File No. 33-54199
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
POST-EFFECTIVE
AMENDMENT NO. 3
TO
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
FIRST INVESTORS SPECIAL SITUATIONS GROWTH AND TREASURY SECURITIES
TRUST, SERIES 1
(Exact Name of Trust)
NIKE SECURITIES L.P.
(Exact Name of Depositor)
1001 Warrenville Road
Lisle, Illinois 60532
(Complete address of Depositor's principal executive offices)
NIKE SECURITIES L.P. CHAPMAN AND CUTLER
Attn: James A. Bowen Attn: Eric F. Fess
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
(Name and complete address of agents for service)
It is proposed that this filing will become effective (check
appropriate box)
: : immediately upon filing pursuant to paragraph (b)
: x : October 1, 1999
: : 60 days after filing pursuant to paragraph (a)
: : on (date) pursuant to paragraph (a) of rule (485 or 486)
<PAGE>
FIRST INVESTORS SPECIAL SITUATIONS
GROWTH & TREASURY SECURITIES TRUST, SERIES 1
811,946 UNITS
PROSPECTUS
Part One
Dated September 28, 1999
Note: Part One of this Prospectus may not be distributed unless accompanied by
Part Two.
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. At August 16,
1999, each Unit represented a 1/811,946 undivided interest in the principal
and net income of the Trust (see "The Trust" in Part Two).
The Units being offered by this Prospectus are issued and outstanding Units
which have been purchased by the Sponsor in the secondary market or from the
Trustee after having been tendered for redemption. The profit or loss
resulting from the sale of Units will accrue to the Sponsor. No proceeds from
the sale of Units will be received by the Trust.
Public Offering Price
The Public Offering Price per Unit is equal to the aggregate value of the
Securities in the Portfolio of the Trust, plus or minus cash, if any, in the
Income and Capital Accounts of the Trust divided by the number of Units
outstanding, plus a sales charge of 6.0% of the Public Offering Price (6.383%
of the net amount invested) excluding income and principal cash. At August
16, 1999, the Public Offering Price per Unit was $14.2380 (see "Public
Offering" in Part Two). The minimum purchase is 200 Units.
Please retain both parts of this Prospectus for future reference.
______________________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
______________________________________________________________________________
NIKE SECURITIES L.P.
Sponsor
<PAGE>
FIRST INVESTORS SPECIAL SITUATIONS
GROWTH & TREASURY SECURITIES TRUST, SERIES 1
SUMMARY OF ESSENTIAL INFORMATION AS OF AUGUST 16, 1999
Sponsor: Nike Securities L.P.
Evaluator: First Trust Advisors L.P.
Trustee: The Bank of New York
<TABLE>
<CAPTION>
GENERAL INFORMATION
<S> <C>
Aggregate Maturity Value of Treasury Obligations
in the Trust $7,576,000
Aggregate Number of Shares of Special Situations in
the Trust 250,231
Number of Units 811,946
Fractional Undivided Interest in the Trust per Unit 1/811,946
Public Offering Price:
Aggregate Value of Securities in the Portfolio $10,943,919
Aggregate Value of Securities per Unit $13.4786
Income and Principal cash (overdraft) in the Portfolio $(81,965)
Income and Principal cash (overdraft) per Unit $(.1009)
Sales Charge 6.383% (6.0% of Public Offering Price,
excluding income and principal cash) $.8603
Public Offering Price per Unit $14.2380
Redemption Price and Sponsor's Repurchase Price per
Unit ($.8603 less than the Public Offering Price per
Unit) $13.3777
</TABLE>
Date Trust Established June 27, 1994
Mandatory Termination Date August 15, 2005
Evaluator's Annual Fee: $.0020 per $10.00 principal amount of Treasury
Obligations outstanding. Evaluations for purposes of sale, purchase or
redemption of Units are made as of the close of trading (4:00 p.m. Eastern
time) on the New York Stock Exchange on each day on which it is open.
Supervisory fee payable to an affiliate Maximum of $.0015 per
of the Sponsor Unit outstanding annually
Trustee's Annual Fee: $.0085 per Unit outstanding.
Record Date: As soon as practicable after Special Situations'
ex-dividend date.
Distribution Date: As soon as practicable after Special Situations'
distribution date.
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Unit Holders of First Investors
Special Situations Growth & Treasury
Securities Trust, Series 1
We have audited the accompanying statement of assets and liabilities,
including the portfolio, of First Investors Special Situations Growth &
Treasury Securities Trust, Series 1 as of May 31, 1999, and the related
statements of operations and changes in net assets for each of the three years
in the period then ended. These financial statements are the responsibility
of the Trust's Sponsor. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of May 31, 1999, by
correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Investors Special
Situations Growth & Treasury Securities Trust, Series 1 at May 31, 1999, and
the results of its operations and changes in its net assets for each of the
three years in the period then ended in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
September 7, 1999
<PAGE>
FIRST INVESTORS SPECIAL SITUATIONS
GROWTH & TREASURY SECURITIES TRUST, SERIES 1
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Securities, at market value (cost, including accretion
on the treasury obligations, $9,480,863) (Note 1) $10,918,238
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND NET ASSETS
<S> <C> <C>
Cash overdraft 46,993
Accrued liabilities 15,315
__________
62,308
__________
Net assets, applicable to 825,594 outstanding
units of fractional undivided interest:
Cost of Trust assets, including accretion on
the treasury obligations (Note 1) $9,480,863
Net unrealized appreciation (Note 2) 1,437,375
Distributable funds (deficit) (62,308)
___________
$10,855,930
===========
Net asset value per unit $13.1492
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FIRST INVESTORS SPECIAL SITUATIONS
GROWTH & TREASURY SECURITIES TRUST, SERIES 1
PORTFOLIO - See accompanying notes to financial statements.
May 31, 1999
<TABLE>
<CAPTION>
Maturity Market
value Name of Issuer and Title of Security value
<C> <S> <C>
"Zero Coupon" U.S. Treasury Bonds
$7,786,000(1) maturing on August 15, 2005 $5,463,202
==========
</TABLE>
<TABLE>
<CAPTION>
Number
of
Shares
<C> <S> <C>
250,231 First Investors Series Fund, Special
Situations Series 5,455,036
___________
Total investments $10,918,238
===========
</TABLE>
(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.
<PAGE>
FIRST INVESTORS SPECIAL SITUATIONS
GROWTH & TREASURY SECURITIES TRUST, SERIES 1
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended May 31,
1999 1998 1997
<S> <C> <C> <C>
Interest income $488,131 520,740 529,379
Dividends:
Capital gain - 533,910 360,872
Ordinary income - - -
________________________________
Total investment income 488,131 1,054,650 890,251
Expenses:
Trustee's fees and related expenses (9,652) (13,216) (14,302)
Evaluator's fees (1,761) (2,013) (2,214)
Supervisory fees (1,321) (1,501) (1,667)
________________________________
Total expenses (12,734) (16,730) (18,183)
________________________________
Investment income - net 475,397 1,037,920 872,068
Net gain (loss) on investments:
Net realized gain (loss) 168,441 290,145 58,171
Change in net unrealized
appreciation or depreciation (669,758) 613,483 (406,751)
________________________________
(501,317) 903,628 (348,580)
________________________________
Net increase (decrease) in net
assets resulting from operations $(25,920) 1,941,548 523,488
================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FIRST INVESTORS SPECIAL SITUATIONS
GROWTH & TREASURY SECURITIES TRUST, SERIES 1
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended May 31,
1999 1998 1997
<S> <C> <C> <C>
Net increase (decrease) in net assets
resulting from operations:
Investment income - net $475,397 1,037,920 872,068
Net realized gain (loss) on
investments 168,441 290,145 58,171
Change in net unrealized appreciation
or (depreciation) on investments (669,758) 613,483 (406,751)
___________________________________
(25,920) 1,941,548 523,488
Units redeemed (109,698, 126,094 and
73,614 in 1999, 1998 and 1997,
respectively) (1,480,344) (1,645,379) (809,082)
Distributions to unit holders:
Investment income - net - (516,967) (340,922)
Principal from investment transactions - - -
___________________________________
- (516,967) (340,922)
___________________________________
Total increase (decrease) in
net assets (1,506,264) (220,798) (626,516)
Net assets:
At the beginning of the year 12,362,194 12,582,992 13,209,508
___________________________________
At the end of the year (including
distributable funds (deficit)
applicable to Trust units of
$(62,308), $(5,447) and $(2,547)
at May 31, 1999, 1998 and 1997,
respectively $10,855,930 12,362,194 12,582,992
===================================
Trust units outstanding at the end
of the year 825,594 935,292 1,061,386
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FIRST INVESTORS SPECIAL SITUATIONS
GROWTH & TREASURY SECURITIES TRUST, SERIES 1
NOTES TO FINANCIAL STATEMENTS
1. Significant accounting policies
Security valuation -
The treasury obligations are stated at values as determined by First Trust
Advisors L.P., an affiliate of the Sponsor. The values are based on (1)
current bid prices for the securities obtained from dealers or brokers who
customarily deal in securities comparable to those held by the Trust, (2)
current bid prices for comparable securities, (3) appraisal or (4) any
combination of the above.
Shares of First Investors Special Situations Series Fund (Special Situations)
are stated at Special Situations' published net asset value as reported by the
Evaluator. Net asset value is determined by dividing the value of Special
Situations' securities plus any cash and other assets (including accrued
interest and dividends receivable) less all liabilities (including accrued
expenses) by the number of shares outstanding, adjusted to the nearest whole
cent.
Investment income -
Dividends from the Special Situations shares, if any, are recorded on Special
Situations' ex-dividend date. Interest income consists of amortization of
original issue discount and market discount or premium on the treasury
obligations. Such amortization is included in the cost of treasury
obligations rather than in distributable funds because it is not currently
available for distribution to unit holders.
Security cost -
Cost of the Trust's treasury obligations is based on the offering price of the
treasury obligations on the dates the treasury obligations were deposited in
the Trust, plus amortization of original issue discount and amortization of
market discount or premium. Cost of the Special Situations shares is based on
the net asset value of such securities on the dates the securities were
deposited in the Trust. The cost of securities sold is determined using the
average cost method. Sales of securities are recorded on the trade date.
Federal income taxes -
The Trust is not taxable for Federal income tax purposes. Each unit holder is
considered to be the owner of a pro rata portion of the Trust and,
accordingly, no provision has been made for Federal income taxes.
Expenses of the Trust -
The Trust pays a fee for Trustee services to The Bank of New York, which is
based on $.0085 per annum per unit outstanding based on the largest aggregate
number of units outstanding during the calendar year. The Evaluator will
receive an annual fee based on $.002 per $10 principal amount of treasury
obligations outstanding. Additionally, the Trust pays recurring financial
reporting costs and an annual supervisory fee payable to an affiliate of the
Sponsor.
<PAGE>
2. Unrealized appreciation and depreciation
An analysis of net unrealized appreciation at May 31, 1999 follows:
<TABLE>
<CAPTION>
Special
Treasury Situation
obligations shares Total
<S> <C> <C> <C>
Unrealized appreciation $224,207 1,213,168 1,437,375
Unrealized depreciation - - -
___________________________________
$224,207 1,213,168 1,437,375
===================================
</TABLE>
3. Other information
Cost to investors -
The cost to initial investors of units of the Trust was based on the aggregate
offering price of the treasury obligations and the aggregate underlying value
of the equity securities on the date of an investor's purchase, plus a sales
charge of 6.0% of the public offering price which is equivalent to
approximately 6.383% of the net amount invested.
Distributions to unit holders -
Distributions to unit holders, if any, are made as soon as practicable after
Special Situations' distribution date.
<PAGE>
Selected data per unit of the Trust
outstanding throughout each year -
<TABLE>
<CAPTION>
Year ended May 31,
1999 1998 1997
<S> <C> <C> <C>
Investment income - interest and dividends $.5566 1.0592 .8055
Expenses (.0145) (.0168) (.0164)
____________________________
Investment income - net .5421 1.0424 .7891
Distributions to unit holders:
Investment income - net - (.5310) (.3137)
Principal from investment transactions - - -
Net gain (loss) on investments (.6104) .8509 (.2585)
____________________________
Total increase (decrease) in net assets (.0683) 1.3623 .2169
Net assets:
Beginning of the year 13.2175 11.8552 11.6383
___________________________
End of the year $13.1492 13.2175 11.8552
===========================
</TABLE>
Investment income - interest and dividends, Expenses and Investment income -
net per unit have been calculated based on the weighted average number of
units outstanding during each year (877,034 units, 995,702 units and 1,105,149
units in 1999, 1998 and 1997, respectively). Distributions to unit holders of
Investment income - net per unit reflects the Trust's actual distributions of
approximately $.5310 per unit to 973,573 units on January 30, 1998, and
approximately $.3137 per unit to 1,086,882 units on February 3, 1997. The
Trust made no distributions to unit holders during the year ended May 31,
1999.
<PAGE>
FIRST INVESTORS SPECIAL SITUATIONS
GROWTH & TREASURY SECURITIES TRUST, SERIES 1
PART ONE
Must be Accompanied by Part Two
___________________
P R O S P E C T U S
___________________
SPONSOR: Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
(800) 621-1675
TRUSTEE: The Bank of New York
101 Barclay Street
New York, New York 10005
LEGAL COUNSEL Chapman and Cutler
TO SPONSOR: 111 West Monroe Street
Chicago, Illinois 60603
LEGAL COUNSEL Tanner Propp & Farber
TO TRUSTEE: 99 Park Avenue
New York, New York 10016
INDEPENDENT Ernst & Young LLP
AUDITORS: Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
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 statement 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 SPECIAL SITUATIONS
GROWTH & TREASURY SECURITIES TRUST
PROSPECTUS
Part Two NOTE: THIS PART TWO PROSPECTUS MAY
Dated September 30, 1999 ONLY BE USED WITH PART ONE
The Trust. First Investors Special Situations Growth & Treasury
Securities Trust (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 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" in Part One.
The Trust has a mandatory termination date ("Mandatory Termination Date"
or "Trust Ending Date") as set forth under "Summary of Essential
Information" in Part One.
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.
BOTH PARTS OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Page 1
The Treasury Obligations deposited in the Trust 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" in Part One. The Trust will automatically terminate shortly
after the maturity of the Treasury Obligations deposited therein.
Public Offering Price. The secondary market Public Offering Price per
Unit will be based upon a pro rata share of the bid prices of the
Treasury Obligations and the 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
as set forth in "Summary of Essential Information" in Part One. The
minimum purchase is that amount set forth in Part One. 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. 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 as set forth in
"Summary of Essential Information" in Part One. As of the date of this
Prospectus, the Sponsor is maintaining a secondary market. If a
secondary market is not maintained in the future, 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.
All expenses incurred in maintaining a secondary market, other than the
fees of the Evaluator, the supervisory and audit expenses and the costs
of the Trustee in transferring and recording the ownership of Units,
will be borne by the Sponsor. If the supply of Units exceeds demand, or
for some other business reason, the Sponsor may discontinue purchases of
Units at such prices. IF A UNIT HOLDER WISHES TO DISPOSE OF HIS OR HER
UNITS, HE OR SHE SHOULD INQUIRE OF THE SPONSOR AS TO CURRENT MARKET
PRICES PRIOR TO MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE. See
"Rights of Unit Holders-How May Units be Redeemed?"
Page 2
FIRST INVESTORS SPECIAL SITUATIONS
GROWTH & TREASURY SECURITIES TRUST
What is First Investors Special Situations Growth & Treasury Securities
Trust?
The First Investors Special Situations Growth & Treasury Securities
Trust is 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.
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.
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.
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). 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. See "How May Units be Redeemed?" The Trust has
a Mandatory Termination Date as set forth under "Summary of Essential
Information" in Part One.
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" appearing in Part One, 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
Page 3
calendar year exceed the aggregate cost of First Trust Advisors L.P. of
supplying such services in such year.
The Evaluator will receive a fee as indicated in the "Summary of
Essential Information" appearing in Part One. 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 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 advisors in
determining the Federal, state, local and any other tax consequences of
the purchase, ownership and disposition of Units in the Trust. For
purposes of the following discussion and opinions, it is assumed that
Page 4
the shares of the Trust represent shares in an entity treated as a
regulated investment company for Federal income tax purposes.
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 each 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 considered to be received by the Trust.
2. Each Unit holder will have a taxable event when the Trust disposes
of a Security (whether by sale, exchange, liquidation, redemption or
otherwise) or upon the sale or redemption of Units by such Unit holder.
The price a Unit holder pays for his or her Units 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 valuation date
nearest the date the Unit holder purchases his or her Units) in order to
determine his or her initial tax basis (before adjustment for accrual of
original issue discount) for his or her pro rata portion of each
Security held by the Trust. Unit holders should consult their own tax
advisors with regard to the calculation of basis. The Treasury
Obligations held by the Trust are treated as stripped bonds and are
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 (determined at the time he or she acquires his or her
Units, in the manner described above) 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 Treasury
Regulations relating to stripped bonds. To the extent the amount of such
discount is less than the respective "de minimis" amount, such discount
is generally 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 advisors regarding the Federal income tax
consequences and accretion of original issue discount. For Federal
income tax purposes, a Unit holder's pro rata portion of dividends
(other than designated capital gain dividends as discussed below), paid
with respect to a Special Situation shares held by the Trust is taxable
as ordinary income to the extent of such Special Situation's current and
accumulated "earnings and profits." A Unit holder's pro rata portion of
dividends paid on such Special Situation share which exceed such current
and accumulated earnings and profits will first reduce a Unit holder's
tax basis in such Special Situation share, and to the extent that such
dividends exceed a Unit holder's tax basis in such Special Situation
shall generally be treated as capital gain. In general, the holding
period for such capital gain will be determined by the period of time a
Unit holder has held his or her Units for more than one year.
3. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Securities held by the Trust
will generally be considered a capital gain except in the case of a
dealer or a financial institution. 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). Unit
holders should consult their tax advisors regarding the recognition of
such capital gains and losses for Federal income tax purposes.
Dividends Received Deduction. Distributions on the Special Situation
shares which are taxable as ordinary income to the Unit holders will
constitute dividends for Federal income tax purposes. To the extent
Page 5
dividends received by the Special Situations are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to the pro rata portion of
such dividends, since the dividends received deduction is generally
available only with respect to dividends paid by domestic corporations.
However, to the extent dividends received by the Special Situations are
from United States corporations (other than real estate investment
trusts) and are designated by the Special Situation as being eligible
for the dividends received deduction, distributions received by
corporate Unit holders (other than corporate Unit holders, such as "S"
corporations, which are not eligible for the deduction because of their
special characteristics and other than for purposes of special taxes
such as accumulated earnings tax and personal holding corporation tax)
with respect to Special Situations attributable to such dividends may
qualify for the 70% dividends received deduction, subject to limitations
otherwise applicable to the availability of the deduction. It should be
noted that various legislative proposals that would affect the dividends
received deduction have been introduced. Unit holders should consult
with their tax advisors with respect to the limitation on an possible
modification of the dividends received deduction.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by
the Trust or Disposition of Units. 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. Distributions of the Fund's net capital gain which the
Fund properly designates as capital gain dividends will be 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. The Internal Revenue Service Restructuring and Reform Act
of 1998 (the "1998 Tax Act") provides that for taxpayers other than
corporations, net capital gain (which is defined as net long-term
capital gain over net short-term capital loss for the taxable year)
realized from property (with certain exclusions) is subject to a maximum
marginal stated tax rate of 20% (10% in the case of certain taxpayers in
the lowest tax bracket). Capital gain or loss is long-term if the
holding period for the asset is more than one year, and is short-term if
the holding period for the asset is one year or less. The date on which
a Unit is acquired (i.e., the "trade date") is excluded for purposes of
determining the holding period of the Unit. The legislation is generally
effective retroactively for amounts properly taken into account on or
after January 1, 1998. Capital gains realized from assets held for one
year or less are taxed at the same rates as ordinary income. Note,
however that the 1998 Tax Act (and the Taxpayer Relief Act of 1997 (the
"1997 Act")) provide that the application of the rules described above
in the case of pass-through entities such as the Series will be
prescribed in future Treasury Regulations. The Internal Revenue Service
has released preliminary guidance which provides that, in general, pass-
through entities such as the Series may designate their capital gains
dividends as either a 20% rate gain distribution, an unrecaptured
section 1250 gain distribution, or a 28% rate gain distribution,
depending on the nature of the gain received by the pass-through entity.
Unit holders should consult their own tax advisors as to the tax rate
applicable to capital gains dividends.
Accordingly, the 1997 Act includes provisions that treat certain
transactions designed to reduce or eliminate risk of loss and
opportunities for gain (e.g., short sales, offsetting notional principal
contracts, futures or forward contracts, or similar transactions) as
constructive sales for purposes of recognition of gain (but not loss)
and for purposes of determining the holding period. Unit holders should
consult their own tax advisors with regard to any such constructive
sales rules.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
"conversion transactions" effective for transactions entered into after
April 30, 1993. Unit holders and prospective investors should consult
with their tax advisors regarding the potential effect of this provision
on their investment in Units. If the Unit holder disposes of a Unit, he
or she is deemed thereby to have disposed of his or her entire pro rata
interest in all assets of the Trust involved including his or her pro
rata portion of all the Securities represented by that Unit.
Limitations on Deductibility of Trust Expenses by Unit Holders. If more
than 50% of the value of the total assets of Special Situations consist
of stock or securities in foreign corporations, Special Situations may
Page 6
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 the foreign tax credit with respect to
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 advisors regarding this election and its consequences to them.
Each Unit holder's pro rata share of each expense paid by the Trust is
deductible by the Unit holder to the same extent as though the expense
had been paid directly by him or her. It should be noted that as result
of the Tax Reform Act of 1986, certain miscellaneous itemized
deductions, such as investment expenses, tax return preparation fees and
employee business expenses will be deductible by an individual only to
the extent they exceed 2% of such individual's adjusted gross income.
Unit holders may be required to treat some or all of the expenses of the
Trust as miscellaneous itemized deductions subject to this limitation.
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 advisors.
Unit holders will be notified annually of the amounts of original issue
discount, dividend 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 advisors
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.
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 advisors
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 7
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.
Shareholder Inquiries. Shareholder inquiries regarding Special
Situations can be made by calling Shareholder Services at 1-800-423-4026.
Fee Table. The following table is intended to assist investors in
understanding the expenses associated with investing in the Series.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)+ 6.25%
<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 (1) Fees Expenses Expenses (2)
__________________________ __________ ______ _________ ____________
<S> <C> <C> <C> <C>
Special Situations Series 0.75%* 0.30%++ 0.48% 1.53%*
____________
<FN>
* Net of waiver and/or reimbursement.
(1)For the fiscal year ended September 30, 1998, the Advisor waived
Management Fees in excess of 0.75% for the Series. Absent the waiver,
such fees would have been 0.97% for the Series. The Advisor has
contractually agreed with the Series to waive Management Fees in excess
of 0.75% for a period of twelve months commencing on February 1, 1999.
(2)If certain Management Fees were not waived, Total Fund Operating
Expenses for Special Situations Series would be 1.75%.
+ 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% 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.
</FN>
</TABLE>
Page 8
For a more complete description of the various costs and expenses, see
"Buying and Selling Shares" 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.
EXAMPLE:
This example helps you to compare the costs of investing in the Series
with the cost of investing in other mutual funds. The example assumes
that (1) you invest $10,000 in the Series for the time periods
indicated; (2) your investment has a 5% return each year; and (3) the
Series' operating expenses remain the same, except for year one which is
net of fees waived. Although your actual costs may be higher or lower,
under these assumptions your costs would be:
Three Five Ten
One Year Years Years Years
_______ ______ ______ ______
Special Situations Series $771 $1,122 $1,495 $2,541
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>
Year Ended
Year Ended December 31 September 30
1994 1995 1996 1997 1998
_____ _____ _____ _____ _____
<S> <C> <C> <C> <C> <C>
Per Share Data
Net Asset Value - Beginning of Period $18.00 $16.43 $19.63 $20.73 $22.18
====== ====== ====== ====== ======
Income from Investment Operations:
Net Investment Income (Loss) + (.04) (.01) (.01) (.09) (.05)
Net Realized and Unrealized Gain
(Loss) on investments (.62) 3.94 2.28 3.44 (4.30)
______ ______ ______ ______ ______
Total from Investment Operations (.66) 3.93 2.27 3.35 (4.35)
====== ====== ====== ====== ======
Less Distributions From:
Net Investment Income - - - - -
Net Realized Gain on Investments .91 .73 1.17 1.90 -
______ ______ ______ ______ ______
Total Distributions .91 .73 1.17 1.90 -
====== ====== ====== ====== ======
Net Asset Value - End of Period $16.43 $19.63 $20.73 $22.18 $17.83
====== ====== ====== ====== ======
Total Return * (3.66)% 23.92% 11.56% 16.15% (19.61)%
Ratios/Supplemental Data
Net Assets-End of Period (in millions) $ 90 $ 125 $158 $194 $160
Ratio of Expenses to Average Net Assets + 1.65% 1.60% 1.59% 1.53% 1.53%**
Ratio of Net Investment Income to
Average Net Assets + (.26)% (.08)% (.13)% (.45)% (.32)%**
Ratio of Expenses to Average Net Assets Before
Expenses Waived or Assumed 1.90% 1.85% 1.84% 1.78% 1.75%**
Ratio of Net Investment Income to Average Net
Assets Before Expenses Waived or Assumed (.51)% (.33)% (.38)% (.70)% (.54)%**
Portfolio Turnover Rate 53% 80% 99% 84% 70%
____________
<FN>
+ Net of expenses waived or assumed by the investment adviser.
* Calculated without sales charge.
** Annualized.
</FN>
</TABLE>
What are Special Situations' Principal Investment Strategies?
The Series invests at least 65% of its total assets in common stocks of
companies with small market capitalizations, which have the potential
for substantial long-term growth. The Series defines small-cap stocks as
Page 9
those with market capitalizations of less than 90% of the weighted
market capitalization of the Standard & Poor's 600 SmallCap Index ("S&P
600 Index") (currently $1.5 billion). The Series' definition of small-
cap will change with market conditions. The Series looks for companies
that are in the early stages of their development, have a new product or
service, are in a position to benefit from some change in the economy,
have new management, or are experiencing some other "special situation"
which makes their stocks undervalued. Because these companies tend to be
smaller, their growth potential is often greater.
In selecting stocks, the Series relies on fundamental research. It
considers, among other things, earnings growth potential, revenue growth
potential, cash flow and tangible book value. The Series attempts to
stay broadly diversified but it may emphasize certain industry sectors
based on economic and market conditions. The Series usually will sell a
stock when it shows deteriorating fundamentals or falls short of the
portfolio manager's expectations. Information on the Series' recent
strategies and holdings can be found in the most recent annual report.
Alternative Strategies:
At times the Series may judge that market, economic or political
conditions make pursuing the Series' investment strategies inconsistent
with the best interest of its shareholders. The Series then temporarily
may use alternative strategies that are mainly designed to limit the
Series' losses.
Description of Principal Risks
Any investment carries with it some level of risk. In general, the
greater the potential reward of an investment, the greater the risk.
Here are the principal risks of owning the Special Situations Fund:
Market Risk:
Because this Series invests in stocks, an investment in the Series is
subject to stock market risk. Stock prices in general may decline over
short or even extended periods not only because of company-specific
developments but also due to an economic downturn, a change in interest
rates, or a change in investor sentiment, regardless of the success or
failure of an individual company's operations. Stock markets tend to run
in cycles with periods when prices generally go up, known as "bull"
markets and periods when stock prices generally go down, referred to as
"bear" markets. The market risk associated with small-cap stocks is
greater than that associated with larger-cap stocks because small-cap
stocks tend to experience sharper price fluctuations than larger-cap
stocks, particularly during bear markets.
Small-cap companies are generally dependent on a small number of
products or services, their earnings are less predictable, and their
share prices more volatile. These companies are also more likely to have
limited markets or financial resources, and may depend on a small,
inexperienced management group.
Liquidity:
Stocks of small-cap companies often are not as broadly traded as those
of larger-cap companies and are often subject to wider price
fluctuations. As a result, at times it may be difficult for the Series
to sell these securities at a reasonable price.
Year 2000 Risks:
The values of securities owned by the Series may be negatively affected
by Year 2000 problems. Many computer systems are not designed to process
correctly date-related information after January 1, 2000. The issuers of
securities held by the Series may incur substantial costs in ensuring
that computer systems on which they rely are Year 2000 ready and may
face business and legal problems if these systems are not ready. If
computer systems used by exchanges, broker/dealers, and other market
participants are not Year 2000 ready, valuing and trading securities
could be difficult. These problems could have a negative effect on the
Series' investment and returns.
Who is the Management of Special Situations?
First Investors Management Company, Inc. ("FIMCO") is the investment
adviser to the Series. Its address is 95 Wall Street, New York, NY
10005. It currently serves as investment adviser to 51 mutual funds or
series of funds with total net assets of approximately $5 billion. FIMCO
supervises all aspects of the series' operations and determines the
series' portfolio transactions, except for Global Fund.
Page 10
As compensation for its services, the Adviser receives an annual fee
from the Series, which is payable monthly. For the fiscal year ended
September 30, 1998, the advisory fee was 0.75% of average daily net
assets, net of waiver.
Portfolio Managers. Patricia D. Poitra serves as Co-Portfolio Manager of
the Special Situations Fund. Ms. Poitra joined FIMCO in 1985 as a Senior
Equity Analyst.
David A. Hanover is Co-Portfolio Manager of the Special Situations Fund.
From 1997 to August 1998, Mr. Hanover was a Portfolio Manager and
Analyst at Heritage Investors Management Corporation. From 1994 to 1996,
Mr. Hanover was Co-Portfolio Manager and Analyst at Psagot Mutual Funds
and in 1993 he was an International Equity Investments Summer Associate
at Howard Hughes Medical Institute.
Regulatory Matters. In June 1992, the Fund's underwriter FIC, entered
into a settlement with the Securities and Exchange Commission ("SEC") to
resolve allegations by the agency that certain of FIC's sales
representatives had made misrepresentations concerning the risks of
investing in two high-yield bond funds, the First Investors Fund For
Income, Inc. and the First Investors High Yield Fund, Inc. ("High Yield
Funds") and had sold these Funds to investors for whom they were not
suitable. Without admitting or denying the SEC's allegations, FIC: (a)
consented to the entry of a final judgment enjoining it from violating
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder and Section 17(a) of the 1933 Act; (b) agreed to the entry of
an administrative order censuring it and requiring it to comply with
undertakings to improve its policies and procedures with regard to
sales, training, supervision and compliance; and (c) agreed to pay $24.7
million to certain investors who purchased shares of the High Yield
Funds from in or about November 1984 to in or about November 1990.
FIC, FIMCO and/or certain affiliated entities and persons have entered
into settlements with regulators in 29 states to resolve allegations,
similar to those made by the SEC, concerning sales of the High Yield
Funds. In October 1993, as part of settlements with Maine,
Massachusetts, New York, Virginia and Washington ("State of
Settlements"), FIC, FIMCO and certain affiliated entities and persons
agreed, without admitting or denying any of the allegations, (a) to be
enjoined from violating certain provisions of the state securities laws;
(b) to engage in remedial measures designed to ensure that proper sales
practices are observed in the future; and (c) to pay $7.5 million, in
addition to the $24.7 million previously paid by FIC in connection with
the SEC settlement, to investors in the High Yield Funds. In addition,
as part of those settlements, several FIC executives including Glenn O.
Head, who is an officer and trustee of the Fund, agreed to be suspended
and enjoined temporarily from associating with any broker/dealer in a
supervisory capacity in certain of the states. On December 8, 1993,
several present and former FIC executives, including Mr. Head, also
agreed, without admitting or denying the allegations, to temporary SEC
suspensions from associating with broker/dealers and in some cases other
regulated entities in a supervisory capacity.
Determination of Net Asset Value. The share price (which is called "net
asset value" or "NAV" per share) for the Series is calculated once each
day as of 4 p.m., Eastern Standard Time ("E.S.T."), on each day the New
York Stock Exchange ("NYSE") is open for regular trading. In the event
that the NYSE closes early, the share price will be determined as of the
time of the closing.
To calculate the NAV, the Series' assets are valued and totaled,
liabilities are subtracted, and the balance, called net assets, is
divided by the number of shares outstanding.
In valuing its assets, the Series uses the market value of securities
for which market quotations or last sale prices are readily available.
If there are no readily available quotations or last sale prices for an
investment or the available quotations are considered to be unreliable,
the securities will be valued at their fair value as determined in good
faith pursuant to procedures adopted by the Board of Directors of the
Series.
Dividends and Other Distributions. To the extent that it has net-
investment income, the Series will declare and pay a dividend from net
investment income on an annual basis. Any net realized capital gains
will be declared and distributed on an annual basis, usually after the
end of the Series' fiscal year. The Series may make an additional
distribution in any year if necessary to avoid a Federal excise tax on
certain undistributed income and capital gain.
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
Page 11
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, FT 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 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.
Like other investment companies, financial and business organizations
and individuals around the world, the Trust could be adversely affected
if the computer systems used by the Sponsor, Evaluator, Portfolio
Supervisor or Trustee or other service providers to the Trust do not
properly process and calculate date-related information and data
involving dates of January 1, 2000 and thereafter. This is commonly
known as the "Year 2000 Problem." The Sponsor, Evaluator, Portfolio
Supervisor and Trustee are taking steps that they believe are reasonably
designed to address the Year 2000 Problem with respect to computer
systems that they use and to obtain reasonable assurances that
comparable steps are being taken by the Trust's other service providers.
At this time, however, there can be no assurance that these steps will
be sufficient to avoid any adverse impact to the Trust.
In addition to the investment risks of the Year 2000 which are disclosed
above, the ability of FIMCO and its affiliates to price the Series'
shares, process purchase and redemption orders, and render other
services could be adversely affected if the computers or other systems
on which they rely are not properly programmed to operate after January
1, 2000. Additionally, because the services provided by FIMCO and its
affiliates depend on the interaction of their computer systems with the
computer systems of brokers, information services and other parties, any
failure on the part of such third party computer systems to deal with
the Year 2000 may have a negative effect on the services provided to the
Series. FIMCO and its affiliates are taking steps that they believe are
reasonably designed to address the Year 2000 problem for computer and
other systems used by them and are obtaining assurances that comparable
steps are being taken by the Series' other service providers. However,
there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the Series. Nor can the Series estimate the extent
of any impact.
To the best of the Sponsor's knowledge, there is no litigation pending
as of the date of this Part Two Prospectus in respect of any Security
which might reasonably be expected to have a material adverse effect on
Page 12
the Trust. 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. The Public Offering
Price is based on the aggregate bid side evaluation of the Treasury
Obligations and the net asset value of the Special Situations shares in
the Trust, plus or minus cash, if any, in the Capital and Income
Accounts held or owned by the Trust, plus a maximum sales charge of 6.0%
of the Public Offering Price (equivalent to 6.383% of the net amount
invested) divided by the number of outstanding Units of the Trust.
The minimum purchase in the Trust is 200 Units. The applicable sales
charge is reduced by a discount as indicated below for volume purchases:
Percent of Percent of
Offering Net Amount
Number of Units Price Invested
________________________ ___________ __________
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%
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.
The Public Offering Price of Units on the date of this Part Two
Prospectus may vary from the amount stated under "Summary of Essential
Information" in Part One in accordance with fluctuations in the prices
of the underlying Securities. The aggregate value of the Units of the
Trust shall be determined (a) on the basis of the bid 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 bid prices are not
available for the Treasury Obligations, on the basis of bid 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.
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.
Although payment is normally made three business days following the
order for purchase (the "date of settlement"), payment may be made prior
thereto. A person will become owner of Units on the date of settlement
provided payment has been received. Cash, if any, made available to the
Sponsor prior to the date of settlement for the purchase of Units may be
used in the Sponsor's business and may be deemed to be a benefit to the
Sponsor, subject to the limitations of the Securities Exchange Act of
1934. Delivery of Units so ordered will be made three business days
following such order or shortly thereafter. See "Rights of Unit Holders-
How May Units be Redeemed?" for information regarding the ability to
redeem Units ordered for purchase.
Page 13
How are Units Distributed?
Units repurchased in the secondary market may be offered by this Part
Two 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. Secondary market sales 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.
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, The New York Times, U.S. News and World
Report, Business Week, Forbes or Fortune. As with other performance
data, performance comparisons should not be considered representative of
the Trust's relative performance for any future period.
What are the Sponsor's Profits?
In maintaining a market for the Units, the Sponsor will 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.
Page 14
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.
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" in Part
One. 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
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
Page 15
Special Situations shares therein. All other receipts (e.g., return of
principal, 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, 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 by calling 1--800-423-4026.
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, at net asset value, for shares of any eligible Fund,
including money market funds. In addition, Class A shares of a Fund may
be exchanged at net asset value for units of any single payment plan
("plan") sponsored by the Underwriter. Shares of a particular class may
be exchanged only for shares of the same class of another fund.
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. Before exchanging Series shares for shares of
another fund or plan, you should read the prospectus of the fund or plan
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 received in "good order" by the Transfer Agent
before the close of regular trading on the NYSE will be processed at the
net asset value determined as of the close of regular trading on the
NYSE that day. "Good order" means that an exchange request must include:
(1) the names of the funds, account numbers (if existing accounts), the
dollar amount, number of shares or percentage of the account you wish to
exchange; (2) share certificates, if issued; and (3) the signature of
all registered owners exactly as the account is registered. Exchange
requests received after that time will be processed on the following
trading day.
Exchanges should be made for investment purposes only. A pattern of
frequent exchanges may be contrary to the best interests of the Series'
other shareholders. Accordingly, the Series has the right, at its sole
discretion, to limit the amount of an exchange, reject any exchange, or,
upon 60 days' notice, materially modify or discontinue the exchange
privilege. The Series will consider all relevant factors in determining
whether a particular frequency of exchanges is contrary to the best
interests of the Series and its other shareholders. Any such restriction
will be made by the Series on a prospective basis only, upon notice to
the shareholder not later than ten days following such shareholder's
most recent exchange. See the Series' prospectus for further information
regarding the Exchange Privilege.
What Reports Will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and the amount
of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per Unit. Within a reasonable time after
the end of each calendar year, the Trustee will furnish to each person
who at any time during the calendar year was a Unit holder of the Trust
the following information in reasonable detail: (1) a summary of
transactions in the Trust for such year; (2) any Securities sold during
Page 16
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 unit investment 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 third business day following such tender,
the Unit holder will be entitled to receive in cash an amount for each
Unit equal to the redemption price per Unit next computed after receipt
by the Trustee of such tender of Units. The day of tender is deemed to
be the date on which Units are received by the Trustee (if such day is a
day in which the New York Stock Exchange is open for trading), except
that as regards Units received after 4:00 p.m. Eastern time (or as of
any earlier closing time on a day on which the NYSE is scheduled in
advance to close at such earlier 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.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of the principal amount of a
Unit redemption if the Trustee has not been furnished the redeeming Unit
holder's tax identification number in the manner required by such
regulations. For further information regarding this withholding, see
"Rights of Unit Holders-How are Income and Capital Distributed?" In the
event the Trustee has not been previously provided such number, one must
be provided at the time redemption is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of the Trust to the extent that funds are
available for such purpose. All other amounts paid on redemption shall
be withdrawn from the Capital Account of the Trust.
The Trustee is empowered to sell 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. The Redemption Price per Unit is the pro
rata share of each Unit determined by the Trustee by adding: (1) the
cash on hand in the Trust other than cash deposited in the Trust to
purchase Securities not applied to the purchase of such Securities; (2)
the aggregate value of the Securities (including "when issued"
contracts, if any) held in the Trust, as determined by the Evaluator on
the basis of bid prices of the Treasury Obligations and the net asset
value of the Special Situations shares next computed; and (3) dividends
or other distributions receivable on Special Situations shares trading
ex-dividend as of the date of computation and amounts accrued, if any,
for rebated Rule 12b-1 fees; and deducting therefrom: (1) amounts
representing any applicable taxes or governmental charges payable out of
the Trust; (2) an amount representing estimated accrued expenses of the
Trust, including but not limited to fees and expenses of the Trustee
(including legal and auditing fees), the Evaluator, the Supervisor and
counsel fees, if any; (3) cash held for distribution to Unit holders of
record of the Trust as of the business day prior to the evaluation being
made; and (4) other liabilities incurred by the Trust; and finally
dividing the results of such computation by the number of Units of the
Trust outstanding as of the date thereof.
The right of redemption may be suspended and payment postponed for any
period during which the NYSE is closed (other than for customary weekend
and holiday closings) or during which the SEC determines that trading on
the NYSE is restricted or any emergency exists, as a result of which
disposal or evaluation of the Securities is not reasonably practicable,
Page 17
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, FT Series (formerly known as 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
$25 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 (630)
241-4141. As of December 31, 1998, the total partners' capital of Nike
Securities L.P. was $18,506,548 (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, 1-800-221-7668. 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.
Page 18
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 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.
Page 19
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 under "Summary of Essential Information" in Part One. 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 financial statements of the Trust appearing in Part One of this
Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein and in the Registration Statement, and are
included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
Page 20
CONTENTS:
First Investors Special Situations Growth
& Treasury Securities Trust
What is First Investors Special Situations Growth
& Treasury Securities Trust? 3
What are the Expenses and Charges? 3
What is the Federal Tax Status of Unit Holders? 4
Are Investments in the Trust Suitable for
Retirement Plans? 7
Portfolio:
What are Treasury Obligations? 8
What is First Investors Special Situations Series? 8
What are Special Situations' Principal Investment
Strategies? 9
Description of Principal Risks 10
Who is the Management of Special Situations? 10
What are Some Additional Considerations
for Investors? 11
Public Offering:
How is the Public Offering Price Determined? 13
How are Units Distributed? 14
What are the Sponsor's Profits? 14
Rights of Unit Holders:
How is Evidence of Ownership Issued
and Transferred? 15
How are Income and Capital Distributed? 15
How Can Distributions to Unit Holders
be Reinvested? 16
What Reports Will Unit Holders Receive? 16
How May Units be Redeemed? 17
How May Units be Purchased by the Sponsor? 18
How May Securities be Removed from the Trust? 18
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 18
Who is the Trustee? 18
Limitations on Liabilities of Sponsor and Trustee 19
Who is the Evaluator? 19
Other Information:
How May the Indenture Be Amended
or Terminated? 20
Legal Opinions 20
Experts 20
__________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO, WHICH THE FUND
HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940,
AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
First Investors Special Situations Growth & Treasury Securities Trust
Prospectus
Part Two
September 30, 1999
First Trust (registered trademark)
1001 Warrenville Road
Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Bank of New York
101 Barclay Street
New York, New York 10286
1-800-221-7668
THIS PART TWO MUST BE
ACCOMPANIED BY PART ONE
PLEASE RETAIN BOTH PARTS OF PROSPECTUS
FOR FUTURE REFERENCE
Page 21
CONTENTS OF POST-EFFECTIVE AMENDMENT
OF REGISTRATION STATEMENT
This Post-Effective Amendment of Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Auditors
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, First Investors Special Situations Growth and
Treasury Securities Trust, Series 1, certifies that it meets all
of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment of its
Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized in the Village of Lisle and
State of Illinois on October 1, 1999.
FIRST INVESTORS SPECIAL SITUATIONS GROWTH
AND TREASURY SECURITIES TRUST, SERIES 1
(Registrant)
ByNIKE SECURITIES L.P.
(Depositor)
ByRobert M. Porcellino
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment of Registration Statement has been
signed below by the following person in the capacity and on the
date indicated:
Signature Title Date
Robert D. Van Kampen Director of )
Nike Securities )
Corporation, ) October 1, 1999
the General Partner )
of Nike Securities L.P. )
)
)Robert M. Porcellino
) Attorney-in-Fact**
David J. Allen Director of Nike
Securities Corporation,
the General Partner of
Nike Securities L.P.
* 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-2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated September 7, 1999 in
this Post-Effective Amendment to the Registration Statement and
related Prospectus of First Investors Special Situations Growth &
Treasury Securities Trust dated September 28, 1999.
ERNST & YOUNG LLP
Chicago, Illinois
September 27, 1999
