SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
A. Exact Name of Trust: FT 880
B. Name of Depositor: FIRST TRUST PORTFOLIOS L.P.
C. Complete Address of Depositor's 1001 Warrenville Road
Principal Executive Offices: Lisle, Illinois 60532
D. Name and Complete Address of
Agents for Service: FIRST TRUST PORTFOLIOS L.P.
Attention: James A. Bowen
Suite 300
1001 Warrenville Road
Lisle, Illinois 60532
CHAPMAN & CUTLER LLP
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
E. Title of Securities
Being Registered: An indefinite number of
Units pursuant to Rule
24f-2 promulgated under
the Investment Company Act
of 1940, as amended.
F. Approximate Date of Proposed
Sale to the Public: ____ Check if it is
proposed that this filing
will become effective on
_____ at ____ p.m.
pursuant to Rule 487.
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION, DATED AUGUST 06, 2004
Equity Dividend Covered Call Portfolio, Series 2
FT 880
FT 880 is a series of a unit investment trust, the FT Series. FT 880
consists of a single portfolio known as Equity Dividend Covered Call
Portfolio, Series 2 (the "Trust"). The Trust invests in a portfolio of
common stocks ("Equity Securities") and U.S. Treasury securities
("Treasury Obligations"). The Equity Securities will be subject to Long
Term Equity Anticipation Securities ("LEAPS(R)" or "Covered Call
Options") which give the option holder the right to buy the Equity
Securities from the Trust at a predetermined price on any business day
prior to the LEAPS'(R) expiration date, which means you give up any
increase in the Equity Security above that price. Collectively, the
Equity Securities and Treasury Obligations are referred to as the
"Securities." The objective of the Trust is to provide the potential for
income and limited capital appreciation.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
FIRST TRUST (R)
1-800-621-9533
The date of this prospectus is September __, 2004
Page 1
Table of Contents
Summary of Essential Information 3
Fee Table 4
Report of Independent Registered Public Accounting Firm 5
Statement of Net Assets 6
Schedule of Investments 7
The FT Series 9
Portfolio 9
Risk Factors 11
Equity Securities Descriptions 13
Public Offering 14
Distribution of Units 16
The Sponsor's Profits 17
The Secondary Market 18
How We Purchase Units 18
Expenses and Charges 18
Tax Status 19
Retirement Plans 21
Rights of Unit Holders 21
Income and Capital Distributions 22
Redeeming Your Units 22
Removing Securities from the Trust 23
Amending or Terminating the Indenture 24
Information on the Sponsor, Trustee and Evaluator 25
Other Information 26
Page 2
Summary of Essential Information
Equity Dividend Covered Call Portfolio, Series 2
FT 880
At the Opening of Business on the Initial Date of Deposit-September __,
2004
Sponsor: First Trust Portfolios L.P.
Trustee: The Bank of New York
Evaluator: First Trust Advisors L.P.
Initial Number of Units
Fractional Undivided Interest in the Trust per Unit 1/
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (1) $ 9.900
Maximum Sales Charge of 2.95% of the Public Offering Price per Unit
(2.980% exclusive of the deferred sales charge and creation and development fee) (2) $ .295
Less Deferred Sales Charge per Unit $(.145)
Less Creation and Development Fee per Unit $(.050)
Public Offering Price per Unit (3) $ 10.00
Sponsor's Initial Repurchase Price per Unit (4) $ 9.755
Redemption Price per Unit (based on the bid side evaluation of the Treasury Obligations and
the aggregate underlying value of the Equity Securities and LEAPS(R), less the deferred sales $ 9.755
charge) (4)
Estimated Net Annual Distribution per Unit for the first year (5) $
Cash CUSIP Number
Reinvestment CUSIP Number (5)
Fee Accounts Cash CUSIP Number
Fee Accounts Reinvestment CUSIP Number (5)
Security Code
Ticker Symbol
First Settlement Date September __, 2004
Mandatory Termination Date (6) January 23, 2006
Income Distribution Record Date Fifteenth day of each June and December, commencing December 15, 2004.
Income Distribution Date (5) Last day of each June and December, commencing December 31, 2004.
______________
<FN>
(1) Each listed Equity Security is valued at its last closing sale
price, which has been reduced by the value of the LEAPS(R). Each
Treasury Obligation is valued at its last offering price. If an Equity
Security is not listed, or if no closing sale price exists, it is valued
at its closing ask price. LEAPS(R) are valued at their last closing sale
price, or if no closing sale price exists, at their closing bid price.
Evaluations for purposes of determining the purchase, sale or redemption
price of Units are made as of the close of trading on the New York Stock
Exchange ("NYSE") (generally 4:00 p.m. Eastern time) on each day on
which it is open (the "Evaluation Time").
(2) The maximum sales charge consists of an initial sales charge, a
deferred sales charge and the creation and development fee. See "Fee
Table" and "Public Offering."
(3) The Public Offering Price shown above reflects the value of the
Securities on the business day prior to the Initial Date of Deposit. No
investor will purchase Units at this price. The price you pay for your
Units will be based on their valuation at the Evaluation Time on the
date you purchase your Units. On the Initial Date of Deposit, the Public
Offering Price per Unit will not include any accumulated dividends on
the Equity Securities or accrued interest on the Treasury Obligations.
After this date, a pro rata share of any accumulated dividends on the
Equity Securities and accrued interest on the Treasury Obligations will
be included. In calculating the price of a Unit, the value of the Equity
Securities is reduced by the value of the LEAPS(R).
(4) Until the earlier of six months after the Initial Date of Deposit or
the end of the initial offering period the Sponsor's Initial Repurchase
Price per Unit and the Redemption Price per Unit will include the
creation and development fee and estimated organization costs per Unit
set forth under "Fee Table." After such date, the Sponsor's Repurchase
Price and Redemption Price per Unit will not include such creation and
development fee and estimated organization costs. See "Redeeming Your
Units."
(5) The estimated net annual distribution for subsequent years, $ per
Unit, is expected to be less than that set forth above for the first
year because a portion of the Securities included in the Trust will be
sold during the first year to pay for organization costs, the deferred
sales charge and the creation and development fee. The actual net annual
distribution you will receive will vary from that set forth above with
changes in the Trust's fees and expenses, in dividends and interest
received and with the sale of Securities. See "Fee Table" and "Expenses
and Charges." In addition, the actual net annual distributions you
receive will be reduced to the extent Securities are called pursuant to
the LEAPS(R) prior to the Trust's termination. See "Risk Factors."
Distributions from the Capital Account will be made monthly on the last
day of each month to Unit holders of record on the fifteenth day of such
month if the amount available for distribution equals at least $1.00 per
100 Units. In any case, the Trustee will distribute any funds in the
Capital Account in December of each year and as part of the final
liquidation distribution.
(6)See "Amending or Terminating the Indenture."
</FN>
Page 3
Fee Table
This Fee Table describes the fees and expenses that you may, directly or
indirectly, pay if you buy and hold Units of the Trust. See "Public
Offering" and "Expenses and Charges." Although the Trust has a term of
approximately 16 months and is a unit investment trust rather than a
mutual fund, this information allows you to compare fees.
Amount
per Unit
_____
Unit Holder Sales Fees (as a percentage of public offering price)
Maximum Sales Charge
Initial sales charge 1.00%(a) $.100
Deferred sales charge 1.45%(b) $.145
Creation and development fee 0.50%(c) $.050
_______ _______
Maximum Sales Charges (including creation and development fee) 2.95% $.295
======= =======
Organization Costs (as a percentage of public offering price)
Estimated organization costs .290%(d) $.0290
======= =======
Estimated Annual Trust Operating Expenses(e)
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative and evaluation fees % $
Trustee's fee and other operating expenses %(f) $
_______ _______
Total % $
======= =======
Example
This example is intended to help you compare the cost of investing in
the Trust with the cost of investing in other investment products. The
example assumes that you invest $10,000 in the Trust for the periods
shown and sell your Units at the end of those periods. The example also
assumes a 5% return on your investment each year and that the Trust's
operating expenses stay the same. The example does not take into
consideration transaction fees which may be charged by certain
broker/dealers for processing redemption requests. Although your actual
costs may vary, based on these assumptions your costs would be:
1 Year 16 Months
______ _________
$ $
The example will not differ if you hold rather than sell your Units at
the end of each period.
_____________
<FN>
(a) The combination of the initial and deferred sales charge comprises
what we refer to as the "transactional sales charge." The initial sales
charge is actually equal to the difference between the maximum sales
charge of 2.95% and the sum of any remaining deferred sales charge and
creation and development fee.
(b) The deferred sales charge is a fixed dollar amount equal to $.145
per Unit which, as a percentage of the Public Offering Price, will vary
over time. The deferred sales charge will be deducted in three monthly
installments commencing January 20, 2005.
(c)The creation and development fee compensates the Sponsor for creating
and developing the Trust. The creation and development fee is a charge
of $.050 per Unit collected at the end of the initial offering period
which is expected to be approximately 120 days from the Initial Date of
Deposit. If the price you pay for your Units exceeds $10.00 per Unit,
the creation and development fee will be less than 0.50%; if the price
you pay for your Units is less than $10.00 per Unit, the creation and
development fee will exceed 0.50%.
(d) Estimated organization costs will be deducted from the assets of the
Trust at the earlier of six months after the Initial Date of Deposit or
the end of the initial offering period.
(e)Each of the fees listed herein is assessed on a fixed dollar amount
per Unit basis which, as a percentage of average net assets, will vary
over time.
(f) Other operating expenses do not include brokerage costs and other
portfolio transaction fees. In certain circumstances the Trust may incur
additional expenses not set forth above. See "Expenses and Charges."
</FN>
Page 4
Report of Independent
Registered Public Accounting Firm
The Sponsor, First Trust Portfolios L.P., and Unit Holders
FT 880
We have audited the accompanying statement of net assets, including the
schedule of investments, of FT 880, comprising Equity Dividend Covered
Call Portfolio, Series 2 (the "Trust"), as of the opening of business on
September __, 2004 (Initial Date of Deposit). This statement of net
assets is the responsibility of the Trust's Sponsor. Our responsibility
is to express an opinion on this statement of net assets based on our
audit.
We conducted our audit in accordance with standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of net assets is free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of net assets.
Our procedures included confirmation of the irrevocable letter of credit
held by The Bank of New York, the Trustee, and deposited in the Trust
for the purchase of Securities, as shown in the statement of net assets,
as of the opening of business on September __, 2004, by correspondence
with the Trustee. An audit also includes assessing the accounting
principles used and significant estimates made by the Trust's Sponsor,
as well as evaluating the overall presentation of the statement of net
assets. We believe that our audit of the statement of net assets
provides a reasonable basis for our opinion.
In our opinion, the statement of net assets referred to above presents
fairly, in all material respects, the financial position of FT 880,
comprising Equity Dividend Covered Call Portfolio, Series 2, at the
opening of business on September __, 2004 (Initial Date of Deposit) in
conformity with accounting principles generally accepted in the United
States of America.
DELOITTE & TOUCHE LLP
Chicago, Illinois
September __, 2004
Page 5
Statement of Net Assets
Equity Dividend Covered Call Portfolio, Series 2
FT 880
At the Opening of Business on the Initial Date of Deposit-September __,
2004
NET ASSETS
Investment in Securities represented by purchase contracts (1) (2) $
Accrued interest on underlying Treasury Obligations (2) (3)
Less liability for call options written-LEAPS(R)-at market value (1) (2) ( )
Less liability for reimbursement to Sponsor for organization costs (4) ( )
Less liability for deferred sales charge (5) ( )
Less liability for creation and development fee (6) ( )
Less distributions payable ( )
________
Net assets $
========
Units outstanding
Net asset value per Unit (7) $
ANALYSIS OF NET ASSETS
Cost to investors (8) $
Less maximum sales charge (8) ( )
Less estimated reimbursement to Sponsor for organization costs (4) ( )
________
Net assets $
========
_____________
<FN>
NOTES TO STATEMENT OF NET ASSETS
(1) The Trust invests in a portfolio of common stocks and U.S. Treasury
securities. Aggregate cost of the Securities listed under "Schedule of
Investments" and the liability for the LEAPS(R) are based on their
aggregate underlying value. The Securities and the LEAPS(R) were
deposited at prices equal to their market value as determined by the
Evaluator.
(2) An irrevocable letter of credit issued by The Bank of New York of
which approximately $150,000 will be allocated to the Trust, has been
deposited with the Trustee as collateral, covering the monies necessary
for the purchase of the Securities according to their purchase contracts
($_______), accrued interest to the Initial Date of Deposit ($__) and
accrued interest from the Initial Date of Deposit to the expected dates
of delivery ($__) of the Treasury Obligation.
(3) The Trustee will advance to the Trust the amount of net interest
accrued to the First Settlement Date which will be distributed to the
Sponsor as Unit holder of record.
(4) A portion of the Public Offering Price consists of an amount
sufficient to reimburse the Sponsor for all or a portion of the costs of
establishing the Trust. These costs have been estimated at $.0290 per
Unit. A payment will be made at the earlier of six months after the
Initial Date of Deposit or the end of the initial offering period to an
account maintained by the Trustee from which the obligation of the
investors to the Sponsor will be satisfied. To the extent that actual
organization costs are greater than the estimated amount, only the
estimated organization costs added to the Public Offering Price will be
reimbursed to the Sponsor and deducted from the assets of the Trust.
(5) Represents the amount of mandatory deferred sales charge
distributions from the Trust ($.145 per Unit), payable to the Sponsor in
three approximately equal monthly installments beginning on January 20,
2005 and on the twentieth day of each month thereafter (or if such date
is not a business day, on the preceding business day) through March 18,
2005. If Unit holders redeem Units before March 18, 2005, they will have
to pay the remaining amount of the deferred sales charge applicable to
such Units when they redeem them.
(6) The creation and development fee ($.050 per Unit) is payable by the
Trust on behalf of Unit holders out of assets of the Trust at the end of
the initial offering period. If Units are redeemed prior to the close of
the initial offering period, the fee will not be deducted from the
proceeds.
(7)Net asset value per Unit is calculated by dividing the Trust's net
assets by the number of Units outstanding. This figure includes
organization costs and the creation and development fee, which will only
be assessed to Units outstanding at the close of the initial offering
period.
(8) The aggregate cost to investors in the Trust includes a maximum
sales charge (comprised of an initial sales charge, a deferred sales
charge and the creation and development fee) computed at the rate of
2.95% of the Public Offering Price per Unit (equivalent to 2.980% of the
net amount invested, exclusive of the deferred sales charge and the
creation and development fee), assuming no reduction of the maximum
sales charge as set forth under "Public Offering."
</FN>
Page 6
Schedule of Investments
Equity Dividend Covered Call Portfolio, Series 2
FT 880
At the Opening of Business on the Initial Date of Deposit-September __, 2004
Equity Securities:
Current
Number Percentage Market Cost of Annual
of Ticker Symbol and of Aggregate Value Securities to Dividend
Shares Name of Issuer of Securities (1)(5) Offering Price per Share the Trust (3) per Share (4)
_______ ___________________________________ ______________ _________ _____________ _____________
% $ $ %
% %
% %
% %
% %
% %
% %
% %
% %
% %
% %
% %
_______ _
Total Equity Securities xxx.xx% $
Treasury Obligations:
Maturity
Value Name of Issuer and Title of Treasury Obligation (1)
________ ________________________________
$ U.S. Treasury Notes, _______%,
maturing ________, 20__ % N.A. $ N.A.
-------
Total Investment in Securities xxx.xx% $
======= q ======
Long Term Equity Anticipation Securities ("LEAPS(R)"): (2)
Number Market Market
of Value per Value to
Contracts (2) Description of Call Options (1) Contract the Trust (3)
____________ _______________________________ _________ _____________
( )% $( ) $( )
(purchase right at: $_____ per share)
( )% ( ) ( )
(purchase right at: $_____ per share)
( )% ( ) ( )
(purchase right at: $_____ per share)
( )% ( ) ( )
(purchase right at: $_____ per share)
( )% ( ) ( )
(purchase right at: $_____ per share)
( )% ( ) ( )
(purchase right at: $_____ per share)
( )% ( ) ( )
(purchase right at: $_____ per share)
( )% ( ) ( )
(purchase right at: $_____ per share)
( )% ( ) ( )
(purchase right at: $_____ per share)
( )% ( ) ( )
(purchase right at: $_____ per share)
( )% ( ) ( )
(purchase right at: $_____ per share)
( )% ( ) ( )
(purchase right at: $_____ per share)
------- q ------
Total Investment in LEAPS(R) ( )% $( )
======= q ======
______________
<FN>
See "Notes to Schedule of Investments" on page 8.
Page 7
NOTES TO SCHEDULE OF INVESTMENTS
(1) All Securities are represented by regular way contracts to purchase
such Securities which are backed by an irrevocable letter of credit
deposited with the Trustee. The Sponsor entered into purchase contracts
for the Securities on September __, 2004. Such purchase contracts are
expected to settle within three business days. The Trust has a Mandatory
Termination Date of January 23, 2006.
(2)The LEAPS(R) can be exercised on any business day prior to their
expiration on ________, 20__. Each contract entitles the holder thereof
to purchase 100 shares of common stock at the strike price. The purpose
of the LEAPS(R) is to provide additional income.
(3) The cost of the Securities to the Trust represents the aggregate
underlying value with respect to the Securities acquired (generally
determined by the closing sale prices of the listed Equity Securities,
the ask prices of the over-the-counter traded Equity Securities and the
offering side price of the Treasury Obligations at the Evaluation Time
on the business day preceding the Initial Date of Deposit). The offering
side price of the Treasury Obligations is greater than the bid side
price of the Treasury Obligations which is the basis on which the
Redemption Price per Unit will be determined. The Evaluator valued the
LEAPS(R) at their last closing sale price (or closing bid price if there
is no closing sale price) at the Evaluation Time on the business day
preceding the Initial Date of Deposit. The value of the Securities,
based on the bid side price of the Treasury Obligations, the value of
the Equity Securities and the value of the LEAPS(R), is $_______. The
valuation of the Securities has been determined by the Evaluator, an
affiliate of the Sponsor. The cost of the Securities to the Sponsor and
the Sponsor's profit or loss (which is the difference between the cost
of the Securities to the Sponsor and the cost of the Securities to the
Trust) are $ and $ , respectively.
(4)Current Annual Dividend per Share for each Equity Security was
annualized based on the latest quarterly or semi-annual dividend
declared by an issuer. There can be no assurance that future dividend
payments, if any, will be maintained in an amount equal to the dividend
listed above.
(5)Securities of companies in the following industries comprise the
percentages of the investments of the Trust as indicated:
________, __%; ________, __%; and ________, __%.
</FN>
Page 8
The FT Series
The FT Series Defined.
We, First Trust Portfolios L.P. (the "Sponsor"), have created hundreds
of similar yet separate series of a unit investment trust which we have
named the FT Series. The series to which this prospectus relates, FT
880, consists of a single portfolio known as Equity Dividend Covered
Call Portfolio, Series 2.
The Trust was created under the laws of the State of New York by a Trust
Agreement (the "Indenture") dated the Initial Date of Deposit. This
agreement, entered into among First Trust Portfolios L.P., as Sponsor,
The Bank of New York as Trustee and First Trust Advisors L.P. as
Portfolio Supervisor and Evaluator, governs the operation of the Trust.
YOU MAY GET MORE SPECIFIC DETAILS CONCERNING THE NATURE, STRUCTURE AND
RISKS OF THIS PRODUCT IN AN "INFORMATION SUPPLEMENT" BY CALLING THE
SPONSOR AT 1-800-621-1675, EXT. 1.
How We Created the Trust.
On the Initial Date of Deposit, we deposited a portfolio of U.S.
Treasury obligations and common stocks (which common stocks are subject
to the LEAPS(R)) with the Trustee, and in turn, the Trustee delivered
documents to us representing our ownership of the Trust in the form of
units ("Units"). Because the Equity Securities held by the Trust are
subject to the LEAPS(R), the Equity Securities' upside potential will be
limited. The Securities were deposited at prices equal to their market
value as determined by the Evaluator, which value has been reduced to
reflect the Trust's obligation under the LEAPS(R).
After the Initial Date of Deposit, we may deposit additional Securities
in the Trust, or cash (including a letter of credit or the equivalent)
with instructions to buy more Securities, to create new Units for sale.
Any additional Equity Securities deposited will be subject to the
LEAPS(R) with the same terms as the LEAPS(R) initially deposited. If we
create additional Units, we will attempt, to the extent practicable, to
maintain the percentage relationship established among the Securities on
the Initial Date of Deposit (as set forth in the "Schedule of
Investments"), adjusted to reflect the sale, redemption or liquidation
of any of the Securities or any stock split or a merger or other
similar event affecting the issuer of the Securities.
Since the prices of the Securities will fluctuate daily, the ratio of
Securities in the Trust, on a market value basis, will also change
daily. The portion of Securities represented by each Unit will not
change as a result of the deposit of additional Securities or cash in
the Trust. If we deposit cash, you and new investors may experience a
dilution of your investment. This is because prices of Securities will
fluctuate between the time of the cash deposit and the purchase of the
Securities, and because the Trust pays the associated brokerage fees. To
reduce this dilution, the Trust will try to buy the Securities as close
to the Evaluation Time and as close to the evaluation price as possible.
In addition, because the Trust pay the brokerage fees associated with
the creation of new Units and with the sale of Securities to meet
redemption and exchange requests, frequent redemption and exchange
activity will likely result in higher brokerage expenses.
An affiliate of the Trustee may receive these brokerage fees or the
Trustee may retain and pay us (or our affiliate) to act as agent for the
Trust to buy Securities. If we or an affiliate of ours act as agent to
the Trust, we will be subject to the restrictions under the Investment
Company Act of 1940, as amended.
We cannot guarantee that the Trust will keep its present size and
composition for any length of time. Securities may be called pursuant to
the LEAPS(R) or periodically sold under certain circumstances, and the
proceeds received by the Trust will be used to meet Trust obligations or
distributed to Unit holders, but will not be reinvested. However,
Securities will not be sold to take advantage of market fluctuations or
changes in anticipated rates of appreciation or depreciation, or if they
no longer meet the criteria by which they were selected. You will not be
able to dispose of or vote any of the Securities in the Trust. As the
holder of the Securities, the Trustee will vote all of the Equity
Securities and will do so based on our instructions.
Neither we nor the Trustee will be liable for a failure in any of the
Securities. However, if a contract for the purchase of any of the
Securities initially deposited in the Trust fails, unless we can
purchase substitute Securities ("Replacement Securities") we will refund
to you that portion of the purchase price and transactional sales charge
resulting from the failed contract on the next Income Distribution Date.
Any Replacement Security the Trust acquires will be identical to those
from the failed contract.
Portfolio
Objectives.
The objective of the Equity Dividend Covered Call Portfolio, Series 2 is
to provide investors with the potential for income and limited capital
appreciation.
Page 9
Many income investors find the current environment challenging and are
looking for alternatives for the income portion of their portfolios.
There are many different approaches to developing a portfolio that
provides income potential, and this investment has been developed to
meet this challenge.
In our opinion, this product may appeal to investors who are seeking
income as a part of their current financial plan.
Each Equity Security is subject to a contractual right, in the form of
LEAPS(R), which gives the holder of the LEAPS(R) (the "Holder") the
right to buy the Equity Security at a predetermined price (the "Strike
Price") on any business day prior to the expiration of the LEAPS(R).
Each LEAPS(R) will be issued by The Options Clearing Corporation ("OCC")
in the form of an American style option, which means that it is
exercisable at the Strike Price on any business day prior to its
expiration date. The expiration date for each of the LEAPS(R) included
in the Trust is ________, 20__. On the Initial Date of Deposit, the
Strike Price of the LEAPS(R) is equal to approximately ______% of the
closing market price on that date of the Equity Securities deposited in
the Trust.
The Portfolio.
The Trust invests in common stocks of companies which have been
selected for their quality of dividend income, and simultaneously, the
Trust sells an American Style Long-Term Equity AnticiPation
Securities (LEAPS(R)) call option against each position. The expiration
date of the LEAPS(R) coincides with the termination of the Trust.
The writing of call options generates premium income. This premium
income is invested in U.S. Treasury Notes and the interest received from
the Notes is paid to Unit holders periodically.
The companies selected for the portfolio are chosen based on each
company's long history of paying dividends at a greater rate than other
companies in the Standard & Poor's 500 Composite Stock Price Index ("S&P
500 Index"). There is, however, no assurance that the companies selected
for the portfolio will declare dividends in the future or that, if
declared, will either remain at current levels or increase over time.
Nor is there any assurance that the equity securities will not be called
prior to the Trust's termination, thereby reducing the amount of
distributions paid to investors.
Market Scenarios.
This Trust is designed with the objective of seeking income plus limited
capital appreciation. Here is how this investment could work under three
scenarios:
- - Stock price increases above the exercise price: The covered call
option is exercised and the underlying stock shares are sold at the
Strike Price. Profits are limited to the premium received from writing
the LEAPS(R), dividends received from the stocks prior to their sale
from the portfolio, interest received from the U.S. Treasury Notes, plus
the difference between each stock's initial price and their Strike
Price. Investors will forgo any dividends paid on the stocks subsequent
to their sale from the portfolio. It is important to note that writing
covered calls limits the appreciation potential of the underlying
securities.
- - Stock price remains stable: The LEAPS(R) expire worthless and the
Trust still owns the stock shares. Profits are limited to the premium
received from writing the LEAPS(R), plus dividends from the stocks, as
well as interest received from the U.S. Treasury Notes.
- - Stock price decreases: The LEAPS(R) expire worthless and the Trust
still owns the stock shares. The breakeven on the stock is lowered by
the premium received on the call, in addition to the dividends received
from writing the LEAPS(R) and, again, interest received from the U.S.
Treasury Notes.
Strategy. The strategy followed by the Trust is a covered call writing
strategy. A writer of a covered call sells call options against stock
currently held by the writer. The writer of a call option receives a
cash premium for selling the call but is obligated to sell the stock at
the Strike Price, if the option is exercised. The payor of the option
premium, the Right Holder, has the right, but not the obligation, to
purchase the stock at the Strike Price on any business day prior to the
LEAPS(R) expiration date. The option writer gives up any increase in the
stock above the Strike Price. This strategy is appropriate for an
investor who is willing to limit the upside potential on the stock in
return for receiving the option premium.
On or before the Initial Date of Deposit, the Sponsor entered into
contracts to buy the Equity Securities. The Sponsor then wrote LEAPS(R)
on each of the Equity Securities and received an option premium
therefore. Using the option premium proceeds, the Sponsor entered into
contracts to buy the Treasury Obligations. On the Initial Date of
Deposit, the Sponsor deposited the Equity Securities subject to the
LEAPS(R) and the Treasury Obligations with the Trustee on behalf of the
Trust. At such time the Sponsor also assigned the LEAPS(R) to the Trust,
giving the Right Holders the right to purchase Equity Securities from
the Trust.
Each LEAPS(R) will give the Right Holder the right (but not the
obligation) to purchase Equity Securities from the Trust at the Strike
Page 10
Price on any business day prior to the LEAPS'(R) expiration. The Strike
Price for an Equity Security held by the Trust will be adjusted downward
(but not below zero) upon certain extraordinary distributions made by
the issuers of the Equity Securities to Unit holders before the
LEAPS'(R) expiration triggered by certain corporate events affecting
such Equity Security. See "Risk Factors-LEAPS(R)."
In calculating the net asset value of a Unit, the price of a Unit is
reduced by the value of the LEAPS(R).
As of the Initial Date of Deposit, the capital appreciation on the
Equity Securities held by the Trust is limited to a maximum of
approximately _____% because of the obligation of the Trust to the Right
Holder with respect to each of the Equity Securities entitling the Right
Holder to purchase the Equity Securities at the Strike Price. The
LEAPS(R) limit your upside potential in the Equity Securities to an
amount equal to the Strike Price. However, as the option premium
received in return for issuing the LEAPS(R) was used to purchase
Treasury Obligations, you will receive interest from the Treasury
Obligations during the life of the Trust and the your pro rata portion
of the principal from the Treasury Obligations at the Trust's maturity.
If the market price of an Equity Security held by the Trust is greater
than its Strike Price, the Trust will not participate in any
appreciation in that Equity Security above the Strike Price because it
is expected that the holder of the related LEAPS(R) will exercise its
right to purchase that Equity Security from the Trust at the Strike
Price. If the market price of an Equity Security held by the Trust is
less than its Strike Price, it is expected that the LEAPS(R) will
terminate without being exercised, and the Trust, in connection with its
termination, will liquidate or distribute the Equity Security at its
then current market value. To the extent particular Equity Securities
held by the Trust decline in price or fail to appreciate to a price
equal to the related Strike Price, the Trust will not achieve its
maximum potential appreciation.
The Treasury Obligations included in the Trust are non-callable debt
obligations that are issued by and backed by the full faith and credit
of the U.S. Government, although Units of the Trust are not so backed.
Additionally, the U.S. Government assures the timely payment of
principal and interest on the underlying Treasury Obligations in the
Trust. Of course, this applies only to the payment of principal and
interest on the Treasury Obligations and not the Units themselves.
You should be aware that predictions stated herein may not be realized.
Of course, as with any similar investment, there can be no guarantee
that the objective of the Trust will be achieved. See "Risk Factors" for
a discussion of the risks of investing in the Trust.
Risk Factors
Price Volatility. The Trust invests in Treasury Obligations, Equity
Securities and LEAPS(R) for each of the Equity Securities. The value of
the Trust's Units will fluctuate with changes in the value of the
Treasury Obligations, Equity Securities and LEAPS(R).
Because the Trust is not managed, the Trustee will not sell Securities
in response to or in anticipation of market fluctuations, as is common
in managed investments. As with any investment, we cannot guarantee that
the performance of the Trust will be positive over any period of time,
especially the relatively short 16-month life of the Trust, or that you
won't lose money. Units of the Trust are not deposits of any bank and
are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Equity Securities. Common stock prices fluctuate for several reasons
including changes in investors' perceptions of the financial condition
of an issuer or the general condition of the relevant stock market, such
as the current market volatility, or when political or economic events
affecting the issuers occur. In addition, common stock prices may be
particularly sensitive to rising interest rates, as the cost of capital
rises and borrowing costs increase.
U.S. Treasury Obligations. U.S. Treasury obligations are direct
obligations of the United States which are backed by the full faith and
credit of the United States. The value of the Treasury Obligations will
be adversely affected by decreases in bond prices and increases in
interest rates. Certain Treasury Obligations may have been purchased on
the Initial Date of Deposit at prices of less than their par value at
maturity, indicating a market discount. Other Treasury Obligations may
have been purchased on the Initial Date of Deposit at prices greater
than their par value at maturity, indicating a market premium. The
coupon interest rate of Treasury Obligations purchased at a market
discount was lower than current market interest rates of newly issued
bonds of comparable rating and type and the coupon interest rate of
Treasury Obligations purchased at a market premium was higher than
current market interest rates of newly issued bonds of comparable rating
and type. Generally, the value of bonds purchased at a market discount
will increase in value faster than bonds purchased at a market premium
if interest rates decrease. Conversely, if interest rates increase, the
Page 11
value of bonds purchased at a market discount will decrease faster than
bonds purchased at a market premium.
LEAPS(R). The value of the LEAPS(R) may be adversely affected if the
market for LEAPS(R) becomes less liquid or smaller. If this occurs,
there will likely be a negative impact on the value of your Units.
Although you may redeem your Units at any time, if you redeem before the
LEAPS(R) are exercised or expire, the value of your Units may be
adversely affected by the value of the LEAPS(R). However, if LEAPS(R)
are not exercised and you hold your Units until the scheduled
Termination Date, the LEAPS(R) will have ceased to exist and the Trust
portfolio will consist of only cash or Securities or a combination of
each.
If you sell or redeem your Units before the LEAPS(R) are exercised, or
if the Trust terminates prior to its scheduled Termination Date and the
LEAPS(R) have not been exercised, you may not realize any appreciation
in the value of the Equity Securities because even if the Equity
Securities appreciate in value, that appreciation may be more than
fully, fully or partly offset by an increase in value in the LEAPS(R).
The value of the LEAPS(R) is deducted from the value of the Trust assets
when determining the value of a Unit. If the Securities decline in
price, your loss may be greater than it would be if there were no
LEAPS(R) because the value of the LEAPS(R) is a reduction to the value
of the Securities when calculating the value of a Unit. An increase in
value of the LEAPS(R), an obligation of the Trust to sell or deliver the
Equity Securities at the Strike Price if the LEAPS(R) are exercised by
the Holder, will reduce the value of the Securities in the Trust, below
the value of the Securities that would otherwise be realizable if the
Equity Securities were not subject to the LEAPS(R). You should note that
even if the price of an Equity Security does not change, if the value of
a LEAPS(R) increases (for example, based on increased volatility of an
Equity Security) your Unit will lose value.
The value of the LEAPS(R) reduces the value of your Units. As the value
of the LEAPS(R) increases, it has a more negative impact on the value of
your Units. The value of the LEAPS(R) will also be affected by changes
in the value and dividend rates of the Equity Securities, an increase in
interest rates, a change in the actual and perceived volatility of the
stock market and the Equity Securities and the remaining time to
expiration. Additionally, the value of a LEAPS(R) does not increase or
decrease at the same rate as the underlying stock (although they
generally move in the same direction). However, as a LEAPS(R) approaches
its expiration date, its value increasingly moves with the price of the
Equity Security subject to the LEAPS(R).
The Strike Price for each LEAPS(R) held by the Trust may be adjusted
downward before the LEAPS(R) expiration triggered by certain corporate
events affecting that Equity Security. A downward adjustment to the
Strike Price will have the effect of reducing the equity appreciation
that a Unit holder may receive. If the Strike Price is adjusted downward
and the LEAPS(R) is exercised at the reduced Strike Price, a Unit Holder
would lose money if the value of the Equity Security at the time that
the Unit is purchased is greater than the adjusted Strike Price.
Adjustments will be made to the Strike Price of an Equity Security based
on adjustments made by the OCC to options on that security. The OCC
generally does not adjust option strike prices to reflect ordinary
dividends but may adjust option strike prices to reflect certain
corporate events such as extraordinary dividends, stock splits, merger
or other extraordinary distributions or events.
If the value of the underlying Equity Securities exceeds the Strike
Price of the LEAPS(R), it is likely that the Holder will exercise their
right to purchase the Equity Security subject to the LEAPS(R) from the
Trust. As the LEAPS(R) may be exercised on any business day prior to
their expiration, Equity Securities may be sold to the Holders of the
LEAPS(R) prior to the termination of the Trust. If this occurs,
distributions from the Trust will be reduced by the amount of the
dividends which would have been paid by Equity Securities sold from the
Trust. As discussed in "Tax Matters," the sale of Equity Securities from
the Trust will likely result in capital gains to Unit holders, which may
be short-term depending on the holding period of the Equity Securities.
In addition, the sale of Equity Securities may, in certain
circumstances, result in the early termination of the Trust.
Distributions. There is no guarantee that the issuers of the Equity
Securities will declare dividends in the future or that if declared they
will either remain at current levels or increase over time. In addition,
there is no guarantee that U.S. Government will be able to satisfy its
interest payment obligations to the Trust over the life of the Trust.
Legislation/Litigation. From time to time, various legislative
initiatives are proposed in the United States and abroad which may have
a negative impact on certain companies represented in the Trust.
Litigation regarding any of the issuers of the Equity Securities, or the
industries represented in the Trust, may negatively impact the share
prices of these Equity Securities. In addition, litigation may be
initiated on a variety of grounds affecting the Treasury Obligations. We
cannot predict what impact any pending or proposed legislation or
pending or threatened litigation will have on the share prices of the
Securities.
Page 12
Foreign Stocks. Certain of the Securities in the Trust are issued by
foreign companies, which makes the Trust subject to more risks than if
it invested solely in domestic common stocks. These Securities are
directly listed on a U.S. securities exchange. Risks of foreign common
stocks include higher brokerage costs; different accounting standards;
expropriation, nationalization or other adverse political or economic
developments; currency devaluations, blockages or transfer restrictions;
restrictions on foreign investments and exchange of securities;
inadequate financial information; and lack of liquidity of certain
foreign markets.
Equity Securities Descriptions
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We have obtained the foregoing descriptions from sources we deem
reliable. We have not independently verified the provided information
either in terms of accuracy or completeness.
Public Offering
The Public Offering Price.
You may buy Units at the Public Offering Price, the per Unit price of
which is comprised of the following:
- - The aggregate offering side evaluation of the Treasury Obligations;
- - The aggregate underlying value of the Equity Securities, less the
value of the LEAPS(R);
- - The amount of any cash in the Income and Capital Accounts;
- - Net interest accrued but unpaid on the Treasury Obligations after the
First Settlement Date to the date of settlement;
- - Dividends receivable on Equity Securities; and
- - The maximum sales charge (which combines an initial upfront sales
charge, a deferred sales charge and the creation and development fee).
The price you pay for your Units will differ from the amount stated
under "Summary of Essential Information" due to various factors,
including fluctuations in the prices of the Securities and LEAPS(R) and
changes in the value of the Income and/or Capital Accounts.
Although you are not required to pay for your Units until three business
days following your order (the "date of settlement"), you may pay before
then. You will become the owner of Units ("Record Owner") on the date of
settlement if payment has been received. If you pay for your Units
before the date of settlement, we may use your payment during this time
and it may be considered a benefit to us, subject to the limitations of
the Securities Exchange Act of 1934.
The number of Units available may be insufficient to meet demand. This
may be because of the Sponsor's inability to, or decision not to,
purchase and deposit underlying Securities in amounts sufficient to
maintain the proportionate numbers of shares of each Security as
required to create additional Units or because of its inability to sell
LEAPS(R).
Organization Costs. Securities purchased with the portion of the Public
Offering Price intended to be used to reimburse the Sponsor for the
Trust's organization costs (including costs of preparing the
registration statement, the Indenture and other closing documents,
registering Units with the Securities and Exchange Commission ("SEC")
and states, the initial audit of the Trust's statement of net assets,
legal fees and the initial fees and expenses of the Trustee) will be
purchased in the same proportionate relationship as all the Securities
contained in the Trust. Securities will be sold to reimburse the Sponsor
for the Trust's organization costs at the earlier of six months after
the Initial Date of Deposit or the end of the initial offering period (a
significantly shorter time period than the life of the Trust). During
the period ending with the earlier of six months after the Initial Date
of Deposit or the end of the initial offering period, there may be a
decrease in the value of the Securities. To the extent the proceeds from
the sale of these Securities are insufficient to repay the Sponsor for
Trust organization costs, the Trustee will sell additional Securities to
allow the Trust to fully reimburse the Sponsor. In that event, the net
asset value per Unit of the Trust will be reduced by the amount of
additional Securities sold. Although the dollar amount of the
reimbursement due to the Sponsor will remain fixed and will never exceed
the per Unit amount set forth in "Notes to Statements of Net Assets,"
this will result in a greater effective cost per Unit to Unit holders
for the reimbursement to the Sponsor. To the extent actual organization
Page 13
costs are less than the estimated amount, only the actual organization
costs will be deducted from the assets of the Trust. When Securities are
sold to reimburse the Sponsor for organization costs, the Trustee will
sell such Securities, to the extent practicable, which will maintain the
same proportionate relationship among the Securities contained in the
Trust as existed prior to such sale.
Accrued Interest.
Accrued interest represents unpaid interest on a bond from the last day
it paid interest. Interest on the Treasury Obligations generally is paid
semi-annually, although the Trust accrues such interest daily. Because
the Trust always has an amount of interest earned but not yet collected,
the Public Offering Price of Units will have added to it the
proportionate share of accrued interest to the date of settlement. You
will receive the amount, if any, of accrued interest included in your
purchase price on the next distribution date. In addition, if you sell
or redeem your Units you will be entitled to receive your proportionate
share of the accrued interest from the purchaser of your Units.
Minimum Purchase.
The minimum amount you can purchase of the Trust is $1,000 worth of
Units ($500 if you are purchasing Units for your Individual Retirement
Account or any other qualified retirement plan).
Maximum Sales Charge.
The maximum sales charge is comprised of a transactional sales charge
and a creation and development fee. After the initial offering period
the maximum sales charge will be reduced by 0.50%, to reflect the amount
of the previously charged creation and development fee.
Transactional Sales Charge.
The transactional sales charge you will pay has both an initial and a
deferred component.
Initial Sales Charge. The initial sales charge, which you will pay at
the time of purchase, is equal to the difference between the maximum
sales charge (2.95% of the Public Offering Price) and the sum of the
maximum remaining deferred sales charge and creation and development fee
(initially equal to $.195 per Unit). This initial sales charge is
initially equal to approximately 1.00% of the Public Offering Price of a
Unit, but will vary from 1.00% depending on the purchase price of your
Units and as deferred sales charge and creation and development fee
payments are made. When the Public Offering Price exceeds $10.00 per
Unit, the initial sales charge will exceed 1.00% of the Public Offering
Price.
Monthly Deferred Sales Charge. In addition, three monthly deferred sales
charge payments of approximately $.0484 per Unit will be deducted from
the Trust's assets on approximately the twentieth day of each month from
January 20, 2005 through March 18, 2005. If you buy Units at a price of
less than $10.00 per Unit, the dollar amount of the deferred sales
charge will not change, but the deferred sales charge on a percentage
basis will be more than 1.45% of the Public Offering Price.
Creation and Development Fee.
As Sponsor, we will also receive, and the Unit holders will pay, a
creation and development fee. See "Expenses and Charges" for a
description of the services provided for this fee. The creation and
development fee is a charge of $.050 per Unit collected at the end of
the initial offering period. If you buy Units at a price of less than
$10.00 per Unit, the dollar amount of the creation and development fee
will not change, but the creation and development fee on a percentage
basis will be more than 0.50% of the Public Offering Price.
Discounts for Certain Persons.
If you invest at least $50,000 (except if you are purchasing for "Fee
Accounts" as described below), the maximum sales charge is reduced as
described below.
Your maximum Dealer
If you invest sales charge concession
(in thousands):* will be: will be:
_________________________ ____________ __________
$50 but less than $100 2.70% 2.00%
$100 but less than $250 2.45% 1.75%
$250 but less than $500 2.20% 1.50%
$500 but less than $1,000 1.95% 1.25%
$1,000 or more 1.40% 0.75%
* The breakpoints will be adjusted to take into consideration purchase
orders stated in dollars which cannot be completely fulfilled due to the
requirement that only whole Units be issued.
The reduced sales charge for quantity purchases will apply only to
purchases made by the same person on any one day from any one dealer. To
help you reach the above levels, you can combine the Units you purchase
of the Trust with any other same day purchases of other trusts for which
we are Principal Underwriter and are currently in the initial offering
period. In addition, we will also consider Units you purchase in the
name of your spouse or child under 21 years of age to be purchases by
you. The reduced sales charges will also apply to a trustee or other
fiduciary purchasing Units for a single trust estate or single fiduciary
account. You must inform your dealer of any combined purchases before
the sale in order to be eligible for the reduced sales charge.
You may use termination proceeds from other unit investment trusts with
a similar strategy as the Trust or your redemption or termination
proceeds from any unit investment trust we sponsor to purchase Units of
Page 14
the Trust during the initial offering period at the Public Offering
Price less 1.00% (for purchases of $1,000,000 or more, the maximum sales
charge will be limited to 1.40% of the Public Offering Price), but you
will not be eligible to receive the reduced sales charges described in
the above table. Please note that if you purchase Units of the Trust in
this manner using redemption proceeds from trusts which assess the
amount of any remaining deferred sales charge at redemption, you should
be aware that any deferred sales charge remaining on these units will be
deducted from those redemption proceeds.
Investors purchasing Units through registered broker/dealers who charge
periodic fees in lieu of commissions or who charge for financial
planning, investment advisory or asset management services or provide
these or comparable services as part of an investment account where a
comprehensive "wrap fee" or similar charge is imposed ("Fee Accounts")
will not be assessed the transactional sales charge described in this
section on the purchase of Units in the primary market. Certain Fee
Accounts Unit holders may be assessed transaction or other account fees
on the purchase and/or redemption of such Units by their broker/dealer
or other processing organizations for providing certain transaction or
account activities. Fee Accounts Units are not available for purchase in
the secondary market. We reserve the right to limit or deny purchases of
Units not subject to the transactional sales charge by investors whose
frequent trading activity we determine to be detrimental to the Trust.
Employees, officers and directors (and immediate family members) of the
Sponsor, our related companies and dealers may purchase Units at the
Public Offering Price less the applicable dealer concession. Immediate
family members include spouses, children, grandchildren, parents,
grandparents, siblings, mothers-in-law, fathers-in-law, sons-in-law,
daughters-in-law, brothers-in-law and sisters-in-law, and trustees,
custodians or fiduciaries for the benefit of such persons.
The Sponsor and certain dealers may establish a schedule where
employees, officers and directors of such dealers can purchase Units of
the Trust at the Public Offering Price less the established schedule
amount, which is designed to compensate such dealers for activities
relating to the sale of Units (the "Employee Dealer Concession").
You will be charged the deferred sales charge per Unit regardless of any
discounts. However, if you are eligible to receive a discount such that
the maximum sales charge you must pay is less than the applicable
maximum deferred sales charge, including Fee Accounts Units, you will be
credited the difference between your maximum sales charge and the
maximum deferred sales charge at the time you buy your Units. If you
elect to have distributions reinvested into additional Units of the
Trust, in addition to the reinvestment Units you receive you will also
be credited additional Units with a dollar value at the time of
reinvestment sufficient to cover the amount of any remaining deferred
sales charge to be collected on such reinvestment Units. The dollar
value of these additional credited Units (as with all Units) will
fluctuate over time, and may be less on the dates deferred sales charges
are collected than their value at the time they were issued.
The Value of the Securities.
The Evaluator will determine the aggregate underlying value of the
Securities in the Trust as of the Evaluation Time on each business day
and will adjust the Public Offering Price of the Units according to this
valuation. This Public Offering Price will be effective for all orders
received before the Evaluation Time on each such day. If we or the
Trustee receive orders for purchases, sales or redemptions after that
time, or on a day which is not a business day, they will be held until
the next determination of price. The term "business day" as used in this
prospectus will exclude Saturdays, Sundays and certain national holidays
on which the NYSE is closed.
The aggregate underlying value of the Treasury Obligations will be
determined on the basis of current offering prices.
The aggregate underlying value of the Equity Securities in the Trust,
and their corresponding LEAPS(R), will be determined as follows: if the
Equity Securities are listed on a securities exchange or The Nasdaq
Stock Market, or a U.S. options exchange (in the case of LEAPS(R)),
their value is generally based on the closing sale prices on that
exchange or system (unless it is determined that these prices are not
appropriate as a basis for valuation). For purposes of valuing
Securities traded on The Nasdaq Stock Market, closing sale price shall
mean the Nasdaq Official Closing Sale Price ("NOCP") as determined by
Nasdaq. However, if there is no closing sale price on that exchange or
system, they are valued based on the closing ask prices in the case of
Equity Securities or bid prices in the case of LEAPS(R). If the Equity
Securities or LEAPS(R) are not so listed, or, if so listed and the
principal market for them is other than on that exchange or system,
their value will generally be based on the current ask prices in the
case of Equity Securities or bid prices in the case of LEAPS(R) on the
over-the-counter market (unless it is determined that these prices are
not appropriate as a basis for valuation). In the event the Evaluator
determines that the last quoted closing price on a U.S. options exchange
does not reflect the market value of the LEAPS(R), the Evaluator may
determine the fair value by considering various factors including the
Page 15
range of prices of transactions effected at the Evaluation Time. If
current ask prices are unavailable, the valuation of the Equity
Securities is generally determined:
a) On the basis of current ask prices for comparable equity securities;
b) By appraising the value of the Equity Securities on the ask side of
the market; or
c) By any combination of the above.
The value of the Equity Securities and the value of the LEAPS(R) have an
interrelated effect on the value of a Unit. The value of the LEAPS(R)
will be affected by the value of the Equity Securities, the volatility
of the Equity Securities, the remaining time to the expiration of the
LEAPS(R), the level of interest rates and the dividend yields on the
Equity Securities.
After the initial offering period is over, the aggregate underlying
value of the Securities will be determined as set forth above, except
that bid prices are used instead of ask or offer prices when necessary
for purposes of valuing the Equity Securities and Treasury Obligations
and ask prices are used instead of bid prices when necessary for
purposes of valuing the LEAPS(R).
Distribution of Units
We intend to qualify Units of the Trust for sale in a number of states.
All Units will be sold at the then current Public Offering Price.
Dealer Concessions.
Dealers and other selling agents can purchase Units at prices which
reflect a concession or agency commission of 2.25% of the Public
Offering Price per Unit, subject to the reduced concession applicable to
volume purchases as set forth in "Public Offering-Discounts for Certain
Persons." However, for Units subject to a transactional sales charge
which are purchased using redemption or termination proceeds or on
purchases by Rollover Unit holders, this amount will be reduced to 1.25%
of the sales price of these Units (0.75% for purchases of $1,000,000 or
more).
Eligible dealer firms and other selling agents who sell Units of the
Trust during the initial offering period in the dollar amounts shown
below will be entitled to the following additional sales concessions as
a percentage of the Public Offering Price:
Total Sales Additional
(in millions): Concession:
___________________ ___________
$1 but less than $3 0.05%
$3 but less than $5 0.10%
$5 or more 0.15%
Dealers and other selling agents will not receive a concession on the
sale of Units which are not subject to a transactional sales charge, but
such Units will be included in determining whether the above volume
sales levels are met. Eligible dealer firms and other selling agents
include clearing firms that place orders with First Trust and provide
First Trust with information with respect to the representatives who
initiated such transactions. Eligible dealer firms and other selling
agents will not include firms that solely provide clearing services to
other broker/dealer firms or firms who place orders through clearing
firms that are eligible dealers. Prudential Investment Management
Services LLC ("PIMS") will receive a concession on Units purchased using
termination, redemption or exchange proceeds from trusts formerly
sponsored by PIMS equal to $2.00 per $1,000 invested. Dealers and other
selling agents who, during any consecutive 12-month period, sell at
least $100 million, $250 million or $500 million worth of primary market
units of unit investment trusts sponsored by us will receive a
concession of $1,000, $2,500 or $5,000, respectively, in the month
following the achievement of this level. We reserve the right to change
the amount of concessions or agency commissions from time to time.
Certain commercial banks may be making Units of the Trusts available to
their customers on an agency basis. A portion of the transactional sales
charge paid by these customers is kept by or given to the banks in the
amounts shown above.
Award Programs.
From time to time we may sponsor programs which provide awards to a
dealer's registered representatives who have sold a minimum number of
Units during a specified time period. We may also pay fees to qualifying
dealers for services or activities which are meant to result in sales of
Units of the Trust. In addition, we will pay to dealers who sponsor
sales contests or recognition programs that conform to our criteria, or
participate in our sales programs, amounts equal to no more than the
total applicable transactional sales charge on Units sold by such
persons during such programs. We make these payments out of our own
assets and not out of Trust assets. These programs will not change the
price you pay for your Units.
Page 16
Advertising and Investment Comparisons.
Advertising materials regarding the Trust may discuss several topics,
including: developing a long-term financial plan; working with your
financial professional; the nature and risks of various investment
strategies and unit investment trusts that could help you reach your
financial goals; the importance of discipline; how the Trust operates;
how securities are selected; various unit investment trust features such
as convenience and costs; and options available for certain types of
unit investment trusts. These materials may include descriptions of the
securities represented in the Trust, research analysis of why they were
selected and information relating to the qualifications of the persons
or entities providing the research analysis. In addition, they may
include research opinions on the economy and securities included and a
list of investment products generally appropriate for pursuing those
recommendations.
From time to time we may compare the estimated returns of the Trust
(which may show performance net of the expenses and charges the Trust
would have incurred) and returns over specified periods of other similar
trusts we sponsor in our advertising and sales materials, with (1)
returns on other taxable investments such as the common stocks
comprising various market indexes, corporate or U.S. Government bonds,
bank CDs and money market accounts or funds, (2) performance data from
Morningstar Publications, Inc. or (3) information from publications such
as Money, The New York Times, U.S. News and World Report, BusinessWeek,
Forbes or Fortune. The investment characteristics of the Trust differ
from other comparative investments. You should not assume that these
performance comparisons will be representative of the Trust's future
performance. We may also, from time to time, use advertising which
classifies trusts or portfolio securities according to capitalization
and/or investment style.
The Sponsor's Profits
We will receive a gross sales commission equal to the maximum
transactional sales charge per Unit less any reduction as stated in
"Public Offering." We will also receive the amount of any collected
creation and development fee. Also, any difference between our cost to
purchase the Securities and the price at which we sell them to the Trust
is considered a profit or loss. (See Note 3 of "Notes to Schedule of
Investments.") During the initial offering period, dealers and others
may also realize profits or sustain losses as a result of fluctuations
after the Date of Deposit in the Public Offering Price they receive when
they sell the Units.
In maintaining a market for Units, any difference between the price at
which we purchase Units and the price at which we sell or redeem them
will be a profit or loss to us.
The Secondary Market
Although not obligated, we intend to maintain a market for the Units
after the initial offering period and continuously offer to purchase
Units at prices based on the Redemption Price per Unit. The Sponsor does
not in any way guarantee the enforceability, marketability or price of
any Securities in the Trust or of the Units.
We will pay all expenses to maintain a secondary market, except the
Evaluator fees and Trustee costs to transfer and record the ownership of
Units. We may discontinue purchases of Units at any time. IF YOU WISH TO
DISPOSE OF YOUR UNITS, YOU SHOULD ASK US FOR THE CURRENT MARKET PRICES
BEFORE MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE. If you sell or
redeem your Units before you have paid the total deferred sales charge
on your Units, you will have to pay the remainder at that time.
How We Purchase Units
The Trustee will notify us of any tender of Units for redemption. If our
bid at that time is equal to or greater than the Redemption Price per
Unit, we may purchase the Units. You will receive your proceeds from the
sale no later than if they were redeemed by the Trustee. We may tender
Units we hold to the Trustee for redemption as any other Units. If we
elect not to purchase Units, the Trustee may sell tendered Units in the
over-the-counter market, if any. However, the amount you will receive is
the same as you would have received on redemption of the Units.
Expenses and Charges
The estimated annual expenses of the Trust are listed under "Fee Table."
If actual expenses of the Trust exceed the estimate, that Trust will
bear the excess. The Trustee will pay operating expenses of the Trust
from the Income Account if funds are available, and then from the
Capital Account. The Income and Capital Accounts are noninterest-bearing
to Unit holders, so the Trustee may earn interest on these funds, thus
benefiting from their use.
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First Trust Advisors L.P., an affiliate of ours, acts as Portfolio
Supervisor and Evaluator and will be compensated for providing portfolio
supervisory services and evaluation services as well as bookkeeping and
other administrative services to the Trust. In providing portfolio
supervisory services, the Portfolio Supervisor may purchase research
services from a number of sources, which may include underwriters or
dealers of the Trust. As Sponsor, we will receive brokerage fees when
the Trust uses us (or an affiliate of ours) as agent in buying or
selling Securities. Legal and regulatory filing fees and expenses
associated with updating the Trust's registration statement yearly are
also chargeable to the Trust.
The fees payable to First Trust Advisors L.P. and the Trustee are based
on the largest aggregate number of Units of the Trust outstanding at any
time during the calendar year, except during the initial offering
period, in which case these fees are calculated based on the largest
number of Units outstanding during the period for which compensation is
paid. These fees may be adjusted for inflation without Unit holders'
approval, but in no case will the annual fees paid to us or our
affiliates for providing services to all unit investment trusts be more
than the actual cost of providing such services in such year.
As Sponsor, we will receive a fee from the Trust for creating and
developing the Trust, including determining the Trust's objectives,
policies, composition and size, selecting service providers and
information services and for providing other similar administrative and
ministerial functions. The "creation and development fee" is a charge of
$.050 per Unit outstanding at the end of the initial offering period.
The Trustee will deduct this amount from the Trust's assets as of the
close of the initial offering period. We do not use this fee to pay
distribution expenses or as compensation for sales efforts. This fee
will not be deducted from your proceeds if you sell or redeem your Units
before the end of the initial offering period.
In addition to the Trust's operating expenses and those fees described
above, the Trust may also incur the following charges:
- - All legal expenses of the Trustee according to its responsibilities
under the Indenture;
- - The expenses and costs incurred by the Trustee to protect the Trust
and your rights and interests;
- - Fees for any extraordinary services the Trustee performed under the
Indenture;
- - Payment for any loss, liability or expense the Trustee incurred
without negligence, bad faith or willful misconduct on its part, in
connection with its acceptance or administration of the Trust;
- - Payment for any loss, liability or expenses we incurred without
negligence, bad faith or willful misconduct in acting as Depositor of
the Trust; and/or
- - All taxes and other government charges imposed upon the Securities or
any part of the Trust.
The above expenses and the Trustee's annual fee are secured by a lien on
the Trust. We cannot guarantee that the distributions received by the
Trust will be sufficient to meet any or all expenses of the Trust. If
there is not enough cash in the Income or Capital Account of the Trust,
the Trustee has the power to sell Securities in the Trust to make cash
available to pay these charges which may result in capital gains or
losses to you. See "Tax Status."
Tax Status
This section summarizes some of the main U.S. federal income tax
consequences of owning Units of the Trust. This section is current as of
the date of this prospectus. Tax laws and interpretations change
frequently, and these summaries do not describe all of the tax
consequences to all taxpayers. For example, these summaries generally do
not describe your situation if you are a corporation, a non-U.S. person,
a broker/dealer, or other investor with special circumstances. In
addition, this section does not describe your state or foreign taxes. As
with any investment, you should consult your own tax professional about
your particular consequences. In addition, the Internal Revenue Service
issued new withholding and reporting regulations effective January 1,
2001. Foreign investors should consult their own tax advisors regarding
the tax consequences of these regulations.
Assets of the Trust.
The Trust will hold one or more of the following: (i) U.S. Treasury
bonds (the "Treasury Obligations") and (ii) stock in domestic and
foreign corporations (the "Equity Securities"). All of the assets held
by the Trust constitute the "Trust Assets." For purposes of this federal
tax discussion, it is assumed that the Equity Securities constitute
equity for federal income tax purposes. Each Equity Security held in the
Trust is subject to a contractual right (the "Call Option") which gives
the holder of the Call Option (the "Right Holder") the right to buy the
Stock from the Trustee at a predetermined price (the "Strike Price") on
any business day prior to the expiration of the Call Option. Upon
creation of the Trust, the Sponsor received a premium in exchange for
writing such Call Option (the "Call Premium").
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Trust Status.
The Trust will not be taxed as a corporation for federal income tax
purposes. As a Unit owner, you will be treated as the owner of a pro
rata portion of the Trust Assets, and as such you will be considered to
have received a pro rata share of income (e.g., dividends, interest, and
capital gains, if any) from the Trust Assets when such income would be
considered to be received by you if you directly owned the Trust Assets.
This is true even if you elect to have your distributions automatically
reinvested into additional Units. In addition, the income from the Trust
Assets which you must take into account for federal income tax purposes
is not reduced by amounts used to pay Trust expenses (including the
deferred sales charge, if any).
Your Tax Basis and Income or Loss upon Disposition.
If the Trust disposes of Trust Assets, you will generally recognize gain
or loss. If you dispose of your Units or redeem your Units for cash, you
will also generally recognize gain or loss. To determine the amount of
this gain or loss, you must subtract your tax basis in the related Trust
Assets from your share of the total amount received in the transaction,
subject to the rules discussed under "Call Option" below. You can
generally determine your initial tax basis in each Trust Asset by
apportioning the cost of your Units, generally including sales charges
plus your pro rata portion of the Call Premium (or, if you purchase your
Unit after the Trust's creation, a pro rata portion of the fair market
value of the Call Option), among each Trust Asset ratably according to
their value on the date you purchase your Units. In certain
circumstances, however, you may have to adjust your tax basis after you
purchase your Units (for example, in the case of accrual of original
issue discount, as discussed below, or certain dividends that exceed a
corporation's accumulated earnings and profits).
Call Option.
As a Unit owner, you will be treated as having assumed the obligations
under the Call Option with respect to the portion of the Call Option
that relates to your pro rata portion of the Equity Securities. As
consideration for this assumption, you will be deemed to have received a
pro rata portion of the Call Premium (or, if you purchase your Unit
after the Trust's creation, a pro rata portion of the fair market value
of the Call Option). However, your pro rata portion of the Call Premium
or Call Option value is not currently taxable to you. Rather, the tax
treatment of your pro rata portion of the Call Premium or Call Option
value will depend upon whether the Call Option expires, is exercised or
is deemed to be sold.
If the Call Option expires without being exercised, your pro rata
portion of the Call Premium or Call Option value will be taxable to you
as short term capital gain on the expiration date of the Call Option.
Alternatively, if the Call Option is exercised such that your pro rata
portion of the Equity Securities are sold to the Option Holder, your pro
rata portion of the Call Premium or Call Option value will be added to
the amount you realize on the sale of the Equity Securities for purposes
of determining your gain or loss. If you sell your Unit before the Call
Option is exercised, you will generally recognize a gain or loss on your
pro rata portion of the Call Option equal to your pro rata portion of
the Call Premium or Call Option value less the fair market value on the
sale date of your pro rata portion of the Call Option. Such gain or loss
will be taxable to you as short term capital gain or loss. In addition,
if you sell your Unit, you will recognize gain or loss on the deemed
sale of the Equity Securities subject to the Call Option equal to the
fair market value of your pro rata portion of the Equity Securities
deemed to be sold less your tax basis in such pro rata portion of the
Equity Securities deemed to be sold.
Taxation of Capital Gains and Dividends.
If you are an individual, the maximum marginal federal tax rate for net
capital gain is generally 15% (generally 5% for certain taxpayers in the
10% and 15% tax brackets). These new capital gains rates are generally
effective for taxable years beginning before January 1, 2009.
Net capital gain equals net long-term capital gain minus net short-term
capital loss for the taxable year. Capital gain or loss is long-term if
the holding period for the asset is more than one year and is short-term
if the holding period for the asset is one year or less. You must
exclude the date you purchase your Units to determine your holding
period. The tax rates for capital gains realized from assets held for
one year or less are generally the same as for ordinary income. The
Internal Revenue Code, however, treats certain capital gains as ordinary
income in special situations.
Under certain circumstances, your pro rata portion of the obligations
under the Call Option could result in your being treated as having a
"straddle" for federal income tax purposes. This could result in you
being required to defer losses that you incur in connection with the
disposition of certain property associated with that straddle and the
disallowance of certain interest and other expense deductions.
In addition, it should be noted that certain dividends received by the
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Trust may qualify to be taxed at the same new rates that apply to net
capital gain (as discussed above), provided certain holding requirements
are satisfied. Under certain circumstances, the existence of the Call
Option may affect whether this holding period requirement is satisfied.
These special rules relating to the taxation of dividends at capital
gains rates generally apply to taxable years beginning before January 1,
2009.
Discount, Accrued Interest and Premium.
Some Treasury Obligations may have been sold with original issue
discount. This generally means that the Treasury Obligations were
originally issued at a price below their face (or par) value. Original
issue discount accrues on a daily basis and generally is treated as
interest income for federal income tax purposes. Your basis of each
Treasury Obligation which was issued with original issue discount must
be increased as original issue discount accrues.
Some Treasury Obligations may have been purchased by you or the Trust at
a market discount. Market discount is generally the excess of the stated
redemption price at maturity for the Treasury Obligation over the
purchase price of the Treasury Obligation (not including unaccrued
original issue discount). Market discount can arise based on the price
the Trust pays for a Treasury Obligation or on the price you pay for
your Units. Market discount is taxed as ordinary income. You will
recognize this income when the Trust receives principal payments on the
Treasury Obligation, when the Treasury Obligation is disposed of or
redeemed, or when you sell or redeem your Units. Alternatively, you may
elect to include market discount in taxable income as it accrues.
Whether or not you make this election will affect how you calculate your
basis and the timing of certain interest expense deductions. "Stripped"
U.S. Treasury obligations are subject to the original issue discount
rules, rather than being treated as having market discount.
Alternatively, some Treasury Obligations may have been purchased by you
or the Trust at a premium. Generally, if the tax basis of your pro rata
portion of any Treasury Obligation exceeds the amount payable at
maturity, such excess is considered premium. You may elect to amortize
bond premium. If you make this election, you may reduce your interest
income received on the Treasury Obligation by the amount of the premium
that is amortized and your tax basis will be reduced.
If the price of your Units includes accrued interest on a Treasury
Obligation, you must include the accrued interest in your tax basis in
that Treasury Obligation. When the Trust receives this accrued interest,
you must treat it as a return of capital and reduce your tax basis in
the Treasury Obligation.
This discussion provides only the general rules with respect to the tax
treatment of original issue discount, market discount and premium. The
rules, however, are complex and special rules apply in certain
circumstances. For example, the accrual of market discount or premium
may differ from the discussion set forth above in the case of Treasury
Obligations that were issued with original issue discount.
In-Kind Distributions.
Under certain circumstances, as described in this prospectus, you may
request a distribution of Trust Assets (an "In-Kind Distribution") at
the Trust's termination. By electing to receive an In-Kind Distribution,
you will receive Trust Assets plus, possibly, cash.
You will not recognize gain or loss if you only receive Trust Assets in
exchange for your pro rata portion of the Trust Assets held by the
Trust. However, if you also receive cash in exchange for a Trust Asset
or a fractional share of a Trust Asset, you will generally recognize
gain or loss based on the difference between the amount of cash you
receive and your tax basis in such Trust Asset or fractional share of
the Trust Asset.
Limitations on the Deductibility of Trust Expenses.
Generally, for federal income tax purposes, you must take into account
your full pro rata share of the Trust's income, even if some of that
income is used to pay Trust expenses. You may deduct your pro rata share
of each expense paid by the Trust to the same extent as if you directly
paid the expense. You may, however, be required to treat some or all of
the expenses of the Trust as miscellaneous itemized deductions.
Individuals may only deduct certain miscellaneous itemized deductions to
the extent they exceed 2% of adjusted gross income.
State and Local Taxes.
Under the existing income tax laws of the State and City of New York,
the Trust will not be taxed as a corporation, and the income of the
Trust will be treated as the income of the Unit holders in the same
manner as for federal income tax purposes.
Retirement Plans
You may purchase Units of the Trust for:
- - Individual Retirement Accounts
- - Keogh Plans
- - Pension funds, and
- - Other tax-deferred retirement plans.
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Generally, the federal income tax on capital gains and income received
in each of the above plans is deferred until you receive distributions.
These distributions are generally treated as ordinary income but may, in
some cases, be eligible for special averaging or tax-deferred rollover
treatment. Before participating in a plan like this, you should review
the tax laws regarding these plans and consult your attorney or tax
advisor. Brokerage firms and other financial institutions offer these
plans with varying fees and charges.
Rights of Unit Holders
Unit Ownership.
The Trustee will treat as Record Owner of Units persons registered as
such on its books. It is your responsibility to notify the Trustee when
you become Record Owner, but normally your broker/dealer provides this
notice. You may elect to hold your Units in either certificated or
uncertificated form. All Fee Accounts Units, however, will be held in
uncertificated form.
Certificated Units. When you purchase your Units, you can request that
they be evidenced by certificates, which will be delivered shortly after
your order. 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. You can transfer or redeem your
certificated Units by endorsing and surrendering the certificate to the
Trustee, along with a written instrument of transfer. You must sign your
name exactly as it appears on the face of the certificate with your
signature guaranteed by an eligible institution. In certain cases the
Trustee may require additional documentation before they will transfer
or redeem your Units.
You may be required to pay a nominal fee to the Trustee for each
certificate reissued or transferred, and to pay any government charge
that may be imposed for each transfer or exchange. If a certificate gets
lost, stolen or destroyed, you may be required to furnish indemnity to
the Trustee to receive replacement certificates. You must surrender
mutilated certificates to the Trustee for replacement.
Uncertificated Units. You may also choose to hold your Units in
uncertificated form. If you choose this option, the Trustee will
establish an account for you and credit your account with the number of
Units you purchase. Within two business days of the issuance or transfer
of Units held in uncertificated form, the Trustee will send you:
- - A written initial transaction statement containing a description of
the Trust;
- - The number of Units issued or transferred;
- - Your name, address and Taxpayer Identification Number ("TIN");
- - A notation of any liens or restrictions of the issuer and any adverse
claims; and
- - The date the transfer was registered.
Uncertificated Units may be transferred the same way as certificated
Units, except that no certificate needs to be presented to the Trustee.
Also, no certificate will be issued when the transfer takes place unless
you request it. You may at any time request that the Trustee issue
certificates for your Units.
Unit Holder Reports.
In connection with each distribution, the Trustee will provide you with
a statement detailing the per Unit amount of income (if any)
distributed. After the end of each calendar year, the Trustee will
provide you:
- - A summary of transactions in the Trust for the year;
- - A list of any Securities sold during the year and the Securities held
at the end of that year by the Trust;
- - The Redemption Price per Unit, computed on the 31st day of December of
such year (or the last business day before); and
- - Amounts of income and capital distributed during the year.
You may request from the Trustee copies of the evaluations of the
Securities as prepared by the Evaluator to enable you to comply with
federal and state tax reporting requirements.
Income and Capital Distributions
You will begin receiving distributions on your Units only after you
become a Record Owner. The Trustee will credit any dividends or interest
received on the Trust's Securities to the Income Account. All other
receipts, such as return of capital, are credited to the Capital Account.
The Trustee will distribute any net income in the Income Account on or
near the Income Distribution Dates to Unit holders of record on the
preceding Income Distribution Record Date. See "Summary of Essential
Information." No income distribution will be paid if accrued expenses of
the Trust exceed amounts in the Income Account on the Income
Distribution Dates. Distribution amounts will vary with changes in the
Trust's fees and expenses, in dividends and interest received and with
the sale of Securities. The Trustee will distribute amounts in the
Capital Account, net of amounts designated to meet redemptions, pay the
deferred sales charge or pay expenses, on the last day of each month to
Unit holders of record on the fifteenth day of each month provided the
Page 21
amount equals at least $1.00 per 100 Units. If the Trustee does not have
your TIN it is required to withhold a certain percentage of your
distribution and deliver such amount to the Internal Revenue Service
("IRS"). You may recover this amount by giving your TIN to the Trustee,
or when you file a tax return. However, you should check your statements
to make sure the Trustee has your TIN to avoid this "back-up withholding."
We anticipate that there will be enough money in the Capital Account to
pay the deferred sales charge. If not, the Trustee may sell Securities
to meet the shortfall.
Within a reasonable time after the Trust is terminated you will receive
a pro rata share of the money from the sale of the Securities. However,
if you are eligible, you may elect to receive an In-Kind Distribution as
described under "Amending or Terminating the Indenture." You will
receive a pro rata share of any other assets remaining in the Trust,
after deducting any unpaid expenses.
The Trustee may establish reserves (the "Reserve Account") within the
Trust to cover anticipated state and local taxes and any governmental
charges to be paid out of the Trust.
Distribution Reinvestment Option. You may elect to have each
distribution of income and/or capital reinvested into additional Units
of the Trust by notifying the Trustee at least 10 days before any Record
Date. Each later distribution of income and/or capital on your Units
will be reinvested by the Trustee into additional Units of the Trust.
There is no transactional sales charge on Units acquired through the
Distribution Reinvestment Option, as discussed under "Public Offering."
This option may not be available in all states and may be terminated by
the Sponsor at any time at its discretion. PLEASE NOTE THAT EVEN IF YOU
REINVEST DISTRIBUTIONS, THEY ARE STILL CONSIDERED DISTRIBUTIONS FOR
INCOME TAX PURPOSES.
Redeeming Your Units
You may redeem all or a portion of your Units at any time by sending the
certificates representing the Units you want to redeem to the Trustee at
its unit investment trust office. If your Units are uncertificated, you
need only deliver a request for redemption to the Trustee. In either
case, the certificates or the redemption request must be properly
endorsed with proper instruments of transfer and signature guarantees as
explained in "Rights of Unit Holders-Unit Ownership" (or by providing
satisfactory indemnity if the certificates were lost, stolen, or
destroyed). No redemption fee will be charged, but you are responsible
for any governmental charges that apply. Certain broker/dealers may
charge a transaction fee for processing redemption requests. Units
redeemed directly through the Trustee are not subject to such
transaction fees. Three business days after the day you tender your
Units (the "Date of Tender") you will receive cash in an amount for each
Unit equal to the Redemption Price per Unit calculated at the Evaluation
Time on the Date of Tender. There is no In-Kind Distribution option at
redemption.
The Date of Tender is considered to be the date on which the Trustee
receives your certificates or redemption request (if such day is a day
the NYSE is open for trading). However, if your certificates or
redemption request are received after 4:00 p.m. Eastern time (or after
any earlier closing time on a day on which the NYSE is scheduled in
advance to close at such earlier time), the Date of Tender is the next
day the NYSE is open for trading.
Any amounts paid on redemption representing income will be withdrawn
from the Income Account if funds are available for that purpose, or from
the Capital Account. All other amounts paid on redemption will be taken
from the Capital Account. The IRS will require the Trustee to withhold a
portion of your redemption proceeds if the Trustee does not have your
TIN, as generally discussed under "Income and Capital Distributions."
The Trustee may sell Securities to make funds available for redemption.
The Trustee will either sell Securities to a purchaser subject to the
LEAPS(R) or purchase the LEAPS(R) which will cancel it and then sell the
underlying Securities. Because of the minimum amounts in which the
LEAPS(R) must be traded, the proceeds of Securities sold subject to
their LEAPS(R) may exceed the amount required at the time to redeem
Units. These excess proceeds will be distributed to Unit holders. If
Securities are sold, the size and diversification of the Trust will be
reduced. These sales may result in lower prices than if the Securities
were sold at a different time.
Your right to redeem Units (and therefore, your right to receive
payment) may be delayed:
- - If the NYSE is closed (other than customary weekend and holiday closings);
- - If the SEC determines that trading on the NYSE is restricted or that an
emergency exists making sale or evaluation of the Securities not
reasonably practical; or
- - For any other period permitted by SEC order.
The Trustee is not liable to any person for any loss or damage which may
result from such a suspension or postponement.
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The Redemption Price.
The Redemption Price per Unit is determined by the Trustee by:
adding
1. cash in the Income and Capital Accounts not designated to purchase
Securities;
2. the aggregate underlying value of the Securities held in the Trust;
3. dividends receivable on the Equity Securities trading ex-dividend as
of the date of computation; and
4. accrued interest on the Treasury Obligations; and
deducting
1. the value of the LEAPS(R);
2. any applicable taxes or governmental charges that need to be paid out
of the Trust;
3. any amounts owed to the Trustee for its advances;
4. estimated accrued expenses of the Trust, if any;
5. cash held for distribution to Unit holders of record of the Trust as
of the business day before the evaluation being made; and
6. liquidation costs for foreign Securities, if any; and
7. other liabilities incurred by the Trust; and
dividing
1. the result by the number of outstanding Units of the Trust.
Any remaining deferred sales charge on the Units when you redeem them
will be deducted from your redemption proceeds. In addition, until the
earlier of six months after the Initial Date of Deposit or the end of
the initial offering period, the Redemption Price per Unit will include
estimated organization costs as set forth under "Fee Table."
Removing Securities from the Trust
The portfolio of the Trust is not managed. However, we may, but are not
required to, direct the Trustee to dispose of an Equity Security (and
its related LEAPS(R)) in certain limited circumstances, including
situations in which:
- - The issuer of an Equity Security defaults in the payment of a declared
dividend;
- - Any action or proceeding prevents the payment of dividends;
- - There is any legal question or impediment affecting an Equity Security;
- - The issuer of an Equity Security has breached a covenant which would
affect the payment of dividends, the issuer's credit standing, or
otherwise damage the sound investment character of such Equity Security;
- - The issuer has defaulted on the payment on any other of its
outstanding obligations;
- - There has been a public tender offer made for an Equity Security or a
merger or acquisition is announced affecting an Equity Security, and
that in our opinion the sale or tender of the Equity Security is in the
best interest of Unit holders; or
- - The price of the Equity Security has declined to such an extent, or
such other credit factors exist, that in our opinion keeping the Equity
Security would be harmful to the Trust.
Except in the limited instance in which the Trust acquires Replacement
Securities, as described in "The FT Series," the Trust may not acquire
any securities or other property other than the Securities. The Trustee,
on behalf of the Trust, will reject any offer for new or exchanged
securities or property in exchange for a Security, such as those
acquired in a merger or other transaction. If such exchanged securities
or property are nevertheless acquired by the Trust, at our instruction,
they will either be sold or held in the Trust. In making the
determination as to whether to sell or hold the exchanged securities or
property we may get advice from the Portfolio Supervisor. Any proceeds
received from the sale of Securities, exchanged securities or property
will be credited to the Capital Account for distribution to Unit holders
or to meet redemption requests. The Trustee may retain and pay us or an
affiliate of ours to act as agent for the Trust to facilitate selling
Securities, exchanged securities or property from the Trust. If we or
our affiliate act in this capacity, we will be held subject to the
restrictions under the Investment Company Act of 1940, as amended.
The Trustee may sell Securities designated by us; or, absent our
direction, at its own discretion, in order to meet redemption requests
or pay expenses. In designating Securities to be sold, we will try to
maintain the proportionate relationship among the Securities. If this is
not possible, the composition and diversification of the Trust may be
changed. To get the best price for the Trust, and to facilitate the
purchase and sale of LEAPS(R), we generally will specify minimum amounts
(typically 100 shares) in which blocks of Securities are to be sold. We
may consider sales of units of unit investment trusts we sponsor when we
make recommendations to the Trustee as to which broker/dealers they
select to execute the Trust's portfolio transactions, or when acting as
agent for the Trust in acquiring or selling Securities on behalf of the
Trust.
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Amending or Terminating the Indenture
Amendments. The Indenture may be amended by us and the Trustee without
your consent:
- - To cure ambiguities;
- - To correct or supplement any defective or inconsistent provision;
- - To make any amendment required by any governmental agency; or
- - To make other changes determined not to be materially adverse to your
best interests (as determined by us and the Trustee).
Termination. As provided by the Indenture, the Trust will terminate on
the Mandatory Termination Date as stated in the "Summary of Essential
Information." The Trust may be terminated earlier:
- - Upon the consent of 100% of the Unit holders;
- - If the value of the Securities owned by the Trust as shown by any
evaluation is less than 20% of the aggregate principal amount of
Securities deposited in the Trust during the initial offering period
(the "Discretionary Liquidation Amount"); or
- - In the event that Units of the Trust not yet sold aggregating more
than 60% of the Units of such Trust are tendered for redemption by
underwriters, including the Sponsor.
Prior to termination, the Trustee will send written notice to all Unit
holders which will specify how you should tender your certificates, if
any, to the Trustee. If the Trust is terminated due to this last reason,
we will refund your entire transactional sales charge; however,
termination of the Trust before the Mandatory Termination Date for any
other stated reason will result in all remaining unpaid deferred sales
charges on your Units being deducted from your termination proceeds.
Unless terminated earlier, the Trustee will begin to sell Equity
Securities in connection with the termination of the Trust during the
period beginning nine business days prior to, and no later than, the
Mandatory Termination Date. We will determine the manner and timing of
the sale of Equity Securities. Because the Trustee must sell the Equity
Securities within a relatively short period of time, the sale of the
Equity Securities as part of the termination process may result in a
lower sales price than might otherwise be realized if such sale were not
required at this time.
The scheduled Mandatory Termination Date will be subsequent to the
expiration date of the LEAPS(R). If the LEAPS(R) are exercised prior to
their expiration, the Trust will receive cash; if the LEAPS(R) are not
exercised, the Trust will continue to hold the Equity Securities in the
Portfolio. If the Trust is terminated early, the Trustee will either (a)
sell the Securities subject to the LEAPS(R); or (b) enter into a closing
purchase transaction as a result of which the LEAPS(R) will be canceled
and then sell the underlying Securities.
At termination, if you own at least 2,500 Units of the Trust, or such
other amount as required by your broker/dealer, the Trustee will send
the registered account holders a form at least 30 days prior to the
Mandatory Termination Date which will enable you to receive an In-Kind
Distribution (reduced by customary transfer and registration charges and
subject to any additional restrictions imposed on Fee Accounts by "wrap
fee" plans) rather than the typical cash distribution. See "Tax Status"
for additional information. If you elect the In-Kind Distribution option
you will receive your pro rata number of whole shares of the Equity
Securities that make up the portfolio, and cash from the Capital Account
equal to the value of the cash received from the Equity Securities sold
to satisfy the LEAPS(R), the Treasury Obligations and fractional shares
of Equity Securities to which you are entitled. To the extent Securities
are sold to satisfy exercised LEAPS(R) you will not receive an In-Kind
Distribution of these Securities. You must notify the Trustee at least
ten business days prior to the Mandatory Termination Date if you elect
this In-Kind Distribution option. If you do not elect to participate in
the In-Kind Distribution option, you will receive a cash distribution
from the sale of the remaining Securities, along with your interest in
the Income and Capital Accounts, within a reasonable time after the
Trust is terminated. Regardless of the distribution involved, the
Trustee will deduct from the Trust any accrued costs, expenses, advances
or indemnities provided for by the Indenture, including estimated
compensation of the Trustee and costs of liquidation and any amounts
required as a reserve to pay any taxes or other governmental charges.
Information on
the Sponsor, Trustee and Evaluator
The Sponsor.
We, First Trust Portfolios L.P., specialize in the underwriting, trading
and wholesale distribution of unit investment trusts under the "First
Trust" brand name and other securities. An Illinois limited partnership
formed in 1991, we act as Sponsor for successive series of:
Page 24
- - The First Trust Combined Series
- - FT Series (formerly known as The First Trust Special Situations Trust)
- - The First Trust Insured Corporate Trust
- - The First Trust of Insured Municipal Bonds
- - The First Trust GNMA
First Trust introduced the first insured unit investment trust in 1974.
To date we have deposited more than $48 billion in First Trust unit
investment trusts. Our employees include a team of professionals with
many years of experience in the unit investment trust industry.
We are a member of the National Association of Securities Dealers, Inc.
and Securities Investor Protection Corporation. Our principal offices
are at 1001 Warrenville Road, Lisle, Illinois 60532; telephone number
(630) 241-4141. As of December 31, 2003, the total consolidated
partners' capital of First Trust Portfolios L.P. and subsidiary was
$20,540,034 (audited).
This information refers only to us and not to the Trust or to any series
of the Trust or to any other dealer. We are including this information
only to inform you of our financial responsibility and our ability to
carry out our contractual obligations. We will provide more detailed
financial information on request.
Code of Ethics. The Sponsor and the Trust have adopted a code of ethics
requiring the Sponsor's employees who have access to information on
Trust transactions to report personal securities transactions. The
purpose of the code is to avoid potential conflicts of interest and to
prevent fraud, deception or misconduct with respect to the Trust.
The Trustee.
The Trustee is The Bank of New York, a trust company organized under the
laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286,
telephone (800) 813-3074. If you have questions regarding your account
or your Trust, please contact the Trustee at its unit investment trust
division offices or your financial adviser. The Sponsor does not have
access to individual account information. The Bank of New York is
subject to supervision and examination by the Superintendent of Banks of
the State of New York and the Board of Governors of the Federal Reserve
System, and its deposits are insured by the Federal Deposit Insurance
Corporation to the extent permitted by law.
The Trustee has not participated in selecting the Securities; it only
provides administrative services.
Limitations of Liabilities of Sponsor and Trustee.
Neither we nor the Trustee will be liable for taking any action or for
not taking any action in good faith according to the Indenture. We will
also not be accountable for errors in judgment. We will only be liable
for our own willful misfeasance, bad faith, gross negligence (ordinary
negligence in the Trustee's case) or reckless disregard of our
obligations and duties. The Trustee is not liable for any loss or
depreciation when the Securities are sold. If we fail to act under the
Indenture, the Trustee may do so, and the Trustee will not be liable for
any action it takes in good faith under the Indenture.
The Trustee will not be liable for any taxes or other governmental
charges or interest on the Securities which the Trustee may be required
to pay under any present or future law of the United States or of any
other taxing authority with jurisdiction. Also, the Indenture states
other provisions regarding the liability of the Trustee.
If we do not perform any of our duties under the Indenture or are not
able to act or become bankrupt, or if our affairs are taken over by
public authorities, then the Trustee may:
- - Appoint a successor sponsor, paying them a reasonable rate not more
than that stated by the SEC,
- - Terminate the Indenture and liquidate the Trust, or
- - Continue to act as Trustee without terminating the Indenture.
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 Trustee, Sponsor and Unit holders may rely on the accuracy of any
evaluation prepared by the Evaluator. The Evaluator will make
determinations in good faith based upon the best available information,
but will not be liable to the Trustee, Sponsor or Unit holders for
errors in judgment.
Other Information
Legal Opinions.
Our counsel is Chapman and Cutler LLP, 111 W. Monroe St., Chicago,
Illinois 60603. They have passed upon the legality of the Units offered
hereby and certain matters relating to federal tax law. Emmet, Marvin &
Martin, LLP acts as the Trustee's counsel, as well as special New York
tax counsel for the Trust.
Page 25
Experts.
The Trust's statement of net assets, including the schedule of
investments, as of the opening of business on the Initial Date of
Deposit included in this prospectus, has been audited by Deloitte &
Touche LLP, independent registered public accounting firm, as stated in
their report appearing herein, and is included in reliance upon the
report of such firm given upon their authority as experts in accounting
and auditing.
Supplemental Information.
If you write or call the Sponsor, you will receive free of charge
supplemental information about this Series, which has been filed with
the SEC and to which we have referred throughout. This information
states more specific details concerning the nature, structure and risks
of this product.
Page 26
This page is intentionally left blank.
Page 27
First Trust(R)
Equity Dividend Covered Call Portfolio, Series 2
FT 880
Sponsor:
FIRST TRUST PORTFOLIOS L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Bank of New York
101 Barclay Street
New York, New York 10286
1-800-813-3074
24-Hour Pricing Line:
1-800-784-1069
This prospectus contains information relating to Equity Dividend Covered
Call Portfolio, Series 2, but does not contain all of the information
about this investment company as filed with the Securities and Exchange
Commission in Washington, D.C. under the:
- Securities Act of 1933 (file no. 333-______) and
- Investment Company Act of 1940 (file no. 811-05903)
Information about the Trust, including its Code of Ethics, can be reviewed and
copied at the Securities and Exchange Commission's Public Reference Room in
Washington D.C. Information regarding the operation of the Commission's Public
Reference Room may be obtained by calling the Commission at
1-202-942-8090.
Information about the Trust is available on the EDGAR Database on the
Commission's Internet site at
http://www.sec.gov.
To obtain copies at prescribed rates -
Write: Public Reference Section of the Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0102
e-mail address: publicinfo@sec.gov
September __, 2004
PLEASE RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE
Page 28
First Trust(R)
The FT Series
Information Supplement
This Information Supplement provides additional information concerning
the structure, operations and risks of the unit investment trust
contained in FT 880 not found in the prospectus for the Trust. This
Information Supplement is not a prospectus and does not include all of
the information you should consider before investing in the Trust. This
Information Supplement should be read in conjunction with the prospectus
for the Trust in which you are considering investing.
This Information Supplement is dated September __, 2004. Capitalized
terms have been defined in the prospectus.
Table of Contents
Risk Factors
Securities 1
Dividends 1
Foreign Issuers 1
Risk Factors
Securities. An investment in Units should be made with an understanding
of the risks which an investment in common stocks entails, including the
risk that the financial condition of the issuers of the Securities or
the general condition of the relevant stock market may worsen, and the
value of the Securities and therefore the value of the Units may
decline. Common stocks are especially susceptible to general stock
market movements and to volatile increases and decreases of value, as
market confidence in and perceptions of the issuers change. These
perceptions are based on unpredictable factors, including expectations
regarding government, economic, monetary and fiscal policies, inflation
and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Both U.S. and foreign
markets have experienced substantial volatility and significant declines
recently as a result of certain or all of these factors.
Dividends. Shareholders of common stocks have rights to receive payments
from the issuers of those common stocks that are generally subordinate
to those of creditors of, or holders of debt obligations or preferred
stocks of, such issuers. Common stocks do not represent an obligation of
the issuer and, therefore, do not offer any assurance of income or
provide the same degree of protection of capital as do debt securities.
The issuance of additional debt securities or preferred stock will
create prior claims for payment of principal, interest and dividends
which could adversely affect the ability and inclination of the issuer
to declare or pay dividends on its common stock or the rights of holders
of common stock with respect to assets of the issuer upon liquidation or
bankruptcy.
Foreign Issuers. Since certain of the Securities included in the Trust
consist of the securities of foreign issuers, an investment in the Trust
involves certain investment risks that are different in some respects
from an investment in a trust which invests entirely in the securities
of domestic issuers. These investment risks include future political or
governmental restrictions which might adversely affect the payment or
receipt of payment of dividends on the relevant Securities, the
possibility that the financial condition of the issuers of the
Securities may become impaired or that the general condition of the
relevant stock market may worsen (both of which would contribute
directly to a decrease in the value of the Securities and thus in the
value of the Units), the limited liquidity and relatively small market
capitalization of the relevant securities market, expropriation or
confiscatory taxation, economic uncertainties and foreign currency
devaluations and fluctuations. In addition, for foreign issuers that are
not subject to the reporting requirements of the Securities Exchange Act
of 1934, there may be less publicly available information than is
available from a domestic issuer. Also, foreign issuers are not
necessarily subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those
applicable to domestic issuers. The securities of many foreign issuers
are less liquid and their prices more volatile than securities of
comparable domestic issuers. In addition, fixed brokerage commissions
and other transaction costs on foreign securities exchanges are
generally higher than in the United States and there is generally less
government supervision and regulation of exchanges, brokers and issuers
in foreign countries than there is in the United States. However, due to
the nature of the issuers of the Securities selected for the Trust, the
Sponsor believes that adequate information will be available to allow
the Supervisor to provide portfolio surveillance for the Trust.
Securities issued by non-U.S. issuers generally pay dividends in foreign
Page 1
currencies and are principally traded in foreign currencies. Therefore,
there is a risk that the U.S. dollar value of these securities will vary
with fluctuations in the U.S. dollar foreign exchange rates for the
various Securities.
On the basis of the best information available to the Sponsor at the
present time, none of the Securities in the Trust are subject to
exchange control restrictions under existing law which would materially
interfere with payment to the Trust of dividends due on, or proceeds
from the sale of, the Securities. However, there can be no assurance
that exchange control regulations might not be adopted in the future
which might adversely affect payment to the Trust. The adoption of
exchange control regulations and other legal restrictions could have an
adverse impact on the marketability of international securities in the
Trust and on the ability of the Trust to satisfy its obligation to
redeem Units tendered to the Trustee for redemption. In addition,
restrictions on the settlement of transactions on either the purchase or
sale side, or both, could cause delays or increase the costs associated
with the purchase and sale of the foreign Securities and correspondingly
could affect the price of the Units.
Investors should be aware that it may not be possible to buy all
Securities at the same time because of the unavailability of any
Security, and restrictions applicable to the Trust relating to the
purchase of a Security by reason of the federal securities laws or
otherwise.
Foreign securities generally have not been registered under the
Securities Act of 1933 and may not be exempt from the registration
requirements of such Act. Sales of non-exempt Securities by the Trust in
the United States securities markets are subject to severe restrictions
and may not be practicable. Accordingly, sales of these Securities by
the Trust will generally be effected only in foreign securities markets.
Although the Sponsor does not believe that the Trust will encounter
obstacles in disposing of the Securities, investors should realize that
the Securities may be traded in foreign countries where the securities
markets are not as developed or efficient and may not be as liquid as
those in the United States. The value of the Securities will be
adversely affected if trading markets for the Securities are limited or
absent.
Page 2
MEMORANDUM
Re: FT 880
The only difference of consequence (except as described
below) between FT 872, which is the current fund, and FT 880, the
filing of which this memorandum accompanies, is the change in the
series number. The list of securities comprising the Fund, the
evaluation, record and distribution dates and other changes
pertaining specifically to the new series, such as size and
number of Units in the Fund and the statement of condition of the
new Fund, will be filed by amendment.
1940 ACT
FORMS N-8A AND N-8B-2
These forms were not filed, as the Form N-8A and Form N-8B-2
filed in respect of Templeton Growth and Treasury Trust, Series 1
and subsequent series (File No. 811-05903) related also to the
subsequent series of the Fund.
1933 ACT
PROSPECTUS
The only significant changes in the Prospectus from the
Series 872 Prospectus relate to the series number and size and
the date and various items of information which will be derived
from and apply specifically to the securities deposited in the
Fund.
CONTENTS OF REGISTRATION STATEMENT
ITEM A Bonding Arrangements of Depositor:
First Trust Portfolios, L.P. is covered by a Broker's
Fidelity Bond, in the total amount of $2,000,000, the
insurer being National Union Fire Insurance Company of
Pittsburgh.
ITEM B This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Prospectus
The signatures
Exhibits
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, FT 880 has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Village of Lisle and State of
Illinois on August 6, 2004.
FT 880
(Registrant)
By: FIRST TRUST PORTFOLIOS, L.P.
(Depositor)
By Jason T. Henry
Senior Vice President
S-2
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below by the following person in the capacity and on the date
indicated:
NAME TITLE* DATE
David J. Allen Director )
of The Charger )
Corporation, the )August 6, 2004
General Partner of )
First Trust )
Portfolios, L.P. )
Judith M. Van Kampen Director )
of The Charger )Jason T. Henry
Corporation, the )Attorney-in-Fact**
General Partner of )
First Trust )
Portfolios, L.P. )
Karla M. Van Kampen-Pierre Director )
of The Charger )
Corporation, the )
General Partner of )
First Trust )
Portfolios, L.P. )
David G. Wisen Director )
of The Charger )
Corporation, the )
General Partner of )
First Trust )
Portfolios, L.P. )
* The title of the person named herein represents his
or her capacity in and relationship to First Trust
Portfolios, 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 FT 597
(File No. 333-76518) and the same is hereby incorporated
herein by this reference.
S-3
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF DELOITTE & TOUCHE LLP
The consent of Deloitte & Touche LLP to the use of its name
and to the reference to such firm in the Prospectus included in
this Registration Statement will be filed by amendment.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement is
filed as Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for FT 785
among First Trust Portfolios, L.P., as Depositor, The
Bank of New York, as Trustee and First Trust Advisors
L.P., as Evaluator and Portfolio Supervisor.
(Incorporated by reference to Amendment No. 1 to Form S-6
[File No. 333-110799] filed on behalf of FT 785)
1.1.1* Form of Trust Agreement for FT 880 among First Trust
Portfolios, L.P., as Depositor, The Bank of New York, as
Trustee and First Trust Advisors L.P., as Evaluator and
Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of First Trust
Portfolios, L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of First Trust Portfolios, L.P. (incorporated
by reference to Amendment No. 1 to Form S-6 [File No.
33-42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of The Charger
Corporation, the general partner of First Trust
Portfolios, L.P., Depositor (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
1.5 Copy of By-Laws of The Charger Corporation, the general
partner of First Trust Portfolios, L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by reference).
2.2 Copy of Code of Ethics (incorporated by reference to
Amendment No. 1 to form S-6 [File No. 333-31176] filed on behalf
of FT 415).
3.1* Opinion of counsel as to legality of Securities being
registered.
S-5
3.2* Opinion of counsel as to Federal income tax status of
Securities being registered.
3.3* Opinion of counsel as to New York income tax status of
Securities being registered.
3.4* Opinion of counsel as to the Trustee and the Trust(s),
including a consent to the use of its name in the
Registration Statement.
4.1* Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Directors listed on
page S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
333-76518] filed on behalf of FT 597).
___________________________________
* To be filed by amendment.
S-6