to Standard &
Poor's Corporation so long as Units of the Trust are rated by
them. The Trustee shall not accept any deposit pursuant to this
Section 2.01(b) unless the Depositor and Trustee have each
determined that the maturity value of the Zero Coupon Obligations
included in the deposit, divided by the number of Units created
by reason of the deposit, shall equal $10.00; written
certifications of such determinations shall be executed by the
Depositor and Trustee and preserved in the Trust records with a
copy of each such written certification to Standard & Poor's
Corporation so long as Units of the Trust are rated by them. The
Depositor shall, at its expense, cause independent public
accountants to review the Trust's holdings at the later of
(i) such time as the Depositor determines no further deposits
shall be made pursuant to this paragraph and (ii), as of the 90th
day following the initial deposit, for the purpose of certifying
whether the face value of the Zero Coupon Obligations then held
by the Trust divided by the Units then outstanding equals $10.00.
A copy of each written report from the independent public
accountants based on their review will be provided to Standard &
Poor's Corporation so long as Units of the Trust are rated by
them. The Depositor, in each case, shall ensure that each
deposit of additional Securities pursuant to this Section shall
be, as nearly as is practicable, in the identical ratio as the
Percentage Ratio for such Securities as is specified in the Trust
Agreement for each Trust and that such Securities are identical
to those deposited on the Initial Date of Deposit. The Depositor
shall deliver the additional Securities which were not delivered
concurrently with the deposit of additional Securities and which
were represented by Contract Obligations within 10 calendar days
after such deposit of additional Securities (the "Additional
Securities Delivery Period"). If a contract to buy such
Securities between the Depositor and Seller is terminated by the
Seller thereof for any reason beyond the control of the Depositor
or if for any other reason the Securities are not delivered to
the Trust by the end of the Additional Securities Delivery Period
for such deposit, the Trustee shall immediately draw on the
Letter of Credit, if any, in its entirety, apply the monies in
accordance with Section 2.01(d), and the Depositor shall
forthwith take the remedial action specified in Section 3.13. If
the Depositor does not take the action specified in Section 3.13
within 10 calendar days of the end of the Additional Securities
Delivery Period, the Trustee shall forthwith take the action
specified in Section 3.13.
(c) In connection with the deposits described in
Section 2.01 (a) and (b), the Depositor has, in the case of
Section 2.01(a) deposits, and, prior to the Trustee accepting a
Section 2.01(b) deposit, will, deposit cash and/or Letter(s) of
Credit (meeting the conditions set forth in Section 2.04) in an
amount sufficient to purchase the Contract Obligations (the
"Purchase Amount") relating to Securities which are not actually
delivered to the Trustee at the time of such deposit, plus in the
case of Contract Obligations which are Zero Coupon Obligations an
additional amount which when added to the Purchase Amount
attributable to the Zero Coupon Obligations (the "Zero Coupon
Obligation Purchase Amount") equals 140% of the Zero Coupon
Obligation Purchase Amount, the terms of which unconditionally
allow the Trustee to draw on the full amount of the available
Letter of Credit. The Trustee may deposit such cash or cash
drawn on the Letter of Credit in a non-interest bearing account
for the Trust.
(d) In the event that the purchase of Contract
Obligations pursuant to any contract shall not be consummated in
accordance with said contract or if the Securities represented by
Contract Obligations are not delivered to the Trust in accordance
with Section 2.01(a) or 2.01(b) and the monies, or, if
applicable, the monies drawn on the Letter of Credit, deposited
by the Depositor are not utilized for Section 3.13 purchases of
New Securities, such funds, to the extent of the purchase price
of failed Contract Obligations for which no Replacement Security
will be acquired pursuant to Section 3.13, plus all amounts
described in the next succeeding two sentences, shall be credited
to the Capital Account and distributed pursuant to Section 3.05
to Unit holders of record as of the Record Date next following
the failure of consummation of such purchase. The Depositor
shall cause to be refunded to each Unit holder his pro rata
portion of the sales charge levied on the sale of Units to such
Unit holder attributable to such Failed Security or Failed
Contract Obligation. The Depositor shall also pay to the
Trustee, for distribution to the Unit holders, interest on such
Failed Security or Failed Contract Obligation at the rate of 5%
per annum or the coupon rate thereon, whichever is greater, to
the date the Depositor is notified of the failure. Any amounts
remaining from monies drawn on the Letter of Credit which are not
used to purchase New Securities or are not used to provide
refunds to Unit holders shall be paid to the Depositor.
(e) The Trustee is hereby irrevocably authorized to
effect registration or transfer of the Securities in fully
registered form to the name of the Trustee or to the name of its
nominee.
Section 2.02. Acceptance of Trust. The Trustee hereby
declares it holds and will hold each Trust as Trustee in trust
upon the trusts herein created for the use and benefit of the
Unit holders, subject to the terms and conditions of this
Indenture.
Section 2.03. Issuance of Units. (a) The Trustee
hereby acknowledges receipt of the deposit of the Securities
listed in Schedule A to the Trust Agreement and referred to in
Section 2.01 hereof and, simultaneously with the receipt of said
deposit, has recorded on its books the ownership, by the
Depositor or such other person or persons as may be indicated by
the Depositor, of the aggregate number of Units specified in the
Trust Agreement and has delivered, or on the order of the
Depositor will deliver, in exchange for such Securities,
documentation evidencing the ownership of the number of Units
specified substantially in the form above recited, representing
the ownership of those Units. The Trustee hereby agrees that on
the date of any Notice of Deposit of Additional Securities from
the Depositor to the Trustee, it shall acknowledge that the
additional Securities identified therein have been deposited with
it by recording on its books the ownership, by the Depositor or
such other person or persons as may be indicated by the
Depositor, of the aggregate number of Units to be issued in
respect of such additional Securities so deposited representing
the ownership of an aggregate number of those Units. In the
event that the Depositor determines that the actual Percentage
Ratio between the Zero Coupon Obligations and the Mutual Fund
shares is different from the original Percentage Ratio
established on the Initial Date of Deposit, additional Securities
may be deposited in the Trust only in the original Percentage
Ratio or as nearly as is practicable to the original Percentage
Ratio.
(b) Under the terms and conditions of the Indenture,
Units will be held in uncertificated form. At such time, an
appropriate notation will be made in the registration book of the
Trustee to indicate ownership of the Units.
Section 2.04. Letter of Credit The Trustee shall not
accept any Letter of Credit under this Indenture unless (i) the
issuer thereof has a rating on its unsecured debt of AAA or A1+
by Standard & Poors Corporation and (ii) the stated expiration
date of the Letter of Credit is thirty days from the respective
date of deposit of Contract Obligations pursuant to Section
2.01(a) or 2.01(b). The Trustee is authorized to downpost the
amount available under the Letter of Credit, if any, deposited by
the Depositor by an amount equal to the purchase price of
Contract Obligations representing Mutual Fund shares delivered to
the Trust and 140% of the purchase price of Contract Obligations
representing Zero Coupon Obligations delivered to the Trust on
the date of delivery of such Mutual Fund shares or Zero Coupon
Obligations.Section 2.04. Letter of Credit The Trustee shall
not accept any Letter of Credit under this Indenture unless (i)
the issuer thereof has a rating on its unsecured debt of AAA or
A1+ by Standard & Poors Corporation and (ii) the stated
expiration date of the Letter of Credit is thirty days from the
respective date of deposit of Contract Obligations pursuant to
Section 2.01(a) or 2.01(b). The Trustee is authorized to
downpost the amount available under the Letter of Credit, if any,
deposited by the Depositor by an amount equal to the purchase
price of Contract Obligations representing Mutual Fund shares
delivered to the Trust and 140% of the purchase price of Contract
Obligations representing Zero Coupon Obligations delivered to the
Trust on the date of delivery of such Mutual Fund shares or Zero
Coupon Obligations.
Section 2.05. Separate Trusts. The Trusts created by
this Indenture are separate and distinct trusts for all purposes
and the assets of one Trust may not be commingled with the assets
of any other nor shall the expenses of any Trust be charged
against the other. The Certificates representing the ownership
of an undivided fractional interest in one Trust shall not be
exchangeable for Certificates representing the ownership of an
undivided fractional interest in any other.
ARTICLE III ADMINISTRATION OF FUND
ARTICLE III
ADMINISTRATION OF FUND
Section 3.01. Initial Cost. The cost of the initial
preparation, printing and execution of the Prospectus and the
Indenture, the initial fees of the Trustee, the fees of the
Evaluator during the initial offering period, and other
reasonable expenses in connection therewith shall be paid by the
Depositor; provided, however, that the liability on the part of
the Depositor for such initial costs, fees and expenses (other
than the Evaluator's fee as provided above) shall not include any
fees, costs or other expenses incurred in connection herewith
after the execution of the Trust Agreement and the deposit
referred to in Section 2.01.
Section 3.02. Income Account. The Trustee shall
collect the income from the Securities in each Trust as such
becomes payable (including all monies representing penalties for
the failure to make timely payments on the Securities, or as
liquidated damages for default or breach of any condition or term
of the Securities or of the underlying instrument relating to any
Securities and other income attributable to a Failed Security or
a Failed Contract Obligation for which no Replacement Security or
Replacement Contract Obligation has been obtained pursuant to
Section 3.13 hereof) and any Rule 12b-1 fees rebated in
accordance with any exemptive orders obtained from the Securities
and Exchange Commission by or on behalf of the Fund and credit
such income to a separate account for each Trust to be known as
the "Income Account".
Section 3.03. Capital Account. All monies received by
the Trustee in respect of the Securities, other than amounts
credited to the Income Account, shall be credited to a separate
account to be known as the "Capital Account" (except for (i)
monies deposited by the Depositor or monies pursuant to draws on
the Letter of Credit for purchase of Securities or Contract
Obligations pursuant to Section 2.01, which shall be separately
held in trust by the Trustee for such purpose and shall not be
credited to the Capital Account except as provided in
Section 2.01(d).
Section 3.04. Reserve Account. From time to time, the
Trustee shall withdraw from the cash on deposit in the Income
Account or the Capital Account of the appropriate Trust such
amounts as it, in its sole discretion, shall deem requisite to
establish a reserve for any applicable taxes or other
governmental charges that may be payable out of the Trust. Such
amounts so withdrawn shall be credited to a separate account for
each Trust to be known as the "Reserve Account". The Trustee
shall not be required to distribute to the Unit holders any of
the amounts in the Reserve Account; provided, however, that if it
shall, in its sole discretion, determine that such amounts are no
longer necessary for the payment of any applicable taxes or other
governmental charges, then it shall promptly deposit such amounts
in the Account from which withdrawn, or if the Trust shall have
terminated or shall be in the process of termination, the Trustee
shall distribute to each Unit holder in accordance with
Section 8.02(d) such holder's interest in the Reserve Account.
Section 3.05. Deductions and Distributions.
I. On or immediately after each Record Date, the
Trustee shall satisfy itself as to the adequacy of the Reserve
Account, making any further credits thereto as may appear
appropriate in accordance with Section 3.04 and shall then with
respect to each Trust:
(a) deduct from the Income Account or, to the extent
funds are not available in such Account, from the Capital Account
and pay to itself individually the amounts that it is at the time
entitled to receive pursuant to Section 6.04;
(b) deduct from the Income Account or, to the extent
funds are not available in such Account, from the Capital Account
and pay to, or reserve for, the Evaluator the amount that it is
at the time entitled to receive pursuant to Section 4.03;
(c) deduct from the Income Account or, to the extent
funds are not available in such Account, from the Capital Account
and pay to counsel, as hereinafter provided for, an amount equal
to unpaid fees and expenses, if any, of such counsel pursuant to
Section 3.08, as certified to by the Depositor; and
(d) deduct from the Income Account or to the extent
funds are not available in such Account, from the Capital Account
and pay to, or reserve for, the Portfolio Supervisor the amount
that it is at the time entitled to receive pursuant to
Section 3.14.
II. (a) On each Distribution Date, the Trustee shall
distribute an amount per Unit equal to such Unit holder's Income
Distribution (as defined below) computed as of the close of
business on the Record Date immediately preceding such
Distribution Date plus such Unit holder's pro rata share of the
balance of the Capital Account (except for monies on deposit
therein required to purchase Contract Obligations) to each Unit
holder of record at the close of business on the Record Date.
The Trust shall provide the following distribution elections:
(1) distributions to be made by mail addressed to the post office
address of the Unit holder as it appears on the registration
books of the Trustee, (2) distributions to be made to the Trustee
as agent for the Unit holder for purchase of shares of the Mutual
Fund applicable to the Trust (which shall be the Unit holders
deemed election), such purchase to be made at the net asset value
computed by the Mutual Fund five Business Days prior to the
applicable Distribution Date (or the net asset value for such
other day as will allow settlement of the purchase, in accordance
with the Mutual Fund's customary settlement procedures, on the
applicable Distribution Date) or (3) distributions to be made to
the designated agent for any other reinvestment program when, as
and if available to the Unit holder through the Depositor. Any
election other than a deemed election as described in the
preceding sentence, and any change in a prior election, shall be
by written notice to, and in form satisfactory to, the Trustee
and must be received, in proper form and properly executed, by
the Trustee by its close of business on the tenth day prior to
the Record Date for the applicable distribution (or the first
Business Day prior thereto if such day is not a Business Day). A
distribution election shall remain in effect until changed as
specified in the preceding sentence. Distributions to Unit
holders who do not effectively elect a cash distribution or
investment in such other reinvestment program as may be offered
by the Depositor shall be invested in shares of the Mutual Fund
applicable to the Trust as provided in clause (2) above. The
Trustee, as Trustee and as agent for investment of distributions,
shall be entitled to rely conclusively on the written notice of
investment election, or absence thereof, provided by the Unit
holder and shall have no liability for loss or damage resulting
from investment, or lack thereof, pursuant to such notice or
absence thereof. A transferee of any Unit may make his
distribution election in the manner as set forth above. The
Trustee shall be entitled to receive in writing a notification
from the Unit holder as to his or her change of address.
(b) For the purposes of this Section 3.05, the Unit
holder's Income Distribution shall be equal to such Unit holder's
pro rata share of the cash balance (other than amortized
discount) in the Income Account computed as of the close of
business on the Record Date immediately preceding such Income
Distribution after deduction of (i) the fees and expenses then
deductible pursuant to Section 3.05 I. and (ii) the Trustee's
estimate of other expenses properly chargeable to the Income
Account pursuant to the Indenture which have accrued, as of such
Record Date or are otherwise properly attributable to the period
to which such Income Distribution relates. For the purposes of
computing the Income Distribution, the cash balance of the Income
Account as of a Record Date shall be deemed to include dividends
declared and receivable on the Mutual Fund shares as of such
Record Date, provided that such dividends are received by the
Trustee on or prior to the following Distribution Date.
(c) The amount to be so distributed to each Unit
holder shall be that pro rata share of the balance of the Income
and Capital Accounts, computed as set forth herein, as shall be
represented by the Units registered in the name of such Unit
holder. In the computation of each such pro rata share,
fractions of less than one cent shall be omitted. After any such
distribution provided for above, any cash balance remaining in
the Income Account or the Capital Account shall be held in the
same manner as other amounts subsequently deposited in each of
such accounts, respectively.
(d) Principal and other income attributable to
Securities or Contract Obligations which the Depositor shall have
declared by written notice to the Trustee to either be Failed
Securities or Failed Contract Obligations for which Replacement
Securities or Replacement Contract Obligations are not to be
substituted pursuant to Section 3.13 hereof shall be distributed
not more than 120 days after the receipt of such notice by the
Trustee or at such earlier time in such manner as the Trustee in
its sole discretion deems to be in the best interest of Unit
holders.
(e) For the purpose of distributions as herein
provided, the Unit holders of record on the registration books of
the Trustee at the close of business on each Record Date shall be
conclusively entitled to such distribution, and no liability
shall attach to the Trustee by reason of payment to any Unit
holder of record. Nothing herein shall be construed to prevent
the payment of amounts from the Income Account and the Capital
Account to individual Unit holders by means of one check, draft
or other instrument or device provided that the appropriate
statement of such distribution shall be furnished therewith as
provided in Section 3.06 hereof.
Section 3.06. Distribution Statements. With each
distribution from the Income or Capital Accounts of a Trust, the
Trustee shall set forth, either in the instrument by means of
which payment of such distribution is made or in an accompanying
statement, the amount being distributed from each such account,
expressed as a dollar amount per Unit of such Trust. The Trustee
shall also furnish each Unit holder with a change of address form
as part of each statement and, at such times as shall be directed
by the Depositor, an election card whereby the Unit holder may
elect to participate in the Reinvestment Program.
Within a reasonable period of time after the last business
day of each calendar year, the Trustee shall furnish to each
person who at any time during such calendar year was a Unit
holder of a Trust a statement setting forth, with respect to such
calendar year and with respect to such Trust:
(A) as to the Income Account:
(1) the amount of income received or accrued on the
Securities (including amounts received as a portion of the
proceeds of any disposition of Securities and the amount of any
rebated Rule 12b-1 fees);
(2) the amounts paid from the Income Account for
purchases of Securities pursuant to Section 3.13 and for
redemptions pursuant to Section 5.02;
(3) the deductions from the Income Account for payment
into the Reserve Account;
(4) the deductions for applicable taxes and fees and
expenses of the Trustee, the Evaluator, the Portfolio Supervisor,
counsel, auditors and any expenses paid by the Trust pursuant to
Section 3.05;
(5) the amounts reserved for purchases of Contract
Obligations or for purchases made pursuant to Section 3.13; and
(6) the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a
dollar amount per 1,000 Units outstanding on the last Business
Day of such calendar year;
(B) as to the Capital Account:
(1) the date of principal payments and prepayments due
to sale, maturity, redemption, liquidation or disposition of any
of the Securities and the net proceeds received therefrom,
separately stating amounts attributable to short-term capital
gains, excluding any portion thereof credited to the Income
Account;
(2) the deductions from the Capital Account, if any,
for payment of applicable taxes and fees and expenses of the
Trustee, the Evaluator, the Portfolio Supervisor, counsel,
auditors and any expenses paid by the Trust under Section 3.05;
(3) the amount paid for purchases of Securities
pursuant to Section 3.13 and for redemptions pursuant to
Section 5.02;
(4) the deductions from the Capital Account for
payments into the Reserve Account;
(5) the amounts reserved for purchases of Contract
Obligations or for purchases made pursuant to Section 3.13; and
(6) the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a
dollar amount per 1,000 Units outstanding on the last Business
Day of such calendar year; and
(C) the following information:
(1) a list of Securities as of the last Business Day
of such calendar year, (grouped in the case of fixed income
obligations by coupon and maturity range) and a list which
identifies all Securities sold or other Securities acquired
during such calendar year, if any;
(2) the number of Units outstanding on the last
Business Day of such calendar year,
(3) the Unit Value as defined in Section 5.01 based on
the last Trust Fund Evaluation pursuant to Section 5.01 made
during such calendar year; and
(4) the amounts actually distributed or which are
otherwise attributable to Unit holders during such calendar year
from the Income and Capital Accounts, separately stated,
expressed both as total dollar amounts and as dollar amounts per
1,000 Units outstanding on the Record Dates for such
distributions and the status of such distributions for Federal
income tax purposes.
Section 3.07. Sale of Securities. If necessary, in
order to maintain the sound investment character of a Trust, the
Depositor may direct the Trustee to sell or liquidate Securities
in such Trust at such price and time and in such manner as shall
be determined by the Depositor, provided that the Depositor has
determined with the advice of the Portfolio Supervisor, if
appropriate, that any one or more of the following conditions
exist (but in the case of Zero Coupon Obligations only upon the
occurrence of events described in (f) and (g) below):
(a) that there has been a default on any of the
Securities in the payment of principal or income, or both, when
due and payable;
(b) that any action or proceeding has been instituted
at law or equity seeking to restrain or enjoin the payment of
principal or income on any such Securities, or that there exists
any other legal question or impediment affecting such Securities
or the payment of principal of or income from the same;
(c) that there has occurred any breach of covenant or
warranty in any trust indenture or other document, under which
such Securities are outstanding or otherwise relating to the
issuer or the guarantor thereof which would adversely affect,
either immediately or contingently, the payment of principal of
or income from the Securities, or their general credit standing,
or otherwise impair the sound investment character of such
Securities;
(d) that there has been a default in the payment of
principal of or income from or premium, if any, on any other
outstanding obligations of the issuer of such Securities;
(e) that the price of any such Securities had declined
to such an extent or other such market or credit factors exist so
that in the opinion of the Depositor, as evidenced in writing to
the Trustee, the retention of such Securities would be
detrimental to the Trust Fund and to the interest of the Unit
holders;
(f) that all of the Securities in the Trust Fund will
be sold in connection with the termination of the Trust pursuant
to Section 8.02 hereof;
(g) that such sale is required due to Units tendered
for redemption.
Upon receipt of such direction from the Depositor, upon
which the Trustee shall rely, the Trustee shall proceed to sell
or liquidate the specified Securities in accordance with such
direction, and upon the receipt of the proceeds of any such sale
or liquidation, after deducting therefrom any fees and expenses
of the Trustee connected with such sale or liquidation and any
brokerage charges, taxes or other governmental charges, shall
deposit such net proceeds in the Capital Account; provided,
however, that Zero Coupon Obligations may not be sold to pay the
fees and expenses of the Trust, including the Trustee's fees, the
Portfolio Supervisor's fees and the Evaluator's fees.
The Trustee shall not be liable or responsible in any way
for depreciation or loss incurred by reason of any sale made
pursuant to any such direction or by reason of the failure of the
Depositor to give any such direction, and in the absence of such
direction the Trustee shall have no duty to sell or liquidate any
Securities under this Section 3.07 except to the extent otherwise
required by Section 3.09 of this Indenture.
Section 3.08. Counsel. The Depositor may employ from
time to time, as it deems necessary or desirable, a firm of
attorneys for any legal services which may be required in
connection with the Securities, including any advice as to
whether any Securities constitute Restricted Securities and any
legal matters relating to the possible disposition or acquisition
of any Securities pursuant to any provisions hereof or for any
other reasons deemed advisable by the Depositor or the Trustee,
in their discretion. The fees and expenses of such counsel may,
at the discretion of the Depositor, be paid by the Trustee from
the Income Account and Capital Account as provided for in
Section 3.05(I)(c) hereof.
Section 3.09. Notice and Sale by Trustee. If at any
time the principal stated value or par value of or income from
any of the Securities shall be in default and not paid or
provision for payment thereof shall not have been duly made, the
Trustee shall notify the Depositor thereof. If within 30 days
after such notification the Depositor has not given any
instruction to sell or hold or has not taken any other action in
connection with such Securities, the Trustee shall sell such
Securities forthwith, and neither the Depositor nor the Trustee
shall be liable or responsible in any way for depreciation or
loss incurred by reason of such sale.
Section 3.10. Trustee not Required to Amortize.
Nothing in this Indenture, or otherwise, shall be construed to
require the Trustee to make any adjustments between the Income
and Capital Accounts by reason of any premium or discount in
respect of any of the Securities.
Section 3.11. Liability of Depositor. The Depositor
shall be under no liability to the Unit holders for any action
taken or for refraining from the taking of any action in good
faith pursuant to this Indenture or for errors in judgment, but
shall be liable only for its own willful misfeasance, bad faith
or gross negligence in the performance of its duties or by reason
of its reckless disregard of its obligations and duties
hereunder. The Depositor may rely in good faith on any paper,
order, notice, list, affidavit, receipt, opinion, endorsement,
assignment, draft or any other document of any kind prima facie
properly executed and submitted to it by the Trustee, bond
counsel or any other persons pursuant to this Indenture and in
furtherance of its duties.
Section 3.12. Notice to Depositor. In the event that
the Trustee shall have been notified at any time of any action to
be taken or proposed to be taken by at least a legally required
number of holders of any Zero Coupon Obligation (including but
not limited to the making of any demand, direction, request,
giving of any notice, consent or waiver or the voting with
respect to any amendment or supplement to any indenture,
resolution, agreement or other instrument under or pursuant to
which the Zero Coupon Obligations have been issued) the Trustee
shall promptly notify the Depositor and shall thereupon take such
action or refrain from taking any action as the Depositor shall
in writing direct; provided, however, that if the Depositor shall
not within five Business Days of the giving of such notice to the
Depositor direct the Trustee to take or refrain from taking any
action, the Trustee shall take such action as it, in its sole
discretion, shall deem advisable.
In the event that the Trustee shall have been notified at
any time of any action to be taken or proposed to be taken by at
least a legally required number of holders of the shares of any
Mutual Fund deposited in a Trust, the Trustee shall take such
action or omit from taking any action, as appropriate, so as to
insure that the shares of such Mutual Fund are voted as closely
as possible in the same manner and the same general proportion,
with respect to all issues, as are the shares of such Mutual Fund
held by owners other than the Trust.
Neither the Depositor nor the Trustee shall be liable to any
person for any action or failure to take action pursuant to the
terms of this Section 3.12 other than failure to notify the
Depositor.
Section 3.13. Replacement Securities. In the event
that any contract to purchase any Contract Obligation is not
consummated in accordance with its terms (a "Failed Contract
Obligation"), the Depositor may instruct the Trustee in writing
to purchase a replacement security as defined herein which has
been selected by the Depositor (the "Replacement Security") or,
if the Depositor does not provide such an instruction, the
Trustee shall purchase a Replacement Security out of funds held
by the Trustee pursuant to Section 3.03. Purchases of
Replacement Securities (the "New Securities") will be made
subject to the conditions set forth below:
(a) The New Securities shall be Zero Coupon
Obligations or Mutual Fund shares as originally selected for
deposit in that series of the Trust and any New Securities which
are Zero Coupon Obligations must have the same maturity value as
the Failed Contract Obligation and, as close as is reasonably
practical, the same maturity date, which must be prior to the
Mandatory Termination Date;
(b) The purchase of the New Securities shall not
adversely affect the Federal income tax status of the Trust;
(c) The purchase price of the New Securities shall not
exceed the total amount of cash deposited, or the amount drawn
under the Letter of Credit deposited, by the Depositor at the
time of the deposit of the Failed Contract Obligation;
(d) The written instructions of the Depositor shall
(i) identify the New Securities to be purchased, (ii) state that
the contract to purchase, if any, to be entered into by the
Trustee is satisfactory in form and substance and (iii) state
that the foregoing conditions of clauses (a) through (d) have
been satisfied with respect to the New Securities; and
(e) The New Securities shall be purchased within
thirty days after the deposit of the Failed Contract Obligation.
Upon satisfaction of the foregoing conditions with respect
to any New Securities which shall be certified by the Depositor
in the written instruction to the Trustee identifying the New
Securities, the Trustee shall enter into the contract to purchase
such New Securities and take all steps reasonably necessary to
complete the purchase thereof. Whenever a New Security is
acquired by the Trustee pursuant to the provisions of this
Section, the Trustee will, as agent for the Depositor, not later
than 5 days after such acquisition, mail to each Unit holder a
notice of such acquisition, including an identification of the
Securities eliminated and the Securities acquired. Amounts in
respect of the purchase price thereof on account of principal
shall be paid out of and charged against the cash deposited, or
the amounts drawn under the Letter of Credit deposited, by the
Depositor at the time of the deposit of the Failed Contract
Obligation. In the event the Trustee shall not consummate any
purchase of New Securities pursuant to this Section 3.13, funds
held for such purchase shall be distributed in accordance with
Section 2.01(d). Any excess of the purchase price of a Failed
Contract Obligation over its corresponding Replacement Security
shall be refunded to the Depositor. The Trustee shall not be
liable or responsible in any way for depreciation or loss
incurred by reason of any purchase made pursuant to, or any
failure to make any purchase authorized by, this Section 3.13.
The Depositor shall not be liable for any failure to instruct the
Trustee to purchase any New Securities, nor shall the Trustee or
Depositor be liable for errors of judgment in respect to this
Section 3.13; provided, however, that this provision shall not
protect the Depositor or the Trustee against any liability to
which they would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
their duties or by reason of their reckless disregard of their
obligations and duties hereunder.
Section 3.14. Portfolio Supervisor. Subject to
Section 3.15 hereof, as compensation for providing supervisory
portfolio services under this Indenture, the Portfolio Supervisor
shall receive, in arrears, against a statement or statements
therefor submitted to the Trustee monthly or annually an
aggregate annual fee in an amount which shall not exceed $0.15
per 1,000 Units outstanding as of January 1 of such year except
for a Trust during the year or years in which an initial offering
period as determined in Section 4.01 of this Indenture occurs, in
which case the fee for a month is based on the Units outstanding
at the end of such month, but in no event shall such compensation
when combined with all compensation received from other series of
the Trust for providing such supervisory services in any calendar
year exceed the aggregate cost to the Portfolio Supervisor for
the cost of providing such services. Such compensation may, from
time to time, be adjusted provided that the total adjustment
upward does not, at the time of such adjustment, exceed the
percentage of the total increase, after the date hereof, in
consumer prices for services as measured by the United States
Department of Labor Consumer Price Index entitled "All Services
Less Rent of Shelter" or similar index, if such index should no
longer be published. The consent or concurrence of any Unit
holder hereunder shall not be required for any such adjustment or
increase. Such compensation shall be paid by the Trustee, upon
receipt of invoice therefor from the Portfolio Supervisor, upon
which, as to the cost incurred by the Portfolio Supervisor of
providing services hereunder the Trustee may rely, and shall be
charged against the Income and/or Capital Accounts in accordance
with Section 3.05.
If the cash balance in the Income and Capital Accounts shall
be insufficient to provide for amounts payable pursuant to this
Section 3.14, the Trustee shall have the power to sell
(i) Securities from the current list of Securities designated to
be sold pursuant to Section 5.02 hereof, or (ii) if no such
Securities have been so designated, such Securities as the
Trustee may see fit to sell in its own discretion, and to apply
the proceeds of any such sale in payment of the amounts payable
pursuant to this Section 3.14, provided however, that Zero Coupon
Obligations may not be sold to pay for amounts payable pursuant
to this Section 3.14. Any moneys payable to the Portfolio
Supervisor pursuant to this Section 3.14 shall be secured by a
lien on the Trust prior to the interest of Unit holders, but no
such lien shall be prior to any lien in favor of the Trustee
under the provisions of Section 6.04 herein.
Except as the context otherwise requires, the Portfolio
Supervisor shall be subject to the provisions of Section 4.05
herein in the same manner as it would if it were the Evaluator.
Section 3.15. Abatement of Compensation of the
Trustee, Evaluator and Portfolio Supervisor. To the extent the
cash balances of the Income and Capital Accounts and the proceeds
of sale of Securities other than the Zero Coupon Obligations
shall be insufficient to pay all expenses of the Trust provided
for herein, such expenses shall be paid in the following order:
(i) expenses and disbursements incurred by, and indemnification
due, the Trustee, including legal and auditing expenses and such
amounts as the Trustee may reasonably require as a reserve for
future expenses, including any reserve for its indemnification,
(ii) compensation of the Trustee for extraordinary services,
(iii) compensation of the Trustee for its ordinary services,
(iv) compensation of the Evaluator, and (v) compensation of the
Portfolio Supervisor and Depositor's counsel; provided, further
that notwithstanding any other provision to the contrary in this
Indenture and that in the event of such insufficiency, the
Trustee shall continue to pay out of its own assets all expenses
of the Trust with the exception of items (iv) and (v) above in
order that no Zero Coupon Obligations be sold to pay the fees and
expenses of the Trust. The parties hereto agree that in the
event that their fees and expenses are abated pursuant to this
Section 3.15, they forever waive any right to reimbursement for
such fees and expenses abated.
ARTICLE IV
EVALUATION OF SECURITIES; EVALUATOR
Section 4.01. Evaluation by Evaluator. (a) The
Evaluator shall determine separately, and shall promptly furnish
to the Trustee and the Depositor upon request, the value of each
issue of Securities (including Contract Obligations)
("Evaluation") as of the close of trading on the New York Stock
Exchange (the "Evaluation Time") (i) on each Business Day during
the period which the Units are being offered for sale to the
public and (ii) on any other day on which a Trust Fund Evaluation
is to be made pursuant to Section 5.01 or which is requested by
the Depositor or the Trustee. For each Trust, the close of
trading on the New York Stock Exchange shall be 4:00 p.m. Eastern
time. As part of the Trust Evaluation, the Evaluator shall
determine separately and promptly furnish to the Trustee and the
Depositor upon request the Evaluation of each issue of Securities
initially deposited in the Trust on the Initial Date of Deposit.
The Evaluator's determination of the offering prices of the
Securities on the Initial Date of Deposit shall be included in
Schedule A attached to the Trust Agreement.
(b) During the initial offering period namely, from
the date of effectiveness of the Registration Statement under the
Securities Act of 1933 relating to the Units, to and including
the day which is designated in writing by the Depositor to the
Trustee and Evaluator as the conclusion of such period, such
Evaluation shall be made in the following manner: if the
Securities are listed on a national securities exchange, such
Evaluation shall generally be based on the closing sale price on
such exchange (unless the Evaluator deems such price
inappropriate as a basis for Evaluation). If the Securities are
not so listed or, if so listed, the principal market therefor is
other than on such exchange or there is no closing sale price on
such exchange, such Evaluation shall generally be based on the
following methods or any combination thereof whichever the
Evaluator deems appropriate: (a) on the basis of current offering
prices for the Zero Coupon Obligations as obtained from
investment dealers or brokers who customarily deal in securities
comparable to those held by the Trust and, with respect to any
Mutual Fund shares deposited in a Trust, the net asset value of
such shares, (b) if offering prices are not available for the
Zero Coupon Obligations, on the basis of the offering price for
comparable securities, (c) by determining the valuation of the
Zero Coupon Obligations on the offering side of the market by
appraisal, or (d) by any combination of the above. For each
Evaluation, the Evaluator shall also confirm and furnish to the
Trustee and the Depositor, on the basis of the information
furnished to the Evaluator by the Trustee as to the value of all
Trust assets other than Securities, the calculation of the Trust
Fund Evaluation to be computed pursuant to Section 5.01.
(c) After the initial offering period and both during
and after the initial offering period, for purposes of the Trust
Fund Evaluations required by Section 5.01 in determining
Redemption Value and Unit Value Evaluation of the Securities
shall be made in the manner described in 4.01(b), on the basis of
current bid prices for the Zero Coupon Obligations and the net
asset value of the Mutual Fund shares.
Section 4.02. Information for Unit Holders. For the
purpose of permitting Unit holders to satisfy any reporting
requirements of applicable federal or state tax law, the
Evaluator shall make available to the Trustee and the Trustee
shall transmit to any Unit holder upon request any determinations
made by it pursuant to Section 4.01.
Section 4.03. Compensation of Evaluator. Subject to
the provision of Section 3.15 hereof, as compensation for its
services hereunder, the Evaluator shall receive against a
statement therefor submitted to the Trustee on or before each
Record Date, an amount equal to the amount specified as
compensation for the Evaluator in the Trust Agreement provided,
however, if at any time the fee of the Trustee shall have been
increased pursuant to Section 6.04, the compensation of the
Evaluator hereunder shall at the same time be ratably increased.
The Evaluator shall charge a pro rated portion of its annual fee
at the time specified in Section 3.05, which pro rated portion
shall be calculated on the basis of the largest number of Units
in the Trust outstanding as of January 1 of such year except for
a Trust during the year or years in which an initial offering
period as determined in Section 4.01 of this Indenture occurs, in
which case the fee for a month is based on the Units outstanding
at the end of such month. If the cash balance in the Income and
Capital Accounts shall be insufficient to provide for amounts
payable pursuant to this Section 4.03, the Trustee shall have the
power to sell (i) Securities from the current list of Securities
designated to be sold pursuant to Section 5.02 hereof, or (ii) if
no such Securities have been so designated, such Securities as
the Trustee may see fit to sell in its own discretion, and to
apply the proceeds of any such sale in payment of the amounts
payable pursuant to this Section 4.03, provided however, that
Zero Coupon Obligations may not be sold to pay for amounts
payable pursuant to this Section 4.03.
Section 4.04. Liability of Evaluator. The Trustee,
the Depositor and the Unit holders may rely on any Evaluation
furnished by the Evaluator and shall have no responsibility for
the accuracy thereof. The determinations made by the Evaluator
hereunder shall be made in good faith upon the basis of the best
information available to it. The Evaluator shall be under no
liability to the Trustee, the Depositor or the Unit holders for
errors in judgment; provided, however, that this provision shall
not protect the Evaluator against any liability to which it would
otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties or by reason
of its reckless disregard of its obligations and duties
hereunder.
Section 4.05. Resignation and Removal of
Evaluator; Successor; (a) The Evaluator may resign and be
discharged hereunder, by executing an instrument in writing
resigning as Evaluator and filing the same with the Depositor and
the Trustee, not less than 60 days before the date specified in
such instrument when, subject to Section 4.05(e), such
resignation is to take effect. Upon receiving such notice of
resignation, the Depositor and the Trustee shall use their best
efforts to appoint a successor evaluator having qualifications
and at a rate of compensation satisfactory to the Depositor and
the Trustee. Such appointment shall be made by written
instrument executed by the Depositor and the Trustee, in
duplicate, one copy of which shall be delivered to the resigning
Evaluator and one copy to the successor evaluator. The Depositor
or the Trustee may remove the Evaluator at any time upon 30 days'
written notice and appoint a successor evaluator having
qualifications and at a rate of compensation satisfactory to the
Depositor and the Trustee. Such appointment shall be made by
written instrument executed by the Depositor and the Trustee, in
duplicate, one copy of which shall be delivered to the Evaluator
so removed and one copy to the successor evaluator. Notice of
such resignation or removal and appointment of a successor
evaluator shall be mailed by the Trustee to each Unit holder then
of record.
(b) Any successor evaluator appointed hereunder shall
execute, acknowledge and deliver to the Depositor and the Trustee
an instrument accepting such appointment hereunder, and such
successor evaluator without any further act, deed or conveyance
shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder with like effect as if
originally named Evaluator herein and shall be bound by all the
terms and conditions of this Indenture.
(c) In case at any time the Evaluator shall resign and
no successor evaluator shall have been appointed and have
accepted appointment within 30 days after notice of resignation
has been received by the Depositor and the Trustee, the Evaluator
may forthwith apply to a court of competent jurisdiction for the
appointment of a successor evaluator. Such court may thereupon
after such notice, if any, as it may deem proper and prescribe,
appoint a successor evaluator.
(d) Any corporation into which the Evaluator hereunder
may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which
the Evaluator hereunder shall be a party, shall be the successor
evaluator under this Indenture without the execution or filing of
any paper, instrument or further act to be done on the part of
the parties hereto, anything herein, or in any agreement relating
to such merger or consolidation, by which the Evaluator may seek
to retain certain powers, rights and privileges theretofore
obtaining for any period of time following such merger or
consolidation, to the contrary notwithstanding.
(e) Any resignation or removal of the Evaluator and
appointment of a successor evaluator pursuant to this Section
shall become effective upon acceptance of appointment by the
successor evaluator as provided in subsection (b) hereof.
ARTICLE V EVALUATION, REDEMPTION, PURCHASE, TRANSFER, INTERCHANGE
OR REPLACEMENT OF UNITS
ARTICLE V
EVALUATION, REDEMPTION, PURCHASE OR TRANSFER OF UNITS
Section 5.01. Trust Evaluation. As of the Evaluation
Time (i) on the last Business Day of each year, (ii) on the day
on which any Unit is tendered for redemption and (iii) on any
other day desired by the Trustee or requested by the Depositor,
the Trustee shall: Add (1) all monies on deposit in the Trust
(excluding (a) cash, cash equivalents or letters of credit
deposited pursuant to Section 2.01 hereof for the purchase of
Securities or Contract Obligations, unless such cash or letters
of credit have been deposited in the Income and Capital Accounts
because of failure to apply such monies to the purchase of
Securities or Contract Obligations pursuant to the provisions of
Sections 2.01, 3.02 and 3.03 hereof and excluding (b) monies
credited to the Reserve Account pursuant to Section 3.04 hereof),
plus (2) the aggregate Evaluation of all Securities (including
Contract Obligations) on deposit in the Trust as is determined by
the Evaluator (such Evaluation to be made on the basis of bid
prices (if Zero Coupon Obligations are sold on such day, then
such Evaluation for the Zero Coupon Obligations shall be at the
weighted average of the execution prices for all Zero Coupon
Obligations sold on such day) for the Zero Coupon Obligations and
Net Asset Value for the Mutual Fund shares for the purpose of
computing redemption value of Units as set forth in Section 5.02
hereof), plus (3) all other income from the Securities (including
dividends receivable on Mutual Fund shares trading ex-dividend as
of the date of such valuation and accrued rebate of Rule 12b-1
fees as reported to the Trustee upon which notification the
Trustee is authorized conclusively to rely) as of the close of
business on the date of such Evaluation together with all other
assets of the Trust. For each such evaluation there shall be
deducted from the sum of the above (i) amounts representing any
applicable taxes or governmental charges payable out of the
respective Trust and for which no deductions shall have
previously been made for the purpose of addition to the Reserve
Account, (ii) amounts representing estimated accrued expenses of
such Trust including but not limited to unpaid fees and expenses
of the Trustee, the Evaluator, the Portfolio Supervisor, the
Depositor and counsel, in each case as reported by the Trustee to
the Depositor on or prior to the date of evaluation, and (iii)
any monies identified by the Trustee as held for distribution to
Unit holders of record as of a Record Date or for payment of the
Redemption Value of Units tendered prior to the date of such
Trust Evaluation. The resulting figure is herein called a "Trust
Fund Evaluation." The value of the pro rata share of each Unit
of the respective Trust determined on the basis of any such
evaluation shall be referred to herein as the "Unit Value."
For each day on which the Trustee shall make a Trust Fund
Evaluation it shall also determine "Unit Value" for such day.
Such "Unit Value" shall be determined by dividing said Trust Fund
Evaluation by the number of Units outstanding on such day.
Section 5.02. Redemptions by Trustee; Purchases by
Depositor. Any Unit tendered for redemption by a Unit holder or
his duly authorized attorney to the Trustee by means of an
appropriate request for redemption in form approved by Trustee
in the City of New York shall be paid by the Trustee on the
seventh calendar day following the day on which tender for redemption
is made in proper form, provided that if such day of payment is not a
Business Day, then such payment shall be on the first Business
Day prior thereto (being herein called the "Settlement Date").
Subject to the next succeeding paragraph and subject to payment
by such Unit holder of any tax or other governmental charges
which may be imposed thereon, such redemption is to be made by
payment of cash equivalent to the Unit Value determined on the
basis of a Trust Fund Evaluation made in accordance with
Section 5.01 determined by the Trustee as of the close of
business on the Redemption Date, multiplied by the number of
Units tendered for redemption (herein called the "Redemption
Value"), or if the Unit holder wishes to redeem a number of Units
less than all those so tendered, multiplied by the number of
Units so designated by such Unit holder for redemption. Units
received for redemption by the Trustee on any day after 4:00 p.m.
Eastern time will be held by the Trustee until the next day on
which the New York Stock Exchange is open for trading and will be
deemed to have been tendered on such day for redemption at the
Redemption Value computed on that day.
The portion of the Redemption Value which represents income
shall be withdrawn from the Income Account to the extent
available. The balance paid on any Redemption Value, including
income not paid from the Income Account, if any, shall be
withdrawn from the Capital Account to the extent that funds are
available for such purpose. If such available funds shall be
insufficient, the Trustee shall sell such Securities as have been
designated on the current list for such purpose by the Portfolio
Supervisor, as hereinafter in this Section 5.02 provided, in
amounts as the Trustee in its discretion shall deem advisable or
necessary in order to fund the Capital Account for purposes of
such redemption, provided, however, that Zero Coupon Obligations
may not be sold unless the Depositor and Trustee, which may rely
on the advice of the Portfolio Supervisor, have determined that
the face value of the Zero Coupon Obligations remaining after
such proposed sale, divided by the number of Units outstanding
after the tendered Units are redeemed, shall equal or exceed
$10.00; a written certification as to such determination shall be
executed by the Depositor and Trustee and preserved in the Trust
records with a copy of each such written certification to
Standard & Poor's Corporation so long as Units of the Trust are
rated by them. Within 90 days of the fiscal year end of the
Trust, the Depositor shall obtain, at its expense, an annual
written certification from the independent public accountants as
to such determination which will also be provided to Standard &
Poor's Corporation so long as Units of the Trust are rated by
them. In the event that (i) Zero Coupon Obligations may not be
sold to fund a redemption of Units pursuant to the second
preceding sentence, and (ii) no other Trust assets are available
for liquidation to fund such redemption, the Trustee will advance
to the Trust such amounts as may be necessary to pay the
Redemption Value of the tendered Units. The Trustee shall be
reimbursed the amount of any such advance from the Trust as soon
as Zero Coupon Obligations may be sold in such amount as will not
reduce the face amount of Zero Coupon Obligations still held in
the Trust below the amount required to distribute $10.00 per Unit
from the proceeds of the sale or maturity of the Zero Coupon
Obligations upon the termination of the Trust on the Mandatory
Termination Date. The Trustee shall be deemed to be the
beneficial owner of the Zero Coupon Obligations held in the Trust
to the extent of all amounts advanced by it pursuant to this
Section 5.02, and such advances shall be secured by a lien on the
Trust prior to the interest of Unit holders, provided, however,
that the Trustee's beneficial interest in the Trust and the lien
securing such interest shall not at any time exceed such amount
as would reduce the amount distributable from the Trust upon
maturity or sale of Zero Coupon Obligations upon the termination
of the Trust on the Mandatory Termination Date to less than
$10.00 per Unit. Sale of Securities by the Trustee shall be made
in such manner as the Trustee shall determine will bring the best
price obtainable for the Trust. In the event that either
(i) funds are withdrawn from the Capital Account and are applied
to the payment of income upon any redemption of Units or
(ii) Securities are sold for the payment of the Redemption Value
and any portion of the proceeds of such sale is applied to the
payment of income upon such redemption, then, in either such
event, the Capital Account shall be reimbursed therefor at such
time as sufficient funds may be next available in the Income
Account for such purpose.
The Trustee may in its discretion, and shall when so
directed by the Depositor in writing, suspend the right of
redemption for Units of a Trust or postpone the date of payment
of the Redemption Value for more than seven calendar days
following the day on which tender for redemption is made (i) for
any period during which the New York Stock Exchange is closed
other than customary weekend and holiday closings or during which
trading on the New York Stock Exchange is restricted; (ii) for
any period during which an emergency exists as a result of which
disposal by such Trust of the Securities is not reasonably
practicable or it is not reasonably practicable fairly to
determine in accordance herewith the value of the Securities; or
(iii) for such other period as the Securities and Exchange
Commission may by order permit, and shall not be liable to any
person or in any way for any loss or damage which may result from
any such suspension or postponement.
Not later than 12:00 p.m. Eastern time on the day of tender
of any Unit for redemption by a Unit holder other than the
Depositor, the Trustee shall notify the Depositor of such tender.
The Depositor shall have the right to purchase such Unit by
notifying the Trustee of its election to make such purchase as
soon as practicable thereafter but in no event subsequent to 1:00
p.m. Eastern time on the day on which such Unit was tendered for
redemption. Such purchase shall be made by payment by the
Depositor to the Unit holder on the Redemption Date of an amount
not less than the Redemption Value which would otherwise be
payable by the Trustee to such Unit holder. So long as the
Depositor maintains a bid in the secondary market, the Depositor
may repurchase the Units tendered to the Trustee for redemption
by the Depositor but shall be under no obligation to maintain any
bids and may, at any time while so maintaining such bids, cease
to do so immediately at any time or from time to time without
notice.
Any Units so purchased by the Depositor may at the option of
the Depositor be tendered to the Trustee for redemption at the
unit investment trust office of the Trustee in the manner
provided in the first paragraph of this Section 5.02.
Notwithstanding the foregoing provisions of this
Section 5.02, until 1:30 p.m. Eastern time on the day on which
such Unit was tendered for redemption the Trustee is hereby
irrevocably authorized in its discretion, in the event that the
Depositor does not purchase any Units tendered to the Trustee for
redemption, or in the event that a Unit is being tendered by the
Depositor for redemption, in lieu of redeeming Units, to sell
Units in the over-the-counter market through any broker-dealer of
its choice for the account of the tendering Unit holder at prices
which will return to the Unit holder an amount in cash, net after
deducting brokerage commissions, transfer taxes and other
charges, equal to or in excess of the Redemption Value which such
Unit holder would otherwise be entitled to receive on redemption
pursuant to this Section 5.02. The Trustee shall pay to the Unit
holder the net proceeds of any such sale on the day on which such
Unit holder would otherwise be entitled to receive payment of the
Redemption Value hereunder.
The Depositor shall maintain with the Trustee a current list
of Securities designated to be sold for the purpose of funding
the Capital Account for redemption of Units tendered for
redemption and, to the extent necessary, for payment of expenses
under this Indenture. In connection therewith, the Depositor may
specify in the Trust Agreement the minimum principal amounts of
any Securities to be sold at any one time. If the Depositor
shall for any reason fail to maintain such a list, the Trustee
may in its sole discretion designate a current list of Securities
for such purposes but prior to the sale of any Zero Coupon
Obligations the Trustee shall receive a certification from the
Depositor and Trustee to the effect described in the second
paragraph of this Section 5.02. The net proceeds of any sale of
Securities from such list representing income shall be credited
to the Income Account and then disbursed therefrom for payment of
expenses and payments to Unit holders required to be paid under
this Indenture. Any balance remaining after such disbursements
shall remain credited to the Capital Account.
Neither the Depositor nor the Trustee shall be liable or
responsible in any way for depreciation or loss incurred by
reason of any sale of Securities made pursuant to this
Section 5.02.
Section 5.03. Transfer of Units. Units may be
transferred by the registered holder thereof by presentation of
transfer instructions, in form satisfactory to the Trustee, to
the Trustee at the unit investment trust office of the Trustee
accompanied by such documents as the Trustee deems necessary to
evidence the authority of the person making such transfer and
executed by the registered holder or his authorized attorney,
whereupon the Trustee shall make proper notification of such
transfer on the registration books of the Trustee.
A sum sufficient to pay any tax or other governmental charge
that may be imposed in connection with any such transfer shall be
paid by the Unit holder to the Trustee.
ARTICLE VI TRUSTEEARTICLE VI
TRUSTEE
Section 6.01. General Definition of Trustees
Liabilities, Rights and Duties;. The Trustee shall in its
discretion undertake such action as it may deem necessary at any
and all times to protect each Trust and the rights and interests
of the Unit holders pursuant to the terms of this Indenture;
provided, however, that the expenses and costs of such actions,
undertakings or proceedings shall be reimbursable to the Trustee
from the Income and Capital Accounts of such Trust, and the
payment of such costs and expenses shall be secured by a lien on
such Trust prior to the interest of Unit holders, subject to the
provisions of Section 3.15.Section 6.01. General Definition
of Trustees Liabilities, Rights and Duties;. The Trustee shall
in its discretion undertake such action as it may deem necessary
at any and all times to protect each Trust and the rights and
interests of the Unit holders pursuant to the terms of this
Indenture; provided, however, that the expenses and costs of such
actions, undertakings or proceedings shall be reimbursable to the
Trustee from the Income and Capital Accounts of such Trust, and
the payment of such costs and expenses shall be secured by a lien
on such Trust prior to the interest of Unit holders, subject to
the provisions of Section 3.15.
In addition to and notwithstanding the other duties, rights,
privileges and liabilities of the Trustee as otherwise set forth,
the liabilities of the Trustee are further defined as follows:
(a) All moneys deposited with or received by the
Trustee hereunder related to a Trust shall be held by it without
interest in trust within the meaning of the Investment Company
Act of 1940, as part of the Trust Fund or the Reserve Account of
such Trust until required to be disbursed in accordance with the
provisions of this Indenture, and such moneys will be segregated
by separate recordation on the trust ledger of the Trustee so
long as such practice preserves a valid preference under
applicable law, or if such preference is not so preserved the
Trustee shall handle such moneys in such other manner as shall
constitute the segregation and holding thereof in trust within
the meaning of the Investment Company Act of 1940.
(b) The Trustee shall be under no liability for any
action taken in good faith on any appraisal, paper, order list,
demand, request, consent, affidavit, notice, opinion, direction,
evaluation, endorsement, assignment, resolution, draft or other
document, whether or not of the same kind, prima facie properly
executed, or for the disposition of moneys, Securities or Units,
pursuant to this Indenture, or in respect of any evaluation which
it is required to make or is required or permitted to have made
by others under this Indenture or otherwise, except by reason of
its own negligence, lack of good faith or willful misconduct,
provided that the Trustee shall not in any event be liable or
responsible for any evaluation made by the Evaluator. The
Trustee may construe any of the provisions of this Indenture,
insofar as the same may appear to be ambiguous or inconsistent
with any other provisions hereof, and any construction of any
such provisions hereof by the Trustee in good faith shall be
binding upon the parties hereto.
(c) The Trustee shall not be responsible for or in
respect of the recitals herein, the validity or sufficiency of
this Indenture or for the due execution hereof by the Depositor,
the Portfolio Supervisor, or the Evaluator, or for the form,
character, genuineness, sufficiency, value or validity of any of
the Securities (except that the Trustee shall be responsible for
the exercise of due care in determining the genuineness of
Securities delivered to it pursuant to contracts for the purchase
of such Securities) or for or in respect of the validity or
sufficiency of the Units (except for the due execution thereof by
the Trustee) or for the due execution thereof by the Depositor,
and the Trustee shall in no event assume or incur any liability,
duty or obligation to any Unit holder or the Depositor other than
as expressly provided for herein. The Trustee shall not be
responsible for or in respect of the validity of any signature by
or on behalf of the Depositor, the Portfolio Supervisor or the
Evaluator.
(d) The Trustee shall be under no obligation to appear
in, prosecute or defend any action which in its opinion may
involve it in expense or liability, unless as often as required
by the Trustee it shall be furnished with reasonable security and
indemnity against such expense or liability, and any pecuniary
cost of the Trustee from such actions shall be deductible from
and a charge against the Income and Capital Accounts of the
affected Trust or Trusts. The Trustee shall, in its discretion,
undertake such action as it may deem necessary at any and all
times to protect the Trust and the rights and interests of the
Unit holders pursuant to the terms of this Indenture, provided
however, that the expenses and costs of such actions,
undertakings or proceedings shall be reimbursable to the Trustee
from the Income and Capital Accounts.
(e) The Trustee may employ agents, attorneys,
accountants and auditors and shall not be answerable for the
default or misconduct of any such agents, attorneys, accountants
or auditors if such agents, attorneys, accountants or auditors
shall have been selected with reasonable care. The Trustee shall
be fully protected in respect of any action under this Indenture
taken or suffered in good faith by the Trustee, in accordance
with the opinion of its counsel. The fees and expenses charged
by such agents, attorneys, accountants and auditors shall
constitute an expense of the Trust reimbursable from the Income
and Capital Accounts of the affected Trust as set forth in
Section 6.04 hereof.
(f) If at any time the Depositor shall fail to
undertake or perform any of the duties which by the terms of this
Indenture are required by it to be undertaken or performed, or
such Depositor shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of such Depositor
or of its property shall be appointed, or any public officer
shall take charge or control of such Depositor or of its property
or affairs for the purpose of rehabilitation, conservation or
liquidation, then in any such case, the Trustee may: (1) appoint
a successor depositor (which may be the Trustee) who shall act
hereunder in all respects in place of such Depositor, which
successor shall be satisfactory to the Trustee, and which may be
compensated at rates deemed by the Trustee to be reasonable under
the circumstances, by deduction ratably from the Income Account
of the affected Trusts or, to the extent funds are not available
in such Account, from the Capital Account of the affected Trusts,
but no such deduction shall be made exceeding such reasonable
amount as the Securities and Exchange Commission may prescribe in
accordance with Section 26(a)(2)(C) of the Investment Company Act
of 1940, or (2) terminate this Indenture and the trust created
hereby and liquidate the Trust Fund in the manner provided in
Section 8.02.
(g) If by reason of the Depositor's redemption of
Units of a Trust not theretofore sold constituting more than 60%
of the number of Units initially authorized, the net worth of the
Trust is reduced to less than 40% of the aggregate principal
amount of Securities deposited in such Trust at the termination
of the Initial Offering Period, the Trustee may in its
discretion, and shall when so directed by the Depositor,
terminate this Indenture and the trust created hereby and
liquidate such Trust, all in the manner provided in Section 8.02.
(h) In no event shall the Trustee 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
hereunder or upon or in respect of any Trust which it 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 the premises. For all such taxes and charges and
for any expenses, including counsel fees, which the Trustee may
sustain or incur with respect to such taxes or charges, the
Trustee shall be reimbursed and indemnified out of the Income and
Capital Accounts of the affected Trust, and the payment of such
amounts so paid by the Trustee shall be secured by a prior lien
on such Trust.
(i) No payment to a Depositor or to any principal
underwriter (as defined in the Investment Company Act of 1940)
for the Trust or to any affiliated person (as so defined) or
agent of a Depositor or such underwriter shall be allowed the
Trustee as an expense except for payment of such reasonable
amounts as the Securities and Exchange Commission may prescribe
as compensation for performing bookkeeping and other
administrative services of a character normally performed by the
Trustee.
(j) The Trustee, except by reason of its own
negligence or willful misconduct, shall not be liable for any
action taken or suffered to be taken by it in good faith and
believed by it to be authorized or within the discretion, rights
or powers conferred upon it by this Indenture.
(k) The Trustee in its individual or any other
capacity may become an owner or pledgee of, or be an underwriter
or dealer in respect of, obligations issued by the same issuer
(or an affiliate of such issuer) of any Securities at any time
held as part of the Trust and may deal in any manner with the
same or with the issuer (or an affiliate of the issuer) with the
rights and powers as if it were not the Trustee hereunder.
(1) The Trust may include a letter or letters of
credit meeting of the requirements of Section 2.04 for the
purchase of Securities or Contract Obligations issued by the
Trustee in its individual capacity for the account of the
Depositor and the Trustee may otherwise deal with the Depositor
and the Trust within the same rights and powers as if it were not
the Trustee hereunder, provided that the Trustee's unsecured debt
is rated AAA or Al+ by Standard & Poor's Corporation.
Notwithstanding any provision to the contrary in this
Indenture, no Zero Coupon Obligations may be sold to pay the fees
and expenses of the Trust, including, without limitation, fees
and expenses set forth in Section 8.02(a), (b) and (c).
Section 6.02. Books, Records and Reports. The Trustee
shall keep proper books of record and account of all the
transactions of each Trust under this Indenture at its corporate
trust office, including a record of the name and address of, and
the Units issued by each Trust and held by, every Unit holder,
and such books and records of each Trust shall be open to
inspection by any Unit holder of such Trust at all reasonable
times during the usual business hours. The Trustee shall make
such annual or other reports as may from time to time be required
under any applicable state or federal statute or rule or
regulation thereunder.
So long as the Depositor is making a secondary market for
the Units and otherwise as desired by the Trustee, the accounts
of the Trust shall be audited not less than annually by
independent public accountants designated from time to time by
the Depositor and the Trustee and the reports of such accountants
shall be furnished by the Trustee to Standard & Poor's
Corporation so long as Units of the Trust are rated by them and,
upon request, to Unit holders. So long as the Depositor is
making a secondary market for Units, the Depositor shall bear the
cost of such annual audits to the extent such cost exceeds $.50
per 1,000 Units of approximately $10.00 per Unit value on the
Initial Date of Deposit (such number to be adjusted appropriately
with respect to Trusts having different initial Unit value).
To the extent permitted under the Investment Company Act of
1940 as evidenced by an opinion of independent counsel to the
Depositor satisfactory to the Trustee or "no-action" letters
issued by or published interpretations of the staff of the
Securities and Exchange Commission, the Trustee shall pay, or
reimburse to the Depositor or others, from the Income or Capital
Account the costs of the preparation of documents and information
with respect to each Trust required by law or regulation in
connection with the maintenance of a secondary market in units of
each Trust. Such costs may include but are not limited to
accounting and legal fees, blue sky registration and filing fees,
printing expenses and other reasonable expenses related to
documents required under Federal and state securities laws.
Section 6.03. Indenture and List of Securities on
File. The Trustee shall keep a certified copy or duplicate
original of this Indenture on file at its corporate trust office
available for inspection at all reasonable times during the usual
business hours by any Unit holder, together with a current list
of the Securities in each Trust.
Section 6.04. Compensation. Subject to the provisions
of Section 3.15 hereof, including the assumption of expenses
therein, the Trustee shall receive at the times set forth in
Section 3.05, as compensation for performing ordinary normal
recurring services under this Indenture, an amount calculated at
the annual compensation rate stated in the Trust Agreement. The
Trustee shall charge a pro rated portion of its annual fee at the
times specified in Section 3.05, which pro rated portion shall be
calculated on the basis of the largest number of Units in the
Trust outstanding as of January 1 of such year except for a Trust
during the year or years in which an initial offering period as
determined in Section 4.01 of this Indenture occurs, in which
case the fee for a month is based on the Units outstanding at the
end of such month. The Trustee may from time to time adjust its
compensation as set forth above, provided that total adjustment
upward does not, at the time of such adjustment, exceed the
percentage of the total increase, after the date hereof, in
consumer prices for services as measured by the United States
Department of Labor Consumer Price Index entitled "All Services
Less Rent". The consent or concurrence of any Unit holder
hereunder shall not be required for any such adjustment or
increase. Such compensation shall be charged by the Trustee
against the Income and Capital Accounts of each Trust on or
immediately after the Record Date on which such period
terminates; provided, however, that such compensation shall be
deemed to provide only for the usual, normal and proper functions
undertaken as Trustee pursuant to this Indenture.
The Trustee shall charge the Income and Capital Accounts for
any and all expenses and disbursements incurred hereunder,
including legal and auditing expenses, and for any extraordinary
services performed hereunder, which extraordinary services shall
include but not be limited to all costs and expenses incurred by
the Trustee in making any annual or other reports or other
documents referred to in Section 6.02; provided, however, that
the amount of any such charge which has not been finally
determined as of any Record Date may be estimated and any
necessary adjustments shall be made. Provided, further, that if
the balances in the Income and Capital Accounts shall be
insufficient to provide for amounts payable pursuant to this
Section 6.04, the Trustee shall have the power to sell Securities
in the manner provided in Section 5.02; provided, however, that
no Zero Coupon Obligations may be sold to pay any fees or
expenses of the Trust. If other Securities are not available in
the Trust's Accounts to sell for such purpose, then such fees and
expenses shall be paid in accordance with Section 3.15 hereof.
The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any such sale.
The Trustee shall be indemnified ratably by the affected
Trust and held harmless against any loss or liability accruing to
it without negligence, bad faith or willful misconduct on its
part, arising out of or in connection with the acceptance or
administration of this Trust, including the costs and expenses
(including counsel fees) of defending itself against any claim of
liability in the premises, including any loss, liability or
expense incurred in acting pursuant to written directions to the
Trustee given by the Depositor from time to time in accordance
with the provisions of this Indenture or in undertaking actions
from time to time which the Trustee deems necessary in its
discretion to protect the Trust and the rights and interests of
the Unit holders pursuant to the terms of this Indenture. Any
monies payable to the Trustee under this Section 6.04 shall be
secured by a lien on the Trust prior to the interest of Unit
holders.
Section 6.05. Removal and Resignation of
Trustee; Successor. The following provisions shall provide for
the removal and resignation of the Trustee and the appointment of
any successor trustee:
(a) The Trustee or any trustee or trustees hereafter
appointed may resign and be discharged of the Trusts created by
this Indenture, by executing an instrument in writing resigning
as Trustee of such Trusts and filing same with the Depositor and
mailing a copy of a notice of resignation to all Unit holders
then of record, not less than 60 days before the date specified
in such instrument when, subject to Section 6.05(e), such
resignation is to take effect. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor
trustee as hereinafter provided, by written instrument, in
duplicate, one copy of which shall be delivered to the resigning
Trustee and one copy to the successor trustee. In case at any
time the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or
of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or
affairs for the purposes of rehabilitation, conservation or
liquidation, then in any such case the Depositor may remove the
Trustee and appoint a successor trustee by written instrument, in
duplicate, one copy of which shall be delivered to the Trustee so
removed and one copy to the successor trustee. Notice of such
resignation or removal of a trustee and appointment of a
successor trustee shall be mailed by the successor trustee,
promptly after its acceptance of such appointment, to each Unit
holder then of record and to Standard & Poor's Corporation so
long as Units of the Trust are rated by them.
(b) Any successor trustee appointed hereunder shall
execute, acknowledge and deliver to the Depositor and to the
resigning or removed Trustee an instrument accepting such
appointment hereunder, and such successor trustee without any
further act, deed or conveyance shall become vested with all the
rights, powers and duties and obligations of its predecessor
hereunder with like effect as if originally named Trustee herein
and shall be bound by all the terms and conditions of this
Indenture. Upon the request of such successor trustee, the
Depositor and the resigning or removed Trustee shall, upon
payment of any amounts due the resigning or removed Trustee, or
provision therefor to the satisfaction of such resigning or
removed Trustee, execute and deliver an instrument acknowledged
by it transferring to such successor trustee all the rights and
powers of the resigning or removed Trustee; and the resigning or
removed Trustee shall transfer, deliver and pay over to the
successor trustee all Securities and moneys at the time held by
it hereunder, together with all necessary instruments of transfer
and assignment or other documents properly executed necessary to
effect such transfer and such of the records or copies thereof
maintained by the resigning or removed Trustee in the
administration hereof as may be requested by the successor
trustee, and shall thereupon be discharged from all duties and
responsibilities under this Indenture. The retiring Trustee
shall, nevertheless, retain a lien upon all Securities and money
held by it hereunder to secure any amounts then due the retiring
Trustee.
(c) In case at any time the Trustee shall resign and
no successor trustee shall have been appointed and have accepted
appointment within 30 days after notice of resignation has been
received by the Depositor, the retiring Trustee may forthwith
apply to a court of competent jurisdiction for the appointment of
a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a
successor trustee.
(d) Any corporation into which any trustee hereunder
maybe merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which
any trustee hereunder shall be a party, shall be the successor
trustee under this Indenture without the execution or filing of
any paper, instrument or further act to be done on the part of
the parties hereto, anything herein, or in any agreement relating
to such merger or consolidation, by which any such trustee may
seek to retain certain powers, rights and privileges theretofore
obtaining for any period of time following such merger or
consolidation, to the contrary notwithstanding.
(e) Any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to this Section shall
become effective upon acceptance of appointment by the successor
trustee as provided in subsection (b) hereof.
Section 6.06. Qualifications of Trustee. The Trustee
shall be a corporation organized and doing business under the
laws of the United States or any state thereof, which is
authorized under such laws to exercise corporate trust powers and
having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
ARTICLE VII RIGHTS OF UNIT HOLDERS
ARTICLE VII
RIGHTS OF UNIT HOLDERS
Section 7.01. Beneficiaries of Trust. By the purchase
and acceptance or other lawful delivery and acceptance of any
Unit, the Unit holder shall be deemed to be a beneficiary of such
Trust created by this Indenture and vested with all right, title
and interest in such Trust to the extent of the Unit or Units set
forth and subject to the terms and conditions of this Indenture.
Section 7.02. Rights, Terms and Conditions. In
addition to the other rights and powers set forth in the other
provisions and conditions of this Indenture, the Unit holders
shall have the following rights and powers and shall be subject
to the following terms and conditions:
(a) A Unit holder may at any time prior to the
Trustee's close of business as of the date on which the Trust is
terminated tender his Units to the Trustee for redemption,
subject to and in accordance with Section 5.02.
(b) The death or incapacity of any Unit holder shall
not operate to terminate this Indenture or a related Trust, nor
entitle his legal representatives or heirs to claim an accounting
or to take any action or proceeding in any court of competent
jurisdiction for a partition or winding up of the Trust Fund or a
related Trust, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them. Each Unit
holder expressly waives any right he may have under any rule of
law, of the provisions of any statute, or otherwise, to require
the Trustee at any time to account, in any manner other than as
expressly provided in this Indenture, in respect of the
Securities or moneys from time to time received, held and applied
by the Trustee hereunder.
(c) No Unit holder shall have any right to vote or in
any manner otherwise control the operation and management of the
Trust Fund, a related Trust, or the obligations and management of
the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, be construed so as to constitute
the Unit holders from time to time as partners or members of an
association; nor shall any Unit holder ever be under any
liability to any third persons by reason of any action taken by
the parties to this Indenture, or any other cause whatsoever.
ARTICLE VIII
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
Section 8.01. Amendments. This Indenture may be
amended from time to time by the Depositor and Trustee hereto or
their respective successors, without the consent of any of the
Unit holders (a) to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective
or inconsistent with any other provision contained herein; or (b)
to make such other provision regarding matters or questions
arising hereunder as shall not adversely affect the interests of
the Unit holders; provided, however, that in no event may any
amendment be made which would adversely affect the
characterization of the Trust as a grantor trust for federal
income tax purposes. This Indenture may not be amended, however,
without the consent of all Unit holders then outstanding, so as
(1) to permit, except in accordance with the terms and conditions
hereof, the acquisition hereunder of any Securities other than
those specified in Schedule A to the Trust Agreement, or (2) to
reduce the aforesaid percentage of Units the holders of which are
required to consent to certain of such amendments. This
Indenture may not be amended so as to reduce the interest in the
Trust represented by Units without the consent of all affected
Unit holders.
Promptly after the execution of any such amendment, the
Trustee shall furnish written notification to all then
outstanding Unit holders of the substance of such amendment and
to Standard & Poor's Corporation so long as Units of the Trust
are rated by them.
Section 8.02. Termination. This Indenture and each
Trust created hereby shall terminate upon the maturity,
redemption, sale or other disposition as the case may be of the
last Security held in such Trust hereunder unless sooner
terminated as hereinbefore specified, and may be terminated at
any time by the written consent of 100% of the Unit holders of
the respective Trust; provided that in no event shall any Trust
continue beyond the Mandatory Termination Date. Upon the date of
termination, the registration books of the Trustee shall be
closed.
Written notice of any termination, specifying the time or
times at which the Unit holders holding Units may surrender such
Units for redemption and the date, determined by the Trustee,
upon which the transfer books of the Trustee, maintained pursuant
to Section 6.01, shall be closed with respect to the terminated
Trust shall be given by the Trustee to Unit holders of such
terminated Trust. Within a reasonable period of time after such
termination, the Trustee shall liquidate the Zero Coupon
Obligations then held, if any, and such of the Mutual Fund shares
as the Trustee shall determine necessary to provide for Trust
fees and expenses and as may be necessary to liquidate any
fractional shares which may not be distributed in kind as
provided hereafter, and shall:
(a) deduct from the Income Account of such Trust or,
to the extent that funds are not available in such Account of
such Trust, from the Capital Account of such Trust, and pay to
itself individually an amount equal to the sum of (i) its accrued
compensation for its ordinary recurring services, (ii) any
compensation due it for its extraordinary services in connection
with such Trust, and (iii) any costs, expenses or indemnities in
connection with such Trust as provided herein;
(b) deduct from the Income Account of such Trust or,
to the extent that funds are not available in such Account, from
the Capital Account of such Trust, and pay accrued and unpaid
fees of the Evaluator, the Portfolio Supervisor and counsel in
connection with such Trust, if any;
(c) deduct from the Income Account of such Trust or
the Capital Account of such Trust any amounts which may be
required to be deposited in the Reserve Account to provide for
payment of any applicable taxes or other governmental charges and
any other amounts which may be required to meet expenses incurred
under this Indenture in connection with such Trust;
(d) distribute to each Unit holder such Unit holder's
(i) pro rata share of the remaining Mutual Fund shares, in kind,
to the extent of the fractional portion of a share allowed to be
transferred on the Transfer Books of the Mutual Fund, and (ii)
pro rata interest in the balances of the Income and Capital
Accounts and, on the conditions set forth in Section 3.04 hereof,
the Reserve Account of the Trust in which he or she holds Units;
provided, however, that not less than 60 days prior to
termination at the Mandatory Termination Date, the Trustee shall
send a written notice to all Unit holders of record at such time,
indicating that they may, if they so elect by a properly computed
election notice received by the Trustee no later than the
Mandatory Termination Date, have the cash component of their
termination distributions invested, at net asset value, in
additional shares of the Mutual Fund.
(e) together with such distribution to each Unit
holder as provided for in (d), furnish to each such Unit holder a
final distribution statement, setting forth the data and
information in substantially the form and manner provided for in
Section 3.06 hereof.
The Trustee shall be under no liability with respect to
moneys held by it in the Income, Reserve and Capital Accounts of
a Trust upon termination except to hold the same in trust within
the meaning of the Investment Company Act of 1940, without
interest until disposed of in accordance with the terms of this
Indenture.
Section 8.03. Construction. This indenture is
executed and delivered in the state of New York, and all laws or
rules of construction of such state shall govern the rights of
the parties hereto and the Unit holders and the interpretation of
the provisions hereof.
Section 8.04. Registration of Units. The Depositor
agrees and undertakes on its own part to register the Units with
the Securities and Exchange Commission or other applicable
governmental agency, Federal or state, pursuant to applicable
Federal or state statutes, if such registration shall be
required, and to do all things that may be necessary or required
to comply with this provision during the term of the Trust Fund
created hereunder, and the Trustee shall incur no liability or be
under any obligation or expenses in connection therewith.
Section 8.05. Written Notice. Any notice, demand,
direction or instruction to be given to the Depositor hereunder
shall be in writing and shall be duly given if mailed or
delivered to the Depositor, 1001 Warrenville Road, Lisle,
Illinois 60532, or at such other address as shall be specified
by the Depositor to the other parties hereto in writing.
Any notice, demand, direction or instruction to be given to
the Trustee shall be in writing and shall be duly given if mailed
or delivered to the Trustee, 101 Barclay Street, New York, New
York, 10286, Attention: Unit Investment Trust Administration, or
such other address as shall be specified by the Trustee to the
other parties hereto in writing.
Any notice, demand, direction or instruction to be given to
the Evaluator hereunder shall be in writing and shall be duly
given if mailed or delivered to the Evaluator at 1001 Warrenville
Road, Lisle, Illinois 60532, or at such other address as shall be
specified by the Evaluator to the other parties hereto in
writing.
Any notice, demand, direction or instruction to be given to
the Portfolio Supervisor shall be in writing and shall be duly
given if mailed or delivered to the Portfolio Supervisor at 1001
Warrenville Road, Lisle, Illinois 60532 hereto or such other
address as shall be specified by the Portfolio Supervisor to the
other parties hereto in writing.
Any notice to be given to the Unit holders shall be duly
given if mailed by first class mail with postage prepaid or
delivered to each Unit holder at the address of such holder
appearing on the registration books of the Trustee.
Section 8.06. Severability. If any one or more of the
covenants, agreements, provisions or terms of this Indenture
shall be held contrary to any express provision of law or
contrary to policy of express law, though not expressly
prohibited, or against public policy, or shall for any reason
whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Indenture and
shall in no way affect the validity or enforceability of the
other provisions of this Indenture or the rights of the holders
thereof.
Section 8.07. Dissolution of Depositor Not to
Terminate. The dissolution of the Depositor for any cause
whatsoever shall not operate to terminate this Indenture or any
Trust Fund insofar as the duties and obligations of the Trustee
are concerned.
IN WITNESS WHEREOF, Nike Securities L.P., The Bank of New
York, First Trust Advisors L.P. and First Trust Advisors L.P.
have each caused these Standard Terms and Conditions of Trust to
be executed and the respective corporate seal to be hereto
affixed and attested (if applicable) by authorized officers; all
as of the day, month and year first above written.
NIKE SECURITIES L.P.,
Depositor
By Carlos E. Nardo
Senior Vice President
THE BANK OF NEW YORK,
Trustee
By Jeffrey Bieselin
Vice President
(SEAL)
Attest:
Ludim Sanabria
Vice President
FIRST TRUST ADVISORS L.P.,
Evaluator
By Carlos E. Nardo
Senior Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Carlos E. Nardo
Senior Vice President
FIRST INVESTORS SPECIAL SITUATIONS GROWTH & TREASURY SECURITIES
TRUST, SERIES 1
TRUST AGREEMENT
Dated: June 27, 1994
This Trust Agreement among Nike Securities L.P., as
Depositor, The Bank of New York, as Trustee, First Trust Advisors
L.P., as Evaluator, and First Trust Advisors L.P., as Portfolio
Supervisor, sets forth certain provisions in full and
incorporates other provisions by reference to the document
entitled "Standard Terms and Conditions of Trust for First
Investors Special Situations Growth & Treasury Securities Trust,
Series 1 and subsequent Series, Effective June 27, 1994" (herein
called the "Standard Terms and Conditions of Trust"), and such
provisions as are incorporated by reference constitute a single
instrument. All references herein to Articles and Sections are
to Articles and Sections of the Standard Terms and Conditions of
Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the
provisions contained in the Standard Terms and Conditions of
Trust are herein incorporated by reference in their entirety and
shall be deemed to be a part of this instrument as fully and to
the same extent as though said provisions had been set forth in
full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit is 10,000 Units.
(2) The initial fractional undivided interest in and
ownership of the Trust represented by each Unit thereof shall be
1/10,000.
Documents representing this number of Units for the Trust
are being recorded on the books of the Trustee for the benefit of
the Depositor pursuant to Section 2.03 of the Standard Terms and
Conditions of Trust.
C. The Percentage Ratio is as follows on the Initial Date
of Deposit:
$1,000 maturity value of Zero Coupon Obligations per 100 Units
to 2,840 shares of the Mutual Fund per 100 Units.
D. The Record Dates shall be as set forth in the
Prospectus under "Summary of Essential Information."
E. The Distribution Dates shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
August 15, 2005.
G. The Zero Coupon Obligations Maturity Date for the Trust
shall be August 15, 2005.
H. The Evaluator's compensation as referred to in Section
4.03 of the Standard Terms and Conditions of Trust shall be an
annual fee of $0.20 per 1,000 Units calculated in the manner
described in Section 4.03 on the largest number of Units
outstanding during each period in respect of which a payment is
made pursuant to Section 3.05, payable on a Distribution Date.
I. The Trustee's Compensation Rate pursuant to Section
6.04 of the Standard Terms and Conditions of Trust shall be an
annual fee of $0.85 per 1,000 Units, calculated in the manner
described in Section 6.04. However, in no event, except as may
otherwise be provided in the Standard Terms and Conditions of
Trust, shall the Trustee receive compensation in any one year
from any Trust of less than $2,000 for such annual compensation.
J. The Initial Date of Deposit for the Trust is June 27,
1994.
IN WITNESS WHEREOF, Nike Securities L.P., The Bank of New
York and First Trust Advisors L.P. have each caused this Trust
Agreement to be executed and the respective corporate seal to be
hereto affixed and attested (if applicable) by authorized
officers; all as of the day, month and year first above written.
NIKE SECURITIES L.P.,
Depositor
By Carlos E. Nardo
Senior Vice President
THE BANK OF NEW YORK,
Trustee
By Jeffrey Bieselin
Vice President
(SEAL)
Attest:
Ludim Sanabria
Vice President
FIRST TRUST ADVISORS L.P
Evaluator
By Carlos E. Nardo
Senior Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Carlos E. Nardo
Senior Vice President
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
First Investors Special Situations Growth & Treasury Securities
Trust, Series 1
(Note: Incorporated herein and made a part hereof for the Trust
is the "Schedule of Investments" for the Trust as set forth in
the Prospectus.)
UNDERWRITER AGREEMENT
June 27, 1994
Nike Securities L.P
1001 Warrenville Road, Suite 300
Lisle, IL 60532
Gentlemen:
1. General. We understand that you, Nike Securities L.P
(the "Sponsor") are entering into this agreement (the
"Agreement") in counterpart with us for issues of First Investors
Special Situations Growth & Treasury Securities Trust, Series 1
and subsequent series, each of which is a unit investment trust
for which you will act as Sponsor. This Agreement shall apply to
any offering on or after June 27, 1994 of units of fractional
undivided interests in such various expandable series of the unit
investments trusts in which we elect to act as an underwriter
(with respect to each such trust, hereinafter "Underwriter")
after receipt of a notice ("Notice") from you stating the name of
the trust and that our participation as Underwriter in the
proposed offering shall be subject to the provisions of this
Agreement. The issuer of the units of fractional undivided
interests in a series of a unit investment trust offered in any
offering of units made pursuant to this Agreement is hereinafter
referred to as the "Fund" and the reference to "Fund" in this
Agreement applies only to such Fund, and such units of such Fund
offered are hereinafter called the "Units." The Fund is or will
be registered as a "unit investment trust" under the Investment
Company Act of 1940 (the "1940 Act") by filing a Notification of
Registration on Form N-8A and a Registration Statement on
Form N-8B-2 with the Securities and Exchange Commission (the
"Commission").
The registration statement for each Fund as finally amended
and revised at the time it becomes effective is herein referred
to as the "Registration Statement" and the related prospectus is
herein referred to as the "Prospectus," except that if the
prospectus filed by the Fund pursuant to Rule 497(c) under the
Securities Act of 1933 (the "1933 Act") shall differ from the
prospectus on file at the time the Registration Statement shall
become effective, the term "Prospectus" shall refer to the
prospectus filed pursuant to Rule 497(c) from and after the date
on which it shall have been filed. The Units to be offered in
any offering will be registered under the 1933 Act. The
following provisions of this Agreement shall apply separately to
each individual offering of Units by a Fund.
2. Designation and Authority of Representative. You are
hereby authorized to act as our representative (the
"Representative") in connection with each Fund for all matters to
which this Agreement relates and to take the action provided
herein to be taken by you or as you may otherwise deem necessary
or advisable. We understand that we have no obligations under
this Agreement with respect to any Fund in which we choose not to
participate as an Underwriter.
You will be under no liability to us for any act or omission
expressly for obligations expressly assumed by you herein and no
obligations on your part will be implied or inferred herefrom.
The rights and liabilities of the respective parties hereto are
several and not joint and nothing herein or hereunder will
constitute them a partnership, association or separate entity.
3. Profit or Loss in Acquisition of Securities. It is
understood that the acquisition of portfolio securities (the
"Securities") for deposit in the portfolio of the Fund shall be
at your cost and risk. Accordingly, if the aggregate cost of the
Securities to the Fund on the date they are delivered to the
Trustee for deposit in the Fund, on the basis of the Trustee's
determination of offering price, shall be less than their actual
aggregate acquisition cost to you as Sponsor, any such loss,
without limitation or restriction, shall be borne by you alone.
If the aggregate cost of such Securities, as so determined, shall
exceed the aggregate cost of such Securities to you as Sponsor,
any such profit, without limitation or restriction, shall be
received by you alone.
We agree that you shall have no liability (as Representative
or otherwise) with respect to the issue, form, validity,
legality, enforceability, value of, or title to the Securities,
except for the exercise of due care in determining the
genuineness of such Securities and the conformance therefor with
the descriptions and qualifications appearing in the Prospectus.
4. Purchase of Units. Promptly after making a
determination to offer Units of a Fund, you agree to notify us as
to the nature of the Fund and to inquire as to whether we desire
to participate in such offering. We will advise you promptly as
to the number of Units which we will purchase or of our decision
not to participate in such offering. Such advice may be by
telegraph, telegram or other form of wire or facsimile
transmission, including a wire transfer to your account of funds
for payment of units purchased by us. You may rely on and we
hereby commit on the terms and conditions of this Agreement to
purchase and pay for the number of Units of the Fund set forth in
such advice (the "Unit Commitment"). Our Unit Commitment may be
increased only by mutual agreement between us and you at any time
prior to the initial date of deposit (as defined in the
Prospectus). We agree that you in your sole discretion reserve
the right to decrease our Unit Commitment at any time prior to
the Initial Date of Deposit and if you so elect to make such a
decrease you will notify us of such election by telephone and
promptly confirm the same by telegraph or writing. We hereby
agree with you to purchase from you and, to pay for on the First
Settlement Date, as defined in the Prospectus, the number of
Units (the "Initial Units") in the Fund designated for purchase
on such date by our Unit Commitment. The price to be paid on the
First Settlement Date for each such Unit shall be the Public
Offering Price per Unit, as defined in the Prospectus, at the
close of business on the next business day after the Initial Date
of Deposit less the concession set forth in the Prospectus which
is applicable to the Unit Commitment, assuming for the purposes
only of the Unit Commitment that all units committed for are
purchased on the Initial Date of Deposit.
On the Initial Date of Deposit, notwithstanding that we pay
for our Initial Units on the First Settlement Date, we will
become the owner of such Initial Units and entitled to the
benefits as well as the risks inherent therein.
You are authorized to retain custody of our Initial Units
until the Registration Statement relating thereto has become
effective under the 1933 Act.
You agree that if we commit in our Unit Commitment to
purchase 500,000 Units or more of the Fund, we may elect in such
Unit Commitment to purchase any designated number of such Units
in amounts of at least 50,000 Units for purchase subsequent to
the Initial Date of Deposit. You agree that we may, on the date
of any Subsequent Deposit (the "Subsequent Date of Deposit"),
purchase any amount of Units so deposited. The price to be paid
on the Settlement Date for Units purchased on each Subsequent
Date of Deposit shall be the Public Offering Price per Unit as of
the close of business on such Subsequent Date of Deposit less the
concession set forth in the Prospectus applicable to the entire
Unit Commitment.
You are authorized to file an amendment to said Registration
Statement describing the Securities and furnishing information
based thereon or relating thereto and any further amendments or
supplements to the Registration Statement or Prospectus which you
may deem. necessary or advisable. We will furnish you upon your
request such information as will be required to insure that the
Registration Statement and Prospectus are current insofar as they
relate to us and we will thereafter continue to furnish you with
such information as may be necessary to keep current and correct
the information previously supplied.
We understand that the Fund will also take action with
respect to the offering and sale of Units in accordance with the
Blue Sky or securities laws of certain states in which it is
proposed that the Units may be offered and sold and will notify
FIC of states in which sales may not occur.
5. Public Offering. You agree that you will advise us
promptly, confirming same in writing, when the Registration
Statement has become effective, and we agree that when we are
advised that the Units are released for public offering we will
make a public offering thereof by means of the Prospectus. The
public offering price and the terms and conditions of the public
offering shall be as set forth in the Prospectus. You shall
determine the public offering price in the manner described in
the Prospectus and shall rely with respect to the offering price
of the Securities upon the determination of the Evaluator named
in the Prospectus. Public advertisement of the offering may be
made by you on behalf of the Underwriter on such date as you
shall determine upon approval by FIC.
6. Public Offering Price. We agree that each day while
this Agreement is in effect for the Fund and the evaluation of
the Fund is made by the Evaluator named in the Prospectus, we
will contact you for such evaluation and for the resultant Public
Offering Price for the purpose of the offering and sale of Units
to the public. We agree, as required by Section 22(d) of the
1940 Act, to offer and sell our Units at the current Public
Offering Price described in the Prospectus.
7. Permitted Transactions. It is agreed that an
Underwriter may make purchases and sales from or to any other
dealer firm less an agreed upon take-down from the Public
Offering Price. It is further agreed that part or all of the
Units purchased by us may be sold to dealers at the then
effective Public Offering Price, less the dealer's concession
described in the Prospectus.
From time to time prior to the termination of this
Agreement, at your request, we will advise you of the number of
Units which we have purchased to such date which remain unsold
and, at your request, we agree to deliver to you any of such
unsold Units to be sold for our account to retail accounts or,
less the dealer's concession then effective, to dealers.
If prior to the termination of this Agreement with respect
to each Fund covered hereby, or such earlier date as you may
determine and advise us thereof in writing, you shall purchase or
contract to purchase any of our Units or any Units issued in
exchange therefor, in the open market or otherwise, or if any
such Units shall be tendered to the Trustee for redemption
because not effectively placed for investment by us, we agree to
repurchase such Units at a price equal to the total cost of such
purchase, including commissions, if any, and transfer taxes on
redelivery. Regardless of the amount paid in the repurchase of
any such Units, it is agreed that they may be resold by us only
at the then effective Public Offering Price.
Until the termination of this Agreement with respect to each
Fund covered hereby, we agree that we will make no purchase of
Units other than (i) purchases provided for in this Agreement;
(ii) purchases approved by you; and (iii) purchases as broker in
executing unsolicited orders.
8 . Other Agreements. We hereby agree as follows:
a. we will refund, on demand and without deduction,
all sales charges to purchasers of Units from us or any dealer
participating in the distribution of our Units if, within ninety
days from the time that the Registration Statement of the Units
under the 1933 Act shall have become effective, (i) the net worth
of the Fund shall be reduced to less than $100,000, or (ii) the
Fund shall have been terminated;
b. you may instruct the Trustee of the Fund that, in
the event that redemption by the Underwriter of Units
constituting part of any unsold allotment of Units shall result
in the Fund having a net worth of less than 40% of the principal
amount of Securities deposited in the Trust on the Initial Date
of Deposit, the Trustee shall terminate the Fund in the manner
provided in the Indenture for the Fund and distribute the
Securities and other assets of the Fund pursuant to the
provisions of the Indenture; and
c. in the event that the Fund shall have been
terminated pursuant to (b) above, we will refund any sales
charges to any purchaser of Units purchased from us, or purchased
from a Dealer participating in the distribution of our Units, on
demand and without deduction. We authorize you to charge our
account for all refunds of sales charges in respect of our Units.
9. Termination. This Agreement shall terminate with
respect to each Fund covered hereby 30 days after the six month
period in which the public offering of the Units of such Fund is
made in accordance with Section 5 hereof, unless sooner
terminated in writing by you, provided that you may extend this
Agreement for not more than four successive periods of 30 days
each upon notice to us. You agree that any termination by you
will be reasonable.
Notwithstanding any settlement on the termination of this
Agreement with respect to any Fund covered hereby, we agree to
pay our share of any amount payable on account of any claim,
demand or liability which may be asserted against FIC, based on
the claim that FIC constitutes an association, unincorporated
business or other separate entity, and our share of any expenses
incurred by you in defending against any such claim, demand or
liability. We also agree to pay any stamp taxes which may be
assessed and paid after such settlement on account of any Units
received or sold hereunder for our account.
Notwithstanding any termination of this Agreement with
respect to any Fund, no sale of the Units of such Fund shall be
made by us at any time except in conformity with the provisions
of Section 22(d) of the 1940 Act.
10. Notices. Notices hereunder shall be deemed to have
been duly given if sent by facsimile to us mailed or telegraphed
to us at our address set forth herein in the case of notices to
us, or to you at 1001 Warrenville Road, Suite 300, Lisle,
Illinois 60532, in the case of notices to you.
11. Net Capital. You represent that you, and we represent
that we, are in compliance with the capital requirements of
Rule 15c3-1, promulgated by the Commission under the Securities
Exchange Act of 1934, and we may, in accordance with and pursuant
to such Rule 15c3-1, agree to purchase the amount of Units to be
purchased by you and us, respectively, under the Agreement.
12. Miscellaneous. We confirm that we are a member in good
standing of the National Association of Securities Dealers, Inc.
We also confirm that we will take reasonable steps to
provide the preliminary prospectus or the Prospectus to any
person making written request therefor to us and to make the
preliminary prospectus available to each person associated with
us expected to solicit customers' orders for the Units prior to
the effective registration date and the Prospectus if he is
expected to offer the Units after the effective date. We
understand that you will supply us upon our request with
sufficient copies of such prospectuses to comply with the
foregoing.
This Agreement is being executed by us and delivered to you
in duplicate. Upon your confirmation hereof, this Agreement
shall constitute a valid and binding contract between us.
Very truly yours,
Please indicate your firm name and address below exactly as you
wish it to appear in the Prospectus.
_______________________________________
_______________________________________
_______________________________________
_______________________________________
Confirmed as of the date set forth at the
head of this Agreement Nike Securities L.P.
By
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
June 27, 1994
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: First Investors Special Situations Growth & Treasury
Securities Trust, Series 1
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of First Investors Special Situations
Growth & Treasury Securities Trust, Series 1 in connection with
the preparation, execution and delivery of a Trust Agreement
dated June 27, 1994 among Nike Securities L.P., as Depositor, The
Bank of New York, as Trustee, First Trust Advisors L.P., as
Evaluator, and First Trust Advisors L.P., as Portfolio
Supervisor, pursuant to which the Depositor has delivered to and
deposited the Securities listed in Schedule A to the Trust
Agreement with the Trustee and pursuant to which the Trustee has
recorded on its books on the order of the Depositor units of
fractional undivided interest in and 100 percent ownership of the
Fund created under said Trust Agreement.
In connection therewith, we have examined such pertinent
records and documents and matters of law as we have deemed
necessary in order to enable us to express the opinions
hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. the execution and delivery of the Trust Agreement and
the execution and issuance of the Units in the Fund have been
duly authorized; and
2. the certificates evidencing the Units in the Fund when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will
constitute valid and binding obligations of the Fund and the
Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-54199)
relating to the Units referred to above, to the use of our name
and to the reference to our firm in said Registration Statement
and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EFF:jlg
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
June 27, 1994
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: First Investors Special Situations Growth & Treasury
Securities Trust, Series 1
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of First Investors Special Situations Growth & Treasury
Securities Trust, Series 1 (the "Fund"), in connection with the
issuance of units of fractional undivided interests in the Trust
of said Fund (the "Trust"), under a Trust Agreement, dated June
27, 1994 (the "Indenture"), among Nike Securities L.P., as
Depositor, The Bank of New York, as Trustee, First Trust Advisors
L.P., as Evaluator and First Trust Advisors L.P., as Portfolio
Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents we have deemed pertinent. The opinions
expressed herein assume that the Trust will be administered, and
investments by the Trust from proceeds of subsequent deposits, if
any, will be made, in accordance with the terms of the Indenture.
The Trust holds both Treasury Obligations and shares of First
Investors Special Situation Series (collectively, "the
Securities") as such terms are defined in the Prospectus.
Based upon the foregoing and upon an investigation of such
matters of law as we consider to be applicable, we are of the
opinion that, under existing federal income tax law:
I. 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 Internal Revenue Code of 1986 (the
"Code"); the income of the Trust will be treated as income of the
Unit holders thereof under the Code; and an item of Trust income
will have the same character in the hands of a Unit holder as it
would have in the hands of the Trustee. Each Unit holder will be
considered to have received his pro rata share of income derived
from each Trust asset when such income is received by the Trust.
II. 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 Units, including sales charges, is allocated among
his 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 Units) in order to determine his initial
cost for his pro rata portion of each Security held by the Trust.
III. With respect to each Unit holder's pro rata portion of
Treasury Obligations held by the Trust: The Treasury Obligations
are treated as bonds that were originally issued at an original
issue discount. Because the Treasury Obligations represent
interest in "stripped" U.S. Treasury bonds, a Unit holder's
initial cost for his pro rata portion of each Treasury Obligation
held by the Trust (determined at the time he acquires his Units,
in the manner described above) shall be treated as its "purchase
price" by the Unit holder. Under the special rules relating to
stripped bonds, original issue discount is effectively treated as
interest for Federal income tax purposes and the amount of
original issue discount in this case is generally the difference
between the bond's purchase price and its stated redemption price
at maturity. A Unit holder will be required to include in gross
income for each taxable year the sum of his daily portions of
original issue discount attributable to the Treasury Obligations
held by the Trust as such original issue discount accrues and
will in general be subject to Federal income tax with respect to
the total amount of such original issue discount that accrues for
such year even though the income is not distributed to the Unit
holders during such year to the extent it is greater than or
equal to the "de minimis" amount determined under a Treasury
Regulation (the "Regulation") issued on December 28, 1992 as
described below. To the extent the amount of such discount is
less than the respective "de minimis" amount, such discount shall
be treated as zero. In general, original issue discount accrues
daily under a constant interest rate method which takes into
account the semi-annual compounding of accrued interest. In the
case of the Treasury Obligations, this method will generally
result in an increasing amount of income to the Unit holders each
year.
IV. With respect to a Unit holder's pro rata portion of
First Investors Special Situations Series shares held by the
Trust:
(a) Each Unit holder will be considered to receive his
pro rata portion of each distribution made by First
Investors Special Situations Series on the shares, when such
distribution is received by Trust. A distribution declared
by First Investors Special Situations Series in October,
November or December to 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 distribution
was declared. To the extent that any distribution by First
Investors Special Situations Series on the shares
constitutes ordinary income, each Unit holder will be deemed
to have received ordinary income when the distribution is
received by the Trust. To the extent any distribution
constitutes a capital gain distribution, each Unit holder
will be deemed to have received a capital gain when the
distribution is received by the Trust. To the extent that
any distribution constitutes a return of capital, each Unit
holder will be deemed to have received a return of capital
when the distribution is received by the Trust.
(b) For Federal income tax purposes, a Unit holder's
pro rata portion of dividends as defined by Section 316 of
the Code paid by a corporation are taxable as ordinary
income to the extent of such corporation's current and
accumulated "Earnings and profits." A Unit holder's pro
rata portion of dividends which exceed such current and
accumulated earnings and profits will first reduce his tax
basis (determined in accordance with paragraph (II) hereof)
in his pro rata portion of First Investors Special
Situations Series shares held by the Trust (and accordingly
his basis in his Units) until the total of all cash
reductions reduces such basis to zero and thereafter should
be reported by the Unit holder as a capital gain. In
general, any such capital gain will be short term unless a
Unit holder has held his Units for more than one year.
(c) First Investors Special Situations Series may
elect to pass through to its shareholders the foreign income
and similar taxes paid by the Fund in order to enable its
shareholders to take a credit (or deduction) for foreign
income taxes paid by the Fund. If this election is made,
Unit holders of the Trust, because they are deemed to own a
pro rata portion of First Investors Special Situations
Series' shares, as described above, must include in their
gross income, for federal income tax purposes, both their
portion of dividends received by the Trust from First
Investors Special Situations Series and also their portion
of the amount which First Investors Special Situations
Series deems to be their portion of foreign income taxes
paid with respect to, or withheld from, dividends, interest,
or other income of the Fund 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.
V. 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 will be
generally long-term if the Unit holder has held his Units for
more than one year. A Unit holder's portion of loss, if any,
upon the sale or redemption of Units or the disposition of
Securities held by the Trust will generally be considered a
capital loss except in the case of a dealer or a financial
institution and will be generally long-term if the Unit holder
has held his Units for more than one year.
VI. 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 do not include expenses incurred by First Investors
Special Situations Series the shares of which are held by the
Trust.
The Code provides a complex set of rules governing the
accrual of original issue discount, including special rules
relating to "stripped" debt instruments such as the Treasury
Obligations. These rules provide that original issue discount
generally accrues on the basis of a constant compound interest
rate. Special rules apply if the purchase price of a Treasury
Obligation exceeds its original issue price plus the amount of
original issue discount which would have previously accrued,
based upon its issue price (its "adjusted issue price").
Similarly, these special rules would apply to a Unit holder if
the tax basis of his pro rata portion of a Treasury Obligation
issued with original issue discount exceeds his pro rata portion
of its adjusted issue price. The application of these rules will
also vary depending on the value of the Treasury Obligations on
the date a Unit holder acquires his Units, and the price a Unit
holder pays for his Units. In addition, as discussed above, the
Regulation provides that the amount of original issue discount on
a stripped bond is considered zero if the actual amount of
original issue discount on such stripped bond as determined under
Section 1286 of the Code is less than a "de minimis" amount,
which, the Regulation provides, is the product of (i) 0.25
percent of the stated redemption price at maturity and (ii) the
number of full years from the date the stripped bond is purchased
(determined separately for each new purchase thereof) to the
final maturity date of the bond.
For taxable years beginning after December 31, 1986 and
before January 1, 1996, certain corporations may be subject to
the environmental tax (the "Superfund Tax") imposed by Section
59A of the Code. Income received from, and gains recognized from
the disposition of, a Security by the Trust will be included in
the computation of the Superfund Tax by such corporations holding
Units in the Trust.
The scope of this opinion is expressly limited to the
matters set forth herein, and, except as expressly set forth
above, we express no opinion with respect to any other taxes,
including state or local taxes or collateral tax consequences
with respect to the purchase, ownership and disposition of Units.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-54199)
relating to the Units referred to above and to the use of our
name and to the reference to our firm in said Registration
Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
EFF/jlg
TANNER PROPP & FARBER
99 PARK AVENUE
NEW YORK, NEW YORK 10016
June 27, 1994
First Investors Special
Situations Growth & Treasury
Securities Trust, Series 1
c/o The Bank of New York,
As Trustee
101 Barclay Street, 17 West
New York, New York 10286
Dear Sirs:
We have acted as special counsel for the First Investors
Special Situations Growth & Treasury Securities Trust, Series 1
(the "Trust") for purposes of determining the applicability of
certain New York taxes under the circumstances hereinafter
described.
The Trust is created pursuant to a Trust Agreement (the
"Indenture"), dated as of today (the "Date of Deposit") among
Nike Securities L.P. (the "Depositor"), First Trust Advisors L.P.
as Evaluator and Portfolio Supervisor, and The Bank of New York
as trustee (the "Trustee"). A prospectus relating to the Trust
will be filed today as an amendment to a registration statement
heretofore filed with the Securities and Exchange Commission
(file number 33-54199) under the Securities Act of 1933, as
amended (the "Prospectus" and the "Registration Statement").
As more fully set forth in the Indenture and in the
Prospectus, the activities of the Trustee will include the
following:
On the Date of Deposit, the Depositor will deposit with the
Trustee as regards the Trust the securities described in the
Prospectus and/or contracts for the purchase thereof together
with an irrevocable letter of credit in the amount required for
the purchase price.
The Trustee will not participate in the selection of the
securities to be deposited in the Trust, and, upon the receipt
thereof, will deliver to the Depositor registered certificates
for or credit to the Depositor's account with the Trustee the
number of Units representing the entire capital of the Trust as
more fully set forth in the Prospectus and the Registration
Statement. The Units, which are represented by certificates or
credits on the books of the Trustee ("Certificates"), will be
offered to the public upon the effectiveness of the Registration
Statement.
The duties of the Trustee, which are ministerial in nature,
will consist primarily of crediting the appropriate accounts with
income received by a Trust and with the proceeds from the
disposition of obligations held in a Trust and the distribution
of such income and proceeds to the Unit holders. The Trustee
will also maintain records of the registered holders of
Certificates representing an interest in a Trust and administer
the redemption of Units by such Certificate holders and may
perform certain administrative functions with respect to an
automatic reinvestment option and a conversion option.
Generally, securities held in a Trust may be removed
therefrom by the Trustee only upon redemption prior to their
stated maturity, at the direction of the Depositor in the event
of material adverse developments or upon the default by the
issuer in payment of income or principal on the securities, and
no provision for payment is made therefor and the Sponsor fails
to instruct the Trustee, within thirty (30) days after
notification, to hold such securities.
Prior to the termination of a Trust, the Trustee is
empowered to sell securities on a list furnished by the Portfolio
Supervisor, only for the purpose of redeeming Units tendered to
it and of paying expenses for which Trust funds are not
available. The Trustee does not have the power to vary the
investment of any Unit holder in a Trust, and under no
circumstances may the proceeds of sale of any securities held by
a Trust be used to purchase new securities to be held therein.
Article 9-A of the New York Tax Law imposes a franchise tax
on business corporations, and, for purposes of that Article,
Section 208(l) defines the term "corporation" to include, among
other things, "any business conducted by a trustee or trustees
wherein interest or ownership is evidenced by certificate or
other written instrument."
The Regulations promulgated under Section 208 provide as
follows:
Any business conducted by a trustee or trustees in which
interest or ownership is evidenced by certificate or other
written instrument includes, but is not limited to, an
association commonly referred to as a "business trust" or
"Massachusetts trust". In determining whether a trustee or
trustees are conducting a business, the form of the agreement is
of significance but is not controlling. The actual activities of
the trustee or trustees, not their purposes and powers, will be
regarded as decisive factors in determining whether a trust is
subject to tax under article 9-A. The mere investment of Trust
and the collection of income therefrom, with incidental
replacement of securities and reinvestment of Trust, does not
constitute the conduct of a business in the case of a business
conducted by a trustee or trustees. 20 NYCRR 1-2.3(b)(2)
(July 11, 1990).
New York cases dealing with the question of whether a trust
will be subject to the franchise tax have also delineated the
general rule that where a trustee merely invests Trust and
collects and distributes the income therefrom, the trust is not
engaged in business and is not subject to the franchise tax.
Burrell v. Lynch, 274 A.D. 347, 84 N.Y.S.2d 171 (3rd Dept. 1948),
order resettled, 274 A.D. 1083, 85 N.Y.S.2d 705 (3rd Dept. 1949).
In an Opinion of the Attorney General of the State of New
York, 47 N.Y. Att'y. Gen. Rep. 213 (Nov. 24, 1942), it was held
that where the trustee of an unincorporated investment trust was
without authority to reinvest amounts received upon the sales of
securities and could dispose of securities making up the trust
only upon the happening of certain specified events or the
existence of certain specified conditions, the trust was not
subject to the franchise tax.
In the instant situation, the Trustee is not empowered to
sell securities contained in the corpus of a Trust and reinvest
the proceeds therefrom. Further, the power to sell such
securities is limited to circumstances in which the
creditworthiness or soundness of the security is in question or
in which cash is needed to pay redeeming Unit holders or to pay
expenses, or where a Trust is liquidated subsequent to the
termination of the Indenture. In substance, the Trustee will
merely collect and distribute income and will not reinvest any
income or proceeds, and the Trustee has no power to vary the
investment of any Unit holder in the Trust.
Under Subpart E of Part I, Subchapter J of Chapter 1 of the
Internal Revenue Code of 1986, as amended (the "Code"), the
grantor of a trust will be deemed to be the owner of the trust
under certain circumstances, and therefore taxable on his
proportionate interest in the income thereof. Where this Federal
tax rule applies, the income attributed to the grantor will also
be income to him for New York income tax purposes. See TSB-M-
78(9)(c), New York Department of Taxation and Finance, June 23,
1978.
By letter, dated today, Messrs. Chapman and Cutler, counsel
for the Depositor, rendered their opinion that each Unit holder
will be considered as owning a share of each asset of a Trust in
the proportion that the number of Units held by such holder bears
to the total number of Units outstanding and the income of a
Trust will be treated as the income of each Unit holder in said
proportion pursuant to Subpart E of Part I, Subchapter J of
Chapter 1 of the Code.
Based on the foregoing and on the opinion of Messrs.
Chapman and Cutler, counsel for the Depositor, dated today, upon
which we specifically rely, we are of the opinion that under
existing laws, rulings, and court decisions interpreting the laws
of the State and City of New York:
1. The Trust will not constitute an association
taxable as a corporation under New York law, and, accordingly,
will not be subject to tax on its income under the New York State
franchise tax or the New York City general corporation tax;
2. The income of the Trust will be treated as the
income of the Unit holders under the income tax laws of the State
and City of New York; and
3. Unit holders who are not residents of the State of
New York are not subject to the income tax law thereof with
respect to any interest or gain derived from the Trust or any
gain from the sale or other disposition of the Units, except to
the extent that such interest or gain is from property employed
in a business, trade, profession or occupation carried on in the
State of New York.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement relating to the Units and
to the use of our name and the reference to our firm in the
Registration Statement and in the Prospectus.
Very truly yours,
MNS:dj
TANNER PROPP & FARBER
99 PARK AVENUE
NEW YORK, NEW YORK 10016
June 27, 1994
The Bank of New York
As Trustee of First Investors
Special Situations Growth & Treasury
Securities Trust, Series 1
101 Barclay Street, 17 West
New York, New York 10286
Dear Sirs:
We are acting as your counsel in connection with the
execution and delivery by you of a certain Trust Agreement dated
as of today (the "Indenture"), among Nike Securities L.P. as
Depositor (the "Depositor"), First Trust Advisors L.P. as
Evaluator and Portfolio Supervisor, and you, as Trustee,
establishing First Investors Special Situations Growth & Treasury
Securities Trust, Series 1 (the "Trust"), and the execution by
you, as Trustee under the Indenture, of a certificate or
certificates evidencing ownership of all of the units of
fractional undivided interests (such certificate or certificates
and such aggregate units being herein respectively called
"Certificates" and "Units") in the Trust, as set forth in the
prospectus, dated today for filing as an amendment to the
registration statement heretofore filed with the Securities and
Exchange Commission (file number 33-54199) under the Securities
Act of 1933, as amended (respectively the "Registration
Statement" and the "Prospectus"), relating to the Trust. The
Trust consists of the total aggregate principal amount of
securities as set forth in the Registration Statement and
Prospectus (including delivery statements relating to contracts
for the purchase of certain securities not yet delivered and
cash, cash equivalents or an irrevocable letter of credit, or a
combination thereof, in the amount required to pay for such
purchases upon the receipt of such securities) defined in the
Indenture as "Securities" and listed in Schedule A to the
Indenture (such Securities, delivery statements and cash, cash
equivalents or letter of credit being herein called the
"Underlying Securities").
We have examined the Indenture, specimen Certificates and
originals (or copies certified or otherwise identified to our
satisfaction) of such other instruments, certificates and
documents as we have deemed necessary or appropriate for the
purpose of rendering this opinion. In such examination, we have
assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals and the conformity to
the original documents of all documents submitted to us as
copies. As to any facts material to our opinion, we have, when
relevant facts were not independently established, relied upon
the aforesaid instruments, certificates and documents.
Based on the foregoing, we are of the opinion that:
1. The Bank of New York is a corporation organized
under the laws of the State of New York with the powers of a
trust company under the Banking Law of the State of New
York.
2. The execution of the Indenture is within the
authorization of the executing officers of The Bank of New
York.
3. The Indenture is in proper form for execution and
delivery by you as Trustee.
4. The Certificates are in proper form for execution
and delivery by you as Trustee.
5. Upon receipt by you of the Underlying Securities
you may properly execute Certificates evidencing ownership
of the Units, registered in the name of the Depositor, and
upon receipt of advice of the effectiveness of the
Registration Statement, you may deliver such Certificates to
or upon the order of the Depositor as provided in the
Closing Memorandum being executed and delivered today by the
parties to the Indenture.
In rendering the foregoing opinion we have not considered,
among other things, whether the Securities have been duly
authorized and delivered under any applicable Federal, state or
local laws.
We hereby consent to the filing of this Opinion as an
exhibit to the Registration Statement and to the use of our name
and the reference to our firm in the Registration Statement and
in the Prospectus.
Very truly yours,
MNS:dj
First Trust Advisors L.P.
1001 Warrenville Road
Lisle, Illinois 60532
June 27, 1994
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: First Investors Special Situations Growth & Treasury
Securities Trust, Series 1
Gentlemen:
We have examined the Registration Statement File No. 33-
54199 for the above captioned fund. We hereby consent to the use
in the Registration Statement of the references to First Trust
Advisors L.P. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
First Trust Advisors L.P.
Carlos E. Nardo
Senior Vice President
