Registration No. 33-56059
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
to
Form S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES
OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust:
The First Trust Special Situations Trust, Series 108
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
NIKE SECURITIES L.P.
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agent for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
E. Title and Amount of Securities Being Registered:
An indefinite number of Units pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended
F. Proposed Maximum
Aggregate Offering Price to the Public of the Securities
Being Registered: Indefinite
G. Amount of Filing Fee (as required by Rule 24f-2):
$500.00*
H. Approximate date of proposed sale to public:
As soon as practicable after the effective date of the
Registration Statement.
*Previously paid
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 108
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust Prospectus front cover
(b) Title of securities issued Summary of Essential
Information
2. Name and address of each depositor Information as to
Sponsor, Trustee and
Evaluator
3. Name and address of trustee Information as to
Sponsor, Trustee and
Evaluator
4. Name and address of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
5. State of organization of trust The First Trust
Special Situations
Trust
6. Execution and termination of Other Information
trust agreement
7. Changes of name *
8. Fiscal year *
9. Litigation *
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer Public Offering
securities
(b) Cumulative or distributive The First Trust
securities Special Situations
Trust
(c) Redemption Rights of Unitholders
(d) Conversion, transfer, etc. Rights of Unitholders
(e) Periodic payment plan *
(f) Voting rights Rights of Unitholders
(g) Notice of certificateholders Other Information
(h) Consents required Rights of Unitholders;
Other Information
(i) Other provisions The First Trust
Special Situations
Trust
11. Types of securities comprising The First Trust
units Special
Situations Trust
Schedule of
Investments
12. Certain information regarding
periodic payment certificates *
13. (a) Load, fees, expenses, etc. Summary of Essential
Information; Public
Offering; The First
Trust Special
Situations Trust
(b) Certain information regarding
periodic payment certificates *
(c) Certain percentages Summary of Essential
Information; The
First Trust Special
Situations Trust;
Public Offering
(d) Certain other fees, etc.
payable by holders Rights of Units
Holders
(e) Certain profits receivable
by depositor, principal,
underwriters, trustee or The First Trust
affiliated persons Special
Situations Trust
(f) Ratio of annual charges *
to income
14. Issuance of trust's securities Rights of Unit Holders
15. Receipt and handling of payments
from purchasers *
16. Acquisition and disposition of
underlying securities The First Trust
Special Situations
Trust; Rights of Unit
Holders;
17. Withdrawal or redemption The First Trust
Special Situations
Trust; Public
Offering; Rights of
Unit Holders
18. (a) Receipt, custody and Rights of Unit Holders
disposition of income
(b) Reinvestment of distributions Rights of Unit Holders
(c) Reserves or special funds Information as to
Sponsor, Trustee and
Evaluator
(d) Schedule of distributions *
19. Records, accounts and reports Rights of Unit Holders
20. Certain miscellaneous provisions
of trust agreement
(a) Amendment Other Information
(b) Termination Other Information
(c) and (d) Trustee, removal Information as
and successor to Sponsor, Trustee
and Evaluator
(e) and (f) Depositor, removal Information as
and successor to Sponsor, Trustee
and Evaluator
21. Loans to security holders *
22. Limitations on liability The First Trust
Special Situations
Trust;
Information as to
Sponsor, Trustee
and Evaluator
23. Bonding arrangements Contents of
Registration
Statement
24. Other material provisions *
of trust agreement
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor Information as to
Sponsor, Trustee and
Evaluator
26. Fees received by depositor *
27. Business of depositor Information as to
Sponsor, Trustee and
Evaluator
28. Certain information as to
officials and affiliated *
persons of depositor
29. Voting securities of depositor *
30. Persons controlling depositor *
31. Payment by depositor for certain
services rendered to trust *
32. Payment by depositor for certain
other services rendered to trust *
33. Remuneration of employees of
depositor for certain services
rendered to trust *
34. Remuneration of other persons
for certain services rendered *
to trust
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's Public Offering
securities by states
36. Suspension of sales of trust's
securities *
37. Revocation of authority to *
distribute
38. (a) Method of distribution Public Offering
(b) Underwriting agreements Public Offering
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as
underwriters to Sponsor, Trustee
and Evaluator
(b) N.A.S.D. membership of
principal underwriters Information as to
Sponsor, Trustee and
Evaluator
40. Certain fees received by See Items 13(a) and
principal underwriters 13(e)
41. (a) Business of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) Branch offices of
principal underwriters *
(c) Salesmen of principal *
underwriters
42. Ownership of trust's securities
by certain persons *
43. Certain brokerage commissions
received by principal *
underwriters
44. (a) Method of valuation Summary of Essential
Information; The
First Trust Special
Situations Trust,
Public Offering
(b) Schedule as to offering *
price
(c) Variation in offering Public Offering
price to certain persons
45. Suspension of redemption rights *
46. (a) Redemption valuation Rights of Unit Holders
(b) Schedule as to redemption *
price
47. Maintenance of position in Public Offering;
underlying securities Rights
of Unit Holders
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of Information as
trustee to Sponsor, Trustee
and Evaluator
49. Fees and expenses of trustee The First Trust
Special Situations
Trust
50. Trustee's lien The First Trust
Special Situations
Trust
VI. INFORMATION CONCERNING THE INSURANCE OF HOLDERS OF
SECURITIES
51. Insurance of holders of
trust's ecurities *
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust The First Trust
agreement with respect to Special
selection or elimination of Situations Trust;
underlying securities Rights of Unit Holders
(b) Transactions involving
elimination of underlying *
securities
(c) Policy regarding substitution The First Trust
or elimination of underlying Special
securities Situations Trust;
Rights of Unit Holders
(d) Fundamental policy not
otherwise covered *
53. Tax status of Trust The First Trust
Special Situations
Trust
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during *
last ten years
55.
56.
57. Certain information regarding
periodic payment plan certificates *
58.
59. Financial statements Report of Independent
(Instruction 1(c) to Auditors, Statement
Form S-6) of Net Assets
*Inapplicable, answer negative or not required.
Emerging Markets Growth & Treasury Securities Trust, Series 1
The Trust. The First Trust Special Situations Trust, Series 108
(the "Trust") is a unit investment trust consisting of a portfolio
containing zero coupon U.S. Treasury bonds and common stocks issued
by foreign companies located in countries experiencing rapid growth
and industrialization (the "emerging market countries").
The objectives of the Trust are to protect Unit holders' capital
and provide potential for capital appreciation or income by investing
a portion of its portfolio in zero coupon U.S. Treasury bonds
("Treasury Obligations"), and the remainder of the Trust's portfolio
in common stocks of foreign companies located in emerging market
countries ("Equity Securities"). Collectively, the Treasury Obligations
and the Equity Securities are referred to herein as the "Securities."
See "Schedule of Investments." The Trust has a mandatory termination
date ("Mandatory Termination Date" or "Trust Ending Date") as
set forth under "Summary of Essential Information." AN INVESTMENT
IN EQUITY SECURITIES ISSUED BY COMPANIES LOCATED IN EMERGING MARKET
COUNTRIES INVOLVES GREATER RISKS THAN THOSE ASSOCIATED WITH AN INVESTMENT
IN DOMESTIC COMMON STOCKS AND MAY BE CONSIDERED SPECULATIVE, ALTHOUGH THE
TREASURY OBLIGATIONS SOMEWHAT MITIGATE THE RISK OF THE EQUITY SECURITIES.
See "Risk Factors" for information concerning the risks inherent in this
investment. 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. The 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 objectives
of the Trust will be achieved.
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 Equity
Securities 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 TRUSTS MAY RECEIVE
MORE OR LESS THAN $10.00 PER UNIT, DEPENDING ON MARKET CONDITIONS
ON THE DATE UNITS ARE SOLD OR REDEEMED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INTERNATIONAL ASSETS ADVISORY CORP.
The date of this Prospectus is November 18, 1994
Page 1
The Treasury Obligations deposited in the Trust on the Initial
Date of Deposit will mature on November 15, 2004 (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 Equity Securities
deposited in the Trust's portfolio have no fixed maturity date
and the value of these underlying Equity Securities will generally
fluctuate with changes in the values of stocks in their respective
market and with changes in the conditions and performance of the
specific Equity Securities owned by the Trust. See "Portfolio."
The Sponsor may, from time to time during a period of up to approximately
360 days after the Initial Date of Deposit, deposit additional
Securities in the Trust, provided it maintains the original percentage
relationship between the Treasury Obligations and Equity Securities
in the Trust's portfolio. Such deposits of additional Securities
will, therefore, be done in such a manner that the maturity value
of each Unit should always be an amount at least equal to $10.00,
and that the original proportionate relationship amongst the individual
issues of the Equity Securities shall be maintained. Any such
difference may be due to the sale, redemption or liquidation of
any Securities deposited in the Trust on the Initial, or any subsequent,
Date of Deposit. See "What is The First Trust Special Situations
Trust?" and "How May Securities be Removed from the Trust?" The
Trust will automatically terminate shortly after the maturity
of the Treasury Obligations deposited therein.
Public Offering Price. The Public Offering Price per Unit of the
Trust during the initial offering period is equal to a pro rata
share of the offering prices of the Treasury Obligations and the
aggregate underlying value of the Equity Securities in the Trust
(generally determined on the basis of the offering side value
of both the Equity Securities and the relevant currency exchange
rate expressed in U.S. dollars and includes the commissions and
relevant taxes associated with acquiring the Equity Securities
during the initial offering period, plus or minus a pro rata share
of cash, if any, in the Capital and Income Accounts of the Trust,
plus a maximum sales charge of 5.5% (equivalent to 5.820% of the
net amount invested). The secondary market Public Offering Price
per Unit will be based upon a pro rata share of the bid prices
of the Treasury Obligations and the aggregate underlying value
of the Equity Securities in the Trust (generally determined on
the basis of the bid side value of both the Equity Securities
and the relevant currency exchange rate expressed in U.S. dollars
and includes the liquidation costs and taxes associated with selling
Equity Securities to meet redemptions or upon Trust termination)
plus or minus a pro rata share of cash, if any, in the Capital
and Income Accounts of the Trust plus a maximum sales charge of
5.5% (equivalent to 5.820% of the net amount invested), subject
to reduction beginning December 1, 1995. The minimum purchase
is $1,000. The sales charge is reduced on a graduated scale for
sales involving at least 10,000 Units. See "How is the Public
Offering Price Determined?"
Dividend and Capital Distributions. Distributions of dividends
and capital received, if any, by the Trust will be paid in cash
on the Distribution Date to Unit holders of record on the Record
Date as set forth in the "Summary of Essential Information." Distributions
of funds in the Capital Account, if any, will be made at least
annually in December of each year. Any distribution of income
and/or capital 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 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 pro rata share of the
Trust's assets, less expenses and tax withholding, in the manner
set forth under "Rights of Unit Holders-How are Income and Capital
Distributed?"
Secondary Market for Units. After the initial offering period,
while under no obligation to do so, the Sponsor may maintain a
market for Units of the Trust and offer to repurchase such Units
at prices which are based on the aggregate bid side evaluation
of the Treasury Obligations and the aggregate underlying value
of Equity Securities in the Trust (generally determined on the
basis of the bid side value of both the Equity Securities and
the relevant currency exchange rate expressed in U.S. dollars
and includes the liquidation costs associated with selling Equity
Securities to meet redemptions or upon Trust termination) plus
or minus
Page 2
cash, if any, in the Capital and Income Accounts of the Trust.
If a secondary market is maintained during the initial offering
period, the prices at which Units will be repurchased will be
based upon the aggregate offering side evaluation of the Treasury
Obligations and the aggregate underlying value of the Equity Securities
in the Trust (generally determined on the basis of the offering
side value of both the Equity Securities and the relevant currency
exchange rate expressed in U.S. dollars and includes the commissions
and stamp taxes associated with acquiring the Equity Securities
during the initial offering period plus or minus cash, if any,
in the Capital and Income Accounts of the Trust. If a secondary
market is not maintained, a Unit holder may redeem Units through
redemption at prices based upon the aggregate bid price of the
Treasury Obligations plus the aggregate underlying value of the
Equity Securities in the Trust (generally determined on the basis
of the bid side value of both the Equity Securities and the relevant
currency exchange rate expressed in U.S. dollars and includes
the liquidation costs associated with selling Equity Securities
to meet redemptions or upon Trust termination) plus or minus a
pro rata share of cash, if any, in the Capital and Income Accounts
of the Trust. See "How May Units be Redeemed?"
Termination. Commencing on the Treasury Obligations Maturity Date,
Equity Securities will begin to be sold in connection with the
termination of the Trust. The Sponsor will determine the manner,
timing and execution of the sale of the Equity Securities. Written
notice of any termination of the Trust specifying the time or
times at which Unit holders may surrender their certificates for
cancellation shall be given by the Trustee to each Unit holder
at his address appearing on the registration books of the Trust
maintained by the Trustee. Unit holders will receive a cash distribution
from the sale of the Securities within a reasonable time after
the Trust is terminated. See "Rights of Unit Holders-How are Income
and Capital Distributed?"
Portfolio Supervisor's Annual Fee. First Trust Advisors L.P.,
the Portfolio Supervisor for the Trust, has retained Global Assets
Advisors, Inc. ("Global Assets Advisors") to provide ongoing research
to the Portfolio Supervisor. Such research will consist of information
covering the financial condition and business prospects of the
equity issuers and an analysis of the emerging market countries,
including economic, tax, currency, political, regulatory and other
similar risks. The Sponsor believes that the research arrangement
is desirable in the present circumstances due to the complexity
of the foreign equity security markets and Global Assets Advisors'
expertise in providing equity research on individual foreign equity
securities, emerging markets and the foreign equity security markets
in general. First Trust Advisors L.P. will pay Global Assets Advisors
$.0070 per Unit for such research. The Supervisory Fee is set
forth under "Summary of Essential Information" and is greater
for this Trust than for other equity security trusts of which
Nike Securities L.P. acts as Sponsor.THE SUPERVISORY FEE IS SET
FORTH UNDER "SUMMARY OF ESSENTIAL INFORMATION" AND IS GREATER
FOR THIS TRUST THAN FOR OTHER EQUITY SECURITY TRUSTS OF WHICH
NIKE SECURITIES L.P. ACTS AS SPONSOR. See "What are the Expenses
and Charges?"
Risk Factors. An investment in the Trust should be made with an
understanding of the risks associated therewith, including, among
other factors, the possible deterioration of either the financial
condition of the issuers or the general condition of international
stock markets, governmental, political, economic and fiscal policies
of emerging market countries, small market capitalization and
volatility of certain foreign markets, volatile interest rates,
economic recession, currency exchange fluctuations, foreign tax
withholding, and differences between domestic and foreign legal,
auditing, brokerage and economic standards. The Trust is not actively
managed and Equity Securities will not be sold by the Trust to
take advantage of market fluctuations or changes in anticipated
rates of appreciation. See "What are Equity Securities?-Risk Factors."
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities-November 18, 1994
Underwriter: International Assets Advisory Corp.
Sponsor: Nike Securities L.P.
Trustee: United States Trust Company of New York
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
General Information
<S> <C>
Aggregate Maturity Value of Treasury Obligations Initially Deposited $ 500,000
Initial Number of Units 50,000
Fractional Undivided Interest in the Trust per Unit 1/50,000
Public Offering Price:
Aggregate Offering Price Evaluation of Securities in Portfolio (1) $ 460,387
Aggregate Offering Price Evaluation of Securities per Unit $ 9.2077
Sales Charge of 5.5% of the Public Offering Price per Unit,
(5.820% of the net amount invested) $ .5359
Public Offering Price per Unit (2) $ 9.7436
Sponsor's Initial Repurchase Price per Unit $ 9.2077
Redemption Price per Unit (based on bid price evaluation of
underlying Treasury Obligations and aggregate underlying value
of Equity Securities) $.5572 less than Public Offering Price
per Unit; $.0213 less than Sponsor's Initial Repurchase Price
per Unit (3) $ 9.1864
</TABLE>
CUSIP Number 33734W 657
First Settlement Date November 28, 1994
Treasury Obligations Maturity Date November 15, 2004
Mandatory Termination Date November 15, 2004
Trustee's Annual Fee (4) $.0110 per Unit outstanding.
Evaluator's Annual Fee $.0040 per Unit outstanding,
payable to an affiliate of the
Sponsor.
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 (4) Maximum of $.0090 per Unit out-
standing annually payable to an
affiliate of the Sponsor.
Income Distribution Record Date Fifteenth day of each December,
commencing December 15, 1995.
Income Distribution Date (5) Last day of each December,
commencing December 30, 1995.
[FN]
________________
(1) Each Equity Security listed on a respective national securities
exchange is valued at the last closing sale price, or if no such
price exists or if the Equity Security is not so listed, at the
closing ask price thereof in U.S. dollars based on the respective
currency exchange rate at the 12:00 p.m. New York spot price on
the day of pricing. The Treasury Obligations are valued at their
aggregate offering side evaluation.
(2) On the Initial Date of Deposit there will be no accumulated
dividends in the Income Account. Anyone ordering Units after such
date will pay a pro rata share of any accumulated dividends in
such Income Account. The Public Offering Price as shown reflects
the value of the Equity Securities at the opening of business
on the Initial Date of Deposit and establishes the original proportionate
relationship amongst the individual securities. No sales to investors
will be executed at this price. Additional Equity Securities will
be deposited during the day of the Initial Date of Deposit which
will be valued as of 4:00 p.m. Eastern time and sold to investors
at a Public Offering Price per Unit based on this valuation.
(3) See "How May Units be Redeemed?"
(4) In addition, the Sponsor will also be reimbursed for bookkeeping
or other administrative expenses currently at a maximum annual
rate of $0.0010 per Unit.
(5) Distributions from the Capital Account, if any, will be made
monthly on the last day of the month to Unit holders of record
on the fifteenth day of such month if the amount available for
distribution equals at least $0.0100 per Unit. Notwithstanding,
distributions of funds in the Capital Account, if any, will be
made in December of each year.
Page 4
Emerging Markets Growth & Treasury Securities Trust,
Series 1
The First Trust Special Situations Trust, Series 108
What is The First Trust Special Situations Trust?
The First Trust Special Situations Trust, Series 108 is one of
a series of investment companies created by the Sponsor under
the name of The First Trust Special Situations Trust, all of which
are generally similar but each of which is separate and is designated
by a different series number (the "Trust"). This Series consists
of an underlying separate unit investment trust designated as:
Emerging Markets Growth & Treasury Securities Trust, Series 1.
The Trust was created under the laws of the State of New York
pursuant to a Trust Agreement (the "Indenture"), dated the Initial
Date of Deposit, with Nike Securities L.P., as Sponsor, United
States Trust Company of New York, as Trustee and First Trust Advisors
L.P., as Portfolio Supervisor and Evaluator.
On the Initial Date of Deposit, the Sponsor deposited with the
Trustee confirmations of contracts for the purchase of zero coupon
U.S. Treasury bonds and common stocks issued by foreign companies
located in countries with emerging markets, together with an irrevocable
letter or letters of credit of a financial institution in an amount
at least equal to the purchase price of such securities. In exchange
for the deposit of securities or contracts to purchase securities
in the Trust, the Trustee delivered to the Sponsor documents evidencing
the entire ownership of the Trust.
The objectives of the Trust are to protect Unit holders' capital
and provide potential for capital appreciation or income through
an investment in zero coupon U.S. Treasury bonds, such securities
being referred to herein as the "Treasury Obligations," and in
equity securities issued by companies located in countries experiencing
rapid growth and industrialization ("emerging market countries")
(the "Equity Securities"). Over the past 20 years, the major percentage
of the world stock market capitalization has shifted dramatically
from the United States to foreign markets, which now account for
approximately two thirds of the world's equity securities. To
achieve the Trust's objective, the Sponsor is relying on favorable
political developments, in which many emerging market countries
are embracing democratic governments and their principals of trade
liberalization, tariff reduction, free-trade agreements, and the
elimination of non-tariff barriers; privatization of industry,
as once government-owned enterprises become private-sector entities;
improving fiscal disciplines and debt reduction; and active trading
of emerging market equity securities. There can be no assurance,
however, that such favorable political development will occur.
In addition, an investment in Equity Securities issued by companies
incorporated or headquartered in emerging market countries involves
greater risks than those associated with an investment in domestic
common stocks. See "Risk Factors" for information concerning the
risks inherent in this investment. 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 purchaser's acquisition
cost. Collectively, the Treasury Obligations and Equity Securities
in the Trust are referred to herein as the "Securities." There
is, of course, no guarantee that the objectives of the Trust will
be achieved.
With the deposit of the Securities on the Initial Date of Deposit,
the Sponsor established a percentage relationship between the
principal amounts of Treasury Obligations and Equity Securities
in the Trust's portfolio. From time to time following the Initial
Date of Deposit, the Sponsor, pursuant to the Indenture, may deposit
additional Securities in the Trust and Units may be continuously
offered for sale to the public by means of this Prospectus, resulting
in a potential increase in the outstanding number of Units of
the Trust. Any additional Securities deposited in the Trust will
maintain, as nearly as is practicable, the original proportionate
relationship of the Treasury Obligations and Equity Securities
in the Trust's portfolio. Such deposits of additional Securities
will, therefore, be done in such a manner that the maturity value
of the Treasury Obligations represented by each Unit should always
be an amount at least equal to $10.00, and that the original proportionate
relationship amongst the individual issues of the Equity Securities
shall be maintained.
Page 5
Any deposit by the Sponsor of additional Securities will duplicate,
as nearly as is practicable, the original proportionate relationship
and not the actual proportionate relationship on the subsequent
date of deposit, since the actual proportionate relationship may
be different than the original proportionate relationship. Any
such difference may be due to the sale, redemption or liquidation
of any of the Securities deposited in the Trust on the Initial,
or any subsequent, Date of Deposit. See "How May Securities be
Removed from the Trust?" On a cost basis to the Trust, the original
percentage relationship on the Initial Date of Deposit was approximately
49.03% Treasury Obligations and approximately 50.97% Equity Securities.
The original percentage relationship of each Equity Security to
the Trust is set forth herein under "Schedule of Investments."
Since the prices of the underlying Treasury Obligations and Equity
Securities will fluctuate daily, the ratio, on a market value
basis, will also change daily. The maturity value of the Treasury
Obligations and the portion of Equity Securities represented by
each Unit will not change as a result of the deposit of additional
Securities in the Trust.
On the Initial Date of Deposit, each Unit of the Trust represented
the undivided fractional interest in the Securities deposited
in the Trust set forth under "Summary of Essential Information."
The Trust has been organized so that purchasers of Units should
receive, at the termination of the Trust, an amount per Unit at
least equal to $10.00 per Unit (which is equal to the per Unit
value upon maturity of the Treasury Obligations), even if the
Equity Securities never paid a dividend and the value of the Equity
Securities in the Trust were to decrease to zero, which the Sponsor
considers highly unlikely. Furthermore, the Sponsor will take
such steps in connection with the deposit of additional Securities
in the Trust as are necessary to maintain a maturity value of
the Units of the Trust at least equal to $10.00 per Unit. The
receipt of only $10.00 per Unit upon the termination of the Trust
(an event which the Sponsor believes is unlikely) represents a
substantial loss on a present value basis. At current interest
rates, the present value of receiving $10.00 per Unit as of the
termination of the Trust would be approximately $4.51 per Unit
(the present value is indicated by the amount per Unit which is
invested in Treasury Obligations). Furthermore, the $10.00 per
Unit in no respect protects investors against diminution in the
purchasing power of their investment due to inflation (although
expectations concerning inflation are a component in determining
prevailing interest rates, which in turn determine present values).
If inflation were to occur at the rate of 5% per annum during
the period ending at the termination of the Trust, the present
dollar value of $10.00 per Unit at the termination of the Trust
would be approximately $6.07 per Unit. To the extent that Units
of the Trust are redeemed, the aggregate value of the Securities
in the Trust will be reduced and the undivided fractional interest
represented by each outstanding Unit of the Trust will increase.
However, if additional Units are issued by the Trust in connection
with the deposit of additional Securities by the Sponsor, the
aggregate value of the Securities in the Trust will be increased
by amounts allocable to additional Units, and the fractional undivided
interest represented by each Unit of the Trust will be decreased
proportionately. See "How May Units be Redeemed?" The Trust has
a Mandatory Termination Date as set forth herein under "Summary
of Essential Information."
What are the Expenses and Charges?
At no cost to the Trust, the Sponsor has borne all the expenses
of creating and establishing the Trust, including the cost of
the initial preparation, printing and execution of the Indenture
and the certificates for the Units, legal and accounting expenses,
expenses of the Trustee and other out-of-pocket expenses. With
the exception of bookkeeping and other administrative services
provided to the Trust, for which the Sponsor will be reimbursed
in amounts not exceeding its cost of providing these services,
the Sponsor will not receive any fees in connection with its activities
relating to the Trust. Such bookkeeping and administrative charges
may be increased without approval of the Unit holders by amounts
not exceeding proportionate increases under the category "All
Services Less Rent of Shelter" in the Consumer Price Index published
by the United States Department of Labor. The fees payable to
the Sponsor for such services may not exceed the actual costs
of providing such services for this Trust, but at no time will
the total amount received for such services rendered to unit investment
trusts of which Nike Securities L.P. is Sponsor in any calendar
year exceed the actual cost to the Sponsor of supplying such services
in such year. First Trust Advisors L.P. will receive an annual
supervisory fee, which is not to exceed the amount set forth under
"Summary of Essential Information,"
Page 6
for providing portfolio supervisory services for the Trust.
Such fee is based on the number of Units outstanding in the Trust
on January 1 of each year except for the year or years in which
an initial offering period occurs in which case the fee for a
month is based on the number of Units outstanding at the end of
such month. The fee may exceed the actual costs of providing such
supervisory services for this Trust, but at no time will the total
amount received for portfolio supervisory services rendered to
unit investment trusts of which Nike Securities L.P. is the Sponsor
in any calendar year exceed the aggregate cost to First Trust
Advisors L.P. of supplying such services in such year.
Subsequent to the initial offering period, the Evaluator, an affiliate
of the Sponsor, will receive a fee as indicated in the "Summary
of Essential Information." The fee may exceed the actual costs
of providing such evaluation services for this Trust, but at no
time will the total amount received for evaluation services rendered
to unit investment trusts of which Nike Securities L.P. is the
Sponsor in any calendar year exceed the aggregate cost to First
Trust Advisors L.P. of supplying such services in such year. The
Trustee pays certain expenses of the Trust for which it is reimbursed
by the Trust. The Trustee will receive for its ordinary recurring
services to the Trust an annual fee computed at $.0110 per annum
per Unit in the Trust outstanding based upon the largest aggregate
number of Units of the Trust outstanding at any time during the
year. For a discussion of the services performed by the Trustee
pursuant to its obligations under the Indenture, reference is made to the
material set forth under "Rights of Unit Holders."
The Trustee's and Evaluator's fees are payable from the Income
Account of the Trust to the extent funds are available and then
from the Capital Account of the Trust. Since the Trustee has the
use of the funds being held in the Capital and Income Accounts
for payment of expenses and redemptions and since such Accounts
are noninterest-bearing to Unit holders, the Trustee benefits
thereby. Part of the Trustee's compensation for its services to
the Trust is expected to result from the use of these funds. Both
fees may be increased without approval of the Unit holders by
amounts not exceeding proportionate increases under the category
"All Services Less Rent of Shelter" in the Consumer Price Index
published by the United States Department of Labor.
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 Equity Securities are all common stocks and the income
stream produced by dividend payments is unpredictable, the Sponsor
cannot provide any assurance that dividends will be sufficient
to meet any or all expenses of the Trust. As described above,
if dividends are insufficient to cover expenses, it is likely
that Equity Securities will have to be sold to meet Trust expenses.
These sales may result in capital gains or losses to Unit holders.
See "What is the Federal Tax Status of Unit Holders?"
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 $0.0050 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
Page 7
assets" (generally, property held for investment) within the meaning
of Section 1221 of the Internal Revenue Code of 1986 (the "Code").
Unit holders should consult their tax advisers in determining
the Federal, state, local and any other tax consequences of the
purchase, ownership and disposition of Units in the Trust.
In the opinion of Chapman and Cutler, special counsel for the
Sponsor, under existing law:
1. The Trust is not an association taxable as a corporation for
Federal income tax purposes; each Unit holder will be treated
as the owner of a pro rata portion of the assets of the Trust
under the Code; and the income of the Trust will be treated as
income of the Unit holders thereof under the Code. Each Unit holder
will be considered to have received his pro rata share of income
derived from each Trust asset when such income is received by
the Trust.
2. Each Unit holder will have a taxable event when the Trust
disposes of a Security (whether by sale, exchange, redemption,
or payment at maturity) or upon the sale or redemption of Units
by such Unit holder. The price a Unit holder pays for his Units,
including sales charges, is allocated among his pro rata portion
of each Security held by the Trust (in proportion to the fair
market values thereof on the date the Unit holder purchases his
Units) in order to determine his initial cost for his pro rata
portion of each Security held by the Trust. The Treasury Obligations
held by the Trust are treated as stripped bonds and may be treated
as bonds issued at an original issue discount as of the date a
Unit holder purchases his Units. Because the Treasury Obligations
represent interests in "stripped" U.S. Treasury bonds, a Unit
holder's initial cost for his pro rata portion of each Treasury
Obligation held by the Trust 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 daily portions of
original issue discount attributable to the Treasury Obligations
held by the Trust as such original issue discount accrues and
will in general be subject to Federal income tax with respect
to the total amount of such original issue discount that accrues
for such year even though the income is not distributed to the
Unit holders during such year to the extent it is not less than
a "de minimis" amount as determined under a Treasury Regulation
issued on December 28, 1992 relating to stripped bonds. To the
extent the amount of such discount is less than the respective
"de minimis" amount, such discount shall be treated as zero. In
general, original issue discount accrues daily under a constant
interest rate method which takes into account the semi-annual
compounding of accrued interest. In the case of the Treasury Obligations,
this method will generally result in an increasing amount of income
to the Unit holders each year. Unit holders should consult their
tax advisers regarding the Federal income tax consequences and
accretion of original issue discount under the stripped bond rules.
For Federal income tax purposes, a Unit holder's pro rata portion
of dividends, as defined by Section 316 of the Code, paid by a
corporation with respect to an Equity Security held by the Trust
are taxable as ordinary income to the extent of such corporation's
current and accumulated "earnings and profits." A Unit holder's
pro rata portion of dividends paid on such Equity Security which
exceed such current and accumulated earnings and profits will
first reduce a Unit holder's tax basis in such Equity Security,
and to the extent that such dividends exceed a Unit holder's tax
basis in such Equity Security shall generally be treated as capital
gain. In general, any such capital gain will be short-term unless
a Unit holder has held his Units for more than one year.
3. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Securities held by the
Trust will generally be considered a capital gain except in the
case of a dealer or a financial institution and, in general, will
be long-term if the Unit holder has held his Units for more than
one year (the date on which the Units are acquired (i.e., the
trade date) is excluded for purposes of determining whether the
Units have been held for more than one year). A Unit holder's
portion of loss, if any, upon the sale or redemption of Units
or the disposition of Securities held by the Trust will generally
be considered a capital loss except in the case of a dealer or
a financial institution and, in general, will be long-term if
the Unit holder has held his Units for more than one year.
Page 8
Unit holders should consult their tax advisers regarding the recognition
of such capital gains and losses for Federal income tax purposes.
4. The Code provides that "miscellaneous itemized deductions"
are allowable only to the extent that they exceed two percent
of an individual taxpayer's adjusted gross income. Miscellaneous
itemized deductions subject to this limitation under present law
include a Unit holder's pro rata share of expenses paid by the
Trust, including fees of the Trustee and the Evaluator.
Recognition of Taxable Gain or Loss Upon Disposition of Securities
by the Trust or Disposition of Units. As discussed above, a Unit
holder may recognize taxable gain (or loss) when a Security is
disposed of by the Trust or if the Unit holder disposes of a Unit.
For taxpayers other than corporations, net capital gains are subject
to a maximum marginal tax rate of 28% in the United States. However,
it should be noted that legislative proposals are introduced from time
to time that affect tax rates and could affect relative differences at
which ordinary income and capital gains are taxed.
The Revenue Reconciliation Act of 1993 (the "Tax Act") raised
tax rates on ordinary income while capital gains remain subject
to a 28% maximum stated rate for taxpayers other than corporations.
Because some or all capital gains are taxed at a comparatively
lower rate under the Tax Act, the Tax Act includes a provision
that recharacterizes capital gains as ordinary income in the case
of certain financial transactions that are "conversion transactions"
effective for transactions entered into after April 30, 1993.
Unit holders and prospective investors should consult with their
tax advisers regarding the potential effect of this provision
on their investment in Units.
General. Each Unit holder will be requested to provide the Unit
holder's taxpayer identification number to the Trustee and to
certify that the Unit holder has not been notified that payments
to the Unit holder are subject to back-up withholding. If the
proper taxpayer identification number and appropriate certification
are not provided when requested, distributions by the Trust to
such Unit holder (including amounts received upon the redemption
of Units) will be subject to back-up withholding. Distributions
by the Trust will generally be subject to United States income
taxation and withholding in the case of Units held by non-resident
alien individuals, foreign corporations or other non-United States
persons (accrual of original issue discount on the Treasury Obligations
may not be subject to taxation or withholding provided certain
requirements are met). Such persons should consult their tax advisers.
Unit holders will be notified annually of the amounts of original
issue discount and income dividends includable in the Unit holder's
gross income and amounts of Trust expenses which may be claimed
as itemized deductions.
Dividend income, long-term capital gains and accrual of original
issue discount may also be subject to state and local taxes. Investors
should consult their tax advisers for specific information on
the tax consequences of particular types of distributions.
It should be noted that payments to the Trust of dividends on
Equity Securities that are attributable to foreign corporations
may be subject to foreign withholding taxes and Unit holders should
consult their tax advisers regarding the potential tax consequences
relating to the payment of any such withholding taxes by the Trust.
Any dividends withheld as a result thereof will nevertheless be
treated as income to the Unit holders. Because, under the grantor
trust rules, an investor is deemed to have paid directly his share
of foreign taxes that have been paid or accrued, if any, an investor
may be entitled to a foreign tax credit or deduction for United
States tax purposes with respect to such taxes. Investors should
consult their tax advisers with respect to foreign withholding
taxes and foreign tax credits.
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 Carter, Ledyard & Milburn, Special Counsel to
the Trust for New York tax matters, under the existing income
tax laws of the State of New York, the Trust is not an association
taxable as a corporation and the income of the Trust will be treated
as the income of the Unit holders thereof.
Page 9
Why are Investments in the Trust Suitable for Retirement Plans?
Units of the Trust may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other tax-deferred
retirement plans. Generally, the Federal income tax relating to
capital gains and income received in each of the foregoing plans
is deferred until distributions are received. Distributions from
such plans are generally treated as ordinary income but may, in
some cases, be eligible for special averaging or tax-deferred
rollover treatment. Investors considering participation in any
such plan should review specific tax laws related thereto and
should consult their attorneys or tax advisers with respect to
the establishment and maintenance of any such plan. Such plans
are offered by brokerage firms and other financial institutions.
Fees and charges with respect to such plans may vary.
PORTFOLIO
What are 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 Equity Securities.
What are Equity Securities?
The Trust also consists of different issues of Equity Securities,
all of which are listed on either a national or foreign securities
exchange or are traded in the over-the-counter market. The Equity
Securities consist of common stocks of companies located in emerging
market countries. See "What are the Equity Securities Selected for
Emerging Markets Growth & Treasury Securities Trust, Series 1?" for
a general description of the companies.
The Trust consists of such of the Securities listed under "Schedule
of Investments" as may continue to be held from time to time in
the Trust and any additional Securities acquired and held by the
Trust pursuant to the provisions of the Trust Agreement together
with cash held in the Income and Capital Accounts. Neither the
Sponsor nor the Trustee shall be liable in any way for any failure
in any of the Securities. However, should any contract for the
purchase of any of the Securities initially deposited hereunder
fail, the Sponsor will, unless substantially all of the moneys
held in the Trust to cover such purchase are reinvested in substitute
Securities in accordance with the Trust Agreement, refund the
cash and sales charge attributable to such failed contract to
all Unit holders on the next distribution date.
Because certain of the Equity Securities from time to time may
be sold under certain circumstances described herein, and because
the proceeds from such events will be distributed to Unit holders
and will not be reinvested, no assurance can be given that the
Trust will retain for any length of time its present size and
composition. Although the Portfolio is not managed, the Sponsor
may instruct the Trustee to sell Equity Securities under certain
limited circumstances. Pursuant to the Indenture and with limited
exceptions, the Trustee may sell any securities or other property
acquired in exchange for Equity Securities such as those acquired
in connection with a merger or other transaction. If offered such
new or exchanged securities or property, the Trustee shall reject
the offer. However, in the event such securities or property are
nonetheless acquired by the Trust, they may be accepted for deposit
in the Trust and either sold by the Trustee or held in the Trust
pursuant to the direction of the Sponsor (who may rely on the
advice of the Portfolio Supervisor). See
Page 10
"How May Securities be Removed from the Trust?" Equity Securities,
however, will not be sold by the Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation or
depreciation.
Risk Factors. An investment in Units of the Trust should be made
with an understanding of the risks such an investment may entail.
Although actions have been taken to provide a diversified portfolio
of Equity Securities, some inherent risks exist due to the concentration
of the Equity Securities within emerging market countries. Unpredictable
factors include the governmental, political, economic and fiscal
policies of emerging market countries which, among other things,
may adversely affect the payment or receipt of payment of dividends
on the relevant Equity Securities or the repatriation of investment
income, capital or the proceeds of sales of non-U.S. issuers;
small market capitalization and volatility of certain foreign
markets, inadequate track record for certain Equity Securities,
foreign currency fluctuations against the United States dollar,
the liquidity of certain Equity Securities or the currencies in
which they are traded, volatile interest rates, exchange control
restrictions, foreign tax withholding, expropriation or confiscatory
taxation. Emerging markets are immature, sometimes vulnerable
to scandal, occasionally manipulated, and, as described below,
lack strong governmental supervisions. In recent years many emerging
markets have experienced record levels of new capital inflows
making them vulnerable to short-term speculators who might liquidate
investments at the first sign of a bearish market, thus creating
illiquidity in the market. In addition, regional influences may
affect the performance of issuers, particularly if an economic
downturn or contraction occurs throughout an emerging market.
Also, fixed brokerage commissions and other transactions costs
on foreign securities exchanges are generally higher than in the
United States and there is generally less government supervision
and regulation of exchanges, brokers and issuers in foreign countries
than there is in the United States. In addition, for the foreign
issuers that are not subject to the reporting requirements of
the Securities Exchange Act of 1934, there may be less publicly
available information than is available from a domestic issuer.
Also, foreign issuers are not necessarily subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to domestic issuers. However, due
to the nature of the issuers of Equity Securities included in
the Trust, the Sponsor believes that adequate information will
be available to allow the Portfolio Supervisor to provide portfolio
surveillance.
Foreign securities generally have not been registered under the
Securities Act of 1933 and may not be exempt from the registration
requirements of the Act. Sales of non-exempt Equity Securities
by the Trust in the United States securities markets are subject
to severe restrictions and may not be practicable. Accordingly,
sales of these Equity Securities by the Trust will generally be
effected only in foreign securities markets. Although the Sponsor
does not believe that the Trust will encounter obstacles in disposing
of the Equity Securities, investors should realize that the Equity
Securities may be traded in foreign countries where the securities
markets are not as developed or efficient and may not be as liquid
as those in the United States. The markets for Equity Securities,
as well as the individual securities, in lesser developed countries
are often substantially smaller, less liquid and more volatile
than those in industrialized countries. This may adversely effect
the market price of such Equity Securities and limit the Trust's
ability to dispose of a particular Equity Security in order to
meet redemption requests or to remove a security as provided for
in "How May Securities be Removed from the Trust?" Certain countries
restrict foreign investment, including limiting foreign investors
to the ownership of a specified class of shares or requiring foreign
investors to dispose of securities already owned if foreign ownership
exceeds certain levels. The imposition of such requirements on
the Trust may result in the Trust disposing of Equity Securities
at a time when it is disadvantageous to Unit holders. In addition,
certain of the Equity Securities in the Trust trade in countries
which have restrictions on the settlement of transactions on either
the purchase or sale side, or both, which are more onerous than
those imposed on U.S. transactions. Such restrictions could cause
delays or increase the costs associated with the purchase and
sale of the individual equity securities and correspondingly could
affect the price of the Units.
The economies of developing countries generally are heavily dependent
upon international trade and, accordingly, have been and may continue
to be adversely affected by trade barriers, exchange controls,
managed
Page 11
adjustments in relative currency values and other protectionist
measures imposed or negotiated by the countries with which they
trade. These economies also have been and may continue to be adversely
affected by economic conditions in the countries with which they
trade. Certain developing countries have historically experienced
and may continue to experience, high rates of inflation, high
interest rates, exchange rate fluctuations, large amounts of external
debt, balance of payments and balance of trade difficulties and
extreme poverty and unemployment. Also, there is a possibility
of nationalization, expropriation or confiscatory taxation, political
changes, government regulation, including foreign exchange controls,
social instability or diplomatic developments (including war)
which could adversely affect the economies of such countries or
the value of the Trust's investments in Equity Securities from
those countries.
The securities of certain of the foreign issuers in the Trust
are in either ADR or GDR form. ADRs evidence American Depositary
Receipts which represent common stock deposited with a custodian
in a depositary. American Depositary Shares, and receipts therefor
(ADRs), are issued by an American bank or trust company to evidence
ownership of underlying securities issued by a foreign corporation.
GDRs evidence Global Depositary Receipts which also represent
common stock deposited with a custodian in a depositary. Global
Depositary Shares, and receipts therefor (GDRs), are issued by
a foreign bank or trust company to evidence ownership of underlying
securities issued by a foreign corporation. These instruments
may not necessarily be denominated in the same currency as the
securities into which they may be converted. For purposes of the
discussion herein, the term ADR generally includes American Depositary
Shares and the term GDR generally includes Global Depositary Shares.
Collectively, ADRs and GDRs are referred to herein as Depositary
Receipts.
Depositary Receipts may be sponsored or unsponsored. In an unsponsored
facility, the depositary initiates and arranges the facility at
the request of market makers and acts as agent for the Depositary
Receipt holder, while the company itself is not involved in the
transaction. In a sponsored facility, the issuing company initiates
the facility and agrees to pay certain administrative and shareholder-related
expenses. Sponsored facilities use a single depositary and entail
a contractual relationship between the issuer, the shareholder
and the depositary; unsponsored facilities involve several depositaries
with no contractual relationship to the company. The depositary
bank that issues a Depositary Receipt generally charges a fee,
based on the price of the Depositary Receipt, upon issuance and
cancellation of the Depositary Receipt. This fee would be in addition
to the brokerage commissions paid upon the acquisition or surrender
of the security. In addition, the depositary bank incurs expenses
in connection with the conversion of dividends or other cash distributions
paid in local currency into U.S. dollars and such expenses are
deducted from the amount of the dividend or distribution paid
to holders, resulting in a lower payout per underlying shares
represented by the Depositary Receipt than would be the case if
the underlying shares were held directly. Certain tax considerations,
including tax rate differentials and withholding requirements,
arising from applications of the tax laws of one nation to nationals
of another and from certain practices in the Depositary Receipt
market may also exist with respect to certain Depositary Receipts.
In varying degrees, any or all of these factors may affect the
value of the Depositary Receipt compared with the value of the
underlying shares in the local market. In addition, the rights
of holders of Depositary Receipts may be different than those
of holders of the underlying shares, and the market for Depositary
Receipts may be less liquid than that for the underlying shares.
ADRs are registered securities pursuant to the Securities Act
of 1933 and may be subject to the reporting requirements of the
Securities Exchange Act of 1934.
For those Equity Securities that are Depositary Receipts, currency
fluctuations will affect the U.S. dollar equivalent of the local
currency price of the underlying domestic share and, as a result,
are likely to affect the value of the Depositary Receipts and
consequently the value of the Equity Securities. The foreign issuers
of securities that are Depositary Receipts may pay dividends in
foreign currencies which must be converted into dollars. Most
foreign currencies have fluctuated widely in value against the
United States dollar for many reasons, including supply and demand
of the respective currency, the soundness of the world economy
and the strength of the respective economy as compared to the
economies of the United States and other countries. Therefore,
for any securities of issuers (whether or not they are in Depositary
Receipt form) whose earnings are stated in foreign currencies,
or which pay dividends in foreign currencies or which are
Page 12
traded in foreign currencies, there is a risk that their United
States dollar value will vary with fluctuations in the United
States dollar foreign exchange rates for the relevant currencies.
An investment in Units should be made with an understanding of
the risks which an investment in common stocks entails, including
the risk that the financial condition of the issuers of the Equity
Securities or the general condition of the common stock market
may worsen and the value of the Equity Securities and therefore
the value of the Units may decline. Common stocks are especially
susceptible to general stock market movements and to volatile
increases and decreases of value as market confidence in and perceptions
of the issuers change. These perceptions are based on unpredictable
factors including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic
expansion or contraction, and global or regional political, economic
or banking crises. Shareholders of common stocks have rights to
receive payments from the issuers of those common stocks that
are generally subordinate to those of creditors of, or holders
of debt obligations or preferred stocks of, such issuers. Shareholders
of common stocks of the type held by the Trust have a right to
receive dividends only when and if, and in the amounts, declared
by the issuer's board of directors and have a right to participate
in amounts available for distribution by the issuer only after
all other claims on the issuer have been paid or provided for.
Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the
same degree of protection of capital as do debt securities. The
issuance of additional debt securities or preferred stock will
create prior claims for payment of principal, interest and dividends
which could adversely affect the ability and inclination of the
issuer to declare or pay dividends on its common stock or the
rights of holders of common stock with respect to assets of the
issuer upon liquidation or bankruptcy. The value of common stocks
is subject to market fluctuations for as long as the common stocks
remain outstanding, and thus the value of the Equity Securities
in the Portfolio may be expected to fluctuate over the life of
the Trust to values higher or lower than those prevailing on the
Initial Date of Deposit.
Holders of common stocks incur more risk than holders of preferred
stocks and debt obligations because common stockholders, as owners
of the entity, have generally inferior rights to receive payments
from the issuer in comparison with the rights of creditors of,
or holders of debt obligations or preferred stocks issued by,
the issuer. Cumulative preferred stock dividends must be paid
before common stock dividends and any cumulative preferred stock
dividend omitted is added to future dividends payable to the holders
of cumulative preferred stock. Preferred stockholders are also
generally entitled to rights on liquidation which are senior to
those of common stockholders.
Whether or not the Equity Securities are listed on either a national
or foreign securities exchange, the principal trading market for the
Equity Securities may be in the over-the-counter market. As a result,
the existence of a liquid trading market for the Equity Securities
may depend on whether dealers will make a market in the Equity
Securities. There can be no assurance that a market will be made
for any of the Equity Securities, that any market for the Equity
Securities will be maintained or of the liquidity of the Equity
Securities in any markets made. In addition, the Trust may be
restricted under the Investment Company Act of 1940 from selling
Equity Securities to the Sponsor. The price at which the Equity
Securities may be sold to meet redemptions, and the value of the
Trust, will be adversely affected if trading markets for the Equity
Securities are limited or absent.
Unit holders will be unable to dispose of any of the Equity Securities
in the Portfolio, as such, and will not be able to vote the Equity
Securities. As the holder of the Equity Securities, the Trustee
will have the right to vote all of the voting stocks in the Trust
and will vote such stocks in accordance with the instructions
of the Sponsor.
Exchange Rate. The Trust is comprised of Equity Securities that
are principally traded in foreign currencies resulting in investment
risks that are substantially different from an investment in a
Trust which invests in securities that are principally traded
in United States dollars. The United States dollar value of a
portfolio (and hence of the Units) and of the distributions from
the portfolio will vary with fluctuations in the United States
dollar foreign exchange rates for the relevant currencies. Most
foreign currencies have fluctuated widely in value against the
United States dollar for many reasons, including supply and demand
of the respective currency, the rate of inflation in the respective
economies compared to the United States, the impact of interest
rate differentials between different currencies on the movement
of foreign currency rates,
Page 13
the balance of imports and exports of goods and services, the
soundness of the world economy and the strength of the respective
economy as compared to the economies of the United States and
other countries.
The post-World War II international monetary system was, until
1973, dominated by the Bretton Woods Treaty, which established
a system of fixed exchange rates and the convertibility of the
United States dollar into gold through foreign central banks.
Starting in 1971, growing volatility in the foreign exchange markets
caused the United States to abandon gold convertibility and to
effect a small devaluation of the United States dollar. In 1973,
the system of fixed exchange rates between a number of the most
important industrial countries of the world, among them the United
States and most Western European countries, was completely abandoned.
Subsequently, major industrialized countries have adopted "floating"
exchange rates, under which daily currency valuations depend on
supply and demand in a freely fluctuating international market.
Many smaller or developing countries have continued to "peg" their
currencies to the United States dollar although there has been
some interest in recent years in "pegging" currencies to "baskets"
of other currencies or to a Special Drawing Right administered
by the International Monetary Fund. From time to time, central
banks in a number of countries also are major buyers and sellers
of foreign currencies, mostly for the purpose of preventing or
reducing substantial exchange rate fluctuations.
Exchange rate fluctuations are partly dependent on a number of
economic factors including economic conditions within countries,
the impact of actual and proposed government policies on the value
of currencies, and transfers of income and capital from one country
to another. These economic factors are influenced primarily by
a particular country's monetary and fiscal policies (although
the perceived political situation in a particular country may
have an influence as well-particularly with respect to transfers
of capital). Investor psychology may also be an important determinant
of currency fluctuations in the short run. Moreover, institutional
investors trying to anticipate the future relative strength or
weakness of a particular currency may sometimes exercise considerable
speculative influence on currency exchange rates by purchasing
or selling large amounts of the same currency or currencies. However,
over the long term, the currency of a country with a low rate
of inflation and a favorable balance of trade should increase
in value relative to the currency of a country with a high rate
of inflation and deficits in their balance of trade.
The following table sets forth, for the periods indicated, the
low and high range of fluctuation concerning the equivalent U.S.
dollar rates of exchange for the listed currencies. Fluctuation
of the rates that have occurred in the past are not necessarily
indicative of fluctuations that may occur over the life of the
Trust.
<TABLE>
<CAPTION>
Foreign Exchange Rates
Range of Fluctuations in Foreign Currencies
Low-High
Argentina Brazil Chile
<S> <C> <C> <C>
1993 0.977-1.0042 12.4-320.9 382.97-431.04
1992 0.9965-1.003 1.319-12.387 333.74-382.00
1991 0.942-0.9985 0.22-1.069 337.34-374.51
1990 0.1865-0.6195 0.177-0.018 295.18-337.09
1989 0.001344-0.1895 0.001-0.011 245.84-297.37
1988 0.000127-0.001333 0.0008-0.01133 240.9-247.89
1987 0.000378-0.00035 0.0000732-0.000763 205.18-238.14
1986 0.0000801-0.000126 0.0000151-0.000071 185.7-204.73
1985 0.0000188-0.00008 0.0000107-0.0000149 129.43-183.86
1984 0.00000235-0.0000179 0.00000324-0.0000104 88.01-128.24
1983 0.00000049-0.00000227 0.000000981-0.00000318 73.33-87.53
</TABLE>
Page 14
<TABLE>
<CAPTION>
Hong Kong South Korea Malaysia Mexico
<S> <C> <C> <C> <C>
1993 7.724-7.756 794-808.8 2.541-2.7001 3.094-3.23
1992 7.723-7.762 762-788.4 2.4865-2.723 3.057-3.147
1991 7.735-7.7961 719-760.8 2.6825-2.796 2.926-3.089
1990 7.7601-7.811 686.3-716.4 2.681-2.731 2.667-2.948
1989 7.7749-7.814 666.3-880.6 2.661-2.767 2.31-2.64
1988 7.79-7.816 684.1-781.6 2.495-2.718 2.2207-2.281
1987 7.78-7.8091 792.3-857.2 2.488-2.606 0.9881-2.2097
1986 7.784-7.814 861.4-889.8 2.418-2.6925 0.4052-0.9235
1985 7.7499-7.811 830.6-892.2 2.408-2.601 0.1978-0.3717
1984 7.784-7.84 791.79-827.4 2.277-2.44 0.148-0.1925
1983 6.56-8.12 751.5-796.91 2.2575-2.3685 0.1005-0.1439
</TABLE>
<TABLE>
<CAPTION>
Philippines Singapore Taiwan Thailand
<S> <C> <C> <C> <C>
1993 24.72-29.81 1.5785-1.6451 36.4-27.1636 25.12-25.54
1992 23.1-27.5 1.5923-1.6605 24.507-25.7475 25.09-26.13
1991 24.72-29.81 1.6305-1.7931 25.47-27.48 25.15-25.73
1990 23.1-27.5 1.7048-1.8843 25.915-27.5 25.09-26.01
1989 21.27-22.32 1.8944-1.966 25.4-28.23 25.36-25.97
1988 20.73-21.3 1.9428-2.0413 28.14-28.99 25.06-25.55
1987 20.43-21.1 1.9985-2.1334 28.6-35.55 25.07-25.95
1986 19.056-22.05 2.1285-2.231 35.66-39.9 26.07-26.55
1985 18.14-19.00 2.09-2.269 39.13-40.6 28.06-26.12
1984 14.01-20.125 2.088-2.178 39.03-40.28 27.15-23.00
1983 9.191-14.01 2.06-2.1458 39.87-40.28 23.00-23.00
</TABLE>
The Evaluator will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange
markets. However, since these markets are volatile and are constantly
changing, depending on the activity at any particular time of
the large international commercial banks, various central banks,
large multi-national corporations, speculators and other buyers
and sellers of foreign currencies, and since actual foreign currency
transactions may not be instantly reported, the exchange rates
estimated by the Evaluator may not be indicative of the amount
in United States dollars the Trust would receive had the Trustee
sold any particular currency in the market. The foreign exchange
transactions of the Trust will be concluded by the Trustee with
foreign exchange dealers acting as principals on a spot (i.e.,
cash) buying basis. Although foreign exchange dealers trade on
a net basis they do realize a profit based upon the difference
between the price at which they are willing to buy a particular
currency (bid price) and the price at which they are willing to
sell the currency (offer price).
The Underwriter has acquired or may acquire the Equity Securities
for the Sponsor and thereby benefits. The Underwriter in its general
securities business acts as agent or principal in connection with
the purchase and sale of equity securities, including the Equity
Securities in the Trust, and may act as market maker in certain
of the Equity Securities. The Underwriter also from time to time
may issue reports on and make recommendations relating to equity
securities, which may include the Equity Securities.
Which are the Equity Securities Selected for Emerging Markets
Growth & Treasury Securities Trust, Series 1?
Cementos de Mexico S.A. (ADR) is headquartered in Monterrey, Mexico.
The company produces, distributes and sells cement and concrete
throughout Mexico and the Southwest region of the United States.
The company's subsidiaries operate cement plants throughout Mexico
and Spain.
China Steel Corporation (GDR), headquartered in Hsiao Kang Kaohsiung
City, Taiwan, manufactures hot rolled steel, steel sheet, wire,
bar and coal tar chemicals. The company sells its products in
Taiwan, northeastern and southeastern Asia, and the United States.
Cifra S.A. de C.V. (ADR) is headquartered in Cuajimalpa, Mexico.
Through its subsidiaries, the company owns and operates discount
stores throughout Mexico which offer groceries, clothing and general
merchandise.
Page 15
A joint venture with Wal-Mart Stores, Inc., develops and expands
these stores throughout Mexico. The company also owns and operates
Mexican cuisine restaurants.
Empresa Nacional de Electricidad S.A. (ADR), headquartered in
Santiago, Chile, transmits and generates electricity throughout
Chile. The company and its subsidiaries operate generation facilities
in Chile. The company also owns undeveloped water rights in the
southern regions of Chile and is involved in the electric industry
in Argentina.
Genting BHD is an investment holding company headquartered in
Kuala Lumpur, Malaysia. Its subsidiaries are involved in transportation
services, hotels and resort-related activities, plantations, property
development, tour promotion, and investment holding.
Grupo Carso S.A. de C.V. (GDR) is a holding company headquartered
in Lomas de Chapultepec, Mexico. The company has investments in
many sectors, including mining, tobacco, tires and auto parts,
food and beverages, and paper and printing. The company also invests
in the manufacturing of electronics, chemicals, and porcelain.
Grupo Televisa S.A. (ADR), headquartered in Mexico City, Mexico,
operates a media company through its subsidiaries. The company
produces, broadcasts, and distributes television programs in Spanish
internationally. The company also produces, publishes and broadcasts
radio and cable television programs, records music, promotes sports
and special events, and conducts outdoor advertising.
Hong Kong Telecommunications, Ltd. (ADR) is a telephone holding
company headquartered in Hong Kong. The company's subsidiaries,
Hong Kong Telephone Company, Ltd. and Cable and Wireless (Hong
Kong) Ltd., provide local and long-distance telephone and telex
services throughout Hong Kong. The company also sells telephones,
facsimile machines and computers.
Hutchison Whampoa, Ltd. (ADR), headquartered in Hong Kong, has
diversified operations in the telecommunications and media, property,
container terminal operations, retail, energy, finance, and investment
industries.
Korea Electric Power Corporation (ADR) generates and supplies
electric power to industrial and residential customers. Headquartered
in Seoul, South Korea, the company is majority-owned by the South
Korean government.
Malayan Banking BHD, headquartered in Kuala Lumpur, Malaysia,
provides commercial and merchant banking, finance, leasing, hire
purchase, insurance and other financial services through its branches
in Malaysia, Singapore, London, New York, Hong Kong and Uzbekistan.
Oversea-Chinese Banking Corp., Ltd., headquartered in Singapore,
offers banking and financial investment services. The company
also operates in Hong Kong and Malaysia.
Philippine Long Distance Telephone Co. (ADR) provides telephone
services to the Philippines from its headquarters in Manila. The
company has a network of central offices that serve Metro Manila
and other cities and municipalities throughout the country and
is the Philippines' principal supplier of long distance service.
Pohang Iron & Steel Company Ltd. (ADR), headquartered in Pohang,
South Korea, manufactures products for the construction and shipbuilding
industries. The company manufactures hot- and cold-rolled steel
products, heavy plate and other steel products.
Samsung Electronics (GDR) is headquartered in Seoul, South Korea,
and manufactures and exports consumer and industrial electronic
equipment, including memory chips.
Shinawatra Computer & Communications Public Co., Ltd. (ADR), headquartered
in Bangkok, Thailand, provides telecommunications services and
markets mainframe computer systems and telecommunications equipment.
It is also a holding company with interests in cable television,
broadcasting, communications satellites, paging services, and
a mobile telephone network. In addition to Thailand, the company's
interests are in Laos, Cambodia, the Philippines and India.
Singapore Airlines, Ltd. is headquartered in Singapore and provides
air transportation, aero-engine overhauling and airport terminal
services, simulator training and aircraft cabin equipment.
TelecomAsia Corporation (GDR) is headquartered in Bangkok, Thailand,
where the company maintains a 2 million-line telephone project
serving the Bangkok metropolitan area.
Page 16
Telecomunicacoes Brasileiras S.A. (ADR) is headquartered in Brasilia,
Brazil, where it manages companies providing telecommunications
services to customers throughout Brazil.
Telefonica de Argentina S.A. (ADR) is headquartered in Buenos
Aires, Argentina, where it supplies fixed-link public telecommunications
and basic telephone services to customers in Argentina.
Telekom Malaysia BHD is headquartered in Kuala Lumpur, Malaysia,
where it provides telecommunications services under a license
issued by the Ministry of Energy, Telecommunications and Posts.
Tenaga Nasional BHD is headquartered in Kuala Lumpur, Malaysia,
where it generates, transmits, distributes and sells electricity
to customers in peninsular Malaysia. Operations of the company
are regulated through a license issued by the Director General
of Electricity Supply. In addition, the company is involved in
manufacturing, selling and repairing transformers and switchgears.
YPF Sociedad Anonima (ADR), headquartered in Buenos Aires, Argentina,
is an integrated oil and gas company which explores for, develops
and produces oil and natural gas in Argentina. In addition, the
company refines, markets, transports and distributes oil and various
other petroleum products, petroleum derivatives, petrochemicals
and liquid petroleum gas.
What are Some Additional Considerations for Investors?
Investors should be aware of certain other considerations before
making a decision to invest in the Trust.
The value of the Equity Securities, 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. The Equity Securities may appreciate or depreciate
in value (or pay dividends) depending on the full range of economic
and market influences affecting these securities. However, the
Sponsor believes that, upon termination of the Trust, even if
the Equity Securities 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). This feature of the Trust provides
Unit holders with principal protection, although they might forego
any earnings on the amount invested. To the extent that Units
are purchased at a price less than $10.00 per Unit, this feature
may also provide a potential for capital appreciation.
Unless a Unit holder purchases Units of the Trust on the Initial
Date of Deposit (or another date when the value of the Units is
$10.00 or less), total distributions, including distributions
made upon termination of the Trust, may be less than the amount
paid for a Unit.
The Sponsor and the Trustee shall not be liable in any way for
any default, failure or defect in any Security. In the event of
a notice that any Treasury Obligation or Equity Securities will
not be delivered ("Failed Contract Obligations") to the Trust,
the Sponsor is authorized under the Indenture to direct the Trustee
to acquire other Treasury Obligations or Equity Securities ("Replacement
Securities"). Any Replacement Security deposited in the Trust
will, in the case of Treasury Obligations, have the same maturity
value and, as closely as can be reasonably acquired by the Sponsor,
the same maturity date or, in the case of Equity Securities, be
identical to those which were the subject of the failed contract.
The Replacement Securities must be purchased within 20 days after
delivery of the notice of a failed contract and the purchase price
may not exceed the amount of funds reserved for the purchase of
the Failed Contract Obligations.
If the right of limited substitution described in the preceding
paragraphs is not utilized to acquire Replacement Securities in
the event of a failed contract, the Sponsor will refund the sales
charge attributable to such Failed Contract Obligations to all
Unit holders of the Trust and the Trustee will distribute the
principal attributable to such Failed Contract Obligations not
more than 120 days after the date on which the Trustee received
a notice from the Sponsor that a Replacement Security would not
be deposited in the Trust. In addition, Unit holders should be
aware that, at the time of receipt of such principal, they may
not be able to reinvest such proceeds in other securities at a
yield equal to or in excess of the yield which such proceeds would
have earned for Unit holders of the Trust.
Page 17
The Indenture also authorizes the Sponsor to increase the size
of the Trust and the number of Units thereof by the deposit of
additional Securities in the Trust and the issuance of a corresponding
number of additional Units.
The Trust consists of the Securities listed under "Schedule of
Investments" (or contracts to purchase such Securities) as may
continue to be held from time to time in the Trust and any additional
Securities acquired and held by the Trust pursuant to the provisions
of the Indenture (including provisions with respect to deposits
into the Trust of Securities in connection with the issuance of
additional Units).
Once all of the Securities in the Trust are acquired, the Trustee
will have no power to vary the investments of the Trust, i.e.,
the Trustee will have no managerial power to take advantage of
market variations to improve a Unit holder's investment, but may
dispose of Securities only under limited circumstances. See "How
May Securities be Removed from the Trust?"
To the best of the Sponsor's knowledge, there is no litigation
pending as of the Initial Date of Deposit in respect of any Security
which might reasonably be expected to have a material adverse
effect on the Trust. At any time after the Initial Date of Deposit,
litigation may be instituted on a variety of grounds with respect
to the Securities. The Sponsor is unable to predict whether any
such litigation will be instituted, or if instituted, whether
such litigation might have a material adverse effect on the Trust.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. During the initial
offering period, the Public Offering Price is based on the aggregate
of the offering side evaluation of the Treasury Obligations in
the Trust and the U.S. dollar aggregate underlying value of the
Equity Securities in the Trust (as determined based on the offer
side of the relevant exchange rate) and including the estimated
costs of acquiring the Equity Securities, plus or minus the U.S.
dollar equivalent of cash, if any, in the Income and Capital Accounts
of the Trust, plus a sales charge of 5.5% (equivalent to 5.820%
of the net amount invested) divided by the number of Units of
the Trust outstanding.
During the initial offering period, the Sponsor's Repurchase Price
is based on the aggregate of the offering side evaluation of the
Treasury Obligations and the U.S. dollar aggregate underlying
value of the Equity Securities in the Trust (as determined based
on the offer side of the relevant exchange rate) and including
the estimated costs of acquiring the Equity Securities, plus or
minus the U.S. dollar equivalent of cash, if any, in the Income
and Capital Accounts of the Trust divided by the number of Units
of the Trust outstanding. For secondary market sales after the
completion of the initial offering period, the Public Offering
Price is based on the aggregate bid side evaluation of the Treasury
Obligations and the U.S. dollar aggregate underlying value of
the Equity Securities in the Trust (as determined based on the
bid side of the relevant exchange rate) and including the estimated
costs of the disposition of the Equity Securities, plus or minus
the U.S. dollar equivalent of cash, if any, in the Income and
Capital Accounts of the Trust, plus a maximum sales charge of
5.5% of the Public Offering Price (equivalent to 5.820% of the
net amount invested), subject to reduction beginning December
1, 1995, divided by the number of outstanding Units of the Trust.
The offering price of the Treasury Obligations in the Trust may
be expected to be greater than the bid price of the Treasury Obligations
by less than 2%.
The minimum purchase of the Trust is $1,000. The applicable sales
charge is reduced by a discount as indicated below for volume
purchases:
<TABLE>
<CAPTION>
Primary and Secondary
_____________________
Percent of Percent of
Offering Net Amount
Number of Units Price Invested
_______________ _________ _________
<S> <C> <C>
10,000 but less than 50,000 0.60% 0.6036%
50,000 but less than 100,000 1.30% 1.3171%
100,000 or more 2.10% 2.1450%
</TABLE>
Page 18
Any such reduced sales charge shall be the responsibility of the
selling Underwriter or dealer. The reduced sales charge structure
will apply on all purchases of Units in the Trust by the same
person on any one day from any one underwriter or dealer. 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 or dealer of
any such combined purchase prior to the sale in order to obtain
the indicated discount. In addition, with respect to the employees,
officers and directors (including their immediate family members,
defined as spouses, children, grandchildren, parents, grandparents,
mothers-in-law, fathers-in-law, sons-in-law and daughters-in-law,
and trustees, custodians or fiduciaries for the benefit of such
persons) of the Sponsor and the Underwriter and their subsidiaries,
the sales charge is reduced by 2.0% of the Public Offering Price
for purchases of Units during the primary and secondary public
offering periods.
Had the Units of the Trust been available for sale on the business
day prior to the Initial Date of Deposit, the Public Offering
Price would have been as indicated in "Summary of Essential Information."
The Public Offering Price of Units on the date of the prospectus
or during the initial offering period may vary from the amount
stated under "Summary of Essential Information" in accordance
with fluctuations in the prices of the underlying Securities.
During the initial offering period, the aggregate value of the
Units of the Trust shall be determined (a) on the basis of the
offering prices of the Treasury Obligations and the U.S. dollar
aggregate underlying value of the Equity Securities therein plus
or minus the U.S. dollar equivalent of cash, if any, in the Income
and Capital Accounts of the Trust, (b) if offering prices are
not available for the Treasury Obligations, on the basis of offering
prices for comparable securities, (c) by determining the value
of the Treasury Obligations on the offer side of the market by
appraisal, or (d) by any combination of the above. The U.S. dollar
aggregate underlying value of the Equity Securities is computed
on the basis of the offering side value of the relevant currency
exchange rate expressed in U.S. dollars and will be determined
in the following manner: if the Equity Securities are listed on
either a national or foreign securities exchange this evaluation is
generally based on the closing sale prices on that exchange or that
system (unless it is determined that these prices are inappropriate as
a basis for valuation) or, if there is no closing sale price on
that exchange or system, at the closing ask prices. If the Equity
Securities are not so listed or, if so listed and the principal
market therefor is other than on an exchange, the evaluation shall
generally be based on the current ask price on the over-the-counter
market (unless it is determined that these prices are inappropriate
as a basis for evaluation). If current ask prices are unavailable,
the evaluation is generally determined (a) on the basis of current
ask prices for comparable securities, (b) by appraising the value
of the Equity Securities on the ask side of the market or (c)
by any combination of the above.
Although payment is normally made five business days following
the order for purchase, payment may be made prior thereto. Cash,
if any, made available to the Sponsor prior to the date of settlement
for the purchase of Units may be used in the Sponsor's business
and may be deemed to be a benefit to the Sponsor, subject to the
limitations of the Securities Exchange Act of 1934. Delivery of
Certificates representing Units so ordered will be made five business
days following such order or shortly thereafter. See "Rights of
Unit Holders-How may Units be Redeemed?" for information regarding
the ability to redeem Units ordered for purchase.
How are Units Distributed?
During the initial offering period (i) for Units issued on the
Initial Date of Deposit and (ii) for additional Units issued after
such date as additional Securities are deposited by the Sponsor,
Units will be distributed to the public at the then current Public
Offering Price. The initial offering period may be up to approximately
360 days. During such period, the Sponsor may deposit additional
Securities in the Trust and create additional Units. Units reacquired
by the Sponsor during the initial offering period (at prices based
upon the aggregate offering price of the Treasury Obligations
and the aggregate underlying value of the Equity Securities in
the Trust plus or minus a pro rata share of cash, if any, in the
Income and Capital Accounts of the Trust) may be resold at the
then current Public Offering Price. Upon the termination of the
initial offering period,
Page 19
unsold Units created or reacquired during the initial offering
period will be sold or resold at the then current Public Offering
Price.
Upon completion of the initial offering, Units repurchased in
the secondary market (see "Will There be a Secondary Market?")
may be offered by this prospectus at the secondary market public
offering price determined in the manner described above.
It is the intention of the Sponsor to qualify Units of the Trust
for sale in a number of states. Sales initially will be made to the
Underwriter, dealers and others at prices which represent a concession
or agency commission of 3.6% of the Public Offering Price, and, for
secondary market sales, 3.6% of the Public Offering Price (or 65% of
the then current maximum sales charge after December 1, 1995). Volume
concessions or agency commissions of an additional 0.40% of the
Public Offering Price will be given to any Underwriter, dealer or bank,
who purchase from the Sponsor at least $100,000 on the Initial
Date of Deposit or $250,000 on any day thereafter. Any Underwriter,
dealer or bank who purchases from the Sponsor $1,000,000 on the Initial
Date of Deposit and commits to purchase at least $5,000,000 from
the Sponsor during the initial offering period will receive a
total additional concession or agency commission of 0.70% of the
Public Offering Price thereafter. In addition, any Underwriter, dealer
or bank who purchases at least $10,000,000 from the Sponsor during
the initial offering period will receive a total additional concession
or agency commission of 0.90% of the Public Offering Price thereafter.
Effective on each December 1, commencing December 1, 1995, the
sales charge will be reduced by 1/2 of 1% to a minimum of 3.5%.
However, resales of Units of the Trust by such Underwriter, dealers
and others to the public will be made at the Public Offering Price
described in the prospectus. The Sponsor reserves the right to change
the amount of the concession or agency commission from time to time.
Certain commercial banks may be 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 in the second preceding sentence.
Under the Glass-Steagall Act, banks are prohibited from underwriting
Trust Units; however, the Glass-Steagall Act does permit certain
agency transactions and the banking regulators have not indicated
that these particular agency transactions are not permitted under
such Act. In Texas and in certain other states, any banks making
Units available must be registered as broker/dealers under state
law.
What are the Sponsor's and Underwriter's Profits?
The Sponsor of the Trust will receive a gross sales commission
equal to 5.5% of the Public Offering Price of the Units (equivalent
to 5.820% of the net amount invested), less any reduced sales
charge for quantity purchases as described under "Public Offering-How
is the Public Offering Price Determined?" See "Underwriting" for
information regarding the receipt of the excess gross sales commissions
by the Sponsor from the Underwriter and additional concessions
available to Underwriters, dealers and others. In addition, the
Sponsor and the Underwriter may be considered to have realized
a profit or to have sustained a loss, as the case may be, in the
amount of any difference between the cost of the Securities to
the Trust (which is based on the Evaluator's determination of
the aggregate offering price of the underlying Securities of such
Trust on the Initial Date of Deposit as well as on subsequent
deposits) and the cost of such Securities to the Sponsor. See
"Underwriting" and Note (2) of "Schedule of Investments." During
the initial offering period, the Underwriter also may realize
profits or sustain losses as a result of fluctuations after the
Date of Deposit in the Public Offering Price received by the Underwriter
upon the sale of Units.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between
the price at which Units are purchased and the price at which
Units are resold (which price includes a sales charge of 5.5%
during the primary market offering period and 5.5% in the secondary
market subject to reduction beginning on December 1, 1995) or
redeemed. The secondary market public offering price of Units
may be greater or less than the cost of such Units to the Sponsor.
Will There be a Secondary Market?
After the initial offering period, although it is not obligated
to do so, the Sponsor and the lead Underwriter intend to maintain
a market for the Units and continuously offer to purchase Units
at prices, subject to change at any time, based upon the aggregate
bid price of the Treasury Obligations in the Portfolio of the
Trust and the aggregate underlying value of the Equity Securities
in the Trust plus or minus cash,
Page 20
if any, in the Income and Capital Accounts of the Trust. All
expenses incurred in maintaining a secondary market, other than
the fees of the Evaluator and the costs of the Trustee in transferring
and recording the ownership of Units, will be borne by the Sponsor.
If the supply of Units exceeds demand, or for some other business
reason, the Sponsor may discontinue purchases of Units at such
prices. IF A UNIT HOLDER WISHES TO DISPOSE OF HIS UNITS, HE SHOULD
INQUIRE OF THE SPONSOR AND/OR UNDERWRITER AS TO CURRENT MARKET
PRICES PRIOR TO MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the
Trustee. Ownership of Units may be evidenced by registered certificates
executed by the Trustee and the Sponsor. Delivery of certificates
representing Units ordered for purchase is normally made five
business days following such order or shortly thereafter. Certificates
are transferable by presentation and surrender to the Trustee
properly endorsed or accompanied by a written instrument or instruments
of transfer. Certificates to be redeemed must be properly endorsed
or accompanied by a written instrument or instruments of transfer.
A Unit holder must sign exactly as his name appears on the face
of the certificate with signature guaranteed by a participant
in the Securities Transfer Agents Medallion Program ("STAMP")
or such other signature guaranty program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee. In
certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of
death, appointments as executor or administrator or certificates
of corporate authority. Record ownership may occur before settlement.
Certificates will be issued in fully registered form, transferable
only on the books of the Trustee in denominations of one Unit
or any multiple thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form.
The Trustee will maintain an account for each such Unit holder
and will credit each such account with the number of Units purchased
by that Unit holder. Within two business days of the issuance
or transfer of Units held in uncertificated form, the Trustee
will send to the registered owner of Units a written initial transaction
statement containing a description of the Trust; the number of
Units issued or transferred; the name, address and taxpayer identification
number, if any, of the new registered owner; a notation of any
liens and restrictions of the issuer and any adverse claims to
which such Units are or may be subject or a statement that there
are no such liens, restrictions or adverse claims; and the date
the transfer was registered. Uncertificated Units are transferable
through the same procedures applicable to Units evidenced by certificates
(described above), except that no certificate need be presented
to the Trustee and no certificate will be issued upon the transfer
unless requested by the Unit holder. A Unit holder may at any
time request the Trustee to issue certificates for Units.
Although no such charge is now made or contemplated, a Unit holder
may be required to pay $2.00 to the Trustee per certificate reissued
or transferred and to pay any governmental charge that may be
imposed in connection with each such transfer or exchange. For
new certificates issued to replace destroyed, stolen or lost certificates,
the Unit holder may be required to furnish indemnity satisfactory
to the Trustee and pay such expenses as the Trustee may incur.
Mutilated certificates must be surrendered to the Trustee for
replacement.
How are Income and Capital Distributed?
The Trustee will distribute any net income (other than accreted
interest on the Treasury Obligations) received with respect to
any of the Securities in the Trust on or about the Income Distribution
Dates to Unit holders of record on the preceding Income Record
Date. See "Summary of Essential Information." The pro rata share
of cash in the Capital Account of each Trust will be computed
as of the first day of each month. Proceeds received on the sale
of any Securities in the Trust, to the extent not used to meet
redemptions of Units or pay expenses, will, however, be distributed
on the last day of each month to Unit holders of record on the
fifteenth day of each month if the amount available for distribution
equals at least $0.01 per Unit. The Trustee is not required to
pay interest on funds held in the Capital Account of a Trust (but
may itself earn interest thereon and therefore benefit from the
use of such funds). The Trustee may from time to time advance
its own funds to make distributions from the Income and Capital
Accounts and will be reimbursed, without
Page 21
interest for any such advance when funds are available. Notwithstanding,
distributions of funds in the Capital Account, if any, will be
made on the last day of each December to Unit holders of record
as of December 15. 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?"
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a specified percentage of any
distribution made by the Trust if the Trustee has not been furnished
the Unit holder's tax identification number in the manner required
by such regulations. Any amount so withheld is transmitted to
the Internal Revenue Service and may be recovered by the Unit
holder only when filing a tax return. Under normal circumstances
the Trustee obtains the Unit holder's tax identification number
from the selling broker. However, a Unit holder should examine
his or her statements from the Trustee to make sure that the Trustee
has been provided a certified tax identification number in order
to avoid this possible "back-up withholding." In the event the
Trustee has not been previously provided such number, one should
be provided as soon as possible.
Within a reasonable time after the Trust is terminated, each Unit
holder will, upon surrender of his Units for redemption, receive:
(i) the pro rata share of the amounts realized upon the disposition
of Equity Securities; (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.
The Trustee will credit to the Income Account of the Trust any
dividends received on the Equity Securities therein. All other
receipts (e.g. return of capital, etc.) are credited to the Capital
Account of the Trust.
The Trustee may establish reserves (the "Reserve Account") within
the Trust for state and local taxes, if any, and any governmental
charges payable out of the Trust.
What Reports will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and
the amount of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per Unit. Within a reasonable
period of time after the end of each calendar year, the Trustee
shall furnish to each person who at any time during the calendar
year was a Unit holder of the Trust the following information
in reasonable detail: (1) a summary of transactions in the Trust
for such year; (2) any Securities sold during the year and the
Securities held at the end of such year by the Trust; (3) the
redemption price per Unit based upon a computation thereof on
the 31st day of December of such year (or the last business day
prior thereto); and (4) amounts of income and capital distributed
during such year.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Securities in the Trust furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his Units by tender
to the Trustee at its corporate trust office in the City of New
York of the certificates representing the Units to be redeemed,
or in the case of uncertificated Units, delivery of a request
for redemption, duly endorsed or accompanied by proper instruments
of transfer with signature guaranteed as explained above (or by
providing satisfactory indemnity, as in connection with lost,
stolen or destroyed certificates), and payment of applicable governmental
charges, if any. No redemption fee will be charged. On the seventh
calendar day following such tender, or if the seventh calendar
day is not a business day, on the first business day prior thereto,
the Unit holder will be entitled to receive in cash an amount
for each Unit equal to the Redemption Price per Unit next computed
after receipt by the Trustee of such tender of Units. The "date
of tender" is deemed to be the date on which Units are received
by the Trustee, except that as regards Units received after 4:00
p.m. Eastern time, the date of tender is the next day on which
the New York Stock Exchange is open for trading and such Units
will be deemed to have been tendered to the Trustee on such day
for redemption at the redemption price computed on that day. Units
so redeemed shall be cancelled. The securities markets in many
countries are open for trading on certain days which are U.S.
holidays on which the Trust will not transact
Page 22
business. The Equity Securities will continue to trade on those
days and thus the value of the Portfolio may be significantly
affected on days when the Unit holders cannot sell or redeem their
Units.
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a specified percentage of the
principal amount of a Unit redemption if the Trustee has not been
furnished the redeeming Unit holder's tax identification number
in the manner required by such regulations. Any amount so withheld
is transmitted to the Internal Revenue Service and may be recovered
by the Unit holder only when filing a tax return. Under normal
circumstances, the Trustee obtains the Unit holder's tax identification
number from the selling broker. However, any time a Unit holder
elects to tender Units for redemption, such Unit holder should
make sure that the Trustee has been provided a certified tax identification
number in order to avoid this possible "back-up withholding."
In the event the Trustee has not been previously provided such
number, one must be provided at the time redemption is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of the Trust to the extent that funds
are available for such purpose. All other amounts paid on redemption
shall be withdrawn from the Capital Account of the Trust.
The Trustee is empowered to sell 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. Equity Securities 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 U.S. dollar aggregate
underlying value of the Equity Securities in the Trust (computed
on the basis of the bid side value of the relevant exchange rate
and which value is net of applicable commissions and stamp taxes)
plus or minus the U.S. dollar equivalent (at the bid side value
of the relevant exchange rate) of cash, if any, in the Income
and Capital Accounts of the Trust, while the Public Offering Price
per Unit during the initial offering period will be determined
on the basis of the offering price of such Treasury Obligations,
as of the close of trading on the New York Stock Exchange on the
date any such determination is made and the U.S. dollar aggregate
underlying value of the Equity Securities in the Trust, plus or
minus the U.S. dollar equivalent of cash, if any, in the Income
and Capital Accounts of the Trust. On the Initial Date of Deposit
the Public Offering Price per Unit (which is based on the offering
prices of the Treasury Obligations and the aggregate underlying
value of the Equity Securities in the Trust and includes the sales
charge) exceeded the Unit value at which Units could have been
redeemed (based upon the current bid prices of the Treasury Obligations
and the aggregate underlying value of the Equity Securities in
the Trust) by the amount shown under "Summary of Essential Information."
The Redemption Price per Unit is the pro rata share of each Unit
determined by the Trustee by adding: (1) the cash on hand in the
Trust other than cash deposited in the Trust to purchase Securities
not applied to the purchase of such Securities; (2) the U.S. dollar
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 aggregate
underlying value of the Equity Securities in the Trust next computed;
and (3) the U.S. dollar equivalent of dividends receivable on
Equity Securities trading ex-dividend as of the date of computation;
and deducting therefrom: (1) amounts representing any applicable
taxes or governmental charges payable out of the Trust; (2) 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 and supervisory 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 aggregate value of the Equity Securities will be determined
in the following manner: if the Equity Securities are listed on
either a national or foreign securities exchange or the NASDAQ National
Market System, this evaluation is generally based on the U.S. dollar
equivalent (at the relevant exchange rate) closing sale prices
on
Page 23
that exchange or that system (unless it is determined that these
prices are inappropriate as a basis for valuation) or, if there
is no closing sale price on that exchange or system, at the closing
bid prices. If the Equity Securities are not so listed or, if
so listed and the principal market therefor is other than on the
exchange, the evaluation shall generally be based on the U.S.
dollar equivalent (at the relevant exchange rate) of the current
bid price on the over-the-counter market (unless these prices
are inappropriate as a basis for evaluation). If current bid prices
are unavailable, the evaluation is generally determined (a) on
the basis of the U.S. dollar equivalent (at the relevant exchange
rate) of the current bid prices for comparable securities, (b)
by appraising the value of the Equity Securities on the bid side
of the market or (c) by any combination of the above. The relevant
exchange rate used for evaluations of the Equity Securities will
include the cost of any forward foreign exchange contract in the
relevant currency to correspond to the requirement that the Trustee
settle redemption requests in U.S. dollars within seven days.
The right of redemption may be suspended and payment postponed
for any period during which the New York Stock Exchange is closed,
other than for customary weekend and holiday closings, or during
which the Securities and Exchange Commission determines that trading
on the New York Stock Exchange is restricted or any emergency
exists, as a result of which disposal or evaluation of the Securities
is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit. Under
certain extreme circumstances, the Sponsor may apply to the Securities
and Exchange Commission for an order permitting a full or partial
suspension of the right of Unit holders to redeem their Units.
The Trustee is not liable to any person in any way for any loss
or damage which may result from any such suspension or postponement.
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 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
an Equity Security in the event that an issuer defaults in the
payment of a dividend that has been declared, that any action
or proceeding has been instituted restraining the payment of dividends
or there exists any legal question or impediment affecting such
Equity Security, that the issuer of the Equity Security has breached
a covenant which would affect the payments of dividends, the credit
standing of the issuer or otherwise impair the sound investment
character of the Equity Security, that the issuer has defaulted
on the payment on any other of its outstanding obligations, that
the price of an Equity Security has declined to such an extent
or other such credit, political or regulatory factors exist so
that in the opinion of the Sponsor based upon its own conclusions,
information supplied by the Portfolio Supervisor or other
available market research, the retention of such Equity Securities
would be detrimental to the Trust. Treasury Obligations may be
sold by the Trustee only pursuant to the liquidation of the Trust
or to meet redemption requests. Except as stated under "Portfolio-What
are Some Additional Considerations for Investors?" For Failed
Contract Obligations, the acquisition by the Trust of any securities
other than the Securities is prohibited. Pursuant to the Indenture
and with limited exceptions, the Trustee may sell any securities
or other property acquired in exchange for Equity Securities such
as those acquired in connection with a merger or other transaction.
If offered such new or exchanged securities or property,
Page 24
the Trustee shall reject the offer. However, in the event such
securities or property are nonetheless acquired by the Trust,
they may be accepted for deposit in the Trust and either sold
by the Trustee or held in the Trust pursuant to the direction
of the Sponsor (who may rely on the advice of the Portfolio Supervisor).
Proceeds from the sale of Securities by the Trustee are credited
to the Capital Account of the Trust for distribution to Unit holders
or to meet redemptions.
The Trustee may also sell 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 by the Trustee to meet Trust expenses.
The Sponsor, in designating Equity Securities to be sold by the
Trustee, will generally make selections in order to maintain,
to the extent practicable, the proportionate relationship among
the number of shares of individual issues of Equity Securities.
To the extent this is not practicable, the composition and diversity
of the Equity Securities may be altered. In order to obtain the
best price for the Trust, it may be necessary for the Sponsor
to specify minimum amounts (generally 100 shares) in which blocks
of Equity Securities are to be sold.
INFORMATION AS TO CONSULTANT, SPONSOR, TRUSTEE AND EVALUATORS
Who is Global Assets Advisors, Inc.?
Global Assets Advisors, Inc., a wholly-owned subsidiary of International
Assets Holding Corporation, will provide research to the Portfolio
Supervisor. Global Assets Advisors utilizes the research of International
Assets Advisory Corporation ("IAAC"), a related corporation, and
the Trust's Underwriter, which is a full-service securities brokerage
firm specializing in global investing. IAAC was formed as a Florida
corporation in 1981 and registered as a broker/dealer in 1982.
The firm has focused on the sale of global debt and equity securities
to its clients. IAAC has developed an experienced team specializing
in the selection, research, trading, currency exchange and execution
of individual equity and fixed-income products on a global basis.
Members of this team are also affiliated with Global Assets Advisors,
Inc. and have many years of experience in the global marketplace.
Global Assets Advisors is a registered investment advisor. Its
principal offices are located at 250 Park Avenue South, Suite
200, Winter Park, Florida 32789. The telephone number is 1-800-432-0000.
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in
1991, acts as Sponsor for successive series of The First Trust
Combined Series, The First Trust Special Situations Trust, The
First Trust Insured Corporate Trust, The First Trust of Insured
Municipal Bonds and The First Trust GNMA. First Trust introduced
the first insured unit investment trust in 1974 and to date more
than $8 billion in First Trust unit investment trusts have been
deposited. The Sponsor's employees include a team of professionals
with many years of experience in the unit investment trust industry.
The Sponsor is a member of the National Association of Securities
Dealers, Inc. and Securities Investor Protection Corporation and
has its principal offices at 1001 Warrenville Road, Lisle, Illinois
60532; telephone number (708) 241-4141. As of December 31, 1993,
the total partners' capital of Nike Securities L.P. was $12,743,032
(audited). (This paragraph relates only to the Sponsor and not
to the Trust or to any series thereof or to any other Underwriter.
The information is included herein only for the purpose of informing
investors as to the financial responsibility of the Sponsor and
its ability to carry out its contractual obligations. More detailed
financial information will be made available by the Sponsor upon
request.)
Who is the Trustee?
The Trustee is United States Trust Company of New York with its
principle place of business at 45 Wall Street, New York, New York
10005 and its unit investment trust offices at 770 Broadway, New
York, New York 10003. Unit holders who have questions regarding
the Trust may call the Customer Service Help Line at 1-800-682-7520.
Page 25
The Trustee is a member of the New York Clearing House Association
and is subject to supervision and examination by the Comptroller
of the Currency, the Federal Deposit Insurance Corporation and
the Board of Governors of the Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not participated
in the selection of the Securities. For information relating to
the responsibilities of the Trustee under the Indenture, reference
is made to the material set forth under "Rights of Unit Holders."
The Trustee and any successor trustee may resign by executing
an instrument in writing and filing the same with the Sponsor
and mailing a copy of a notice of resignation to all Unit holders.
Upon receipt of such notice, the Sponsor is obligated to appoint
a successor trustee promptly. If the Trustee becomes incapable
of acting or becomes bankrupt or its affairs are taken over by
public authorities, the Sponsor may remove the Trustee and appoint
a successor as provided in the Indenture. If upon resignation
of a trustee no successor has accepted the appointment within
30 days after notification, the retiring trustee may apply to
a court of competent jurisdiction for the appointment of a successor.
The resignation or removal of a trustee becomes effective only
when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which a Trustee shall be a party, shall
be the successor Trustee. The Trustee must be a banking corporation
organized under the laws of the United States or any State and
having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit
holders for taking any action or for refraining from taking any
action in good faith pursuant to the Indenture, or for errors
in judgment, but shall be liable only for their own willful misfeasance,
bad faith, gross 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 becomes incapable of acting or becomes bankrupt or
its affairs are taken over by public authorities, then the Trustee
may (a) appoint a successor Sponsor at rates of compensation deemed
by the Trustee to be reasonable and not exceeding amounts prescribed
by the Securities and Exchange Commission, or (b) terminate the
Indenture and liquidate the Trust as provided herein, or (c) continue
to act as Trustee without terminating the Indenture.
Who is the Evaluator?
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois
60532. The Evaluator may resign or may be removed by the Sponsor
and the Trustee, in which event the Sponsor and the Trustee are
to use their best efforts to appoint a satisfactory successor.
Such resignation or removal shall become effective upon the acceptance
of appointment by the successor Evaluator. If upon resignation
of the Evaluator no successor has accepted appointment within
30 days after notice of resignation, the Evaluator may apply to
a court of competent jurisdiction for the appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for
the accuracy thereof. Determinations by the Evaluator under the
Indenture shall be made in good faith upon the basis of the best
information available to it, provided, however, that the Evaluator
shall be under no liability to the Trustee, Sponsor or Unit holders
for errors in judgment. This provision
Page 26
shall not protect the Evaluator in any case of willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations
and duties.
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment
is (1) to cure any ambiguity or to correct or supplement any provision
of the Indenture which may be defective or inconsistent with any
other provision contained therein, or (2) to make such other provisions
as shall not adversely affect the interest of the Unit holders
(as determined in good faith by the Sponsor and the Trustee).
The Indenture provides that the Trust shall terminate upon the
maturity, redemption or other disposition of the last of the Treasury
Obligations held in the Trust, but in no event beyond the Mandatory
Termination Date indicated herein under "Summary of Essential
Information." The Trust may be liquidated at any time by consent
of 100% of the Unit holders of the Trust or by the Trustee in
the event that Units of the Trust not yet sold aggregating more
than 60% of the Units of the Trust are tendered for redemption
by the Sponsor. If the Trust is liquidated because of the redemption
of unsold Units of the Trust, the Sponsor will refund to each
purchaser of Units of the Trust the entire sales charge paid by
such purchaser. In the event of termination, written notice thereof
will be sent by the Trustee to all Unit holders of the Trust.
Within a reasonable period after termination, the Trustee will
follow the procedures set forth under "How are Income and Capital
Distributed?"
Commencing on the Treasury Obligations Maturity Date, Equity Securities
will begin to be sold in connection with the termination of the
Trust. The Sponsor will determine the manner, timing and execution
of the sale of the Equity Securities. Written notice of any termination
of the Trust specifying the time or times at which Unit holders
may surrender their certificates for cancellation shall be given
by the Trustee to each Unit holder at his address appearing on
the registration books of the Trust maintained by the Trustee.
All Unit holders will receive their pro rata portion of the Treasury
Obligations in cash upon the termination of the Trust. Unit holders
will receive a cash distribution from the sale of the remaining
Securities within a reasonable time after the Trust is terminated.
Regardless of the distribution involved, the Trustee will deduct
from the funds of the Trust any accrued costs, expenses, advances
or indemnities provided by the Trust Agreement, including estimated
compensation of the Trustee and costs of liquidation and any amounts
required as a reserve to provide for payment of any applicable
taxes or other governmental charges. Any sale of Securities in
the Trust upon termination may result in a lower amount than might
otherwise be realized if such sale were not required at such time.
The Trustee will then distribute to each Unit holder his pro rata
share of the balance of the Income and Capital Accounts.
Legal Opinions
The legality of the Units offered hereby and certain matters relating
to Federal tax law have been passed upon by Chapman and Cutler,
111 West Monroe Street, Chicago, Illinois 60603, as counsel for
the Sponsor. Carter, Ledyard & Milburn, will act as counsel for
the Trustee and as special New York tax counsel for the Trust.
Experts
The statement of net assets, including the schedule of investments,
of the Trust at the opening of business on the Initial Date of
Deposit appearing in this Prospectus and Registration Statement
has been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon appearing elsewhere herein and
in the Registration Statement, and is included in reliance upon
such report given upon the authority of such firm as experts in
accounting and auditing.
Page 27
UNDERWRITING
The Underwriter named below has purchased Units in the following
amount:
<TABLE>
<CAPTION>
Number of
Name Address Units
___ _______ _________
<S> <C> <C>
Underwriter
International Assets Advisory Corp. 250 Park Avenue South, Suite 200,
Winter Park, FL 32789 50,000
========
</TABLE>
On the Initial Date of Deposit, the Underwriter of the Trust became
the owner of the Units of the Trust and entitled to the benefits
thereof, as well as the risks inherent therein.
The Underwriter Agreement provides that a public offering of the
Units of the Trust will be made at the Public Offering Price described
in the prospectus. Units may also be sold to or through dealers
and others during the initial offering period and in the secondary
market at prices representing a concession or agency commission
as described in "Public Offering-How are Units Distributed?"
The Underwriter has agreed to underwrite additional Units of the
Trust as they become available. The Sponsor will receive from
the Underwriter the difference between the gross sales concession
and the Public Offering Price of the Units as described in "Public
Offering-How are Units Distributed?"
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 a total return
basis with the Morgan Stanley World Index or other global indices,
the Dow Jones Industrial Average, the S&P 500 Composite Price
Stock Index, or performance data from Lipper Analytical Services,
Inc. and Morningstar Publications, Inc. or from publications such
as Money Magazine, The New York Times, U.S. News and World Report,
Business Week, Forbes Magazine or Fortune Magazine. As with other
performance data, performance comparisons should not be considered
representative of the Trust's relative performance for any future
period.
Page 28
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 108
We have audited the accompanying statement of net assets, including
the schedule of investments, of The First Trust Special Situations
Trust, Series 108, comprised of Emerging Markets Growth & Treasury
Securities Trust, Series 1, as of the opening of business on
November 18, 1994. This statement of net assets is the responsibility
of the Trust's Sponsor. Our responsibility is to express an opinion
on this statement of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the statement
of net assets is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the statement of net assets. Our procedures included
confirmation of the letter of credit held by the Trustee and deposited
in the Trust on November 18, 1994. An audit also includes assessing
the accounting principles used and significant estimates made
by the Sponsor, as well as evaluating the overall presentation
of the statement of net assets. We believe that our audit of the
statement of net assets provides a reasonable basis for our opinion.
In our opinion, the statement of net assets referred to above
presents fairly, in all material respects, the financial position
of The First Trust Special Situations Trust, Series 108, comprised
of Emerging Markets Growth & Treasury Securities Trust, Series
1, at the opening of business on November 18, 1994 in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
November 18, 1994
Page 29
Statement of Net Assets
Emerging Markets Growth & Treasury Securities Trust, Series 1
The First Trust Special Situations Trust, Series 108
At the Opening of Business on the Initial Date of Deposit
November 18, 1994
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Securities represented by purchase
contracts (1) (2) $ 460,387
==========
Units outstanding 50,000
==========
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (3) $ 487,182
Less sales charge (3) (26,795)
__________
Net Assets $ 460,387
==========
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Securities listed under "Schedule of
Investments" is based on offering side evaluations of the Treasury
Obligations and the aggregate underlying value of the Equity Securities.
(2) An irrevocable letter of credit totaling $600,000 issued
by Bankers Trust Company has been deposited with the Trustee covering
the monies necessary for the purchase of the Securities pursuant
to contracts for the purchase of such Securities.
(3) The aggregate cost to investors includes a sales charge computed
at the rate of 5.5% of the Public Offering Price (equivalent to
5.820% of the net amount invested), assuming no reduction of sales
charge for quantity purchases.
Page 30
Schedule of Investments
Emerging Markets Growth & Treasury Securities Trust, Series 1
The First Trust Special Situations Trust, Series 108
At the Opening of Business on the Initial Date of Deposit
November 18, 1994
<TABLE>
<CAPTION>
Market Value Cost
Percentage of per Share of
Maturity Aggregate of Equity Securities
Value Name of Issuer and Title of Security (1) Offering Price Securities to Trust (2)
________ ________________________________________ __________________ ____________ ___________
<C> <S> <C> <C> <C>
$ 500,000 Zero coupon U.S. Treasury bonds
maturing November 15, 2004 49.03% $225,710
Number
of Ticker Symbol and
Shares Name of Issuer of Equity Securities
_________ ___________________________________
500 CMXBY US Cementos de Mexico S.A. (ADR) 1.97% 18.1250 9,062
600 CSGDS LI China Steel Corporation (GDR) 2.59% 19.8800 11,928
3,400 CIFRAY US Cifra S.A. de C.V. (ADR) 1.99% 2.7000 9,180
350 EOC US Empresa Nacional de
Electricidad S.A. (ADR) 2.10% 27.6250 9,669
1,000 GENT MK Genting BHD 1.96% 9.0069 9,007
500 GPCDR LI Grupo Carso S.A. de C.V. (GDR) 2.20% 20.2500 10,125
250 TV US Grupo Televisa S.A. (ADR) 2.29% 42.1250 10,531
450 HKT UN Hong Kong
Telecommunications, Ltd. (ADR) 2.00% 20.5000 9,225
400 HUWHY US Hutchison Whampoa, Ltd. (ADR) 1.96% 22.5600 9,024
500 KEP UN Korea Electric Power Corporation (ADR) 2.31% 21.2500 10,625
1,000 MAY MK Malayan Banking BHD 1.44% 6.6285 6,628
1,000 OCBCF SP Oversea-Chinese Banking Corp., Ltd. 2.42% 11.1459 11,146
200 PHI US Philippine Long Distance
Telephone Co. (ADR) 2.32% 53.3750 10,675
300 PKX US Pohang Iron & Steel Company Ltd. (ADR) 2.20% 33.7500 10,125
200 SAMN LI Samsung Electronics (GDR) 2.47% 57.0000 11,400
1,000 SHWCY US Shinawatra Computer & Communications
Public Co., Ltd. (ADR) 3.30% 15.1900 15,190
1,000 SIAF SP Singapore Airlines, Ltd. 2.12% 9.7866 9,787
300 TELECA LX TelecomAsia Corporation (GDR) 2.26% 34.7500 10,425
250 TBRAY US Telecomunicacoes Brasileiras S.A. (ADR) 2.79% 51.4200 12,855
200 TAR US Telefonica de Argentina S.A. (ADR) 2.53% 58.1250 11,625
1,000 T MK Telekom Malaysia BHD 1.68% 7.7202 7,720
2,000 TNB MK Tenaga Nasional BHD 1.88% 4.3280 8,656
450 YPF US YPF Sociedad Anonima (ADR) 2.19% 22.3750 10,069
______ __________
Total Equity Securities 50.97% 234,677
______ __________
Total Investments 100% $460,387
====== ==========
</TABLE>
[FN]
Page 31
(1) The Treasury Obligations are being purchased at a discount
from their par value because there is no stated interest income
thereon (such securities are often referred to as zero coupon
U.S. Treasury 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.
All securities are represented by regular way contracts to purchase
such securities for the performance of which an irrevocable letter
of credit has been deposited with the Trustee. The contracts to
purchase securities were entered into by the Sponsor on November
17, 1994.
(2) The cost of the securities to the Trust represents the offering
side evaluation as determined by the Evaluator, an affiliate of
the Sponsor, with respect to the Treasury Obligations and the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined on the basis of the offering side
value of both the Equity Securities and the relevant currency
exchange rate expressed in U.S. dollars and includes the commissions
and relevant taxes associated with acquiring the Equity Securities
on the business day preceding the Initial Date of Deposit). The
offering side evaluation of the Treasury Obligations is greater
than the bid side evaluation of such Treasury Obligations which
is the basis on which the Redemption Price per Unit will be determined
after the initial offering period. The aggregate value, based
on the bid side evaluation of the Treasury Obligations and the
aggregate underlying value of the Equity Securities on the Initial
Date of Deposit, was $459,321. Cost and profit to the Sponsor
relating to the purchase of the Treasury Obligations sold to the
Trust were $ 225,710 and $0, respectively. Cost and loss to Sponsor
relating to the purchase of the Equity Securities sold to the
Trust were $236,186 and $1,509, respectively.
Page 32
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Page 33
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Page 34
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Page 35
<TABLE>
<CAPTION>
CONTENTS:
<S> <C>
Summary of Essential Information 4
Emerging Markets Growth & Treasury Securities Trust, Series 1
The First Trust Special Situations Trust, Series 108:
What is The First Trust Special Situations Trust? 5
What are the Expenses and Charges? 6
What is the Federal Tax Status of Unit Holders? 7
Why are Investments in the Trust Suitable
for Retirement Plans? 10
Portfolio:
What are Treasury Obligations? 10
What are Equity Securities? 10
Risk Factors 11
Which are the Equity Securities Selected for
Emerging Markets Growth & Treasury
Securities Trust, Series 1? 15
What are Some Additional Considerations
for Investors? 17
Public Offering:
How is the Public Offering Price Determined? 18
How are Units Distributed? 19
What are the Sponsor's and Underwriter's Profits? 20
Will There be a Secondary Market? 20
Rights of Unit Holders:
How is Evidence of Ownership Issued
and Transferred? 21
How are Income and Capital Distributed? 21
What Reports will Unit Holders Receive? 22
How May Units be Redeemed? 22
How May Units be Purchased by the Sponsor? 24
How May Securities be Removed from the Trust? 24
Information as to Consultant, Sponsor, Trustee
and Evaluators:
Who is Global Assets Advisors, Inc.? 25
Who is the Sponsor? 25
Who is the Trustee? 25
Limitations on Liabilities of Sponsor and Trustee 26
Who is the Evaluator? 26
Other Information:
How May the Indenture be Amended
or Terminated? 27
Legal Opinions 27
Experts 27
Underwriting 28
Report of Independent Auditors 29
Statement of Net Assets 30
Notes to Statement of Net Assets 30
Schedule of Investments 31
</TABLE>
______________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION
TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET
FORTH IN THE REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO,
WHICH THE TRUST HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, AND TO WHICH REFERENCE IS HEREBY MADE.
Emerging Markets
Growth & Treasury
Securities Trust
Series 1
International Assets
Advisory Corp.
250 Park Avenue South
Suite 200
Winter Park, Florida 32789
1-800-432-0000
Trustee:
United States Trust Company
of New York
770 Broadway
New York, New York 10003
1-800-682-7520
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
November 18, 1994
CONTENTS OF REGISTRATION STATEMENT
A. BONDING ARRANGEMENTS OF DEPOSITOR:
Nike Securities L.P. is covered by a Brokers' Fidelity Bond,
in the total amount of $1,000,000, the insurer being
National Union Fire Insurance Company of Pittsburgh.
B. THIS REGISTRATION STATEMENT ON FORM S-6 COMPRISES
THE FOLLOWING PAPERS AND DOCUMENTS:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
Financial Data Schedule
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The First Trust Special Situations Trust, Series
108, has duly caused this Amendment to Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the Village of Lisle and State of Illinois on
November 18, 1994.
THE FIRST TRUST SPECIAL SITUATIONS
TRUST, SERIES 108
By NIKE SECURITIES L.P.
Depositor
By Carlos E. Nardo
Senior Vice President
S-2
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below by the following person in the capacity and on the date
indicated:
NAME TITLE* DATE
Robert D. Van Kampen Sole Director )
of Nike Securities )
Corporation, the ) November 18, 1994
General Partner of )
Nike Securities L.P. )
)
)
) Carlos E. Nardo
) Attorney-in-Fact**
)
)
* The title of the person named herein represents his
capacity in and relationship to Nike Securities L.P.,
Depositor.
** An executed copy of the related power of attorney was
filed with the Securities and Exchange Commission in
connection with the Amendment No. 1 to Form S-6 of The
First Trust Special Situations Trust, Series 18 (File No.
33-42683) and the same is hereby incorporated herein by
this reference.
S-3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated November 18, 1994,
in Amendment No. 2 to the Registration Statement (Form S-6) (File
No. 33-56059) and related Prospectus of The First Trust Special
Situations Trust, Series 108.
ERNST & YOUNG LLP
Chicago, Illinois
November 18, 1994
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement
will be filed as Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 18 and
subsequent Series effective October 15, 1991 among Nike
Securities L.P., as Depositor, United States Trust
Company of New York as Trustee, Securities Evaluation
Service, Inc., as Evaluator, and Nike Financial Advisory
Services L.P. as Portfolio Supervisor (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.1.1 Form of Trust Agreement for Series 108 among Nike
Securities L.P., as Depositor, United States Trust
Company of New York, as Trustee, First Trust Advisors
L.P., as Evaluator, and First Trust Advisors L.P., as
Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities
L.P., Depositor (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-
6 [File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
1.6 Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42755] filed on
behalf of The First Trust Special Situations Trust,
Series 19).
2.1 Copy of Certificate of Ownership (included in Exhibit
1.1 filed herewith on page 2 and incorporated herein by
reference).
S-5
3.1 Opinion of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal income tax status of
securities being registered.
3.3 Opinion of counsel as to New York income tax status of
securities being registered.
3.4 Opinion of counsel as to advancement of funds by
Trustee.
4.1 Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on
page S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
EX-27 Financial Data Schedule.
S-6
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 108
TRUST AGREEMENT
Dated: November 18, 1994
This Trust Agreement among Nike Securities L.P., as
Depositor, United States Trust Company of New York, as Trustee
and First Trust Advisors L.P., as Evaluator and Portfolio
Supervisor, sets forth certain provisions in full and
incorporates other provisions by reference to the document
entitled "Standard Terms and Conditions of Trust for The First
Trust Special Situations Trust, Series 18 and subsequent Series,
Effective October 15, 1991, as amended" (herein called the
"Standard Terms and Conditions of Trust"), and such provisions as
are incorporated by reference constitute a single instrument.
All references herein to Articles and Sections are to Articles
and Sections of the Standard Terms and Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II and Part III hereof,
all the provisions contained in the Standard Terms and Conditions
of Trust are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully and
to the same extent as tough said provisions had been set forth in
full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit is 50,000 Units.
(2) The initial fractional undivided interest in and
ownership of the Trust represented by each Unit thereof shall be
1/50,000.
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio is as follows on the Initial Date
of Deposit:
1.97% Cementos de Mexico S.A., 2.59% China Steel
Corporation, 1.99% Cifra S.A. de C.V., 2.10% Empresa
Nacional de Electricidad S.A., 1.96% Genting BHD,
2.20% Grupo Carso S.A. de C.V., 2.29% Grupo Televisa S.A.,
2.00% Hong Kong Telecommunications, Ltd., 1.96% Hutchison
Whampoa, Ltd., 2.31% Korea Electric Power Corporation,
1.44% Malayan Banking BHD, 2.42% Oversea-Chinese Banking
Corp., Ltd., 2.32% Philippine Long Distance Telephone
Co., 2.20% Pohang Iron & Steel Company Ltd., 2.47%
Samsung Electronics, 3.30% Shinawatra Computer &
Communications, 2.12% Singapore Airlines, Ltd., 2.26%
TelecomAsia Corporation, 2.79% Telecomunicacoes
Brasileiras S.A., 2.53% Telefonica de Argentina S.A.,
1.68% Telekom Malaysia BHD, 1.88% Tenaga Nasional BHD,
2.19% YPF Sociedad Anonima.
D. The Record Dates for Income and Capital distributions
shall be as set forth in the Prospectus under "Summary of
Essential Information."
E. The Distribution Dates for Income and Capital
distributions shall be as set forth in the Prospectus under
"Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
November 15, 2004.
G. The Treasury Obligations Maturity Date for the Trust
shall be November 15, 2004.
H. The Evaluator's compensation as referred to in Section
4.03 of the Standard Terms and Conditions of Trust shall be an
annual fee of $0.0040 per Unit calculated on the largest number
of Units outstanding during each period in respect of which a
payment is made pursuant to Section 3.05, payable on a
Distribution Date.
I. The Trustee's Compensation Rate pursuant to Section
6.04 of the Standard Terms and Conditions of Trust shall be an
annual fee of $0.0110 per Unit, calculated on the largest number
of Units outstanding during each period in respect of which a
payment is made pursuant to Section 3.05. However, in no event,
except as may be otherwise be provided in the Standard Terms and
Conditions of Trust, shall the Trustee receive compensation in
any one year from any Trust of less than $2,000 for such annual
compensation.
J. The Initial Date of Deposit for the Trust is November
18, 1994.
K. The minimum amount of Equity Securities to be sold by
the Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 1,000 shares.
PART III
A. The term "Capital Account" as used herein and as set
forth in the Prospectus shall be deemed to refer to the
"Principal Account."
B. For purposes of this Trust, all references in the
Standard Terms and Conditions of Trust including provisions
thereof amended hereby to "$1.00 per Unit" shall be amended to
read "$10.00 per Unit" and all references to "per 1,000 Units"
shall be amended to read "per 100 Units."
C. Section 1.01(3) shall be amended to read as follows:
"(3) "Evaluator" shall mean First Trust Advisors
L.P. and its successors in interest, or any successor
evaluator appointed as hereinafter provided."
D. Section 1.01(4) shall be amended to read as follows:
"(4) "Portfolio Supervisor" shall mean First Trust
Advisors L.P. and its successors in interest, or any
successor portfolio supervisor appointed as hereinafter
provided."
E. Paragraph (b) of Section 2.01 of the Standard Terms and
Conditions of Trust is amended by substituting the following
sentences for the third and fourth sentences of such paragraph:
"The Trustee shall not accept any deposit pursuant
to this Section 2.01(b) unless the Depositor and
Trustee have each determined that the maturity value of
the Zero Coupon Obligations included in the deposit,
divided by the number of Units created by reason of the
deposit, shall equal $1.00; written certifications of
such determinations shall be executed by the Depositor
and Trustee and preserved in the Trust records with a
copy of each such written certification to Standard &
Poor's Corporation so long as Units of the Trust are
rated by them. The Depositor shall, at its expense,
cause independent public accountants to review the
Trust's holdings (i) at such time as the Depositor
determines no further deposits shall be made pursuant
to this paragraph and (ii), if earlier, as of the 90th
day following the initial deposit, for the purpose of
certifying whether the face value of the Zero Coupon
Obligations then held by the Trust divided by the Units
then outstanding equals $1.00. A copy of each written
report from the independent public accountants based on
their review will be provided to Standard & Poor's
Corporation so long as Units of the Trust are rated by
them."
F. Section 2.01(c) of the Standard Terms and Conditions of
Trust is hereby amended by adding the following at the conclusion
thereof:
"If any Contract Obligation requires settlement
in a foreign currency, in connection with the deposit
of such Contract Obligation the Depositor will deposit
with the Trustee either an amount of such currency
sufficient to settle the contract or a foreign
exchange contract in such amount which settles
concurrently with the settlement of the Contract
Obligation and cash or a Letter of Credit in U.S.
dollars sufficient to perform such foreign exchange
contract."
G. Article II is hereby amended by inserting the following
paragraph after Section 2.01(e) which shall be entitled 2.01(f):
"(f) In connection with and at the time of any
deposit of additional Securities pursuant to Section
2.01(b), the Depositor shall exactly replicate Cash (as
defined below) received or receivable by the Trust as
of the date of such deposit. For purposes of this
paragraph, "Cash" means, as to the Capital Account,
cash or other property (other than Securities) on hand
in the Capital Account or receivable and to be credited
to the Capital Account as of the date of the deposit
(other than amounts to be distributed solely to persons
other than holders of Units created by the deposit)
and, as to the Income Account, cash or other property
(other than Securities) received by the Trust as of the
date of the deposit or receivable by the Trust in
respect of a coupon or record date which has occurred
or will occur before the Trust will be the holder of
record of a Security, reduced by the amount of any cash
or other property received or receivable on any
Securities allocable (in accordance with the Trustee's
calculation of the monthly distribution from the Income
Account pursuant to Section 3.05.) to a distribution
made or to be made in respect of a Record Date
occurring prior to the deposit. Such replication will
be made on the basis of a fraction, the numerator of
which is the number of Units created by the deposit and
the denominator of which is the number of Units which
are outstanding immediately prior to the deposit. Cash
represented by foreign currency shall be replicated in
such currency or, if the Trustee has entered into a
contract for the conversion thereof, in U.S. dollars in
an amount replicating the dollars to be received on
such conversion."
H. The second paragraph of Section 3.02 of the Standard
Terms and Conditions of Trust is hereby deleted and replaced with
the following sentence:
"Any non-cash distributions (other than a non-
taxable distribution of the shares of the distributing
corporation which shall be retained by the Trust)
received by the Trust shall be dealt with in the manner
described at Section 3.12, herein, and shall by
retained or disposed of by the Trust according to those
provisions. The proceeds of any disposition shall be
credited to the Income Account of the Trust. Neither
the Trustee nor the Depositor shall be liable or
responsible in any way for depreciation or loss
incurred by reason of any such sale."
I. Section 3.05 of Article III of the Standard Terms and
Conditions of Trust is hereby amended to include the following
subsection:
"Section 3.05I(e) deduct from the Income Account
or, to the extent funds are not available in such
Account, from the Capital Account and pay to the
Depositor the amount that it is entitled to receive
pursuant to Section 3.16.
J. Paragraph (a) of subsection II of Section 3.05 of the
Standard Terms and Conditions of Trust is hereby amended to
substitute the following sentence for the first sentence of such
paragraph:
"On each Distribution Date, the Trustee shall
distribute to each Unit holder of record at the close
of business on the Record Date immediately preceding
such Distribution Date an amount per Unit equal to such
Unit holder's Income Distribution (as defined below, if
such Distribution Date is a Distribution Date requiring
a distribution from the Income Account) plus such Unit
holder's pro rata share of the balance of the Principal
Account (except for monies on deposit therein required
to purchase Contract Obligations) computed as of the
close of business on such Record Date after deduction
of any amounts provided in Subsection I (if such
Distribution Date is exclusively a Distribution Date
requiring a distribution from the Capital Account, then
the calculation shall exclude amounts in the Income
Account), provided, however, that with respect to
distributions other than the distribution occurring in
the month of December of each year, the Trustee shall
not be required to make a distribution from the
Principal Account unless the amount available for
distribution shall equal $1.00 per 1,000 Units in the
case of Units initially offered at approximately $1.00
per Unit, or, $1.00 per 100 Units in the case of Units
initially offered at approximately $10.00 per Unit."
K. Section 3.12 of the Standard Terms and Conditions of
Trust is hereby deleted in its entirety and replaced with the
following language:
"Section 3.12. Notice to Depositor.
In the event that the Trustee shall have been
notified at any time of any action to be taken or
proposed to be taken by at least a legally required
number of holders of any Securities deposited in a
Trust, the Trustee shall take such action or omit from
taking any action, as appropriate, so as to insure that
the Securities are voted as closely as possible in the
same manner and the same general proportion as are the
Securities held by owners other than the Trust.
In the event that an offer by the issuer of any of
the Securities or any other party shall be made to
issue new securities, or to exchange securities, for
Trust Securities, the Trustee shall reject such offer.
However, should any issuance, exchange or substitution
be effected notwithstanding such rejection or without
an initial offer, any securities, cash and/or property
received shall be deposited hereunder and shall be
promptly sold, if securities or property, by the
Trustee pursuant to the Depositor's direction, unless
the Depositor advises the Trustee to keep such
securities or property. The Depositor may rely on the
Portfolio Supervisor in so advising the Trustee. The
cash received in such exchange and cash proceeds of any
such sales shall be distributed to Unit holders on the
next distribution date in the manner set forth in
Section 3.05 regarding distributions from the Principal
Account. The Trustee shall not be liable or
responsible in any way for depreciation or loss
incurred by reason of any such sale.
Neither the Depositor nor the Trustee shall be
liable to any person for any action or failure to take
action pursuant to the terms of this Section 3.12.
Whenever new securities or property is received
and retained by the Trust pursuant to this Section
3.12, the Trustee shall, within five days thereafter,
mail to all Unit holders of the Trust notices of such
acquisition unless legal counsel for the Trust
determines that such notice is not required by The
Investment Company Act of 1940, as amended."
With respect to information as to corporate
actions taken by issuers of foreign Securities held in
a Trust, the Trustee shall have a duty to take action
upon, or to transmit to the Depositor, only such
information which it receives from any eligible foreign
custodian employed pursuant to Section 6.01(e) or which
is otherwise actually delivered to the Trustee, and the
Trustee shall have no liability for loss which results
from its failure otherwise to be timely apprised of any
such corporate action.
L. Article III, Section 3.14 of the Standard Terms and
Conditions of Trust is hereby amended in the following manner:
1. The first sentence of Section 3.14 of the Standard
Terms and Conditions of Trust is amended by
deleting "but in no event shall such compensation
when combined with all compensation received from
other series of the Trust" and in its place
inserting "but in no event shall such compensation
when combined with all compensation received from
other unit investment trusts for which the
Depositor hereunder is acting as Depositor."
2. For purposes of this Trust, the reference to the
Portfolio Supervisor's fee as being "$0.25 per
1,000 Units" shall be amended to read "$0.0090 per
Unit."
M. The title of Section 3.15 of the Standard Terms and
Conditions of Trust is hereby deleted and replaced in its
entirety with the following: "Section 3.15. Abatement of
Compensation of the Trustee, Evaluator, Portfolio Supervisor and
Sponsor"; and Section 3.15 (v) is hereby amended by inserting the
following phrase immediately after "(v) compensation of the
Portfolio Supervisor":
",the Sponsor for Bookkeeping and Administrative Expenses"
N. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraphs
which shall be entitled Section 3.16.:
"Section 3.16. Bookkeeping and Administrative
Expenses. Subject to the provision of Section 3.15
hereof, as compensation for providing bookkeeping and
other administrative services of a character described
in Section 26(a)(2)(C) of the Investment Company Act of
1940 to the extent such services are in addition to,
and do not duplicate, the services to be provided
hereunder by the Trustee or the Portfolio Supervisor,
the Depositor shall receive against a statement or
statements therefor submitted to the Trustee monthly or
annually an aggregate annual fee in an amount which
shall not exceed $0.0010 times the number of Units
outstanding as of January 1 of such year except for a
year or years in which an initial offering period as
determined by Section 4.01 of this Indenture occurs, in
which case the fee for a month is based on the number
of Units outstanding at the end of such month (such
annual fee to be pro rated for any calendar year in
which the Depositor provides service during less than
the whole of such year), but in no event shall such
compensation when combined with all compensation
received from other unit investment trusts for which
the Depositor hereunder is acting as Depositor for
providing such bookkeeping and administrative services
in any calendar year exceed the aggregate cost to the
Depositor providing services to such unit investment
trusts. Such compensation may, from time to time, be
adjusted provided that the total adjustment upward does
not, at the time of such adjustment, exceed the
percentage of the total increase, after the date
hereof, in consumer prices for services as measured by
the United States Department of Labor Consumer Price
Index entitled "All Services Less Rent of Shelter" or
similar index, if such index should no longer be
published. The consent or concurrence of any Unit
holder hereunder shall not be required for any such
adjustment or increase. Such compensation shall be
paid by the Trustee, upon receipt of invoice therefor
from the Depositor, upon which, as to the cost incurred
by the Depositor of providing services hereunder the
Trustee may rely, and shall be charged against the
Income and Capital Accounts on or before the
Distribution Date following the Monthly Record Date on
which such period terminates. The Trustee shall have
no liability to any Certificateholder or other person
for any payment made in good faith pursuant to this
Section.
If the cash balance in the Income and Capital
Accounts shall be insufficient to provide for amounts
payable pursuant to this Section 3.16, the Trustee
shall have the power to sell (i) Securities from the
current list of Securities designated to be sold
pursuant to Section 5.02 hereof, or (ii) if no such
Securities have been so designated, such Securities as
the Trustee may see fit to sell in its own discretion,
and to apply the proceeds of any such sale in payment
of the amounts payable pursuant to this Section 3.16,
provided, however, that Zero Coupon Obligations may not
be sold to pay for amounts payable pursuant to this
Section 3.16.
Any moneys payable to the Depositor pursuant to
this Section 3.16 shall be secured by a prior lien on
the Trust Fund except that no such lien shall be prior
to any lien in favor of the Trustee under the
provisions of Section 6.04 herein."
O. Article III of the Standard Terms and Conditions of
Trust is hereby amended by adding the following new Section 3.18:
"Section 3.18. Foreign Currency Exchange. Unless the
Depositor shall otherwise direct, whenever funds are
received by the Trustee in foreign currency, upon the
receipt thereof or, if such funds are to be received in
respect of a sale of Securities, concurrently with the
contract of the sale for the Security (in the latter case
the foreign exchange contract to have a settlement date
coincident with the relevant contract of sale for the
Security), the Trustee shall enter into a foreign exchange
contract for the conversion of such funds to U.S. dollars
pursuant to the instruction of the Depositor. The Trustee
shall have no liability for any loss or depreciation
resulting from action taken pursuant to such instruction."
P. Article IV, Section 4.01 of the Standard Terms and
Conditions of Trust is hereby amended in the following manner:
1. Section 4.01(b) is hereby amended by deleting
that portion of the first sentence appearing after the
colon and the entire second sentence and replacing them
in their entirety with the following:
"(a) on the basis of the offering prices of
the Zero Coupon Obligations and the value of the
Equity Securities therein, (b) if offering prices
are not available for the Zero Coupon Obligations,
on the basis of offering prices for comparable
securities, (c) by determining the value of the
Zero Coupon Obligations on the offer side by
appraisal, or (d) by any combination of the above.
The value of the Equity Securities is computed in
the following manner: if the Equity Securities
are listed on a national or foreign securities
exchange or the NASDAQ National Market System,
such Evaluation shall generally be based on the
closing sale price on the exchange or system which
is the principal market therefor, which shall be
deemed to be the New York Stock Exchange if the
Securities are listed thereon (unless the
Evaluator deems such price inappropriate as a
basis for evaluation), or if there is no closing
sale price on such exchange or system, at the
closing ask prices. If the Equity Securities are
not so listed or, if so listed and the principal
market therefor is other than on an exchange, the
evaluation shall generally be based on the current
ask price on the over-the-counter market (unless
it is determined that these prices are
inappropriate as a basis for evaluation). If
current ask prices are unavailable, the evaluation
is generally determined (a) on the basis of
current ask prices for comparable securities, (b)
by appraising the value of the Equity Securities
on the ask side of the market or (c) any
combination of the above. If the Trust holds
Securities denominated in a currency other than
U.S. dollars, the Evaluation of such Security
shall be converted to U.S. dollars based on
current offering side exchange rates, unless the
Security is in the form of an American Depositary
Share or Receipt, in which case the Evaluations
shall be based upon the U.S. dollar prices in the
market for American Depositary Shares or Receipts
(unless the Evaluator deems such prices
inappropriate as a basis for valuation). The
Evaluator shall add to the Evaluation of each
Security the amount of any commissions and
relevant taxes associated with the acquisition of
the Security." As used herein, the closing sale
price is deemed to mean the most recent closing
sale price on the relevant securities exchange
immediately prior to the Evaluation time.
2. Section 4.01(c) is hereby deleted and
replaced in its entirety with the following:
"(c) After the initial offering period and
both during and after the initial offering period,
for purposes of the Trust Fund Evaluations
required by Section 5.01 in determining Redemption
Value and Unit Value, Evaluation of the Securities
shall be made in the manner described in Section
4.01(b), on the basis of current bid prices for
the Zero Coupon Obligations, the bid side value of
the relevant currency exchange rate expressed in
U.S. dollars and, except in those cases in which
the Equity Securities are listed on a national or
foreign securities exchange or the NASDAQ National
Market System and the closing sale prices are
utilized, on the basis of the current bid prices
of the Equity Securities. In addition, the
Evaluator shall (i) not make the addition
specified in the last sentence of Section 4.01(b)
and (ii) shall reduce the Evaluation of each
Security by the amount of any liquidation costs
(other than brokerage costs incurred on any
national securities exchange) and any capital
gains or other taxes which would be incurred by
the Trust upon the sale of such Security, such
taxes being computed as if the Security were sold
on the date of the Evaluation."
Q. The first sentence of Section 4.03 of the Standard
Terms and Conditions of Trust is hereby deleted and replaced with
the following sentence:
"Subject to the provision of Section 3.15 hereof,
as compensation for its services hereunder, the
Evaluator shall receive against a statement therefor
submitted to the Trustee on or before each Record Date
(upon which the Trustee may rely as the Evaluator's
certification that the amount stated does not exceed
the cost incurred by the Evaluator in providing
services as described below), an amount equal to the
amount specified as compensation for the Evaluator in
the Trust Agreement, but in no event shall such
compensation when combined with all compensation
received from other unit investment trusts for which
the Depositor hereunder is acting as Depositor for
providing such evaluation services in any calendar year
exceed the aggregate cost to the Evaluator of providing
such services."
R. Section 5.01 is hereby amended to add the following at
the conclusion of the first paragraph thereof:
"Amounts receivable by the Trust in foreign currency
shall be reported to the Evaluator who shall convert the
same to U.S. dollars based on current exchange rates, in the
same manner as provided in Section 4.01(b) or 4.01(c), as
applicable, for the conversion of the valuation of foreign
Equity Securities, and the Evaluator shall report such
conversion with each Evaluation made pursuant to Section
4.01."
S. The last sentence of the first paragraph of Section
5.02 of the Standard Terms and Conditions of Trust is amended by
substituting "4:00 p.m. Eastern time" for "12:00 p.m in the City
of New York."
T. The second paragraph of Section 5.02 of the Standard
Terms and Conditions of Trust is amended by substituting the
following sentence for the third sentence of the second paragraph
of such Section:
"If such available funds shall be insufficient,
the Trustee shall sell such Securities as have been
designated on the current list for such purpose by the
Portfolio Supervisor, as hereinafter in this Section
5.02 provided, in amounts as the Trustee in its
discretion shall deem advisable or necessary in order
to fund the Principal Account for purposes of such
redemption, provided however, that Zero Coupon
Obligations may not be sold unless the Depositor and
Trustee, which may rely on the advice of the Portfolio
Supervisor, have determined that the face value of the
Zero Coupon Obligations remaining after such proposed
sale, divided by the number of Units outstanding after
the tendered Units are redeemed, shall equal or exceed
$1.00; a written certification as to such
determination shall be executed by the Depositor and
Trustee and preserved in the Trust records with a copy
of each such written certification to Standard & Poor's
Corporation so long as Units of the Trust are rated by
them. Within 90 days of the fiscal year end of the
Trust, the Depositor shall obtain, at its expense, an
annual written certification from the independent
public accountants as to such determination which will
also be provided to Standard & Poor's Corporation so
long as Units of the Trust are rated by them."
U. The third sentence of the seventh paragraph of Section
5.02 of the Standard Terms and Conditions of Trust is amended by
deleting "a certification from the independent public accountants
to the effect described in the second paragraph of this Section
5.02" and in its place inserting "a certification from the
Depositor and Trustee to the effect described in the second
paragraph of this Section 5.02."
V. The fourth paragraph of Section 5.02 of the Standard
Terms and Conditions of Trust is hereby amended by deleting the
last sentence of that paragraph and replacing it in its entirety
with the following:
"So long as the Depositor maintains a bid in the
secondary market, the Depositor shall repurchase the
Units tendered to the Trustee for redemption but shall
be under no obligation to maintain any bids and may, at
any time while so maintaining such bids, cease to do so
immediately at any time or from time to time without
notice."
W. Paragraph (e) of Section 6.01 of Article VI of the
Standard Terms and Conditions of Trust is amended to read as
follows:
"(e) (I) Subject to the provisions of
subparagraphs (II) and (III) of this paragraph, the
Trustee may employ agents, sub-custodians, attorneys,
accountants and auditors and shall not be answerable
for the default or misconduct of any such agents, sub-
custodians, attorneys, accountants or auditors if such
agents, sub-custodians, attorneys, accountants or
auditors shall have been selected with reasonable care.
The Trustee shall be fully protected in respect of any
action under this Indenture taken or suffered in good
faith by the Trustee in accordance with the opinion of
counsel, which may be counsel to the Depositor
acceptable to the Trustee, provided, however, that this
disclaimer of liability shall not (i) excuse the
Trustee from the responsibilities specified in
subparagraph II below or (ii) limit the obligation of
the Trustee to indemnify the Trust under subparagraph
III below. The fees and expenses charged by such
agents, sub-custodians, attorneys, accountants or
auditors shall constitute an expense of the Trust
reimbursable from the Income and Capital Accounts of
the affected Trust as set forth in section 6.04 hereof.
(II) The Trustee may place and maintain in the
care of an eligible foreign custodian (which is
employed by the Trustee as a sub-custodian as
contemplated by subparagraph (I) of this paragraph (e)
and which may be an affiliate or subsidiary of the
Trustee or any other entity in which the Trustee may
have an ownership interest) the Trust's foreign
securities, cash and cash equivalents in amounts
reasonably necessary to effect the Trust's foreign
securities transactions, provided that:
(1) The Trustee shall have:
(i) determined that maintaining the Trust's
assets in a particular country or countries is
consistent with the best interests of the Trust
and the Certificateholders;
(ii) determined that maintaining the Trust's
assets with such eligible foreign custodian is
consistent with the best interests of the Trust
and the Certificateholders; and
(iii) entered into a written contract which
is consistent with the best interests of the Trust
and the Certificateholders and which will govern
the manner in which such eligible foreign
custodian will maintain the Trust's assets and
which provides that:
(A) The Trust will be adequately
indemnified and its assets adequately insured
in the event of loss (without regard to the
indemnity provided by the Trustee under
Section III hereof);
(B) The Trust's assets will not be
subject to any right, charge, security
interest, lien or claim of any kind in favor
of the eligible foreign custodian or its
creditors except a claim for payment for
their safe custody or administration;
(C) Beneficial ownership of the Trust's
assets will be freely transferable without
the payment of money or value other than for
safe custody or administration;
(D) Adequate records will be maintained
identifying the assets as belonging to the
Trust;
(E) The Trust's independent public
accountants will be given access to records
identifying assets of the Trust or
confirmation of the contents of those
records; and
(F) The Trustee will receive periodic
reports with respect to safekeeping of the
Trust's assets, including, but not
necessarily limited to, notification of any
transfer to or from the Trustee's account.
(2) The Trustee shall establish a system to
monitor such foreign custody arrangements to ensure
compliance with the conditions of this subparagraph.
(3) The Trustee, at least annually, shall review
and approve the continuing maintenance of Trust assets
in a particular country or countries with a particular
eligible foreign custodian or particular eligible
foreign custodians as consistent with the best
interests of the Trust and the Certificateholders.
(4) The Trustee shall maintain and keep current
written records regarding the basis for the choice or
continued use of a particular eligible foreign
custodian pursuant to this subparagraph, and such
records shall be available for inspection by
Certificateholders and the Securities and Exchange
Commission at the Trustee's offices at all reasonable
times during its usual business hours.
(5) Where the Trustee has determined that a
foreign custodian may no longer be considered eligible
under this subparagraph or that, pursuant to clause (3)
above, continuance of the arrangement would not be
consistent with the best interests of the Trust and the
Certificateholders, the Trust must withdraw its assets
from the care of that custodian as soon as reasonably
practicable, and in any event within 180 days of the
date when the Trustee made the determination.
As used in this subparagraph (II),
(1) "foreign securities" include:
securities issued and sold primarily outside the United
States by a foreign government, a national of any
foreign country or a corporation or other organization
incorporated or organized under the laws of any foreign
country and securities issued or guaranteed by the
government of the United States or by any state or any
political subdivision thereof or by any agency thereof
or by any entity organized under the laws of the United
States or of any state thereof which have been issued
and sold primarily outside the United States.
(2) "eligible foreign custodian" means
(a) The following securities depositories
and clearing agencies which operate transnational
systems for the central handling of securities or
equivalent book entries which, by appropriate exemptive
order issued by the Securities and Exchange Commission,
have been qualified as eligible foreign custodians for
the Trust but only for so long as such exemptive order
continues in effect: Morgan Guaranty Trust Company of
New York, Brussels, Belgium, in its capacity as
operator of the Euroclear System ("Euroclear"), and
Central de Livraison de Valeurs Mobilieres, S.A.
("CEDEL").
(b) Any other entity that shall have been
qualified as an eligible foreign custodian for the
foreign securities of the Trust by the Securities and
Exchange Commission by exemptive order, rule or other
appropriate action, commencing on such date as it shall
have been so qualified but only for so long as such
exemptive order, rule or other appropriate action
continues in effect.
The determinations set forth above to be made by
the Trustee should be made only after consideration of
all matters which the Trustee, in carrying out its
fiduciary duties, finds relevant, including, but not
necessarily limited to, consideration of the following:
1. With respect to the selection of the
country where the Trust's assets will be maintained,
the Trustee should consider:
a. Whether applicable foreign law would
restrict the access afforded the Trust's independent
public accountants to books and records kept by an
eligible foreign custodian located in that country;
b. Whether applicable foreign law would
restrict the Trust's ability to recover its assets in
the event of the bankruptcy of an eligible foreign
custodian located in that country;
c. Whether applicable foreign law would
restrict the Trust's ability to recover assets that are
lost while under the control of an eligible foreign
custodian located in that country;
d. The likelihood of expropriation,
nationalization, freezes, or confiscation of the
Trust's assets; and
e. Whether difficulties in converting the
Trust's cash and cash equivalents to U.S. dollars are
reasonably foreseeable.
2. With respect to the selection of an
eligible foreign custodian, the Trustee should
consider:
a. The financial strength of the eligible
foreign custodian, its general reputation and standing
in the country in which it is located, its ability to
provide efficiently the custodial services required and
the relative cost for those services;
b. Whether the eligible foreign custodian
would provide a level of safeguards for maintaining the
Trust's assets not materially different from that
provided by the Trustee in maintaining the Trust's
securities in the United States;
c. Whether the eligible foreign custodian
has branch offices in the United States in order to
facilitate the assertion of jurisdiction over and
enforcement of judgments against such custodian; and
d. In the case of an eligible foreign
custodian that is a foreign securities depository, the
number of participants in, and operating history of,
the depository.
3. The Trustee should consider the extent
of the Trust's exposure to loss because of the use of
an eligible foreign custodian. The potential effect of
such exposure upon Certificateholders shall be
disclosed, if material, by the Depositor in the
prospectus relating to the Trust.
(III) The Trustee will indemnify and hold
the Trust harmless from and against any loss that shall
occur as the result of the failure of an eligible
foreign custodian holding the foreign securities of the
Trust to exercise reasonable care with respect to the
safekeeping of such foreign securities to the same
extent that the Trustee would be required to indemnify
and hold the Trust harmless if the Trustee were holding
such foreign securities in the jurisdiction of the
United States whose laws govern the indenture,
provided, however, that the Trustee will not be liable
for loss except by reason of the gross negligence, bad
faith or willful misconduct of the Trustee or the
eligible foreign custodian."
X. Section 8.02 of the Standard Terms and Conditions of
Trust shall be amended to delete the reference to "100,000 Units"
and substitute "2,500 Units" in the second sentence of the second
paragraph thereof.
IN WITNESS WHEREOF, Nike Securities L.P., United States
Trust Company of New York and First Trust Advisors L.P. have each
caused this Trust Agreement to be executed and the respective
corporate seal to be hereto affixed and attested (if applicable)
by authorized officers; all as of the day, month and year first
above written.
NIKE SECURITIES L.P.,
Depositor
By Carlos E. Nardo
Senior Vice President
UNITED STATES TRUST COMPANY OF NEW
YORK, Trustee
(SEAL) By Thomas Porrazzo
Vice President
Attest:
Rosalia A. Raviele
Assistant Vice President
FIRST TRUST ADVISORS L.P.,
Evaluator
By Carlos E. Nardo
Senior Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Carlos E. Nardo
Senior Vice President
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
The First Trust Special Situations Trust, Series 108
(Note: Incorporated herein and made a part hereof for the
Trust is the "Schedule of Investments" for the Trust as set forth
in the Prospectus.)
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
November 18, 1994
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: The First Trust Special Situations Trust, Series 108
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of The First Trust Special Situations
Trust, Series 108 in connection with the preparation, execution
and delivery of a Trust Agreement dated November 18, 1994 among
Nike Securities L.P., as Depositor, United States Trust Company
of New York, as Trustee, First Trust Advisors L.P., as Evaluator,
and First Trust Advisors L.P., as Portfolio Supervisor, pursuant
to which the Depositor has delivered to and deposited the
Securities listed in Schedule A to the Trust Agreement with the
Trustee and pursuant to which the Trustee has issued to or on the
order of the Depositor a certificate or certificates representing
units of fractional undivided interest in and ownership of the
Fund created under said Trust Agreement.
In connection therewith, we have examined such pertinent
records and documents and matters of law as we have deemed
necessary in order to enable us to express the opinions
hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. the execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units
in the Fund have been duly authorized; and
2. the certificates evidencing the Units in the Fund when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will
constitute valid and binding obligations of the Fund and the
Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-56059)
relating to the Units referred to above, to the use of our name
and to the reference to our firm in said Registration Statement
and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EFF:jln
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
November 18, 1994
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
United States Trust Company of New York
770 Broadway
New York, New York 10003
Re: The First Trust Special Situations Trust, Series 108
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of The First Trust Special Situations Trust, Series 108 (the
"Fund"), in connection with the issuance of units of fractional
undivided interests in the Trust (the "Trust"), under a Trust
Agreement, dated November 18, 1994 (the "Indenture"), between
Nike Securities L.P., as Depositor, United States Trust Company
of New York, as Trustee, First Trust Advisors L.P., as Evaluator
and First Trust Advisors L.P., as Portfolio Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents we have deemed pertinent. The opinions
expressed herein assume that the Trusts will be administered, and
investments by the Trusts from proceeds of subsequent deposits,
if any, will be made, in accordance with the terms of the
Indenture. The Trusts hold both Treasury Obligations and Equity
Securities (collectively, the "Securities") as such terms are
defined in the Prospectus.
Based upon the foregoing and upon an investigation of such
matters of law as we consider to be applicable, we are of the
opinion that, under existing federal income tax law:
I. The Trust is not an association taxable as the
corporation for Federal income tax purposes; each Unit
holder will be treated as the owner of a pro rata portion of
the assets of the Trust under the Internal Revenue Code of
1986 (the "Code"); the income of the Trust will be treated
as income of the Unit holders thereof under the Code; and an
item of Trust income will have the same character in the
hands of a Unit holder as it would have in the hands of the
Trustee. Each Unit holder will be considered to have
received his pro rata share of income derived from the Trust
asset when such income is received by the Trust.
II. Each Unit holder will have a taxable event when a
Trust disposes of a Security (whether by sale, exchange,
redemption, or payment at maturity) or upon the sale or
redemption of Units by such Unit holder. The price a Unit
holder pays for his Units, including sales charges, is
allocated among his pro rata portion of each Security held
by the Trust (in proportion to the fair market values
thereof on the date the Unit holder purchases his Units) in
order to determine his initial cost for his pro rata portion
of each Security held by the Trust. The Treasury
Obligations are treated as bonds that were originally issued
at an original issue discount. Because the Treasury
Obligations represent interests in "stripped" U.S. Treasury
bonds, a Unit holder's initial cost for his pro rata portion
of each Treasury Obligation held by the Trust (determined at
the time he acquires his Units, in the manner described
above) shall be treated as its "purchase price" by a Unit
holder. Under the special rules relating to stripped bonds,
original issue discount is effectively treated as interest
for Federal income tax purposes and the amount of original
issue discount in this case is generally the difference
between the bond's purchase price and its stated redemption
price at maturity. A Unit holder will be required to
include in gross income for each taxable year the sum of his
daily portions of original issue discount attributable to
the Treasury Obligations held by the Trust as such original
issue discount accrues and will in general be subject to
Federal income tax with respect to the total amount of such
original issue discount that accrues for such year even
though the income is not distributed to the Unit holders
during such year to the extent it is greater than or equal
to a "de minimis" amount determined under a Treasury
Regulation (the "Regulation") issued on December 28, 1992 as
described below. To the extent the amount of such discount
is less than the respective "de minimis" amount, such
discount shall be treated as zero. In general, original
issue discount accrues daily under a constant interest rate
method which takes into account the semi-annual compounding
of accrued interest. In the case of the Treasury
Obligations, this method will generally result in an
increasing amount of income to the Unit holders each year.
For Federal income tax purposes, a Unit holder's pro rata
portion of dividends as defined by Section 316 of the Code
paid by a corporation are taxable as ordinary income to the
extent of such corporation's current and accumulated
"earnings and profits." A Unit holder's pro rata portion of
dividends which exceed such current and accumulated earnings
and profits will first reduce a Unit holder's tax basis in
such Security (and accordingly his basis in his Units), and
to the extent that such dividends exceed a Unit holder's tax
basis in such Security shall be treated as gain from the
sale or exchange of property.
III. A Unit holder's portion of gain, if any, upon the
sale or redemption of Units or the disposition of Securities
held by the Trust will generally be considered a capital
gain except in the case of a dealer or a financial
institution and will be generally long-term if the Unit
holder has held his Units for more than one year. A Unit
holder's portion of loss, if any, upon the sale or
redemption of Units or the disposition of Securities held by
the Trust will generally be considered a capital loss except
in the case of a dealer or a financial institution and will
be generally long-term if the Unit holder has held his Units
for more than one year.
IV. The Code provides that "miscellaneous itemized
deductions" are allowable only to the extent that they
exceed two percent of an individual taxpayer's adjusted
gross income. Miscellaneous itemized deductions subject to
this limitation under present law include a Unit holder's
pro rata share of expenses paid by the Trust, including fees
of the Trustee and the Evaluator.
The Code provides a complex set of rules governing the
accrual of original issue discount, including special rules
relating to "stripped" debt instruments such as the Treasury
Obligations. These rules provide that original issue discount
generally accrues on the basis of a constant compound interest
rate. Special rules apply if the purchase price of a Treasury
Obligation exceeds its original issue price plus the amount of
original issue discount which would have previously accrued,
based upon its issue price (its "adjusted issue price").
Similarly, these special rules would apply to a Unit holder if
the tax basis of his pro rata portion of a Treasury Obligation
issued with original issue discount exceeds his pro rata portion
of its adjusted issue price. The application of these rules will
also vary depending on the value of the Treasury Obligations on
the date a Unit holder acquires his Units, and the price a Unit
holder pays for his Units. In addition, as discussed above, the
Regulation provides that the amount of original issue discount on
a stripped bond is considered zero if the actual amount of
original issue discount on such stripped bond as determined under
Section 1286 of the Code is less than a "de minimis" amount,
which, the Regulation provides, is the product of (i) 0.25
percent of the stated redemption price at maturity and (ii) the
number of full years from the date the stripped bond is purchased
(determined separately for each new purchaser thereof) to the
final maturity date of the bond.
For taxable years beginning after December 31, 1986 and
before January 1, 1996, certain corporations may be subject to
the environmental tax (the "Superfund Tax") imposed by Section
59A of the Code. Income received from, and gains recognized from
the disposition of, a Security by the Trust will be included in
the computation of the Superfund Tax by such corporations holding
Units in the Trust.
The scope of this opinion is expressly limited to the
matters set forth herein, and, except as expressly set forth
above, we express no opinion with respect to any other taxes,
including state or local taxes or collateral tax consequences
with respect to the purchase, ownership and disposition of Units.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-56059)
relating to the Units referred to above and to the use of our
name and to the reference to our firm in said Registration
Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
EFF/jln
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
November 18, 1994
United States Trust Company
of New York, as Trustee of
The First Trust Special
Situations Trust, Series 108
Emerging Markets Growth & Treasury
Securities Trust, Series 1
770 Broadway - 6th Floor
New York, New York 10003
Attention: Mr. C. William Steelman
Executive Vice President
Re: The First Trust Special Situations Trust, Series 108
Emerging Markets Growth & Treasury Securities Trust,
Series 1
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for The First Trust Special Situations Trust, Series
108, Emerging Markets Growth & Treasury Securities Trust, Series
1 (the "Trust"), which will be established under a Standard Terms
and Conditions of Trust dated October 15, 1991, and a related
Trust Agreement dated as of today (collectively, the
"Indenture"), among Nike Securities L.P., as Depositor (the
"Depositor"); First Trust Advisors L.P., as Evaluator; First
Trust Advisors L.P., as Portfolio Supervisor and United States
Trust Company of New York, as Trustee (the "Trustee"). Pursuant
to the terms of the Indenture, units of fractional undivided
interest in the Trust (the "Units") will be issued in the
aggregate number set forth in the Indenture.
We have examined and are familiar with originals or
certified copies, or copies otherwise identified to our
satisfaction, of such documents as we have deemed necessary or
appropriate for the purpose of this opinion. In giving this
opinion, we have relied upon the two opinions, each dated today
and addressed to the Trustee, of Chapman and Cutler, counsel for
the Depositor, with respect to the matters of law set forth
therein.
Based upon the foregoing, we are of the opinion that:
1. The Trust will not constitute an association taxable as
a corporation under New York law, and accordingly will not be
subject to the New York State franchise tax or the New York City
general corporation tax.
2. Under the income tax laws of the State and City of New
York, the income of the Trust will be considered the income of
the holders of the Units.
We consent to the filing of this opinion as an exhibit to
the Registration Statement (No. 33-56059) filed with the
Securities and Exchange Commission with respect to the
registration of the sale of the Units and to the references to
our name under the captions "What is the Federal Tax Status of
Unit Holders?" and "Legal Opinions" in such Registration
Statement and the preliminary prospectus included therein.
Very truly yours,
Carter, Ledyard & Milburn
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
November 18, 1994
United States Trust Company
of New York, as Trustee of
The First Trust Special Situations
Trust, Series 108
Emerging Markets Growth & Treasury
Securities Trust, Series 1
770 Broadway - 6th Floor
New York, New York 10003
Attention: Mr. C. William Steelman
Executive Vice President
Re: The First Trust Special Situations Trust, Series 108
Emerging Markets Growth & Treasury Securities Trust,
Series 1
Dear Sirs:
We are acting as counsel for United States Trust Company of New
York (the "Trust Company") in connection with the execution and
delivery of a Standard Terms and Conditions of Trust dated
October 15, 1991, and a related Trust Agreement, dated today's
date (collectively, the "Indenture"), among Nike Securities L.P.,
as Depositor (the "Depositor"); First Trust Advisors L.P., as
Evaluator; First Trust Advisors L.P., as Portfolio Supervisor;
and the Trust Company, as Trustee (the "Trustee"), establishing
The First Trust Special Situations Trust, Series 108 Emerging
Markets Growth & Treasury Securities Trust, Series 3 (the
"Trust"), and the execution by the Trust Company, as Trustee
under the Indenture, of a certificate or certificates evidencing
ownership of units (such certificate or certificates and such
aggregate units being herein called "Certificates" and "Units"),
each of which represents an undivided interest in the Trust,which
consists of zero coupon U.S. Treasury bonds and common stocks
(including confirmations of contracts for the purchase of certain
obligations not delivered and cash, cash equivalents or an
irrevocable letter of credit or a combination thereof, in the
amount required for such purchase upon the receipt of such
obligations), such obligations being defined in the Indenture as
Securities and listed in the Schedule to the Indenture.
We have examined the Indenture, the Closing Memorandum dated
today's date, a specimen Certificate, and such other documents as
we have deemed necessary in order to render this opinion. Based
on the foregoing, we are of the opinion that:
1. The Trust Company is a duly organized and existing
corporation having the powers of a trust company under the laws
of the State of New York.
2. The Indenture has been duly executed and delivered by the
Trust Company and, assuming due execution and delivery by the
other parties thereto, constitutes the valid and legally binding
obligation of the Trust Company.
3. The Certificates are in proper form for execution and
delivery by the Trust Company, as Trustee.
4. The Trust Company, as Trustee, has duly executed and
delivered to or upon the order of the Depositor a Certificate or
Certificates evidencing ownership of the Units, registered in the
name of the Depositor. Upon receipt of confirmation of the
effectiveness of the registration statement for the sale of the
Units filed with the Securities and Exchange Commission under the
Securities Act of 1933, the Trustee may deliver such other
Certificates, in such names and denominations as the Depositor
may request, to or upon the order of the Depositor as provided in
the Closing Memorandum.
5. The Trust Company, as Trustee, may lawfully under the New
York Banking Law advance to the Trust amounts as may be necessary
to provide monthly interest distributions of approximately equal
amounts, and be reimbursed, without interest, for any such
advances from funds in the interest account on the ensuing record
date, as provided in the Indenture.
In rendering the foregoing opinion, we have not considered, among
other things, whether the Securities have been duly authorized
and delivered.
Very truly yours,
Carter, Ledyard & Milburn
First Trust Advisors L.P.
1001 Warrenville Road
Lisle, Illinois 60532
November 18, 1994
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 108
Gentlemen:
We have examined the Registration Statement File No. 33-
56059 for the above captioned fund. We hereby consent to the use
in the Registration Statement of the references to First Trust
Advisors L.P. as Evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
First Trust Advisors L.P.
Carlos E. Nardo
Senior Vice President
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