SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1 to
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
A. Exact Name of Trust: FT 5969
B. Name of Depositor: FIRST TRUST PORTFOLIOS L.P.
C. Complete Address of Depositor's 120 East Liberty Drive
Principal Executive Offices: Suite 400
Wheaton, Illinois 60187
D. Name and Complete Address of
Agents for Service: FIRST TRUST PORTFOLIOS L.P.
Attention: James A. Bowen
120 East Liberty Drive
Suite 400
Wheaton, Illinois 60187
CHAPMAN & CUTLER LLP
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
E. Title and Amount of Securities
Being Registered: An indefinite number of
Units pursuant to Rule
24f-2 promulgated under
the Investment Company Act
of 1940, as amended.
F. 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 MARCH 4, 2016
Diversified Fixed Income ETF Portfolio, Series 26
FT 5969
FT 5969 is a series of a unit investment trust, the FT Series. FT 5969
consists of a single portfolio known as Diversified Fixed Income ETF
Portfolio, Series 26 (the "Trust"). The Trust invests in a diversified
portfolio of common stocks ("Securities") issued by fixed-income
exchange-traded funds ("ETFs" or "Funds"). Certain of the ETFs invest in
high-yield securities. See "Risk Factors" for a discussion of the risk
of investing in high-yield securities or "junk" bonds. An investment can
be made in the underlying Securities directly rather than through the
Trust. These direct investments can be made without paying the sales
charge, operating expenses and organizational costs of the Trust. The
Trust seeks a high rate of current monthly income.
THE SECURITIES AND EXCHANGE COMMISSION ("SEC") HAS NOT APPROVED OR
DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
FIRST TRUST(R)
800-621-1675
The date of this prospectus is April __, 2016
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 9
Risk Factors 10
Public Offering 13
Distribution of Units 17
The Sponsor's Profits 18
The Secondary Market 18
How We Purchase Units 18
Expenses and Charges 18
Tax Status 19
Retirement Plans 22
Rights of Unit Holders 22
Income and Capital Distributions 23
Redeeming Your Units 23
Investing in a New Trust 24
Removing Securities from the Trust 25
Amending or Terminating the Indenture 26
Information on the Sponsor, Trustee, FTPS Unit Servicing
Agent and Evaluator 26
Other Information 28
Page 2
Summary of Essential Information (Unaudited)
Diversified Fixed Income ETF Portfolio, Series 26
FT 5969
At the Opening of Business on the Initial Date of Deposit-April __, 2016
Sponsor: First Trust Portfolios L.P.
Trustee: The Bank of New York Mellon
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) (.145)
_______
Redemption Price per Unit (5) 9.755
Less Creation and Development Fee per Unit (3) (5) (.050)
Less Organization Costs per Unit (5) (.032)
_______
Net Asset Value per Unit $ 9.673
=======
Cash CUSIP Number
Reinvestment CUSIP Number
Fee Account Cash CUSIP Number
Fee Account Reinvestment CUSIP Number
FTPS CUSIP Number
Pricing Line Product Code
Ticker Symbol
First Settlement Date April __, 2016
Mandatory Termination Date (6) July 17, 2017
Income Distribution Record Date Tenth day of each month, commencing May 10, 2016.
Income Distribution Date (7) Twenty-fifth day of each month, commencing May 25, 2016.
_____________
<FN>
(1) As of the Evaluation Time 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
dividends on the Securities. After this date, a pro rata share of any
accumulated dividends on the Securities will be included.
(3) You will pay a maximum sales charge of 2.95% of the Public
Offering Price per Unit (equivalent to 2.98% 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 at
the Evaluation Time on the business day prior to the Initial Date of
Deposit. If a Security is not listed, or if no closing sale price
exists, it is valued at its closing ask price on such date. See "Public
Offering-The Value of the Securities." 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 and the estimated organization
costs per Unit will be deducted from the 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, these fees will not be deducted from the
redemption proceeds. See "Redeeming Your Units."
(6) See "Amending or Terminating the Indenture."
(7) The Trustee will distribute money from the Capital Account
monthly on the twenty-fifth day of each month to Unit holders of record
on the tenth day of each month if the amount available for distribution
equals at least $1.00 per 100 Units. In any case, the Trustee will
distribute any funds in the Capital Account in December of each year and
as part of the final liquidation distribution. See "Income and Capital
Distributions." Upon termination of the Trust, amounts in the Income
Account (which consist of dividends on the Securities) will be included
in amounts distributed to remaining Unit holders.
</FN>
Page 3
Fee Table (Unaudited)
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 15 months and is a unit investment trust rather than a
mutual fund, this information allows you to compare fees.
Amount
per Unit
________
Unit Holder Sales Fees (as a percentage of public offering price)
Maximum Sales Charge
Initial sales charge 1.00%(a) $.100
Deferred sales charge 1.45%(b) $.145
Creation and development fee 0.50%(c) $.050
_____ _____
Maximum sales charge (including creation and development fee) 2.95% $.295
===== =====
Organization Costs (as a percentage of public offering price)
Estimated organization costs .320%(d) $.0320
===== ======
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) $
Acquired Fund fees and 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, the principal
amount and distributions are rolled every 15 months into a New Trust and
you are subject to a reduced transactional sales charge. The example
also assumes a 5% return on your investment each year and that your
Trust's, and each New 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, assuming you roll your proceeds from one trust to the next for
the periods shown, would be:
1 Year 3 Years 5 Years 10 Years
______ _______ _______ ________
$ $ $ $
If you elect not to roll your proceeds from one trust to the next, your
costs will be limited by the number of years your proceeds are invested,
as set forth above.
_____________
<FN>
(a) The combination of the initial and deferred sales charge comprises
what we refer to as the "transactional sales charge." The initial sales
charge is actually equal to the difference between the maximum sales
charge of 2.95% and the sum of any remaining deferred sales charge and
creation and development fee.
(b) The deferred sales charge is a fixed dollar amount equal to $.145
per Unit which, as a percentage of the Public Offering Price, will vary
over time. The deferred sales charge will be deducted in three monthly
installments commencing July 20, 2016.
(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 end of the initial offering period. Estimated organization
costs are assessed on a fixed dollar amount per Unit basis which, as a
percentage of average net assets, will vary over time.
(e) With the exception of the underlying 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 actual Trust operating expenses, the Trust, and
therefore Unit holders, will indirectly bear similar operating expenses
of the Funds in which the Trust invests in the estimated amounts set
forth in the table. These expenses are estimated based on the actual
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 Fund shares were
held directly.
</FN>
Page 4
Report of Independent
Registered Public Accounting Firm
Page 5
Statement of Net Assets
Diversified Fixed Income ETF Portfolio, Series 26
FT 5969
At the Opening of Business on the Initial Date of Deposit-April __, 2016
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) $9.673
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 Trust is registered as a unit investment trust under the Investment
Company Act of 1940. 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. The Trust intends to comply
in its initial fiscal year and thereafter with provisions of the
Internal Revenue Code applicable to regulated investment companies and
as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) distributed to
Unit holders.
(1) The Trust invests in a diversified portfolio of ETFs. Aggregate
cost of the Securities listed under "Schedule of Investments" for the
Trust is based on their aggregate underlying value. The Trust has a
Mandatory Termination Date of July 17, 2017.
(2) An irrevocable letter of credit issued by The Bank of New York
Mellon, of which approximately $______ has been 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 $.0320 per
Unit. A payment will be made at 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 of the Trust 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 $.145 per Unit, payable to the Sponsor in three
approximately equal monthly installments beginning on July 20, 2016 and
on the twentieth day of each month thereafter (or if such date is not a
business day, on the preceding business day) through September 20, 2016.
If Unit holders redeem Units before September 20, 2016, they will have
to pay the remaining amount of the deferred sales charge applicable to
such Units when they redeem them.
(5) The creation and development fee ($.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 close of the initial offering
period.
(7) The aggregate cost to investors in the Trust includes a maximum
sales charge (comprised of an initial and a deferred sales charge and
the creation and development fee) computed at the rate of 2.95% of the
Public Offering Price (equivalent to 2.98% 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
Diversified Fixed Income ETF Portfolio, Series 26
FT 5969
At the Opening of Business on the Initial Date of Deposit-April __, 2016
Percentage Market Cost of
Ticker Symbol and of Aggregate Number Value per Securities to
Name of Issuer of Securities (1) Offering Price of Shares Share the Trust (2)
_____________________________________ ______________ _________ _________ _____________
EXCHANGE-TRADED FUNDS (100.00%):
% $ $
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
_______ ______
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 ___, 2016. 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 cost of
Securities to the Trust may not compute due to rounding the market value
per share. The valuation of the Securities has been determined by the
Evaluator, an affiliate of the Sponsor. In accordance with Financial
Accounting Standards Board Accounting Standards Codification 820, "Fair
Value Measurement," the Trust's investments are classified as Level 1,
which refers to securities traded in an active market. 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
5969, consists of a single portfolio known as Diversified Fixed Income
ETF Portfolio, Series 26.
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 Mellon 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 800-621-1675, DEPT. CODE 2.
How We Created the Trust.
On the Initial Date of Deposit, we deposited a portfolio of ETFs 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 under
"Schedule of Investments"), adjusted to reflect the sale, redemption or
liquidation of any of the Securities or any stock split or 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 (the "1940 Act"). When acting in an
agency capacity, we may select various broker/dealers to execute
securities transactions on behalf of the Trust, which may include
broker/dealers who sell Units of the Trust. We do not consider sales of
Units of the Trust or any other products sponsored by First Trust as a
factor in selecting such broker/dealers.
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 to satisfy Trust obligations, to meet
redemption requests and, as described in "Removing Securities from the
Trust," to maintain the sound investment character of the Trust, 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 the Securities and,
except as described in "Removing Securities from the Trust," will
endeavor to vote the Securities such that the Securities are voted as
closely as possible in the same manner and the same general proportion
as are the Securities held by owners other than such Trust.
Neither we nor the Trustee will be liable for a failure in any of the
Securities. However, if a contract for the purchase of any of the
Securities initially deposited in the Trust fails, unless we can
purchase substitute Securities ("Replacement Securities"), we will
refund to you that portion of the purchase price and transactional sales
charge resulting from the failed contract on the next Income
Distribution Date. Any Replacement Security the Trust acquires will be
identical to those from the failed contract.
Page 8
Portfolio
Objective.
The Trust seeks a high rate of current monthly income by investing in a
diversified portfolio of fixed-income ETFs.
The Trust is a unit investment trust which seeks to provide investors
with current monthly income and diversification across fixed income
asset classes. To accomplish this, the portfolio invests in a broad
range of ETFs which are further diversified among U.S. and foreign fixed
income securities of various maturities and credit quality.
Instead of using multiple investments, investors may be able to fulfill
the fixed income allocation within their investment plans with this
single, diversified portfolio.
What is Asset Allocation? Asset allocation is the process of developing
a diversified investment portfolio by combining different assets in
varying proportions. A portfolio's long-term performance is determined
primarily by the distribution of dollars among asset classes. The asset
allocation decision is one of the most important decisions you will make
as an investor. Studies have found that an asset allocation policy is
the number one factor in determining both the return and the risk of an
investment portfolio.*
Contributing Factors to Performance Variation*
Factor Impact
____________________________________________________
Asset Allocation Policy 91.5%
Market Timing 1.8%
Security Selection 4.6%
Other 2.1%
* Source: Gary P. Brinson, L. Randolph Hood, and Gilbert L. Beebower,
July/August 1986; Gary P. Brinson, Brian D. Singer, and Gilbert L.
Beebower, May/June 1991. Past performance is no guarantee of future
results.
What is an ETF?
ETFs offer investors the opportunity to buy and sell an entire basket of
securities with a single transaction throughout the trading day. ETFs
combine the characteristics of a mutual fund with the convenience and
trading flexibility of stocks. Below is a list of other ETF features.
- Diversification-ETFs hold a basket of securities which helps to
mitigate single security risk. It is important to note that
diversification does not guarantee a profit or protect against loss.
- Transparency-ETF holdings are available daily so investors know what
they own.
- Tax Efficiency-The ETF structure allows for increased tax efficiency.
- Fully Invested-Unlike a traditional mutual fund, ETFs do not need to
hold cash in order to satisfy investor redemptions which allows them to
better adhere to their investment objective.
ETF Selection.
The ETFs were selected by our research department based on a number of
factors including, but not limited to, the size and liquidity of the
ETF, the current dividend yield of the ETF, the quality and character of
the securities held by the ETF, and the expense ratio of the ETF, while
attempting to limit the overlap of the securities held by the ETFs.
Exchange-Traded Funds. ETFs are investment pools that hold other
securities. ETFs are either passively-managed index funds that seek to
replicate the performance or composition of a recognized securities
index or actively-managed funds that seek to achieve a stated investment
objective. ETFs are either open-end management investment companies or
unit investment trusts registered under the 1940 Act. Unlike typical
open-end funds or unit investment trusts, ETFs generally do not sell or
redeem their individual shares at net asset value. ETFs generally sell
and redeem shares in large blocks (often known as "Creation Units");
however, the Sponsor does not intend to sell or redeem ETFs in this
manner. In addition, securities exchanges list ETF shares for trading,
which allows investors to purchase and sell individual ETF shares at
current market prices throughout the day. The Trust will purchase and
sell ETF shares on these securities exchanges. ETFs therefore possess
characteristics of traditional open-end funds and unit investment
trusts, which issue redeemable shares, and of corporate common stocks or
closed-end funds, which generally issue shares that trade at negotiated
prices on securities exchanges and are not redeemable.
ETFs can provide exposure to broad-based indices, growth and value
styles, market cap segments, sectors and industries, specific countries
or regions of the world or physical commodities. The securities
comprising ETFs may be common stocks, fixed-income securities or
physical commodities. ETFs contain a number of securities, anywhere from
fewer than 20 securities up to more than 1,000 securities. As a result,
investors in ETFs obtain exposure to a much greater number of securities
than an individual investor would typically be able to obtain on their
Page 9
own. The performance of index-based ETFs is generally highly correlated
with the indices or sectors which they are designed to track.
You should be aware that predictions stated herein may not be realized.
Of course, 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
Principal Risks.
The following is a discussion of the principal risks of investing in the
Trust.
Price Volatility. The Trust invests in ETFs. The value of the Trust's
Units will fluctuate with changes in the value of these Securities. The
value of a security fluctuates 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 market
volatility, or when political or economic events affecting the issuers
occur.
Because the Trust is not managed, the Trustee will not sell Securities
in response to or in anticipation of market fluctuations, as is common
in managed investments. As with any investment, we cannot guarantee that
the performance of the Trust will be positive over any period of time,
especially the relatively short 15-month life of the Trust, or that you
won't lose money. Units of the Trust are not deposits of any bank and
are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Current Economic Conditions. The global economy continues to experience
subdued growth. Most developed and developing economies are continuing
to struggle against the lingering effects of the financial crisis which
began in 2007, grappling in particular with the challenges of taking
appropriate fiscal and monetary policy actions. Inflation remains tame
worldwide, partly reflecting output gaps, high unemployment and a
continued financial deleveraging in major developed economies. The
global employment situation remains challenging, as long-lasting effects
from the financial crisis continue to weigh on labor markets in many
countries and regions. Prices of most primary commodities, a driving
force behind many emerging market economies, have declined moderately in
recent years, mainly driven by generally weak global demand as global
economic growth remains anemic.
The financial crisis began with problems in the U.S. housing and credit
markets, many of which were caused by defaults on "subprime" mortgages
and mortgage-backed securities, eventually leading to the failures of
some large financial institutions and has negatively impacted most
sectors of the global economy. Recently, falling oil and other commodity
prices, subdued growth in China and other emerging markets and uncertain
economic forecasts for the United States and a number of developed
countries have contributed to significant market volatility worldwide.
Due to the current state of uncertainty in the economy, the value of the
Securities held by the Trust may be subject to steep declines or
increased volatility due to changes in performance or perception of the
issuers. To combat the financial crisis, central banks in the United
States, Europe and Asia have held interest rates at historically low
levels for several years. However, there is no assurance that this will
continue in the future and no way to predict how quickly interest rates
will rise once central banks change their current position. In addition,
other extraordinary steps have been taken by the governments of several
leading economic countries to combat the financial crisis; however, the
impact of these measures has been mixed and in certain instances has
produced unintended consequences.
Distributions. As stated under "Summary of Essential Information," the
Trust will generally make monthly distributions of income. The Funds
held by the Trust make distributions on a monthly or quarterly basis. As
a result of changing interest rates, refundings, sales or defaults on
the underlying securities held by the Funds, and other factors, there is
no guarantee that distributions will either remain at current levels or
increase over time.
Exchange-Traded Funds. The Trust invests in shares of ETFs. ETFs are
investment pools that hold other securities. ETFs are either passively-
managed index funds that seek to replicate the performance or
composition of a recognized securities index or actively-managed funds
that seek to achieve a stated investment objective. ETFs are either open-
end management investment companies or unit investment trusts registered
under the 1940 Act. Unlike typical open-end funds or unit investment
trusts, ETFs generally do not sell or redeem their individual shares at
net asset value. ETFs generally sell and redeem shares in large blocks
(often known as "Creation Units"); however, the Sponsor does not intend
to sell or redeem ETFs in this manner. In addition, securities exchanges
list ETF shares for trading, which allows investors to purchase and sell
individual ETF shares at current market prices throughout the day. The
Page 10
Trust will purchase and sell ETF shares on these securities exchanges.
ETFs therefore possess characteristics of traditional open-end funds and
unit investment trusts, which issue redeemable shares, and of corporate
common stocks or closed-end funds, which generally issue shares that
trade at negotiated prices on securities exchanges and are not
redeemable. ETFs are subject to various risks, including management's
ability to meet the fund's investment objective, and to manage the
fund's portfolio when the underlying securities are redeemed or sold,
during periods of market turmoil and as investors' perceptions regarding
ETFs or their underlying investments change. The Trust and the
underlying funds have management and operating expenses. You will bear
not only your share of your Trust's expenses, but also the expenses of
the underlying funds. By investing in other funds, a Trust incurs
greater expenses than you would incur if you invested directly in the
funds.
Shares of ETFs may 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 the ETF 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.
Investment in Other Investment Companies Risk. Because the Trust holds
Funds, Unit holders are subject to the risk that the securities selected
by the Funds' investment advisors will underperform the markets, the
relevant indices or the securities selected by other funds. Further,
Funds may in the future invest in other types of securities which
involve risk which may differ from those set forth below. In addition,
because the Trust holds Funds, Unit holders bear both their
proportionate share of the expenses of the Trust and, indirectly the
expenses of the Funds. Certain of the Funds held by the Trust may invest
a relatively high percentage of their assets in a limited number of
issuers. As a result, these Funds may be more susceptible to a single
adverse economic or regulatory occurrence affecting one or more of these
issuers, experience increased volatility and be highly concentrated in
certain issuers.
Index Correlation Risk. Index correlation risk is the risk that the
performance of an index-based ETF will vary from the actual performance
of the fund's target index, known as "tracking error." This can happen
due to transaction costs, market impact, corporate actions (such as
mergers and spin-offs) and timing variances. Some index-based ETFs use a
technique called "representative sampling," which means that the ETF
invests in a representative sample of securities in its target index
rather than all of the index securities. This could increase the risk of
a tracking error.
High-Yield Securities. Certain of the Funds held by the Trust invest in
securities rated below investment grade by one or more rating agencies
(high-yield securities or "junk" bonds). High-yield securities held by
Funds represent approximately ____% of the underlying assets of the
Trust. 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 securities or "junk" bonds, 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 that 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, and therefore carry an increased
risk of default as compared to investment grade issues. 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.
Investment Grade Securities. Certain of the Funds held by the Trust
invest in investment grade securities. The value of these securities
will decline 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.
Page 11
Preferred Securities. Certain of the Funds held by the Trust invest in
preferred stocks. Preferred stocks are unique securities that combine
some of the characteristics of both common stocks and bonds. Preferred
stocks generally pay a fixed rate of return and are sold on the basis of
current yield, like bonds. However, because they are equity securities,
preferred stocks provide equity ownership of a company and the income is
paid in the form of dividends. Preferred stocks typically have a yield
advantage over common stocks as well as comparably-rated fixed income
investments. Preferred stocks are typically subordinated to bonds and
other debt instruments in a company's capital structure, in terms of
priority to corporate income, and therefore will be subject to greater
credit risk than those debt instruments.
Senior Loan Securities ("Senior Loans"). Certain of the Funds held by
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 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
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 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 "Risk
Factors-High-Yield Securities" 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.
Foreign Securities. Certain of the Funds held by the Trust invest in
securities issued by foreign entities, which makes the Trust subject to
more risks than if it only invested in Funds which invest solely in
domestic securities. A foreign security is either directly listed on a
U.S. securities exchange, is in the form of an American Depositary
Receipt/ADR or a Global Depositary Receipt/GDR which trades on the over-
the-counter market or is listed on a U.S. or foreign securities
exchange, or is directly listed on a foreign securities exchange. Risks
of foreign securities include higher brokerage costs; different
accounting standards; expropriation, nationalization or other adverse
political or economic developments; currency devaluations, blockages or
transfer restrictions; restrictions on foreign investments and exchange
of securities; inadequate financial information; lack of liquidity of
certain foreign markets; and less government supervision and regulation
of exchanges, brokers, and issuers in foreign countries. Certain foreign
markets have experienced heightened volatility due to recent negative
political or economic developments or natural disasters. Securities
issued by non-U.S. issuers may pay interest and/or dividends in foreign
currencies and may be principally traded in foreign currencies.
Therefore, there is a risk that the U.S. dollar value of these interest
and/or dividend payments and/or securities will vary with fluctuations
in foreign exchange rates. Investments in debt securities of foreign
governments present special risks, including the fact that issuers may
be unable or unwilling to repay principal and/or interest when due in
accordance with the terms of such debt, or may be unable to make such
repayments when due in the currency required under the terms of the
debt. Political, economic and social events also may have a greater
impact on the price of debt securities issued by foreign governments
than on the price of U.S. securities.
American Depositary Receipts/ADRs, Global Depositary Receipts/GDRs and
similarly structured securities may be less liquid than the underlying
shares in their primary trading market. Any distributions paid to the
holders of depositary receipts are usually subject to a fee charged by
the depositary. Issuers of depositary receipts are not obligated to
disclose information that is considered material in the United States.
As a result, there may be less information available regarding such
issuers. Holders of depositary receipts may have limited voting rights,
and investment restrictions in certain countries may adversely impact
the value of depositary receipts because such restrictions may limit the
ability to convert shares into depositary receipts and vice versa. Such
restrictions may cause shares of the underlying issuer to trade at a
discount or premium to the market price of the depositary receipts.
Page 12
Emerging Markets. Certain of the Funds held by the Trust invest in
securities issued by companies headquartered in countries considered to
be emerging markets. Risks of investing in developing or emerging
countries are even greater than the risks associated with foreign
investments in general. These increased risks include, among other
risks, the possibility of investment and trading limitations, greater
liquidity concerns, higher price volatility, greater delays and
disruptions in settlement transactions, greater political uncertainties
and greater dependence on international trade or development assistance.
In addition, emerging market countries may be subject to overburdened
infrastructures, obsolete financial systems and environmental problems.
For these reasons, investments in emerging markets are often considered
speculative.
Interest Rate Risk. Interest rate risk is the risk that the value of the
securities held by the Funds held by the Trust will fall if interest
rates increase. Securities typically fall in value when interest rates
rise and rise in value when interest rates fall. Securities with longer
periods before maturity are often more sensitive to interest rate changes.
Credit Risk. Credit risk is the risk that a security's issuer is unable
or unwilling to make dividend, interest or principal payments when due
and the related risk that the value of a security may decline because of
concerns about the issuer's ability or willingness to make such payments.
Call Risk. Call risk is the risk that the issuer prepays or "calls" a
bond before its stated maturity. An issuer might call a bond if interest
rates fall and the bond pays a higher than market interest rate or if
the issuer no longer needs the money for its original purpose. A bond's
call price could be less than the price the Fund paid for the bond and
could be below the bond's par value. This means a Fund could receive
less than the amount paid for the bond and may not be able to reinvest
the proceeds in securities with as high a yield as the called bond. A
Fund may contain bonds that have "make whole" call options that
generally cause the bonds to be redeemable at any time at a designated
price. Such bonds are generally more likely to be subject to early
redemption and may result in the reduction of income received by the Fund.
Extension Risk. If interest rates rise, certain obligations may be paid
off by the obligor at a slower rate than expected, which will cause the
value of such obligations to fall.
Leverage Risk. Certain of the Funds held by the Trust may employ the use
of leverage in their portfolios. Leverage may be structural leverage,
through borrowings or the issuance of preferred stock, or effective
leverage, which results from a Fund's investment in derivative
instruments that are inherently leveraged. While leverage often serves
to increase the yield of a Fund, this leverage also subjects the Fund to
increased risks, including the likelihood of increased volatility and
the possibility that the Fund's common share income will fall if the
dividend rate on the preferred shares or the interest rate on any
borrowings rises.
Market Risk. Market risk is the risk that the value of the Securities
held by the Trust will fluctuate. Market value fluctuates in response to
various factors. These can include changes in interest rates, inflation,
the financial condition of a Securities' issuer, perceptions of the
issuer, ratings on a bond, or political or economic events affecting the
issuer. Because the Trust is not managed, the Trustee will not sell
Securities in response to or in anticipation of market fluctuations, as
is common in managed investments.
Prepayment Risk. Many types of debt instruments are subject to
prepayment risk, which is the risk that the issuer will repay principal
prior to the maturity date. Debt instruments allowing prepayment may
offer less potential for gains during a period of declining interest
rates.
Legislation/Litigation. From time to time, various legislative
initiatives are proposed in the United States and abroad which may have
a negative impact on certain of the Trust's investments. In addition,
litigation regarding any of the issuers of the Securities, or the
industries represented by these issuers, may negatively impact the value
of these securities. We cannot predict what impact any pending or
proposed legislation or pending or threatened litigation will have on
the value of the Trust's investments.
Public Offering
The Public Offering Price.
Units will be purchased 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).
Page 13
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.
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, as amended.
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 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 end of the initial offering period (a significantly shorter time
period than the life of the Trust). During 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 per account you can purchase of the Trust is
generally $1,000 worth of Units ($500 if you are purchasing Units for
your Individual Retirement Account or any other qualified retirement
plan), but such amounts may vary depending on your selling firm.
Maximum Sales Charge.
The maximum sales charge is comprised of a transactional sales charge
and a creation and development fee. After the initial offering period
the maximum sales charge will be reduced by 0.50%, to reflect the amount
of the previously charged creation and development fee.
Transactional Sales Charge.
The transactional sales charge you will pay has both an initial and a
deferred component.
Initial Sales Charge. The initial sales charge, which you will pay at
the time of purchase, is equal to the difference between the maximum
sales charge of 2.95% of the Public Offering Price and the sum of the
maximum remaining deferred sales charge and creation and development fee
(initially $.195 per Unit). On the Initial Date of Deposit, the initial
sales charge is equal to approximately 1.00% of the Public Offering
Price of a Unit. Thereafter, it will vary from 1.00% depending on the
purchase price of your Units and as deferred sales charge and creation
and development fee payments are made. When the Public Offering Price
exceeds $10.00 per Unit, the initial sales charge will exceed 1.00% of
the Public Offering Price.
Monthly Deferred Sales Charge. In addition, three monthly deferred sales
charge payments of approximately $.0484 per Unit will be deducted from
the Trust's assets on approximately the twentieth day of each month from
July 20, 2016 through September 20, 2016. If you buy Units at a price of
less than $10.00 per Unit, the dollar amount of the deferred sales
charge will not change, but the deferred sales charge on a percentage
basis will be more than 1.45% of the Public Offering Price.
Creation and Development Fee.
As Sponsor, we will also receive, and the Unit holders will pay, a
creation and development fee. See "Expenses and Charges" for a
description of the services provided for this fee. The creation and
development fee is a charge of $.050 per Unit collected at the end of
the initial offering period. If you buy Units at a price of less than
$10.00 per Unit, the dollar amount of the creation and development fee
will not change, but the creation and development fee on a percentage
basis will be more than 0.50% of the Public Offering Price.
Page 14
Discounts for Certain Persons.
The maximum sales charge is 2.95% per Unit and the maximum dealer
concession is 2.25% per Unit. However, if you invest at least $50,000
including any proceeds as described below (except if you are purchasing
for "Fee Accounts" as described below), the maximum sales charge for the
amount of the investment eligible to receive the reduced sales charge is
reduced as follows:
Your maximum Dealer
If you invest sales charge concession
(in thousands):* will be: will be:
___________________________________________________________
$50 but less than $100 2.70% 2.00%
$100 but less than $250 2.45% 1.75%
$250 but less than $500 2.20% 1.50%
$500 but less than $1,000 1.95% 1.25%
$1,000 or more 1.40% 0.75%
* The breakpoints will be adjusted to take into consideration purchase
orders stated in dollars which cannot be completely fulfilled due to the
requirement that only whole Units be issued.
The reduced sales charge for quantity purchases will apply only to
purchases not eligible for the Rollover, redemption or termination
proceeds discount set forth below made by the same person on any one day
from any one dealer. To help you reach the above levels, you can combine
the Units you purchase of the Trust with any other same day purchases of
other trusts for which we are Principal Underwriter and are currently in
the initial offering period. In addition, we will also consider Units
you purchase in the name of your spouse, or the equivalent if recognized
under local law, or child (including step-children) under the age of 21
living in the same household 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 including pension,
profit sharing or employee benefit plans, as well as multiple-employee
benefit plans of a single employer or affiliated employers (provided
they are not aggregated with personal accounts). You must inform your
dealer of any combined purchases before the sale in order to be eligible
for the reduced sales charge.
You are entitled to use your Rollover proceeds from a previous series of
the Trust, or redemption or termination proceeds from any unit
investment trust (regardless of who was 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 1.40% of the Public Offering Price), but you
will not be eligible to receive the reduced sales charges described in
the above table with respect to such proceeds. 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 to receive the reduced sales charge
described in this paragraph, the trade date of the Rollover, redemption
or termination resulting in the receipt of such proceeds must have
occurred within 30 calendar days prior to 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 Rollover, termination or redemption proceeds used
for the Unit purchase and such transaction must be from the same
account. 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.
If you are purchasing Units for an investment account, the terms of
which provide that your registered investment advisor or registered
broker/dealer (a) charges periodic fees in lieu of commissions; (b)
charges for financial planning, investment advisory or asset management
services; or (c) charges a comprehensive "wrap fee" or similar fee for
these or comparable services ("Fee Accounts"), you will not be assessed
the transactional sales charge described in this section on such
purchases. These Units will be designated as Fee Account Units and,
depending upon the purchase instructions we receive, assigned either a
Fee Account Cash CUSIP Number, if you elect to have distributions paid
to you, or a Fee Account Reinvestment CUSIP Number, if you elect to have
distributions reinvested into additional Units of the Trust. Certain Fee
Account Unit holders may be assessed transaction or other account fees
on the purchase and/or redemption of such Units by their registered
investment advisor, broker/dealer or other processing organizations for
providing certain transaction or account activities. Fee Account 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 and their affiliates will
purchase Units at the Public Offering Price less the applicable dealer
Page 15
concession, subject to the policies of the related selling firm.
Immediate family members include spouses, or the equivalent if
recognized under local law, children or step-children under the age of
21 living in the same household, parents or step-parents and trustees,
custodians or fiduciaries for the benefit of such persons. Only
employees, officers and directors of companies that allow their
employees to participate in this employee discount program are eligible
for the discounts.
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 Account Units, you will be
credited additional Units with a dollar value equal to 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 and creation and
development fee 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
or the creation and development fee are collected than their value at
the time they were issued.
The Value of the Securities.
The Evaluator will determine the aggregate underlying value of the
Securities in the Trust as of the Evaluation Time on each business day
and will adjust the Public Offering Price of the Units according to this
valuation. This Public Offering Price will be effective for all orders
received before the Evaluation Time on each such day. If we or the
Trustee receive orders for purchases, sales or redemptions after that
time, or on a day which is not a business day, they will be held until
the next determination of price. The term "business day" as used in this
prospectus shall mean any day on which the NYSE is open.
The aggregate underlying value of the Securities in the Trust will be
determined as follows: if the Securities are listed on a national or
foreign securities exchange or The NASDAQ Stock Market, LLC(R), their
value shall generally be based on the closing sale price on the exchange
or system which is the principal market therefore ("Primary Exchange"),
which shall be deemed to be the NYSE if the Securities are listed
thereon (unless the Evaluator deems such price inappropriate as the
basis for evaluation). In the event a closing sale price on the Primary
Exchange is not published, the Securities will be valued based on the
last trade price on the Primary Exchange. If no trades occur on the
Primary Exchange for a specific trade date, the value will be based on
the closing sale price from, in the opinion of the Evaluator, an
appropriate secondary exchange, if any. If no trades occur on the
Primary Exchange or any appropriate secondary exchange on a specific
trade date, the Evaluator will determine the value of the Securities
using the best information available to the Evaluator, which may include
the prior day's evaluated price. If the Security is an American
Depositary Receipt/ADR, Global Depositary Receipt/GDR or other similar
security in which no trade occurs on the Primary Exchange or any
appropriate secondary exchange on a specific trade date, the value will
be based on the evaluated price of the underlying security, determined
as set forth above, after applying the appropriate ADR/GDR ratio, the
exchange rate and such other information which the Evaluator deems
appropriate. For purposes of valuing Securities traded on The NASDAQ
Stock Market, LLC(R), closing sale price shall mean the Nasdaq(R)
Official Closing Price as determined by The NASDAQ Stock Market, LLC(R).
If the Securities are not so listed or, if so listed and the principal
market therefore is other than on the Primary Exchange or any
appropriate secondary exchange, the value shall generally be based on
the current ask price on the over-the-counter market (unless the
Evaluator deems such price inappropriate as a basis for evaluation). If
current ask prices are unavailable, the value is generally determined
(a) on the basis of current ask prices for comparable securities, (b) by
appraising the value of the Securities on the ask side of the market, or
(c) any combination of the above. If such prices are in a currency other
than U.S. dollars, the value of such Security shall be converted to U.S.
dollars based on current exchange rates (unless the Evaluator deems such
prices inappropriate as a basis for evaluation). If the Evaluator deems
a price determined as set forth above to be inappropriate as the basis
for evaluation, the Evaluator shall use such other information available
to the Evaluator which it deems appropriate as the basis for determining
the value of a Security.
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.
Page 16
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 2.25% of the Public
Offering Price per Unit, subject to the reduced concession applicable to
volume purchases as set forth in "Public Offering-Discounts for Certain
Persons." However, for Units subject to a transactional sales charge
which are purchased using redemption or termination proceeds or on
purchases by Rollover Unit holders, this amount will be reduced to 1.30%
of the sales price of these Units (0.75% for purchases of $1,000,000 or
more).
Eligible dealer firms and other selling agents who, 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 of units during the
current month of unit investment trusts sponsored by us:
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 but less than $750 0.125%
$750 but less than $1,000 0.130%
$1,000 but less than $1,500 0.135%
$1,500 but less than $2,000 0.140%
$2,000 but less than $3,000 0.150%
$3,000 but less than $4,000 0.160%
$4,000 but less than $5,000 0.170%
$5,000 or more 0.175%
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
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
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 advisors, 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,
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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, Inc. or (3) information from publications such as Money,
The New York Times, U.S. News and World Report, Bloomberg Businessweek,
Forbes or Fortune. The investment characteristics of the Trust differ
from other comparative investments. You should not assume that these
performance comparisons will be representative of the Trust's future
performance. We may also, from time to time, use advertising which
classifies trusts or portfolio securities according to capitalization
and/or investment style.
The Sponsor's Profits
We will receive a gross sales commission equal to the maximum
transactional sales charge per Unit 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.
The Secondary Market
Although not obligated, we may 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 (OR THE FTPS UNIT
SERVICING AGENT IN THE CASE OF FTPS UNITS). 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 Unit Servicing Agent in the case of FTPS Units)
will notify us of any tender of Units for redemption. If our bid at that
time is equal to or greater than the Redemption Price per Unit, we may
purchase the Units. You will receive your proceeds from the sale no
later than if they were redeemed by the Trustee. We may tender Units
that 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 of the Trust exceed the estimate, the Trust will bear
the excess. The Trustee will pay operating expenses of the Trust from
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the Income Account if funds are available, and then from the Capital
Account. The Income and Capital Accounts are non-interest-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 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 fees paid to us
or our affiliates for providing services to all unit investment trusts
be more than the actual cost of providing such services in such year.
As Sponsor, we will receive a fee from the Trust for creating and
developing the Trust, including determining the Trust's objectives,
policies, composition and size, selecting service providers and
information services and for providing other similar administrative and
ministerial functions. The "creation and development fee" is a charge of
$.050 per Unit outstanding at the end of the initial offering period.
The Trustee will deduct this amount from the Trust's assets as of the
close of the initial offering period. We do not use this fee to pay
distribution expenses or as compensation for sales efforts. This fee
will not be deducted from your proceeds if you sell or redeem your Units
before the end of the initial offering period.
In addition to the Trust's operating expenses and those fees described
above, the Trust may also incur the following charges:
- All legal expenses of the Trustee according to its responsibilities
under the Indenture;
- The expenses and costs incurred by the Trustee to protect the Trust
and your rights and interests;
- Fees for any extraordinary services the Trustee performed under the
Indenture;
- Payment for any loss, liability or expense the Trustee incurred
without negligence, bad faith or willful misconduct on its part, in
connection with its acceptance or administration of the Trust;
- Payment for any loss, liability or expenses we incurred without
negligence, bad faith or willful misconduct in acting as Sponsor of the
Trust;
- Foreign custodial and transaction fees (which may include compensation
paid to the Trustee or its subsidiaries or affiliates), if any; 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 Account, 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, except as specifically
provided below, 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 may not
describe your state, local or foreign tax consequences.
This federal income tax summary is based in part on the advice of
counsel to the Sponsor. The Internal Revenue Service ("IRS") could
disagree with any conclusions set forth in this section. In addition,
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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.
Trust Status.
The Trust intends to qualify as a "regulated investment company,"
commonly known as a "RIC," under the federal tax laws. If the Trust
qualifies as a RIC and distributes its income as required by the tax
law, the Trust generally will not pay federal income taxes.
For federal income tax purposes, you are treated as the owner of Trust
Units and not of the assets held by the Trust. Taxability issues are
taken into account at the trust level. Your federal income tax treatment
of income from the Trust is based on the distributions paid by the Trust.
Income From the Trust.
Trust distributions are generally taxable. After the end of each year,
you will receive a tax statement that separates the Trust's
distributions into ordinary dividends, capital gains dividends and
returns of capital. Income reported is generally net of expenses (but
see Deductibility of Trust Expenses, below). Ordinary income
distributions are generally taxed at your ordinary tax rate, however, as
further discussed below, certain ordinary income distributions received
from the Trust may be taxed at the capital gains tax rates. Generally,
you will treat all capital gains dividends as long-term capital gains
regardless of how long you have owned your Units. To determine your
actual tax liability for your capital gains dividends, you must
calculate your total net capital gain or loss for the tax year after
considering all of your other taxable transactions, as described below.
In addition, the Trust may make distributions that represent a return of
capital for tax purposes and thus will generally not be taxable to you.
The tax status of your distributions from the Trust is not affected by
whether you reinvest your distributions in additional Units or receive
them in cash. The income from the Trust that you must take into account
for federal income tax purposes is not reduced by amounts used to pay a
deferred sales charge, if any. The tax laws may require you to treat
distributions made to you in January as if you had received them on
December 31 of the previous year.
Under the "Health Care and Education Reconciliation Act of 2010," income
from the Trust may also be subject to a 3.8% "Medicare tax." This tax
will generally apply to your net investment income if your adjusted
gross income exceeds certain threshold amounts, which are $250,000 in
the case of married couples filing joint returns and $200,000 in the
case of single individuals.
Distributions with Respect to Certain Stock Dividends.
Ordinary income dividends received by an individual Unit holder from a
regulated investment company such as the Trust are generally taxed at
the same rates that apply to net capital gain, as discussed below,
provided certain holding period requirements are satisfied and provided
the dividends are attributable to qualifying dividends received by the
Trust itself. Dividends that do not meet these requirements will
generally be taxed at ordinary income rates. The Trust will provide
notice to its Unit holders of the amount of any distribution which may
be taken into account as a dividend which is eligible for the capital
gains tax rates.
Dividends Received Deduction.
A corporation that owns Units generally will not be entitled to the
dividends received deduction with respect to many dividends received
from the Trust because the dividends received deduction is generally not
available for distributions from regulated investment companies.
However, certain ordinary income dividends on Units that are
attributable to qualifying dividends received by the Trust from certain
corporations may be reported by the Trust as being eligible for the
dividends received deduction.
Sale or Redemption of Units.
If you sell or redeem your Units, you will generally recognize a taxable
gain or loss. To determine the amount of this gain or loss, you must
subtract your tax basis in your Units from the amount you receive in the
transaction. Your tax basis in your Units is generally equal to the cost
of your Units, generally including sales charges. In some cases,
however, you may have to adjust your tax basis after you purchase your
Units.
The information statement you receive in regard to the sale or
redemption of your Units may contain information about your basis in the
Units and whether any gain or loss recognized by you should be
considered long-term or short-term capital gain. The information
reported to you is based upon rules that do not take into consideration
all facts that may be known to you or your advisors. You should consult
with your tax advisors about any adjustments that may need to be made to
the information reported to you.
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Capital Gains and Losses.
If you are an individual, the maximum marginal federal tax rate for net
capital gain is generally 20% (0% for certain taxpayers in the 10% or
15% tax brackets). An additional 3.8% "Medicare tax" may also apply to
gain from the sale or redemption of Units of the Trust, subject to the
income thresholds as described above.
Net capital gain equals net long-term capital gain minus net short-term
capital loss for the taxable year. Capital gain or loss is long-term if
the holding period for the asset is more than one year and is short-term
if the holding period for the asset is one year or less. You must
exclude the date you purchase your Units to determine your holding
period. However, if you receive a capital gain dividend from the Trust
and sell your Units at a loss after holding it for six months or less,
the loss will be recharacterized as long-term capital loss to the extent
of the capital gain dividend received. 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 treats certain capital
gains as ordinary income in special situations.
Capital gain received from assets held for more than one year that is
considered "unrecaptured section 1250 gain" is taxed at a maximum stated
tax rate of 25%. In the case of capital gains dividends, the
determination of which portion of the capital gains dividend, if any, is
subject to the 25% tax rate, will be made based on rules prescribed by
the United States Treasury.
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 10 business days before the Trust's Mandatory
Termination Date. By electing to receive an In-Kind Distribution, you
will receive Trust assets plus, possibly, cash. THIS DISTRIBUTION IS
SUBJECT TO TAXATION, AND YOU WILL GENERALLY RECOGNIZE GAIN OR LOSS,
GENERALLY BASED ON THE VALUE AT THAT TIME OF THE SECURITIES AND THE
AMOUNT OF CASH RECEIVED. The IRS could, however, assert that a loss
could not be currently deducted.
Rollovers.
If you elect to have your proceeds from the Trust rolled over into a
future series of the Trust, the exchange would generally be considered a
sale for federal income tax purposes.
Deductibility of Trust Expenses.
Expenses incurred and deducted by the Trust will generally not be
treated as income taxable to you. In some cases, however, you may be
required to treat your portion of these Trust expenses as income. In
these cases you may be able to take a deduction for these expenses.
However, certain miscellaneous itemized deductions, such as investment
expenses, may be deducted by individuals only to the extent that all of
these deductions exceed 2% of the individual's adjusted gross income.
Also, certain individuals may also be subject to a phase-out of the
deductibility of itemized deductions based upon their income.
Investments in Certain Foreign Corporations.
If the Trust holds an equity interest in any "passive foreign investment
companies" ("PFICs"), which are generally certain foreign corporations
that receive at least 75% of their annual gross income from passive
sources (such as interest, dividends, certain rents and royalties or
capital gains) or that hold at least 50% of their assets in investments
producing such passive income, the Trust could be subject to U.S.
federal income tax and additional interest charges on gains and certain
distributions with respect to those equity interests, even if all the
income or gain is timely distributed to its Unit holders. Similarly, if
the Trust invests in a fund (a "Portfolio Fund") that invests in PFICs,
the Portfolio Fund may be subject to such taxes. The Trust will not be
able to pass through to its Unit holders any credit or deduction for
such taxes whenever the taxes are imposed at the Trust level or on a
Portfolio Fund. The Trust (or the Portfolio Fund) may be able to make an
election that could ameliorate these adverse tax consequences. In this
case, the Trust (or the Portfolio Fund) would recognize as ordinary
income any increase in the value of such PFIC shares, and as ordinary
loss any decrease in such value to the extent it did not exceed prior
increases included in income. Under this election, the Trust (or the
Portfolio Fund) might be required to recognize in a year income in
excess of its distributions from PFICs and its proceeds from
dispositions of PFIC stock during that year, and such income would
nevertheless be subject to the distribution requirement and would be
taken into account for purposes of the 4% excise tax. Dividends paid by
PFICs will not be treated as qualified dividend income.
Foreign Investors.
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 should be aware that, generally, subject to applicable tax
treaties, distributions from the Trust will be characterized as
dividends for federal income tax purposes (other than dividends which
the Trust properly reports as capital gain dividends) and will be
subject to U.S. income taxes, including withholding taxes, subject to
certain exceptions described below. However, except as described below,
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distributions received by a foreign investor from the Trust that are
properly reported by such Trust as capital gain dividends may not be
subject to U.S. federal income taxes, including withholding taxes,
provided that the Trust makes certain elections and certain other
conditions are met. Distributions from the Trust that are properly
reported by the Trust as an interest-related dividend attributable to
certain interest income received by the Trust or as a short-term capital
gain dividend attributable to certain net short-term capital gain income
received by the Trust may not be subject to U.S. federal income taxes,
including withholding taxes, when received by certain foreign investors,
provided that the Trust makes certain elections and certain other
conditions are met.
Distributions may be subject to a U.S. withholding tax of 30% in the
case of distributions to or dispositions by (i) certain non-U.S.
financial institutions that have not entered into an agreement with the
U.S. Treasury to collect and disclose certain information and are not
resident in a jurisdiction that has entered into such an agreement with
the U.S. Treasury and (ii) certain other non-U.S. entities that do not
provide certain certifications and information about the entity's U.S.
owners. Dispositions of Units by such persons may be subject to such
withholding after December 31, 2018.
Foreign Tax Credit.
If at least 50% of the value of the total assets of the Trust (at the
close of the taxable year) is represented by foreign securities or at
least 50% of the value of the total assets of the Trust (at the close of
each quarter of the taxable year) is represented by interests in other
RICs, the tax statement that you receive may include an item showing
foreign taxes the Trust paid to other countries. In this case, dividends
taxed to you will include your share of the taxes the Trust paid to
other countries. You may be able to deduct or receive a tax credit for
your share of these taxes.
You should consult your tax advisor regarding potential foreign, state
or local taxation with respect to your Units.
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
advisor. Brokerage firms and other financial institutions offer these
plans with varying fees and charges.
Rights of Unit Holders
Unit Ownership.
Ownership of Units will not be evidenced by certificates. If you
purchase or hold Units through a broker/dealer or bank, your ownership
of Units will be recorded in book-entry form at the Depository Trust
Company ("DTC") and credited on its records to your broker/dealer's or
bank's DTC account. If you purchase or hold FTPS Units, your ownership
of FTPS Units will be recorded in book-entry form on the register of
Unit holdings maintained by the FTPS Unit Servicing Agent. Transfer of
Units will be accomplished by book entries made by DTC and its
participants if the Units are registered to DTC or its nominee, Cede &
Co., or otherwise will be accomplished by book entries made by the FTPS
Unit Servicing Agent, with respect to FTPS Units. DTC will forward all
notices and credit all payments received in respect of the Units held by
the DTC participants. You will receive written confirmation of your
purchases and sales of Units from the broker/dealer or bank through
which you made the transaction or from the FTPS Unit Servicing Agent if
you purchased and hold FTPS Units. You may transfer your Units by
contacting the broker/dealer or bank through which you hold your Units,
or the FTPS Unit Servicing Agent, if you hold FTPS Units.
Unit Holder Reports.
The Trustee will prepare a statement detailing the per Unit amounts (if
any) distributed from the Income Account and Capital Account in
connection with each distribution. In addition, at the end of each
calendar year, the Trustee will prepare a statement which contains the
following information:
- 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.
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It is the responsibility of the entity through which you hold your Units
to distribute these statements to you. In addition, you may also request
from the Trustee copies of the evaluations of the Securities as prepared
by the Evaluator to enable you to comply with applicable federal and
state tax reporting requirements.
Income and Capital Distributions
You will begin receiving distributions on your Units only after you
become a Record Owner. The Trustee will credit dividends received on the
Trust's Securities to the Income Account of the Trust. All other
receipts, such as return of capital and capital gain dividends, are
credited to the Capital Account of the Trust.
The Trustee will make distributions on or near the Income Distribution
Dates to Unit holders of record on the preceding Income Distribution
Record Date. Distributions will consist of an amount substantially equal
to the Unit holder's pro rata share of the balance of the Income Account
calculated on the basis of one-twelfth of the estimated annual dividend
distributions (reset on a quarterly basis) in the Income Account after
deducting estimated expenses. See "Summary of Essential Information."
The amount of the initial distribution from the Income Account will be
prorated based on the number of days in the first payment period. 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 amounts 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 twenty-fifth day of each month to
Unit holders of record on the tenth day of each month provided the
amount equals at least $1.00 per 100 Units. In any case, the Trustee
will distribute any funds in the Capital Account in December of each
year and as part of the final liquidation distribution. 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, unless you are a
Rollover Unit holder, 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 your broker/dealer or bank (or the FTPS Unit
Servicing Agent with respect to FTPS Units) within the time period
required by such entities so that they can notify the Trustee of your
election 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 such Trust. There is no 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. Because the Trust may begin selling
Securities nine business days prior to the Mandatory Termination Date,
reinvestment is not available during this period. 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 a
request for redemption to your broker/dealer or bank through which you
hold your Units or to the FTPS Unit Servicing Agent, if you hold FTPS
Units. 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. Three business days
Page 23
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 your redemption
request is received by the Trustee from the broker/dealer or bank
through which you hold your Units, or, if you hold FTPS Units, the date
the redemption request is received by the FTPS Unit Servicing Agent (if
such day is a day the NYSE is open for trading). However, if the
redemption request is received after 4:00 p.m. Eastern time (or after
any earlier closing time on a day on which the NYSE is scheduled in
advance to close at such earlier time), the Date of Tender is the next
day the NYSE is open for trading.
Any amounts paid on redemption representing income will be withdrawn
from the Income Account if funds are available for that purpose, or from
the Capital Account. All other amounts paid on redemption will be taken
from the Capital Account. The IRS will require the Trustee to withhold a
portion of your redemption proceeds if the Trustee does not have your
TIN as generally discussed under "Income and Capital Distributions."
If you tender for redemption at least 2,500 Units, or such larger amount
as required by your broker/dealer or bank, 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 to your
broker/dealer or bank at the time of tender. However, to be eligible to
participate in the In-Kind Distribution option at redemption, 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
10 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's
or broker/dealer's account at DTC. 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 Securities that make up the portfolio, and
cash from the Capital Account equal to the fractional shares to which
you are entitled.
If you elect to receive an In-Kind Distribution of Securities, you
should be aware that it will be considered a taxable event at the time
you receive the Securities. See "Tax Status" for additional information.
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 of the Trust not designated to
purchase Securities;
2. the aggregate underlying value of the Securities held in the Trust; and
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;
5. liquidation costs for foreign Securities, if any; and
6. 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 they
are collected, the Redemption Price per Unit will include estimated
organization costs as set forth under "Fee Table."
Investing in a New Trust
The Trust's portfolio has been selected on the basis of income potential
for a limited time period. When the Trust is about to terminate, you may
Page 24
have the option to roll your proceeds into the next series of the Trust
(the "New Trust") if one is available. We intend to create the New Trust
in conjunction with the termination of the Trust and plan to apply the
same strategy we used to select the portfolio for the Trust to the New
Trust.
If you wish to have the proceeds from your Units rolled into a New Trust
you must notify the broker/dealer where your Units are held (or the FTPS
Unit Servicing Agent in the case of FTPS Units) of your election prior
to that firm's cut-off date. If you make this election you will be
considered a "Rollover Unit holder."
Once all of the Securities are sold in connection with the termination
of the Trust, as described in "Amending or Terminating the Indenture,"
your proceeds, less any brokerage fees, governmental charges or other
expenses involved in the sales, will be used to buy units of a New Trust
or trust with a similar investment strategy that you have selected,
provided such trusts are registered and being offered. Accordingly,
proceeds may be uninvested for up to several days. Units purchased with
rollover proceeds will generally be purchased subject to the maximum
remaining deferred sales charge and creation and development fee on such
units (currently expected to be $.195 per unit), but not the initial
sales charge. Units purchased using proceeds from Fee Account Units will
generally not be subject to any transactional sales charge.
We intend to create New Trust units as quickly as possible, depending on
the availability of the securities contained in a New Trust's portfolio.
Rollover Unit holders will be given first priority to purchase New Trust
units. We cannot, however, assure the exact timing of the creation of
New Trust units or the total number of New Trust units we will create.
Any proceeds not invested on behalf of Rollover Unit holders in New
Trust units will be distributed within a reasonable time after such
occurrence. Although we believe that enough New Trust units can be
created, monies in a New Trust may not be fully invested on the next
business day.
Please note that there are certain tax consequences associated with
becoming a Rollover Unit holder. See "Tax Status." We may modify, amend
or terminate this rollover option upon 60 days notice.
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
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 (i) in order to
maintain the qualification of the Trust as a "regulated investment
company" or (ii) to provide funds to make any distribution for a taxable
year in order to avoid imposition of any income or excise taxes on
undistributed income in the Trust;
- 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;
- 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; or
- The sale of the Security is necessary for the Trust to comply with
such federal and/or state securities laws, regulations and/or regulatory
actions and interpretations which may be in effect from time to time.
Except for instances in which the Trust acquires Replacement Securities,
as described in "The FT Series," the Trust will generally not acquire
any securities or other property other than the Securities. The Trustee,
on behalf of the Trust and at the direction of the Sponsor, will vote
for or against 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 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
Page 25
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
1940 Act. When acting in an agency capacity, we may select various
broker/dealers to execute securities transactions on behalf of the
Trust, which may include broker/dealers who sell Units of the Trust. We
do not consider sales of Units of the Trust or any other products
sponsored by First Trust as a factor in selecting such broker/dealers.
As authorized by the Indenture, the Trustee may also employ a subsidiary
or affiliate of the Trustee to act as broker in selling such Securities
or property. The Trust will pay for these brokerage services at standard
commission rates.
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 as stated in the "Summary of Essential
Information." The Trust may be terminated earlier:
- Upon the consent of 100% of the Unit holders of the Trust;
- 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"); or
- In the event that Units of the Trust not yet sold aggregating more
than 60% of the Units of the Trust are tendered for redemption by
underwriters, including the Sponsor.
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.
If you do not elect to participate in the Rollover Option, you will
receive a cash distribution from the sale of the remaining Securities,
along with your interest in the Income and Capital Accounts, within a
reasonable time after the Trust is terminated. The Trustee will deduct
from the Trust any accrued costs, expenses, advances or indemnities
provided for by the Indenture, including estimated compensation of the
Trustee and costs of liquidation and any amounts required as a reserve
to pay any taxes or other governmental charges.
Information on the Sponsor, Trustee,
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 took over the First Trust product line and 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
The First Trust product line commenced with the first insured unit
investment trust in 1974. To date we have deposited more than $320
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.
Page 26
We are a member of FINRA and SIPC. Our principal offices are at 120 East
Liberty Drive, Wheaton, Illinois 60187; telephone number 800-621-1675.
As of December 31, 2015, the total consolidated partners' capital of
First Trust Portfolios L.P. and subsidiaries was $68,871,801.
This information refers only to us and not to the Trust or to any series
of the Trust or to any other dealer. We are including this information
only to inform you of our financial responsibility and our ability to
carry out our contractual obligations. We will provide more detailed
financial information on request.
Code of Ethics. The Sponsor and the Trust have adopted a code of ethics
requiring the Sponsor's employees who have access to information on
Trust transactions to report personal securities transactions. The
purpose of the code is to avoid potential conflicts of interest and to
prevent fraud, deception or misconduct with respect to the Trust.
The Trustee.
The Trustee is The Bank of New York Mellon, a trust company organized
under the laws of New York. The Bank of New York Mellon 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 advisor. The Sponsor does not
have access to individual account information. The Bank of New York
Mellon is subject to supervision and examination by the Superintendent
of the New York State Department of Financial Services 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 for the
Trust; 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 120 East Liberty Drive, Wheaton,
Illinois 60187. If you have questions regarding the FTPS Units, you may
call the FTPS Unit Servicing Agent at 800-621-1675, dept. code 1. 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:
- 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 120 East Liberty Drive, Wheaton, Illinois 60187.
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
Page 27
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.
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.
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Page 31
First Trust(R)
Diversified Fixed Income ETF Portfolio, Series 26
FT 5969
Sponsor:
First Trust Portfolios L.P.
Member SIPC o Member FINRA
120 East Liberty Drive
Wheaton, Illinois 60187
800-621-1675
FTPS Unit Servicing Agent: Trustee:
FTP Services LLC The Bank of New York Mellon
120 East Liberty Drive 101 Barclay Street
Wheaton, Illinois 60187 New York, New York 10286
800-621-1675, dept. code 1 800-813-3074
24-Hour Pricing Line:
800-446-0132
Please refer to the "Summary of Essential
Information" for the Product Code.
________________________
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 SEC in Washington, D.C. under
the:
- Securities Act of 1933 (file no. 333-209928) and
- Investment Company Act of 1940 (file no. 811-05903)
Information about the Trust, including its Codes of Ethics, can be
reviewed and copied at the SEC's Public Reference Room in Washington,
D.C. Information regarding the operation of the SEC's Public Reference
Room may be obtained by calling the SEC at 202-942-8090.
Information about the Trust is available on the EDGAR Database on the
SEC's Internet site at http://www.sec.gov.
To obtain copies at prescribed rates -
Write: Public Reference Section of the SEC
100 F Street, N.E.
Washington, D.C. 20549
e-mail address: publicinfo@sec.gov
April __, 2016
PLEASE RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE
Page 32
First Trust(R)
The FT Series
Information Supplement
This Information Supplement provides additional information concerning
the structure, operations and risks of the unit investment trust
contained in FT 5969 not found in the prospectus for the Trust. This
Information Supplement is not a prospectus and does not include all of
the information you should consider before investing in the Trust. This
Information Supplement should be read in conjunction with the prospectus
for the Trust in which you are considering investing.
This Information Supplement is dated April __, 2016. Capitalized terms
have been defined in the prospectus.
Table of Contents
Risk Factors
Securities 1
Common Stocks 1
Preferred Stocks 2
Trust Preferred Securities 2
REITs 3
ETFs 4
Closed-End Funds 4
Business Development Companies 5
Convertible Securities 6
Fixed-Income Securities 7
High-Yield Securities 9
Senior Loans 10
Subprime Residential Mortgage Loans 10
TIPs 11
Foreign Issuers 11
Emerging Markets 12
Small and/or Mid Capitalization Companies 12
Risk Factors
Securities. The Securities in the Trust may represent common stock
("Common Stocks"), preferred stock ("Preferred Stocks"), trust preferred
securities ("Trust Preferred Securities"), real estate investment trusts
("REITs"), exchange-traded funds ("ETFs"), closed-end funds ("Closed-End
Funds") and/or business development companies. As such, an investment in
Units of the Trust should be made with an understanding of the risks of
investing in such Securities.
Common Stocks. An investment in common stocks should be made with an
understanding of the risks which such an investment entails, including
the risk that the financial condition of the issuers of the common
stocks or the general condition of the relevant stock market may worsen,
and the value of the common stocks and therefore the value of the Units
may decline. Common stocks are especially susceptible to general stock
market movements and to volatile increases and decreases of value, as
market confidence in and perceptions of the issuers change. These
perceptions are based on unpredictable factors, including expectations
regarding government, economic, monetary and fiscal policies, inflation
and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Both U.S. and foreign
markets have experienced substantial volatility and significant declines
recently as a result of certain or all of these factors.
Shareholders of common stocks have rights to receive payments from the
issuers of those common stocks that are generally subordinate to those
of creditors of, or holders of debt obligations or preferred stocks of,
such issuers. Shareholders of common stocks have a right to receive
dividends only when and if, and in the amounts, declared by the issuer's
board of directors and have a right to participate in amounts available
for distribution by the issuer only after all other claims on the issuer
Page 1
have been paid or provided for. Common stocks do not represent an
obligation of the issuer and, therefore, do not offer any assurance of
income or provide the same degree of protection of capital as do debt
securities. The issuance of additional debt securities or preferred
stock will create prior claims for payment of principal, interest and
dividends which could adversely affect the ability and inclination of
the issuer to declare or pay dividends on its common stock or the rights
of holders of common stock with respect to assets of the issuer upon
liquidation or bankruptcy. Cumulative preferred stock dividends must be
paid before common stock dividends, and any cumulative preferred stock
dividend omitted is added to future dividends payable to the holders of
cumulative preferred stock. Preferred stockholders are also generally
entitled to rights on liquidation which are senior to those of common
stockholders.
Preferred Stocks. An investment in preferred stocks should be made with
an understanding of the risks which such an investment entails,
including the risk that the financial condition of the issuers of the
Securities or the general condition of the preferred stock market may
worsen, and the value of the preferred stocks and therefore the value of
the Units may decline. Preferred stocks may be susceptible to general
stock market movements and to volatile increases and decreases of value
as market confidence in and perceptions of the issuers change. These
perceptions are based on unpredictable factors, including expectations
regarding government, economic, monetary and fiscal policies, inflation
and interest rates, economic expansion or contraction, market liquidity,
and global or regional political, economic or banking crises. Preferred
stocks are also vulnerable to Congressional reductions in the dividends
received deduction which would adversely affect the after-tax return to
the investors who can take advantage of the deduction. Such a reduction
might adversely affect the value of preferred stocks in general. Holders
of preferred stocks, as owners of the entity, have rights to receive
payments from the issuers of those preferred stocks that are generally
subordinate to those of creditors of, or holders of debt obligations or,
in some cases, other senior preferred stocks of, such issuers. Preferred
stocks do not represent an obligation of the issuer and, therefore, do
not offer any assurance of income or provide the same degree of
protection of capital as do debt securities. The issuance of additional
debt securities or senior preferred stocks will create prior claims for
payment of principal and interest and senior dividends which could
adversely affect the ability and inclination of the issuer to declare or
pay dividends on its preferred stock or the rights of holders of
preferred stock with respect to assets of the issuer upon liquidation or
bankruptcy. The value of preferred stocks is subject to market
fluctuations for as long as the preferred stocks remain outstanding, and
thus the value of the Securities may be expected to fluctuate over the
life of the Trust to values higher or lower than those prevailing on the
Initial Date of Deposit.
Trust Preferred Securities. An investment in trust preferred securities
should be made with an understanding of the risks which such an
investment entails. Holders of trust preferred securities incur risks in
addition to or slightly different than the typical risks of holding
preferred stocks. Trust preferred securities are limited-life preferred
securities that are typically issued by corporations, generally in the
form of interest-bearing notes or preferred securities, or by an
affiliated business trust of a corporation, generally in the form of
beneficial interests in subordinated debentures issued by the
corporation, or similarly structured securities. The maturity and
dividend rate of the trust preferred securities are structured to match
the maturity and coupon interest rate of the interest-bearing notes,
preferred securities or subordinated debentures. Trust preferred
securities usually mature on the stated maturity date of the interest-
bearing notes, preferred securities or subordinated debentures and may
be redeemed or liquidated prior to the stated maturity date of such
instruments for any reason on or after their stated call date or upon
the occurrence of certain extraordinary circumstances at any time. Trust
preferred securities generally have a yield advantage over traditional
preferred stocks, but unlike preferred stocks, distributions on the
trust preferred securities are treated as interest rather than dividends
for Federal income tax purposes. Unlike most preferred stocks,
distributions received from trust preferred securities are not eligible
for the dividends-received deduction. Certain of the risks unique to
trust preferred securities include: (i) distributions on trust preferred
securities will be made only if interest payments on the interest-
bearing notes, preferred securities or subordinated debentures are made;
(ii) a corporation issuing the interest-bearing notes, preferred
securities or subordinated debentures may defer interest payments on
these instruments for up to 20 consecutive quarters and if such election
is made, distributions will not be made on the trust preferred
securities during the deferral period; (iii) certain tax or regulatory
events may trigger the redemption of the interest-bearing notes,
preferred securities or subordinated debentures by the issuing
corporation and result in prepayment of the trust preferred securities
prior to their stated maturity date; (iv) future legislation may be
proposed or enacted that may prohibit the corporation from deducting its
interest payments on the interest-bearing notes, preferred securities or
subordinated debentures for tax purposes, making redemption of these
instruments likely; (v) a corporation may redeem the interest-bearing
Page 2
notes, preferred securities or subordinated debentures in whole at any
time or in part from time to time on or after a stated call date; (vi)
trust preferred securities holders have very limited voting rights; and
(vii) payment of interest on the interest-bearing notes, preferred
securities or subordinated debentures, and therefore distributions on
the trust preferred securities, is dependent on the financial condition
of the issuing corporation.
REITs. An investment in REITs should be made with an understanding of
the risks which such an investment entails. Generally, these include
economic recession, the cyclical nature of real estate markets,
competitive overbuilding, unusually adverse weather conditions, changing
demographics, changes in governmental regulations (including tax laws
and environmental, building, zoning and sales regulations), increases in
real estate taxes or costs of material and labor, the inability to
secure performance guarantees or insurance as required, the
unavailability of investment capital and the inability to obtain
construction financing or mortgage loans at rates acceptable to builders
and purchasers of real estate. Additional risks include an inability to
reduce expenditures associated with a property (such as mortgage
payments and property taxes) when rental revenue declines, and possible
loss upon foreclosure of mortgaged properties if mortgage payments are
not paid when due.
REITs are financial vehicles that have as their objective the pooling of
capital from a number of investors in order to participate directly in
real estate ownership or financing. REITs are generally fully integrated
operating companies that have interests in income-producing real estate.
Equity REITs emphasize direct property investment, holding their
invested assets primarily in the ownership of real estate or other
equity interests. REITs obtain capital funds for investment in
underlying real estate assets by selling debt or equity securities in
the public or institutional capital markets or by bank borrowing. Thus,
the returns on common equities of REITs will be significantly affected
by changes in costs of capital and, particularly in the case of highly
"leveraged" REITs (i.e., those with large amounts of borrowings
outstanding), by changes in the level of interest rates. The objective
of an equity REIT is to purchase income-producing real estate properties
in order to generate high levels of cash flow from rental income and a
gradual asset appreciation, and they typically invest in properties such
as office, retail, industrial, hotel and apartment buildings and
healthcare facilities.
REITs are a creation of the tax law. REITs essentially operate as a
corporation or business trust with the advantage of exemption from
corporate income taxes provided the REIT satisfies the requirements of
Sections 856 through 860 of the Internal Revenue Code. The major tests
for tax-qualified status are that the REIT (i) be managed by one or more
trustees or directors, (ii) issue shares of transferable interest to its
owners, (iii) have at least 100 shareholders, (iv) have no more than 50%
of the shares held by five or fewer individuals, (v) invest
substantially all of its capital in real estate related assets and
derive substantially all of its gross income from real estate related
assets and (vi) distributed at least 95% of its taxable income to its
shareholders each year. If a REIT should fail to qualify for such tax
status, the related shareholders (including such Trust) could be
adversely affected by the resulting tax consequences.
The underlying value of REITs and their ability to pay dividends may be
adversely affected by changes in national economic conditions, changes
in local market conditions due to changes in general or local economic
conditions and neighborhood characteristics, increased competition from
other properties, obsolescence of property, changes in the availability,
cost and terms of mortgage funds, the impact of present or future
environmental legislation and compliance with environmental laws, the
ongoing need for capital improvements, particularly in older properties,
changes in real estate tax rates and other operating expenses,
regulatory and economic impediments to raising rents, adverse changes in
governmental rules and fiscal policies, dependency on management skill,
civil unrest, acts of God, including earthquakes, fires and other
natural disasters (which may result in uninsured losses), acts of war,
adverse changes in zoning laws, and other factors which are beyond the
control of the issuers of REITs. The value of REITs may at times be
particularly sensitive to devaluation in the event of rising interest
rates.
REITs may concentrate investments in specific geographic areas or in
specific property types, i.e., hotels, shopping malls, residential
complexes, office buildings and timberlands. The impact of economic
conditions on REITs can also be expected to vary with geographic
location and property type. Investors should be aware that REITs may not
be diversified and are subject to the risks of financing projects. REITs
are also subject to defaults by borrowers, self-liquidation, the
market's perception of the REIT industry generally, and the possibility
of failing to qualify for pass-through of income under the Internal
Revenue Code, and to maintain exemption from the Investment Company Act
of 1940. A default by a borrower or lessee may cause a REIT to
experience delays in enforcing its right as mortgagee or lessor and to
incur significant costs related to protecting its investments. In
addition, because real estate generally is subject to real property
Page 3
taxes, REITs may be adversely affected by increases or decreases in
property tax rates and assessments or reassessments of the properties
underlying REITs by taxing authorities. Furthermore, because real estate
is relatively illiquid, the ability of REITs to vary their portfolios in
response to changes in economic and other conditions may be limited and
may adversely affect the value of the Units. There can be no assurance
that any REIT will be able to dispose of its underlying real estate
assets when advantageous or necessary.
Issuers of REITs generally maintain comprehensive insurance on presently
owned and subsequently acquired real property assets, including
liability, fire and extended coverage. However, certain types of losses
may be uninsurable or not be economically insurable as to which the
underlying properties are at risk in their particular locales. There can
be no assurance that insurance coverage will be sufficient to pay the
full current market value or current replacement cost of any lost
investment. Various factors might make it impracticable to use insurance
proceeds to replace a facility after it has been damaged or destroyed.
Under such circumstances, the insurance proceeds received by a REIT
might not be adequate to restore its economic position with respect to
such property.
Under various environmental laws, a current or previous owner or
operator of real property may be liable for the costs of removal or
remediation of hazardous or toxic substances on, under or in such
property. Such laws often impose liability whether or not the owner or
operator caused or knew of the presence of such hazardous or toxic
substances and whether or not the storage of such substances was in
violation of a tenant's lease. In addition, the presence of hazardous or
toxic substances, or the failure to remediate such property properly,
may adversely affect the owner's ability to borrow using such real
property as collateral. No assurance can be given that REITs may not be
presently liable or potentially liable for any such costs in connection
with real estate assets they presently own or subsequently acquire.
ETFs. An investment in ETFs should be made with an understanding of the
risks which such an investment entails. ETFs are investment pools that
hold other securities. ETFs are either passively-managed index funds
that seek to replicate the performance or composition of a recognized
securities index or actively-managed funds that seek to achieve a stated
investment objective. ETFs are either open-end management investment
companies or unit investment trusts registered under the Investment
Company Act of 1940, as amended. Unlike typical open-end funds or unit
investment trusts, ETFs generally do not sell or redeem their individual
shares at net asset value. ETFs generally sell and redeem shares in
large blocks (often known as "Creation Units"), however, the Sponsor
does not intend to sell or redeem ETFs in this manner. In addition,
securities exchanges list ETF shares for trading, which allow investors
to purchase and sell individual ETF shares among themselves at market
prices throughout the day. The Trust will purchase and sell ETF shares
on these securities exchanges. ETFs therefore possess characteristics of
traditional open-end funds and unit investment trusts, which issue
redeemable shares, and of corporate common stocks or closed-end funds,
which generally issue shares that trade at negotiated prices on
securities exchanges and are not redeemable.
ETFs can provide exposure to broad-based indexes, growth and value
styles, market cap segments, sectors and industries, specific countries
or regions of the world or physical commodities. The securities
comprising ETFs may be common stocks, fixed-income securities or
physical commodities. ETFs contain a number of securities, anywhere from
fewer than 20 securities up to more than 1,000 securities. As a result,
investors in ETFs obtain exposure to a much greater number of securities
than an individual investor would typically be able to obtain on their
own. The performance of index-based ETFs is generally highly correlated
with the indices or sectors which they are designed to track.
ETFs are subject to various risks, including management's ability to
meet the fund's investment objective, and to manage the fund's portfolio
when the underlying securities are redeemed or sold, during periods of
market turmoil and as investors' perceptions regarding ETFs or their
underlying investments change.
Shares of ETFs 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 the ETF 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.
Closed-End Funds. An investment in closed-end funds should be made with
an understanding of the risks which such an investment entails. 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
Page 4
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 a 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.
A 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
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.
Business Development Companies. An investment in business development
companies should be made with an understanding of the risks which such
an investment entails. Business development companies' portfolios are
managed and their shares are generally listed on a securities exchange.
Business development companies are closed-end funds which have elected
to be treated as business development companies. The net asset value of
business development company shares will fluctuate with changes in the
value of the underlying securities which the business development
company fund owns. In addition, for various reasons business development
company 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. Business development companies' 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 business development company shares which
were purchased by the Trust at a premium. In the unlikely event that a
business development company 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 a Trust since shares of open-end funds trade at net asset
value. Certain business development companies 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 the Trust are repurchased by a fund, the Trust's
position in that fund would be reduced and the cash would be distributed.
A Trust is prohibited from subscribing to a rights offering for shares
of any of the business development companies 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
Page 5
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.
Business development companies may utilize leveraging in their
portfolios. Leveraging 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.
Convertible Securities. The following section applies to individual
Trusts which contain Securities which invest in convertible securities.
Convertible securities include convertible subordinated debentures and
corporate bonds ("Convertible Bonds") and cumulative convertible
preferred stocks ("Convertible Preferred Stocks"). Convertible
securities contain a conversion privilege which, under specified
circumstances, offers the holder the right to exchange such security for
common stock of the issuing corporation. Convertible Bonds obligate the
issuing company to pay a stated annual rate of interest (or a stated
dividend in the case of Convertible Preferred Stocks) and to return the
principal amount after a specified period of time. The income offered by
convertible securities is generally higher than the dividends received
from the underlying common stock, but lower than similar quality non-
convertible debt securities. Convertible securities are usually priced
at a premium to their conversion value, i.e., the value of the common
stock received if the holder were to exchange the convertible security.
The holder of the convertible security may choose at any time to
exchange the convertible security for a specified number of shares of
the common stock of the corporation, or occasionally a subsidiary
company, at a specified price, as defined by the corporation when the
security is issued. Accordingly, the value of the convertible obligation
may generally be expected to increase (decrease) as the price of the
associated common stock increases (decreases). Also, the market value of
convertible securities tends to be influenced by the level of interest
rates and tends to decline as interest rates increase and, conversely,
to increase as interest rates decline. Convertible securities rank
senior to common stocks in an issuer's capital structure, but are junior
to non-convertible debt securities. As convertible securities are
considered junior to any non-convertible debt securities issued by the
corporation, convertible securities are typically rated by established
credit ratings agencies at one level below the rating on such
corporation's non-convertible debt.
Convertible securities are hybrid securities, combining the investment
characteristics of both bonds and common stock. Like a bond (or
preferred stock), a convertible security pays interest at a fixed rate
(dividend), but may be converted into common stock at a specified price
or conversion rate.
When the conversion price of the convertible security is significantly
above the price of the issuer's common stock, a convertible security
takes on the risk characteristics of a bond. At such times, the price of
a convertible security will vary inversely with changes in the level of
interest rates. In other words, when interest rates rise, prices of
convertible securities will generally fall; conversely, when interest
rates fall, prices of convertible securities will generally rise. This
interest rate risk is in part offset by the income paid by the
convertible securities.
In contrast, when the conversion price of a convertible security and the
common stock price are close to one another, a convertible security will
behave like a common stock. In such cases, the prices of convertible
securities may exhibit the short-term price volatility characteristic of
common stocks.
For these reasons Unit holders must be willing to accept the market
risks of both bonds and common stocks. However, because convertible
securities have characteristics of both common stocks and bonds, they
tend to be less sensitive to interest rate changes than bonds of
comparable maturity and quality, and less sensitive to stock market
changes than fully invested common stock portfolios. Because of these
factors and the hybrid nature of convertible securities, Unit holders
should recognize that convertible securities are likely to perform quite
differently than broadly-based measures of the stock and bond markets.
The market for convertible securities includes a larger proportion of
small- to medium-size companies than the broad stock market (as measured
by such indices as the Standard & Poor's 500 Composite Stock Price
Index). Companies which issue convertible securities are often lower in
credit quality, typically rated below "Investment Grade." Moreover, the
credit rating of a company's convertible issuance is generally lower
than the rating of the company's conventional debt issues since the
convertible security is normally a "junior" security. Securities with
such ratings are considered speculative, and thus pose a greater risk of
default than investment grade securities.
Page 6
High-risk securities may be thinly traded, which can adversely affect
the prices at which such securities can be sold and can result in high
transaction costs. Judgment plays a greater role in valuing high risk
securities than securities for which more extensive quotations and last
sale information are available. Adverse publicity and changing investor
perceptions may affect the ability of outside price services to value
securities.
During an economic downturn or a prolonged period of rising interest
rates, the ability of issuers of debt to serve their payment
obligations, meet projected goals, or obtain additional financing may be
impaired.
Convertible securities are subject to the risk that the financial
condition of the issuers of the convertible securities or the general
condition of the stock market or bond market may worsen and the value of
the convertible securities and therefore the value of the Units may
decline. Convertible securities may be susceptible to general stock
market movements and to increases and decreases of value as market
confidence in and perceptions of the issuers change. These perceptions
are based on unpredictable factors including expectations regarding
government, economic, monetary and fiscal policies, inflation and
interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Convertible Preferred
Stocks are also subject to Congressional reductions in the dividends-
received deduction which would adversely affect the after-tax return to
the corporate investors who can take advantage of the deduction. Such
reductions also might adversely affect the value of preferred stocks in
general. Holders of preferred stocks have rights to receive payments
from the issuers of those preferred stocks that are generally
subordinate to those of creditors of, or holders of debt obligations or,
in some cases, senior preferred stocks of, such issuers. Convertible
Preferred Stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income (since dividends on a
preferred stock must be declared by the issuer's Board of Directors) or
provide the same degree of protection of capital as do debt securities.
Cumulative preferred stock dividends must be paid before common stock
dividends and any cumulative preferred stock dividend omitted is added
to future dividends payable to the holders of cumulative preferred
stock. The issuance of additional debt securities or senior preferred
stock will create prior claims for payment of principal and interest and
senior dividends which could adversely affect the ability and
inclination of the issuer to declare or pay dividends on its preferred
stock or the rights of holders of preferred stock with respect to assets
of the issuer upon liquidation or bankruptcy. The value of preferred
stocks is subject to market fluctuations for as long as the preferred
stocks remain outstanding, and thus the value of the Convertible
Preferred Stocks in the Funds may be expected to fluctuate over the life
of the Trust to values higher or lower than those prevailing on the Date
of Deposit. Holders of Convertible Preferred Stocks incur more risk than
holders of debt obligations because preferred stockholders, as owners of
the entity, have generally inferior rights to receive payments from the
issuer in comparison with the rights of creditors of or holders of debt
obligations issued by the issuer.
Convertible Bonds are typically subordinated debentures and, therefore,
the claims of senior creditors must be settled in full before any
payment will be made to holders of Convertible Bonds in the event of
insolvency or bankruptcy. Senior creditors typically include all other
long-term debt issuers and bank loans. Convertible Bonds do, however,
have a priority over common and preferred stock. Investors in
Convertible Bonds pay for the conversion privilege by accepting a
significantly lower yield-to-maturity than that concurrently offered by
non-convertible bonds of equivalent quality.
Whether or not the convertible securities are listed on a national
securities exchange, the principal trading market for the convertible
securities may be in the over-the-counter market. As a result, the
existence of a liquid trading market for the convertible securities may
depend on whether dealers will make a market in the convertible
securities. There can be no assurance that a market will be made for any
of the convertible securities, that any market for the convertible
securities will be maintained or of the liquidity of the convertible
securities in any markets made.
Issues of Convertible Bonds and Convertible Preferred Stocks generally
provide that the convertible security may be liquidated, either by a
partial scheduled redemption pursuant to a sinking fund or by a
refunding redemption pursuant to which, at the option of the issuer, all
or part of the issue can be retired from any available funds, at prices
which may or may not include a premium over the involuntary liquidation
preference, which generally is the same as the par or stated value of
the convertible security. In general, optional redemption provisions are
more likely to be exercised when the convertible security is valued at a
premium over par or stated value than when they are valued at a discount
from par or stated value. Generally, the value of the convertible
security will be at a premium over par when market interest rates fall
below the coupon rate.
Fixed-Income Securities. The following section applies to individual
Trusts which contain Securities which invest in fixed-income securities.
Fixed-income securities, in many cases, do not have the benefit of
covenants which would prevent the issuer from engaging in capital
Page 7
restructurings or borrowing transactions in connection with corporate
acquisitions, leveraged buyouts or restructurings which could have the
effect of reducing the ability of the issuer to meet its debt
obligations and might result in the ratings of the securities and the
value of the underlying Trust portfolio being reduced.
Fixed-income securities may have been acquired at a market discount from
par value at maturity. The coupon interest rates on the discount
securities at the time they were purchased were lower than the current
market interest rates for newly issued securities of comparable rating
and type. If such interest rates for newly issued comparable securities
increase, the market discount of previously issued securities will
become greater, and if such interest rates for newly issued comparable
securities decline, the market discount of previously issued securities
will be reduced, other things being equal. Investors should also note
that the value of securities purchased at a market discount will
increase in value faster than securities purchased at a market premium
if interest rates decrease. Conversely, if interest rates increase, the
value of securities purchased at a market discount will decrease faster
than securities purchased at a market premium. In addition, if interest
rates rise, the prepayment risk of higher yielding, premium securities
and the prepayment benefit for lower yielding, discount securities will
be reduced. A discount security held to maturity will have a larger
portion of its total return in the form of capital gain and less in the
form of interest income than a comparable security newly issued at
current market rates. Market discount attributable to interest changes
does not indicate a lack of market confidence in the issue. Neither the
Sponsor nor the Trustee shall be liable in any way for any default,
failure or defect in any of the securities.
Fixed-income securities may be original issue discount securities or
zero coupon securities. Under current law, the original issue discount,
which is the difference between the stated redemption price at maturity
and the issue price of the securities, is deemed to accrue on a daily
basis and the accrued portion is treated as interest income for federal
income tax purposes. On sale or redemption, any gain realized that is in
excess of the earned portion of original issue discount will be taxable
as capital gain unless the gain is attributable to market discount in
which case the accretion of market discount is taxable as ordinary
income. The current value of an original discount security reflects the
present value of its stated redemption price at maturity. The market
value tends to increase in greater increments as the securities approach
maturity. The effect of owning deep discount zero coupon Securities
which do not make current interest payments is that a fixed yield is
earned not only on the original investment, but also, in effect, on all
earnings during the life of the discount obligation. This implicit
reinvestment of earnings at the same rate eliminates the risk of being
unable to reinvest the income on such obligations at a rate as high as
the implicit yield on the discount obligation, but at the same time
eliminates the holder's ability to reinvest at higher rates in the
future. For this reason, the zero coupon securities are subject to
substantially greater price fluctuations during periods of changing
interest rates than are securities of comparable quality which make
regular interest payments.
Fixed-income securities may have been acquired at a market premium from
par value at maturity. The coupon interest rates on the premium
securities at the time they were purchased were higher than the current
market interest rates for newly issued securities of comparable rating
and type. If such interest rates for newly issued and otherwise
comparable securities decrease, the market premium of previously issued
securities will be increased, and if such interest rates for newly
issued comparable securities increase, the market premium of previously
issued securities will be reduced, other things being equal. The current
returns of securities trading at a market premium are initially higher
than the current returns of comparable securities of a similar type
issued at currently prevailing interest rates because premium securities
tend to decrease in market value as they approach maturity when the face
amount becomes payable. Because part of the purchase price is thus
returned not at maturity but through current income payments, early
redemption of a premium security at par or early prepayments of
principal will result in a reduction in yield. Redemption pursuant to
call provisions generally will, and redemption pursuant to sinking fund
provisions may, occur at times when the redeemed securities have an
offering side valuation which represents a premium over par or for
original issue discount securities a premium over the accreted value. To
the extent that the securities were purchased at a price higher than the
price at which they are redeemed, this will represent a loss of capital.
Certain fixed-income securities may be subject to being called or
redeemed in whole or in part prior to their stated maturities pursuant
to optional redemption provisions, sinking fund provisions or otherwise.
A security subject to optional call is one which is subject to
redemption or refunding prior to maturity at the option of the issuer. A
refunding is a method by which a security issue is redeemed, at or
before maturity, by the proceeds of a new security issue. A security
subject to sinking fund redemption is one which is subject to partial
call from time to time at par or from a fund accumulated for the
scheduled retirement of a portion of an issue prior to maturity.
Redemption pursuant to call provisions is more likely to occur, and
Page 8
redemption pursuant to sinking fund provisions may occur, when the
securities have an offering side valuation which represents a premium
over par or for original issue discount securities a premium over the
accreted value.
High-Yield Securities. The following section applies to individual
Trusts which contain Securities which invest in high-yield securities.
An investment in high-yield securities should be made with an
understanding of the risks that an investment in high-yield, high-risk,
fixed-rate, domestic and foreign securities or "junk" bonds may entail,
including increased credit risks and the risk that the value of high-
yield securities 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
securities generally. High-yield securities 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 securities, 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 securities resulting in a higher incidence of defaults among
high-yield, high-risk securities. 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 securities, 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 securities or "junk" bonds, 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, by established companies whose operations or industries are
depressed or by highly leveraged companies purchased in leveraged buyout
transactions. The market for high-yield securities is very specialized
and investors in it have been predominantly financial institutions. High-
yield securities are generally not listed on a national securities
exchange. Trading of high-yield securities, 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
security market is a dealer market, rather than an auction market, no
single obtainable price for a given security prevails at any given time.
Prices are determined by negotiation between traders. The existence of a
liquid trading market for the securities may depend on whether dealers
will make a market in the securities. There can be no assurance that a
market will be made for any of the securities, that any market for the
securities will be maintained or of the liquidity of the securities in
any markets made. Not all dealers maintain markets in all high-yield
securities. Therefore, since there are fewer traders in these securities
than there are in "investment grade" securities, the bid-offer spread is
usually greater for high-yield securities than it is for investment
grade securities.
Lower-rated securities tend to offer higher yields than higher-rated
securities with the same maturities because the creditworthiness of the
issuers of lower-rated securities may not be as strong as that of other
issuers. Moreover, if a fixed-income security is recharacterized as
equity by the Internal Revenue Service for federal income tax purposes,
the issuer's interest deduction with respect to the security 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 lower-rated securities, the yields and
prices of these securities tend to fluctuate more than higher-rated
securities with changes in the perceived quality of the credit of their
issuers. In addition, the market value of high-yield, high-risk, fixed-
income securities may fluctuate more than the market value of higher-
rated securities since high-yield, high-risk, fixed-income securities
tend to reflect short-term credit development to a greater extent than
higher-rated securities. Lower-rated securities generally involve
greater risks of loss of income and principal than higher-rated
securities. Issuers of lower-rated securities may possess fewer
creditworthiness characteristics than issuers of higher-rated securities
and, especially in 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 securities 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 securities which carry lower ratings.
Page 9
Should the issuer of any security default in the payment of principal or
interest, the Securities in the Trust may incur additional expenses
seeking payment on the defaulted security. Because amounts (if any)
recovered by the Securities in the Trust in payment under the defaulted
security may not be reflected in the value of the Securities until
actually received by the Securities 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 securities 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.
Senior Loans. The following section applies to individual Trusts which
contain Securities which 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 Securities 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 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
Securities 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.
Subprime Residential Mortgage Loans. The following section applies to
individual Trusts which contain Securities which invest in subprime
residential mortgage loans. An investment in subprime residential
mortgage loans should be made with an understanding of the risks which
such an investment entails, including increased credit risks and the
risk that the value of subprime residential mortgage loans will decline,
and may decline precipitously, with increases in interest rates. In a
high interest rate environment, the value of subprime residential
mortgage loans may be adversely affected when payments on the mortgages
do not occur as anticipated, resulting in the extension of the
mortgage's effective maturity and the related increase in interest rate
sensitivity of a longer-term investment. The value of subprime mortgage
loans may also change due to shifts in the market's perception of
issuers and regulatory or tax changes adversely affecting the mortgage
securities markets as a whole. Due to current economic conditions,
including fluctuating interest rates and declining home values, as well
as aggressive lending practices, subprime mortgage loans have in recent
periods experienced increased rates of delinquency, foreclosure,
bankruptcy and loss, and they are likely to continue to experience rates
that are higher, and that may be substantially higher, than those
experienced by mortgage loans underwritten in a more traditional manner.
Thus, because of the higher delinquency rates and losses associated with
subprime mortgage loans, risks of investing in Securities which hold
subprime mortgage loans are similar to those which affect high-yield
securities or "junk" bonds, which include less liquidity, greater
volatility and an increased risk of default as compared to higher rated
securities.
Page 10
TIPS. The following section applies to individual Trusts which contain
Securities which invest in TIPs. TIPS are inflation-indexed fixed-income
securities issued by the U.S. Department of Treasury that utilize an
inflation mechanism tied to the Consumer Price Index ("CPI"). TIPS are
backed by the full faith and credit of the United States. TIPS are
offered with coupon interest rates lower than those of nominal rate
Treasury securities. The coupon interest rate remains fixed throughout
the term of the securities. However, each day the principal value of the
TIPS is adjusted based upon a pro-rata portion of the CPI as reported
three months earlier. Future interest payments are made based upon the
coupon interest rate and the adjusted principal value. In a falling
inflationary environment, both interest payments and the value of the
TIPS will decline.
Foreign Issuers. The following section applies to individual Trusts
which contain Securities issued by, or invest in securities issued by,
foreign entities. Since certain of the Securities held by the Trust
consist of, or invest in, securities issued by foreign entities, an
investment in the Trust involves certain investment risks that are
different in some respects from an investment in a trust which invests
solely in the securities of domestic entities. 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, as amended, 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 may pay interest and/or dividends
in foreign currencies and may be principally traded in foreign
currencies. Therefore, there is a risk that the U.S. dollar value of
these interest and/or dividend payments and/or securities will vary with
fluctuations in foreign exchange rates.
On the basis of the best information available to the Sponsor at the
present time, none of the Securities in the Trust are subject to
exchange control restrictions under existing law which would materially
interfere with payment to the Trust of dividends due on, or proceeds
from the sale of, the Securities. However, there can be no assurance
that exchange control regulations might not be adopted in the future
which might adversely affect payment to the Trust. The adoption of
exchange control regulations and other legal restrictions could have an
adverse impact on the marketability of international securities in the
Trust and on the ability of the Trust to satisfy its obligation to
redeem Units tendered to the Trustee for redemption. In addition,
restrictions on the settlement of transactions on either the purchase or
sale side, or both, could cause delays or increase the costs associated
with the purchase and sale of the foreign Securities and correspondingly
could affect the price of the Units.
Investors should be aware that it may not be possible to buy all
Securities at the same time because of the unavailability of any
Security, and restrictions applicable to the Trust relating to the
purchase of a Security by reason of the federal securities laws or
otherwise.
Foreign securities generally have not been registered under the
Securities Act of 1933 and may not be exempt from the registration
requirements of such Act. Sales of non-exempt Securities by the Trust in
the United States securities markets are subject to severe restrictions
and may not be practicable. Accordingly, sales of these Securities by
the Trust will generally be effected only in foreign securities markets.
Although the Sponsor does not believe that the Trust will encounter
obstacles in disposing of the Securities, investors should realize that
the Securities may be traded in foreign countries where the securities
markets are not as developed or efficient and may not be as liquid as
those in the United States. The value of the Securities will be
adversely affected if trading markets for the Securities are limited or
absent.
Page 11
Emerging Markets. The following section applies to individual Trusts
which contain Securities issued by, or invest in securities from certain
smaller and emerging markets. Compared to more mature markets, some
emerging markets may have a low level of regulation, enforcement of
regulations and monitoring of investors' activities. Those activities
may include practices such as trading on material non-public
information. The securities markets of developing countries are not as
large as the more established securities markets and have substantially
less trading volume, resulting in a lack of liquidity and high price
volatility. There may be a high concentration of market capitalization
and trading volume in a small number of issuers representing a limited
number of industries as well as a high concentration of investors and
financial intermediaries. These factors may adversely affect the timing
and pricing of the acquisition or disposal of securities.
In certain emerging markets, registrars are not subject to effective
government supervision nor are they always independent from issuers. The
possibility of fraud, negligence, undue influence being exerted by the
issuer or refusal to recognize ownership exists, which, along with other
factors, could result in the registration of a shareholding being
completely lost. Investors should therefore be aware that the Trust
could suffer loss arising from these registration problems. In addition,
the legal remedies in emerging markets are often more limited than the
remedies available in the United States.
Practices pertaining to the settlement of securities transactions in
emerging markets involve higher risks than those in developed markets,
in large part because of the need to use brokers and counterparties who
are less well capitalized, and custody and registration of assets in
some countries may be unreliable. As a result, brokerage commissions and
other fees are generally higher in emerging markets and the procedures
and rules governing foreign transactions and custody may involve delays
in payment, delivery or recovery of money or investments. Delays in
settlement could result in investment opportunities being missed if the
Trust is unable to acquire or dispose of a security. Certain foreign
investments may also be less liquid and more volatile than U.S.
investments, which may mean at times that such investments are unable to
be sold at desirable prices.
Political and economic structures in emerging markets often change
rapidly, which may cause instability. In adverse social and political
circumstances, governments have been involved in policies of
expropriation, confiscatory taxation, nationalization, intervention in
the securities market and trade settlement, and imposition of foreign
investment restrictions and exchange controls, and these could be
repeated in the future. In addition to withholding taxes on investment
income, some governments in emerging markets may impose different
capital gains taxes on foreign investors. Foreign investments may also
be subject to the risks of seizure by a foreign government and the
imposition of restrictions on the exchange or export of foreign
currency. Additionally, some governments exercise substantial influence
over the private economic sector and the political and social
uncertainties that exist for many developing countries are considerable.
Another risk common to most developing countries is that the economy is
heavily export oriented and, accordingly, is dependent upon
international trade. The existence of overburdened infrastructures and
obsolete financial systems also presents risks in certain countries, as
do environmental problems. Certain economies also depend to a large
degree upon exports of primary commodities and, therefore, are
vulnerable to changes in commodity prices which, in turn, may be
affected by a variety of factors.
Small and/or Mid Capitalization Companies. The following section applies
to individual Trusts which contain Securities issued by, or invest in
Securities that hold securities issued by, small and/or mid
capitalization companies. While historically stocks of small and mid
capitalization companies have outperformed the stocks of large
companies, the former have customarily involved more investment risk as
well. Such companies may have limited product lines, markets or
financial resources; may lack management depth or experience; and may be
more vulnerable to adverse general market or economic developments than
large companies. Some of these companies may distribute, sell or produce
products which have recently been brought to market and may be dependent
on key personnel.
The prices of small and mid cap company securities are often more
volatile than prices associated with large company issues, and can
display abrupt or erratic movements at times, due to limited trading
volumes and less publicly available information. Also, because such
companies normally have fewer shares outstanding and these shares trade
less frequently than large companies, it may be more difficult for the
Trusts which contain these Securities to buy and sell significant
amounts of such shares without an unfavorable impact on prevailing
market prices.
Page 12
MEMORANDUM
Re: FT 5969
The only difference of consequence (except as described below)
between FT 5835 which is the current fund, and FT 5969, 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 5835
Prospectus relate to the series number and size and the date and various
items of information which will be derived from and apply specifically to
the securities deposited in the Fund.
CONTENTS OF REGISTRATION STATEMENT
ITEM A Bonding Arrangements of Depositor:
First Trust Portfolios L.P. is covered by a Broker's Fidelity
Bond, in the total amount of $2,000,000, the insurer being
National Union Fire Insurance Company of Pittsburgh.
ITEM B This Registration Statement on Form S-6 comprises the following
papers and documents:
The facing sheet
The Prospectus
The signatures
Exhibits
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, FT 5969 has duly caused this Amendment No. 1 to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Wheaton and State of Illinois
on March 4, 2016.
FT 5969
(Registrant)
By: FIRST TRUST PORTFOLIOS L.P.
(Depositor)
By: Elizabeth H. Bull
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
---- ----- ----
James A. Bowen Director of The Charger Corporation, the )March 4, 2016
General Partner of First Trust )
Portfolios L.P. )
)Elizabeth H. Bull
)Attorney-in-Fact**
* The title of the person named herein represents his 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
Amendment No. 2 to Form S-6 of FT 2669 (File No. 333-169625) and
the same is hereby incorporated herein by this reference.
S-3
CONSENT OF COUNSEL
The consent of counsel to the use of its name in the Prospectus
included in this Registration Statement will be contained in its
respective opinion to be filed as Exhibit 3.1 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 will be filed as
Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for FT 4484 and
certain subsequent Series among First Trust Portfolios L.P., as
Depositor, The Bank of New York Mellon, as Trustee, First Trust
Advisors L.P., as Evaluator and Portfolio Supervisor and FTP
Services LLC, as FTPS Unit Servicing Agent (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 333-191558]
filed on behalf of FT 4484).
1.1.1* Form of Trust Agreement for FT 5969 among First Trust Portfolios
L.P., as Depositor, The Bank of New York Mellon, 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. 2 to Form S-6 [File No. 333-169625]
filed on behalf of FT 2669).
1.6 Underwriter Agreement (incorporated by reference to Amendment No.
1 to Form S-6 [File No. 33-42755] filed on behalf of The First
Trust Special Situations Trust, Series 19).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1 filed
herewith on page 2 and incorporated herein by reference).
2.2 Copy of Code of Ethics (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 333-156964] filed on behalf of FT
1987).
S-5
3.1* Opinion of counsel as to legality 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 Director listed on page S-3 of
this Registration Statement (incorporated by reference to
Amendment No. 2 to Form S-6 [File No. 333-169625] filed on behalf
of FT 2669).
-----------------------------------
* To be filed by amendment.
S-6