Registration No. 33-60813
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to Form S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES
OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust:
The First Trust Special Situations Trust, Series 120
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agents for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
E. Title and Amount of Securities Being Registered:
An indefinite number of Units pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as
amended
F. Proposed Maximum Aggregate Offering Price to the Public of
the Securities Being Registered: Indefinite
G. Amount of Filing Fee (as required by Rule 24f-2): $500.00*
H. Approximate date of proposed sale to public:
As soon as practicable after the effective date of the
Registration Statement.
________________________________
*Previously paid
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 120
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
FORM N-8B-2 ITEM NUMBER FORM S-6 HEADING IN PROSPECTUS
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust Prospectus front cover
(b) Title of securities issued Summary of Essential
Information
2. Name and address of each depositor Information as to
Sponsor, Trustee and
Evaluator
3. Name and address of trustee Information as to
Sponsor, Trustee and
Evaluator
4. Name and address of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
5. State of organization of trust The First Trust
Special Situations
Trust
6. Execution and termination of Other Information
trust agreement
7. Changes of name *
8. Fiscal year *
9. Litigation *
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer Public Offering
securities
(b) Cumulative or distributive The First Trust
securities Special Situations
Trust
(c) Redemption Rights of Unitholders
(d) Conversion, transfer, etc. Rights of Unitholders
(e) Periodic payment plan *
(f) Voting rights Rights of Unitholders
(g) Notice of certificateholders Other Information
(h) Consents required Rights of Unitholders;
Other Information
(i) Other provisions The First Trust
Special Situations
Trust
11. Types of securities comprising The First Trust
units Special
Situations Trust
Schedule of
Investments
12. Certain information regarding
periodic payment certificates *
13. (a) Load, fees, expenses, etc. Summary of Essential
Information; Public
Offering; The First
Trust Special
Situations Trust
(b) Certain information regarding
periodic payment certificates *
(c) Certain percentages Summary of Essential
Information; The
First Trust Special
Situations Trust;
Public Offering
(d) Certain other fees, etc.
payable by holders Rights of Units
Holders
(e) Certain profits receivable
by depositor, principal,
underwriters, trustee or The First Trust
affiliated persons Special
Situations Trust
(f) Ratio of annual charges *
to income
14. Issuance of trust's securities Rights of Unit Holders
15. Receipt and handling of payments
from purchasers *
16. Acquisition and disposition of
underlying securities The First Trust
Special Situations
Trust; Rights of Unit
Holders;
17. Withdrawal or redemption The First Trust
Special Situations
Trust; Public
Offering; Rights of
Unit Holders
18. (a) Receipt, custody and Rights of Unit Holders
disposition of income
(b) Reinvestment of distributions Rights of Unit Holders
(c) Reserves or special funds Information as to
Sponsor, Trustee and
Evaluator
(d) Schedule of distributions *
19. Records, accounts and reports Rights of Unit Holders
20. Certain miscellaneous provisions
of trust agreement
(a) Amendment Other Information
(b) Termination Other Information
(c) and (d) Trustee, removal Information as
and successor to Sponsor, Trustee
and Evaluator
(e) and (f) Depositor, removal Information as
and successor to Sponsor, Trustee
and Evaluator
21. Loans to security holders *
22. Limitations on liability The First Trust
Special Situations
Trust;
Information as to
Sponsor, Trustee
and Evaluator
23. Bonding arrangements Contents of
Registration
Statement
24. Other material provisions *
of trust agreement
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor Information as to
Sponsor, Trustee and
Evaluator
26. Fees received by depositor *
27. Business of depositor Information as to
Sponsor, Trustee and
Evaluator
28. Certain information as to
officials and affiliated *
persons of depositor
29. Voting securities of depositor *
30. Persons controlling depositor *
31. Payment by depositor for certain
services rendered to trust *
32. Payment by depositor for certain
other services rendered to trust *
33. Remuneration of employees of
depositor for certain services
rendered to trust *
34. Remuneration of other persons
for certain services rendered *
to trust
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's Public Offering
securities by states
36. Suspension of sales of trust's
securities *
37. Revocation of authority to *
distribute
38. (a) Method of distribution Public Offering
(b) Underwriting agreements Public Offering
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as
underwriters to Sponsor, Trustee
and Evaluator
(b) N.A.S.D. membership of
principal underwriters Information as to
Sponsor, Trustee and
Evaluator
40. Certain fees received by See Items 13(a) and
principal underwriters 13(e)
41. (a) Business of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) Branch offices of
principal underwriters *
(c) Salesmen of principal *
underwriters
42. Ownership of trust's securities
by certain persons *
43. Certain brokerage commissions
received by principal *
underwriters
44. (a) Method of valuation Summary of Essential
Information; The
First Trust Special
Situations Trust,
Public Offering
(b) Schedule as to offering *
price
(c) Variation in offering Public Offering
price to certain persons
45. Suspension of redemption rights *
46. (a) Redemption valuation Rights of Unit Holders
(b) Schedule as to redemption *
price
47. Maintenance of position in Public Offering;
underlying securities Rights
of Unit Holders
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of Information as
trustee to Sponsor, Trustee
and Evaluator
49. Fees and expenses of trustee The First Trust
Special Situations
Trust
50. Trustee's lien The First Trust
Special Situations
Trust
VI. INFORMATION CONCERNING THE INSURANCE OF HOLDERS OF
SECURITIES
51. Insurance of holders of
trust's ecurities *
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust The First Trust
agreement with respect to Special
selection or elimination of Situations Trust;
underlying securities Rights of Unit Holders
(b) Transactions involving
elimination of underlying *
securities
(c) Policy regarding substitution The First Trust
or elimination of underlying Special
securities Situations Trust;
Rights of Unit Holders
(d) Fundamental policy not
otherwise covered *
53. Tax status of Trust The First Trust
Special Situations
Trust
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during *
last ten years
55.
56.
57. Certain information regarding
periodic payment certificates *
58.
59. Financial statements Report of Independent
(Instruction 1(c) to Form S-6) Auditors
Statement of Net
Assets
* Inapplicable, answer negative or not required.
Marquis Value Equity & Treasury Securities Trust, Series 1
The Trust. The First Trust (registered trademark) Special Situations
Trust, Series 120 (the "Trust") is a unit investment trust consisting
of a portfolio of zero coupon U.S. Treasury bonds and shares of
Marquis Funds Value Equity Fund (the "Fund"). The Fund is an open-end,
diversified management investment company, commonly known as a
mutual fund.
The objective of the Trust is to protect Unit holders' capital
by investing a portion of the Trust's portfolio in zero coupon
U.S. Treasury bonds ("Treasury Obligations") and to provide for
potential long-term capital appreciation by investing a portion
of the Trust's portfolio in shares of Marquis Funds Value Equity
Fund. Collectively the Treasury Obligations and the Fund shares
are referred to herein as the "Securities." The Fund's investment
objective is long-term capital appreciation. In seeking its objective,
the Fund will invest primarily in equity securities of established
companies that have a market capitalization in excess of $500
million and have the potential for capital appreciation. The Fund
may invest in equity securities of foreign issuers traded in the
United States, including American Depositary Receipts (ADRs).
THE FUND'S TECHNIQUES MAY BE CONSIDERED SPECULATIVE INVESTMENT
METHODS AND INCREASE RISKS AND COSTS TO THE FUND. ALSO, THE FUND
MAY PURCHASE EQUITY SECURITIES THAT ARE VOLATILE AND MAY FLUCTUATE
IN VALUE MORE THAN OTHER TYPES OF INVESTMENTS. SEE "WHAT IS MARQUIS
FUNDS VALUE EQUITY FUND?-RISK FACTORS AND DESCRIPTION OF PERMITTED
INVESTMENTS." The Treasury Obligations evidence the right to receive
a fixed payment at a future date from the U.S. Government and
are backed by the full faith and credit of the U.S. Government.
The guarantee of the U.S. Government does not apply to the market
value of the Treasury Obligations or the Units of the Trust, whose
net asset value will fluctuate and, prior to maturity, may be
worth more or less than a purchaser's acquisition cost. This Trust
is intended to achieve its objective over the life of the Trust
and as such is best suited for those investors capable of holding
Units to maturity. There is, of course, no guarantee that the
objective of the Trust will be achieved. See "Portfolio."
UNITS OF THE TRUST ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY BANK, AND UNITS ARE NOT FEDERALLY INSURED OR OTHERWISE
PROTECTED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION AND INVOLVE
INVESTMENT RISK INCLUDING LOSS OF PRINCIPAL OF THE AMOUNT INVESTED.
The Trust has a mandatory termination date ("Mandatory Termination
Date" or "Trust Ending Date") as set forth under "Summary of Essential
Information."
Each Unit of the Trust represents an undivided fractional interest
in all the Securities deposited in the Trust. The Trust has been
organized so that purchasers of Units should receive, at the termination
of the Trust, an amount per Unit at least equal to $11.00 (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 underlying
Fund shares were to decrease to zero, which the Sponsor considers
highly unlikely. This feature of the Trust provides Unit holders
who purchase Units at a price of $11.00 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 $11.00
per Unit, this feature may also provide a potential for capital
appreciation. As a result of the volatile nature of the market
for zero coupon U.S. Treasury bonds, Units sold or redeemed prior
to maturity will fluctuate in price and the underlying Treasury
Obligations may be valued at a price greater or less than their
value as of the Initial Date of Deposit. UNIT HOLDERS DISPOSING
OF THEIR UNITS PRIOR TO THE MATURITY OF THE TRUST MAY RECEIVE
MORE OR LESS THAN $11.00 PER UNIT, DEPENDING ON MARKET CONDITIONS
ON THE DATE UNITS ARE SOLD OR REDEEMED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
First Trust (registered trademark)
The date of this Prospectus is August 14, 1995
Page 1
The Treasury Obligations deposited in the Trust on the Initial
Date of Deposit will mature on February 15, 2007 (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 Fund shares deposited
in the Trust's portfolio have no fixed maturity date and the net
asset value of the shares will fluctuate. See "Portfolio."
The Sponsor may, from time to time during a period of approximately
360 days after the Initial Date of Deposit, also deposit additional
Securities in the Trust, provided it maintains the original percentage
relationship between the Treasury Obligations and Fund shares
in the Trust's portfolio. Such deposits of additional Securities
will, therefore, be done in such a manner that the maturity value
of each Unit should always be an amount at least equal to $11.00,
plus the then current net asset value of the Fund shares represented
by each Unit. See "What is Marquis Value Equity & Treasury Securities
Trust?" and "How May Securities be Removed from the Trust?" The
Trust will automatically terminate shortly after the maturity
of the Treasury Obligations deposited therein.
Public Offering Price. The Public Offering Price per Unit of the
Trust during the initial offering period is equal to a pro rata
share of the offering prices of the Treasury Obligations and the
net asset value of the Fund shares in the Trust plus or minus
a pro rata share of cash, if any, in the Capital and Income Accounts
of the Trust, plus a maximum sales charge of 4.5% (equivalent
to 4.712% of the net amount invested). The secondary market Public
Offering Price per Unit will be based upon a pro rata share of
the bid prices of the Treasury Obligations and the net asset value
of the Fund shares in the Trust plus or minus a pro rata share
of cash, if any, in the Capital and Income Accounts of the Trust
plus a maximum sales charge of 4.5% (equivalent to 4.712% of the
net amount invested). The minimum purchase is $1,000. The sales
charge is reduced on a graduated scale for sales involving at
least $100,000. See "How is the Public Offering Price Determined?"
Income and Capital Distributions. Distributions of net income,
if any, other than amortized discount, will be made at least annually.
Distributions of realized capital gains, if any, received by the
Trust, will be made whenever the Fund makes such a distribution.
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 FEDERAL INCOME TAX AT
ORDINARY INCOME RATES AS IF A DISTRIBUTION HAD OCCURRED. See "What
is the Federal Tax Status of Unit Holders?" Additionally, upon
termination of the Trust, the Trustee will distribute, upon surrender
of Units for redemption, to each Unit holder his or her pro rata
share of the Trust's assets, less expenses, in the manner set
forth under "Rights of Unit Holders-How are Income and Capital
Distributed?"
Reinvestment. Each Unit holder will, unless he or she elects to
receive cash payments, have distributions of principal (including,
if elected by Unit holders, the proceeds received upon the maturity
of the Treasury Obligations in the Trust at termination) and income
earned by the Trust, automatically invested in shares of the Fund
(if Fund shares are registered in the Unit holder's state of residence)
in the name of the Unit holder. Such distributions (including,
if elected by Unit holders, the proceeds received upon the maturity
of the Treasury Obligations in the Trust at termination) will
be reinvested without a sales charge to the Unit Holder on each
applicable distribution date. See "Rights of Unit Holders-How
Can Distributions to Unit Holders be Reinvested?"
Secondary Market for Units. After the initial offering period,
while under no obligation to do so, the Sponsor may maintain a
market for Units of the Trust and offer to resell such Units at
prices which are based on the aggregate bid side evaluation of
the Treasury Obligations and the aggregate net asset value of
the Fund shares in the Trust plus or minus a pro rata share of
cash, if any, in the Capital and Income Accounts of the Trust
plus a maximum sales charge of 4.5% (equivalent to 4.712% of the
net amount invested). If a secondary market is maintained during
the initial offering period, the prices at which Units will be
repurchased will be based upon the aggregate offering side evaluation
of the Treasury Obligations and the aggregate net asset value
of the Fund shares in 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 net asset value of the Fund shares in the Trust
plus or minus a pro rata share of cash, if any,
Page 2
in the Capital and Income Accounts of the Trust. See "Rights
of Unit Holders-How May Units be Redeemed?"
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 Securities
which make up the Trust or the general condition of the stock
market, volatile interest rates, economic recession, currency
exchange fluctuations, foreign withholding, and differences between
domestic and foreign legal, auditing, brokerage and economic standards.
The Trust is not actively managed and Securities will not be sold
by the Trust to take advantage of market fluctuations or changes
in anticipated rates of appreciation. See "What is Marquis Funds
Value Equity Fund?-Risk Factors and Description of Permitted Investments."
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit of the
Securities-August 14, 1995
Sponsor: Nike Securities L.P.
Trustee: United States Trust Company of New York
Evaluator: FT Evaluators L.P.
<TABLE>
<CAPTION>
General Information
<S> <C>
Aggregate Maturity Value of Treasury Obligations Initially Deposited $ 110,000
Aggregate Number of Shares of the Marquis Funds Value Equity
Fund Initially Deposited 4,450
Initial Number of Units 10,000
Fractional Undivided Interest in the Trust per Unit 1/10,000
Public Offering Price per Unit
Aggregate Offering Price Evaluation of Securities in Portfolio (1) $ 100,280
Aggregate Offering Price Evaluation of Securities per Unit $ 10.0280
Sales Charge 4.5% (4.712% of the net amount invested) $ .4725
Public Offering Price per Unit (2) $ 10.5005
Sponsor's Initial Repurchase Price per Unit $ 10.0280
Redemption Price per Unit (based on bid price evaluation of underlying
Treasury Obligations and net asset value of the Fund shares)
$.4892 less than Public Offering Price per Unit;
$.0167 less than Sponsor's Initial Repurchase Price per Unit (3) $ 10.0113
</TABLE>
CUSIP Number 33718R 120
First Settlement Date August 17, 1995
Treasury Obligations Maturity Date February 15, 2007
Mandatory Termination Date February 15, 2007
Trustee's Annual Fee $.009 per Unit outstanding.
Evaluator's Annual Fee $0.0020 per $10.00 principal amount
of Treasury Obligations. Evaluations
for purposes of sale, purchase
or redemption of Units are made as
of the close of regular trading
(generally 4:00 p.m., eastern standard
time) on the New York Stock Exchange
("NYSE") on each day on which the
NYSE is open.
Supervisory Fee (4) Maximum of $0.0015 per Unit
outstanding annually payable to
an affiliate of the Sponsor.
Estimated Annual Organizational
Costs (5) $.0040 per Unit.
Estimated Marquis Funds Value
Equity Fund Expenses (6) $.0452 per Unit.
Record Date As soon as practicable after the
Fund's ex-dividend date.
Distribution Date As soon as practicable after the
Fund's distribution date.
[FN]
________________________________
(1) The shares of the Fund are valued at their net asset value.
The Treasury Obligations are valued at their aggregate offering
side evaluation.
(2) The Public Offering Price as shown reflects the value of
the Securities at the close of business on the business day prior
to the Initial Date of Deposit and establishes the original proportionate
relationship amongst the individual securities. No sales to investors
will be executed at this price. Additional Securities will be
deposited during the day of the Initial Date of Deposit which
will be valued as of 4:00 p.m. eastern standard time and sold
to investors at a Public Offering Price per Unit based on this
valuation.
(3) See "How May Units be Redeemed?"
(4) The Sponsor will also be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of
$.0010 per Unit.
(5) The Trust (and therefore Unit holders) will bear all or a
portion of its organizational costs (including costs of preparing
the registration statement, the trust indenture and other closing
documents, registering Units with the Securities and Exchange
Commission and states, the initial audit of each Trust portfolio
and the initial fees and expenses of the Trustee but not including
the expenses incurred in the printing of preliminary and final
prospectuses, and expenses incurred in the preparation and printing
of brochures and other advertising materials and any other selling
expenses) as is common for mutual funds. Total organizational
expenses will be amortized over a five year period. See "What
are the Expenses and Charges?" and "Statement of Net Assets."
Historically, the sponsors of unit investment trusts have paid
all the costs of establishing such trusts.
(6) Estimated Marquis Funds Value Equity Fund Expenses are based
upon the net asset value of the number of Marquis Funds Value
Equity Fund Shares per Unit multiplied by the Fund's Annual Operating
Expense ratio. See "What is Marquis Funds Value Equity Fund?-Fund
Expenses."
Page 4
Marquis Value Equity & Treasury Securities Trust, Series 1
The First Trust (registered trademark) Special Situations Trust,
Series 120
What is The First Trust Special Situations Trust?
The First Trust Special Situations Trust, Series 120 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:
Marquis Value Equity & 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, First Trust Advisors L.P.,
as Portfolio Supervisor and FT Evaluators L.P., as Evaluator.
On the Initial Date of Deposit, the Sponsor deposited with the
Trustee confirmations of contracts for the purchase of the Securities
in the Trust together with an irrevocable letter or letters of
credit of a financial institution in an amount at least equal
to the purchase price of such Securities. In exchange for the
deposit of Securities or contracts to purchase Securities in the
Trust, the Trustee delivered to the Sponsor documents evidencing
the entire ownership of the Trust.
The objective of the Trust is to protect Unit holders' capital
by investing a portion of the Trust's portfolio in zero coupon
U.S. Treasury bonds ("Treasury Obligations") and to provide for
potential long-term capital appreciation by investing a portion
of the Trust's portfolio in shares of Marquis Funds Value Equity
Fund (the "Fund"). The Fund is a mutual fund with the investment
objective of long-term capital appreciation. In seeking its objective,
the Fund will invest primarily in equity securities of established
companies that have a market capitalization in excess of $500
million and have the potential for capital appreciation. The Fund
may invest in equity securities of foreign issuers traded in the
United States, including American Depositary Receipts (ADRs).
The Fund may purchase equity securities that are volatile and
may fluctuate in value more than other types of investments. The
Fund's techniques may be considered speculative investment methods
and increase risks and costs to the Fund. See "What is Marquis
Funds Value Equity Fund?-Risk Factors and Description of Permitted
Investments." The Treasury Obligations evidence the right to receive
a fixed payment at a future date from the U.S. Government and
are backed by the full faith and credit of the U.S. Government.
The guarantee of the U.S. Government does not apply to the market
value of the Treasury Obligations or the Units of the Trust, whose
net asset value will fluctuate and, prior to maturity, may be
more or less than a Unit holder's acquisition cost. Collectively,
the Treasury Obligations and Fund shares in the Trust are referred
to herein as the "Securities." There is, of course, no guarantee
that the objective of the Trust will be achieved.
With the deposit of the Securities on the Initial Date of Deposit,
the Sponsor established a percentage relationship between the
principal amounts of Treasury Obligations and Fund shares in the
Trust's portfolio. From time to time following the Initial Date
of Deposit the Sponsor, pursuant to the Indenture, may deposit
additional Securities in the Trust and Units may be continuously
offered for sale to the public by means of this Prospectus, resulting
in a potential increase in the outstanding number of Units of
the Trust. Any additional Securities deposited in the Trust will
maintain, as nearly as is practicable, the original percentage
relationship between the Treasury Obligations and Fund shares
initially established for the Trust. Such deposits of additional
Securities will, therefore, be done in such a manner that the
maturity value of each Unit should always be an amount at least
equal to $11.00, plus the then current net asset value of the
Fund shares represented by each Unit. Any deposit by the Sponsor
of additional Securities will duplicate, as nearly as is practicable,
the original percentage relationship and not the actual percentage
relationship on the subsequent date of deposit, since the actual
percentage relationship may be different than the original percentage
relationship. This difference may be due to the sale, redemption
or liquidation of any of the Securities deposited in the Trust
on the Initial, or any subsequent, Date of Deposit. See "How May
Securities be Removed from the
Page 5
Trust?" On a cost basis to the Trust, the original percentage
relationship on the Initial Date of Deposit was approximately
49.94% Treasury Obligations and 50.06% Fund shares. Since the
prices of the Fund shares and Treasury Obligations will fluctuate
daily, the ratio, on a market value basis, will also change daily.
The maturity value of the Treasury Obligations and the portion
of the Fund shares 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 $11.00 per Unit (which is equal to the per Unit
value upon maturity of the Treasury Obligations), even if the
Fund shares never paid a dividend and the value of the Fund shares
in the Trust were to decrease to zero, which the Sponsor considers
highly unlikely. Furthermore, the Sponsor will take such steps
in connection with the deposit of additional Securities in the
Trust as are necessary to maintain a maturity value of the Units
of the Trust at least equal to $11.00 per Unit. The receipt of
only $11.00 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 $11.00 per Unit as of the termination
of the Trust would be approximately $5.01 per Unit (the present
value is indicated by the amount per Unit which is invested in
Treasury Obligations). Furthermore, the $11.00 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 $11.00
per Unit at the termination of the Trust would be approximately
$6.20 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?
With the exception of bookkeeping and other administrative services
provided to the Trust, for which the Sponsor will be reimbursed
in amounts as set forth under "Summary of Essential Information,"
the Sponsor will not receive any fees in connection with its activities
relating to the Trust. Such bookkeeping and administrative charges
may be increased without approval of the Unit holders by amounts
not exceeding proportionate increases under the category "All
Services Less Rent of Shelter" in the Consumer Price Index published
by the United States Department of Labor. The fees payable to
the Sponsor for such services may exceed the actual costs of providing
such services for the Trust, but at no time will the total amount
received for such services rendered to unit investment trusts
of which Nike Securities L.P. is the Sponsor in any calendar year
exceed the actual cost to the Sponsor of supplying such services
in such year. First Trust Advisors L.P., an affiliate of the Sponsor,
will receive an annual supervisory fee, which is not to exceed
the amount set forth under "Summary of Essential Information,"
for providing portfolio supervisory services for the Trust. Such
fee is based on the number of Units outstanding in the Trust on
January 1 of each year except during the year or years in which
an initial offering period occurs in which case the fee for a
month is based on the number of Units outstanding at the end of
such month. The fee may exceed the actual costs of providing such
supervisory services for the Trust, but at no time will the total
amount received for portfolio supervisory services rendered to
unit investment trusts of which Nike Securities L.P. is the Sponsor
in any calendar year exceed the aggregate cost of First Trust
Advisors L.P. of supplying such services in such year.
Subsequent to the initial offering period, the Evaluator will
receive a fee as indicated in the "Summary of Essential Information."
No fee is paid to the Evaluator with respect to the Fund shares
in the Trust. The Trustee pays certain expenses of the Trust for
which it is reimbursed by the Trust. The Trustee will receive
for its ordinary
Page 6
recurring services to the Trust and for all normal expenses of
the Trustee incurred by or in connection with its responsibilities
under the Indenture, an annual fee computed at $.009 per annum
per Unit in the Trust outstanding based upon the number of Units
outstanding in the Trust on January 1 of each year except during
the year or years in which an initial offering period occurs in
which case the fee for a month is based on the number of Units
outstanding at the end of such month. For a discussion of the
services performed by the Trustee pursuant to its obligations
under the Indenture, reference is made to the material set forth
under "Rights of Unit Holders." Rule 12b-1 fees, if any, imposed
on shares of the Fund held in the Trust, are rebated to the Trust,
deposited in the Income Account and are used to pay expenses of
the Trust.
The Trustee's and Evaluator's fees are payable from the Income
Account of the Trust to the extent funds are available and then
from the Capital Account of the Trust. Since the Trustee has the
use of the funds being held in the Capital and Income Accounts
for payment of expenses and redemptions and since such Accounts
are non-interest bearing to Unit holders, the Trustee benefits
thereby. Part of the Trustee's compensation for its services to
the Trust is expected to result from the use of these funds. Both
fees may be increased without approval of the Unit holders by
amounts not exceeding proportionate increases under the category
"All Services Less Rent of Shelter" in the Consumer Price Index
published by the United States Department of Labor.
Expenses incurred in establishing the Trust, including costs of
preparing the registration statement, the trust indenture and
other closing documents, registering Units with the Securities
and Exchange Commission and states, the initial audit of the Trust
portfolio and the initial fees and expenses of the Trustee and
any other out-of-pocket expenses, will be paid by the Trust and
amortized over the first five years of the Trust. 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 Fund shares consist primarily of common stock and the
income stream produced by dividends is unpredictable, the Sponsor
cannot provide any assurance that dividends will be sufficient
to meet any or all expenses of the Trust. As discussed above,
if dividends are insufficient to cover expenses, it is likely
that Fund shares will have to be sold to meet Trust expenses.
These sales may result in capital gains or losses to Unit holders.
See "What is the Federal Tax Status of Unit Holders?"
The Indenture requires the Trust to be audited on an annual basis
at the expense of the Trust by independent auditors selected by
the Sponsor. So long as the Sponsor is making a secondary market
for the Units, the Sponsor is required to bear the cost of such
annual audits to the extent such cost exceeds $0.005 per Unit.
Unit holders of the Trust covered by an audit may obtain a copy
of the audited financial statements upon request.
What is the Federal Tax Status of Unit Holders?
The following is a general discussion of certain of the Federal
income tax consequences of the purchase, ownership and disposition
of the Units. The summary is limited to investors who hold the
Units as "capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Internal Revenue Code
of 1986, as amended (the "Code"). Unit holders should consult
their tax advisers in determining
Page 7
the Federal, state, local and any other tax consequences of the
purchase, ownership and disposition of Units in the Trust.
In the opinion of Chapman and Cutler, counsel for the Sponsor,
under existing law:
1. The Trust is not an association taxable as a corporation for
Federal income tax purposes; each Unit holder will be treated
as the owner of a pro rata portion of the assets of the Trust
under the Code; the income of the Trust will be treated as income
of the Unit holders thereof under the Code; and each Unit holder
will be considered to have received his or her pro rata share
of income derived from each Trust asset when such income is received
by the Trust.
2. Each Unit holder will have a taxable event when the Trust
disposes of a Security (whether by sale, exchange, redemption,
or payment at maturity) or upon the sale or redemption of Units
by such Unit holder. The price a Unit holder pays for his or her
Units, including sales charges, is allocated among his or her
pro rata portion of each Security held by the Trust (in proportion
to the fair market values thereof on the date the Unit holder
purchases his or her Units) in order to determine his or her initial
cost for his or her pro rata portion of each Security held by
the Trust. The Treasury Obligations held by 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 or her
Units. Because the Treasury Obligations represent interests in
"stripped" U.S. Treasury bonds, a Unit holder's initial cost for
his or her pro rata portion of each Treasury Obligation held by
the Trust shall be treated as its "purchase price" by the Unit
holder. Original issue discount is effectively treated as interest
for Federal income tax purposes and the amount of original issue
discount in this case is generally the difference between the
bond's purchase price and its stated redemption price at maturity.
A Unit holder will be required to include in gross income for
each taxable year the sum of his or her daily portions of original
issue discount attributable to the Treasury Obligations held by
the Trust as such original issue discount accrues and will in
general be subject to Federal income tax with respect to the total
amount of such original issue discount that accrues for such year
even though the income is not distributed to the Unit holders
during such year to the extent it is not less than a "de minimis"
amount as determined under a 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 with respect to a Fund
share held by the Trust are taxable as ordinary income to the
extent of such Fund's current and accumulated "earnings and profits."
A Unit holder's pro rata portion of dividends paid on such Fund
share which exceed such current and accumulated earnings and profits
will first reduce a Unit holder's tax basis in such Fund share,
and to the extent that such dividends exceed a Unit holder's tax
basis in such Fund share 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 or her Units for
more than one year. A Unit holder's portion of loss, if any, upon
the sale or redemption of Units or the disposition of Securities
held by the Trust will generally be considered a capital loss
except in the case of a dealer or a financial institution and,
in general, will be long-term if the Unit holder has held his
or her Units for more than one year. Unit holders should consult
their tax advisers regarding the recognition of such capital gains
and losses for Federal income tax purposes.
4. The Code provides that "miscellaneous itemized deductions"
are allowable only to the extent that they exceed two percent
of an individual taxpayer's adjusted gross income. Miscellaneous
itemized deductions subject to this limitation under present law
include a Unit holder's pro rata share of expenses
Page 8
paid by the Trust, including fees of the Trustee and the Evaluator
but not including expenses incurred by the Fund, the shares of
which are held by the Trust.
Because Unit holders are deemed to directly own a pro rata portion
of the Fund shares as discussed above, Unit holders are advised
to read the discussion of tax consequences for the Fund set forth
under "Who is the Management of Marquis Funds Value Equity Fund?-Tax
Status of the Fund." Distributions declared by the Fund on the
Fund shares in October, November or December that are held by
the Trust and paid during the following January will be treated
as having been received by Unit holders on December 31 in the
year such distributions were declared. Long-term capital gains
distributions on the Fund shares are taxable to the Unit holders
as long-term capital gains regardless of how long a person has
been a Unit holder. If a Unit holder holds his or her Units for
six months or less or if the Trust holds shares of the Fund for
six months or less, any loss incurred by a Unit holder related
to the disposition of the Fund shares will be treated as a long-term
capital loss to the extent of any long-term capital gains distributions
received (or deemed to have been received) with respect to such
shares. For taxpayers other than corporations, net capital gains
are subject to a maximum marginal tax rate of 28 percent. However,
it should be noted that legislative proposals are introduced from
time to time that 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.
Special Tax Consequences of In-Kind Distributions Upon Termination
of the Trust. As discussed in "Rights of Unit Holders-How are
Income and Capital Distributed?," under certain circumstances
a Unit Holder will receive an In-Kind Distribution upon the termination
of the Trust. The Unit Holder requesting an In-Kind Distribution
will be liable for expenses related thereto (the "Distribution
Expenses") and the amount of such In-Kind Distribution will be
reduced by the amount of the Distribution Expenses. See "Rights
of Unit Holder-How are Income and Capital Distributed?" Treasury
Obligations held by the Trust will not be distributed to a Unit
holder as part of an In-Kind Distribution. The tax consequences
relating to the sale of Treasury Obligations are discussed above.
As previously discussed, prior to the termination of the Trust,
a Unit holder is considered as owning a pro rata portion of each
of the Trust assets for Federal income tax purposes. The receipt
of an In-Kind Distribution upon the termination of the Trust would
be deemed an exchange of such Unit holder's pro rata portion of
each of the shares of stock (including the Fund shares) and other
assets held by the Trust in exchange for an undivided interest
in whole shares of the Fund plus, possibly, cash.
There are generally three different potential tax consequences
which may occur under an In-Kind Distribution with respect to
each Security owned by the Trust. A "Security" for this purpose
is a particular class of stock issued by a particular corporation
(and does not include the Treasury Obligations in the Trust).
If the Unit holder receives only whole shares of the Fund in exchange
for his or her pro rata portion in each share of the Fund held
by the Trust, there is no taxable gain or loss recognized upon
such deemed exchange pursuant to Section 1036 of the Code. If
the Unit holder receives whole shares of the Fund plus cash in
lieu of a fractional share of the Fund, and if the fair market
value of the Unit holder's pro rata portion of the shares of the
Fund exceeds his tax basis in his pro rata portion of the Fund,
taxable gain would be recognized in an amount not to exceed the
amount of such cash received, pursuant to Section 1031(b) of the
Code. No taxable loss would be recognized upon such an exchange
pursuant to Section 1031(c) of the Code, whether or not cash is
received in lieu of a fractional share. Under either of these
circumstances, special rules will be applied under Section 1031(d)
of the Code to determine the Unit holder's tax basis in the shares
of the Fund which he receives as part of the In-Kind Distribution.
Finally, if a Unit holder's pro rata interest in the Fund does
Page 9
not equal a whole share, he may receive entirely cash in exchange
for his pro rata portion of the Fund. In such case, taxable gain
or loss is measured by comparing the amount of cash received by
the Unit holder with his tax basis in the Fund share.
A Unit holder who requests an In-Kind Distribution has to analyze
the tax consequences with respect to each Security owned by the
Trust. In analyzing the tax consequences with respect to each
Security, such Unit holder must allocate the Distribution Expenses
among the Securities (the "Allocable Expenses"). The Allocable
Expenses will reduce the amount realized with respect to each
Security so that the fair market value of the shares of such Security
received (if any) and cash received in lieu thereof (as a result
of any fractional shares) by such Unit holder should equal the
amount realized for purposes of determining the applicable tax
consequences in connection with an In-Kind Distribution. A Unit
holder's tax basis in shares of such Security received will be
increased by the Allocable Expenses relating to such Security.
The amount of taxable gain (or loss) recognized upon such exchange
will generally equal the sum of the gain (or loss) recognized
under the rules described above by such Unit holder with respect
to each Security owned by the Trust. Unit holders who request
an In-Kind Distribution are advised to consult their tax advisers
in this regard.
The Fund may elect to pass through to its shareholders the foreign
income and similar taxes paid by the Fund in order to enable such
shareholders to take a credit (or deduction) for foreign income
taxes paid by the Fund. If such an election is made, Unit holders
of the Trust, because they are deemed to own a pro rata portion
of the Fund shares held by the Trust, as described above, must
include in their gross income, for Federal income tax purposes,
both their portion of dividends received by the Trust from the
Fund, and also their portion of the amount which the Fund deems
to be the Trust's portion of foreign income taxes paid with respect
to, or withheld from, dividends, interest or other income of the
Fund from its foreign investments. Unit holders may then subtract
from their Federal income tax the amount of such taxes withheld,
or else treat such foreign taxes as deductions from gross income;
however, as in the case of investors receiving income directly
from foreign sources, the above described tax credit or deduction
is subject to certain limitations. Unit holders should consult
their tax advisers regarding this election and its consequences
to them.
General. Each Unit holder will be requested to provide its taxpayer
identification number to the Trustee and to certify that the Unit
holder has not been notified that payments to the Unit holder
are subject to back-up withholding. If the proper taxpayer identification
number and appropriate certification are not provided when requested,
distributions by the Trust to such Unit holder (including amounts
received upon the redemption of Units) will be subject to back-up
withholding. Distributions by the Trust will generally be subject
to United States income taxation and withholding in the case of
Units held by non-resident alien individuals, foreign corporations
or other non-United States persons (accrual of original issue
discount on the Treasury Obligations may not be subject to Federal
taxation or withholding provided certain requirements are met).
Such persons should consult their tax advisers.
Unit holders will be notified annually of the amounts of original
issue discount, income and long-term capital gains distributions
includable in the Unit holder's gross income and the amount of
Trust expenses which may be claimed as itemized deductions.
Distributions of income, long-term capital gains and accrual of
original issue discount may also be subject to state and local
taxes. Foreign investors may be subject to different Federal income
tax consequences than those described above. Investors should
consult their tax advisers for specific information on the tax
consequences of particular types of distributions.
Unit holders desiring to purchase Units for tax-deferred plans
and IRAs should consult their broker for details on establishing
such accounts. Units may also be purchased by persons who already
have self-directed plans established. See "Why are Investments
in the Trust Suitable for Retirement Plans?"
In the opinion of 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 10
Why are Investments in the Trust Suitable for Retirement Plans?
Units of the Trust may be well suited for purchase by Individual
Retirement Accounts, pension funds and other tax-deferred retirement
plans. Generally, the Federal income tax relating to capital gains
and income received in each of the foregoing plans is deferred
until distributions are received. Distributions from such plans
are generally treated as ordinary income but may, in some cases,
be eligible for special averaging or tax-deferred rollover treatment.
Investors considering participation in any such plan should review
specific tax laws related thereto and should consult their attorneys
or tax advisers with respect to the establishment and maintenance
of any such plan. Such plans are offered by brokerage firms and
other financial institutions. Fees and charges with respect to
such plans may vary.
PORTFOLIO
What are Treasury Obligations?
The Treasury Obligations deposited in the Trust consist of U.S.
Treasury bonds which have been stripped of their unmatured interest
coupons. The Treasury Obligations evidence the right to receive
a fixed payment at a future date from the U.S. Government, and
are backed by the full faith and credit of the U.S. Government.
Treasury Obligations are purchased at a deep discount because
the buyer obtains only the right to a fixed payment at a fixed
date in the future and does not receive any periodic interest
payments. The effect of owning deep discount bonds which do not
make current interest payments (such as the Treasury Obligations)
is that a fixed yield is earned not only on the original investment
but also, in effect, on all earnings during the life of the discount
obligation. This implicit reinvestment of earnings at the same
rate eliminates the risk of being unable to reinvest the income
on such obligations at a rate as high as the implicit yield on
the discount obligation, but at the same time eliminates the holder's
ability to reinvest at higher rates in the future. For this reason,
the Treasury Obligations are subject to substantially greater
price fluctuations during periods of changing interest rates than
are securities of comparable quality which make regular interest
payments. The effect of being able to acquire the Treasury Obligations
at a lower price is to permit more of the Trust's portfolio to
be invested in shares of the Fund.
What is Marquis Funds Value Equity Fund?
The portfolio of the Trust also contains shares of Marquis Funds
Value Equity Fund.
Marquis Funds Value Equity Fund (the "Fund") is a mutual fund
with the investment objective of long-term capital appreciation.
In seeking its objective, the Fund will invest primarily in equity
securities of established companies that have a market capitalization
in excess of $500 million and have the potential for capital appreciation.
The Fund may invest in equity securities of foreign issuers traded
in the United States, including American Depositary Receipts (ADRs).
THE FUND'S TECHNIQUES MAY BE CONSIDERED SPECULATIVE INVESTMENT
METHODS AND INCREASE RISKS AND COSTS TO THE FUND. THE FUND MAY
ALSO PURCHASE EQUITY SECURITIES THAT ARE VOLATILE AND MAY FLUCTUATE
IN VALUE MORE THAN OTHER TYPES OF INVESTMENTS. See "Risk Factors
and Description of Permitted Investments" below.
The Fund offers two classes of shares ("Class A" and "Class B")
which may be purchased at a price equal to their respective net
asset value per share, plus a sales charge. The Trust has purchased
Class A shares for deposit in the Trust at net asset value without
a sales charge and any reference to Fund shares in this prospectus
shall refer to Class A shares.
This Prospectus sets forth, concisely, information about the Fund
that a prospective investor should know before investing. A Statement
of Additional Information about the Fund (the "Additional Statement")
has been filed with the Securities and Exchange Commission ("SEC")
and is available without charge by calling 1-800-462-9511. The
Additional Statement (which is incorporated in its entirety by
reference in the Fund's Prospectus) contains more detailed information
about the Fund and its management, including more complete information
as to certain risk factors.
Fund Expenses
The following table sets forth the fees that an investor in the
Fund might pay and the expenses paid by the Fund during its fiscal
year ended September 30, 1994.
Page 11
<TABLE>
<CAPTION>
Shareholder Transaction Expenses
Class A
Shares
_______
<S> <C>
Maximum Sales Charge on Purchases (as a percentage of offering price) * 3.50%
Sales Charge on Reinvested Dividends None
Maximum Contingent Deferred Sales Charge on Redemptions None
Wire Redemption Fee $25
Exchange Fee None
</TABLE>
<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(as a percentage of average net assets)
Class A
Shares
_______
<S> <C>
Advisory Fees (after fee waivers) ** 0.47%
Administration Fees 0.20%
12b-1 (Distribution and/or Service Plan) Fees *** 0.00%
Other Expenses 0.23%
_____
Total Fund Operating Expenses (after fee waivers) 0.90%
</TABLE>
[FN]
________________________________
* There is no sales load payable upon the purchase of the Fund
shares deposited in the Trust. However, the maximum sales charge
on the Units, and therefore indirectly on the Fund shares is 4.5%
during the initial offering period and 4.5% in the secondary market.
** The Adviser has waived, on a voluntary basis, a portion of
its fee, and the advisory fees shown reflect this voluntary waiver.
The Adviser reserves the right to terminate its waiver at any
time in its sole discretion. Absent such waiver, the advisory
fees would be .74%.
*** Currently, there are no 12b-1 fees on Class A shares of the
Fund. However, if 12b-1 fees are imposed on Class A shares in
the future, the 12b-1 fees on shares held in the Trust shall be
rebated to the Trust and used to reduce expenses of the Trust.
Unit holders who acquire shares of the Fund through reinvestment
of dividends or other distributions or through reinvestment at
the Trust's termination will begin to incur 12b-1 fees, if any,
at such time as shares are acquired.
The purpose of this table is to assist an investor in understanding
the various costs and expenses that an investor in shares of the
Fund will bear directly (Shareholder Transaction Expenses) or
indirectly (Annual Fund Operating Expenses). The sales charge
rate shown for Class A shares is the current maximum rate applicable
to purchases of Class A shares of the Fund. "Other Expenses" includes
such expenses as custodial and transfer agent fees, audit, legal
and other business operating expenses, but excludes extraordinary
expenses.
The following examples apply the above-stated expenses and the
current maximum sales charge to a hypothetical $1,000 investment
in shares of the Fund over the time period shown below, assuming
a 5% annual rate of return on the investment and redemption at
the end of each time period.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
______ _______ _______ ________
<S> <C> <C> <C> <C>
Class A Shares $44 $63 $83 $142
</TABLE>
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES OR PERFORMANCE. EXPENSES ARE SUBJECT
TO CHANGE AND ACTUAL PERFORMANCE AND EXPENSES MAY BE LESS OR GREATER
THAN THOSE ILLUSTRATED ABOVE.
Page 12
THE RULE 12B-1 FEES, IF ANY, IMPOSED ON SHARES HELD IN THE TRUST
WILL BE REBATED TO THE TRUST AND WILL BE USED TO REDUCE EXPENSES OF THE
TRUST RESULTING IN INCREASED DISTRIBUTIONS TO UNIT HOLDERS. UNIT
HOLDERS WHO ACQUIRE SHARES OF THE FUND THROUGH REINVESTMENT
OF DIVIDENDS OR OTHER DISTRIBUTIONS OR THROUGH REINVESTMENT AT
THE TRUST'S TERMINATION WILL BEGIN TO INCUR RULE 12B-1 FEES, IF
ANY, AT SUCH TIME AS SHARES ARE ACQUIRED.
Financial Highlights
The following financial highlights for a share outstanding throughout
the year, insofar as they relate to the fiscal period ended September
30, 1994, have been audited by another independent public accountant
whose report thereon was unqualified. This information appears
in the Fund's Prospectus and should be read in conjunction with
the Fund's financial statements and notes thereto which are included
in the Additional Statement under the heading "Financial Information."
Additional performance information is set forth in the Fund's
1994 Annual Report to Shareholders and is available upon request
and without charge by calling 1-800-471-1144.
<TABLE>
<CAPTION>
For a Class A Share Outstanding Throughout the Period{
Ratio of Ratio of
Expenses Net
Realized to Income to
Net and Distributions Net Net Ratio of Ratio Average Average
Asset Unrealized from Asset Assets Expenses of Net Net Net
Value Net Gains or Net Value End of to Income Assets Assets Portfolio
Beginning Investment (Losses) on Investment End of Total Period Average to Average (Excluding (Excluding Turnover
of Period Income Investments Income Period Return (000) Net Assets Net Assets Waivers) Waivers) Rate
_________ _________ ___________ _____________ ______ ______ ______ __________ __________ __________ __________ _________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$10.00 0.18 (0.35) (0.18) $9.65 (1.64%)*$41,922 0.90% 1.95% 1.17% 1.68% 161.42%
</TABLE>
[FN]
________________________________
{ The Fund commenced operations on October 22, 1993.
* Total return, excluding sales charge, is for the period indicated
and has been annualized.
What are the Fund's Investment Policies?
The Fund is an open-end, diversified management investment company
presently organized as a Massachusetts business trust under a
Declaration of Trust dated June 29, 1993. In seeking its objective
of long-term capital appreciation, the Fund emphasizes investment
in equity securities of established companies that have a market
capitalization in excess of $500 million. The Fund may invest
in equity securities of foreign issuers traded in the United States,
including American Depositary Receipts (ADRs). These equity securities
are considered by the Fund's investment adviser, the Trust Group
of First National Bank of Commerce in New Orleans (the "Adviser"),
to have long-term capital appreciation possibilities based on
the soundness of the issuer and the company's relative value based
on an analysis of various fundamental financial characteristics,
including earnings yield, book value, cash flow, anticipated future
growth of dividends and earnings estimates. Although capital appreciation
is the primary purpose for investing in a security, the Fund will
focus on companies that pay current dividends. The Fund will be
as fully invested as practicable (at least 65% of its total assets
under normal conditions) in common stocks, warrants, rights to
purchase common stocks, debt securities convertible to common
stocks and preferred stocks (together "equity securities"). The
Fund may invest in money market instruments. The Fund may also
invest in equity securities of foreign issuers traded in the United
States, including American Depositary Receipts (ADRs).
The Fund's portfolio turnover rate for the fiscal year ended September
30, 1994 was 161.42%. This rate of turnover will likely result
in higher brokerage commissions and higher levels of realized
capital gains than if the turnover rate was lower.
The Fund invests in securities of smaller, less well-known companies
as well as those of large, well-known companies (not generally
included in the definition of "growth-type" companies). The Fund
is intended for investors seeking capital appreciation over the
long-term and who are willing to assume greater risks in the hope
of achieving greater gains, and is not meant for investors seeking
assured income and conservation of capital.
For temporary defensive purposes when the Adviser determines that
market conditions warrant, the Fund may invest up to 100% of its
assets in money market instruments and cash. To the extent the
Fund is investing for temporary defensive purposes, the Fund will
not be pursuing its investment objective.
Page 13
Risk Factors and Description of Permitted Investments
The following is a description of the permitted investments and
investment practices for the Fund and associated risk factors.
Further discussion is contained in the Additional Statement.
American Depositary Receipts ("ADRs") are securities typically
issued by a U.S. financial institution. ADRs evidence ownership
interests in a pool of securities issued by a foreign issuer and
deposited with the depositary. ADRs may be available through "sponsored"
and "unsponsored" facilities. A sponsored facility is established
jointly by the issuer of the security underlying the receipt and
a depositary, whereas an unsponsored facility may be established
by a depositary without participation by the issuer of the underlying
security. Holders of unsponsored depositary receipts generally
bear all the costs of the unsponsored facility. The depositary
of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer
of the deposited security or to pass through, to the holders of
the receipts, voting rights with respect to the deposited securities.
Foreign investments involve risks that are different from investments
in securities of U.S. issuers. These risks may include future
unfavorable political and economic developments, possible withholding
taxes, seizure of foreign deposits, currency controls, interest
limitations or other governmental restrictions which might affect
payment of principal or interest. Additionally, there may be less
public information available about foreign issuers. The Fund may
invest in sponsored and unsponsored ADRs.
Bankers' Acceptances are bills of exchange or time drafts drawn
on and accepted by a commercial bank. Bankers' acceptances are
used by corporations to finance the shipment and storage of goods
and to furnish dollar exchange. Maturities are generally six months
or less.
Certificates of Deposit are interest-bearing instruments with
a specific short-term maturity. They are issued by banks and savings
and loan institutions in exchange for the deposit of funds and
normally can be traded in the secondary market prior to maturity.
Certificates of deposit with penalties for early withdrawal will
be considered illiquid.
Commercial Paper is a term used to describe unsecured short-term
promissory notes issued by corporations and other entities. Maturities
on these issues vary from a few to 270 days.
Convertible Securities are corporate securities that are exchangeable
for a set number of another security at a prestated price. Convertible
securities typically have characteristics similar to both fixed
income and equity securities. Because of the conversion feature,
the market value of convertible securities tends to move together
with the market value of the underlying stock. The value of convertible
securities is also affected by prevailing interest rates, the
credit quality of the issuer and any call provisions.
Equity Securities include common stocks, preferred stocks, warrants
to acquire common stock and securities convertible into common
stock. Investments in equity securities are subject to market
risks that may cause their prices to fluctuate over time. Changes
in the value of portfolio securities will not necessarily affect
cash income derived from these securities, but will affect a Fund's
net asset value.
Fixed Income Securities include bonds, notes, debentures and other
interest-bearing securities that represent indebtedness. The market
value of the fixed income investments in which the Fund invests
will change in response to interest rate changes and other factors.
During periods of falling interest rates, the values of outstanding
fixed income securities generally rise. Conversely, during periods
of rising interest rates, the values of such securities generally
decline. Moreover, while securities with longer maturities tend
to produce higher yields, the prices of longer maturity securities
are also subject to greater market fluctuations as a result of
changes in interest rates. Changes by recognized agencies in the
rating of any fixed income security and in the ability of an issuer
to make payments of interest and principal also affect the value
of these investments. Changes in the value of these securities
will not necessarily affect cash income derived from these securities
but will affect the Fund's net asset value.
Futures and Options on Futures. The Fund may invest in futures
and options on futures to a limited extent. Specifically, the
Fund may enter into futures contracts and options on futures contracts
traded on an exchange regulated by the Commodities Futures Trading
Commission ("CFTC") if, to the extent that such futures and options
are not for "bona fide hedging purposes" (as defined by the CFTC),
the aggregate initial margin
Page 14
and premiums on such positions (excluding the amount by which
options are in the money) do not exceed 5% of the Fund's net assets.
In addition, the Fund may enter into futures contracts and options
on futures contracts only to the extent that obligations under
such contracts or transactions, together with options on securities,
represent not more than 25% of the Fund's assets.
The Fund may buy and sell futures contracts and related options
to manage its exposure to changing interest rates and security
prices. Some futures strategies, including selling futures, buying
puts and writing calls, reduce the Fund's exposure to price fluctuations.
Other strategies, including buying futures, writing puts and buying
calls, tend to increase market exposure. Futures and options may
be combined with each other in order to adjust the risk and return
characteristics of the overall portfolio. The Fund may invest
in futures and related options based on any type of security or
index traded on U.S. or foreign exchanges or over-the-counter,
as long as the underlying security, or securities represented
by an index, are permitted investments of the Fund.
Options and futures can be volatile instruments and involve certain
risks. If the Adviser applies a hedge at an inappropriate time
or judges interest rates incorrectly, options and futures strategies
may lower the Fund's return. The Fund could also experience losses
if the prices of its options and futures positions were poorly
correlated with its other instruments, or if it could not close
out its positions because of an illiquid secondary market.
In order to cover any obligations it may have under options or
futures contracts, the Fund will either own the underlying asset,
have a contract to acquire such an asset without additional cost
or set aside, in a segregated account, high quality liquid assets
in an amount at least equal in value to such obligations.
Illiquid Securities are securities which cannot be disposed of
within seven business days at approximately the price at which
they are being carried on the Fund's books. An illiquid security
includes a demand instrument with a demand notice period exceeding
seven days, if there is no secondary market for such security
and repurchase agreements of over 7 days in length. The Fund will
not invest more than 15% of its net assets in such instruments.
Money Market Securities are high-quality, dollar-denominated,
short-term debt instruments. They consist of: (i) bankers' acceptances,
certificates of deposits, notes and time deposits of highly-rated
U.S. banks and U.S. branches of foreign banks; (ii) U.S. Treasury
obligations and obligations issued or guaranteed by the agencies
and instrumentalities of the U.S. Government; (iii) high-quality
commercial paper issued by U.S. and foreign corporations; (iv)
debt obligations with a maturity of one year or less issued by
corporations with outstanding high-quality commercial paper; and
(v) repurchase agreements involving any of the foregoing obligations
entered into with highly-rated banks and broker-dealers.
Mortgage-Backed Securities ("MBSs") are instruments which entitle
the holder to a share of all interest and principal payments from
mortgages underlying the security. The mortgages backing these
securities include conventional thirty-year fixed rate mortgages,
graduated payment mortgages and adjustable rate mortgages. During
periods of declining interest rates, prepayment of mortgages underlying
mortgage-backed securities can be expected to accelerate. Prepayment
of mortgages which underlie securities purchased at a premium
often results in capital losses, while prepayment of mortgages
purchased at a discount often results in capital gains. Because
of these unpredictable prepayment characteristics, it is often
not possible to predict accurately the average life or realized
yield of a particular issue. The following are types of MBSs that
may be included in the Fund:
Government Pass-Through Securities are securities that are issued
or guaranteed by a U.S. Government agency representing an interest
in a pool of mortgage loans. The primary issuers or guarantors
of these mortgage-backed securities are GNMA, FNMA and FHLMC.
FNMA and FHLMC obligations are not backed by the full faith and
credit of the U.S. Government as GNMA certificates are, but FNMA
and FHLMC securities are supported by the instrumentalities' right
to borrow from the United States Treasury. Each of GNMA, FNMA
and FHLMC guarantees timely distributions of interest to certificate
holders. Each of GNMA and FNMA also guarantees timely distributions
of scheduled principal. FHLMC has in the past guaranteed only
the ultimate collection of principal of the underlying mortgage
loan; however,
Page 15
FHLMC now issues Mortgage-Backed Securities (FHLMC Gold PCs)
which also guarantees timely payment of monthly principal reduction.
Government and private guarantees do not extend to the securities'
value, which is likely to vary inversely with fluctuations in
interest rates.
Private Pass-Through Securities are mortgage-backed securities
issued by a non-governmental entity such as a trust, which securities
include collateralized mortgage obligations ("CMOs") and real
estate mortgage investment conduits ("REMICs"), that are rated
in one of the top two rating categories. While they are generally
structured with one or more types of credit enhancement, Private
Pass-Through Securities typically lack a guarantee by an entity
having the credit status of a governmental agency or instrumentality.
CMOs are debt obligations or multi-class pass-through certificates
issued by agencies or instrumentalities of the U.S. Government
or by private originators or investors in mortgage loans. In a
CMO, series of bonds or certificates are issued in multiple classes.
Principal and interest paid on the underlying mortgage assets
may be allocated among the several classes of a series of a CMO
in a variety of ways. Each class of a CMO, often referred to as
a "tranche," is issued with a specific fixed or floating coupon
rate and has a stated maturity or final distribution date. Principal
payments on the underlying mortgage assets may cause CMOs to be
retired substantially earlier than their stated maturities or
final distribution dates, resulting in a loss of all or part of
any premium paid.
REMICs. A REMIC is a CMO that qualifies for special tax treatment
under the Internal Revenue Code and invests in certain mortgages
principally secured by interests in real property. Investors may
purchase beneficial interests in REMICs, which are known as "regular"
interests, or "residual" interests. Guaranteed REMIC pass-through
certificates ("REMIC Certificates") issued by FNMA or FHLMC represent
beneficial ownership interests in a REMIC trust consisting principally
of mortgage loans or FNMA-, FHLMC- or GNMA-guaranteed mortgage
pass-through certificates. For FHLMC REMIC Certificates, FHLMC
guarantees the timely payment of interest, and also guarantees
the payment of principal as payments are required to be made on
the underlying mortgage participation certificates. FNMA REMIC
Certificates are issued and guaranteed as to timely distribution
of principal and interest by FNMA.
Stripped Mortgage-Backed Securities ("SMBs") are usually structured
with two classes that receive specified proportions of the monthly
interest and principal payments from a pool of mortgage securities.
One class may receive all of the interest payments and is thus
termed an interest-only class ("IO"), while the other class may
receive all of the principal payments and is thus termed the principal-only
class ("PO"). The value of IOs tends to increase as rates rise
and decrease as rates fall; the opposite is true of POs. SMBs
are extremely sensitive to changes in interest rates because of
the impact thereon of prepayment of principal on the underlying
mortgage securities. The market for SMBs is not as fully developed
as other markets; SMBs therefore may be illiquid.
Risk Factors. Due to the possibility of prepayments of the underlying
mortgage instruments, mortgage-backed securities generally do
not have a known maturity. In the absence of a known maturity,
market participants generally refer to an estimated average life.
An average life estimate is a function of an assumption regarding
anticipated prepayment patterns, based upon current interest rates,
current conditions in the relevant housing markets and other factors.
The assumption is necessarily subjective, and thus different market
participants can produce different average life estimates with
regard to the same security. There can be no assurance that estimated
average life will be a security's actual average life.
Municipal Securities consist of (i) debt obligations issued by
or on behalf of public authorities to obtain funds to be used
for various public facilities, for refunding outstanding obligations,
for general operating expenses and for lending such funds to other
public institutions and facilities and (ii) certain private activity
and industrial development bonds issued by or on behalf of public
authorities to obtain funds to provide for the construction, equipment,
repair or improvement of privately operated facilities. General
obligation bonds are backed by the taxing power of the issuing
municipality. Revenue bonds are backed by the revenues
Page 16
of a project or facility; tolls from a toll bridge for example.
Certificates of participation represent an interest in an underlying
obligation or commitment such as an obligation issued in connection
with a leasing arrangement. The payment of principal and interest
on private activity and industrial development bonds generally
is dependent solely on the ability of the facility's user to meet
its financial obligations and the pledge, if any, of real and
personal property so financed as security for such payment.
Municipal securities include general obligation notes, tax anticipation
notes, revenue anticipation notes, bond anticipation notes, certificates
of indebtedness, demand notes and construction loan notes. Municipal
bonds include general obligation bonds, revenue or special obligation
bonds, private activity and industrial development bonds.
Options. Put and call options for various securities and indices
are traded on national securities exchanges. Options may be used
by the Fund from time to time as the Adviser deems to be appropriate.
Options will generally be used for hedging purposes.
A put option gives the purchaser of the option the right to sell,
and the writer the obligation to buy, the underlying security
at any time during the option period. A call option gives the
purchaser of the option the the right to buy, and the writer of
the option the obligation to sell, the underlying security at
any time during the option period. The premium paid to the writer
is the consideration for undertaking the obligations under the
option contract. The initial purchase (sale) of an option contract
is an "opening transaction." In order to close out an option position,
the Fund may enter into a "closing transaction"-the sale (purchase)
of an option contract on the same security with the same exercise
price and expiration date as the option contract originally opened.
Although the Fund will engage in option transactions as hedging
transactions, there are risks associated with such investments
including the following: (i) the success of a hedging strategy
may depend on the ability of the Adviser to predict movements
in the prices of the individual securities, fluctuations in markets
and movements in interest rates; (ii) there may be an imperfect
or no correlation between the changes in market value of the securities
held by the Fund and the prices of options; (iii) there may not
be a liquid secondary market for options and (iv) while the Fund
will receive a premium when it writes covered call options, it
may not participate fully in a rise in the market value of the
underlying security. The Fund is permitted to engage in option
transactions with respect to securities that are permitted investments
and related indices. The Fund may write only covered call options.
The aggregate value of option positions may not exceed 10% of
the Fund's net assets as of the time such options are entered
into by the Fund.
Receipts-TRs, TIGRs and CATS-are interests in separately traded
interest and principal component parts of U.S. Treasury obligations
that are issued by banks or brokerage firms and are created by
depositing U.S. Treasury obligations into a special account at
a custodian bank. The custodian holds the interest and principal
payments for the benefit of the registered owners of the certificates
or receipts. The custodian arranges for the issuance of the certificates
or receipts evidencing ownership and maintains the register. Receipts
include "Treasury Receipts" ("TRs"), "Treasury Investment Growth
Receipts" ("TIGRs") and "Certificates of Accrual on Treasury Securities"
("CATS").
STRIPS, TRs, TIGRs and CATS are sold as zero coupon securities
which means that they are sold at a substantial discount and redeemed
at face value at their maturity date without interim cash payments
of interest or principal. The amount of this discount is accrued
over the life of the security and constitutes the income earned
on the security for both accounting and tax purposes. Because
of these features, receipts may be subject to greater price volatility
than interest-paying U.S. Treasury Obligations.
Repurchase Agreements are agreements by which the Fund obtains
a security and simultaneously commits to return the security to
the seller at an agreed-upon price on an agreed-upon date within
a number of days from the date of purchase. Repurchase agreements
must be fully collateralized at all times. The Fund bears a risk
of loss in the event the other party defaults on its obligations
and the Fund is delayed or prevented from its right to dispose
of the collateral. The Fund will enter into repurchase agreements
only with financial institutions deemed to present minimal risk
of bankruptcy during the term of the agreement based
Page 17
on established guidelines. Repurchase agreements are considered
loans under the Investment Company Act of 1940, as amended.
Securities Lending. In order to generate additional income, the
Fund may lend the securities in which it owns pursuant to agreements
requiring that the loan be continuously secured by collateral
consisting of cash and/or securities of the U.S. Government or
its agencies equal to at least 100% of the market value of the
securities lent. The Fund will continue to receive interest on
the securities lent while simultaneously earning interest on the
investment of cash collateral. Collateral is marked to market
daily to provide a level of collateral at least equal to the value
of the securities lent. There may be risks of delay in recovery
of the securities or even loss of rights in the collateral should
the borrower of the securities fail financially or become insolvent.
Time Deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit,
it earns a specified rate of interest over a definite period of
time; however, it cannot be traded in the secondary market. Time
deposits are considered to be illiquid securities.
U.S. Government Agency Obligations are obligations issued or guaranteed
by agencies of the United States Government, including, among
others, the Federal Farm Credit Bank, the Federal Housing Administration
and the Small Business Administration, and obligations issued
or guaranteed by instrumentalities of the United States Government,
including, among others, the Federal Home Loan Mortgage Corporation,
the Federal Land Banks and the United States Postal Service. Some
of these securities are supported by the full faith and credit
of the United States Treasury (e.g., Government National Mortgage
Association), others are supported by the right of the issuer
to borrow from the Treasury (e.g., Federal Farm Credit Bank),
while still others are supported only by the credit of the instrumentality
(e.g., Federal National Mortgage Association). Guarantees of principal
by agencies or instrumentalities of the United States Government
may be a guarantee of payment at the maturity of the obligation
so that in the event of a default prior to maturity there might
not be a market and thus no means of realizing on the obligation
prior to maturity. Guarantees as to the timely payment of principal
and interest do not extend to the value or yield of these securities
nor to the value of the Fund's shares.
U.S. Government Securities. Any guaranty by the U.S. Government
of the securities in which the Fund invests guarantees only the
payment of principal and interest on the guaranteed security and
does not guarantee the yield or value of that security or the
yield or value of shares of that Fund.
U.S. Treasury Obligations consist of bills, notes and bonds issued
by the U.S. Treasury and separately traded interest and principal
component parts of such obligations that are transferable through
the Federal book-entry system known as Separately Traded Registered
Interest and Principal Securities ("STRIPS").
Variable and Floating Rate Instruments. Certain of the obligations
purchased by the Fund may carry variable or floating rates of
interest, may involve a conditional or unconditional demand feature
and may include variable amount master demand notes. Such instruments
bear interest at rates which are not fixed, but which vary with
changes in specified market rates or indices. The interest rates
on these securities may be reset daily, weekly, quarterly or some
other reset period, and may have a floor or ceiling on interest
rate changes. There is a risk that the current interest rate on
such obligations may not accurately reflect existing market interest
rates. A demand instrument with a demand notice exceeding seven
days may be considered illiquid if there is no secondary market
for such securities.
Warrants are instruments giving holders the right, but not the
obligation, to buy shares of a company at a given price during
a specified period.
Who is the Management of Marquis Funds Value Equity Fund?
First National Bank of Commerce in New Orleans (the "Adviser"),
210 Baronne Street, New Orleans, Louisiana 70112, acts as the
Fund's investment adviser under an advisory agreement (the "Advisory
Agreement") with the Fund. The Adviser, through its Trust Group,
makes the investment decisions for the assets of the Fund and
continuously reviews, supervises and administers the investment
programs of the Fund, subject to the supervision of, and policies
established by, the Trustees of the Fund.
Page 18
As of September 30, 1994, the Adviser's Trust Group managed approximately
$1.5 billion in discretionary investment management accounts for
individuals, corporations and institutions with widely varying
investment needs and objectives. The Trust Group has managed assets
with similar investment objectives and policies to those of the
Fund for the past six years. The Adviser has provided investment
management services since 1933. The Adviser is a wholly-owned
subsidiary of First Commerce Corporation.
The Glass-Steagall Act restricts the securities activities of
national banks such as First National Bank of Commerce in New
Orleans, but the Comptroller of the Currency permits national
banks to provide investment advisory and other services to mutual
funds. Should the Comptroller's position be challenged successfully
in court or reversed by legislation, the Fund might have to make
other investment advisory arrangements.
The Fund's shares are not sponsored, endorsed or guaranteed by,
and do not constitute obligations or deposits of, the Adviser
or First Commerce Corporation and are not insured by the FDIC
or issued or guaranteed by the U.S. Government or any of its agencies.
The Adviser is entitled to a fee, which is calculated daily and
paid monthly, at an annual rate of .74% of the average daily net
assets of the Fund. The Adviser may voluntarily waive a portion
of its fees in order to limit the total operating expenses of
the Fund. The Adviser reserves the right, in its sole discretion,
to terminate these voluntary fee waivers at any time. For the
fiscal year ended September 30, 1994, the Adviser was paid an
advisory fee of .47% of the Fund's average daily net assets.
John C. Portwood, CFA, Senior Vice President of the Adviser, has
oversight responsibilities of the portfolio managers of all Marquis
Funds since inception. With over 26 years of investment management
experience, Mr. Portwood has been the manager of the Adviser's
Trust Investment Division for the past six years.
Effective September 1, 1994, James C. McElroy, CFA, Vice President
and Director of Portfolio Management for the Adviser, became the
portfolio manager of the Fund. Mr. McElroy, who has more than
12 years of portfolio management experience, joined the Adviser
in January 1994. Prior to that, Mr. McElroy served in similar
capacities with Zeliff, Wallace Advisory (1991-1993) and C&S Investment
Advisors (1981-1990).
Determination of Net Asset Value. The net asset value per share
of the Fund is determined as of the close of trading on the New
York Stock Exchange (typically, 3:00 p.m., central standard time)
on each Business Day by dividing the total market value of the
Fund's investments and other assets, less any liabilities, by
the total outstanding shares of the Fund. Purchases will be made
in full and fractional shares calculated to three decimal places.
Pursuant to guidelines adopted and monitored by the Trustees of
the Fund, the Fund may use a pricing service to provide market
quotations or fair market valuations. A pricing service may derive
such valuations through the use of a matrix system to value fixed
income securities which considers factors such as securities prices,
yield features, ratings and developments related to a specific
security. Although the methodology and procedures for determining
net asset value are identical for both classes of the Fund, the
net asset value per share of such classes may differ because of
the distribution expenses charged to Class B shares.
Dividends, Distributions and Taxes. The following summary of federal
income tax consequences is based on current tax laws and regulations,
which may be changed by legislative, judicial or administrative
action. No attempt has been made to present a detailed explanation
of the federal, state or local income tax treatment of the Fund
or its shareholders. Accordingly, shareholders are urged to consult
their tax advisers regarding specific questions as to federal,
state and local income taxes. State and local tax consequences
on an investment in the Fund may differ from the federal income
tax consequences described below. Additional information concerning
taxes is set forth in the Additional Statement.
Dividends and Distributions. Substantially all net investment
income (not including capital gains) is declared and paid quarterly
for the Fund. Shareholders who own shares at the close of business
on the record date will be entitled to receive the dividend. The
Fund intends to pay such dividends on the first business day of
the month following the month the dividend was declared. Currently,
capital gains of the Fund, if any, will be distributed at least
annually.
Page 19
Shareholders automatically receive all income dividends and capital
gain distributions in additional shares at the net asset value
next determined following the record date, unless the shareholder
has elected to take such payment in cash. Shareholders may change
their election by providing written notice to the Administrator
at least 15 days prior to the distribution.
Dividends and other distributions of the Fund are paid on a per-share
basis. The value of each share will be reduced by the amount of
the payment. If shares are purchased shortly before the record
date for a dividend or the distribution of capital gains, a shareholder
will pay the full price for the shares and receive some portion
of the price back as a taxable dividend or other distribution.
Tax Status of the Fund's Dividends and Distributions. The Fund
will distribute all of its net investment income (including, for
this purpose, net short-term capital gain) to shareholders. Dividends
from net investment income will be taxable to shareholders as
ordinary income whether received in cash or in additional shares.
Distributions from net investment income will qualify for the
dividends-received deduction for corporate shareholders only to
the extent such distributions are derived from dividends paid
by domestic corporations. It can be expected that only certain
dividends of the Fund will qualify for that deduction. Any net
realized capital gains will be distributed at least annually and
will be taxed to shareholders as long-term capital gains, regardless
of how long the shareholder has held shares. Distributions from
net capital gains do not qualify for the dividends-received deduction.
The Fund will make annual reports to shareholders of the federal
income tax status of all distributions, including the amount of
dividends eligible for the dividends-received deduction.
Certain securities purchased by the Fund (such as STRIPS, TRs,
TIGRs and CATS, defined in "Description of Permitted Investments
and Risk Factors") are sold with original issue discount and thus
do not make periodic cash interest payments. The Fund will be
required to include as part of its current income the accrued
discount on such obligations even though the Fund has not received
any interest payments on such obligations during that period.
Because the Fund distributes all of its net investment income
to its shareholders, the Fund may have to sell portfolio securities
to distribute such accrued income, which may occur at a time when
the Adviser would not have chosen to sell such securities and
which may result in a taxable gain or loss.
Income received on direct U.S. Government obligations is exempt
from income tax at the state level when received directly and
may be exempt, depending on the state, when received by a shareholder
provided certain state-specific conditions are satisfied. Shareholders
should consult their tax advisers to determine whether any portion
of the income dividends received from the Fund is considered tax
exempt in their particular state.
Ordinarily, shareholders will include in income all dividends
declared by the Fund in the year those dividends are paid. However,
dividends declared by the Fund in October, November or December
of any year and payable to shareholders of record on a date in
one of those months will be deemed to have been paid by the Fund
and received by the shareholders on the last day of that month,
if paid by the Fund at any time during the following January.
The Fund intends to make sufficient distributions prior to the
end of each calendar year to avoid liability for federal excise
tax. A sale, exchange, or redemption of the Fund's shares is a
taxable event to the shareholder.
Tax Status of the Fund. The Fund is treated as a separate entity
for federal income tax purposes and is not combined with other
Marquis Funds. The Fund intends to qualify for the special tax
treatment afforded regulated investment companies as defined under
Subchapter M of the Code. As long as the Fund qualifies for this
special tax treatment, it will be relieved of federal income tax
on that part of its net investment income and net capital gain
(the excess of net long-term capital gains over net short-term
capital loss) which it distributes to shareholders.
Fund Performance Information
From time to time, the Fund may advertise yield and total return.
These figures will be based on historical earnings and are not
intended to indicate future performance. The yield of the Fund
refers to the annualized income
Page 20
generated by an investment in the Fund over a specified 30-day
period. The yield is calculated by assuming that the same amount
of income generated by the investment during that period is generated
in each 30-day period over one year and is shown as a percentage
of the investment.
The total return of the Fund refers to the average compounded
rate of return to a hypothetical investment, net of any sales
charge imposed on Class A shares redeemed at the end of the specified
period covered by the total return figure, for designated time
periods (including, but not limited to, the period from which
the Fund commenced operations through the specified date), assuming
that the entire investment is redeemed at the end of each period
and assuming the reinvestment of all dividend and capital gain
distributions. The total return of the Fund may also be quoted
as a dollar amount or on an aggregate basis, an actual basis,
without inclusion of any front-end or contingent sales charges
or with a reduced sales charge in advertisements distributed to
investors entitled to a reduced sales charge.
The Fund may periodically compare its performance to other mutual
funds tracked by mutual fund rating services (such as Lipper Analytical),
financial and business publications and periodicals; broad groups
of comparable mutual funds; unmanaged indices which may assume
investment of dividends but generally do not reflect deductions
for administrative and management costs or other investment alternatives.
The Fund may quote Morningstar, Inc., a service that ranks mutual
funds on the basis of risk-adjusted performance, and Ibbotson
Associates of Chicago, Illinois, which provides historical returns
of the capital markets in the United States. The Fund may use
long-term performance of these capital markets to demonstrate
general long-term risk versus reward scenarios and could include
the value of a hypothetical investment in any of the capital markets.
The Fund may also quote financial and business publications and
periodicals as they relate to fund management, investment philosophy
and investment techniques.
The Fund may quote various measures of volatility and benchmark
correlation in advertising and may compare these measures to those
of other funds. Measures of volatility attempt to compare historical
share price fluctuations or total returns to a benchmark, while
measures of benchmark correlation indicate the validity of a comparative
benchmark. Measures of volatility and correlation are calculated
using averages of historical data and cannot be calculated precisely.
Additional Information
Description of the Fund and its Shares. The Fund is an open-end,
diversified management investment company that offers units of
beneficial interest ("shares") in the Fund through two separate
classes, Class A and Class B, which provide for variations in
sales charges, distribution costs, voting rights and dividends.
Except for these differences between classes, each share of the
Fund represents an undivided, proportionate interest in that Fund.
Each share held entitles the shareholder or record to one vote.
Each Class will vote separately on matters relating solely to
that Class. As a Massachusetts business trust, the Fund is not
required to hold annual meetings of shareholders, but meetings
of shareholders will be held from time to time to seek approval
for certain changes in the operation of the Fund and for the election
of Trustees under certain circumstances. In addition, a Trustee
may be removed by the remaining Trustees or by shareholders at
a special meeting called upon written request of shareholders
owning at least 10% of the outstanding shares of the Fund. In
the event that such a meeting is requested, the Fund will provide
appropriate assistance and information to the shareholders requesting
the meeting.
The Custodian and the Transfer Agent. First National Bank of Commerce
in New Orleans acts as Custodian of the Fund. The Custodian holds
cash, securities and other assets of the Fund as required by the
1940 Act, and remuneration may be earned for such services.
DST Systems, Inc. ("DST"), 210 West 10th Street, Kansas City,
Missouri 64105, 1-800-471-1144, acts as transfer agent for the
Fund under a Transfer Agent Agreement. DST also acts as the dividend
disbursing agent and shareholder servicing agent for the Fund.
What are Some Additional Considerations for Investors?
Investors should be aware of certain other considerations before
making a decision to invest in the Trust described herein.
Page 21
The Fund has agreed to waive any sales charge on shares sold to
the Trust. Furthermore, FT Evaluators L.P. has agreed to waive
its usual fee for acting as Evaluator of the Trust's portfolio
with respect to that portion of the portfolio comprised of Fund
shares, since information with respect to the price of the Fund's
shares is readily available to it. In addition, the Indenture
requires the Trustee to vote all shares of the Fund held in the
Trust in the same manner and ratio on all proposals as the vote
of owners of Fund shares not held by the Trust.
The value of the Fund's shares, like the value of the Treasury
Obligations, will fluctuate over the life of the Trust and may
be more or less than the price at which they were deposited in
the Trust. The Fund's shares may appreciate or depreciate in value
(or pay dividends or other distributions) depending on the full
range of economic and market influences affecting the securities
in which it is invested and the success of the Fund's Adviser
in anticipating or taking advantage of such opportunities as they
may occur. However, the Sponsor believes that, upon termination
of the Trust, even if the Fund shares deposited in the Trust are
worthless, an event which the Sponsor considers highly unlikely,
the Treasury Obligations will provide sufficient principal to
at least equal $11.00 per Unit (which is equal to the per Unit
value upon maturity of the Treasury Obligations) for those individuals
purchasing on the Initial Date of Deposit (or any other Date when
the value of the Units is $11.00 or less). This feature of the
Trust provides Unit holders with principal protection, although
they might forego any earnings on the amount invested. To the
extent that Units are purchased at a price less than $11.00 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
$11.00 or less), total distributions, including distributions
made upon termination of the Trust, may be less than the amount
paid for a Unit.
The Sponsor, Adviser, Underwriter, Fund and the Trustee shall
not be liable in any way for any default, failure or defect in
any Security. In the event of a notice that any Treasury Obligation
will not be delivered ("Failed Treasury Obligations") to the Trust,
the Sponsor is authorized under the Indenture to direct the Trustee
to acquire other Treasury Obligations ("Replacement Treasury Obligations").
Any Replacement Treasury Obligation deposited in the Trust will
have the same maturity value and, as closely as can be reasonably
acquired by the Sponsor, the same maturity date. The Replacement
Treasury Obligations must be purchased within 30 days after the
deposit of the Failed Treasury Obligations and the purchase price
may not exceed the amount of funds reserved for the purchase of
the Failed Treasury Obligations.
If the right of limited substitution described in the preceding
paragraphs is not utilized to acquire Replacement Treasury Obligations
in the event of a failed contract, the Sponsor will refund the
sales charge attributable to such Failed Treasury Obligations
to all Unit holders of the Trust and the Trustee will distribute
the principal cash attributable to such Failed Treasury Obligations
not more than 120 days after the date on which the Trustee received
a notice from the Sponsor that a Replacement Treasury Obligation
would not be deposited in the Trust. In addition, Unit holders
should be aware that, at the time of receipt of such principal,
they may not be able to reinvest such proceeds in other securities
at a yield equal to or in excess of the yield which such proceeds
would have earned for Unit holders of the Trust.
The Indenture also authorizes the Sponsor to increase the size
of the Trust and the number of Units thereof by the deposit of
additional Securities in the Trust and the issuance of a corresponding
number of additional Units.
The Trust consists of the Securities listed under "Schedule of
Investments" (or contracts to purchase such Securities) as may
continue to be held from time to time in the Trust and any additional
Securities acquired and held by the Trust pursuant to the provisions
of the Indenture (including provisions with respect to deposits
into the Trust of Securities in connection with the issuance of
additional Units).
Once all of the Securities in the Trust are acquired, the Trustee
will have no power to vary the investments of the Trust, i.e.,
the Trustee will have no managerial power to take advantage of
market variations to improve a Unit holder's investment but may
dispose of Securities only under limited circumstances. See "How
May Securities be Removed from the Trust?" Of course, the portfolio
of the Fund will be changing as the Adviser attempts to achieve
the Fund's objective.
Page 22
To the best of the Sponsor's knowledge, there is no litigation
pending as of the Initial Date of Deposit in respect of any Security
which might reasonably be expected to have a material adverse
effect on the Trust. At any time after the Initial Date of Deposit,
litigation may be instituted on a variety of grounds with respect
to the Securities. The Sponsor is unable to predict whether any
such litigation will be instituted, or if instituted, whether
such litigation might have a material adverse effect on the Trust.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. During the initial
offering period, the Public Offering Price is based on the aggregate
of the offering side evaluation of the Treasury Obligations in
the Trust and the net asset value of the Fund shares in the Trust,
plus or minus cash, if any, in the Capital and Income Accounts
held or owned by the Trust, plus a sales charge of 4.5% (equivalent
to 4.712% of the net amount invested) divided by the amount of
Units of the Trust outstanding.
During the initial offering period, the Sponsor's Repurchase Price
is based on the aggregate of the offering side evaluation of the
Treasury Obligations and the net asset value of the Fund shares
in the Trust divided by the amount of Units of the Trust outstanding.
For secondary market sales after the completion of the initial
offering period, the Public Offering Price is based on the aggregate
bid side evaluation of the Treasury Obligations and the net asset
value of the Fund shares in the Trust, plus or minus cash, if
any, in the Capital and Income Accounts held or owned by the Trust,
plus a maximum sales charge of 4.5% of the Public Offering Price
(equivalent to 4.712% of the net amount invested) divided by the
number of outstanding Units of the Trust.
The minimum purchase in the Trust is $1,000. The applicable sales
charge is reduced by a discount as indicated below for volume
purchases (except for sales made pursuant to a "wrap fee account"
or similar arrangements as set forth below):
Primary and Secondary
__________________________
Percent of Percent of
Offering Net Amount
Dollar Amount of Trade Price Invested
_______________ _________ __________
$ 100,000 but less than $250,000 1.00% 1.0101%
$ 250,000 but less than $500,000 1.50% 1.5228%
$ 500,000 but less than $1,000,000 2.00% 2.0408%
$1,000,000 or more 3.00% 3.0928%
Any such reduced sales charge shall be the responsibility of the
selling broker/dealer, bank or other selling agent. The reduced
sales charge structure will apply on all purchases of Units in
the Trust by the same person on any one day from any one broker/dealer,
bank or other selling agent. Additionally, Units purchased in
the name of the spouse of a purchaser or in the name of a child
of such purchaser under 21 years of age will be deemed, for the
purposes of calculating the applicable sales charge, to be additional
purchases by the purchaser. The reduced sales charges will also
be applicable to a trustee or other fiduciary purchasing securities
for a single trust estate or single fiduciary account. The purchaser
must inform the broker/dealer, bank or other selling agent of
any such combined purchase prior to the sale in order to obtain
the indicated discount. With respect to the employees, officers
and directors (including their immediate families and trustees,
custodians or a fiduciary for the benefit of such person) of the
Sponsor, broker/dealers, banks or other selling agents and their
affiliates, the sales charge is reduced by 2.0% of the Public
Offering Price for purchases of Units during the initial and secondary
offering periods.
Units may be purchased in the primary or secondary market at the
Public Offering Price less the concession the Sponsor typically
allows to dealers and other selling agents for purchases (see
"Public Offering-How are Units Distributed?") by investors who
purchase Units through registered investment advisers, certified
Page 23
financial planners or registered broker-dealers who in each case
either charge periodic fees for financial planning, investment
advisory or asset-management services, or provide such services
in connection with the establishment of an investment account
for which a comprehensive "wrap fee" is imposed.
Had the Units of the Trust been available for sale on the business
day immediately prior to the Initial Date of Deposit, the Public
Offering Price would have been as indicated in "Summary of Essential
Information." The Public Offering Price of Units on the date of
this prospectus or during the initial offering period may vary
from the amount stated under "Summary of Essential Information"
in accordance with fluctuations in the prices of the underlying
Securities. During the initial offering period, the aggregate
value of the Units of the Trust shall be determined (a) on the
basis of the offering prices of the Treasury Obligations and the
net asset value of the Fund shares therein plus or minus a pro
rata share of cash, if any, in the Capital and Income Accounts
of the Trust, (b) if offering prices are not available for the
Treasury Obligations, on the basis of offering prices for comparable
securities, (c) by determining the value of the Treasury Obligations
on the offer side of the market by appraisal, or (d) by any combination
of the above.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the bid price per
Unit of the Treasury Obligations and the net asset value of the
Fund shares therein plus or minus a pro rata share of cash, if
any, in the Capital and Income Accounts of the Trust plus the
applicable sales charge.
The offering price of the Treasury Obligations in the Trust may
be expected to be greater than the bid price of the Treasury Obligations
by less than 2%.
Although payment is normally made three business days following
the order for purchase, payment may be made prior thereto. A person
will become owner of the Units on the date of settlement provided
payment has been received. Cash, if any, made available to the
Sponsor prior to the date of settlement for the purchase of Units
may be used in the Sponsor's business and may be deemed to be
a benefit to the Sponsor, subject to the limitations of the Securities
Exchange Act of 1934. Delivery of Units so ordered will be made
three business days following such order or shortly thereafter.
See "Rights of Unit Holders-How May Units be Redeemed?" for information
regarding the ability to redeem Units ordered for purchase.
How are Units Distributed?
During the initial offering period (i) for Units issued on the
Initial Date of Deposit and (ii) for additional Units issued after
such date, as additional Securities are deposited by the Sponsor,
Units will be distributed to the public at the then current Public
Offering Price. The initial offering period may be up to approximately
360 days. During such period, the Sponsor intends to deposit additional
Securities in the Trust and create additional Units. Units reacquired
by the Sponsor or the Underwriters during the initial offering
period (at prices based upon the aggregate offering price of the
Treasury Obligations and the aggregate net asset value of the
Fund shares plus or minus a pro rata share of cash, if any, in
the Capital and Income Accounts of the Trust) may be resold at
the then current Public Offering Price. Upon the termination of
the initial offering period, unsold Units created or reacquired
during the initial offering period will be sold or resold at the
then current Public Offering Price.
Upon completion of the initial offering, Units repurchased in
the secondary market (see "Will There be a Secondary Market?")
may be offered by this prospectus at the secondary market public
offering price determined in the manner described above.
It is the intention of the Sponsor to qualify Units of the Trust
for sale in a number of states. Sales in the primary and secondary
market will be made to broker/dealers, banks and other selling
agents at prices which represent a concession or agency commission
of 3.5% of the Public Offering Price.
The Sponsor reserves the right to change the amount of the concession
or agency commission from time to time. Certain commercial banks
and their brokerage affiliates are making Units of the Trust available
to their customers on an agency basis. A portion of the sales
charge paid by these customers is retained by or remitted to the
banks or their brokerage affiliates in the amounts indicated above.
Under the Glass-Steagall Act, banks and their affiliates may be
prohibited from underwriting Trust Units; however, the Glass-Steagall
Act does permit certain agency transactions and the banking regulators
have not indicated that
Page 24
these particular agency transactions are not permitted under such
Act. In Texas and in certain other states, any banks making Units
available must be registered as broker/dealers under state law.
From time to time the Sponsor may implement programs under which
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 a dealer may be eligible to win other
nominal awards for certain sales efforts, or under which the Sponsor
will reallow to any such 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 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 Dow Jones Industrial Average, the S&P 500 Composite
Price Stock Index, the Morgan Stanley World Index or other global
indices, or performance data from Lipper Analytical Services,
Inc. and Morningstar Publications, Inc. or from publications such
as Money, The New York Times, U.S. News and World Report, Business
Week, Forbes or Fortune. As with other performance data, performance
comparisons should not be considered representative of the Trust's
relative performance for any future period.
What are the Sponsor's Profits?
The Sponsor of the Trust will receive a gross sales commission
equal to 4.5% of the Public Offering Price of the Units (equivalent
to 4.712% 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 "Public Offering-How
are Units Distributed?" for information regarding the receipt
of the excess gross sales commissions by the Sponsor from the
Underwriters and additional concessions available to the dealers
and other selling agents. In addition, the Sponsor may be considered
to have realized a profit or sustained a loss, as the case may
be, in the amount of any difference between the cost of the Treasury
Obligations to the Trust (which is based on the Evaluator's determination
of the aggregate offering price of the underlying Treasury Obligations
of such Trust on the Initial Date of Deposit) and the cost of
such Treasury Obligations to the Sponsor. See Note (2) of "Schedule
of Investments." During the initial offering period, the Underwriters
may also realize profits or sustain losses as a result of fluctuations
after the Date of Deposit in the Public Offering Price received
by the dealers and other selling agents upon the sale of Units.
The Sponsor will deposit all shares of the Fund at net asset value,
i.e., without a sales charge, and so will not receive any profit
from the deposit of Fund shares.
In maintaining a market for the Units, the Sponsor or Underwriters
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 4.5%) or redeemed. The secondary market public
Page 25
offering price of Units may be greater or less than the cost of
such Units to the Sponsor or Underwriters.
Will There be a Secondary Market?
After the initial offering period, although not obligated to do
so, the Sponsor intends to, and the Underwriters may, maintain
a market for the Units and continuously to offer to purchase Units
at prices, subject to change at any time, based upon the aggregate
bid price of the Treasury Obligations in the portfolio of the
Trust and the net asset value of the Fund shares in the Trust
plus or minus cash, if any, in the Capital and Income Accounts
of the Trust. All expenses incurred in maintaining a secondary
market, other than the fees of the Evaluator, the supervisory
and audit expenses and the costs of the Trustee in transferring
and recording the ownership of Units, will be borne by the Sponsor.
If the supply of Units exceeds demand, or for some other business
reason, the Sponsor may discontinue purchases of Units at such
prices. IF A UNIT HOLDER WISHES TO DISPOSE OF HIS OR HER UNITS,
HE OR SHE SHOULD INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES
PRIOR TO MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units
that person 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 three
business days following such order or shortly thereafter. Certificates
are transferable by presentation and surrender to the Trustee
properly endorsed or accompanied by a written instrument or instruments
of transfer. Certificates to be redeemed must be properly endorsed
or accompanied by a written instrument or instruments of transfer.
A Unit holder must sign exactly as his name appears on the face
of the certificate with signature guaranteed by a participant
in the Securities Transfer Agents Medallion Program ("STAMP")
or such other signature guaranty program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee. In
certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of
death, appointments as executor or administrator or certificates
of corporate authority. Record ownership may occur before settlement.
Certificates will be issued in fully registered form, transferable
only on the books of the Trustee in denominations of one Unit
or any multiple thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form.
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.
Page 26
How are Income and Capital Distributed?
The Trustee will distribute any net income (other than accreted
interest) received with respect to any of the Securities in the
Trust on or about the Distribution Dates to Unit holders of record
on the preceding Record Date. See "Summary of Essential Information."
Proceeds received from rebated Rule 12b-1 fees, if any, or on
the sale of any Securities in the Trust, to the extent not used
to meet redemptions of Units or pay expenses, will be distributed
at least annually on each Distribution Date to Unit holders of
record on the preceding Record Date. Income with respect to the
original issue discount on the Treasury Obligations in the Trust,
will not be distributed currently, although Unit holders will
be subject to Federal income tax as if a distribution had occurred.
See "What is the Federal Tax Status of Unit Holders?"
The Record Date and Distribution Date were established so as to
occur shortly after the record date and the payment dates of the
Fund. The Fund normally pays dividends on its net investment income
quarterly. Net realized capital gains, if any, will be distributed
at least annually.
Within a reasonable time after the Trust is terminated, each Unit
holder will, upon surrender of his or her Units for redemption,
receive: (i) the number of shares of the Fund attributable to
his or her Units, which will be distributed "in-kind" directly
to his or her account, rather than redeemed, (ii) a pro rata share
of the amounts realized upon the disposition of the Treasury Obligations
and (iii) a pro rata share of any other assets of the Trust, less
expenses of the Trust, subject to the limitation that Treasury
Obligations may not be sold to pay for Trust expenses. Not less
than 60 days prior to the termination of the Trust, Unit holders
will be offered the option of having the proceeds from the disposition
of the Treasury Obligations in the Trust invested on the date
such proceeds become available to the Trust, in additional shares
of the Fund at net asset value. Such shares will not be subject
to a sales charge or a contingent deferred sales load but such
shares will incur Rule 12b-1 fees, if any, as do all other shares
held directly by investors in the Fund. Unless a Unit holder indicates
that he or she wishes to reinvest such amounts, they will be paid
in cash, as indicated above. A Unit holder may, of course, at
any time after the Fund shares are distributed to his or her account,
instruct the Fund to redeem all or a portion of the shares in
his or her account. Shares of the Fund, as more fully described
in its prospectus, will be redeemed at the then current net asset
value. If within 180 days after the termination of the Trust a
registered owner of Units has not surrendered the Units, the Trustee
shall liquidate the shares of the Fund held for such Unit holder
and hold the funds to which such Unit holder is entitled until
such Units are surrendered.
The Trustee will credit to the Income Account of the Trust any
dividends, distributions or rebated Rule 12b-1 fees, if any, received
on the Fund shares therein. All other receipts (e.g., return of
principal, etc.) are credited to the Capital Account of the Trust.
The Trustee may establish reserves (the "Reserve Account") within
the Trust for state and local taxes, if any, and any governmental
charges payable out of the Trust.
How Can Distributions to Unit Holders be Reinvested?
Each Unit holder of the Trust will have distributions of principal
or income automatically invested in Fund shares (if Fund shares
are registered in the Unit holder's state of residence) deposited
at such share's net asset value next computed, unless he or she
indicates at the time of purchase, or subsequently notifies the
Trustee in writing, that he or she wishes to receive cash payments.
Shares of the Fund obtained through reinvestment will not be subject
to a sales charge, although such shares will incur Rule 12b-1
fees, if any, as do all other shares held directly by investors
in the Fund. Reinvestment by the Trust in Fund shares will normally
be made as of the distribution date of the Trust after the Trustee
deducts therefrom the expenses of the Trust.
Additional information with respect to the investment objective
and policies of the Fund is contained in its Additional Statement
(which is hereby incorporated by reference), which can be obtained
by calling 1-800-462-9511.
Unit holders who are receiving distributions in cash may elect
to participate in the automatic reinvestment feature by filing
with the Trustee an election to have such distributions reinvested
without a sales charge. Such election must be received by the
Trustee at least ten days prior to the Record Date applicable to
Page 27
any distribution in order to be in effect for such Record Date.
Any such election shall remain in effect until a subsequent notice
is received by the Trustee.
Exchange Privilege. Shares of the Fund held in a Unit holder's
reinvestment account may be exchanged generally at net asset value.
You may exchange Class A or Class B shares of the Fund for Class
A or Class B shares, respectively, of any other Marquis Fund without
paying any additional sales charge. You may exchange an investment
in Class A shares of any Marquis Fund for shares of the Marquis
Money Market Fund and move your investment back into Class A shares
of any Marquis Fund, without paying any additional sales charge.
See "Exchange Privilege" in the Fund's prospectus for additional
information regarding the exchange procedure. THE EXCHANGE PRIVILEGE
DOES NOT APPLY TO MARQUIS FUNDS VALUE EQUITY FUND SHARES IN THE
TRUST'S PORTFOLIO, ONLY TO THOSE HELD IN A UNIT HOLDER'S REINVESTMENT
ACCOUNT.
General Information on Exchanges. You must have received a current
prospectus of the Fund into which you wish to move your investment
before the exchange will be effected. Exchanges will be made only
after instructions in writing or by telephone (an "Exchange Request")
are received by DST. If an Exchange Request in good order is received
by DST by 3:00 p.m. central standard time, on any Business Day,
the exchange will occur on that day. The exchange privilege may
be exercised only in those states where the class or shares of
the "new" fund may legally be sold.
Customers who beneficially own shares held of record by a financial
institution should contact that institution if they wish to exchange
shares. The institution will contact DST and effect the exchange
on behalf of the Customer.
The Fund reserves the right to change the terms or conditions
of the exchange privilege discussed herein upon sixty days' notice.
What Reports Will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and
the amount of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per Unit. Within a reasonable
time after the end of each calendar year, the Trustee will furnish
to each person who at any time during the calendar year was a
Unit holder of the Trust the following information in reasonable
detail: (1) a summary of transactions in the Trust for such year;
(2) any Securities sold during the year and the Securities held
at the end of such year by the Trust; (3) the redemption price
per Unit based upon a computation thereof on the 31st day of December
of such year (or the last business day prior thereto); and (4)
amounts of income and capital gains distributed during such year.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his or her Units
by tender to the Trustee at its corporate trust office in the
City of New York of the certificates representing the Units to
be redeemed, or in the case of uncertificated Units, delivery
of a request for redemption, duly endorsed or accompanied by proper
instruments of transfer with signature guaranteed as explained
above (or by providing satisfactory indemnity, as in connection
with lost, stolen or destroyed certificates), and payment of applicable
governmental charges, if any. No redemption fee will be charged.
On the third business day following such tender, the Unit holder
will be entitled to receive in cash an amount for each Unit equal
to the redemption price per Unit next computed after receipt by
the Trustee of such tender of Units. The day of tender is deemed
to be the date on which Units are received by the Trustee, except
that as regards Units received after 4:00 p.m. eastern standard
time, the date of tender is the next day on which the NYSE is
open for trading and such Units will be deemed to have been tendered
to the Trustee on such day for redemption at the redemption price
computed on that day. Units so redeemed shall be cancelled.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of the Trust to the extent that funds
are available for such purpose. All other amounts paid on redemption
shall be withdrawn from the Capital Account of the Trust.
The Trustee is empowered to sell Securities of the Trust in order
to make funds available for redemption. To the extent that Securities
are sold, the size and diversity of the Trust will be reduced.
Such sales may be required at a time when Securities would not
otherwise be sold and might result in lower prices than might
otherwise
Page 28
be realized. Shares of the Fund 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 $11.00 per Unit.
The redemption price per Unit (as well as the secondary market
Public Offering Price) will be determined on the basis of the
bid price of the Treasury Obligations and the net asset value
of the Fund shares in the Trust, plus or minus cash, if any, in
the Capital and Income Accounts of the Trust, while the Public
Offering Price per Unit during the initial offering period will
be determined on the basis of the offering price of such Treasury
Obligations, as of the close of trading on the NYSE on the date
any such determination is made and the net asset value of the
Fund shares in the Trust, plus or minus cash, if any, in the Capital
and Income Accounts. On the Initial Date of Deposit, the Public
Offering Price per Unit (which is based on the offering prices
of the Treasury Obligations and the net asset value of the Fund
shares and includes the sales charge) exceeded the Unit value
at which Units could have been redeemed (based upon the current
bid prices of the Treasury Obligations and the net asset value
of the Fund shares in the Trust) by the amount shown under "Summary
of Essential Information." The Redemption Price per Unit is the
pro rata share of each Unit determined by the Trustee by adding:
(1) the cash on hand in the Trust other than cash deposited in
the Trust to purchase Securities not applied to the purchase of
such Securities; (2) the aggregate value of the Securities (including
"when issued" contracts, if any) held in the Trust, as determined
by the Evaluator on the basis of bid prices of the Treasury Obligations
and the net asset value of the Fund shares next computed; and
(3) dividends or other distributions receivable on Fund shares
trading ex-dividend as of the date of computation and amounts
accrued, if any, for rebated Rule 12b-1 fees; and deducting therefrom:
(1) amounts representing any applicable taxes or governmental
charges payable out of the Trust; (2) an amount representing estimated
accrued expenses of the Trust, including but not limited to fees
and expenses of the Trustee (including legal and auditing fees),
the Evaluator, the Supervisor and counsel fees, if any; (3) cash
held for distribution to Unit holders of record of the Trust as
of the business day prior to the evaluation being made; and (4)
other liabilities incurred by the Trust; and finally dividing
the results of such computation by the number of Units of the
Trust outstanding as of the date thereof.
The right of redemption may be suspended and payment postponed
for any period during which the NYSE is closed (other than for
customary weekend and holiday closings) or during which the SEC
determines that trading on the NYSE is restricted or any emergency
exists, as a result of which disposal or evaluation of the Securities
is not reasonably practicable, or for such other periods as the
SEC may by order permit. Under certain extreme circumstances,
the Sponsor may apply to the SEC for an order permitting a full
or partial suspension of the right of Unit holders to redeem their
Units. The Trustee is not liable to any person in any way for
any loss or damage which may result from any such suspension or
postponement.
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase
such Units by notifying the Trustee before 1:00 p.m. eastern standard
time on the same business day and by making payment therefor to
the Unit holder not later than the day on which the Units would
otherwise have been redeemed by the Trustee. Units held by the
Sponsor may be tendered to the Trustee for redemption as any other
Units. In the event the Sponsor does not purchase Units, the Trustee
may sell Units tendered for redemption in the over-the-counter
market, if any, as long as the amount to be received by the Unit
holder is equal to the amount he or she would have received on
redemption of the Units.
The offering price of any Units acquired by the Sponsor will be
in accord with the Public Offering Price described in the then
effective prospectus describing such Units. Any profit or loss
resulting from the resale or redemption of such Units will belong
to the Sponsor.
How May Securities be Removed from the Trust?
The portfolio of the Trust is not "managed" by the Sponsor or
the Trustee; their activities described herein are governed solely
by the provisions of the Indenture. The Indenture provides that
the Sponsor may (but need not) direct the Trustee to dispose of
a Security in the unlikely event that an issuer of a Security
defaults in
Page 29
the payment of dividends or interest or there exist certain other
materially adverse conditions described in the Indenture.
The Trustee may also sell Securities designated by the Sponsor,
or if not so directed, in its own discretion, for the purpose
of redeeming Units of the Trust tendered for redemption and the
payment of expenses; provided, however, that in the case of Securities
sold to meet redemption requests, Treasury Obligations may only
be sold if the Trust is assured of retaining a sufficient principal
amount of Treasury Obligations to provide funds upon maturity
of the Trust at least equal to $11.00 per Unit. Treasury Obligations
may not be sold to meet Trust expenses.
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in
1991, acts as Sponsor for successive series of The First Trust
Combined Series, The First Trust Special Situations Trust, The
First Trust Insured Corporate Trust, The First Trust of Insured
Municipal Bonds and The First Trust GNMA. First Trust introduced
the first insured unit investment trust in 1974 and to date more
than $9 billion in First Trust unit investment trusts have been
deposited. The Sponsor's employees include a team of professionals
with many years of experience in the unit investment trust industry.
The Sponsor is a member of the National Association of Securities
Dealers, Inc. and Securities Investor Protection Corporation and
has its principal offices at 1001 Warrenville Road, Lisle, Illinois
60532; telephone number (708) 241-4141. As of December 31, 1994,
the total partners' capital of Nike Securities L.P. was $10,863,058
(audited). (This paragraph relates only to the Sponsor and not
to the 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
principal 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
this Trust, may call the Customer Service Help Line at 1-800-682-7520.
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 the Trustee no successor has accepted the appointment within
30 days after notification, the retiring Trustee may apply to
a court of competent jurisdiction for the appointment of a successor.
The resignation or removal of the Trustee becomes effective only
when the successor Trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor Trustee.
Any corporation into which the Trustee may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which a Trustee shall be a party, shall
be the successor Trustee. The Trustee must be a banking corporation
organized under the laws of the United States or any State and
having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
Page 30
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit
holders for taking any action or for refraining from taking any
action in good faith pursuant to the Indenture, or for errors
in judgment, but shall be liable only for their own willful misfeasance,
bad faith, gross negligence (ordinary negligence in the case of
the Trustee) or reckless disregard of their obligations and duties.
The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Securities.
In the event of the failure of the Sponsor to act under the Indenture,
the Trustee may act thereunder and shall not be liable for any
action taken by it in good faith under the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or
upon or in respect of the Trust which the Trustee may be required
to pay under any present or future law of the United States of
America or of any other taxing authority having jurisdiction.
In addition, the Indenture contains other customary provisions
limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or become incapable of acting or become bankrupt or
its affairs are taken over by public authorities, then the Trustee
may (a) appoint a successor Sponsor at rates of compensation deemed
by the Trustee to be reasonable and not exceeding amounts prescribed
by the SEC, or (b) terminate the Indenture and liquidate the Trust
as provided herein, or (c) continue to act as Trustee without
terminating the Indenture.
Who is the Evaluator?
The Evaluator is FT Evaluators L.P., an Illinois limited partnership
formed in 1994 and an affiliate of the Sponsor. The Evaluator's
address is 1001 Warrenville Road, Lisle, Illinois 60532. The Evaluator
may resign or may be removed by the Sponsor and the Trustee, in
which event the Sponsor and the Trustee are to use their best
efforts to appoint a satisfactory successor. Such resignation
or removal shall become effective upon the acceptance of appointment
by the successor Evaluator. If upon resignation of the Evaluator
no successor has accepted appointment within 30 days after notice
of resignation, the Evaluator may apply to a court of competent
jurisdiction for the appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for
the accuracy thereof. Determinations by the Evaluator under the
Indenture shall be made in good faith upon the basis of the best
information available to it, provided, however, that the Evaluator
shall be under no liability to the Trustee, Sponsor or Unit holders
for errors in judgment. This provision shall not protect the Evaluator
in any case of willful misfeasance, bad faith, gross negligence
or reckless disregard of its obligations and duties.
OTHER INFORMATION
How May the Indenture Be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment
is (1) to cure any ambiguity or to correct or supplement any provision
of the Indenture which may be defective or inconsistent with any
other provision contained therein, or (2) to make such other provisions
as shall not adversely affect the interest of the Unit holders
(as determined in good faith by the Sponsor and the Trustee).
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 Underwriters, including the Sponsor. If the Trust is liquidated
because of the redemption of unsold Units of the Trust by the
Underwriter, the Sponsor will refund to each purchaser of Units
of the Trust the entire sales charge paid by such purchaser. In
the event of termination, written notice thereof will be sent
by the Trustee to all Unit holders
Page 31
of the Trust. Within a reasonable period after termination, the
Trustee will follow the procedures set forth under "How are Income
and Principal Distributed?"
Legal Opinions
The legality of the Units offered hereby and certain matters relating
to Federal tax law have been passed upon by Chapman and Cutler,
111 West Monroe Street, Chicago, Illinois 60603, as counsel for
the Sponsor. 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 32
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
The First Trust Special Situations Trust, Series 120
We have audited the accompanying statement of net assets, including
the schedule of investments, of The First Trust Special Situations
Trust, Series 120, comprised of Marquis Value Equity & Treasury
Securities Trust, Series 1, as of the opening of business on August
14, 1995. This statement of net assets is the responsibility of
the Trust's Sponsor. Our responsibility is to express an opinion
on this statement of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the statement
of net assets is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the statement of net assets. Our procedures included
confirmation of the letter of credit held by the Trustee and deposited
in the Trust at the opening of business on August 14, 1995. An
audit also includes assessing the accounting principles used and
significant estimates made by the Sponsor, as well as evaluating
the overall presentation of the statement of net assets. We believe
that our audit of the statement of net assets provides a reasonable
basis for our opinion.
In our opinion, the statement of net assets referred to above
presents fairly, in all material respects, the financial position
of The First Trust Special Situations Trust, Series 120, comprised
of Marquis Value Equity & Treasury Securities Trust, Series 1,
at the opening of business on August 14, 1995, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
August 14, 1995
Page 33
Statement of Net Assets
Marquis Value Equity & Treasury Securities Trust, Series 1
The First Trust Special Situations Trust, Series 120
At the Opening of Business on August 14, 1995
the Initial Date of Deposit
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investment in Securities represented by purchase contracts (1) (2) $ 100,280
Organizational costs (3) 20,000
---------
Total assets 120,280
LIABILITIES
Accrued organizational costs (3) 20,000
_________
Net assets $ 100,280
=========
Units outstanding 10,000
=========
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NET ASSETS
<S> <C>
Cost to investors (4) $ 105,005
Less sales charge (4) (4,725)
__________
Net assets $ 100,280
==========
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) The aggregate cost of the Securities listed under "Schedule
of Investments" is based on the offering side evaluations of the
Treasury Obligations and the net asset value of the Fund shares.
(2) An irrevocable letter of credit totaling $200,000, issued
by Bankers Trust Company, has been deposited with the Trustee
which is sufficient for the purchase of the Securities pursuant
to contracts for the purchase of such Securities.
(3) The Trust will bear all or a portion of its estimated organizational
costs which will be deferred and amortized over five years from
the Initial Date of Deposit. The estimated organizational costs
are based on 1,000,000 Units of the Trust expected to be issued.
To the extent the number of Units issued is larger or smaller,
the estimate will vary.
(4) The aggregate cost to investors includes a sales charge computed
at the rate of 4.5% of the Public Offering Price (equivalent to
4.712% of the net amount invested), assuming no reduction of sales
charge for quantity purchases.
Page 34
Schedule of Investments
Marquis Value Equity & Treasury Securities Trust, Series 1
The First Trust Special Situations Trust, Series 120
At the Opening of Business on August 14, 1995
the Initial Date of Deposit
<TABLE>
<CAPTION>
PORTFOLIO
Percentage of Cost of
Maturity Aggregate Securities
Value Name of Issuer and Title of Security (1) Offering Price to Trust (2)
________ ________________________________________ ______________ ____________
<C> <S> <C> <C>
$110,000 Zero Coupon U.S. Treasury bonds
maturing on February 15, 2007 49.94% $ 50,084
Number of
Shares
_________
4,450 Marquis Funds Value Equity Fund 50.06% 50,196
________ ________
Total Investments 100% $100,280
======== ========
</TABLE>
[FN]
__________________
(1) The Treasury Obligations have been purchased at a discount
from their par value because there is no stated interest income
thereon (such securities are often referred to as U.S. Treasury
zero coupon bonds). Over the life of the Treasury Obligations
the value increases, so that upon maturity the holders will receive
100% of the principal amount thereof.
Shares of Marquis Funds Value Equity Fund (the "Fund") have
been valued at their net asset value as of the opening of business
on the Initial Date of Deposit.
All Securities are represented by regular way contracts to purchase
such Securities for the performance of which an irrevocable letter
of credit has been deposited with the Trustee. The contracts to
purchase the Securities were entered into by the Sponsor on August
11 and 14, 1995.
(2) The cost of the Securities to the Trust represents the offering
side evaluation as determined by FT Evaluators L.P., the Evaluator
(an affiliate of the Sponsor) with respect to the Treasury Obligations
and the net asset value with respect to the Fund shares acquired.
The offering side evaluation of the Treasury Obligations is greater
than the bid side evaluation of such Treasury Obligations which
is the basis on which the Redemption Price per Unit will be determined
after the initial offering period. The aggregate value, based
on the bid side evaluation of the Treasury Obligations and the
net asset value of the Fund shares on the Initial Date of Deposit,
was $100,113. Cost and profit to the Sponsor relating to the purchase
of the Treasury Obligations were $50,084 and $0, respectively.
Cost and profit to the Sponsor relating to the Fund shares were
$50,196 and $0, respectively.
Page 35
<TABLE>
<CAPTION>
CONTENTS:
<S> <C>
Summary of Essential Information 4
Marquis Value Equity & Treasury Securities
Trust, Series 1
The First Trust Special Situations Trust, Series 120:
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? 11
Portfolio:
What are Treasury Obligations? 11
What is Marquis Funds Equity Value Fund? 11
Fund Expenses 11
What are the Fund's Investment Policies? 13
Risk Factors and Description of Permitted
Investments 14
Who is the Management of Marquis Funds
Value Equity Fund? 18
Fund Performance Information 20
Additional Information 21
What are Some Additional Considerations
for Investors? 21
Public Offering:
How is the Public Offering Price Determined? 23
How are Units Distributed? 24
What are the Sponsor's Profits? 25
Will There be a Secondary Market? 26
Rights of Unit Holders:
How is Evidence of Ownership Issued
and Transferred? 26
How are Income and Capital Distributed? 27
How Can Distributions to Unit Holders
be Reinvested? 27
What Reports Will Unit Holders Receive? 28
How May Units be Redeemed? 28
How May Units be Purchased by the Sponsor? 29
How May Securities be Removed from the Trust? 29
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 30
Who is the Trustee? 30
Limitations on Liabilities of Sponsor and Trustee 31
Who is the Evaluator? 31
Other Information:
How May the Indenture Be Amended
or Terminated? 31
Legal Opinions 32
Experts 32
Report of Independent Auditors 33
Statement of Net Assets 34
Schedule of Investments 35
</TABLE>
___________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION
TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET
FORTH IN THE REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO,
WHICH THE FUND HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
Marquis Value
Equity & Treasury
Securities Trust
Series 1
First Trust (registered trademark)
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-708-241-4141
Trustee:
United States Trust Company
of New York
770 Broadway
New York, New York 10003
1-800-682-7520
Servicing Agent:
DST Systems, Inc.
210 West 10th Street
Kansas City, Missouri 64105
1-800-471-1144
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
August 14, 1995
Page 36
CONTENTS OF REGISTRATION STATEMENT
A. Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Brokers' Fidelity
Bond, in the total amountof $1,000,000, the insurer
being National Union Fire Insurance Company of
Pittsburgh.
B.This Registration Statement on Form S-6 comprises the following
papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The First Trust Special Situations Trust, Series
120, has duly caused this Amendment of Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the Village of Lisle and State of Illinois on
August 14, 1995.
THE FIRST TRUST SPECIAL SITUATIONS
TRUST, SERIES 120
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 ) August 14, 1995
General Partner of )
Nike Securities L.P. )
)
) Carlos E. Nardo
)Attorney-in-Fact**
)
)
)
* The title of the person named herein represents his
capacity in and relationship to Nike Securities L.P.,
Depositor.
** An executed copy of the related power of attorney was
filed with the Securities and Exchange Commission in
connection with the Amendment No. 1 to Form S-6 of The
First Trust Special Situations Trust, Series 18 (File No.
33-42683) and the same is hereby incorporated herein by
this reference.
S-3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated August 14, 1995 in
Amendment No. 1 to the Registration Statement (Form S-6) (File
No. 33-60813) and related Prospectus of The First Trust Special
Situations Trust, Series 120.
ERNST & YOUNG LLP
Chicago, Illinois
August 14, 1995
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF FT EVALUATORS L.P.
The consent of FT Evaluators L.P. to the use of its name in
the Prospectus included in the Registration Statement will be
filed as Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for
Oppenheimer Global Growth & Treasury Securities Trust,
Series 1 and subsequent Series effective September 22,
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.
1.1.1 Form of Trust Agreement for Series 120 among Nike
Securities L.P. as Depositor, United States Trust Company
of New York as Trustee, FT Evaluators L.P. as Evaluator,
and First Trust Advisors L.P. as Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities L.P.,
Depositor (incorporated by reference to Amendment No. 1
to Form S-6 [File No. 33-42683] filed on behalf of The
First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by
reference).
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.
S-5
3.3 Opinion of counsel as to New York income tax status of
securities being registered.
3.4 Opinion of counsel as to advancement of funds by Trustee.
4.1 Consent of FT Evaluators L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on page
S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
S-6
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 120
TRUST AGREEMENT
Dated: August 14, 1995
This Trust Agreement among Nike Securities L.P., as
Depositor, United States Trust Company of New York, as Trustee,
FT Evaluators L.P., as Evaluator, and First Trust Advisors L.P.,
as Portfolio Supervisor, sets forth certain provisions in full
and incorporates other provisions by reference to the document
entitled "Standard Terms and Conditions of Trust for Oppenheimer
Global Growth & Treasury Securities Trust, Series 1 and
subsequent Series, Effective September 22, 1994" (herein called
the "Standard Terms and Conditions of Trust"), and such
provisions as are incorporated by reference constitute a single
instrument. All references herein to Articles and Sections are
to Articles and Sections of the Standard Terms and Conditions of
Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the
provisions contained in the Standard Terms and Conditions of
Trust are herein incorporated by reference in their entirety and
shall be deemed to be a part of this instrument as fully and to
the same extent as though said provisions had been set forth in
full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit is 10,000 Units.
(2) The initial fractional undivided interest in and
ownership of the Trust represented by each Unit thereof shall be
1/10,000.
Documents representing this number of Units for the Trust
are being 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:
$1,100 maturity value of Zero Coupon Obligations per 100 Units
to 44.5 shares of the Mutual Fund per 100 Units.
D. The Record Dates shall be as set forth in the
Prospectus under "Summary of Essential Information."
E. The Distribution Dates shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
February 15, 2007.
G. The Zero Coupon Obligations Maturity Date for the Trust
shall be February 15, 2007.
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 $0.0020 per $10.00 principal amount of Treasury
Obligations 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 $0.0090 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 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 August 14,
1995.
K. For purposes of this Trust, any reference to
"Oppenheimer Global Growth & Treasury Securities Trust" in the
Standard Terms and Conditions of Trust referred to above shall be
replaced in its entirety with "Marquis Value Equity & Treasury
Securities Trust."
L. Section 1.01(3) shall be amended to red as follows:
"(3) "Evaluator" shall mean FT Evaluators L.P. and
its successors in interest, or any successor evaluator appointed
as hereinafter provided."
M. For purposes of this Trust, Units of the Trust will not
be rated by Standard & Poor's Ratings Group and any reference to
such rating in the Standard Terms and Conditions of Trust shall
be inapplicable.
N. Section 3.02 of the Standard Terms and Conditions of
Trust shall be deleted and replaced in its entirety with the
following:
"Section 3.02. Income Account. The Trustee shall
collect the income from the Securities in the Trust as such
becomes payable (including all monies representing penalties for
the failure to make timely payments on the Securities, or as
liquidated damages for default or breach of any condition or term
of the Securities or of the underlying instrument relating to any
Securities and other income attributable to a Failed Security or
a Failed Contract Obligation for which no Replacement Security or
Replacement Contract Obligation has been obtained pursuant to
Section 3.13 hereof) and any Rule 12b-1 fees rebated by or on
behalf of the Fund and credit such income to a separate account
for the Trust to be known as the "Income Account".
O. For purposes of this Trust, all references in the
Standard Terms and Conditions of Trust to "$10.00" or "$10.00 per
Unit" shall be amended to read "$11.00" and "$11.00 per Unit",
respectively.
P. The first sentence of Section 3.14. shall be amended to
read as follows:
"Subject to Section 3.15 hereof, as compensation for
providing supervisory portfolio services under this Indenture,
the Portfolio Supervisor shall receive, in arrears, against a
statement or statements therefor submitted to the Trustee monthly
or annually an aggregate annual fee in an amount which shall not
exceed $0.0035 per Unit outstanding as of January 1 of such year
except for a Trust during the year or years in which an initial
offering period as determined in Section 4.01 of this Indenture
occurs, in which case the fee for a month is based on the number
of Units outstanding at the end of such month (such annual fee to
be pro rated for any calendar year in which the Portfolio
Supervisor provides services during less than the whole of such
year), but in no event shall such compensation when combined with
all compensation received from other series of the Trust for
providing such supervisory services in any calendar year exceed
the aggregate cost to the Portfolio Supervisor for the cost of
providing such services."
Q. Section 3.01 of the Standard Terms and Conditions of
Trust shall be replaced in its entirety with the following:
"Section 3.01. Initial Cost. The expenses incurred in
establishing the Trust, including the cost of the preparation and
typesetting of the registration statement, prospectuses
(including preliminary and final prospectuses), the indenture and
other documents relating to the Trust, printing of Certificates,
Securities and Exchange Commission and state blue sky
registration fees, the costs of the initial valuation of the
portfolio and audit of the Trust, the initial fees and expenses
of the Trustee, and legal and other out-of-pocket expenses
related thereto, but not including the expenses incurred in the
printing of preliminary prospectuses and final prospectuses,
expenses incurred in the preparation and printing of brochures
and other advertising materials and any other selling expenses,
to the extent not borne by the Depositor, shall be borne by the
Trust. To the extent the funds in the Income and Principal
Accounts of the Trust shall be insufficient to pay the expenses
borne by the Trust specified in this Section 3.01, the Trustee
shall advance out of its own funds and cause to be deposited and
credited to the Income Account such amount as may be required to
permit payment of such expenses. The Trustee shall be reimbursed
for such advance on each Record Date from funds on hand in the
Income Account or, to the extent funds are not available in such
Account, from the Principal Account, in the amount deemed to have
accrued as of such Record Date as provided in the following
sentence (less prior payments on account of such advances, if
any), and the provisions of Section 6.04 with respect to the
reimbursement of disbursements for Trust expenses, including,
without limitation, the lien in favor of the Trustee therefor and
the authority to sell Securities as needed to fund such
reimbursement, shall apply to the payment of expenses and the
amounts advanced pursuant to this Section. For the purposes of
the preceding sentence and the addition provided in clause (4) of
the first sentence of Section 5.01, the expenses borne by the
Trust pursuant to this Section shall be deemed to have been paid
on the date of the Trust Agreement and to accrue at a daily rate
over the time period specified for their amortization provided in
the Prospectus; provided, however, that nothing herein shall be
deemed to prevent, and the Trustee shall be entitled to, full
reimbursement for any advances made pursuant to this Section no
later than the termination of the Trust. For purposes of
calculating the accrual of organizational expenses under this
Section 3.01, the Trustee shall rely on the written estimates of
such expenses provided by the Depositor pursuant to Section
5.01."
R. Section 5.01 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The second sentence of the first paragraph of Section
5.01 shall be amended by adding the following at the conclusion
thereof: ", plus (4) amounts representing organizational
expenses paid from the Trust less amounts representing accrued
organizational expenses of the Trust, plus (5) all other assets
of the Trust"
(ii) The following shall be added at the end of the first
paragraph of Section 5.01:
Until the Depositor has informed the Trustee that there will
be no further deposits of Additional Securities pursuant to
section 2.01(b), the Depositor shall provide the Trustee with
written estimates of (i) the total organizational expenses to be
borne by the Trust pursuant to Section 3.01 and (ii) the total
number of Units to be issued in connection with the initial
deposit and all anticipated deposits of additional Securities.
For purposes of calculating the Trust Fund Evaluation and Unit
Value, the Trustee shall treat all such anticipated expenses as
having been paid and all liabilities therefor as having been
incurred, and all Units as having been issued, in each case on
the date of the Trust Agreement, and, in connection with each
such calculation, shall take into account a pro rata portion of
such expense and liability based on the actual number of Units
issued as of the date of such calculation. In the event the
Trustee is informed by the Depositor of a revision in its
estimate of total expenses or total Units and upon the conclusion
of the deposit of additional Securities, the Trustee shall base
calculations made thereafter on such revised estimates or actual
expenses, respectively, but such adjustment shall not affect
calculations made prior thereto and no adjustment shall be made
in respect thereof.
IN WITNESS WHEREOF, Nike Securities L.P., United States
Trust Company of New York, FT Evaluators L.P. 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
By Thomas Porrazzo
Vice President
[SEAL]
ATTEST:
Rosalia A. Raviele
Assistant Vice President
FT EVALUATORS L.P.,
Evaluator
By Carlos E. Nardo
Senior Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Carlos E. Nardo
Senior Vice President
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
The First Trust Special Situations Trust, Series 120
(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
August 14, 1995
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: The First Trust Special Situations Trust, Series 120
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of The First Trust Special Situations
Trust, Series 120 in connection with the preparation, execution
and delivery of a Trust Agreement dated August 14, 1995 among
Nike Securities L.P., as Depositor, United States Trust Company
of New York, as Trustee, FT Evaluators L.P., as Evaluator, and
First Trust Advisors L.P., as Portfolio Supervisor, pursuant to
which the Depositor has delivered to and deposited the Securities
listed in Schedule A to the Trust Agreement with the Trustee and
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 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. 33-60813)
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
August 14, 1995
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 120
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of The First Trust Special Situations Trust, Series 120 (the
"Fund"), in connection with the issuance of units of fractional
undivided interests in the Trust of said Fund (the "Trust"),
under a Trust Agreement, dated August 14, 1995 (the "Indenture"),
between Nike Securities L.P., as Depositor, United States Trust
Company of New York, as Trustee, FT Evaluators L.P., as Evaluator
and First Trust Advisors L.P., as Portfolio Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents we have deemed pertinent. The opinions
expressed herein assume that the Trust will be administered, and
investments by the Trust from proceeds of subsequent deposits, if
any, will be made, in accordance with the terms of the Indenture.
The Trust holds both Treasury Obligations and shares of Marquis
Funds Value Equity Fund (collectively, "the Securities") as such
terms are defined in the Prospectus.
Based upon the foregoing and upon an investigation of such
matters of law as we consider to be applicable, we are of the
opinion that, under existing federal income tax law:
I. The Trust is not an association taxable as a
corporation for Federal income tax purposes; each Unit holder
will be treated as the owner of a pro rata portion of the assets
of the Trust under the Internal Revenue Code of 1986 (the
"Code"); the income of the Trust will be treated as income of the
Unit holders thereof under the Code; and an item of Trust income
will have the same character in the hands of a Unit holder as it
would have in the hands of the Trustee. Each Unit holder will be
considered to have received his pro rata share of income derived
from each Trust asset when such income is received by the Trust.
II. Each Unit holder will have a taxable event when the
Trust disposes of a Security (whether by sale, exchange,
redemption, or payment at maturity) or upon the sale or
redemption of Units by such Unit holder. The price a Unit holder
pays for his Units, including sales charges, is allocated among
his pro rata portion of each Security held by the Trust (in
proportion to the fair market values thereof on the date the Unit
holder purchases his Units) in order to determine his initial
cost for his pro rata portion of each Security held by the Trust.
III. With respect to each Unit holder's pro rata portion of
Treasury Obligations held by the Trust: The Treasury Obligations
are treated as bonds that were originally issued at an original
issue discount. Because the Treasury Obligations represent
interest in "stripped" U.S. Treasury bonds, a Unit holder's
initial cost for his pro rata portion of each Treasury Obligation
held by the Trust (determined at the time he acquires his Units,
in the manner described above) shall be treated as its "purchase
price" by the Unit holder. Under the special rules relating to
stripped bonds, original issue discount is effectively treated as
interest for Federal income tax purposes and the amount of
original issue discount in this case is generally the difference
between the bond's purchase price and its stated redemption price
at maturity. A Unit holder will be required to include in gross
income for each taxable year the sum of his daily portions of
original issue discount attributable to the Treasury Obligations
held by the Trust as such original issue discount accrues and
will in general be subject to Federal income tax with respect to
the total amount of such original issue discount that accrues for
such year even though the income is not distributed to the Unit
holders during such year to the extent it is greater than or
equal to the "de minimis" amount determined under a Treasury
Regulation (the "Regulation") issued on December 28, 1992 as
described below. To the extent the amount of such discount is
less than the respective "de minimis" amount, such discount shall
be treated as zero. In general, original issue discount accrues
daily under a constant interest rate method which takes into
account the semi-annual compounding of accrued interest. In the
case of the Treasury Obligations, this method will generally
result in an increasing amount of income to the Unit holders each
year.
IV. With respect to a Unit holder's pro rata portion of
Marquis Funds Value Equity Fund shares held by the Trust:
(a) Each Unit holder will be considered to receive his
pro rata portion of each distribution made by Marquis Funds
Value Equity Fund on the shares, when such distribution is
received by Trust. A distribution declared by Marquis Funds
Value Equity Fund in October, November or December to the
Trust and paid during the following January will be treated
as having been received by Unit holders on December 31 in
the year such distribution was declared. To the extent that
any distribution by Marquis Funds Value Equity Fund on the
shares constitutes ordinary income, each Unit holder will be
deemed to have received ordinary income when the
distribution is received by the Trust. To the extent any
distribution constitutes a capital gain distribution, each
Unit holder will be deemed to have received a capital gain
when the distribution is received by the Trust. To the
extent that any distribution constitutes a return of
capital, each Unit holder will be deemed to have received a
return of capital when the distribution is received by the
Trust.
(b) To the extent that Marquis Funds Value Equity Fund
makes a distribution on the shares which constitutes a
return of capital, such distribution should be applied by a
Unit holder to reduce his basis (determined in accordance
with paragraph (II) hereof) in his pro rata portion of
Marquis Funds Value Equity Fund shares held by the Trust
until the total of all cash reductions reduces such basis to
zero and thereafter should be reported by the Unit holder as
a capital gain.
(c) Marquis Funds Value Equity Fund may elect to pass
through to its shareholders the foreign income and similar
taxes paid by the Fund in order to enable its shareholders
to take a credit (or deduction) for foreign income taxes
paid by the Fund. If this election is made, Unit holders of
the Trust, because they are deemed to own a pro rata portion
of Marquis Funds Value Equity Fund's shares, as described
above, must include in their gross income, for federal
income tax purposes, both their portion of dividends
received by the Trust from Marquis Funds Value Equity Fund
and also their portion of the amount which Marquis Funds
Value Equity Fund deems to be their portion of foreign
income taxes paid with respect to, or withheld from,
dividends, interest, or other income of the Fund from its
foreign investments. Unit holders may then subtract from
their federal income tax the amount of such taxes withheld,
or else treat such foreign taxes as deductions from gross
income; however, as in the case of investors receiving
income directly from foreign sources, the above described
tax credit or deduction is subject to certain limitations.
V. A Unit holder's portion of gain, if any, upon the sale
or redemption of Units or the disposition of Securities held by
the Trust will generally be considered a capital gain except in
the case of a dealer or a financial institution and will be
generally long-term if the Unit holder has held his Units for
more than one year. A Unit holder's portion of loss, if any,
upon the sale or redemption of Units or the disposition of
Securities held by the Trust will generally be considered a
capital loss except in the case of a dealer or a financial
institution and will be generally long-term if the Unit holder
has held his Units for more than one year.
VI. The Code provides that "miscellaneous itemized
deductions" are allowable only to the extent that they exceed two
percent of an individual taxpayer's adjusted gross income.
Miscellaneous itemized deductions subject to this limitation
under present law include a Unit holder's pro rata share of
expenses paid by the Trust, including fees of the Trustee and the
Evaluator but do not include expenses incurred by Marquis Funds
Value Equity Fund the shares of which are held by the Trust.
The Code provides a complex set of rules governing the
accrual of original issue discount, including special rules
relating to "stripped" debt instruments such as the Treasury
Obligations. These rules provide that original issue discount
generally accrues on the basis of a constant compound interest
rate. Special rules apply if the purchase price of a Treasury
Obligation exceeds its original issue price plus the amount of
original issue discount which would have previously accrued,
based upon its issue price (its "adjusted issue price").
Similarly, these special rules would apply to a Unit holder if
the tax basis of his pro rata portion of a Treasury Obligation
issued with original issue discount exceeds his pro rata portion
of its adjusted issue price. The application of these rules will
also vary depending on the value of the Treasury Obligations on
the date a Unit holder acquires his Units, and the price a Unit
holder pays for his Units. In addition, as discussed above, the
Regulation provides that the amount of original issue discount on
a stripped bond is considered zero if the actual amount of
original issue discount on such stripped bond as determined under
Section 1286 of the Code is less than a "de minimis" amount,
which, the Regulation provides, is the product of (i) 0.25
percent of the stated redemption price at maturity and (ii) the
number of full years from the date the stripped bond is purchased
(determined separately for each new purchase thereof) to the
final maturity date of the bond.
For taxable years beginning after December 31, 1986 and
before January 1, 1996, certain corporations may be subject to
the environmental tax (the "Superfund Tax") imposed by Section
59A of the Code. Income received from, and gains recognized from
the disposition of, a Security by the Trust will be included in
the computation of the Superfund Tax by such corporations holding
Units in the Trust.
The scope of this opinion is expressly limited to the
matters set forth herein, and, except as expressly set forth
above, we express no opinion with respect to any other taxes,
including state or local taxes or collateral tax consequences
with respect to the purchase, ownership and disposition of Units.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-60813)
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
August 14, 1995
The First Trust Special Situations
Trust, Series 120
c/o United States Trust Company
of New York, as Trustee
770 Broadway - 6th Floor
New York, New York 10003
Re: The First Trust Special Situations Trust, Series 120
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for The First Trust Special Situations Trust, Series
120 (the "Trust"), which will be established under a Standard
Terms and Conditions of Trust dated September 22, 1994, and a
related Trust Agreement dated as of today (collectively, the
"Indenture"), among Nike Securities L.P., as Depositor (the
"Depositor"); FT Evaluators L.P., as Evaluator; First Trust
Advisors L.P., as Portfolio Supervisor and 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. 33-60813) 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. In
giving this consent, we do not agree that we come within the
category of persons whose consent is required by the Securities
Act or the Rules.
Very truly yours,
CARTER, LEDYARD & MILBURN
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
August 14, 1995
United States Trust Company
of New York, as Trustee of
The First Trust Special Situations
Trust, Series 120
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 120
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
September 22, 1994, and a related Trust Agreement, dated today's
date (collectively, the "Indenture"), among Nike Securities L.P.,
as Depositor (the "Depositor"); FT Evalautors 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 120 (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, consisting of
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 Bonds 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 Fund 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 Bonds have been duly authorized
and delivered, the efficacy of the insurance.
Very truly yours,
CARTER, LEDYARD & MILBURN
FT Evaluators L.P.
1001 Warrenville Road
Lisle, Illinois 60532
August 14, 1995
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: The First Trust Special Situations Trust, Series 120
Gentlemen:
We have examined the Registration Statement File No. 33-
60813 for the above captioned fund. We hereby consent to the use
in the Registration Statement of the references to FT Evaluators
L.P. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
FT Evaluators L.P.
Robert W. Bredemeier
Senior Vice President
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information
extracted from Amendment number 1 to form S-6 and is qualified
in its entirety by reference to such Amendment number 1 to form S-6.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> Marquis Value Equity & Treasury
Securities Trust
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> Other
<FISCAL-YEAR-END> AUG-14-1995
<PERIOD-START> AUG-14-1995
<PERIOD-END> AUG-14-1995
<INVESTMENTS-AT-COST> 100,280
<INVESTMENTS-AT-VALUE> 100,280
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100,280
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100,280
<SHARES-COMMON-STOCK> 10,000
<SHARES-COMMON-PRIOR> 10,000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100,280
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
