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 1401
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 APRIL 11, 2007
Senior Loan Select Closed-End Portfolio Series
FT 1401
FT 1401 is a series of a unit investment trust, the FT Series. FT 1401
consists of a single portfolio known as Senior Loan Select Closed-End
Portfolio Series (the "Trust"). The Trust invests in a diversified
portfolio of common stocks ("Securities") of closed-end investment
companies ("Closed-End Funds") which invest in senior corporate loans
("Senior Loans"). See "Risk Factors" for a discussion of the risks of
investing in Senior Loans and "high-yield" or "junk" Securities. The
Trust seeks to provide investors with the potential for high current
income.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
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 April __, 2007
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 8
Portfolio 8
Risk Factors 9
Public Offering 10
Distribution of Units 13
The Sponsor's Profits 14
The Secondary Market 15
How We Purchase Units 15
Expenses and Charges 15
Tax Status 16
Retirement Plans 18
Rights of Unit Holders 18
Income and Capital Distributions 19
Redeeming Your Units 19
Removing Securities from the Trust 20
Amending or Terminating the Indenture 21
Information on the Sponsor, Trustee, FTPS Unit
Servicing Agent and Evaluator 22
Other Information 23
Page 2
Summary of Essential Information
Senior Loan Select Closed-End Portfolio Series
FT 1401
At the Opening of Business on the Initial Date of Deposit-April __, 2007
Sponsor: First Trust Portfolios L.P.
Trustee: The Bank of New York
FTPS Unit Servicing Agent: FTP Services LLC
Evaluator: First Trust Advisors L.P.
Initial Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/
Public Offering Price:
Public Offering Price per Unit (2) $10.000
Less Initial Sales Charge per Unit (3) (.100)
--------
Aggregate Offering Price Evaluation of Securities per Unit (4) 9.900
Less Deferred Sales Charge per Unit (3) (.245)
--------
Redemption Price per Unit (5) 9.655
Less Creation and Development Fee per Unit (3)(5) (.050)
Less Organization Costs per Unit (5) (.029)
--------
Net Asset Value per Unit $ 9.576
========
Estimated Net Annual Distribution per Unit for the first year (6) $
Cash CUSIP Number
Reinvestment CUSIP Number
Fee Accounts Cash CUSIP Number
Fee Accounts Reinvestment CUSIP Number
FTPS CUSIP Number
Security Code
Ticker Symbol
First Settlement Date April __, 2007
Mandatory Termination Date (7) April 21, 2009
Distribution Record Date Fifteenth day of each month, commencing May 15, 2007.
Distribution Date (6) Last day of each month, commencing May 31, 2007.
_____________
<FN>
NOTES TO SUMMARY OF ESSENTIAL INFORMATION
(1) As of the close of business on the Initial Date of Deposit, we may
adjust the number of Units of the Trust so that the Public Offering
Price per Unit will equal approximately $10.00. If we make such an
adjustment, the fractional undivided interest per Unit will vary from
the amount indicated above.
(2) 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 cash in the
Income Account. After this date, a pro rata share of any cash in the
Income Account will be included.
(3) You will pay a maximum sales charge of 3.95% of the Public Offering
Price per Unit (equivalent to 3.99% of the net amount invested) which
consists of an initial sales charge, a deferred sales charge and a
creation and development fee. The sales charges are described in the
"Fee Table."
(4) Each listed Security is valued at its last closing sale price. If a
Security is not listed, or if no closing sale price exists, it is valued
at its closing ask 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").
(5) The creation and development fee will be deducted from the assets of
the Trust at the end of the initial offering period and the estimated
organization costs per Unit 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. If units are redeemed prior to
any such reduction, these fees will not be deducted from the redemption
proceeds. See "Redeeming Your Units."
(6) 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. We base our estimate
of the dividends the Trust will receive from the Securities by
annualizing the most recent dividends declared by the issuers of the
Securities. There is no guarantee that the issuers of the Securities
will declare dividends in the future or that if declared they will
either remain at current levels or increase over time. Due to this, and
various other factors, actual dividends received from the Securities may
be less than their most recent annualized dividends. In this case, the
actual net annual distribution you receive will be less than the
estimated amount set forth above. The actual net annual distribution per
Unit you receive will also vary from that set forth above with changes
in the Trust's fees and expenses and with the sale of Securities. See
"Fee Table" and "Expenses and Charges." The Trustee will distribute
money from the Income and Capital Accounts, as determined at the monthly
Record Date, monthly on the last day of each month to Unit holders of
record on the fifteenth day of such month provided the aggregate amount,
exclusive of sale proceeds, in the Income and Capital Accounts available
for distribution equals at least 0.1% of the net asset value of the
Trust. Undistributed money in the Income and Capital Accounts will be
distributed in the next month in which the aggregate amount available
for distribution, exclusive of sale proceeds, equals or exceeds 0.1% of
the net asset value of the Trust. Distributions of sale proceeds from
the Capital Account will be made monthly on the last day of the month to
Unit holders of record on the fifteenth day of such month if the amount
available for distribution equals at least $1.00 per 100 Units. See
"Income and Capital Distributions."
(7) 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 two years 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 2.45%(b) $.245
Creation and development fee 0.50%(c) $.050
_______ _______
Maximum Sales Charge (including creation and development fee) 3.95% $.395
======= =======
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, evaluation
and FTPS Unit servicing fees % $
Trustee's fee and other operating expenses %(f) $
Underlying Closed-End Fund expenses %(g) $
________ ________
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 all 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 2 Years
______ _______
$ $
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 3.95% 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 $.245 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 August 20, 2007.
(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 three months from the Initial Date
of Deposit. If the price you pay for your Units exceeds $10 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 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) With the exception of the underlying Closed-End Fund expenses, 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."
(g) Although not an actual Trust operating expense, the Trust, and
therefore Unit holders, will indirectly bear similar operating expenses
of the Closed-End Funds in which the Trust invests in the estimated
amounts set forth in the table. These expenses are estimated based on
the actual Closed-End Fund expenses disclosed in a fund's most recent
SEC filing but are subject to change in the future. An investor in the
Trust will therefore indirectly pay higher expenses than if the
underlying Closed-End Fund shares were held directly.
</FN>
Page 4
Report of Independent
Registered Public Accounting Firm
Page 5
Statement of Net Assets
Senior Loan Select Closed-End Portfolio Series
FT 1401
At the Opening of Business on the
Initial Date of Deposit-April __, 2007
NET ASSETS
Investment in Securities represented by purchase contracts (1) (2) $
Less liability for reimbursement to Sponsor for organization costs (3) ( )
Less liability for deferred sales charge (4) ( )
Less liability for creation and development fee (5) ( )
________
Net assets $
========
Units outstanding
Net asset value per Unit (6) $ 9.576
ANALYSIS OF NET ASSETS
Cost to investors (7) $
Less maximum sales charge (7) ( )
Less estimated reimbursement to Sponsor for organization costs (3) ( )
________
Net assets $
========
______________
<FN>
NOTES TO STATEMENT OF NET ASSETS
The Sponsor is responsible for the preparation of financial statements
in accordance with accounting principles generally accepted in the
United States which require the Sponsor to make estimates and
assumptions that affect amounts reported herein. Actual results could
differ from those estimates.
(1) The Trust invests in a portfolio of common stocks of closed-end
investment companies. Aggregate cost of the Securities listed under
"Schedule of Investments" is based on their aggregate underlying value.
The Trust has a Mandatory Termination Date of April 21, 2009.
(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.
(3) 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.
(4) Represents the amount of mandatory deferred sales charge
distributions of $.245 per Unit, payable to the Sponsor in three
approximately equal monthly installments beginning on August 20, 2007
and on the twentieth day of each month thereafter (or if such date is
not a business day, on the preceding business day) through October 19,
2007. If Unit holders redeem Units before October 19, 2007, they will
have to pay the remaining amount of the deferred sales charge applicable
to such Units when they redeem them.
(5) The creation and development fee ($.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.
(6) 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 earlier of six months after the
Initial Date of Deposit or the end of the initial offering period in the
case of organization costs or the close of the initial offering period
in the case of the creation and development fee.
(7) 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
3.95% of the Public Offering Price per Unit (equivalent to 3.99% 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
Senior Loan Select Closed-End Portfolio Series
FT 1401
At the Opening of Business on the
Initial Date of Deposit-April __, 2007
Percentage Number Market Cost of
Ticker Symbol and of Aggregate of Value Securities to
Name of Issuer of Securities (1) Offering Price Shares per Share the Trust (2)
________________________________ ____________ _____ ______ ________
% $ $
%
%
%
%
%
%
%
%
%
%
%
%
%
%
______ _________
Total Investments 100.00% $
====== ======
__________
<FN>
(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 April __, 2007. Such purchase contracts are
expected to settle within three business days.
(2) 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 Securities and the
ask prices of over-the-counter traded Securities at the Evaluation Time
on the business day prior to the Initial Date of Deposit). 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.
</FN>
Page 7
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
1401, consists of a single portfolio known as Senior Loan Select Closed-
End Portfolio Series.
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, FTP Services LLC ("FTPS") as FTPS Unit
Servicing Agent 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 common
stocks of Closed-End Funds with the Trustee and in turn, the Trustee
delivered documents to us representing our ownership of the Trust, in
the form of units ("Units").
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, in order to create new Units
for sale. 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 "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 pays 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 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 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 Distribution Date. Any
Replacement Security the Trust acquires will be identical to those from
the failed contract.
Portfolio
Objectives.
The objective of Senior Loan Select Closed-End Portfolio Series is to
provide investors the potential for high current income by investing in
a diversified portfolio of closed-end funds which invest in senior loan
floating rate securities.
The combination of sustained economic growth in the United States,
rising corporate profits and the steady decline in corporate bond
defaults over the past two years, in our opinion, makes this portfolio
of senior loan closed-end funds a timely alternative for investors
seeking the potential for high current income.
Furthermore, the securities underlying the senior loan closed-end funds
Page 8
have floating rates which are structured to reset as interest rates move
up or down so that investors can take advantage of these movements.
Falling Default Rate.
The default rate on senior loan floating rate securities continues to
remain relatively low thanks to a strong U.S. economy. According to
Standard & Poor's LCD, the default rate on senior loans stood at an all-
time low of 0.46% in February 2007. The historical average is 3.31%. Of
course there can be no assurance that the default rate for senior loan
floating rate securities will not increase.
Closed-End Advantages.
- - Portfolio Control. Since closed-end funds maintain a relatively fixed
pool of investment capital, portfolio managers are better able to adhere
to their investment philosophies through greater flexibility and
control. In addition, closed-end funds do not have to manage fund
liquidity to meet potentially large redemptions.
- - Income Distributions. Closed-end funds are structured to generally
provide a more stable income stream than other managed fixed-income
investment products because they are not subjected to cash inflows and
outflows, which can dilute dividends over time. However, as a result of
bond calls, redemptions and advanced refundings, which can dilute a
fund's income, the Trust cannot guarantee consistent income.
As with any similar investments, 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 common stocks of Closed-End
Funds. The value of the Trust's Units will fluctuate with changes in the
value of these common stocks. 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.
Because the Trust is not managed, the Trustee will not sell stocks 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 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.
Distributions. As stated under "Summary of Essential Information," the
Trust will generally make monthly distributions of income. The Closed-
End Funds make distributions on a monthly or quarterly basis. As a
result of changing interest rates, refundings, sales or defaults on the
underlying bonds held by the Closed-End Funds, and other factors, there
is no guarantee that distributions will either remain at current levels
or increase over time.
Closed-End Funds. Closed-end funds are actively managed investment
companies which invest in various types of securities. Closed-end funds
issue shares of common stock that are traded on a securities exchange.
Closed-end funds are subject to various risks, including management's
ability to meet the closed-end fund's investment objective, and to
manage the closed-end fund portfolio when the underlying securities are
redeemed or sold, during periods of market turmoil and as investors'
perceptions regarding closed-end funds or their underlying investments
change.
Shares of closed-end funds frequently trade at a discount from their net
asset value in the secondary market. This risk is separate and distinct
from the risk that the net asset value of closed-end fund shares may
decrease. The amount of such discount from net asset value is subject to
change from time to time in response to various factors.
Certain of the Closed-End Funds included in the Trust may employ the use
of leverage in their portfolios through borrowings or the issuance of
preferred stock. While leverage often serves to increase the yield of a
closed-end fund, this leverage also subjects the closed-end fund to
increased risks, including the likelihood of increased volatility and
the possibility that the closed-end fund's common share income will fall
if the dividend rate on the preferred shares or the interest rate on any
borrowings rises.
Senior Loans. The Closed-End Funds in the Trust invest in Senior Loans
issued by banks, other financial institutions and other investors to
corporations, partnerships, limited liability companies and other
entities to finance leveraged buyouts, recapitalizations, mergers,
acquisitions, stock repurchases, debt refinancings and, to a lesser
extent, for general operating and other purposes. An investment by
Closed-End Funds in Senior Loans involves risk that the borrowers under
Senior Loans may default on their obligations to pay principal or
Page 9
interest when due. Although Senior Loans may be secured by specific
collateral, there can be no assurance that liquidation of collateral
would satisfy the borrower's obligation in the event of non-payment or
that such collateral could be readily liquidated. Senior Loans are
typically structured as floating rate instruments in which the interest
rate payable on the obligation fluctuates with interest rate changes. As
a result, the yield on Closed-End Funds investing in Senior Loans will
generally decline in a falling interest rate environment and increase in
a rising interest rate environment. Senior Loans are generally below
investment grade quality and may be unrated at the time of investment;
are generally not registered with the SEC or state securities
commissions; and are generally not listed on any securities exchange.
See "High-Yield Securities" below for a description of the risks
involved in investing in below investment grade securities. In addition,
the amount of public information available on Senior Loans is generally
less extensive than that available for other types of assets.
High-Yield Securities. Certain of the Closed-End Funds held by the Trust
invest in high-yield securities. High-yield, high risk securities are
subject to greater market fluctuations and risk of loss than securities
with higher investment ratings. The value of these securities will
decline significantly with increases in interest rates, not only because
increases in rates generally decrease values, but also because increased
rates may indicate an economic slowdown. An economic slowdown, or a
reduction in an issuer's creditworthiness, may result in the issuer
being unable to maintain earnings at a level sufficient to maintain
interest and principal payments.
High-yield or "junk" securities, the generic names for securities rated
below "BBB-" by Standard & Poor's or below "Baa3" by Moody's, are
frequently issued by corporations in the growth stage of their
development or by established companies who are highly leveraged or
whose operations or industries are depressed. Obligations rated below
"BBB-" should be considered speculative as these ratings indicate a
quality of less than investment grade. Because high-yield securities are
generally subordinated obligations and are perceived by investors to be
riskier than higher rated securities, their prices tend to fluctuate
more than higher rated securities and are affected by short-term credit
developments to a greater degree.
The market for high-yield securities is smaller and less liquid than
that for investment grade securities. High-yield securities are
generally not listed on a national securities exchange but trade in the
over-the-counter markets. Due to the smaller, less liquid market for
high-yield securities, the bid-offer spread on such securities is
generally greater than it is for investment grade securities and the
purchase or sale of such securities may take longer to complete.
Foreign Securities. Certain of the underlying bonds held by certain of
the Closed-End Funds in the Trust are issued by foreign entities, which
makes the Trust subject to more risks than if it only invested in Closed-
End Funds which invest solely in domestic bonds. Risks of foreign bonds
include restrictions on foreign investments and exchange of securities
and inadequate financial information. Foreign securities may also be
affected by market and political factors specific to the issuer's
country as well as fluctuations in foreign currency exchange rates.
Risks associated with investing in foreign securities may be more
pronounced in emerging markets where the securities markets are
substantially smaller, less developed, less liquid, less regulated, and
more volatile that the securities markets of the U.S. and developed
foreign markets. In addition, brokerage and other transaction costs on
foreign securities exchanges are often higher than in the United States
and there is generally less government supervision and regulation of
exchanges, brokers and issuers in foreign countries.
Legislation/Litigation. From time to time, various legislative
initiatives are proposed which may have a negative impact on the prices
of certain corporate bonds owned by the Closed-End Funds represented in
the Trust. In addition, litigation regarding any of the issuers of the
corporate bonds owned by such Closed-End Funds, or of the industries
represented by such issuers, may negatively impact the share prices of
these Securities. We cannot predict what impact any pending or proposed
legislation or pending or threatened litigation will have on the share
prices of the Securities or of the issuers of the underlying bonds in
which they invest.
Public Offering
The Public Offering Price.
You may buy Units at the Public Offering Price, the price per Unit of
which is comprised of the following:
- - The aggregate underlying value of the Securities;
- - The amount of any cash in the Income and Capital Accounts;
- - Dividends receivable on 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 changes in
the value of the Income and/or Capital Accounts.
Page 10
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.
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 for the Trust in "Notes to Statement 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 costs are less than the estimated amount, only the actual
organization costs will ultimately be charged to the Trust. When
Securities are sold to reimburse the Sponsor for organization costs, the
Trustee will sell 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.
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
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 of 3.95% of the Public Offering Price and the sum of the
maximum remaining deferred sales charge and creation and development fee
(initially $.295 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
charges of approximately $.0817 per Unit will be deducted from the
Trust's assets on approximately the twentieth day of each month from
August 20, 2007 through October 19, 2007. 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 2.45% of the Public Offering Price.
If you purchase Units after the last deferred sales charge payment has
been assessed, your transactional sales charge will consist of a one-
time initial sales charge of 3.45% of the Public Offering Price
(equivalent to 3.573% of the net amount invested). The transactional
sales charge will be reduced by 1/2 of 1% on each subsequent April 30,
commencing April 30, 2008 to a minimum transactional sales charge of
3.00%.
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
follows:
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Your maximum Dealer
If you invest sales charge concession
(in thousands):* will be: will be:
______________ ____________ ___________
$50 but less than $100 3.70% 2.90%
$100 but less than $250 3.45% 2.65%
$250 but less than $500 3.10% 2.35%
$500 but less than $1,000 2.95% 2.25%
$1,000 or more 2.45% 1.80%
* 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 in this prospectus 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
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 2.45% of the Public Offering Price), but you
will not be eligible to receive the reduced sales charge 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. In order to be eligible for
this reduced sales charge program, the termination or redemption
proceeds used to purchase Units must be derived from a transaction that
occurred within 30 days of your Unit purchase. In addition, this program
will only be available for investors that utilize the same broker/dealer
(or a different broker/dealer with appropriate notification) for both
the Unit purchase and the transaction resulting in the receipt of the
termination or redemption proceeds used for the Unit purchase. You may
be required to provide appropriate documentation or other information to
your broker/dealer to evidence your eligibility for this reduced sales
charge program.
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.
Page 12
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 Securities in the Trust will be
determined as follows: if the Securities are listed on a securities
exchange or The Nasdaq Stock Market, their value is generally based on
the closing sale prices (which in the case of certain foreign stock
exchanges may be the official closing price) on that exchange or system
(unless it is determined that these prices are not appropriate as a
basis for valuation, as may be the case with certain foreign Securities
listed on a foreign securities exchange). For purposes of valuing
Securities traded on The Nasdaq Stock Market, closing sale price shall
mean the Nasdaq Official Closing 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. If the Securities 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 on the over-the-counter market (unless
it is determined that these prices are not appropriate as a basis for
valuation). If current ask prices are unavailable or, if available but
determined by the Evaluator to not be appropriate, the valuation is
generally determined:
a) On the basis of current ask prices for comparable equity securities;
b) By appraising the value of the Securities on the ask side of the
market; or
c) By any combination of the above.
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 prices when necessary.
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.
The Sponsor compensates intermediaries, such as broker/dealers and
banks, for their activities that are intended to result in sales of
Units of the Trust. This compensation includes dealer concessions
described in the following section and may include additional
concessions and other compensation and benefits to broker/dealers and
other intermediaries.
Dealer Concessions.
Dealers and other selling agents can purchase Units at prices which
represent a concession or agency commission of 3.15% of the Public
Offering Price per Unit (or 65% of the maximum transactional sales
charge for secondary market sales), 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 with redemption or
termination proceeds, this amount will be reduced to 2.15% of the sales
price of these Units (1.80% for purchases of $1,000,000 or more).
Eligible dealer firms and other selling agents who, during the previous
consecutive 12-month period through the end of the most recent month,
sold primary market units of unit investment trusts sponsored by us in
the dollar amounts shown below will be entitled to the following
additional sales concession on primary market sales during the current
month of units of unit investment trusts sponsored by us and which were
deposited on June 30, 2006 or later:
Total sales Additional
(in millions) Concession
_____________________ ___________
$25 but less than $100 0.050%
$100 but less than $150 0.075%
$150 but less than $250 0.100%
$250 but less than $500 0.115%
$500 or more 0.125%
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. We reserve the right to change the
amount of concessions or agency commissions from time to time. Certain
Page 13
commercial banks may be making Units of the Trust 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.
Other Compensation and Benefits to Broker/Dealers.
The Sponsor, at its own expense and out of its own profits, currently
provides additional compensation and benefits to broker/dealers who sell
shares of Units of this Trust and other First Trust products. This
compensation is intended to result in additional sales of First Trust
products and/or compensate broker/dealers and financial advisors for
past sales. A number of factors are considered in determining whether to
pay these additional amounts. Such factors may include, but are not
limited to, the level or type of services provided by the intermediary,
the level or expected level of sales of First Trust products by the
intermediary or its agents, the placing of First Trust products on a
preferred or recommended product list, access to an intermediary's
personnel, and other factors. The Sponsor makes these payments for
marketing, promotional or related expenses, including, but not limited
to, expenses of entertaining retail customers and financial advisers,
advertising, sponsorship of events or seminars, obtaining information
about the breakdown of Unit sales among an intermediary's
representatives or offices, obtaining shelf space in broker/dealer firms
and similar activities designed to promote the sale of the Sponsor's
products. The Sponsor makes such payments to a substantial majority of
intermediaries that sell First Trust products. The Sponsor may also make
certain payments to, or on behalf of, intermediaries to defray a portion
of their costs incurred for the purpose of facilitating Unit sales, such
as the costs of developing or purchasing trading systems to process Unit
trades. Payments of such additional compensation described in this and
the preceding paragraph, some of which may be characterized as "revenue
sharing," may create an incentive for financial intermediaries and their
agents to sell or recommend a First Trust product, including the Trust,
over products offered by other sponsors or fund companies. These
arrangements will not change the price you pay for your Units.
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
principal businesses of the companies 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 industry sectors 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 differs
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 of the Trust 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 2 of "Schedule of
Investments"). During the initial offering period, dealers and others
may also realize profits or sustain losses as a result of fluctuations
in the Public Offering Price they receive when they sell the Units.
In maintaining a market for the 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.
Page 14
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.
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 (or the FTPS Servicing Agent in the case of FTPS Units) will
notify us of any tender of Units for redemption. If our bid 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 (or the FTPS Unit Servicing Agent in the case of FTPS
Units) 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 exceed the estimate, the 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. In addition, investors will also indirectly pay a portion of the
expenses of the underlying Closed-End Funds.
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. As authorized by the Indenture, the Trustee may
employ a subsidiary or affiliate of the Trustee to act as broker to
execute certain transactions for the Trust. The Trust will pay for such
services at standard commission rates.
FTP Services LLC, an affiliate of ours, acts as FTPS Unit Servicing
Agent to the Trust with respect to the Trust's FTPS Units. FTPS Units
are Units which are purchased and sold through the Fund/SERV(R) trading
system or on a manual basis through FTP Services LLC. In all other
respects, FTPS Units are identical to other Units. FTP Services LLC will
be compensated for providing shareholder services to the FTPS Units.
The fees payable to First Trust Advisors L.P., FTP Services LLC 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 fee 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;
Page 15
- - 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. In addition, if there is not enough cash in the Income or
Capital Accounts of the Trust, the Trustee has the power to sell
Securities to make cash available to pay these charges which may result
in capital gains or losses to you. See "Tax Status."
Tax Status
Federal Tax Matters.
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, local or foreign
tax consequences.
This federal income tax summary is based in part on the advice and
opinion of counsel to the Sponsor. The Internal Revenue Service ("IRS")
could disagree with any conclusions set forth in this section. In
addition, our counsel was not asked to review, and has not reached a
conclusion with respect to the federal income tax treatment of the
assets to be deposited in the Trust. This may not be sufficient for you
to use for the purpose of avoiding penalties under federal tax law.
As with any investment, you should seek advice based on your individual
circumstances from your own tax advisor.
Assets of the Trust.
The Trust is expected to hold shares (the "RIC Shares") in funds
qualifying as regulated investment companies ("RICs") that are treated
as interests in regulated investment companies for federal income tax
purposes. It is possible that the Trust will also hold other assets,
including assets that are treated differently for federal income tax
purposes from those described above, in which case you will have federal
income tax consequences different from or in addition to those described
in this section. All of the assets held by the Trust constitute the
"Trust Assets." Neither our counsel nor we have analyzed the proper
federal income tax treatment of the Trust Assets and thus neither our
counsel nor we have reached a conclusion regarding the federal income
tax treatment of the Trust Assets.
Trust Status.
If the Trust is at all times operated in accordance with the documents
establishing the Trust and certain requirements of federal income tax
law are met, 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 each of the Trust Assets, and as such you will
be considered to have received a pro rata share of income (e.g.,
dividends and capital gains, if any) from each Trust Asset 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 reinvested into additional Units. In addition, the income
from Trust Assets that you must take into account for federal income tax
purposes is not reduced by amounts used to pay sales charges or Trust
expenses.
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.
You can generally determine your initial tax basis in each Trust Asset
by apportioning the cost of your Units, including sales charges, among
the Trust Assets ratably according to their values on the date you
acquire your Units. In certain circumstances, however, you may have to
adjust your tax basis after you acquire your Units (for example, in the
case of certain dividends that exceed a corporation's accumulated
earnings and profits, as discussed below).
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 capital gains rates are generally
effective for taxable years beginning before January 1, 2011.
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
Page 16
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.
Dividends from RIC Shares.
Some dividends on the RIC Shares may be designated as "capital gain
dividends," generally taxable to you as long-term capital gains. Other
dividends on the RIC Shares will generally be taxable to you as ordinary
income. Certain ordinary income dividends from a RIC may qualify to be
taxed at the same rates that apply to net capital gain (as discussed
above), provided certain holding period requirements are satisfied and
provided the dividends are attributable to qualifying dividends received
by the RIC itself. These special rules relating to the taxation of
ordinary income dividends from RICs generally apply to taxable years
beginning before January 1, 2011. RICs are required to provide notice to
their shareholders of the amount of any distribution that may be taken
into account as a dividend that is eligible for the capital gains tax
rates. If you hold a Unit for six months or less or if the Trust holds a
RIC Share for six months or less, any loss incurred by you related to
the disposition of such RIC Share will be treated as a long-term capital
loss to the extent of any long-term capital gain distributions received
(or deemed to have been received) with respect to such RIC Share.
Distributions of income or capital gains declared on the RIC Shares in
October, November or December will be deemed to have been paid to you on
December 31 of the year they are declared, even when paid by the RIC
during the following January.
Dividends Received Deduction.
A corporation that owns Units generally will not be entitled to the
dividends received deduction with respect to many dividends received by
the Trust, because the dividends received deduction is generally not
available for dividends from RICs. However, certain dividends on the RIC
Shares that are attributable to dividends received by the RIC from
certain domestic corporations may be designated by the RIC as being
eligible for the dividends received deduction.
In-Kind Distributions.
Under certain circumstances as described in this prospectus, you may
request an In-Kind Distribution of Trust Assets when you redeem your
Units at any time prior to 30 business days before the Trust's Mandatory
Termination Date. However, this ability to request an In-Kind
Distribution will terminate at any time that the number of outstanding
Units has been reduced to 10% or less of the highest number of Units
issued by the Trust. 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 whole Trust Assets in exchange for the
identical amount of your pro rata portion of the same Trust Assets held
by the Trust. However, if you also receive cash in exchange for a Trust
Asset or a fractional portion 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
portion.
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 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.
Foreign, State and Local Taxes.
If you are a foreign investor (i.e., an investor other than a U.S.
citizen or resident or a U.S. corporation, partnership, estate or
trust), you may not be subject to U.S. federal income taxes, including
withholding taxes, on some of the income from the Trust or on any gain
from the sale or redemption of your Units, provided that certain
conditions are met. You should consult your tax advisor with respect to
the conditions you must meet in order to be exempt for U.S. tax
purposes. You should also consult your tax advisor with respect to other
U.S. tax withholding and reporting requirements.
Under certain circumstances, a RIC may elect to pass through to its
shareholders certain foreign taxes paid by the RIC. If the RIC makes
this election with respect to RIC Shares, you must include in your
income for federal income tax purposes your portion of such taxes and
you may be entitled to a credit or deduction for such taxes.
Based on the advice of Carter Ledyard & Milburn LLP, special counsel to
the Trust for New York tax matters, under the existing income tax laws
of the State and City of New York, assuming that the Trust is not
treated as a corporation for federal income tax purposes, it will not be
taxed as a corporation for New York State and New York City tax
purposes, 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.
You should consult your tax advisor regarding potential foreign, state
or local taxation with respect to your Units.
Page 17
Retirement Plans
You may purchase Units of the Trust for:
- - Individual Retirement Accounts,
- - Keogh Plans,
- - Pension funds, and
- - Other tax-deferred retirement plans.
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
adviser. 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. For the purposes of record keeping, the Trustee will
treat the FTPS Unit Servicing Agent as sole Record Owner of FTPS Units
on its books. The FTPS Unit Servicing Agent will keep a record of all
individual FTPS Unit holders, the actual Record Owners of such Units, on
its books. It is your responsibility to notify the Trustee (or the FTPS
Unit Servicing Agent in the case of FTPS Units) 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 and FTPS 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 (or the FTPS
Unit Servicing Agent in the case of FTPS Units) 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 (or the FTPS Unit Servicing
Agent in the case of FTPS Units) will send you:
- - A written initial transaction statement containing a description of
the Trust;
- - A list of 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 (or the FTPS Unit
Servicing Agent in the case of FTPS Units) 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 (or the FTPS Unit
Servicing Agent in the case of FTPS Units) 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 (or the FTPS Unit Servicing Agent in
the case of FTPS Units) copies of the evaluations of the Securities as
prepared by the Evaluator to enable you to comply with federal and state
tax reporting requirements.
Page 18
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 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 money from the Income and Capital Accounts,
as determined at the monthly Record Date, monthly on the last day of
each month to Unit holders on the fifteenth day of such month provided
the aggregate amount, exclusive of sale proceeds, available for
distribution in the Income and Capital Accounts equals at least 0.1% of
the net asset value of the Trust. Undistributed money in the Income and
Capital Accounts will be distributed in the next month in which the
aggregate amount available for distribution, exclusive of sale proceeds,
equals or exceeds 0.1% of the net asset value of the Trust. 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 Distribution Dates. Distribution amounts will vary with changes in
the Trust's fees and expenses, in dividends received and with the sale
of Securities. The Trustee will distribute sale proceeds in the Capital
Account, net of amounts designated to meet redemptions, pay the deferred
sales charge and creation and development fee or pay expenses, on the
last day of each month to Unit holders of record on the fifteenth day of
such month provided the 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 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 of
the Trust 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
the pro rata share of the money from the sale of the Securities. All
Unit holders 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 or 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 (or the FTPS Unit Servicing Agent
in the case of FTPS Units) 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. Each reinvestment plan is subject to
availability or limitation by the Sponsor and each broker/dealer or
selling firm. The Sponsor or broker/dealers may suspend or terminate the
offering of a reinvestment plan at any time. Please contact your
financial professional for additional information. 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
the address set forth on the back cover of this prospectus. If your
Units are uncertificated, you need only deliver a request for redemption
to the Trustee (or the FTPS Unit Servicing Agent in the case of FTPS
Units). 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 (or the FTPS Unit
Servicing Agent in the case of FTPS Units) 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.
The Date of Tender is considered to be the date on which the Trustee (or
the FTPS Unit Servicing Agent in the case of FTPS Units) 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.
Page 19
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."
If you tender at least 2,500 Units, or such other amount as required by
your broker/dealer, for redemption, rather than receiving cash, you may
elect to receive an In-Kind Distribution in an amount equal to the
Redemption Price per Unit by making this request in writing to the
Trustee at the time of tender. However, to be eligible to participate in
the In-Kind Distribution option at redemption, Fee Accounts Unit holders
must hold their Units through the end of the initial offering period.
The In-Kind Distribution option is generally not available to FTPS Unit
holders. No In-Kind Distribution requests submitted during the 30
business days prior to the Trust's Mandatory Termination Date will be
honored. Where possible, the Trustee will make an In-Kind Distribution
by distributing each of the Securities in book-entry form to your bank
or broker/dealer account at the Depository Trust Company. The Trustee
will subtract any customary transfer and registration charges from your
In-Kind Distribution. As a tendering Unit holder, you will receive your
pro rata number of whole shares of the Securities that make up the
portfolio, and cash from the Capital Account equal to the fractional
shares to which you are entitled.
The Trustee may sell Securities to make funds available for redemption.
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.
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 Securities trading ex-dividend as of the
date of computation; and
deducting
1. any applicable taxes or governmental charges that need to be paid out
of the Trust;
2. any amounts owed to the Trustee for its advances;
3. estimated accrued expenses of the Trust, if any;
4. cash held for distribution to Unit holders of record of the Trust as
of the business day before the evaluation being made; and
5. 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 a Security in certain
limited circumstances, including situations in which:
- - The issuer of the 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 the Security;
- - The issuer of the 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 the Security;
- - The issuer has defaulted on the payment of any other of its
outstanding obligations;
- - There has been a public tender offer made for a Security or a merger
Page 20
or acquisition is announced affecting a Security, and that in our
opinion the sale or tender of the Security is in the best interest of
Unit holders;
- - The sale of Securities is necessary or advisable in order to maintain
the qualification of the Trust as a "regulated investment company" in
the case of a Trust which has elected to qualify as such;
- - The price of the Security has declined to such an extent, or such
other credit factors exist, that in our opinion keeping the Security
would be harmful to the Trust; or
- - As a result of the ownership of the Security, the Trust or its Unit
holders would be a direct or indirect shareholder of a passive foreign
investment company.
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 of the Trust 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.
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 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. 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 the lower of $2,000,000 or 20% of the total
value of Securities deposited in the Trust during the initial offering
period ("Discretionary Liquidation Amount"); and
- - 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 registered
account holders which will specify how certificates, if any, should be
tendered to the Trustee. If the Trust is terminated due to this last
reason, we will refund your entire 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. For various
reasons, the Trust may be reduced below the Discretionary Liquidation
Amount and could therefore be terminated before the Mandatory
Termination Date.
Unless terminated earlier, the Trustee will begin to sell 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
Securities. Because the Trustee must sell the Securities within a
relatively short period of time, the sale of 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.
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. 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.
Page 21
Information on the Sponsor, Trustee,
FTPS Unit Servicing
Agent 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:
- - 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 $85 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 NASD 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,
2006, the total consolidated partners' capital of First Trust Portfolios
L.P. and subsidiaries was $50,884,373 (audited).
This information refers only to the Sponsor 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.
The FTPS Unit Servicing Agent.
The FTPS Unit Servicing Agent is FTP Services LLC, an Illinois limited
liability company formed in 2005 and an affiliate of the Sponsor. FTP
Services LLC acts as record keeper, shareholder servicing agent and
distribution agent for Units which are purchased and sold through the
Fund/SERV(R) trading system or on a manual basis through FTP Services
LLC. FTP Services LLC provides FTPS Units with administrative and
distribution related services as described in this prospectus. The FTPS
Unit Servicing Agent's address is 1001 Warrenville Road, Lisle, Illinois
60532. If you have questions regarding the FTPS Units, you may call the
FTPS Unit Servicing Agent at (866) 514-7768. The FTPS Unit Servicing
Agent has not participated in selecting the Securities; it only provides
administrative services to the FTPS Units. Fund/SERV(R) is a service of
National Securities Clearing Corporation, a subsidiary of The Depository
Trust & Clearing Corporation.
Limitations of Liabilities of Sponsor, FTPS Unit Servicing Agent and
Trustee.
Neither we, the FTPS Unit Servicing Agent 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 FTPS Unit Servicing
Agent and 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:
Page 22
- - 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, FTPS Unit Servicing Agent 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,
FTPS Unit Servicing Agent 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. Carter Ledyard &
Milburn LLP acts as the Trustee's counsel, as well as special New York
tax counsel for the Trust.
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, an 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 23
First Trust(R)
Senior Loan Select Closed-End Portfolio Series
FT 1401
Sponsor:
FIRST TRUST PORTFOLIOS L.P.
1001 Warrenville Road
Lisle, Illinois 60532
1-630-241-4141
FTPS Unit Servicing Agent: Trustee:
FTP Services LLC The Bank of New York
1001 Warrenville Road 101 Barclay Street
Lisle, Illinois 60532 New York, New York 10286
1-866-514-7768 1-800-813-3074
24-Hour Pricing Line:
1-800-446-0132
________________________
When Units of the Trust are no longer available, this prospectus may be
used as a preliminary prospectus
for a future series, in which case you should note the following:
THE INFORMATION IN THE PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL, OR ACCEPT OFFERS TO BUY, SECURITIES OF A FUTURE SERIES
UNTIL THAT SERIES HAS BECOME EFFECTIVE WITH THE SECURITIES AND EXCHANGE
COMMISSION. NO SECURITIES CAN BE SOLD IN ANY STATE WHERE A SALE WOULD BE
ILLEGAL.
________________________
This prospectus contains information relating to the above-mentioned
unit investment trust, 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
100 F Street, N.E.
Washington, D.C. 20549
e-mail address: publicinfo@sec.gov
April __, 2007
PLEASE RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE
Page 24
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 ("the
Trust") contained in FT 1401 not found in the prospectus for the Trust.
This Information Supplement is not a prospectus and does not include all
of the information that a prospective investor should consider before
investing in the Trust. This Information Supplement should be read in
conjunction with the prospectus for the Trust.
This Information Supplement is dated April __, 2007. Capitalized terms
have been defined in the prospectus.
Table of Contents
Risk Factors
Securities 1
Foreign Issuers 2
Senior Loans 2
High-Yield Securities 3
Risk Factors.
Securities. The Securities in the Trust represent shares of closed-end
mutual funds which invest in either senior loans. As such, an investment
in Units of the Trust should be made with an understanding of the risks
of investing in both closed-end fund shares and senior loans.
Closed-end mutual funds' portfolios are managed and their shares are
generally listed on a securities exchange. The net asset value of closed-
end fund shares will fluctuate with changes in the value of the
underlying securities which the closed-end fund owns. In addition, for
various reasons closed-end fund shares frequently trade at a discount
from their net asset value in the secondary market. The amount of such
discount from net asset value is subject to change from time to time in
response to various factors. Closed-end funds' articles of incorporation
may contain certain anti-takeover provisions that may have the effect of
inhibiting a fund's possible conversion to open-end status and limiting
the ability of other persons to acquire control of a fund. In certain
circumstances, these provisions might also inhibit the ability of
stockholders (including the Trust) to sell their shares at a premium
over prevailing market prices. This characteristic is a risk separate
and distinct from the risk that a fund's net asset value will decrease.
In particular, this characteristic would increase the loss or reduce the
return on the sale of those closed-end fund shares which were purchased
by a Trust at a premium. In the unlikely event that a closed-end fund
converts to open-end status at a time when its shares are trading at a
premium there would be an immediate loss in value to the Trust since
shares of open-end funds trade at net asset value. Certain closed-end
funds may have in place or may put in place in the future plans pursuant
to which the fund may repurchase its own shares in the marketplace.
Typically, these plans are put in place in an attempt by a fund's board
of directors to reduce a discount on its share price. To the extent such
a plan was implemented and shares owned by a Trust are repurchased by a
fund, the Trust's position in that fund would be reduced and the cash
would be distributed.
The Trust is prohibited from subscribing to a rights offering for shares
of any of the closed-end funds in which they invest. In the event of a
rights offering for additional shares of a fund, Unit holders should
expect that their Trust will, at the completion of the offer, own a
smaller proportional interest in such fund that would otherwise be the
case. It is not possible to determine the extent of this dilution in
share ownership without knowing what proportion of the shares in a
rights offering will be subscribed. This may be particularly serious
when the subscription price per share for the offer is less than the
fund's net asset value per share. Assuming that all rights are exercised
and there is no change in the net asset value per share, the aggregate
net asset value of each shareholder's shares of common stock should
decrease as a result of the offer. If a fund's subscription price per
share is below that fund's net asset value per share at the expiration
of the offer, shareholders would experience an immediate dilution of the
aggregate net asset value of their shares of common stock as a result of
the offer, which could be substantial.
Closed-end funds may utilize leveraging in their portfolios. Leveraging
Page 1
can be expected to cause increased price volatility for those fund's
shares, and as a result, increased volatility for the price of the Units
of a Trust. There can be no assurance that a leveraging strategy will be
successful during any period in which it is employed.
See "Senior Loans" and "High-Yield Securities" below for a discussion of
certain of the risks associated with specific types of investments.
Foreign Issuers. Since certain of the underlying bonds held by certain
of the Closed-End Funds in the Trust are issued by foreign companies, 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
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.
Senior Loans. The Closed-End Funds in the Trust invest in Senior Loans
issued by banks, other financial institutions, and other investors to
corporations, partnerships, limited liability companies and other
entities to finance leveraged buyouts, recapitalizations, mergers,
acquisitions, stock repurchases, debt refinancings and, to a lesser
extent, for general operating and other purposes. An investment by
Closed-End Funds in Senior Loans involves risk that the borrowers under
Senior Loans may default on their obligations to pay principal or
interest when due. Although Senior Loans may be secured by specific
collateral, there can be no assurance that liquidation of collateral
would satisfy the borrower's obligation in the event of non-payment or
that such collateral could be readily liquidated. Senior Loans are
Page 2
typically structured as floating rate instruments in which the interest
rate payable on the obligation fluctuates with interest rate changes. As
a result, the yield on Closed-End Funds investing in Senior Loans will
generally decline in a falling interest rate environment and increase in
a rising interest rate environment. Senior Loans are generally below
investment grade quality and may be unrated at the time of investment;
are generally not registered with the SEC or state securities
commissions; and are generally not listed on any securities exchange. In
addition, the amount of public information available on Senior Loans is
generally less extensive than that available for other types of assets.
High-Yield Securities. An investment in Units of the Trust should be
made with an understanding of the risks that an investment in "high-
yield, high-risk," fixed-rate, domestic and foreign debt obligations or
"junk bonds" may entail, including increased credit risks and the risk
that the value of the Units will decline, and may decline precipitously,
with increases in interest rates. In recent years there have been wide
fluctuations in interest rates and thus in the value of fixed-rate, debt
obligations generally. Bonds such as those included in the funds in the
Trust are, under most circumstances, subject to greater market
fluctuations and risk of loss of income and principal than are
investments in lower-yielding, higher-rated bonds, and their value may
decline precipitously because of increases in interest rates, not only
because the increases in rates generally decrease values, but also
because increased rates may indicate a slowdown in the economy and a
decrease in the value of assets generally that may adversely affect the
credit of issuers of high-yield, high-risk bonds resulting in a higher
incidence of defaults among high-yield, high-risk bonds. A slowdown in
the economy, or a development adversely affecting an issuer's
creditworthiness, may result in the issuer being unable to maintain
earnings or sell assets at the rate and at the prices, respectively,
that are required to produce sufficient cash flow to meet its interest
and principal requirements. For an issuer that has outstanding both
senior commercial bank debt and subordinated high-yield, high-risk
bonds, an increase in interest rates will increase that issuer's
interest expense insofar as the interest rate on the bank debt is
fluctuating. However, many leveraged issuers enter into interest rate
protection agreements to fix or cap the interest rate on a large portion
of their bank debt. This reduces exposure to increasing rates, but
reduces the benefit to the issuer of declining rates. The Sponsor cannot
predict future economic policies or their consequences or, therefore,
the course or extent of any similar market fluctuations in the future.
"High-yield" or "junk" bonds, the generic names for bonds rated below
"BBB-" by Standard & Poor's, or below "Baa3" by Moody's, are frequently
issued by corporations in the growth stage of their development, by
established companies whose operations or industries are depressed or by
highly leveraged companies purchased in leveraged buyout transactions.
The market for high-yield bonds is very specialized and investors in it
have been predominantly financial institutions. High-yield bonds are
generally not listed on a national securities exchange. Trading of high-
yield bonds, therefore, takes place primarily in over-the-counter
markets which consist of groups of dealer firms that are typically major
securities firms. Because the high-yield bond market is a dealer market,
rather than an auction market, no single obtainable price for a given
bond prevails at any given time. Prices are determined by negotiation
between traders. The existence of a liquid trading market for the bonds
may depend on whether dealers will make a market in the bonds. There can
be no assurance that a market will be made for any of the bonds, that
any market for the bonds will be maintained or of the liquidity of the
bonds in any markets made. Not all dealers maintain markets in all high-
yield bonds. Therefore, since there are fewer traders in these bonds
than there are in "investment grade" bonds, the bid-offer spread is
usually greater for high-yield bonds than it is for investment grade
bonds. The price at which the bonds may be sold to meet redemptions and
the value of the Trust will be adversely affected if trading markets for
the bonds are limited or absent. If the rate of redemptions is great,
the value of the Trust may decline to a level that requires liquidation.
Lower-rated bonds tend to offer higher yields than higher-rated bonds
with the same maturities because the creditworthiness of the issuers of
lower-rated bonds may not be as strong as that of other issuers.
Moreover, if a bond is recharacterized as equity by the Internal Revenue
Service for federal income tax purposes, the issuer's interest deduction
with respect to the bond will be disallowed and this disallowance may
adversely affect the issuer's credit rating. Because investors generally
perceive that there are greater risks associated with the lower-rated
bonds in the Trust, the yields and prices of these bonds tend to
fluctuate more than higher-rated bonds with changes in the perceived
quality of the credit of their issuers. In addition, the market value of
high-yield, high-risk, fixed-income bonds may fluctuate more than the
market value of higher-rated bonds since high-yield, high-risk, fixed-
income bonds tend to reflect short-term credit development to a greater
extent than higher-rated bonds. Lower-rated bonds generally involve
greater risks of loss of income and principal than higher-rated bonds.
Issuers of lower-rated bonds may possess fewer creditworthiness
characteristics than issuers of higher-rated bonds and, especially in
Page 3
the case of issuers whose obligations or credit standing have recently
been downgraded, may be subject to claims by debtholders, owners of
property leased to the issuer or others which, if sustained, would make
it more difficult for the issuers to meet their payment obligations.
High-yield, high-risk bonds are also affected by variables such as
interest rates, inflation rates and real growth in the economy.
Therefore, investors should consider carefully the relative risks
associated with investment in bonds which carry lower ratings.
The value of the Units reflects the value of the portfolio bonds,
including the value (if any) of bonds in default. Should the issuer of
any bond default in the payment of principal or interest, the funds in
the Trust may incur additional expenses seeking payment on the defaulted
bond. Because amounts (if any) recovered by the funds in payment under
the defaulted bond may not be reflected in the value of the fund shares
until actually received by the funds, and depending upon when a Unit
holder purchases or sells his or her Units, it is possible that a Unit
holder would bear a portion of the cost of recovery without receiving
any portion of the payment recovered.
High-yield, high-risk bonds are generally subordinated obligations. The
payment of principal (and premium, if any), interest and sinking fund
requirements with respect to subordinated obligations of an issuer is
subordinated in right of payment to the payment of senior obligations of
the issuer. Senior obligations generally include most, if not all,
significant debt obligations of an issuer, whether existing at the time
of issuance of subordinated debt or created thereafter. Upon any
distribution of the assets of an issuer with subordinated obligations
upon dissolution, total or partial liquidation or reorganization of or
similar proceeding relating to the issuer, the holders of senior
indebtedness will be entitled to receive payment in full before holders
of subordinated indebtedness will be entitled to receive any payment.
Moreover, generally no payment with respect to subordinated indebtedness
may be made while there exists a default with respect to any senior
indebtedness. Thus, in the event of insolvency, holders of senior
indebtedness of an issuer generally will recover more, ratably, than
holders of subordinated indebtedness of that issuer.
Obligations that are rated lower than "BBB-" by Standard & Poor's, or
"Baa3" by Moody's, respectively, should be considered speculative as
such ratings indicate a quality of less than investment grade. Investors
should carefully review the objective of the Trust and consider their
ability to assume the risks involved before making an investment in the
Trust.
Page 4
MEMORANDUM
Re: FT 1401
The only difference of consequence (except as described
below) between FT 1369 which is the current fund, and FT 1401,
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 FT
1369 Prospectus relates 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 1401 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 April 11, 2007.
FT 1401
(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
Judith M. Van Kampen Director )
of The Charger )
Corporation, the ) April 11, 2007
General Partner of )
First Trust )
Portfolios, L.P. )
Karla M. Van Kampen-Pierre Director )
of The Charger )
Corporation, the ) Jason T. Henry
General Partner of ) Attorney-in-Fact**
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 and 3.3 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 1401 among First Trust
Portfolios L.P., as Depositor, The Bank of New York, as
Trustee, First Trust Advisors L.P., as Evaluator and
Portfolio Supervisor, and FTP Services LLC, as FTPS Unit
Servicing Agent.
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.
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