File No. 33-60813
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
POST-EFFECTIVE
AMENDMENT NO. 2
TO
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 120
MARQUIS VALUE EQUITY & TREASURY SECURITIES TRUST, SERIES 1
(Exact Name of Trust)
NIKE SECURITIES L.P.
(Exact Name of Depositor)
1001 Warrenville Road
Lisle, Illinois 60532
(Complete address of Depositor's principal executive offices)
NIKE SECURITIES L.P. CHAPMAN AND CUTLER
Attn: James A. Bowen Attn: Eric F. Fess
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
(Name and complete address of agents for service)
It is proposed that this filing will become effective (check
appropriate box)
: : immediately upon filing pursuant to paragraph (b)
: x : November 28, 1997
: : 60 days after filing pursuant to paragraph (a)
: : on (date) pursuant to paragraph (a) of rule (485 or 486)
Pursuant to Rule 24f-2 under the Investment Company Act of
1940, the issuer has registered an indefinite amount of
securities. A 24f-2 Notice for the offering was last filed on
September 15, 1997.
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 120
MARQUIS VALUE EQUITY & TREASURY SECURITIES TRUST, SERIES 1
161,236 Units
PROSPECTUS
Part One
Dated November 25, 1997
Note: Part One of this Prospectus may not be distributed unless accompanied by
Part Two.
The Trust
The Marquis Value Equity & Treasury Securities Trust (the "Trust") is a unit
investment trust consisting of a portfolio of "zero coupon" U.S. Treasury
bonds (Treasury Obligations) and shares of Marquis Funds Value Equity Fund
(Marquis). Marquis is an open-end diversified management investment company,
commonly known as a mutual fund. At October 16, 1997, each Unit represented a
1/161,236 undivided interest in the principal and net income of the Trust (see
"The Trust" in Part Two).
The Units being offered by this Prospectus are issued and outstanding Units
which have been purchased by the Sponsor in the secondary market or from the
Trustee after having been tendered for redemption. The profit or loss
resulting from the sale of Units will accrue to the Sponsor. No proceeds from
the sale of Units will be received by the Trust.
Public Offering Price
The Public Offering Price per Unit is equal to the aggregate value of the
Securities in the Portfolio of the Trust, plus or minus cash, if any, in the
Income and Capital accounts of the Trust, divided by the number of Units
outstanding, plus a sales charge of 4.5% of the Public Offering Price (4.712%
of the amount invested, excluding income and principal cash). At October 16,
1997, the Public Offering Price per Unit was $15.3159 (see "Public Offering"
in Part Two).
Please retain both parts of this Prospectus for future reference.
_____________________________________________________________________________
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.
_____________________________________________________________________________
NIKE SECURITIES L.P.
Sponsor
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 120
MARQUIS VALUE EQUITY & TREASURY SECURITIES TRUST, SERIES 1
SUMMARY OF ESSENTIAL INFORMATION AS OF OCTOBER 16, 1997
Sponsor: Nike Securities L.P.
Evaluator: First Trust Advisors, L.P.
Trustee: The Chase Manhattan Bank
<TABLE>
<CAPTION>
GENERAL INFORMATION
<S> <C>
Aggregate Maturity Value of Treasury Obligations in the Trust $1,776,000
Aggregate Number of Shares of Marquis in the Trust 92,115
Number of Units 161,236
Fractional Undivided Interest in the Trust per Unit 1/161,236
Public Offering Price per Unit:
Aggregate Value of Securities in the Portfolio $2,637,214
Aggregate Value of Securities per Unit $16.3562
Income and principal cash (overdraft) in the portfolio $(292,003)
Income and principal cash (overdraft) per unit $(1.8110)
Sales Charge 4.712% (4.5% of Public Offering Price) $.7707
Public Offering Price per Unit $15.3159
Redemption Price and Sponsor's Repurchase Price per
Unit ($.7707 less than the Public Offering Price
per Unit) $14.5452
</TABLE>
Date Trust Established August 14, 1995
Mandatory Termination Date February 15, 2007
Evaluator's Annual Fee: $.0020 per $10 principal amount of Treasury
Obligations outstanding. Evaluations for purposes of sale, purchase or
redemption of Units are made as of the close of trading (4:00 p.m. Eastern
time) on the New York Stock Exchange on each day on which it is open.
Annual amortization of deferred organization costs: $4,423 annually
Supervisory fee payable to an affiliate Maximum of $.0015 per Unit
of the Sponsor outstanding annually
Bookkeeping and administrative expenses payable Maximum of $.0010 per Unit
to the Sponsor outstanding annually
Trustee's Annual Fee: $.0096 per Unit outstanding.
Record Date: As soon as practicable after Marquis' ex-dividend date.
Distribution Date: As soon as practicable after Marquis' distribution date.
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Unit Holders of The First Trust Special Situations
Trust, Series 120, Marquis Value Equity
& Treasury Securities Trust, Series 1
We have audited the accompanying statement of assets and liabilities,
including the portfolio, of The First Trust Special Situations Trust, Series
120, Marquis Value Equity & Treasury Securities Trust, Series 1 as of July 31,
1997, and the related statements of operations and changes in net assets for
the year then ended and for the period from the Initial Date of Deposit,
August 14, 1995, to July 31, 1996. These financial statements are the
responsibility of the Trust's Sponsor. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of July 31, 1997, by
correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The First Trust Special
Situations Trust, Series 120, Marquis Value Equity & Treasury Securities
Trust, Series 1 at July 31, 1997, and the results of its operations and
changes in its net assets for the year then ended and for the period from the
Initial Date of Deposit, August 14, 1995, to July 31, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
October 24, 1997
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 120
MARQUIS VALUE EQUITY & TREASURY SECURITIES TRUST, SERIES 1
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Securities, at market value (cost, including
accretion on the treasury obligations,
$2,127,639)(Note 1) $2,564,653
Unamortized deferred organization costs 13,427
___________
2,578,080
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND NET ASSETS
<S> <C> <C>
Accrued liabilities 3,310
Cash overdraft 253,492
___________
256,802
___________
Net assets, applicable to 165,034 outstanding
units of fractional undivided interest:
Cost of Trust assets, including accretion
on the treasury obligations (Note 1) $2,127,639
Net unrealized appreciation (Note 2) 437,014
Distributable funds (deficit) (243,375)
___________
$2,321,278
===========
Net asset value per unit $14.0655
===========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 120
MARQUIS VALUE EQUITY & TREASURY SECURITIES TRUST, SERIES 1
PORTFOLIO
July 31, 1997
<TABLE>
<CAPTION>
Maturity Market
value Name of Issuer and Title of Security value
<C> <S> <C>
Zero Coupon U.S. Treasury bonds
$1,816,000 (1) maturing February 15, 2007 $1,016,200
==========
Shares
<C> <S> <C>
92,115 Marquis Funds Value Equity Fund 1,548,453
========== __________
Total investments $2,564,653
==========
</TABLE>
(1) The treasury obligations have been purchased at a discount from their
par value because there is no stated interest income thereon. Over the
life of the treasury obligations the value increases, so that upon
maturity the holders will receive 100% of the principal amount thereof.
[FN]
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 120
MARQUIS VALUE EQUITY & TREASURY SECURITIES TRUST, SERIES 1
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from the
Initial Date
of Deposit,
Year Ended Aug. 14, 1995,
July 31, to July 31,
1997 1996
<S> <C> <C>
Interest income $144,641 43,890
Dividends:
Ordinary income 33,887 15,642
Capital gain 61,171 6,031
________________________
Total investment income 239,699 65,563
Expenses:
Trustee's fees and related expenses (3,229) (2,825)
Evaluator's fees (370) (262)
Supervisory fees (297) (200)
Administrative fees (198) (134)
Amortization of deferred organization costs (4,423) (4,265)
________________________
Total expenses (8,517) (7,686)
________________________
Investment income - net 231,182 57,877
Net gain (loss) on investments:
Net realized gain (loss) (88,763) -
Change in unrealized appreciation
or depreciation 517,300 (80,286)
________________________
428,537 (80,286)
________________________
Net increase (decrease) in net
assets resulting from operations $659,719 (22,409)
========================
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 120
MARQUIS VALUE EQUITY & TREASURY SECURITIES TRUST, SERIES 1
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Period from the
Initial Date
of Deposit,
Year Ended Aug. 14, 1995,
July 31, to July 31,
1997 1996
<S> <C> <C>
Net increase (decrease) in net assets
resulting from operations:
Investment income - net $231,182 57,877
Net realized gain (loss)
on investments (88,763) -
Change in unrealized appreciation
or depreciation on investments 517,300 (80,286)
__________________________
659,719 (22,409)
Unit redemptions (41,966 units in 1997) (486,188) -
Units issued (197,000 in 1996) - 2,162,744
Distributions to unit holders:
Investment income - net (24,806) (7,167)
Principal from investment transactions (60,895) -
__________________________
(85,701) (7,167)
__________________________
Total increase (decrease) in net
assets 87,830 2,133,168
Net assets:
At the beginning of the period
(representing 207,000 and 10,000
units outstanding at August 1,
1996 and August 14, 1995, respectively) 2,233,448 100,280
__________________________
At the end of the period (including
distributable funds (deficit)
applicable to Trust units of ($243,375)
and $6,820 at July 31, 1997 and
1996, respectively) $2,321,278 2,233,448
==========================
Trust units outstanding at the end
of the period 165,034 207,000
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 120
MARQUIS VALUE EQUITY & TREASURY SECURITIES TRUST, SERIES 1
NOTES TO FINANCIAL STATEMENTS
1. Significant accounting policies
Security valuation -
The treasury obligations are stated at values as determined by First Trust
Advisors L.P., an affiliate of the Sponsor. The values are based on (1)
current bid prices for the securities obtained from dealers or brokers who
customarily deal in securities comparable to those held by the Trust, (2)
current bid prices for comparable securities, (3) appraisal or (4) any
combination of the above.
Shares of Marquis Funds Value Equity Fund (Marquis) are stated at Marquis'
published net asset value as reported by the Evaluator. Net asset value is
determined by dividing the value of Marquis' securities plus any cash and
other assets (including accrued interest and dividends receivable) less all
liabilities (including accrued expenses) by the number of shares outstanding,
adjusted to the nearest whole cent.
Investment income -
Dividends from the Marquis shares are recorded on Marquis' ex-dividend date.
Interest income consists of amortization of original issue discount and market
discount or premium on the treasury obligations. Such amortization is
included in the cost of the treasury obligations rather than in distributable
funds because it is not currently available for distribution to unit holders.
Security cost -
Cost of the Trust's treasury obligations is based on the offering price of the
treasury obligations on the dates the treasury obligations were deposited in
the Trust, plus amortization of original issue discount and amortization of
market discount or premium. Cost of the Marquis shares is based on the net
asset value of such shares on the dates the shares were deposited in the
Trust. The cost of securities sold is determined on the average cost method.
Sales of securities are recorded on the trade date.
Federal income taxes -
The Trust is not taxable for Federal income tax purposes. Each unit holder is
considered to be the owner of a pro rata portion of the Trust and,
accordingly, no provision has been made for Federal income taxes.
Expenses of the Trust -
The Trust pays a fee for Trustee services which is based on $.0096 per annum
per unit outstanding based on the largest aggregate number of units
outstanding during the calendar year. Prior to September 1, 1995, the Trustee
was United States Trust Company of New York; effective September 1, 1995, The
Chase Manhattan Bank succeeded United States Trust Company of New York as
Trustee. The Evaluator receives an annual fee based on $0.002 per $10.00
principal amount of treasury obligations outstanding. Additionally, the Trust
pays recurring financial reporting costs, an annual supervisory fee payable to
an affiliate of the Sponsor and an annual administrative fee payable to the
Sponsor.
<PAGE>
Organization Costs -
The Trust has paid a portion of the costs incurred to organize 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's portfolio and
the initial fees and expenses of the Trustee. Such costs totaling $22,115
have been deferred and will be amortized over five years from the Initial Date
of Deposit.
2. Unrealized appreciation and depreciation
An analysis of net unrealized appreciation at July 31, 1997 follows:
<TABLE>
<CAPTION>
Treasury Marquis
obligations shares Total
<S> <C> <C> <C>
Unrealized appreciation $11,625 425,389 437,014
Unrealized depreciation - - -
___________________________________
$11,625 425,389 437,014
===================================
</TABLE>
3. Other information
Cost to investors -
The cost to initial investors of units of the Trust was based on the aggregate
offering price of the treasury obligations and the net asset value of the
Marquis shares on the date of an investor's purchase, plus a sales charge of
4.5% of the public offering price which is equivalent to approximately 4.712%
of the net amount invested.
Distributions to unit holders -
Distributions to unit holders are made as soon as practicable after Marquis'
distribution date.
<PAGE>
Selected data per unit of the Trust outstanding
throughout each period -
<TABLE>
<CAPTION>
Period from the
Initial Date
of Deposit,
Year Ended Aug. 14, 1995,
July 31, to July 31,
1997 1996
<S> <C> <C>
Investment income - interest and dividends $1.3181 .4984
Expenses (.0468) (.0584)
_________________________
Investment income - net 1.2713 .4400
Distributions to unit holders:
Investment income - net (.1292) (.0828)
Principal from investment transactions (.3172) -
Net gain (loss) on investments 2.4510 .4044
________________________
Total increase (decrease) in net assets 3.2759 .7616
Net assets:
Beginning of the period 10.7896 10.0280
_________________________
End of the period $14.0655 10.7896
=========================
</TABLE>
Investment income - interest and dividends, expenses and investment income -
net per unit have been calculated based on the weighted average number of
units outstanding during each period (181,855 and 131,540 units during the
periods ended July 31, 1997 and 1996, respectively). Distributions to unit
holders of investment income - net per unit reflects the Trust's cash
distributions of approximately $.1292 per unit to 192,008 units on January 21,
1997, approximately $.0696 per unit to 85,000 units on December 26, 1995 and
approximately $.0132 per unit to 95,000 units on January 3, 1996.
Distributions to unit holders of principal from investment transactions
reflects the Trust's cash distribution of approximately $.3172 per unit to
192,008 units on January 21, 1997. The net gain (loss) on investments per
unit during the period ended July 31, 1996 includes the effects of changes
arising from issuance of 197,000 additional units during the period at net
asset values which differed from the net asset value per unit of the original
10,000 units ($10.0280 per unit) on August 14, 1995.
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 120
MARQUIS VALUE EQUITY & TREASURY SECURITIES TRUST, SERIES 1
PART ONE
Must be Accompanied by Part Two
___________________
P R O S P E C T U S
___________________
SPONSOR: Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
(800) 621-1675
TRUSTEE: The Chase Manhattan Bank
4 New York Plaza, 6th Floor
New York, New York 10004-2413
LEGAL COUNSEL Chapman and Cutler
TO SPONSOR: 111 West Monroe Street
Chicago, Illinois 60603
LEGAL COUNSEL Carter, Ledyard & Milburn
TO TRUSTEE: 2 Wall Street
New York, New York 10005
INDEPENDENT Ernst & Young, LLP
AUDITORS: Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, securities in any jurisdiction to any person to whom it is not
lawful to make such offer in such jurisdiction.
This Prospectus does not contain all the information set forth in the
registration statement and exhibits relating thereto, which the Trust has
filed with the Securities and Exchange Commission, Washington, D.C., under the
Securities Act of 1933 and the Investment Company Act of 1940, and to which
reference is hereby made.
MARQUIS VALUE EQUITY & TREASURY SECURITIES TRUST
The First Trust (registered trademark) Special Situations Trust
PROSPECTUS
Part Two NOTE: THIS PART TWO PROSPECTUS MAY
Dated November 28, 1997 ONLY BE USED WITH PART ONE
The Trust. The First Trust(registered trademark) Special Situations
Trust (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" in Part One.
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" in Part One.
Each Unit of the Trust represents an undivided fractional interest in
all the Securities deposited in the Trust. The Trust has been organized
so that purchasers of Units should receive, at the termination of the
Trust, an amount per Unit at least equal to $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 forgo
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
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR AEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Page 1
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.
The Treasury Obligations deposited in the Trust will mature on the
Treasury Obligations Maturity Date set forth in Part One. 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" in
Part One. The Trust will automatically terminate shortly after the
maturity of the Treasury Obligations deposited therein.
Public Offering Price. The secondary market Public Offering Price per
Unit will be based upon a pro rata share of the bid prices of the
Treasury Obligations and the net asset value of the 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), capital gains, if any, 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. 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 as set forth in "Summary of
Essential Information" in Part One. As of the date of this Prospectus,
the Sponsor is maintaining a secondary market. If a secondary market is
not maintained in the future, a Unit holder may redeem Units through
redemption at prices based upon the aggregate bid price of the Treasury
Obligations plus the aggregate net asset value of the 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. All expenses incurred in maintaining a
secondary market, other than the fees of the Evaluator, the supervisory
and audit expenses and the costs of the Trustee in transferring and
recording the ownership of Units, will be borne by the Sponsor. If the
supply of Units exceeds demand, or for some other business reason, the
Sponsor may discontinue purchases of Units at such prices. IF A UNIT
HOLDER WISHES TO DISPOSE OF HIS OR HER UNITS, HE OR SHE SHOULD INQUIRE
OF THE SPONSOR AS TO CURRENT MARKET PRICES PRIOR TO MAKING A TENDER FOR
REDEMPTION TO THE TRUSTEE. See "Rights of Unit Holders-How May Units be
Redeemed?"
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 2
MARQUIS VALUE EQUITY & TREASURY SECURITIES TRUST SERIES
The First Trust (registered trademark) Special Situations Trust
What is Marquis Value Equity & Treasury Securities Trust?
The Marquis Value Equity & Treasury Securities Trust is one of a series
of investment companies created by the Sponsor under the name of Marquis
Value Equity & Treasury Securities Trust, all of which are generally
similar but each of which is separate and is designated by a different
series number (the "Trust"). This Series was created under the laws of
the State of New York pursuant to a Trust Agreement (the "Indenture"),
dated the Initial Date of Deposit, with Nike Securities L.P., as
Sponsor, The Chase Manhattan Bank, as Trustee and First Trust Advisors
L.P., as Portfolio Supervisor and Evaluator.
The objective of the Trust is to protect Unit holders' capital by
investing a portion of the Trust's portfolio in zero coupon U.S.
Treasury bonds ("Treasury Obligations") and to provide for potential
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.
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. 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. 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). To the extent that Units of the Trust are redeemed, the
aggregate value of the Securities in the Trust will be reduced and the
undivided fractional interest represented by each outstanding Unit of
the Trust will increase. See "How May Units be Redeemed?" The Trust has
a Mandatory Termination Date as set forth herein under "Summary of
Essential Information" in Part One.
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" in Part
One, 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 aggregate 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" in Part One for providing portfolio
supervisory services for the Trust. Such fee is based on the number of
Units outstanding in the Trust on January 1 of each year. The fee may
exceed the aggregate 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
Page 3
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.
The Evaluator, an affiliate of the Sponsor, will receive a fee as
indicated in the "Summary of Essential Information" in Part One. No fee
is paid to the Evaluator with respect to the Fund shares in the Trust.
The fee may exceed the actual costs of providing such evaluation
services for the Trust, but at no time will the total amount received
for evaluation services rendered in any calendar year to all unit
investment trusts of which Nike Securities L.P. is the Sponsor exceed
the aggregate cost to First Trust Advisors L.P. of supplying such
services in such year. The Trustee pays certain expenses of the Trust
for which it is reimbursed by the Trust. The Trustee will receive for
its ordinary recurring services to the Trust an annual fee as set forth
in the "Summary of Essential Information" in Part One. Such fee will be
based upon the largest aggregate number of Units of the Trust
outstanding on January 1 of each year. For a discussion of the services
performed by the Trustee pursuant to its obligations under the
Indenture, reference is made to the material set forth under "Rights of
Unit Holders." Rule 12b-1 fees, 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.
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.
Page 4
What is the Federal Tax Status of Unit Holders?
The following is a general discussion of certain of the Federal income
tax consequences of the purchase, ownership and disposition of the
Units. The summary is limited to investors who hold the Units as
"capital assets" (generally, property held for investment) within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended
(the "Code"). Unit holders should consult their tax advisers in
determining the Federal, state, local and any other tax consequences of
the purchase, ownership and disposition of Units in the Trust. For
purposes of the following discussions and opinions, it is assumed that
shares in the Fund represent shares in an entity treated as a regulated
investment company for Federal income tax purposes.
In the opinion of Chapman and Cutler, counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for
Federal income tax purposes; each Unit holder will be treated as the
owner of a pro rata portion of each of the assets of the Trust under the
Code; the income of the Trust will be treated as income of the Unit
holders thereof under the Code; and each Unit holder will be considered
to have received his or her pro rata share of income derived from each
Trust asset when such income is considered to be received by the Trust.
2. Each Unit holder will have a taxable event when the Trust disposes
of a Security (whether by sale, exchange, liquidation, redemption,
payment at maturity or otherwise) or upon the sale or redemption of
Units by such Unit holder (except to the extent an in-kind distribution
of stocks is received by such Unit holder as described below). The price
a Unit holder pays for his or her Units is allocated among his or her
pro rata portion of each Security held by the Trust (in proportion to
the fair market values thereof on the valuation date closest to the date
the Unit holder purchases his or her Units) in order to determine his or
her initial tax basis (before adjustment for accrual of original issue
discount) for his or her pro rata portion of each Security held by the
Trust. It should be noted that certain legislative proposals have been
made which could effect the calculation of basis for Unit holders
holding securities that are substantially identical to the Securities.
Unit holders should consult their own tax advisors with regard to
calculation of basis. The Treasury Obligations held by the Trust are
treated as stripped bonds and are treated as bonds issued at an original
issue discount as of the date a Unit holder purchases his or her Units.
Because the Treasury Obligations represent interests in "stripped" U.S.
Treasury bonds, a Unit holder's initial cost for his or her pro rata
portion of each Treasury Obligation held by the Trust (determined at the
time he or she acquires his or her Units in the manner described above)
shall be treated as its "purchase price" by the Unit holder. Original
issue discount is effectively treated as interest for Federal income tax
purposes and the amount of original issue discount in this case is
generally the difference between the bond's purchase price and its
stated redemption price at maturity. A Unit holder will be required to
include in gross income for each taxable year the sum of his or her
daily portions of original issue discount attributable to the Treasury
Obligations held by the Trust as such original issue discount accrues
and will in general be subject to Federal income tax with respect to the
total amount of such original issue discount that accrues for such year
even though the income is not distributed to the Unit holders during
such year to the extent it is not less than a "de minimis" amount as
determined under Treasury Regulations relating to stripped bonds. To the
extent the amount of such discount is less than the respective "de
minimis" amount, such discount is generally treated as zero. In general,
original issue discount accrues daily under a constant interest rate
method which takes into account the semi-annual compounding of accrued
interest. In the case of the Treasury Obligations, this method will
generally result in an increasing amount of income to the Unit holders
each year. Unit holders should consult their tax advisers regarding the
Federal income tax consequences and accretion of original issue
discount. For Federal income tax purposes, a Unit holder's pro rata
portion of dividends (other than designated capital gain dividends as
discussed below) 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
Page 5
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, the holding period for such capital gain will be determined by
the period of time a Unit holder has held his or her Units.
3. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Securities held by the Trust
will generally be considered a capital gain except in the case of a
dealer or a financial institution. A Unit holder's portion of loss, if
any, upon the sale or redemption of Units or the disposition of
Securities held by the Trust will generally be considered a capital loss
(except in the case of a dealer or a financial institution). Unit
holders should consult their tax advisers regarding the recognition of
such capital gains and losses for Federal income tax purposes.
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.
Distributions of the Fund's net capital gain which the Fund properly
designates as capital gain dividends will be taxable to the Unit holders
as long-term capital gains regardless of how long a person has been a
Unit holder. If a Unit holder holds his or her Units for six months or
less or if the Trust holds shares of 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 gain (which is defined as net long-term
capital gain over net short-term capital loss for the taxable year) is
subject to a maximum marginal stated tax rate of either 28% or 20%,
depending upon the holding periods of the capital assets. Capital loss
is long-term if the holding period for the asset is more than one year,
and is short-term if the holding period for the asset is one year or
less. Generally, capital gains realized from assets held for more than
one year but not more than 18 months are taxed at a maximum marginal
stated tax rate of 28% and capital gains realized from assets (with
certain exclusions) held for more than 18 months are taxed at a maximum
marginal stated tax rate of 20% (10% in the case of certain taxpayers in
the lowest tax bracket). Further, capital gains realized from assets
held for one year or less are taxed at the same rates as ordinary
income. Legislation is currently pending that provides the appropriate
methodology that should be applied in netting the realized capital gains
and losses. Such legislation is proposed to be effective retroactively
for tax years ending after May 6, 1997. Note, however, that the 1997 Act
provides that the application of the rules described above in the case
of pass-through entities, such as the Fund shares will be prescribed in
future Treasury Regulations. Accordingly, Unit holders should consult
their own tax advisors as to the tax rate applicable to capital gain
dividends from the Fund.
The Taxpayer Relief Act of 1997 (the "1997 Act") includes provisions
that treat certain transactions designed to reduce or eliminate risk of
loss and opportunities for gain (e.g., short sales, offsetting notional
principal contracts, futures or forward contracts, or similar
transactions) as constructive sales for purposes of recognition of gain
(but not loss) and for purposes of determining the holding period. Unit
holders should consult their own tax advisors with regard to any such
constructive sales rules.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
"conversion transactions" effective for transactions entered into after
April 30, 1993. Unit holders and prospective investors should consult
with their tax advisers regarding the potential effect of this provision
on their investment in Units. If the Unit holder disposes of a Unit, he
or she is deemed thereby to have disposed of his or her entire pro rata
interest in all assets of the Trust involved including his or her pro
rata portion of all the Securities represented by that Unit.
Distributions on the Fund shares which are taxable as ordinary income to
the Unit holders will constitute dividends for Federal income tax
purposes. To the extent dividends received by the Fund are attributable
to foreign corporations, a corporation that owns Units will not be
entitled to the dividends received deduction with respect to the pro
rata portion of such dividends, since the dividends received deduction
Page 6
is generally available only with respect to dividends paid by domestic
corporations. However, to the extent dividends received by the Fund are
from United States corporations (other than real estate investment
trusts) and are designated by the Fund as being eligible for the
dividends received deduction, distributions received by corporate Unit
holders with respect to Fund shares attributable to such dividends may
qualify for the 70% dividends received deduction, subject to limitations
otherwise applicable to the availability of the deduction. It should be
noted that various legislative proposals that would affect the dividends
received deduction have been introduced. Unit holders should consult
with their tax advisers with respect to the limitation on a possible
modification of the dividends received deduction.
If more than 50% of the value of the total assets of the Fund consists
of stock or securities in foreign corporations, 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 the foreign tax credit with respect to such
taxes withheld, or else treat such foreign taxes as deductions from
gross income; however, as in the case of investors receiving income
directly from foreign sources, the above described tax credit or
deduction is subject to certain limitations. Unit holders should consult
their tax advisers regarding this election and its consequences to them.
Each Unit holder's pro rata share of each expense paid by the Trust is
deductible by the Unit holder to the same extent as though the expense
had been paid directly by him. It should be noted that as result of the
Tax Reform Act of 1986, certain miscellaneous itemized deductions, such
as investment expenses, tax return preparation fees and employee
business expenses will be deductible by an individual only to the extent
they exceed 2% of such individual's adjusted gross income. Unit holders
may be required to treat some or all of the expenses of the Trust as
miscellaneous itemized deductions subject to this limitation.
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 will result in the Unit
holder receiving an undivided interest in whole shares of the Fund plus,
possibly, cash.
The potential tax consequences that may occur under an In-Kind
Distribution with respect to each Fund Share will depend on whether or
not a Unit holder receives cash in addition to Fund Shares. A Unit
holder will not recognize gain or loss with respect to Fund Shares if a
Unit holder only receives shares of the Fund in exchange for his or her
pro rata portion in each share of the Fund held by the Trust. However,
if a Unit holder also receives cash in exchange for a fractional share
of the Fund, such Unit holder will generally recognize gain or loss
based upon the difference between the amount of cash received by the
Unit holder and his or her tax basis in such fractional share of the
Fund. Because a Unit holder will receive cash in exchange for his or her
pro rata portion in each Treasury Obligation held by the Trust, such
Unit holder will generally recognize gain or loss based upon the
difference between the amount of cash received by the Unit holder and
his or her tax basis in such Treasury Obligation, regardless of whether
the Unit holder reinvests the cash relating to the Treasury Obligations
into additional Fund Shares.
Because the Trust will own many Securities, a Unit holder who requests
In Kind Distribution will have to analyze the tax consequences with
respect to each Security owned by the Trust. 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
Page 7
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.
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, dividend income and long-term capital gains distributions
includable in the Unit holder's gross income and the amount of Trust
expenses which may be claimed as itemized deductions.
Distributions of income, long-term capital gains and accrual of original
issue discount may also be subject to state and local taxes. Foreign
investors may be subject to different Federal income tax consequences
than those described above. Investors should consult their tax 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?"
The foregoing discussion relates only to the tax treatment of United
States Unit holders ("U.S. Unit holders") with regard to Federal and
certain aspects of New York State and City income taxes. Unit holders
may be subject to taxation in New York or in other jurisdictions and
should consult their own tax advisers in this regard. As used herein,
the term "U.S. Unit holder" means an owner of a Unit in the Trust that
(a) is (i) for United States Federal income tax purposes a citizen or
resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (iii) an estate or trust the
income of which is subject to United States Federal income taxation
regardless of its source or (b) does not qualify as a U.S. Unit holder
in paragraph (a) but whose income from a Unit is effectively connected
with such Unit holder's conduct of a United States trade or business.
The term also includes certain former citizens of the United States
whose income and gain on the Units will be taxable.
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.
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
Page 8
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 as of January 28, 1997.
<TABLE>
<CAPTION>
Class A
Shares
________
<S> <C>
Shareholder Transaction Expenses
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
______________
<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% in the secondary
market.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees (after fee waivers) *** 0.74%
12b-1 (Distribution and/or Service Plan) Fees **** 0.00%
Other Expenses *** 0.26%
Total Fund Operating Expenses (after fee waivers) 1.00%
<FN>
** Effective March 1, 1996, a redemption charge of 1.00% will be
assessed against the proceeds of any redemption request relating to
Class A Shares of the Fund that were purchased without a sales charge in
reliance upon the waiver accorded to purchases in the amount of $1
million or more, but only where such redemption request is made within a
year of the date the shares were purchased.
***The Adviser has voluntarily agreed to waive its fee, and the
Administrator has voluntarily agreed to reimburse Other Expenses, to the
extent necessary to keep "Total Operating Expenses" from exceeding
1.00%. The Adviser and Administrator each reserves the right to
terminate its waiver at any time in its sole discretion. Absent such
waiver, total fund operating expenses would be 1.02%.
****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.
</FN>
</TABLE>
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.
1 year 3 years 5 years 10 years
______ _______ _______ ________
Class A Shares $45 $66 $88 $153
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.
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, 1996, 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 1996
Annual Report to Shareholders and is available upon request and without
charge by calling 1-800-471-1144.
Page 10
<TABLE>
<CAPTION>
For a Class A Share Outstanding Throughout the Period+
Net Realized
Net and Distributions Net
Asset Unrealized from Asset
Value Net Gains or Net Distributions Value
Beginning Investment (Losses) on Investment from Capital End of Total
of Period Income Investments Income Gains Period Return*
_________ __________ ___________ ___________ _____________ _______ _______
<S> <C> <C> <C> <C> <C> <C>
1996 $11.81 $0.25 $1.30 $(0.25) $(0.18) $12.93 13.38%
1995 9.65 0.24 2.16 (0.24) -- 11.81 25.13%
1994 10.00 0.18 (0.35) (0.18) -- 9.65 (1.64)
</TABLE>
<TABLE>
<CAPTION>
Ratio of Ratio of
Expenses Net
to Income to
Net Ratio of Ratio Average Average
Assets Expenses of Net Net Net
End of to Income Assets Assets Portfolio
Period Average to Average (Excluding (Excluding Turnover
(000) Net Assets Net Assets Waivers) Waivers) Rate
_______ __________ __________ __________ __________ _________
<S> <C> <C> <C> <C> <C> <C>
1996 $93,508 0.97% 2.12% 1.02% 2.07% 95.93% $.0795
1995 58,854 0.90% 2.40% 1.07% 2.23% 97.88% n/a
1994 41,922 0.90 1.95 1.17 1.68 161.42 n/a
<FN>
+ The Fund commenced operations on October 22, 1993.
* Total return, excluding sales charge, is for the period indicated and
has been annualized.
**Average commission rate paid for security purchases and sales during
the period. Presentation of the rate is only required for fiscal years
beginning after September 1, 1995.
</FN>
</TABLE>
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, 1996 was 95.93%. 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.
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.
Page 11
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 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
Page 12
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, 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.
Page 13
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 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
Page 14
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 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
Page 15
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.
When-Issued and Delayed Delivery Securities or delayed delivery basis
transactions involve the purchase of instrument with payment and
delivery taking place in the future. Delivery of and payment for these
securities may occur a month or more after the day of the purchase
commitment. To the extent required by the 1940 Act, a Fund will maintain
with the custodian a separate account with liquid high grade debt
securities or cash in an amount at least equal to these commitments. The
interest rate realized on these securities is fixed as of the purchase
date and no interest accrues to the Fund before settlement. These
securities are subject to market fluctuation due to changes in market
interest rates and it is possible that the market value at the time of
settlement could be higher or lower than the purchase price if the
general level of interest rates has changed. Although a Fund generally
purchases securities on a when-issued or forward commitment basis with
the intention of actually acquiring securities for its portfolio, a Fund
may dispose of a when-issued security or forward commitment prior to
settlement if it deems it appropriate.
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.
As of September 30, 1996, the Adviser's Trust Group managed
approximately $2.3 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 seven 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,
Page 16
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, 1996,
the Adviser was paid an advisory fee of .74% 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 and effective January, 1996, serves as portfolio
co-manager of the Fund. With over 27 years of investment management
experience, Mr. Portwood has been the manager of the Adviser's Trust
Group for the past eight years.
Gregory W. Hodlewsky, Vice President of the Adviser, serves as co-
manager of the Fund, and has 10 years of experience in portfolio
management, investment trading and research. Mr. Hodlewsky joined the
Adviser in 1994.
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 (generally 4:00 p.m. Eastern 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
Statement of Additional Information.
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.
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 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 to the extent of the Fund's earnings and
profits. Dividends paid by the Fund to corporate shareholders will
qualify for the dividends-received deduction to the extent attributable
Page 17
to dividends received by the Fund from domestic corporations, it can be
expected that only certain dividends of the Fund will qualify for that
deduction. A portion of such dividends received may be subject to the
alternative minimum tax. 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 and regardless of
whether the distributions are received in cash or in additional 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 imputed interest 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 imputed 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.
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 December 31, if paid by the Fund at any time during the
following January.
Income received on direct U.S. Government obligations is exempt from
income tax at the state level and may be exempt, depending on the state,
when received by a shareholder as income dividends provided certain
state-specific conditions are satisfied. The Fund will inform
shareholders annually of the percentage of income and distributions
derived from direct U.S. obligations. 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.
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 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
Page 18
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.
The Fund has agreed to waive any sales charge on shares sold to the
Trust. Furthermore, First Trust Advisors L.P. has agreed to waive its
usual fee for acting as Evaluator of the Trust's portfolio with respect
to that portion of the portfolio comprised of 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). This feature of the Trust
Page 19
provides Unit holders who purchase Units at a Public Offering Price of
$11.00 or less 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 a 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.
The Trust consists of the Securities listed under "Portfolio" in Part
One 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.
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.
To the best of the Sponsor's knowledge, there is no litigation pending
as of the date of this Part Two Prospectus with respect to any Security
which might reasonably be expected to have a material adverse effect on
the Trust. At any time after the date of this Part Two Prospectus,
litigation may be instituted on a variety of grounds with respect to the
Securities. The Sponsor is unable to predict whether any such litigation
will be instituted, or if instituted, whether such litigation might have
a material adverse effect on the Trust.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. The Public Offering
Price is based on the aggregate bid side evaluation of the Treasury
Obligations and the net asset value of the 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):
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
Page 20
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 secondary offering period.
Units may be purchased 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 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.
The Public Offering Price of Units on the date of this Part Two
Prospectus may vary from the amount stated under "Summary of Essential
Information" in Part One in accordance with fluctuations in the prices
of the underlying Securities. The aggregate value of the Units of the
Trust shall be determined (a) on the basis of the bid prices of the
Treasury Obligations and the net asset value of the 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 bid 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 bid side of the market by appraisal, or (d) by any combination of
the above.
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?
Units repurchased in the secondary market may be offered by this Part
Two Prospectus at the secondary market public offering price determined
in the manner described above.
It is the intention of the Sponsor to qualify Units of the Trust for
sale in a number of states. Sales in the 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. However, resales of Units of the Trust by such dealers
and others to the public will be made at the Public Offering Price
described in this Prospectus. The Sponsor reserves the right to change
the amount of the concession or agency commission from time to time.
Certain commercial banks 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 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.
Page 21
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?
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 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 or her 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
Page 22
credit each such account with the number of Units purchased by that Unit
holder. Within two business days of the issuance or transfer of Units
held in uncertificated form, the Trustee will send to the registered
owner of Units a written initial transaction statement containing a
description of the Trust; the number of Units issued or transferred; the
name, address and taxpayer identification number, if any, of the new
registered owner; a notation of any liens and restrictions of the issuer
and any adverse claims to which such Units are or may be subject or a
statement that there are no such liens, restrictions or adverse claims;
and the date the transfer was registered. Uncertificated Units are
transferable through the same procedures applicable to Units evidenced
by certificates (described above), except that no certificate need be
presented to the Trustee and no certificate will be issued upon the
transfer unless requested by the Unit holder. A Unit holder may at any
time request the Trustee to issue certificates for Units.
Although no such charge is now made or contemplated, a Unit holder may
be required to pay $2.00 to the Trustee per certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or exchange. For new certificates
issued to replace destroyed, stolen or lost certificates, the Unit
holder may be required to furnish indemnity satisfactory to the Trustee
and pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
How are Income and Capital Distributed?
The Trustee will distribute any net income (other than accreted
interest) received with respect to any of the Securities in the Trust on
or about the Distribution Dates to Unit holders of record on the
preceding Record Date. See "Summary of Essential Information" in Part
One. Proceeds received from rebated Rule 12b-1 fees, 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.
Page 23
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 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 shares of the Fund for Class A shares 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
Page 24
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 (if such day is a
day on which the New York Stock Exchange is open for trading), except
that as regards Units received after 4:00 p.m. Eastern time (or as of
any earlier closing time on a day on which the New York Stock Exchange
is scheduled in advance to close at such earlier time), the date of
tender is the next day on which the NYSE is open for trading and such
Units will be deemed to have been tendered to the Trustee on such day
for redemption at the redemption price computed on that day. Units so
redeemed shall be cancelled.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of the Trust to the extent that funds are
available for such purpose. All other amounts paid on redemption shall
be withdrawn from the Capital Account of the Trust.
The Trustee is empowered to sell Securities of the Trust in order to
make funds available for redemption. To the extent that Securities are
sold, the size and diversity of the Trust will be reduced. Such sales
may be required at a time when Securities would not otherwise be sold
and might result in lower prices than might otherwise be realized.
Shares of 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. 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 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
Page 25
the over-the-counter market, if any, as long as the amount to be
received by the Unit holder is equal to the amount he or she would have
received on redemption of the Units.
The offering price of any Units acquired by the Sponsor will be in
accord with the Public Offering Price described in the then effective
prospectus describing such Units. Any profit or loss resulting from the
resale or redemption of such Units will belong to the Sponsor.
How May Securities be Removed from the Trust?
The portfolio of the Trust is not "managed" by the Sponsor or the
Trustee; their activities described herein are governed solely by the
provisions of the Indenture. The Indenture provides that the Sponsor may
(but need not) direct the Trustee to dispose of a Security in the
unlikely event that an issuer of a Security defaults in the payment of
dividends or interest or there exist certain other materially adverse
conditions described in the Indenture.
The Trustee may also sell Securities designated by the Sponsor, or if
not so directed, in its own discretion, for the purpose of redeeming
Units of the Trust tendered for redemption and the payment of expenses;
provided, however, that in the case of Securities sold to meet
redemption requests, Treasury Obligations may only be sold if the Trust
is assured of retaining a sufficient principal amount of Treasury
Obligations to provide funds upon maturity of the Trust at least equal
to $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 FT Series (formerly known as The First Trust Special
Situations Trust), The First Trust Insured Corporate Trust, The First
Trust of Insured Municipal Bonds and The First Trust GNMA. First Trust
introduced the first insured unit investment trust in 1974 and to date
more than $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 (630) 241-4141. As of December 31, 1996, the total
partners' capital of Nike Securities L.P. was $9,005,203 (audited).
(This paragraph relates only to the Sponsor and not to the Trust or to
any series thereof or to any other Underwriter. The information is
included herein only for the purpose of informing investors as to the
financial responsibility of the Sponsor and its ability to carry out its
contractual obligations. More detailed financial information will be
made available by the Sponsor upon request.)
Who is the Trustee?
The Trustee is The Chase Manhattan Bank with its principal executive
office located at 270 Park Avenue, New York, New York 10017 and its unit
investment trust office at 4 New York Plaza, 6th floor, New York, New
York 10004-2413. Unit holders who have questions regarding the Trust may
call the Customer Service Help Line at 1-800-682-7520. The Trustee is
subject to supervision by the Superintendent of Banks of the State of
New York, 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
Page 26
apply to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of the Trustee becomes effective
only when the successor Trustee accepts its appointment as such or when
a court of competent jurisdiction appoints a successor Trustee.
Any corporation into which the Trustee may be merged or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which a Trustee shall be a party, shall be the
successor Trustee. The Trustee must be a banking corporation organized
under the laws of the United States or any State and having at all times
an aggregate capital, surplus and undivided profits of not less than
$5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit holders
for taking any action or for refraining from taking any action in good
faith pursuant to the Indenture, or for errors in judgment, but shall be
liable only for their own willful misfeasance, bad faith, gross
negligence (ordinary negligence in the case of the Trustee) or reckless
disregard of their obligations and duties. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the
Trustee of any of the Securities. In the event of the failure of the
Sponsor to act under the Indenture, the Trustee may act thereunder and
shall not be liable for any action taken by it in good faith under the
Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or upon or in
respect of the Trust which the Trustee may be required to pay under any
present or future law of the United States of America or of any other
taxing authority having jurisdiction. In addition, the Indenture
contains other customary provisions limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or become incapable of acting or become bankrupt or its
affairs are taken over by public authorities, then the Trustee may (a)
appoint a successor Sponsor at rates of compensation deemed by the
Trustee to be reasonable and not exceeding amounts prescribed by the
SEC, or (b) terminate the Indenture and liquidate the Trust as provided
herein, or (c) continue to act as Trustee without terminating the
Indenture.
Who is the Evaluator?
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532. The
Evaluator may resign or may be removed by the Sponsor and the Trustee,
in which event the Sponsor and the Trustee are to use their best efforts
to appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor
Evaluator. If upon resignation of the Evaluator no successor has
accepted appointment within 30 days after notice of resignation, the
Evaluator may apply to a court of competent jurisdiction for the
appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Indenture
shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee, Sponsor or Unit holders for errors in
judgment. This provision shall not protect the Evaluator in any case of
willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties.
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
Page 27
indicated herein under "Summary of Essential Information" in Part One.
The Trust may be liquidated at any time by consent of 100% of the Unit
holders of the Trust or by the Trustee in the event that Units of the
Trust not yet sold aggregating more than 60% of the Units of the Trust
are tendered for redemption by the 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 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 Portfolio of the Trust
appearing in Part One of this Prospectus and Registration Statement has
been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing elsewhere therein 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 28
This page is intentionally left blank.
Page 29
This page is intentionally left blank.
Page 30
This page is intentionally left blank.
Page 31
CONTENTS:
The First Trust Special Situations Trust
The Marquis Value Equity & Treasury
Securities Trust Series:
What is Marquis Value Equity & Treasury
Securities Trust? 3
What are the Expenses and Charges? 3
What is the Federal Tax Status of Unit Holders? 5
Why are Investments in the Trust Suitable for
Retirement Plans? 8
Portfolio:
What are Treasury Obligations? 8
What is Marquis Funds Value Equity Fund? 9
Fund Expenses 9
Financial Highlights 10
What are the Fund's Investment Policies? 11
Risk Factors and Description of Permitted
Investments 11
Who is the Management of Marquis Funds Value
Equity Fund? 16
Fund Performance Information 18
Additional Information 19
What are Some Additional Considerations for
Investors? 19
Public Offering:
How is the Public Offering Price Determined? 20
How are Units Distributed? 21
What are the Sponsor's Profits? 22
Will There be a Secondary Market? 22
Rights of Unit Holders:
How is Evidence of Ownership Issued
and Transferred? 22
How are Income and Capital Distributed? 23
How Can Distributions to Unit Holders
be Reinvested? 24
What Reports will Unit Holders Receive? 24
How May Units be Redeemed? 24
How May Units be Purchased by the Sponsor? 25
How May Equity Securities be
Removed from the Trust? 26
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 26
Who is the Trustee? 26
Limitations on Liabilities of Sponsor and Trustee 27
Who is the Evaluator? 27
Other Information:
How May the Indenture be Amended or Terminated? 27
Legal Opinions 28
Experts 28
___________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO, WHICH THE TRUST
HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940,
AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
MARQUIS VALUE EQUITY & TREASURY SECURITIES TRUST
SERIES
The First Trust
Special Situations Trust
Prospectus
Part Two
November 28, 1997
First Trust (registered trademark)
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
THIS PART TWO MUST BE
ACCOMPANIED BY PART ONE.
Page 32
CONTENTS OF POST-EFFECTIVE AMENDMENT
OF REGISTRATION STATEMENT
This Post-Effective Amendment of Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Auditors
Financial Data Schedule
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES
120 MARQUIS VALUE EQUITY & TREASURY SECURITIES TRUST, SERIES 1,
certifies that it meets all of the requirements for effectiveness
of this Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Post-Effective
Amendment of its Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized in the
Village of Lisle and State of Illinois on November 28, 1997.
THE FIRST TRUST SPECIAL SITUATIONS TRUST,
SERIES 120
MARQUIS VALUE EQUITY & TREASURY SECURITIES
TRUST, SERIES 1
(Registrant)
By NIKE SECURITIES L.P.
(Depositor)
By Robert M. Porcellino
Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment of Registration Statement has been
signed below by the following person in the capacity and on the
date indicated:
Signature Title Date
Robert D. Van Kampen Director of )
Nike Securities )
Corporation, ) November 28, 1997
the General Partner )
of Nike Securities L.P. )
)
) Robert M. Porcellino
David J. Allen Director of Nike ) Attorney-in-Fact**
Securities Corporation,
the Genral Partner of
Nike Securities L.P.
*The title of the person named herein represents his capacity in
and relationship to Nike Securities L.P., Depositor.
**An executed copy of the related power of attorney was filed
with the Securities and Exchange Commission in connection
with the Amendment No. 1 to Form S-6 of The First Trust
Combined Series 258 (File No. 33-63483) and the same is
hereby incorporated herein by this reference.
S-2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated October 24, 1997 in
this Post-Effective Amendment to the Registration Statement and
related Prospectus of The First Trust Special Situations Trust
dated November 25, 1997.
ERNST & YOUNG LLP
Chicago, Illinois
November 24, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
Post Effective Amendment to form S-6 and is qualified in its entirety
by reference to such Post Effective Amendment to form S-6.
</LEGEND>
<SERIES>
<NUMBER> 001
<NAME> MARQUIS GROWTH & TREASURY TRUST SERIES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 2,127,639
<INVESTMENTS-AT-VALUE> 2,564,653
<RECEIVABLES> 0
<ASSETS-OTHER> 13,427
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,578,080
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 256,802
<TOTAL-LIABILITIES> 256,802
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,127,639
<SHARES-COMMON-STOCK> 165,034
<SHARES-COMMON-PRIOR> 207,000
<ACCUMULATED-NII-CURRENT> (243,375)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 437,014
<NET-ASSETS> 2,321,278
<DIVIDEND-INCOME> 95,058
<INTEREST-INCOME> 144,641
<OTHER-INCOME> 0
<EXPENSES-NET> 8,517
<NET-INVESTMENT-INCOME> 231,182
<REALIZED-GAINS-CURRENT> (88,763)
<APPREC-INCREASE-CURRENT> 517,300
<NET-CHANGE-FROM-OPS> 659,719
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 24,806
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 60,895
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 41,996
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 87,830
<ACCUMULATED-NII-PRIOR> 6,820
<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>
