Chapman and Cutler LLP
111 West Monroe Street
Chicago, Illinois 60603
September 4, 2013
Mr. Edward Bartz
Division of Investment Management
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Guggenheim Defined Portfolios, Series 1040
Zacks Indicator Defined Outcome Trust, Series 1
File Nos. 333-188046 and 811-03763
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Dear Mr. Bartz:
This letter is in response to your comments in your letter dated May 17,
2013 regarding the registration statement on Form S-6 for Guggenheim Defined
Portfolios, Series 1040, filed on April 19, 2013 with the Securities and
Exchange Commission (the "Commission"). The registration statement offers the
Zacks Indicator Defined Outcome Trust, Series 1 (the "Trust").
PROSPECTUS
Investment Summary -- Principal Investment Strategy
1. In this section, please describe the types of securities in which the
Trust will invest.
Response: The following has been added to the end of the first paragraph:
"The trust may invest in the common stocks of U.S. and foreign companies, which
may have small-, mid- and large-capitalizations." In addition, repetitive
language in number 3 under "Security Selection" has been deleted.
Investment Summary -- Defined Outcome Trust
2. This section states that the Trust will automatically liquidate once
its net asset value reaches 15% above its deposit price, net of the 3% sales
load. Please clarify in this section that the Trust will liquidate upon the
sooner of (1) its 12 month scheduled termination, or (2) the attainment of this
15% net increase in net asset value. Please provide a similar disclosure in the
Overview section.
Response: The "Defined Outcome Trust" section has been revised to state:
The Defined Outcome Trust provides an inherent investment discipline by having a
built-in trigger based on performance. This trust has a predetermined
performance trigger that would automatically liquidate the trust's holdings once
the per unit net asset value reaches or exceeds 15% above its initial net asset
value as calculated on the date of deposit, net of the 2.95% upfront sales
charge and other related investment expenses. The trust's net asset is
calculated once daily at the end of the day. The liquidation proceeds will then
be returned to all unitholders on the settlement date. This type of trust
facilitates making strategies investible within an unit investment trust that
are shorter term in opportunity. If the predetermined performance trigger is not
met within approximately 12 months, the trust will terminate at that time by
liquidating its holdings and returning the liquidation proceeds to the
unitholders." Additionally, the related sentence in the "Overview" section has
been revised to state: "The trust is scheduled to terminate at the earlier of
(1) approximately 12 months or (2) the per unit net asset value reaching or
exceeding 15% above the initial net asset value as calculated on the date of
deposit, net of the 2.95% upfront sales charge and other related investment
expenses."
Investment Summary -- Future Trusts
3. Disclosure in this section provides that the sponsor may create a
future trust that follows the same investment strategy approximately three
months after the Trust's date of deposit. Since the termination date of the
Trust is uncertain, and could possibly occur in less than three months, please
disclose in this section what happens if the Trust terminates prior to the
availability of a future trust. Also, please explain to us whether there will be
any delay in reinvesting an investor's proceeds of liquidation in a future trust
should the Trust attain a 15% net increase in net asset value.
Response: This section has been deleted.
Investment Summary -- Principal Risks
4. The fourth bullet point in this section states that the Trust invests
in small- and mid-capitalization companies, while the fifth bullet point states
that the Trust invests in ADRs and U.S. -listed foreign securities. Please
disclose these types of investments in the discussions of the Trust's principal
investment strategies.
Response: Please see the answer to comment number 1.
Additional Revisions
In addition to the above, some additional revisions were made to the
prospectus. Please note that the investment objective has changed to state that
"[t]he trust seeks to maximize total return through capital appreciation."
Furthermore, the sales charge structure has been changed so that there is an
upfront sales charge of 2.95% and no deferred sales charge or additional
creation and development fee. Finally, predetermined trigger risk disclosures
have been added.
We appreciate your prompt attention to this registration statement. If you
have any questions or comments or would like to discuss our responses to your
questions please feel free to contact the undersigned at (312) 845-3484.
Very truly yours,
CHAPMAN AND CUTLER LLP
By /s/ Morrison C. Warren
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Morrison C. Warren