Form 487 Advisors Disciplined

Article

November 8, 2016 1:08 PM EST

E-mail

1933 ACT FILE NO.: 333-214051
1940 ACT FILE NO.: 811-21056
CIK NO.: 1675312

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 1
TO
REGISTRATION STATEMENT
ON
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: Advisors Disciplined Trust 1738

B. Name of depositor: ADVISORS ASSET MANAGEMENT, INC.

C. Complete address of depositor's principal executive offices:

18925 Base Camp Road
Monument, Colorado 80132

D. Name and complete address of agent for service:

WITH A COPY TO:

Scott Colyer Scott R. Anderson
ADVISORS ASSET MANAGEMENT, INC. CHAPMAN AND CUTLER LLP
18925 Base Camp Road 111 West Monroe Street
Monument, Colorado 80132 Chicago, Illinois 60603-4080

E. Title of securities being registered: Units of undivided beneficial
interest

F. Approximate date of proposed public offering:

AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT

[X] Check box if it is proposed that this filing will become effective on
November 8, 2016 at 10:00 a.m. pursuant to Rule 487.

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COHEN & STEERS DYNAMIC INCOME PORTFOLIO, SERIES 2016-4

(ADVISORS DISCIPLINED TRUST 1738)

A portfolio
seeking total return
with an emphasis on
current income

PROSPECTUS

NOVEMBER 8, 2016

[LOGO] As with any investment, the Securities
and Exchange Commission has not approved
AAM or disapproved of these securities or
passed upon the adequacy or accuracy of
ADVISORS this prospectus. Any contrary
ASSET MANAGEMENT representation is a criminal offense.

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INVESTMENT SUMMARY
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INVESTMENT OBJECTIVE

The trust seeks to provide total return with an emphasis on current income.
There is no assurance the trust will achieve its objective.

PRINCIPAL INVESTMENT STRATEGY

The trust seeks to achieve its objective by investing in five categories of
investments selected by Cohen & Steers Capital Management, Inc. (the "Portfolio
Consultant") using its five proprietary strategies (the "Select Strategies").
Allocations to the Select Strategies will be approximately equal weighted at the
trust's inception and may vary thereafter. The five proprietary Select
Strategies are:

1. DIVIDEND-PAYING EQUITIES: The strategy seeks to identify high-quality
stocks with sustainable cash flows, growing dividends and that have the
potential for capital appreciation, issued by companies across a variety
of industries and sectors.

2. REAL ESTATE INVESTMENT TRUSTS ("REITS"): The strategy provides access to
U.S. commercial properties through a diversified portfolio of REITs and
other real estate securities that Portfolio Consultant believes offer
superior growth potential and attractive valuations.

3. MASTER LIMITED PARTNERSHIPS ("MLPS"): The strategy provides access to
MLPs and other midstream energy companies.

4. PREFERRED SECURITIES: The strategy provides access to a wide spectrum of
the preferred securities market while seeking to control long-term credit
and interest-rate risks.

5. TAXABLE CLOSED-END FUNDS: The strategy targets investments in the common
stock of closed-end management investment companies (known as "closed-end
funds" and referred to herein as the "funds") that invest significantly in
equity, debt and other or income-producing securities.

The Portfolio Consultant's investment process is unique for the respective
investment team selecting each respective sleeve. However, each team's
investment process is integrated, combining rigorous bottom-up research with top
down macroeconomic views which are employed in selecting securities that are
believed to present the best relative value and potential to contribute to the
trust's investment objective.

Approximately 4.00% of the portfolio consists of funds classified as "non-
diversified" under the Investment Company Act of 1940. These funds have the
ability to invest more than 5% of their assets in securities of a single issuer
which could reduce diversification.

PRINCIPAL RISKS

As with all investments, you can lose money by investing in this trust. The
trust also might not perform as well as you expect. This can happen for reasons
such as these:

* SECURITY PRICES WILL FLUCTUATE. The value of your investment may fall over
time.

* AN ISSUER MAY BE UNABLE TO MAKE INCOME AND/OR PRINCIPAL PAYMENTS, OR DECLARE
DIVIDENDS, IN THE FUTURE. This may reduce the level of income the trust
receives which would reduce your income and cause the value of your units
to fall.

* THE FINANCIAL CONDITION OF AN ISSUER MAY WORSEN OR ITS CREDIT RATINGS MAY
DROP, RESULTING IN A REDUCTION IN THE VALUE OF YOUR UNITS. This may occur
at any point in time, including during the primary offering period.

* THE VALUE OF CERTAIN SECURITIES WILL GENERALLY FALL IF INTEREST RATES, IN
GENERAL, RISE. No one can predict whether interest rates will rise or fall
in the future.

* THE TRUST INVESTS IN SHARES OF CLOSED-END FUNDS. CLOSED-END FUNDS TEND TO
TRADE AT A DISCOUNT FROM THEIR NET ASSET VALUE AND ARE SUBJECT TO RISKS
RELATED TO FACTORS SUCH AS THE MANAGER'S ABILITY TO ACHIEVE A FUND'S
OBJECTIVE, MARKET CONDITIONS AFFECTING A FUND'S INVESTMENTS AND USE OF
LEVERAGE. The trust

2 Investment Summary

and the underlying funds have management and operating expenses. You will
bear not only your share of the trust's expenses, but also the expenses of
the underlying funds. By investing in funds, the trust incurs greater
expenses than you would incur if you invested directly in the funds.

* THE TRUST INVESTS IN PREFERRED SECURITIES. Preferred securities are
subordinated to bonds and other debt instruments in a company's capital
structure and therefore will be subject to greater credit risk than those
debt instruments. In addition, preferred securities are subject to other
risks, such as having no or limited voting rights, being subject to special
redemption rights, having distributions deferred or skipped, having limited
liquidity, changing tax treatments and possibly being in heavily regulated
industries.

* THE TRUST INVESTS IN SHARES OF REITS. A REIT IS A COMPANY DEDICATED TO
OWNING AND, IN SOME CASES, OPERATING INCOME-PRODUCING REAL ESTATE. SOME
REITS ENGAGE IN FINANCING REAL ESTATE. Negative developments in the real
estate industry will affect the value of your investment greater than in a
more diversified investment.

* THE TRUST AND CERTAIN FUNDS HELD BY THE TRUST INVEST IN MLPS. MLPS ARE
LIMITED PARTNERSHIPS OR LIMITED LIABILITY COMPANIES THAT ARE GENERALLY
TAXED AS PARTNERSHIPS WITH INTERESTS TRADED ON SECURITIES EXCHANGES. Most
MLPs generally operate in the energy natural resources or real estate
sector and are subject to the risks generally applicable to companies in
those sectors. MLPs are also subject to the risk that authorities could
challenge the tax treatment of MLPs for federal income tax purposes which
could have a negative impact on the after-tax income available for
distribution by the MLPs and/or the value of the trust's investments.

* THE TRUST AND/OR THE UNDERLYING FUNDS MAY INVEST IN SECURITIES OF SMALL AND
MID-SIZE COMPANIES. These securities are often more volatile and have
lower trading volumes than securities of larger companies. Small and mid-
size companies may have limited products or financial resources, management
inexperience and less publicly available information.

* THE TRUST AND/OR THE UNDERLYING FUNDS MAY INVEST IN UNRATED SECURITIES OR
SECURITIES RATED BELOW INVESTMENT GRADE AND ARE CONSIDERED TO BE "JUNK"
SECURITIES. These securities are considered to be speculative and are
subject to greater market and credit risks. Accordingly, the risk of
default is higher than investment grade securities. In addition, these
securities may be more sensitive to interest rate changes and may be more
likely to make early returns of principal.

* SECURITIES OF FOREIGN ISSUERS HELD BY THE TRUST AND/OR THE UNDERLYING FUNDS
IN THE TRUST PRESENT RISKS BEYOND THOSE OF U.S. ISSUERS. These risks may
include market and political factors related to the issuer's foreign
market, international trade conditions, the global and country-specific
political environment, less regulation, smaller or less liquid markets,
increased volatility, differing accounting practices and changes in the
value of foreign currencies.

* WE* DO NOT ACTIVELY MANAGE THE PORTFOLIO. While the closed-end funds
have managed portfolios, except in limited circumstances, the trust will
hold, and continue to buy, shares of the same securities even if their
market value declines.

--------------------
* "AAM," "we" and related terms mean Advisors Asset Management, Inc., the
trust sponsor, unless the context clearly suggests otherwise.

Investment Summary 3

WHO SHOULD INVEST

You should consider this investment if you want:

* to own a defined portfolio of securities seeking total return with an
emphasis on current income.

* to diversify your overall portfolio with investments in various types of
securities.

You should not consider this investment if you:

* are uncomfortable with the risks of an unmanaged investment in the
securities held by the trust.

* are uncomfortable with the trust's investment strategy.

* seek aggressive growth without current income.

* seek capital preservation or capital appreciation as a primary objective.

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ESSENTIAL INFORMATION
---------------------

UNIT PRICE AT INCEPTION $10.0000

INCEPTION DATE November 8, 2016
TERMINATION DATE November 5, 2018

ESTIMATED NET ANNUAL
DISTRIBUTIONS*
First year $0.5484 per unit
Second year $0.5426 per unit

DISTRIBUTION DATES 25th day of each month
RECORD DATES 10th day of each month

CUSIP NUMBERS
Standard Accounts
Cash distributions 00776H385
Reinvest distributions 00776H393
Fee Based Accounts
Cash distributions 00776H401
Reinvest distributions 00776H419

TICKER SYMBOL DIPAAX

MINIMUM INVESTMENT $1,000/100 units

TAX STRUCTURE Regulated Investment Company

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* As of November 7, 2016 and may vary thereafter.

FEES AND EXPENSES

The amounts below are estimates of the direct and indirect expenses that you
may incur based on a $10 unit price. Actual expenses may vary.

AS A % AMOUNT
OF $1,000 PER 100
SALES FEE INVESTED UNITS
------------------------

Initial sales fee 1.00% $10.00
Deferred sales fee 2.45 24.50
Creation & development fee 0.50 5.00
------- -------
Maximum sales fee 3.95% $39.50
======= =======

ORGANIZATION COSTS 0.38% $3.80
======= =======

AS A % AMOUNT
ANNUAL OF NET PER 100
OPERATING EXPENSES ASSETS UNITS
------------------------

Trustee fee & expenses 0.24% $2.34
Supervisory, evaluation
and administration fees 0.10 1.00
Fund expenses 0.39 3.69
------- -------
Total 0.73% $7.03
======= =======

The initial sales fee is the difference between the total sales fee (maximum
of 3.95% of the unit offering price) and the sum of the remaining deferred sales
fee and the total creation and development fee. The deferred sales fee is fixed
at $0.245 per unit and is paid in three monthly installments beginning
February 20, 2017. The creation and development fee is fixed at $0.05 per unit
and is paid at the end of the initial offering period (anticipated to be
approximately three months). The trust will indirectly bear the management and
operating expenses of the underlying closed-end funds. While the trust will not
pay these expenses directly out of its assets, these expenses are shown in the
trust's annual operating expenses above to illustrate the impact of these
expenses.

EXAMPLE

This example helps you compare the cost of this trust with other unit trusts
and mutual funds. In the example we assume that the expenses do not change and
that the trust's annual return is 5%. Your actual returns and expenses will
vary. Based on these assumptions, you would pay these expenses for every
$10,000 you invest in the trust:

1 year $503
2 years (life of trust) $576

These amounts are the same regardless of whether you sell your investment at
the end of a period or continue to hold your investment.

4 Investment Summary

COHEN & STEERS DYNAMIC INCOME PORTFOLIO, SERIES 2016-4
(ADVISORS DISCIPLINED TRUST 1738)
PORTFOLIO
AS OF THE TRUST INCEPTION DATE, NOVEMBER 8, 2016

PERCENTAGE OF
NUMBER AGGREGATE MARKET COST OF
OF TICKER OFFERING VALUE PER SECURITIES
SHARES SYMBOL ISSUER(1) PRICE SHARE(1) TO TRUST(2)
---------------------------------------------------------------------------------------------------------------------------------

EQUITY SECURITIES -- 60.00%

CONSUMER STAPLES - 2.99%

23 MO Altria Group, Inc. 1.01% $65.27 $1,501
21 BG Bunge Limited (4) 0.98 69.08 1,451
35 KO The Coca-Cola Company 1.00 42.46 1,486

ENERGY - 19.99%

46 BPL Buckeye Partners LP 1.98 64.07 2,947
111 CQP Cheniere Energy Partners LP 2.00 26.85 2,980
89 ETP Energy Transfer Partners LP 2.00 33.46 2,978
91 GEL Genesis Energy LP 2.01 32.81 2,986
24 HP Helmerich & Payne, Inc. 1.01 62.46 1,499
22 OXY Occidental Petroleum Corporation 0.99 67.25 1,480
139 RMP Rice Midstream Partners LP 2.01 21.51 2,990
65 TEP Tallgrass Energy Partners LP 1.98 45.20 2,938
67 TLLP Tesoro Logistics LP 2.00 44.39 2,974
54 WES Western Gas Partners LP 2.01 55.30 2,986
89 WPZ Williams Partners LP 2.00 33.40 2,973

FINANCIALS - 4.02%

14 CME CME Group, Inc. 0.99 104.80 1,467
143 HBAN Huntington Bancshares, Inc. 1.00 10.45 1,494
17 PRU Prudential Financial, Inc. 1.02 88.82 1,510
33 WFC Wells Fargo & Company 1.01 45.40 1,498

HEALTH CARE - 3.00%

25 ABBV AbbVie, Inc. 0.99 58.91 1,473
25 MRK Merck & Company, Inc. 1.01 60.05 1,501
49 PFE Pfizer, Inc. 1.00 30.38 1,489

(continued)

Investment Summary 5

COHEN & STEERS DYNAMIC INCOME PORTFOLIO, SERIES 2016-4
(ADVISORS DISCIPLINED TRUST 1738)
PORTFOLIO (CONTINUED)
AS OF THE TRUST INCEPTION DATE, NOVEMBER 8, 2016

INDUSTRIALS - 1.96%

11 CMI Cummins, Inc. 0.96% $130.34 $1,434
51 GE General Electric Company 1.00 29.31 1,495

INFORMATION TECHNOLOGY - 3.01%

48 CSCO Cisco Systems, Inc. 1.00 30.94 1,485
43 INTC Intel Corporation 1.00 34.69 1,492
22 QCOM QUALCOMM, Inc. 1.01 68.46 1,506

MATERIALS - 2.03%

34 IP International Paper Company 1.02 44.47 1,512
19 LYB LyondellBasell Industries (4) 1.01 79.16 1,504

REAL ESTATE - 19.98%

64 ADC Agree Realty Corporation 2.02 46.91 3,002
28 ARE Alexandria Real Estate Equities, Inc. 2.00 106.03 2,969
17 AVB AvalonBay Communities, Inc. 1.95 170.72 2,902
83 DEI Douglas Emmett, Inc. 2.01 36.10 2,996
71 EDR Education Realty Trust, Inc. 1.99 41.74 2,964
101 HTA Healthcare Trust of America, Inc. 2.00 29.37 2,966
59 PLD Prologis, Inc. 2.02 50.82 2,998
16 SPG Simon Property Group, Inc. 1.96 181.93 2,911
40 SUI Sun Communities, Inc. 2.02 75.15 3,006
86 UDR UDR, Inc. 2.01 34.66 2,981

TELECOMMUNICATION SERVICES - 0.99%

40 T AT&T, Inc. 0.99 36.81 1,472

UTILITIES - 2.03%

103 SPH Suburban Propane Partners LP 2.03 29.36 3,024

(continued)

6 Investment Summary

COHEN & STEERS DYNAMIC INCOME PORTFOLIO, SERIES 2016-4
(ADVISORS DISCIPLINED TRUST 1738)
PORTFOLIO (CONTINUED)
AS OF THE TRUST INCEPTION DATE, NOVEMBER 8, 2016

CLOSED-END FUNDS -- 20.00%

310 CSQ Calamos Strategic Total Return Fund 2.00% $9.60 $2,976
259 GLV Clough Global Dividend and Income Fund 2.00 11.48 2,973
156 EVT Eaton Vance Tax-Advantaged Dividend Income Fund 2.00 19.09 2,978
295 ETY Eaton Vance Tax-Managed Diversified Equity Income Fund 2.01 10.11 2,982
127 FEN First Trust Energy Income and Growth Fund 2.00 23.43 2,976
570 GAB Gabelli Equity Trust, Inc. 2.00 5.22 2,975
155 GOF Guggenheim Strategic Opportunities Fund 2.00 19.20 2,976
261 VTA Invesco Dynamic Credit Opportunities Fund 2.00 11.41 2,978
129 HTD John Hancock Tax-Advantaged Dividend Income Fund 1.99 22.97 2,963
229 JCE Nuveen Core Equity Alpha Fund 2.00 12.95 2,966

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TOTAL EQUITY SECURITIES AND CLOSED-END FUNDS 80.00% $118,963
========= ==========

PERCENTAGE OF COST OF
NUMBER AGGREGATE MARKET SECURITIES
OF OFFERING REDEMPTION VALUE PER TO
SHARES ISSUER(5) PRICE PROVISIONS(6) SHARE(1) TRUST(2)
----------------------------------------------------------------------------------------------------------------------------------

PREFERRED SECURITIES -- 20.00%

CONSUMER STAPLES - 1.99%

103 CHS, Inc., Series 4, 7.50% 1.99% 1/21/2025 @ 25 $28.73 $2,959

FINANCIALS - 14.00%

111 The Allstate Corporation, Series E, 6.625% 2.00 4/15/2019 @ 25 26.85 2,980
113 Bank of America Corporation, Series Y, 6.50% 2.01 1/27/2020 @ 25 26.42 2,986
106 Citigroup, Inc., Series J, 7.125% 2.00 9/30/2023 @ 25 27.99 2,967
111 The Goldman Sachs Group, Inc., Series N, 6.30% 2.01 5/10/2021 @ 25 26.89 2,985
111 JPMorgan Chase & Company, Series AA, 6.10% 2.00 9/1/2020 @ 25 26.84 2,979
103 Morgan Stanley, Series E, 7.125% 1.99 10/15/2023 @ 25 28.68 2,954
114 Wells Fargo & Company, Series V, 6.00% 1.99 12/15/2020 @ 25 25.99 2,963

(Continued)

Investment Summary 7

COHEN & STEERS DYNAMIC INCOME PORTFOLIO, SERIES 2016-4
(ADVISORS DISCIPLINED TRUST 1738)
PORTFOLIO (CONTINUED)
AS OF THE TRUST INCEPTION DATE, NOVEMBER 8, 2016

REAL ESTATE - 2.01%

115 American Homes 4 Rent, Series E, 6.35% 2.01% 6/29/2021 @ 25 $25.92 $2,981

UTILITIES - 2.00%

111 The Southern Company, 6.25%, due 10/15/2075 2.00 10/15/2020 @ 25 26.72 2,966

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TOTAL PREFERRED SECURITIES 20.00% $29,720
========= ==========

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TOTAL 100.00% $148,683
========= ==========

See "Notes to Portfolio"

8 Investment Summary

Notes to Portfolio

(1) Securities are represented by contracts to purchase such securities. The
value of each security is based on the most recent closing sale price of
each security as of the close of regular trading on the New York Stock
Exchange on the business day prior to the trust's inception date. In
accordance with Accounting Standards Codification 820, "Fair Value
Measurements", the trust's investments are classified as Level 1, which
refers to security prices determined using quoted prices in active markets
for identical securities.

(2) 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 $148,683 and $0,
respectively.

(3) This is a non-income producing security.

(4) This is a security issued by a foreign company.

Equity Securities and Preferred Securities comprise 80.00% of the
investments of the trust, broken down by country of organization as set
forth below:

Bermuda 0.98%
Netherlands 1.01%
United States 78.01%

(5) Shown under this heading is the stated dividend or income distribution rate
of each of the securities, expressed as an annual dollar amount or as a
percentage of par or stated value. Each security was originally issued
with a par or stated value per share equal to $25. Securities are
represented by contracts to purchase securities.

(6) The securities are first redeemable on such date and at such price as
listed above. Optional redemption provisions, which may be exercised in
whole or in part, are at prices of par or stated value. Optional
redemption provisions generally will occur at times when the redeemed
securities have an offering side evaluation which represents a premium over
par or stated value. To the extent that the securities were acquired at a
price higher than the redemption price, this will represent a loss of
capital when compared with the public offering price of the units when
acquired. Distributions to unitholders will generally be reduced by the
amount of the income which otherwise would have been paid with respect to
redeemed securities, and any principal amount received on such redemption
after satisfying any redemption requests for units received by the trust
will be distributed to unitholders. Certain of the securities have
provisions which would allow for their redemption prior to the earliest
stated call date pursuant to the occurrence of certain extraordinary
events.

(7) The security has a "make whole" call option and may be redeemable in whole
or in part at the option of the issuer at a redemption price generally
equal to the greater of (i) 100% of the aggregate principal amount of the
security or (ii) the sum of the present values of the remaining scheduled
payments of principal and interest thereon, discounted to the date of
redemption on a periodic basis at a set premium to the then current
applicable Treasury Rate plus accrued and unpaid interest on the principal
amount being redeemed to the date of redemption.

Investment Summary 9

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UNDERSTANDING YOUR INVESTMENT
-----------------------------

HOW TO BUY UNITS

You can buy units of the trust on any business day the New York Stock
Exchange is open by contacting your financial professional. Unit prices are
available daily on the Internet at WWW.AAMLIVE.COM. The public offering price
of units includes:

* the net asset value per unit plus

* organization costs plus

* the sales fee.

The "net asset value per unit" is the value of the securities, cash and other
assets in the trust reduced by the liabilities of the trust divided by the total
units outstanding. We often refer to the public offering price of units as the
"offer price" or "purchase price." The offer price will be effective for all
orders received prior to the close of regular trading on the New York Stock
Exchange (normally 4:00 p.m. Eastern time). If we receive your order prior to
the close of regular trading on the New York Stock Exchange or authorized
financial professionals receive your order prior to that time and properly
transmit the order to us by the time that we designate, then you will receive
the price computed on the date of receipt. If we receive your order after the
close of regular trading on the New York Stock Exchange, if authorized financial
professionals receive your order after that time or if orders are received by
such persons and are not transmitted to us by the time that we designate, then
you will receive the price computed on the date of the next determined offer
price provided that your order is received in a timely manner on that date. It
is the responsibility of the authorized financial professional to transmit the
orders that they receive to us in a timely manner. Certain broker-dealers may
charge a transaction or other fee for processing unit purchase orders.

VALUE OF THE SECURITIES. We determine the value of the securities as of the
close of regular trading on the New York Stock Exchange on each day that
exchange is open. We generally determine the value of securities using the last
sale price for securities traded on a national securities exchange. For this
purpose, the trustee provides us closing prices from a reporting service
approved by us. In some cases we will price a security based on its fair value
after considering appropriate factors relevant to the value of the security. We
will only do this if a security is not principally traded on a national
securities exchange or if the market quotes are unavailable or inappropriate.

We determined the initial prices of the securities shown under "Portfolio" in
this prospectus as described above at the close of regular trading on the New
York Stock Exchange on the business day before the date of this prospectus. On
the first day we sell units we will compute the unit price as of the close of
regular trading on the New York Stock Exchange or the time the registration
statement filed with the Securities and Exchange Commission becomes effective,
if later.

ORGANIZATION COSTS. During the initial offering period, part of the value of
the units represents an amount that will pay the costs of creating your trust.
These costs include the costs of preparing the registration statement and legal
documents, federal and state registration fees, the Portfolio Consultant's
security selection fee, the initial fees and expenses of the trustee and the
initial audit. Your trust will sell securities to reimburse us for these costs
at the end of the initial offering period or after six months, if earlier. The
value of your units will decline when the trust pays these costs.

10 Understanding Your Investment

TRANSACTIONAL SALES FEE. You pay a fee in connection with purchasing units.
We refer to this fee as the "transactional sales fee." The transactional sales
fee has both an initial and a deferred component and equals 3.45% of the public
offering price per unit based on a $10 public offering price per unit. This
percentage amount of the transactional sales fee is based on the unit price on
the trust's inception date. The transactional sales fee equals the difference
between the total sales fee and the creation and development fee. As a result,
the percentage and dollar amount of the transactional sales fee will vary as the
public offering price per unit varies. The transactional sales fee does not
include the creation and development fee which is described under "Fees and
Expenses."

The maximum sales fee equals 3.95% of the public offering price per unit at
the time of purchase. You pay the initial sales fee at the time you buy units.
The initial sales fee is the difference between the total sales fee percentage
(maximum of 3.95% of the public offering price per unit) and the sum of the
remaining fixed dollar deferred sales fee and the total fixed dollar creation
and development fee. The initial sales fee will be approximately 1.00% of the
public offering price per unit depending on the public offering price per unit.
The deferred sales fee is fixed at $0.245 per unit. Your trust pays the
deferred sales fee in equal monthly installments as described on page 4. If you
redeem or sell your units prior to collection of the total deferred sales fee,
you will pay any remaining deferred sales fee upon redemption or sale of your
units.

If you purchase units after the last deferred sales fee payment has been
assessed, the secondary market sales fee is equal to 3.95% of the public
offering price and does not include deferred payments (i.e., unitholders who buy
in the secondary market after collection of the deferred sales fees are not
charged deferred sales fees).

MINIMUM PURCHASE. The minimum amount you can purchase of the trust appears
on page 4 under "Essential Information", but such amounts may vary depending on
your selling firm.

REDUCING YOUR SALES FEE. We offer a variety of ways for you to reduce the
fee you pay. It is your financial professional's responsibility to alert us of
any discount when you order units. Except as expressly provided herein, you may
not combine discounts. Since the deferred sales fee and the creation and
development fee are fixed dollar amounts per unit, your trust must charge these
fees per unit regardless of any discounts. However, if you are eligible to
receive a discount such that your total sales fee is less than the fixed dollar
amounts of the deferred sales fee and the creation and development fee, we will
credit you the difference between your total sales fee and these fixed dollar
fees at the time you buy units.

Large Purchases. You can reduce your sales fee by increasing the size of
your investment:

IF YOU PURCHASE: YOUR FEE WILL BE:
------------------------------------------

Less than $50,000 3.95%
$50,000 - $99,999 3.70
$100,000 - $249,999 3.45
$250,000 - $499,999 3.10
$500,000 - $999,999 2.95
$1,000,000 or more 2.45

We apply these fees as a percent of the public offering price per unit at the
time of purchase. The breakpoints will be adjusted to take into consideration
purchase orders stated in dollars which cannot be completely fulfilled due to
the requirements that only whole units be issued.

Understanding Your Investment 11

You aggregate initial offering period unit orders submitted by the same
person for units of any of the trusts we sponsor on any single day from any one
broker-dealer to qualify for a purchase level. If you purchase initial offering
period units that qualify for the fee account or rollover/exchange discount
described below and also purchase additional initial offering period units on a
single day from the same broker-dealer that do not qualify for the fee account
or rollover/exchange discount, you aggregate all initial offering period units
purchased for purposes of determining the applicable breakpoint level in the
table above on the additional units, but such additional units will not qualify
for the fee account or rollover/exchange discount described below. Secondary
market unit purchases are not aggregated with initial offering period unit
purchases for purposes of determining the applicable breakpoint level. You can
also include these orders as your own for purposes of this aggregation:

* orders submitted by your spouse or children (including step-children)
under 21 years of age living in the same household and

* orders submitted by your trust estate or fiduciary accounts.

The discounts described above apply only to initial offering period
purchases.

Fee Accounts. Investors may purchase units through registered investment
advisers, certified financial planners or registered broker-dealers who in each
case either charge investor accounts ("Fee Accounts") periodic fees for
brokerage services, financial planning, investment advisory or asset management
services, or provide such services in connection with an investment account for
which a comprehensive "wrap fee" charge ("Wrap Fee") is imposed. You should
consult your financial advisor to determine whether you can benefit from these
accounts. To purchase units in these Fee Accounts, your financial advisor must
purchase units designated with one of the Fee Account CUSIP numbers, if
available. Please contact your financial advisor for more information. If
units of the trust are purchased for a Fee Account and the units are subject to
a Wrap Fee in such Fee Account (i.e., the trust is "Wrap Fee Eligible") then
investors may be eligible to purchase units of the trust in these Fee Accounts
that are not subject to the transactional sales fee but will be subject to the
creation and development fee that is retained by the sponsor. For example, this
table illustrates the sales fee you will pay as a percentage of the initial $10
public offering price per unit (the percentage will vary with the unit price).

Initial sales fee 0.00%
Deferred sales fee 0.00%
-------
Transactional sales fee 0.00%
=======
Creation and development fee 0.50%
-------
Total sales fee 0.50%
=======

This discount applies only during the initial offering period. Certain Fee
Account investors may be assessed transaction or other fees on the purchase
and/or redemption of units by their broker-dealer or other processing
organizations for providing certain transaction or account activities. We
reserve the right to limit or deny purchases of units in Fee Accounts by
investors or selling firms whose frequent trading activity is determined to be
detrimental to the trust.

Employees. We waive the transactional sales fee for purchases made by
officers, directors and employees (and immediate family members) of the sponsor
and its affiliates. These purchases are not subject to the transactional sales
fee but will be subject to the creation and development fee. We also waive a
portion of the sales fee for purchases

12 Understanding Your Investment

made by officers, directors and employees (and immediate family members) of
selling firms. These purchases are made at the public offering price per unit
less the applicable regular dealer concession. Immediate family members for the
purposes of this section include your spouse, children (including step-children)
under the age of 21 living in the same household, and parents (including step-
parents). These discounts apply to initial offering period and secondary market
purchases. All employee discounts are subject to the policies of the related
selling firm, including but not limited to, householding policies or
limitations. Only officers, directors and employees (and their immediate family
members) of selling firms that allow such persons to participate in this
employee discount program are eligible for the discount.

Rollover/Exchange Option. We waive a portion of the sales fee on units of
the trust offered in this prospectus if you buy your units with redemption or
termination proceeds from any unit investment trusts (regardless of sponsor).
The discounted public offering price per unit for these transactions is equal to
the regular public offering price per unit less 1.00%. However, if you invest
redemption or termination proceeds of $500,000 or more in units of the trust,
the maximum sales fee on your units will be limited to the maximum sales fee for
the applicable amount invested in the table under "Large Purchases" above. To
qualify for this discount, the termination or redemption proceeds used to
purchase units of the trust offered in this prospectus must be derived from a
transaction that occurred within 30 calendar days of your purchase of units of
the trust offered in this prospectus. In addition, the discount will only be
available for investors that utilize the same broker-dealer (or a different
broker-dealer with appropriate notification) for both the unit purchase and the
transaction resulting in the receipt of the termination or redemption proceeds
used for the unit purchase. You may be required to provide appropriate
documentation or other information to your broker-dealer to evidence your
eligibility for this sales fee discount.

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 fee at redemption, you should be aware that any deferred sales
fee remaining on these units will be deducted from those redemption proceeds.
These discounts apply only to initial offering period purchases.

Dividend Reinvestment Plan. We do not charge any sales fee when you reinvest
distributions from your trust into additional units of the trust. This sales
fee discount applies to initial offering period and secondary market purchases.
Since the deferred sales fee and the creation and development fee are fixed
dollar amounts per unit, your trust must charge these fees per unit regardless
of this discount. If you elect the distribution reinvestment plan, we will
credit you with additional units with a dollar value sufficient to cover the
amount of any remaining deferred sales fee and creation and development fee that
will be collected on such units at the time of reinvestment. The dollar value
of these units will fluctuate over time.

RETIREMENT ACCOUNTS. The portfolio may be suitable for purchase in tax-
advantaged retirement accounts. You should contact your financial professional
about the accounts offered and any additional fees imposed.

HOW TO SELL YOUR UNITS

You can sell or redeem your units on any business day the New York Stock
Exchange is open by contacting your financial professional. Unit prices are
available daily on the Internet at

Understanding Your Investment 13

WWW.AAMLIVE.COM or through your financial professional. The sale and redemption
price of units is equal to the net asset value per unit, provided that you will
not pay any remaining creation and development fee or organization costs if you
sell or redeem units during the initial offering period. The sale and
redemption price is sometimes referred to as the "liquidation price." You pay
any remaining deferred sales fee when you sell or redeem your units. Certain
broker-dealers may charge a transaction fee for processing unit redemption or
sale requests.

SELLING UNITS. We may maintain a secondary market for units. This means
that if you want to sell your units, we may buy them at the current net asset
value, provided that you will not pay any remaining creation and development fee
or organization costs if you redeem units during the initial offering period.
We may then resell the units to other investors at the public offering price or
redeem them for the redemption price. Our secondary market repurchase price is
the same as the redemption price. Certain broker-dealers might also maintain a
secondary market in units. You should contact your financial professional for
current repurchase prices to determine the best price available. We may
discontinue our secondary market at any time without notice. Even if we do not
make a market, you will be able to redeem your units with the trustee on any
business day for the current redemption price.

REDEEMING UNITS. You may also redeem your units directly with the trustee,
The Bank of New York Mellon, on any day the New York Stock Exchange is open.
The redemption price that you will receive for units is equal to the net asset
value per unit, provided that you will not pay any remaining creation and
development fee or organization costs if you redeem units during the initial
offering period. You will pay any remaining deferred sales fee at the time you
redeem units. You will receive the net asset value for a particular day if the
trustee receives your completed redemption request prior to the close of regular
trading on the New York Stock Exchange. Redemption requests received by
authorized financial professionals prior to the close of regular trading on the
New York Stock Exchange that are properly transmitted to the trustee by the time
designated by the trustee, are priced based on the date of receipt. Redemption
requests received by the trustee after the close of regular trading on the New
York Stock Exchange, redemption requests received by authorized financial
professionals after that time or redemption requests received by such persons
that are not transmitted to the trustee until after the time designated by the
trustee, are priced based on the date of the next determined redemption price
provided they are received in a timely manner by the trustee on such date. It
is the responsibility of authorized financial professionals to transmit
redemption requests received by them to the trustee so they will be received in
a timely manner. If your request is not received in a timely manner or is
incomplete in any way, you will receive the next net asset value computed after
the trustee receives your completed request.

If you redeem your units, the trustee will generally send you a payment for
your units no later than seven days after it receives all necessary
documentation (this will usually only take three business days). The only time
the trustee can delay your payment is if the New York Stock Exchange is closed
(other than weekends or holidays), the Securities and Exchange Commission
determines that trading on that exchange is restricted or an emergency exists
making sale or evaluation of the securities not reasonably practicable, and for
any other period that the Securities and Exchange Commission permits.

14 Understanding Your Investment

You can request an in-kind distribution of the securities underlying your
units if you tender at least 2,500 units for redemption (or such other amount as
required by your financial professional's firm). This option is generally
available only for securities traded and held in the United States. The trustee
will make any in-kind distribution of securities by distributing applicable
securities in book entry form to the account of your financial professional at
Depository Trust Company. You will receive whole shares of the applicable
securities and cash equal to any fractional shares. You may not request this
option in the last 30 days of your trust's life. We may discontinue this option
upon sixty days notice.

EXCHANGE OPTION. You may be able to exchange your units for units of our
unit trusts at a reduced sales fee. You can contact your financial professional
for more information about trusts currently available for exchanges. Before you
exchange units, you should read the prospectus carefully and understand the
risks and fees. You should then discuss this option with your financial
professional to determine whether your investment goals have changed, whether
current trusts suit you and to discuss tax consequences. We may discontinue
this option at any time upon sixty days notice.

DISTRIBUTIONS

MONTHLY DISTRIBUTIONS. Your trust generally pays distributions of its net
investment income (pro-rated on an annual basis) along with any excess capital
on each monthly distribution date to unitholders of record on the preceding
record date. The record and distribution dates are shown under "Essential
Information" in the "Investment Summary" section of this prospectus. In some
cases, your trust might pay a special distribution if it holds an excessive
amount of cash pending distribution. For example, this could happen as a result
of a merger or similar transaction involving a company whose stock is in your
portfolio. The trust will also generally make required distributions or
distributions to avoid imposition of tax at the end of each year because it is
structured as a "regulated investment company" for federal tax purposes. The
amount of your distributions will vary from time to time as companies change
their dividends or trust expenses change.

The closed-end funds in the trust's portfolio generally make dividend
payments on a monthly basis. Different funds pay dividends at different times
during a month. When the trust receives dividends and other income
distributions from a portfolio security, the trustee credits such payments to
the trust's accounts. In an effort to make relatively regular income
distributions, the trust's monthly income distribution is equal to one-twelfth
of the estimated net annual income distributions to be received by the trust
after deduction of trust operating expenses. Because the trust does not
necessarily receive income distributions at a constant rate throughout the year,
the trust's income distributions to unitholders may be more or less than the
amount credited to the trust accounts as of the record date. For the purpose of
minimizing fluctuation in income distributions, the trustee is authorized to
advance such amounts as may be necessary to provide income distributions of
approximately equal amounts. The trustee will be reimbursed, without interest,
for any such advances from available income received by the trust on the ensuing
record date.

ESTIMATED ANNUAL DISTRIBUTIONS. The estimated net annual distributions are
shown under "Essential Information" in the "Investment Summary" section of this
prospectus. We generally

Understanding Your Investment 15

base the estimate of the dividends the trust will receive from the closed-end
funds by annualizing the most recent dividends declared by the closed-end funds.
We generally base the estimate of the income the trust may receive from
operating companies by annualizing the most recent ordinary dividend declared by
an issuer (or adding the most recent interim and final dividends declared for
certain foreign issuers) and/or on scheduled income payments. However, dividend
conventions for certain companies and/or certain countries differ from those in
the United States and in certain instances, dividends paid or declared over
several years or other periods were used to estimate annual distributions. Due
to this and various other factors, actual dividends and other income
distributions received by the trust will most likely differ from the most recent
annualized dividends or scheduled income payments. The actual net annual
distributions you will receive will vary with changes in the trust's fees and
expenses, in dividends and other income distributions received and with the sale
of securities. The estimated net annual distributions for subsequent years are
expected to be less than estimated distributions for the first year because a
portion of the securities included in the trust portfolio will be sold during
the first year to pay for organization costs, creation and development fee and
the deferred sales fee.

REPORTS. The trustee or your financial professional will make available to
you a statement showing income and other receipts of your trust for each
distribution. Each year the trustee will also provide an annual report on your
trust's activity and certain tax information. You can request copies of
security evaluations to enable you to complete your tax forms and audited
financial statements for your trust, if available.

INVESTMENT RISKS

All investments involve risk. This section describes the main risks that can
impact the value of the securities in your portfolio. You should understand
these risks before you invest. If the value of the securities falls, the value
of your units will also fall. We cannot guarantee that your trust will achieve
its objective or that your investment return will be positive over any period.

MARKET RISK. Market risk is the risk that the value of the securities in
your trust will fluctuate. This could cause the value of your units to fall
below your original purchase price. Market value fluctuates in response to
various factors. These can include changes in interest rates, inflation, the
financial condition of a security's issuer, perceptions of the issuer, or
ratings on a security. Even though we supervise your portfolio, you should
remember that we do not manage your portfolio. Your trust will not sell a
security solely because the market value falls as is possible in a managed fund.

SELECTION RISK. Selection risk is the risk that the securities selected for
inclusion by the trust or by a fund's management will underperform the markets,
relevant indices or the securities selected by other funds with similar
investment objectives and investment strategies. This means you may lose money
or earn less money than other comparable investments.

EQUITY SECURITIES. The trust and/or certain funds held by the trust may
invest in securities representing equity ownership of a company. Investments in
such securities are exposed to risks associated with the companies issuing the
securities, the sectors and geographic locations they are involved in and the
markets that such securities are traded on among other risks as described
herein.

16 Understanding Your Investment

FIXED INCOME SECURITIES. Certain funds held by the trust may invest in fixed
income securities and similar securities. Fixed income securities involve
certain unique risks such as credit risk and interest rate risk among other
things as described in greater detail below.

DIVIDEND PAYMENT RISK. Dividend payment risk is the risk that an issuer of a
security is unwilling or unable to pay income on a security. Stocks represent
ownership interests in the issuers and are not obligations of the issuers.
Common stockholders have a right to receive dividends only after the company has
provided for payment of its creditors, bondholders and preferred stockholders.
Common stocks do not assure dividend payments. Dividends are paid only when
declared by an issuer's board of directors and the amount of any dividend may
vary over time.

CREDIT RISK. Credit risk is the risk that a borrower is unable to meet its
obligation to pay principal or interest on a security held by a fund. This
could cause the value of your units to fall and may reduce the level of
dividends a fund pays which would reduce your income.

INTEREST RATE RISK. Interest rate risk is the risk that the value of fixed
income securities and similar securities held by a fund will fall if interest
rates increase. Bonds and other fixed income 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. The securities in your trust may be subject to a greater risk of
rising interest rates than would normally be the case due to the current period
of historically low rates.

PREFERRED SECURITIES. Your trust and/or the underlying funds may invest in
preferred securities including preferred stocks, trust preferred securities,
subordinated or junior notes and debentures and other similarly structured
securities. Preferred securities combine some of the characteristics of common
stocks and bonds. Preferred securities generally pay fixed or adjustable rate
income in the form of dividends or interest to investors. Preferred securities
generally have preference over common stock in the payment of income and the
liquidation of a company's assets. However, preferred securities are typically
subordinated to bonds and other debt instruments in a company's capital
structure and therefore will be subject to greater credit risk than those debt
instruments. Because of their subordinated position in the capital structure of
an issuer, the ability to defer dividend or interest payments for extended
periods of time without triggering an event of default for the issuer, and
certain other features, preferred securities are often treated as equity-like
instruments by both issuers and investors, as their quality and value are
heavily dependent on the profitability and cash flows of the issuer rather than
on any legal claims to specific assets. Most retail-available preferred
securities have a $25 par (or "face") value but can also have par values of $50
or $1,000. Preferred securities are often callable at their par value at some
point in time after their original issuance date. Income payments on preferred
securities are generally stated as a percentage of these par values although
certain preferred securities provide for variable or additional participation
payments.

Understanding Your Investment 17

preferred securities) distributions. The issuer of a non-cumulative preferred
security does not have an obligation to make up any arrearages to holders of
such securities and non-cumulative preferred securities can defer distributions
indefinitely. Cumulative preferred securities typically contain provisions that
allow an issuer, at its discretion, to defer distributions payments for up to 10
years. If a preferred security is deferring its distribution, investors may be
required to recognize income for tax purposes while they are not receiving any
income. In certain circumstances, an issuer of preferred securities may redeem
the securities during their life. For certain types of preferred securities, a
redemption may be triggered by a change in federal income tax or securities
laws. As with call provisions, a redemption by the issuer may negatively impact
the return of the security. Preferred security holders generally have no voting
rights with respect to the issuing company except in very limited situations,
such as if the issuer fails to make income payments for a specified period of
time or if a declaration of default occurs and is continuing. Preferred
securities may be substantially less liquid than many other securities, such as
U.S. government securities or common stock. The federal income tax treatment of
preferred securities may not be clear or may be subject to recharacterization by
the Internal Revenue Service. Issuers of preferred securities may be in
industries that are heavily regulated and that may receive government funding.
The value of preferred securities issued by these companies may be affected by
changes in government policy, such as increased regulation, ownership
restrictions, deregulation or reduced government funding.

Preferred stocks are a category of preferred securities that are typically
considered equity securities and make income payments from an issuer's after-tax
profits that are treated as dividends for tax purposes. While they generally
provide for specified income payments as a percentage of their par value, these
payments generally do not carry the same set of guarantees afforded to
bondholders and have higher risks of non-payment or deferral.

Certain preferred securities may be issued by trusts or other special purpose
entities established by operating companies, and are therefore not direct
obligations of operating companies. At the time a trust or special purpose
entity sells its preferred securities to investors, the trust or special purpose
entity generally purchases debt of the operating company with terms comparable
to those of the trust or special purpose entity securities. The trust or
special purpose entity, as the holder of the operating company's debt, has
priority with respect to the operating company's earnings and profits over the
operating company's common shareholders, but is typically subordinated to other
classes of the operating company's debt. Distribution payments of trust
preferred securities generally coincide with interest payments on the underlying
obligations. Distributions from trust preferred securities are typically
treated as interest rather than dividends for federal income tax purposes and
therefore, are not eligible for the dividends-received deduction or the lower
federal tax rates applicable to qualified dividends. Trust preferred securities
generally involve the same risks as traditional preferred stocks but are also
subject to unique risks, including risks associated with income payments only
being made if payments on the underlying obligations are made. Typically, a
trust preferred security will have a rating that is below that of its
corresponding operating company's senior debt securities due to its subordinated
nature.

Subordinated or junior notes or debentures are securities that generally have
priority to common stock and other preferred securities in a company's capital
structure but are subordinated

18 Understanding Your Investment

to other bonds and debt instruments in a company's capital structure. As a
result, these securities will be subject to greater credit risk than those
senior debt instruments and will not receive income payments or return of
principal in the event of insolvency until all obligations on senior debt
instruments have been made. Distributions from these securities are typically
treated as interest rather than dividends for federal income tax purposes and
therefore, are not eligible for the dividends-received deduction or the lower
federal tax rates applicable to qualified dividends. Investments in
subordinated or junior notes or debentures also generally involve risks similar
to risks of other preferred securities described above.

REAL ESTATE INVESTMENT TRUSTS. REITs may be exposed to the risks associated
with the ownership of real estate which include, among other factors, changes in
general U.S., global and local economic conditions, declines in real estate
values, changes in the financial health of tenants, overbuilding and increased
competition for tenants, oversupply of properties for sale, changing
demographics, changes in interest rates, tax rates and other operating expenses,
changes in government regulations, faulty construction and the ongoing need for
capital improvements, regulatory and judicial requirements including relating to
liability for environmental hazards, changes in neighborhood values and buyer
demand, and the unavailability of construction financing or mortgage loans at
rates acceptable to developers.

Many factors can have an adverse impact on the performance of a REIT,
including its cash available for distribution, the credit quality of the REIT or
the real estate industry generally. The success of a REIT depends on various
factors, including the occupancy and rent levels, appreciation of the underlying
property and the ability to raise rents on those properties. Economic
recession, overbuilding, tax law changes, higher interest rates or excessive
speculation can all negatively impact REITs, their future earnings and share
prices. Variations in rental income and space availability and vacancy rates in
terms of supply and demand are additional factors affecting real estate
generally and REITs in particular. Properties owned by a REIT may not be
adequately insured against certain losses and may be subject to significant
environmental liabilities, including remediation costs. You should also be
aware that REITs may not be diversified and are subject to the risks of
financing projects. The real estate industry may be cyclical, and, if REIT
securities are acquired at or near the top of the cycle, there is increased risk
of a decline in value of the REIT securities. At various points in time, demand
for certain types of real estate may inflate the value of real estate. This may
increase the risk of a substantial decline in the value of such real estate and
increase the risk of a decline in the value of the securities. REITs are also
subject to defaults by borrowers and the market's perception of the REIT
industry generally. Because of their structure, and a current legal requirement
that they distribute at least 90% of their taxable income to shareholders
annually, REITs require frequent amounts of new funding, through both borrowing
money and issuing stock. Thus, REITs historically have frequently issued
substantial amounts of new equity shares (or equivalents) to purchase or build
new properties. This may adversely affect REIT equity share market prices.
Both existing and new share issuances may have an adverse effect on these prices
in the future, especially if REITs issue stock when real estate prices are
relatively high and stock prices are relatively low.

Mortgage REITs engage in financing real estate, purchasing or originating
mortgages and mortgage-backed securities and earning income

Understanding Your Investment 19

from the interest on these investments. Such REITs face risks similar to those
of other financial firms, such as changes in interest rates, general market
conditions and credit risk, in addition to risks associated with an investment
in real estate.

MLPS. The trust and/or certain funds held by the trust invest MLPs. MLPs are
limited partnership or limited liability companies that are generally taxed as
partnership whose interests are generally traded on securities exchanges. An
MLP consists of a general partner and limited partners. The general partner
manages the partnership, has an ownership stake in the partnership and is
eligible to receive an incentive distribution. The limited partners provide
capital to the partnership, have a limited (if any) role in the operation and
management of the partnership and receive cash distributions. Unlike
stockholders of a corporation, limited partners do not elect directors annually
and generally have the right to vote only on certain significant events, such as
mergers, a sale of substantially all of the partnership assets, removal of the
general partner or material amendments to the partnership agreement. Limited
partners generally have first right to a minimum quarterly distribution prior to
distributions to the convertible subordinated unit holders or the general
partner (including incentive distributions) and typically have arrearage rights
if the minimum quarterly distribution is not met. Most MLPs generally operate
in the energy natural resources or real estate sector and are subject to the
risks generally applicable to companies in those sectors. Those risks include,
but are not limited to, commodity pricing risk, supply and demand risk,
depletion risk and exploration risk. MLPs are also subject to the risk that
authorities could challenge the tax treatment of MLPs for federal income tax
purposes which could have a negative impact on the after-tax income available
for distribution by the MLPs and/or the value of the trust's investments.

CLOSED-END FUNDS. Closed-end funds are a type of investment company that
holds an actively managed portfolio of securities. Closed-end funds issue
shares in "closed-end" offerings which generally trade on a stock exchange
(although some closed-end fund shares are not listed on a securities exchange).
In addition, closed-end funds don't have to manage fund liquidity to meet
potentially large redemptions.

Closed-end funds are subject to various risks, including management's ability
to meet the closed-end fund's investment objective, and to manage the closed-end
fund portfolio when the underlying securities are redeemed or sold, during
periods of market turmoil and as investors' perceptions regarding closed-end
funds or their underlying investments change.

Shares of closed-end funds frequently trade at a discount from their net
asset value in the secondary market. This risk is separate and distinct from
the risk that the net asset value of closed-end fund shares may decrease. The
amount of such discount from net asset value is subject to change from time to
time in response to various factors.

Certain of the closed-end funds included in the trust may employ the use of
leverage in their portfolios through the issuance of preferred stock. While
leverage often serves to increase the yield of a closed-end fund, this leverage
also subjects the closed-end fund to increased risks. These risks may include
the likelihood of increased volatility and the possibility that the closed-end
fund's common share income will fall if the dividend rate on the preferred
shares or the interest rate on any borrowings rises.

20 Understanding Your Investment

The use of leverage may cause a closed-end fund to liquidate portfolio positions
when it may not be advantageous to do so to satisfy its obligations or to meet
any required asset segregation requirements.

Certain closed-end funds held by the trust may engage in borrowing.
Borrowing may exaggerate changes in the net asset value of a fund's shares and
in the return on a fund's portfolio. Borrowing will cost a fund interest
expense and other fees. The costs of borrowing may reduce a fund's return.
Borrowing may cause a fund to liquidate positions when it may not be
advantageous to do so to satisfy its obligations.

Certain closed-end funds held by the trust may engage in securities lending.
Securities lending involves the risk that the borrower may fail to return the
securities in a timely manner or at all. As a result, a fund could lose money
and there may be a delay in recovering the loaned securities. A fund could also
lose money if it does not recover the securities and/or the value of the
collateral falls, including the value of investments made with cash collateral.
These events could trigger adverse tax consequences for a fund.

Only the trustee may vote the shares of the closed-end funds held in the
trust. The trustee will vote the shares in the same general proportion as
shares held by other shareholders of each fund. Your trust may be required,
however, to reject any offer for securities or other property in exchange for
portfolio securities as described under "How the Trust Works--Changing Your
Portfolio."

NON-DIVERSIFICATION RISK. Certain funds held by the trust may be classified
as "non-diversified". Such funds may be more exposed to the risks associated
with and developments affecting an individual issuer, industry and/or asset
class than a fund that invests more widely.

BUSINESS DEVELOPMENT COMPANY RISK. Certain funds held by the trust may
invest in business development companies ("BDCs"). BDCs are closed-end
investment companies that have elected to be treated as business development
companies under the Investment Company Act of 1940. BDCs are required to hold
at least 70% of their investments in eligible assets which include, among other
things, (i) securities of eligible portfolio companies (generally, domestic
companies that are not investment companies and that cannot have a class of
securities listed on a national securities exchange or have securities that are
marginable that are purchased from that company in a private transaction), (ii)
securities received by the BDC in connection with its ownership of securities of
eligible portfolio companies, or (iii) cash, cash items, government securities,
or high quality debt securities maturing one year or less from the time of
investment. BDCs' ability to grow and their overall financial condition is
impacted significantly by their ability to raise capital. In addition to
raising capital through the issuance of common stock, BDCs may engage in
borrowing. This may involve using revolving credit facilities, the
securitization of loans through separate wholly-owned subsidiaries and issuing
of debt and preferred securities. BDCs are less restricted than other closed-
end funds as to the amount of debt they can have outstanding. These borrowings,
also known as leverage, magnify the potential for gain or loss on amounts
invested and, accordingly, the risks associated with investing in BDC
securities. While the value of a BDC's assets increases, leveraging would cause
the net value per share of BDC common stock to increase more sharply than it
would have had such BDC not leveraged. However, if the value of a BDC's assets
decreases, leveraging would cause net asset value to decline more

Understanding Your Investment 21

sharply than it otherwise would have had such BDC not leveraged. In addition to
decreasing the value of a BDC's common stock, it could also adversely impact a
BDC's ability to make dividend payments. A BDC's credit rating may change over
time which could adversely affect their ability to obtain additional credit
and/or increase the cost of such borrowing. Agreements governing BDC's credit
facilities and related funding and service agreements may contain various
covenants that limit the BDC's discretion in operating its business along with
other limitations. Any defaults may restrict the BDC's ability to manage assets
securing related assets which may adversely impact the BDC's liquidity and
operations. BDCs may enter into hedging transaction and utilize derivative
instruments such as forward contracts, options and swaps. Unanticipated
movements and improper correlation of hedging instruments may prevent a BDC from
hedging against exposure to risk of loss. BDCs may issue options, warrants, and
rights to convert to voting securities to its officers, employees and board
members. Any issuance of derivative securities requires the approval of the
company's board of directors and authorization by the company's shareholders. A
BDC may operate a profit-sharing plan for its employees, subject to certain
restrictions.

BDC investments are frequently not publicly traded and, as a result, there is
uncertainty as to the value and liquidity of those investments. BDCs may use
independent valuation firms to value their investments and such valuations may
be uncertain, be based on estimates and/or differ materially from that which
would have been used if a ready market for those investments existed. The value
of a BDC could be adversely affected if its determinations regarding the fair
value of investments was materially higher than the value realized upon sale of
such investments. Due to the relative illiquidity of certain BDC investments,
if a BDC is required to liquidate all or a portion of its portfolio quickly, it
may realize significantly less than the value at which such investments are
recorded. Further restrictions may exist on the ability to liquidate certain
assets to the extent that subsidiaries or related parties have material non-
public information regarding such assets. BDCs are required to make available
significant managerial assistance to their portfolio companies. Significant
managerial assistance refers to any arrangement whereby a BDC provides
significant guidance and counsel concerning the management, operations, or
business objectives and policies of a portfolio company. Examples of such
activities include arranging financing, managing relationships with financing
sources, recruiting management personnel, and evaluating acquisition and
divestiture opportunities. BDCs are frequently externally managed by an
investment adviser which may also provide this external managerial assistance to
portfolio companies. Such investment adviser's liability may be limited under
their investment advisory agreement which may lead such investment adviser to
act in a riskier manner than it would were it investing for its own account.
Such investment advisers may be entitled to incentive compensation which may
cause such adviser to make more speculative and riskier investments than it
would if investing for its own account. Such compensation may be due even in
the case of declines to the value of a BDC's investments.

BDCs frequently have high expenses which may include, but are not limited to,
the payment of management fees, administration expenses, taxes, interest payable
on debt, governmental charges, independent director fees and expenses, valuation
expenses, and fees payable to third parties relating to or associated with
making investments. The trust will indirectly

22 Understanding Your Investment

bear these expenses. These expenses may fluctuate significantly over time. If
a BDC fails to maintain its status as a BDC it may be regulated as a closed-end
fund which would subject such BDC to additional regulatory restrictions and
significantly decrease its operating flexibility. In addition, such failure
could trigger an event of default under certain outstanding indebtedness which
could have a material adverse impact on its business.

INVESTMENT IN OTHER INVESTMENT COMPANIES. As with other investments,
investments in other investment companies are subject to market and selection
risk. In addition, when the trust acquires shares of investment companies
shareholders bear both their proportionate share of fees and expenses in the
trust and, indirectly, the expenses of the underlying investment companies.
Investment companies' expenses are subject to the risk of fluctuation including
in response to fluctuation in a fund's assets. Accordingly, a fund's actual
expenses may vary from what is indicated at the time of investment by the trust.
There are certain regulatory limitations on the ability of the trust to hold
other investment companies which may impact the trust's ability to invest
certain funds, may impact the weighting of a fund in the trust's portfolio and
may impact the trust's ability to issue additional units in the future.

SECTOR CONCENTRATION RISK. Sector concentration risk is the risk that the
value of your trust is more susceptible to fluctuations based on factors that
impact a particular sector because the exposure to such sectors through the
securities held by the trust or through the securities in the funds held by the
trust are concentrated within a particular sector. Refer to the "Principal
Risks" in the "Investment Summary" section in this prospectus for sector
concentrations.

FOREIGN ISSUER RISK. The trust and/or certain funds held by the trust may
invest in the securities of foreign issuers. An investment in securities of
foreign issuers involves certain risks that are different in some respects from
an investment in securities of domestic issuers. These include risks associated
with future political and economic developments, international trade conditions,
foreign withholding taxes, liquidity concerns, currency fluctuations,
volatility, restrictions on foreign investments and exchange of securities,
potential for expropriation of assets, confiscatory taxation, difficulty in
obtaining or enforcing a court judgment, potential inability to collect when a
company goes bankrupt and economic, political or social instability. Moreover,
individual foreign economies may differ favorably or unfavorably from the U.S.
economy for reasons including differences in growth of gross domestic product,
rates of inflation, capital reinvestment, resources, self-sufficiency and
balance of payments positions There may be less publicly available information
about a foreign issuer than is available from a domestic issuer as a result of
different accounting, auditing and financial reporting standards. Some foreign
markets are less liquid than U.S. markets which could cause securities to be
bought at a higher price or sold at a lower price than would be the case in a
highly liquid market.

Brokerage and other transaction costs on foreign exchanges are often higher
than in the U.S. and there is generally less governmental supervision of
exchanges, brokers and issuers in foreign countries. The increased expense of
investing in foreign markets may reduce the amount an investor can earn on its
investments and typically results in a higher operating expense ratio than
investments in only domestic securities. Custody of certain securities may be
maintained by a global custody and clearing institution. Settlement and
clearance procedures in certain

Understanding Your Investment 23

foreign markets differ significantly from those in the U.S. Foreign settlement
and clearance procedures and trade regulations also may involve certain risks
(such as delays in payment for or delivery of securities) not typically
associated with the settlement of domestic securities. Round lot trading
requirements exist in certain foreign securities markets which could cause the
proportional composition and diversification of the trust's and/or a fund's
portfolio to vary when the trust or a fund buys or sells securities.

CURRENCY RISK. Because securities of foreign issuers not listed on a U.S.
securities exchange generally pay income and trade in foreign currencies, the
U.S. dollar value of these securities and income will vary with fluctuations in
foreign exchange rates. Most foreign currencies have fluctuated widely in value
against the U.S. dollar for various economic and political reasons. Generally,
when the U.S. dollar rises in value against a foreign currency, a security
denominated in that currency loses value because the currency is worth fewer
U.S. dollars. Conversely, when the U.S. dollar decreases in value against a
foreign currency, a security denominated in that currency gains value because
the currency is worth more U.S. dollars. This risk, generally known as
"currency risk," means that a strong U.S. dollar will reduce returns for U.S.
investors while a weak U.S. dollar will increase those returns.

DEPOSITARY RECEIPTS RISK. Certain stocks held by the trust and/or the closed-
end funds may be held in the form of depositary receipts. Depositary receipts
represent receipts for foreign common stock deposited with a custodian (which
may include the trustee of your trust). Depositary receipts generally involve
the same types of risks as foreign common stock held directly. Some depositary
receipts may experience less liquidity than the underlying common stocks traded
in their home market. Certain depositary receipts are unsponsored (i.e. issued
without the participation or involvement of the issuer of the underlying
security). The issuers of unsponsored depositary receipts are not obligated to
disclose information that may be considered material in the U.S. Therefore,
there may be less information available regarding these issuers and, as a
result, there may not be a correlation between certain information impacting a
security and the market value of the depositary receipts.

EMERGING MARKETS. The trust and/or certain funds held by the trust may
invest in certain securities issued by entities located in emerging markets.
Emerging markets are generally defined as countries in the initial states of
their industrialization cycles with low per capita income. The markets of
emerging markets countries are generally more volatile than the markets of
developed countries with more mature economies. All of the risks of investing
in foreign securities described above are heightened by investing in emerging
markets countries.

SUPRANATIONAL ENTITIES' SECURITIES. Certain funds held by the trust may
invest in obligations issued by supranational entities such as the International
Bank for Reconstruction and Development (the World Bank). The government
members, or "stockholders," usually make initial capital contributions to
supranational entities and in many cases are committed to make additional
capital contributions if a supranational entity is unable to repay its
borrowings. There is no guarantee that one or more stockholders of a
supranational entity will continue to make any necessary additional capital
contributions. If such contributions are not made, the entity may be unable to
pay interest or repay principal on its debt securities, and a fund may lose
money on such investments.

24 Understanding Your Investment

SMALL AND MID-SIZE COMPANIES. The trust and/or certain funds held by the
trust may invest in securities issued by small and mid-size companies. The
share prices of these companies are often more volatile than those of larger
companies as a result of several factors common to many such issuers, including
limited trading volumes, products or financial resources, management
inexperience and less publicly available information. In particular, companies
with smaller capitalizations may be less financially secure, depend on a smaller
number of key personnel and generally be subject to more unpredictable price
changes than larger, more established companies and the markets as a whole.
Smaller capitalization and emerging growth companies may be particularly
sensitive to changes in interest rates, borrowing costs and earnings.

BOND QUALITY RISK. Bond quality risk is the risk that a bond will fall in
value if a rating agency decreases or withdraws the bond's rating.

PREPAYMENT RISK. When interest rates fall, among other factors, the issuer
of a security may prepay their obligations earlier than expected. Such amounts
will result in early distributions to the fund and such funds may be unable to
reinvest such amounts at the yields originally invested which could adversely
impact the funds and the trust. Certain bonds held by the funds include call
provisions which expose such funds and the trust to 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, in general fall and the bond pays a
higher interest rate or if it no longer needs the money for the original
purpose. If an issuer calls a bond, a fund holding such bond will receive
principal but future interest distributions will fall. Such fund might not be
able to reinvest this principal at as high a yield. A bond's call price could
be less than the price paid for the bond and could be below the bond's par
value. Certain bonds may also be subject to extraordinary optional or mandatory
redemptions if certain events occur, such as certain changes in tax laws, the
substantial damage or destruction by fire or other casualty of the project for
which the proceeds of the bonds were used, and various other events.

EXTENSION RISK. When interest rates rise, among other factors, issues of a
security may pay off obligations more slowly than expected causing the value of
such obligations to fall.

MARKET DISCOUNT. Certain funds held by the trust may invest in bonds whose
current market values were below the principal value on the purchase date. A
primary reason for the market value of such bonds being less than the principal
value is that the interest rate of such bonds is at a lower rate than the
current market interest rates for comparable bonds. Bonds selling at market
discounts tend to increase in market value as they approach maturity.

PREMIUM BONDS. Certain funds held by the trust may invest in bonds whose
current market values were above the principal value on the purchase date. A
primary reason for the market value of such bonds being higher than the
principal value is that the interest rate of such bonds is at a higher rate than
the current market interest rates for comparable bonds. The current returns of
bonds trading at a market premium are initially higher than the current returns
of comparable bonds issued at currently prevailing interest rates because
premium bonds tend to decrease in market value as they approach maturity when
the principal value becomes payable. Because part of the purchase price is
effectively returned not at maturity but through current income payments, early
redemption of a premium bond at par or

Understanding Your Investment 25

any other amount below the purchase price 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 bonds have a market value
that represents a premium over par or, for original issue discount securities, a
premium over the accreted value.

MUNICIPAL BONDS. Certain funds held by the trust may invest in municipal
bonds. Municipal bonds are debt obligations issued by states or by political
subdivisions or authorities of states. Municipal bonds are typically designated
as general obligation bonds, which are general obligations of a governmental
entity that are backed by the taxing power of such entity, or revenue bonds,
which are payable from the income of a specific project or authority and are not
supported by the issuer's power to levy taxes. Municipal bonds are long-term
fixed rate debt obligations that generally decline in value with increases in
interest rates, when an issuer's financial condition worsens or when the rating
on a bond is decreased. Many municipal bonds may be called or redeemed prior to
their stated maturity, an event which is more likely to occur when interest
rates fall. In such an occurrence, a fund may not be able to reinvest the money
it receives in other bonds that have as high a yield or as long a maturity.
Many municipal bonds are subject to continuing requirements as to the actual use
of the bond proceeds or manner of operation of the project financed from bond
proceeds that may affect the exemption of interest on such bonds from federal
income taxation. The market for municipal bonds is generally less liquid than
for other securities and therefore the price of municipal bonds may be more
volatile and subject to greater price fluctuations than securities with greater
liquidity. In addition, an issuer's ability to make income distributions
generally depends on several factors including the financial condition of the
issuer and general economic conditions. Any of these factors may negatively
impact the price of municipal bonds held by a fund and would therefore impact
the price of both the fund shares and the trust units.

SOVEREIGN DEBT. Certain funds held by the trust may invest in sovereign
debt. Sovereign debt instruments are subject to the risk that a governmental
entity may delay or refuse to pay interest or repay principal on its sovereign
debt, due, for example, to cash flow problems, insufficient foreign currency
reserves, political considerations, the relative size of the governmental
entity's debt position in relation to the economy or the failure to put in place
required economic reforms. If a governmental entity defaults, it may ask for
more time in which to pay or for further loans. There is no legal process for
collecting sovereign debt that a government does not pay nor are there
bankruptcy proceedings through which all or part of the sovereign debt that a
governmental entity has not repaid may be collected.

U.S. GOVERNMENT OBLIGATIONS RISK. Certain funds held by the trust may invest
in obligations of the U.S. Government. Obligations of U.S. Government agencies,
authorities, instrumentalities and sponsored enterprises have historically
involved little risk of loss of principal if held to maturity. However, not all
U.S. Government securities are backed by the full faith and credit of the United
States. Obligations of certain agencies, authorities, instrumentalities and
sponsored enterprises of the U.S. Government are backed by the full faith and
credit of the United States (e.g., the Government National Mortgage
Association); other obligations are backed by the right of the issuer to borrow
from the U.S. Treasury (e.g., the Federal Home Loan Banks) and others are
supported by the discretionary authority of the U.S. Government to purchase an
agency's obligations.

26 Understanding Your Investment

Still others are backed only by the credit of the agency, authority,
instrumentality or sponsored enterprise issuing the obligation. No assurance
can be given that the U.S. Government would provide financial support to any of
these entities if it is not obligated to do so by law.

U.S. TREASURY OBLIGATIONS. Certain funds held by the trust may invest in
U.S. Treasury obligations. U.S. Treasury obligations are direct obligations of
the United States which are backed by the full faith and credit of the United
States. The value of U.S. Treasury obligations will be adversely affected by
decreases in bond prices and increases in interest rates.

HIGH YIELD OR "JUNK" SECURITIES. Certain funds held by the trust may invest
in high yield securities or unrated securities. High yield, high risk
securities are subject to greater market fluctuations and risk of loss than
securities with higher investment ratings. The value of these securities will
decline significantly with increases in interest rates, not only because
increases in rates generally decrease values, but also because increased rates
may indicate an economic slowdown. An economic slowdown, or a reduction in an
issuer's creditworthiness, may result in the issuer being unable to maintain
earnings at a level sufficient to maintain interest and principal payments.
High yield or "junk" securities, the generic names for securities rated below
"BBB" by Standard & Poor's or "Baa" by Moody, are frequently issued by
corporations in the growth stage of their development or by established
companies who are highly leveraged or whose operations or industries are
depressed. Securities rated below BBB or Baa are considered speculative as
these ratings indicate a quality of less than investment grade. Because high
yield securities are generally subordinated obligations and are perceived by
investors to be riskier than higher rated securities, their prices tend to
fluctuate more than higher rated securities and are affected by short-term
credit developments to a greater degree. The market for high-yield securities
is smaller and less liquid than that for investment grade securities. High
yield securities are generally not listed on a national securities exchange but
trade in the over-the-counter markets. Due to the smaller, less liquid market
for high yield securities, the bid-offer spread on such securities is generally
greater than it is for investment grade securities and the purchase or sale of
such securities may take longer to complete.

SENIOR LOANS. Certain funds held by the trust may invest in senior loans and
similar transactions. Senior loans are 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 the funds in senior loans and similar transactions involves risk
that the borrowers under such transactions 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.
In

Understanding Your Investment 27

addition, the amount of public information available on senior loans is
generally less extensive than that available for other types of securities.

CONVERTIBLE SECURITIES. Certain funds held by the trust may invest in
convertible securities. Convertible securities generally offer lower interest
or dividend yields than non-convertible fixed-income securities of similar
credit quality because of the potential for capital appreciation. The market
values of convertible securities tend to decline as interest rates increase and,
conversely, to increase as interest rates decline. However, a convertible
security's market value also tends to reflect the market price of the common
stock of the issuing company, particularly when that stock price is greater than
the convertible security's "conversion price." The conversion price is defined
as the predetermined price or exchange ratio at which the convertible security
can be converted or exchanged for the underlying common stock. As the market
price of the underlying common stock declines below the conversion price, the
price of the convertible security tends to be increasingly influenced more by
the yield of the convertible security. Thus, it may not decline in price to the
same extent as the underlying common stock. In the event of a liquidation of
the issuing company, holders of convertible securities would be paid before that
company's common stockholders. Consequently, an issuer's convertible securities
generally entail less risk than its common stock. However, convertible
securities fall below debt obligations of the same issuer in order of preference
or priority in the event of a liquidation and are typically unrated or rated
lower than such debt obligations.

Mandatory convertible securities are distinguished as a subset of convertible
securities because the conversion is not optional and the conversion price at
maturity is based solely upon the market price of the underlying common stock,
which may be significantly less than par or the price (above or below par) paid.
For these reasons, the risks associated with investing in mandatory convertible
securities most closely resemble the risks inherent in common stocks. Mandatory
convertible securities customarily pay a higher coupon yield to compensate for
the potential risk of additional price volatility and loss upon conversion.
Because the market price of a mandatory convertible security increasingly
corresponds to the market price of its underlying common stock, as the
convertible security approaches its conversion date, there can be no assurance
that the higher coupon will compensate for a potential loss.

FLOATING RATE INSTRUMENTS. Certain funds held by the trust may invest in
floating rate securities. A floating rate security is an instrument in which
the interest rate payable on the obligation fluctuates on a periodic basis based
upon changes in a benchmark, often related to interest rates. As a result, the
yield on such a security will generally decline with negative changes to the
benchmark, causing the trust to experience a reduction in the income it receives
from such securities. A sudden and significant increase in the applicable
benchmark may increase the risk of payment defaults and cause a decline in the
value of the security.

ASSET-BACKED SECURITIES. Certain funds held by the trust may invest in asset-
backed securities ("ABS"). ABS are securities backed by pools of loans or other
receivables. ABS are created from many types of assets, including auto loans,
credit card receivables, home equity loans, and student loans. ABS are issued
through special purpose vehicles that are bankruptcy remote from the issuer of
the collateral. The credit quality of an ABS transaction depends on the
performance of the underlying assets. To protect ABS investors

28 Understanding Your Investment

from the possibility that some borrowers could miss payments or even default on
their loans, ABS include various forms of credit enhancement. Some ABS,
particularly home equity loan transactions, are subject to interest rate risk
and prepayment risk. A change in interest rates can affect the pace of payments
on the underlying loans, which in turn, affects total return on the securities.
ABS also carry credit or default risk. If many borrowers on the underlying
loans default, losses could exceed the credit enhancement level and result in
losses to investors in an ABS transaction. Finally, ABS have structure risk due
to a unique characteristic known as early amortization, or early payout, risk.
Built into the structure of most ABS are triggers for early payout, designed to
protect investors from losses. These triggers are unique to each transaction
and can include: a big rise in defaults on the underlying loans, a sharp drop in
the credit enhancement level, or even the bankruptcy of the originator. Once
early amortization begins, all incoming loan payments (after expenses are paid)
are used to pay investors as quickly as possible based upon a predetermined
priority of payment.

MORTGAGE-BACKED SECURITIES. Certain funds held by the trust may invest in
mortgage-backed securities. Mortgage-backed securities are a type of ABS
representing direct or indirect participations in, or are secured by and payable
from, mortgage loans secured by real property and can include single- and multi-
class pass-through securities and collateralized mortgage obligations.
Mortgage-backed securities are based on different types of mortgages, including
those on commercial real estate or residential properties. These securities
often have stated maturities of up to thirty years when they are issued,
depending upon the length of the mortgages underlying the securities. In
practice, however, unscheduled or early payments of principal and interest on
the underlying mortgages may make the securities' effective maturity shorter
than this. Rising interest rates tend to extend the duration of mortgage-backed
securities, making them more sensitive to changes in interest rates, and may
reduce the market value of the securities. In addition, mortgage-backed
securities are subject to prepayment risk, the risk that borrowers may pay off
their mortgages sooner than expected, particularly when interest rates decline.
This can reduce the funds', and therefore the trust's, returns because the funds
may have to reinvest that money at lower prevailing interest rates.

RESTRICTED SECURITIES. Certain funds held by the trust may invest in
securities that may only be resold pursuant to Rule 144A under the Securities
Act of 1933. Such securities may not be readily marketable. Restricted
securities may be sold only to purchasers meeting certain eligibility
requirements in privately negotiated transactions or in a public offering with
respect to which a registration statement is in effect under the Securities Act.
Where registration of such securities under the Securities Act is required, a
fund may be obligated to pay all or part of the registration expenses and a
considerable period may elapse between the time of the decision to sell and the
time the fund may be permitted to sell a security under an effective
registration statement. If, during such a period, adverse market conditions
were to develop, the fund might obtain a less favorable price than that which
prevailed when it decided to sell.

LIQUIDITY RISK. Liquidity risk is the risk that the value of a security will
fall if trading in the security is limited or absent. No one can guarantee that
a liquid trading market will exist for any security.

COVERED CALL OPTION STRATEGIES. Certain funds held by the trust may invest
using covered call option strategies. You should understand the

Understanding Your Investment 29

risks of these strategies before you invest. In employing a covered call
strategy, a closed-end fund will generally write (sell) call options on a
significant portion of the fund's managed assets. These call options will give
the option holder the right, but not the obligation, to purchase a security from
the fund at the strike price on or prior to the option's expiration date. The
ability to successfully implement the fund's investment strategy depends on the
fund adviser's ability to predict pertinent market movements, which cannot be
assured. Thus, the use of options may require a fund to sell portfolio
securities at inopportune times or for prices other than current market values,
may limit the amount of appreciation the fund can realize on an investment, or
may cause the fund to hold a security that it might otherwise sell. The writer
(seller) of an option has no control over the time when it may be required to
fulfill its obligation as a writer (seller) of the option. Once an option
writer (seller) has received an exercise notice, it cannot effect a closing
purchase transaction in order to terminate its obligation under the option and
must deliver the underlying security at the exercise price. As the writer
(seller) of a covered call option, a fund forgoes, during the option's life, the
opportunity to profit from increases in the market value of the security
underlying the call option above the sum of the premium and the strike price of
the call option, but has retained the risk of loss should the price of the
underlying security decline. The value of the options written (sold) by a fund,
which will be marked-to-market on a daily basis, will be affected by changes in
the value and dividend rates of the underlying securities, an increase in
interest rates, changes in the actual or perceived volatility of securities
markets and the underlying securities and the remaining time to the options'
expiration. The value of the options may also be adversely affected if the
market for the options becomes less liquid or smaller.

An option is generally considered "covered" if a fund owns the security
underlying the call option or has an absolute and immediate right to acquire
that security without additional cash consideration (or, if required, liquid
cash or other assets are segregated by the fund) upon conversion or exchange of
other securities held by the fund. In certain cases, a call option may also be
considered covered if a fund holds a call option on the same security as the
call option written (sold) provided that certain conditions are met. By writing
(selling) covered call options, a fund generally seeks to generate income, in
the form of the premiums received for writing (selling) the call options.
Investment income paid by a fund to its shareholders (such as the trust) may be
derived primarily from the premiums it receives from writing (selling) call
options and, to a lesser extent, from the dividends and interest it receives
from the equity securities or other investments held in the fund's portfolio and
short-term gains thereon. Premiums from writing (selling) call options and
dividends and interest payments made by the securities in a fund's portfolio can
vary widely over time.

REAL ESTATE RELATED SECURITIES. The trust and/or certain funds held by the
trust may invest in securities providing exposure to real estate investments.
Risks associated with the ownership of real estate include, among other factors,
changes in general U.S., global and local economic conditions, decline in real
estate values, changes in the financial health of tenants, overbuilding and
increased competition for tenants, oversupply of properties for sale, changing
demographics, changes in interest rates, tax rates and other operating expenses,
changes in government regulations, faulty construction and the ongoing need for
capital improvements, regulatory and judicial requirements, including relating
to liability for environmental hazards, changes in neighborhood

30 Understanding Your Investment

values and buyer demand, and the unavailability of construction financing or
mortgage loans at rates acceptable to developers.

DERIVATIVES RISK. Certain funds held by the trust may engage in transactions
in derivatives. Derivatives are subject to counterparty risk which is the risk
that the other party in a transaction may be unable or unwilling to meet
obligations when due. Use of derivatives may increase volatility of a fund and
the trust and reduce returns. Fluctuations in the value of derivatives may not
correspond with fluctuations of underlying exposures. Unanticipated market
movements could result in significant losses on derivative positions including
greater losses than amounts originally invested and potentially unlimited losses
in the case of certain derivatives. There are no assurances that there will be
a secondary market available in any derivative position which could result in
illiquidity and the inability of a fund to liquidate or terminate positions as
valued. Valuation of derivative positions may be difficult and increase during
times of market turmoil. Certain derivatives may be used as a hedge against
other securities positions however hedging can be subject to the risk of
imperfect alignment and there are no assurances that a hedge will be achieved as
intended which can pose significant loss to a fund and the trust. Recent
legislation has called for significant increases to the regulation of the
derivatives market. Regulatory changes and rulemaking is ongoing and the full
impact may not be known for some time. This increased regulation may make
derivatives more costly, limit the availability of derivatives or otherwise
adversely affect the value or performance of derivatives. Examples of increased
regulation include, but are not limited to the imposition of clearing and
reporting requirements on transactions that fall within the definition of "swap"
and "security-based swap", increased recordkeeping and reporting requirements,
changing definitional and registration requirements, and changes to the way that
funds' use of derivatives is regulated. We cannot predict the effects of any
new governmental regulation that may be implemented on the ability of a fund to
use any financial derivative product, and there can be no assurance that any new
governmental regulation will not adversely affect a fund's ability to achieve
its investment objective. The federal income tax treatment of a derivative may
not be as favorable as a direct investment in the asset that a derivative
provides exposure to which may adversely impact the timing, character and amount
of income a fund realizes from its investment. The tax treatment of certain
derivatives is unsettled and may be subject to future legislation, regulation or
administrative pronouncements.

SWAPS. Certain funds held by the trust may invest in swaps. In addition to
general risks associated with derivatives described above, swap agreements
involve the risk that the party with whom a fund has entered into the swap will
default on its obligation to pay a fund and the risk that a fund will not be
able to meet its obligations to pay the other party to the agreement. Swaps
entered into by a fund may include, but are not limited to, interest rate swaps,
total return swaps and/or credit default swaps. In an interest rate swap
transaction, two parties exchange rights to receive interest payments, such as
exchanging the right to receive floating rate payments based on a reference
interest rate for the right to receive fixed rate payments. In addition to the
general risks associated with derivatives and swaps described above, interest
rate swaps are subject to interest rate risk and credit risk. In a total return
swap transaction, one party agrees to pay another party an amount equal to the
total return on a reference asset during a specified period of time in return
for periodic payments based on a fixed or

Understanding Your Investment 31

variable interest rate or on the total return from a different reference asset.
In addition to the general risks associated with derivatives and swaps described
above, total return swaps could result in losses if the reference asset does not
perform as anticipated and these swaps can have the potential for unlimited
losses. In a credit default swap transaction, one party makes one or more
payments over the term of the contract to the counterparty, provided that no
event of default with respect to a specific obligation or issuer has occurred.
In return, upon any event of default, such party would receive from the
counterparty a payment equal to the par (or other agreed-upon) value of such
specified obligation. In addition to general risks associated with derivatives
and swaps described above, credit default swaps involve special risks because
they are difficult to value, are highly susceptible to liquidity and credit
risk, and generally pay a return to the party that has paid the premium only in
the event of an actual default by the issuer of the underlying obligation (as
opposed to a credit downgrade or other indication of financial difficulty).

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Certain funds held by the trust
may may engage in forward foreign currency exchange transactions. Forward
foreign exchange transactions are contracts to purchase or sell a specified
amount of a specified currency or multinational currency unit at a price and
future date set at the time of the contract. Forward foreign currency exchange
contracts do not eliminate fluctuations in the value of non-U.S. securities but
rather allow a fund to establish a fixed rate of exchange for a future point in
time. This strategy can have the effect of reducing returns and minimizing
opportunities for gain.

INDEXED AND INVERSE SECURITIES. Certain funds held by the trust may invest
in indexed and inverse securities. In addition to general risks associated with
derivatives described above, indexed and inverse securities are subject to risk
with respect to the value of the particular index. These securities are subject
to leverage risk and correlation risk. Certain indexed and inverse securities
have greater sensitivity to changes in interest rates or index levels than other
securities, and a fund's investment in such instruments may decline
significantly in value if interest rates or index levels move in a way a fund's
management does not anticipate.

FUTURES. Certain funds held by the trust may engage in futures transactions.
In addition to general risks associated with derivatives described above, the
primary risks associated with the use of futures contracts and options are (a)
the imperfect correlation between the change in market value of the instruments
held by a fund and the price of the futures contract or option; (b) possible
lack of a liquid secondary market for a futures contract and the resulting
inability to close a futures contract when desired; (c) losses caused by
unanticipated market movements, which are potentially unlimited; (d) the
investment adviser's inability to predict correctly the direction of securities
prices, interest rates, currency exchange rates and other economic factors; and
(e) the possibility that the counterparty will default in the performance of its
obligations. While futures contracts are generally liquid instruments, under
certain market conditions they may become illiquid. Futures exchanges may
impose daily or intra-day price change limits and/or limit the volume of
trading. Additionally, government regulation may further reduce liquidity
through similar trading restrictions.

OPTIONS. Certain funds held by the trust may engage in options transactions.
In addition to general risks associated with derivatives described above,
options are considered speculative. When

32 Understanding Your Investment

a fund purchases an option, it may lose the premium paid for it if the price of
the underlying security or other assets decreased or remained the same (in the
case of a call option) or increased or remained the same (in the case of a put
option). If a put or call option purchased by a fund were permitted to expire
without being sold or exercised, its premium would represent a loss to a fund.
To the extent that a fund writes or sells an option, if the decline or increase
in the underlying asset is significantly below or above the exercise price of
the written option, a fund could experience substantial and potentially
unlimited losses.

REPURCHASE AGREEMENT RISK. If the other party to a repurchase agreement
defaults on its obligation under such agreement, a fund may suffer delays and
incur costs or lose money in exercising its rights under the agreement. If the
seller fails to repurchase the security under a repurchase agreement and the
market value of such security declines, such fund may lose money.

SHORT SALES RISK. Certain funds held by the trust may engage in short sales.
Because making short sales in securities that it does not own exposes a fund to
the risks associated with those securities, such short sales involve speculative
exposure risk. A fund will incur a loss as a result of a short sale if the
price of the security increases between the date of the short sale and the date
on which such fund replaces the security sold short. A fund will realize a gain
if the security declines in price between those dates. As a result, if a fund
makes short sales in securities that increase in value, it will likely
underperform similar funds that do not make short sales in securities they do
not own. There can be no assurance that a fund will be able to close out a
short sale position at any particular time or at an acceptable price. Although
a fund's gain is limited to the amount at which it sold a security short, its
potential loss is limited only by the maximum attainable price of the security,
less the price at which the security was sold. Short sale transactions involve
leverage because they can provide investment exposure in an amount exceeding the
initial investment. A fund may also pay transaction costs and borrowing fees in
connection with short sales.

COMMODITIES. Certain funds held by the trust may have exposure to the
commodities market. This exposure could expose such funds and the trust to
greater volatility than investment in other securities. The value of
investments providing commodity exposure may be affected by changes in overall
market movements, commodity index volatility, changes in interest rates, or
factors affecting a particular industry or commodity, such as drought, floods,
weather, embargoes, tariffs and international economic, political and regulatory
developments.

MONEY MARKET SECURITIES. Certain funds held by the trust may invest in money
market securities. If market conditions improve while a fund has temporarily
invested some or all of its assets in high quality money market securities, this
strategy could result in reducing the potential gain from the market upswing,
thus reducing a fund's opportunity to achieve its investment objective.

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 securities held by the trust or underlying funds. In addition,
litigation regarding any of the issuers of the securities or of the industries
represented by these issuers may negatively impact the share prices of these
securities. No one can predict what impact any pending or threatened litigation
will have on the share prices of the securities.

Understanding Your Investment 33

NO FDIC GUARANTEE. An investment in the trust is not a deposit of any bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.

HOW THE TRUST WORKS

YOUR TRUST. Your trust is a unit investment trust registered under the
Investment Company Act of 1940. We created the trust under a trust agreement
between Advisors Asset Management, Inc. (as depositor/sponsor, evaluator and
supervisor) and The Bank of New York Mellon (as trustee). To create your trust,
we deposited securities with the trustee (or contracts to purchase securities
along with an irrevocable letter of credit or other consideration to pay for the
securities). In exchange, the trustee delivered units of your trust to us.
Each unit represents an undivided interest in the assets of your trust. These
units remain outstanding until redeemed or until your trust terminates. At the
close of the New York Stock Exchange on the trust's inception date, the number
of units may be adjusted so that the public offering price per unit equals $10.
The number of units and fractional interest of each unit in the trust will
increase or decrease to the extent of any adjustment.

CHANGING YOUR PORTFOLIO. Your trust is not a managed fund. Unlike a managed
fund, we designed your portfolio to remain relatively fixed. Your trust will
generally buy and sell securities:

* to pay expenses,

* to issue additional units or redeem units,

* in limited circumstances to protect the trust,

* to make required distributions or avoid imposition of taxes on the trust,
or

* as permitted by the trust agreement.

When your trust sells securities, the composition and diversification of the
securities in the portfolio may be altered. However, if the trustee sells fund
shares to redeem units or to pay trust expenses or sales charges, the trustee
will do so, as nearly as practicable, on a pro rata basis. If a public tender
offer has been made for a security or a merger, acquisition or similar
transaction has been announced affecting a security, the trustee may either sell
the security or accept a tender offer if the supervisor determines that the
action is in the best interest of unitholders. The trustee will distribute any
cash proceeds to unitholders. If an offer by the issuer of any of the portfolio
securities or any other party is made to issue new securities, or to exchange
securities, for trust portfolio securities, the trustee will at the direction of
the sponsor, vote for or against, or accept or reject, any offer for new or
exchanged securities or property in exchange for a trust portfolio security. If
any such issuance, exchange or substitution occurs (regardless of any action or
rejection by a trust), any securities and/or property received will be deposited
into the trust and will be promptly sold by the trustee pursuant to the
sponsor's direction, unless the sponsor advises the trustee to keep such
securities or property. If any contract for the purchase of securities fails,
the sponsor will refund the cash and sales fee attributable to the failed
contract to unitholders on or before the next distribution date unless
substantially all of the moneys held to cover the purchase are reinvested in
substitute securities in accordance with the trust agreement. The sponsor may
direct the reinvestment of security sale proceeds if the sale is the direct
result of serious adverse credit factors which, in the opinion of the sponsor,
would make retention of the securities detrimental to the trust. In such a
case, the sponsor may, but is not obligated to, direct the reinvestment of sale
proceeds in any other securities that meet the criteria for inclusion in the
trust on the trust's inception date. The sponsor may

34 Understanding Your Investment

also instruct the trustee to take action necessary to ensure that the portfolio
continues to satisfy the qualifications of a regulated investment company. One
such limitation is that, generally, at the close of each quarter of each taxable
year, not more than 25 percent of the value of the trust's assets may be
invested in the securities of one or more qualified publicly traded partnership
and certain other assets. At the trust's inception, 20.02% of the assets in the
trust are invested in securities of one or more qualified publicly traded
partnership. If the portion of the publicly traded partnerships exceed 25% of
the trust, the trust may need to dispose of certain trust assets or stop
purchasing additional units of the publicly traded partnerships which would
alter the composition and diversity of the securities in the portfolio.

We will increase the size of your trust as we sell units. When we create
additional units, we will seek to replicate the existing portfolio. When your
trust buys securities, it may pay brokerage or other acquisition fees. You
could experience a dilution of your investment because of these fees and
fluctuations in security prices between the time we create units and the time
your trust buys the securities. When your trust buys or sells securities, we
may direct that it place orders with and pay brokerage commissions to brokers
that sell units or are affiliated with us, your trust or the trustee.

Pursuant to an exemptive order, your trust may be able to purchase securities
from other trusts that we sponsor when we create additional units. Your trust
may also be able to sell securities to other trusts that we sponsor to satisfy
unit redemption, pay deferred sales charges or expenses, in connection with
periodic tax compliance or in connection with the termination of your trust.
The exemption may enable each trust to eliminate commission costs on these
transactions. The price for those securities will be the closing price on the
sale date on the exchange where the securities are principally traded as
certified by us to the trustee.

AMENDING THE TRUST AGREEMENT. The sponsor and the trustee can change the
trust agreement without your consent to correct any provision that may be
defective or to make other provisions that will not materially adversely affect
your interest (as determined by the sponsor and the trustee). We cannot change
this agreement to reduce your interest in your trust without your consent.
Investors owning two-thirds of the units in your trust may vote to change this
agreement.

TERMINATION OF YOUR TRUST. Your trust will terminate on the termination date
set forth under "Essential Information" in the "Investment Summary" section of
this prospectus. The trustee may terminate your trust early if the value of the
trust is less than 40% of the original value of the securities in the trust at
the time of deposit. At this size, the expenses of your trust may create an
undue burden on your investment. Investors owning two-thirds of the units in
your trust may also vote to terminate the trust early. The trustee will
liquidate the trust in the event that a sufficient number of units not yet sold
to the public are tendered for redemption so that the net worth of the trust
would be reduced to less than 40% of the value of the securities at the time
they were deposited in the trust. If this happens, we will refund any sales
charge that you paid.

You will receive your final distribution within a reasonable time following
liquidation of all the securities after deducting final expenses. Your
termination distribution may be less than the price you originally paid for your
units.

Understanding Your Investment 35

THE SPONSOR. The sponsor of the trust is Advisors Asset Management, Inc. We
are a broker-dealer specializing in providing trading and support services to
broker-dealers, registered representatives, investment advisers and other
financial professionals. Our headquarters are located at 18925 Base Camp Road,
Monument, Colorado 80132. You can contact our unit investment trust division at
8100 East 22nd Street North, Building 800, Suite 102, Wichita, Kansas 67226 or
by using the contacts listed on the back cover of this prospectus. AAM is a
registered broker-dealer and investment adviser, a member of the Financial
Industry Regulatory Authority, Inc. (FINRA) and Securities Investor Protection
Corporation (SIPC) and a registrant of the Municipal Securities Rulemaking Board
(MSRB). If we fail to or cannot perform our duties as sponsor or become
bankrupt, the trustee may replace us, continue to operate your trust without a
sponsor, or terminate your trust.

We and your trust have adopted a code of ethics requiring our 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 your
trust.

The sponsor or an affiliate may use the list of securities in the trust in
its independent capacity (which may include acting as an investment adviser or
broker-dealer) and distribute this information to various individuals and
entities. The sponsor or an affiliate may recommend or effect transactions in
the securities. This may also have an impact on the price your trust pays for
the securities and the price received upon unit redemption or trust termination.
The sponsor may act as agent or principal in connection with the purchase and
sale of securities, including those held by the trust, and may act as a
specialist market maker in the securities. The sponsor may also issue reports
and make recommendations on the securities in the trust. The sponsor or an
affiliate may have participated in a public offering of one or more of the
securities in the trust. The sponsor, an affiliate or their employees may have
a long or short position in these securities or related securities. An officer,
director or employee of the sponsor or an affiliate may be an officer or
director for the issuers of the securities.

THE TRUSTEE. The Bank of New York Mellon is the trustee of your trust with
its principal unit investment trust division offices located at 2 Hanson Place,
12th Floor, Brooklyn, New York 11217. You can contact the trustee by calling
the telephone number on the back cover of this prospectus or by writing to its
unit investment trust office. We may remove and replace the trustee in some
cases without your consent. The trustee may also resign by notifying us and
investors.

PORTFOLIO CONSULTANT. The Portfolio Consultant, Cohen & Steers Capital
Management, Inc., is a registered investment adviser. Founded in 1986, the
Portfolio Consultant is a global investment manager specializing in liquid real
assets, including real estate securities, listed infrastructure, commodities
and natural resource equities, as well as preferred securities and other income
solutions. As of September 30, 2016, the Portfolio Consultant had $60.5
billion in assets under management. The Portfolio Consultant manages separate
account portfolios for institutional investors, including some of the world's
largest pension funds and endowments. In addition, the Portfolio Consultant
manages open- and closed-end funds for both retail and institutional investors.
The Portfolio Consultant is among the largest real

36 Understanding Your Investment

estate investment trust ("REIT") managers in the U.S. and employs a significant
research and trading staff. Many investors have come to view the Portfolio
Consultant as an important source for income-oriented investment products.

The Portfolio Consultant is not an affiliate of the sponsor. The Portfolio
Consultant makes no representations that the portfolio will achieve the
investment objectives or will be profitable or suitable for any particular
potential investor. The sponsor did not select the securities for the trust.

The Portfolio Consultant may use the list of securities in its independent
capacity as an investment adviser and distribute this information to various
individuals and entities. The Portfolio Consultant may recommend to other
clients or otherwise effect transactions in the securities held by the trust.
This may have an adverse effect on the prices of the securities. This also may
have an impact on the price the trust pays for the securities and the price
received upon unit redemptions or liquidation of the securities. The Portfolio
Consultant also may issue reports and makes recommendations on securities, which
may include the securities in the trust.

Neither the Portfolio Consultant nor the sponsor manages the trust. Opinions
expressed by the Portfolio Consultant are not necessarily those of the sponsor,
and may not actually come to pass. The Portfolio Consultant is being
compensated for its portfolio consulting services, including selection of the
trust portfolio.

HOW WE DISTRIBUTE UNITS. We sell units to the public through broker-dealers
and other firms. These distribution firms each receive part of the sales fee
when they sell units. During the initial offering period, the broker-dealer
concession or agency commission for broker-dealers and other firms is as
follows:

TRANSACTION CONCESSION OR
AMOUNT: AGENCY COMMISSION:
------------------------------------------

Less than $50,000 3.10%
$50,000 - $99,999 2.85
$100,000 - $249,999 2.60
$250,000 - $499,999 2.30
$500,000 - $999,999 2.20
$1,000,000 or more 1.75

We apply these concessions or agency commissions as a percent of the public
offering price per unit at the time of the transaction. The broker-dealer
concession or agency commission is 65% of the sales fee for secondary market
sales. For transactions involving unitholders of other unit investment trusts
who use their redemption or termination proceeds to purchase units of the trust,
the broker-dealer concession or agency commission is 2.15% of the public
offering price per unit. No broker-dealer concession or agency commission is
paid to broker-dealers, investment advisers or other selling firms in connection
with unit sales in Fee Accounts subject to a Wrap Fee.

Broker-dealers and other firms that sell units of certain unit investment
trusts for which AAM acts as sponsor are eligible to receive additional
compensation for volume sales. The sponsor offers two separate volume
concession structures for certain trusts that are referred to as "Volume
Concession A" and "Volume Concession B." The trust offered in this prospectus
is a Volume Concession A trust. Broker-dealers and other firms that sell units
of any Volume Concession A trust are eligible to receive the additional
compensation described below. Such payments will be in addition to the regular
concessions paid to firms as set forth in the applicable trust's prospectus.
The additional concession is based on total initial

Understanding Your Investment 37

offering period sales of all Volume Concession A trusts during a calendar
quarter as set forth in the following table:

INITIAL OFFERING PERIOD SALES VOLUME
DURING CALENDAR QUARTER CONCESSION
---------------------------------------------------------

Less than $10,000,000 0.000%
$10,000,000 but less than $25,000,000 0.050
$25,000,000 but less than $50,000,000 0.100
$50,000,000 but less than $75,000,000 0.110
$75,000,000 but less than $100,000,000 0.120
$100,000,000 but less than $250,000,000 0.125
$250,000,000 but less than $500,000,000 0.135
$500,000,000 or more 0.150

This volume concession will be paid on units of all Volume Concession A
trusts sold in the initial offering period, except as described below. For a
trust to be eligible for this additional Volume Concession A compensation for
calendar quarter sales, the trust's prospectus must include disclosure related
to this additional Volume Concession A compensation; a trust is not eligible for
this additional Volume Concession A compensation if the prospectus for such
trust does not include disclosure related to this additional Volume Concession A
compensation. Broker-dealer firms will not receive additional compensation
unless they sell at least $10.0 million of units of Volume Concession A trusts
during a calendar quarter. For example, if a firm sells $9.5 million of units
of Volume Concession A trusts in the initial offering period during a calendar
quarter, the firm will not receive any additional compensation with respect to
such trusts. Once a firm reaches a particular breakpoint during a quarter, the
firm will receive the stated volume concession on all initial offering period
sales of Volume Concession A trusts during the applicable quarter. For example,
if a firm sells $12.5 million of units of Volume Concession A trusts in the
initial offering period during a calendar quarter, the firm will receive
additional compensation of 0.05% of $12.5 million and if a firm sells $27.0
million of units of Volume Concession A trusts in the initial offering period
during a calendar quarter, the firm will receive additional compensation of
0.100% of $27.0 million.

In addition, dealer firms will not receive volume concessions on the sale of
units which are not subject to a transactional sales charge. However, such
sales will be included in determining whether a firm has met the sales level
breakpoints for volume concessions subject to the policies of the related
selling firm. Secondary market sales of all unit trusts are excluded for
purposes of these volume concessions. We will pay these amounts out of our own
assets within a reasonable time following each calendar quarter.

Any sales fee discount is borne by the broker-dealer or selling firm out of
the broker-dealer concession or agency commission. We reserve the right to
change the amount of concessions or agency commissions from time to time.

We currently provide, at our own expense and out of our own profits,
additional compensation and benefits to broker-dealers who sell units of this
trust and our other products. This compensation is intended to result in
additional sales of our 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 our products by the intermediary or its
agents, the placing of our products on a preferred or recommended product list
and access to an intermediary's personnel. We may make these payments for
marketing, promotional or related expenses,

38 Understanding Your Investment

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 our products. We make such
payments to a substantial majority of intermediaries that sell our products. We
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 paragraph and the
volume concessions described above, some of which may be characterized as
"revenue sharing," may create an incentive for financial intermediaries and
their agents to sell or recommend our products, including this trust, over other
products. These arrangements will not change the price you pay for your units.

We generally register units for sale in various states in the U.S. We do not
register units for sale in any foreign country. This prospectus does not
constitute an offer of units in any state or country where units cannot be
offered or sold lawfully. We may reject any order for units in whole or in
part.

We may gain or lose money when we hold units in the primary or secondary
market due to fluctuations in unit prices. The gain or loss is equal to the
difference between the price we pay for units and the price at which we sell or
redeem them. We may also gain or lose money when we deposit securities to
create units. The amount of our profit or loss on the initial deposit of
securities into the trust is shown in the "Notes to Portfolio."

TAXES

This section summarizes some of the main U.S. federal income tax consequences
of owning units of the trust. This section is current as of the date of this
prospectus. Tax laws and interpretations change frequently, and these summaries
do not describe all of the tax consequences to all taxpayers. For example,
these summaries generally do not describe your situation if you are a
corporation, a non-U.S. person, a broker/dealer, or other investor with special
circumstances. In addition, this section does not describe your state, local or
foreign tax consequences.

This federal income tax summary is based in part on the advice of counsel to
the sponsor. The Internal Revenue Service could disagree with any conclusions
set forth in this section. In addition, our counsel was not asked to review,
and has not reached a conclusion with respect to the federal income tax
treatment of the assets to be deposited in your 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. Your trust intends to qualify as a "regulated investment
company" under the federal tax laws. If your trust qualifies as a regulated
investment company and distributes its income as required by the tax law, your
trust generally will not pay federal income taxes. If your trust invests in a
partnership, an adverse federal income tax audit of that partnership could
result in the trust being required to pay federal income tax or pay a deficiency
dividend (without having received additional cash).

Understanding Your Investment 39

DISTRIBUTIONS. Trust distributions are generally taxable. After the end of
each year, you will receive a tax statement that separates your trust's
distributions into three categories, ordinary income distributions, capital gain
dividends and return of capital. Ordinary income distributions are generally
taxed at your ordinary tax rate, however, as further discussed below, certain
ordinary income distributions received from your trust may be taxed at the
capital gains tax rates. Generally, you will treat all capital gain dividends
as long-term capital gains regardless of how long you have owned your units. To
determine your actual tax liability for your capital gain 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, your
trust may make distributions that represent a return of capital for tax purposes
and thus will generally not be taxable to you. A return of capital, although
not initially taxable to you, will result in a reduction in the basis in your
units and subsequently result in higher levels of taxable capital gains in the
future. In addition, if the non-dividend distribution exceeds your basis in
your units, you will have long-term or short-term gain depending upon your
holding period. The tax status of your distributions from your trust is not
affected by whether you reinvest your distributions in additional units or
receive them in cash. The income from your trust that you must take into
account for federal income tax purposes is not reduced by amounts used to pay a
deferred sales fee, 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. Income from your trust may also be subject to a 3.8 percent
"medicare tax." This tax generally applies 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.

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 your 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 your 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.

CAPITAL GAINS AND LOSSES AND CERTAIN ORDINARY INCOME DIVIDENDS. If you are
an individual, the maximum marginal stated federal tax rate for net capital gain
is generally 20% for taxpayers in the 39.6% tax bracket, 15% for taxpayers in
the 25%, 28%, 33% and 35% tax brackets and 0% for taxpayers in the 10% and 15%
tax brackets. Some portion of your capital gain dividends may be subject to
higher maximum marginal stated federal income tax rates. Some portion of your
capital gain dividends may be attributable to the trust's interest in a master
limited partnership which may be subject to a maximum marginal stated federal
income tax rate of 28%, rather than the rates set forth above. In addition,
capital gain

40 Understanding Your Investment

received from assets held for more than one year that is considered
"unrecaptured section 1250 gain" (which may be the case, for example, with some
capital gains attributable to equity interests in real estate investment trusts
that constitute interests in entities treated as real estate investment trusts
for federal income tax purposes) is taxed at a maximum stated tax rate of 25%.
In the case of capital gain dividends, the determination of which portion of the
capital gain dividend, if any, is subject to the 28% tax rate or the 25% tax
rate, will be made based on rules prescribed by the United States Treasury.
Capital gains may also be subject to the "medicare tax" 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 your trust and sell your unit 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.

Ordinary income dividends received by an individual unitholder from a
regulated investment company such as your trust are generally taxed at the same
rates that apply to net capital gain (as discussed above), provided certain
holding period requirements are satisfied and provided the dividends are
attributable to qualifying dividends received by your trust itself.
Distributions with respect to shares in real estate investment trusts are
qualifying dividends only in limited circumstances. Your trust will provide
notice to its unitholders of the amount of any distribution which may be taken
into account as a dividend which is eligible for the capital gains tax rates.

IN-KIND DISTRIBUTIONS. Under certain circumstances, as described in this
prospectus, you may receive an in-kind distribution of trust securities when you
redeem units or when your trust terminates. This distribution will be treated
as a sale for federal income tax purposes 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 Internal Revenue Service could however assert that
a loss could not be currently deducted.

ROLLOVERS AND EXCHANGES. If you elect to have your proceeds from your trust
rolled over into a future trust, the exchange would generally be considered a
sale for federal income tax purposes.

DEDUCTIBILITY OF TRUST EXPENSES. Expenses incurred and deducted by your
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. Some individuals may also
be subject to further limitations on the amount of their itemized deductions,
depending on their income.

FOREIGN TAX CREDIT. If your trust invests in any foreign securities, the tax
statement that you

Understanding Your Investment 41

receive may include an item showing foreign taxes your trust paid to other
countries. In this case, dividends taxed to you will include your share of the
taxes your trust paid to other countries. You may be able to deduct or receive
a tax credit for your share of these taxes.

INVESTMENTS IN CERTAIN FOREIGN CORPORATIONS. If your 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 unitholders. Your trust will not be able to
pass through to its unitholders any credit or deduction for such taxes. Your
trust may be able to make an election that could ameliorate these adverse tax
consequences. In this case, your trust 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, your trust 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 are not 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 your trust will be characterized as dividends for federal
income tax purposes (other than dividends which your 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,
distributions received by a foreign investor from your trust that are properly
reported by your trust as capital gain dividends may not be subject to U.S.
federal income taxes, including withholding taxes, provided that your trust
makes certain elections and certain other conditions are met. Distributions
from your 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. In addition, distributions in respect of units may be subject to a U.S.
withholding tax of 30% in the case of distributions to (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. You should
also consult your tax advisor with respect to other U.S. tax withholding and
reporting requirements.

42 Understanding Your Investment

EXPENSES

Your trust will pay various expenses to conduct its operations. The "Fees
and Expenses" section of the "Investment Summary" in this prospectus shows the
estimated amount of these expenses.

The sponsor will receive a fee from your 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. This "creation and
development fee" is a charge of $0.05 per unit. The trustee will deduct this
amount from your trust's assets as of the close of the initial offering period.
No portion of this fee is applied to the payment of distribution expenses or as
compensation for sales efforts. This fee will not be deducted from proceeds
received upon a repurchase, redemption or exchange of units before the close of
the initial public offering period.

Your trust will pay a fee to the trustee for its services. The trustee also
benefits when it holds cash for your trust in non-interest bearing accounts.
Your trust will reimburse us as supervisor, evaluator and sponsor for providing
portfolio supervisory services, for evaluating your portfolio and for providing
bookkeeping and administrative services. Our reimbursements may exceed the
costs of the services we provide to your trust but will not exceed the costs of
services provided to all of our unit investment trusts in any calendar year.
All of these fees may adjust for inflation without your approval.

Your trust will also pay its general operating expenses. Your trust may pay
expenses such as trustee expenses (including legal and auditing expenses),
various governmental charges, fees for extraordinary trustee services, costs of
taking action to protect your trust, costs of indemnifying the trustee and the
sponsor, legal fees and expenses and expenses incurred in contacting you. Your
trust may pay the costs of updating its registration statement each year. The
trust will pay a license fee for the use of certain service marks, trademarks,
trade names and/or other property of Cohen &Steers Capital Management, Inc. The
trustee will generally pay trust expenses from distributions received on the
securities but in some cases may sell securities to pay trust expenses.

The trust will also indirectly bear the expenses of the underlying closed-end
funds. While the trust will not pay these expenses directly out of its assets,
these expenses are shown in the trust's annual operating expenses under "Fees
and Expenses" to illustrate the impact of these expenses.

EXPERTS

LEGAL MATTERS. Chapman and Cutler LLP acts as counsel for the trust and has
given an opinion that the units are validly issued. Dorsey & Whitney LLP acts
as counsel for the trustee.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. Grant Thornton LLP,
independent registered public accounting firm, audited the statement of
financial condition and the portfolio included in this prospectus.

ADDITIONAL INFORMATION

This prospectus does not contain all the information in the registration
statement that your trust filed with the Securities and Exchange Commission.
The Information Supplement, which was filed with the Securities and Exchange
Commission, includes more detailed information

Understanding Your Investment 43

about the securities in your portfolio, investment risks and general information
about your trust. You can obtain the Information Supplement by contacting us or
the Securities and Exchange Commission as indicated on the back cover of this
prospectus. This prospectus incorporates the Information Supplement by
reference (it is legally considered part of this prospectus).

44 Understanding Your Investment

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

UNITHOLDERS
ADVISORS DISCIPLINED TRUST 1738

We have audited the accompanying statement of financial condition, including the
trust portfolio on pages 5, 6, 7, 8 and 9, of Advisors Disciplined Trust 1738,
as of November 8, 2016, the initial date of deposit. The statement of
financial condition is the responsibility of the trust's sponsor. Our
responsibility is to express an opinion on this statement of financial condition
based on our audit.

We conducted our audit in accordance with auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the statement of financial condition is free of material misstatement. We were
not engaged to perform an audit of the trust's internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the statement of
financial condition, assessing the accounting principles used and significant
estimates made by the sponsor, as well as evaluating the overall statement of
financial condition presentation. Our procedures included confirmation with The
Bank of New York Mellon, trustee, of cash or an irrevocable letter of credit
deposited for the purchase of securities as shown in the statement of financial
condition as of November 8, 2016. We believe that our audit of the statement
of financial condition provides a reasonable basis for our opinion.

In our opinion, the statement of financial condition referred to above presents
fairly, in all material respects, the financial position of Advisors Disciplined
Trust 1738 as of November 8, 2016, in conformity with accounting principles
generally accepted in the United States of America.

Chicago, Illinois GRANT THORNTON LLP
November 8, 2016

ADVISORS DISCIPLINED TRUST 1738

STATEMENT OF FINANCIAL CONDITION AS OF NOVEMBER 8, 2016
-----------------------------------------------------------------------------------------------------------

INVESTMENT IN SECURITIES
Contracts to purchase underlying securities (1)(2) . . . . . . . . . . . . . . . . . . . . . . $ 148,683
----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 148,683
==========

LIABILITIES AND INTEREST OF INVESTORS
Liabilities:
Organization costs (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 571
Deferred sales fee (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,680
Creation and development fee (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 751
----------
5,002
----------

Interest of investors:
Cost to investors (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,190
Less: initial sales fee (4)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,507
Less: deferred sales fee, creation and development fee and organization costs (3)(4)(5) . . 5,002
----------
Net interest of investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143,681
----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 148,683
==========

Number of units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,019
==========

Net asset value per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9.567
==========

(1) Aggregate cost of the securities is based on the closing sale price
evaluations as determined by the evaluator.
(2) Cash or an irrevocable letter of credit has been deposited with the trustee
covering the funds (aggregating $200,000) necessary for the purchase of
securities in the trust represented by purchase contracts.
(3) A portion of the public offering price represents an amount sufficient to
pay for all or a portion of the costs incurred in establishing and offering
the trust. These costs have been estimated at $0.038 per unit for the
trust. A distribution will be made as of the earlier of the close of the
initial offering period or six months following the trust's inception date
to an account maintained by the trustee from which this obligation of the
investors will be satisfied. To the extent the actual organization costs
are greater than the estimated amount, only the estimated organization
costs added to the public offering price will be reimbursed to the sponsor
and deducted from the assets of the trust.
(4) The total sales fee consists of an initial sales fee, a deferred sales fee
and a creation and development fee. The initial sales fee is equal to the
difference between the maximum sales fee and the sum of the remaining
deferred sales fee and the total creation and development fee. On the
inception date, the total sales fee is 3.95% of the public offering price
per unit. The deferred sales fee is equal to $0.245 per unit and the
creation and development fee is equal to $0.05 per unit.
(5) The aggregate cost to investors includes the applicable sales fee assuming
no reduction of sales fees.

Understanding Your Investment 45

CONTENTS

INVESTMENT SUMMARY
-----------------------------------------------------------------------

A concise description 2 Investment Objective
of essential information 2 Principal Investment Strategy
about the portfolio 2 Principal Risks
4 Who Should Invest
4 Essential Information
4 Fees and Expenses
5 Portfolio

UNDERSTANDING YOUR INVESTMENT
-----------------------------------------------------------------------

Detailed information to 10 How to Buy Units
help you understand 13 How to Sell Your Units
your investment 15 Distributions
16 Investment Risks
34 How the Trust Works
39 Taxes
43 Expenses
43 Experts
43 Additional Information
45 Report of Independent Registered
Public Accounting Firm
45 Statement of Financial Condition

WHERE TO LEARN MORE
-----------------------------------------------------------------------

You can contact us for VISIT US ON THE INTERNET
free information about http://www.AAMlive.com
this and other investments, CALL ADVISORS ASSET
including the Information MANAGEMENT, INC.
Supplement (877) 858-1773
CALL THE BANK OF NEW YORK MELLON
(800) 848-6468

ADDITIONAL INFORMATION
-----------------------------------------------------------------------

This prospectus does not contain all information filed with the
Securities and Exchange Commission. To obtain or copy this
information including the Information Supplement (a duplication
fee may be required):

E-MAIL: [email protected]
WRITE: Public Reference Section
Washington, D.C. 20549
VISIT: http://www.sec.gov
(EDGAR Database)
CALL: 1-202-551-8090
(only for information on the operation of the
Public Reference Section)

REFER TO:
ADVISORS DISCIPLINED TRUST 1738
Securities Act file number: 333-214051
Investment Company Act file number: 811-21056

COHEN & STEERS
DYNAMIC INCOME
PORTFOLIO,
SERIES 2016-4

PROSPECTUS

NOVEMBER 8, 2016

[LOGO]

AAM

ADVISORS
ASSET MANAGEMENT

ADVISORS DISCIPLINED TRUST
INFORMATION SUPPLEMENT FOR TRUSTS
INVESTING IN EQUITY AND/OR PREFERRED SECURITIES
OCTOBER 24, 2016

This Information Supplement provides additional information concerning
Advisors Disciplined Trust unit investment trusts that have prospectuses dated
on and after the date set forth above investing in equity and/or preferred
securities. This Information Supplement should be read in conjunction with the
prospectus for a trust. It is not a prospectus. It does not include all of the
information that an investor should consider before investing in a trust. It
may not be used to offer or sell units of a trust without the prospectus. This
Information Supplement is incorporated into the prospectus by reference and has
been filed as part of the registration statement with the Securities and
Exchange Commission for each applicable trust. Investors should obtain and read
the prospectus prior to purchasing units of a trust. You can obtain the
prospectus without charge at www.aamlive.com, by contacting your financial
professional, Advisors Asset Management, Inc. at 18925 Base Camp Road, Suite
203, Monument, Colorado 80132 or at 8100 East 22nd Street North, Building 800,
Suite 102, Wichita, Kansas 67226 or by calling (877) 858-1773.

CONTENTS

General Information 2
Investment Policies 2
Risk Factors 5
Administration of the Trust 55

GENERAL INFORMATION

Each trust is one of a series of separate unit investment trusts ("UITs")
created under the name Advisors Disciplined Trust and registered under the
Investment Company Act of 1940. Each trust was created as a common law trust on
the initial date of deposit set forth in the prospectus for such trust under the
laws of the state of New York. Each trust was created under a trust agreement
among Advisors Asset Management, Inc. (as sponsor/depositor, evaluator and
supervisor) and The Bank of New York Mellon (as trustee).

When a trust was created, the sponsor delivered to the trustee securities
or contracts for the purchase thereof for deposit in the trust and the trustee
delivered to the sponsor documentation evidencing the ownership of units of the
trust. At the close of the New York Stock Exchange on a trust's initial date of
deposit or the first day units are offered to the public, the number of units
may be adjusted so that the public offering price per unit equals $10. The
number of units, fractional interest of each unit in a trust and any estimated
income distributions per unit will increase or decrease to the extent of any
adjustment. Additional units of a trust may be issued from time to time by
depositing in the trust additional securities (or contracts for the purchase
thereof together with cash or irrevocable letters of credit) or cash (including
a letter of credit or the equivalent) with instructions to purchase additional
securities. As additional units are issued by a trust, the aggregate value of
the securities in the trust will be increased and the fractional undivided
interest in the trust represented by each unit will be decreased. The sponsor
may continue to make additional deposits of securities into a trust, provided
that such additional deposits will be in amounts which will generally maintain
the existing relationship among the shares of the securities in such trust.
Thus, although additional units will be issued, each unit will generally
continue to represent the approximately same number of shares of each security.
If the sponsor deposits cash to purchase additional securities, existing and new
investors may experience a dilution of their investments and a reduction in
their anticipated income because of fluctuations in the prices of the securities
between the time of the deposit and the purchase of the securities and because a
trust will pay any associated brokerage fees.

Neither the sponsor nor the trustee shall be liable in any way for any
failure in any of the securities. However, should any contract for the purchase
of any of the securities initially deposited in a trust fail, the sponsor will,
unless substantially all of the moneys held in the trust to cover such purchase
are reinvested in substitute securities in accordance with the trust agreement,
refund the cash and sales charge attributable to such failed contract to all
unitholders on the next distribution date.

INVESTMENT POLICIES

Each trust is a UIT and is not an "actively managed" fund. Traditional
methods of investment management for a managed fund typically involve frequent
changes in a portfolio of securities on the basis of economic, financial and
market analysis. The portfolio of a trust, however, will not be actively
managed and therefore the adverse financial condition of an issuer will not
necessarily require the sale of its securities from a portfolio.

-2-

The sponsor may not alter the portfolio of a trust by the purchase, sale or
substitution of securities, except in special circumstances as provided in the
applicable trust agreement. Thus, the assets of a trust will generally remain
unchanged under normal circumstances. Each trust agreement provides that the
sponsor may direct the trustee to sell, liquidate or otherwise dispose of
securities in the trust at such price and time and in such manner as shall be
determined by the sponsor, provided that the supervisor has determined, if
appropriate, that any one or more of the following conditions exist with respect
to such securities: (i) that there has been a default in the payment of
dividends, interest, principal or other payments, after declared and when due
and payable; (ii) that any action or proceeding has been instituted at law or
equity seeking to restrain or enjoin the payment of dividends, interest,
principal or other payments on securities after declared and when due and
payable, or that there exists any legal question or impediment affecting such
securities or the payment of dividends, interest, principal or other payments
from the same; (iii) that there has occurred any breach of covenant or warranty
in any document relating to the issuer of the securities which would adversely
affect either immediately or contingently the payment of dividends, interest,
principal or other payments on the securities, or the general credit standing of
the issuer or otherwise impair the sound investment character of such
securities; (iv) that there has been a default in the payment of dividends,
interest, principal, income, premium or other similar payments, if any, on any
other outstanding obligations of the issuer of such securities; (v) that the
price of the security has declined to such an extent or other such credit
factors exist so that in the opinion of the supervisor, as evidenced in writing
to the trustee, the retention of such securities would be detrimental to the
trust and to the interest of the unitholders; (vi) that all of the securities in
the trust will be sold pursuant to termination of the trust; (vii) that such
sale is required due to units tendered for redemption; (viii) that there has
been a public tender offer made for a security or a merger or acquisition is
announced affecting a security, and that in the opinion of the supervisor the
sale or tender of the security is in the best interest of the unitholders; (ix)
if the trust is designed to be a grantor trust for tax purposes, that the sale
of such securities is required in order to prevent the trust from being deemed
an association taxable as a corporation for federal income tax purposes; (x) if
the trust has elected to be a regulated investment company (a "RIC") for tax
purposes, that such sale is necessary or advisable (a) to maintain the
qualification of the trust as a RIC or (b) to provide funds to make any
distribution for a taxable year in order to avoid imposition of any income or
excise taxes on the trust or on undistributed income in the trust; (xi) that as
result of the ownership of the security, the trust or its unitholders would be a
direct or indirect shareholder of a passive foreign investment company as
defined in section 1297(a) of the Internal Revenue Code; or (xii) that such sale
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. The trustee may also sell securities, designated by
the supervisor, from a trust for the purpose of the payment of expenses. In the
event a security is sold as a direct result of serious adverse credit factors
affecting the issuer of such security and a trust is a RIC for tax purposes,
then the sponsor may, if permitted by applicable law, but is not obligated, to
direct the reinvestment of the proceeds of the sale of such security in any
other securities which meet the criteria necessary for inclusion in such trust
on the initial date of deposit.

If the trustee is notified at any time of any action to be taken or
proposed to be taken by holders of the portfolio securities, the trustee will
notify the sponsor and will take such action or refrain from taking any action
as the sponsor directs and, if the sponsor does not within five

-3-

business days of the giving of such notice direct the trustee to take or refrain
from taking any action, the trustee will take such reasonable action or refrain
from taking any action so that the securities are voted as closely as possible
in the same manner and the same general proportion, with respect to all issues,
as are shares of such securities that are held by owners other than the trust.
Notwithstanding the foregoing, in the event that the trustee shall have been
notified at any time of any action to be taken or proposed to be taken by
holders of shares of any registered investment company, the trustee will
thereupon take such reasonable action or refrain from taking any action with
respect to the fund shares so that the fund shares are voted as closely as
possible in the same manner and the same general proportion, with respect to all
issues, as are shares of such fund shares that are held by owners other than the
related trust.

In the event that an offer by the issuer of any of the securities or any
other party is made to issue new securities, or to exchange securities, for
trust portfolio securities, the trustee will reject such offer, provided that in
the case of a trust that is a RIC for tax purposes, if an offer by the issuer of
any of the securities or any other party is made to issue new securities, or to
exchange securities, for trust portfolio securities, the trustee will at the
direction of the sponsor, vote for or against, or accept or reject, any offer
for new or exchanged securities or property in exchange for a trust portfolio
security. If any such issuance, exchange or substitution occurs (regardless of
any action or rejection by a trust), any securities, cash and/or property
received will be deposited into the trust and will be promptly sold, if
securities or property, by the trustee pursuant to the sponsor's direction,
unless the sponsor advises the trustee to keep such securities, cash or
property. The sponsor may rely on the supervisor in so advising the trustee.

Proceeds from the sale of securities (or any securities or other property
received by a trust in exchange for securities) are credited to the Capital
Account of the trust for distribution to unitholders or to meet redemptions.
Except for failed securities and as provided herein, in a prospectus or in a
trust agreement, the acquisition by a trust of any securities other than the
portfolio securities is prohibited.

Because certain of the securities in certain of the trusts may from time to
time under certain circumstances be sold or otherwise liquidated and because the
proceeds from such events will be distributed to unitholders and will not be
reinvested, no assurance can be given that a trust will retain for any length of
time its present size and composition. Neither the sponsor nor the trustee
shall be liable in any way for any default, failure or defect in any security.
In the event of a failure to deliver any security that has been purchased for a
trust under a contract ("Failed Securities"), the sponsor is authorized under
the trust agreement to direct the trustee to acquire other securities
("Replacement Securities") to make up the original corpus of such trust.

The Replacement Securities must be securities as originally selected for
deposit in a trust or, in the case of a trust that is a RIC for tax purposes,
securities which the sponsor determines to be similar in character as the
securities originally selected for deposit in the trust and the purchase of the
Replacement Securities may not adversely affect the federal income tax status of
the trust. The Replacement Securities must be purchased within thirty days
after the deposit of the Failed Security. Whenever a Replacement Security is
acquired for a trust, the trustee shall notify all unitholders of the trust of
the acquisition of the Replacement Security and shall, on the next monthly
distribution date which is more than thirty days thereafter, make a pro rata

-4-

distribution of the amount, if any, by which the cost to the trust of the Failed
Security exceeded the cost of the Replacement Security. The trustee will not be
liable or responsible in any way for depreciation or loss incurred by reason of
any purchase made pursuant to, or any failure to make any purchase of
Replacement Securities. The sponsor will not be liable for any failure to
instruct the trustee to purchase any Replacement Securities, nor shall the
trustee or sponsor be liable for errors of judgment in connection with Failed
Securities or Replacement Securities.

If the right of limited substitution described in the preceding paragraphs
is not utilized to acquire Replacement Securities in the event of a failed
contract, the sponsor will refund the sales charge attributable to such Failed
Securities to all unitholders of the related trust and the trustee will
distribute the cash attributable to such Failed Securities not more than thirty
days after the date on which the trustee would have been required to purchase a
Replacement Security. In addition, unitholders should be aware that, at the
time of receipt of such cash, they may not be able to reinvest such proceeds in
other securities at a return equal to or in excess of the return which such
proceeds would have earned for unitholders of a trust. In the event that a
Replacement Security is not acquired by a trust, the income for such trust may
be reduced.

RISK FACTORS

An investment in units of a trust, and/or shares of other registered
investment companies ("funds") held by a trust, if any, may be subject to some
or all of the risks described below. In addition, you should carefully review
the objective, strategy and risk of the trust as described in the prospectus and
consider your ability to assume the risks involved before making an investment
in a trust.

MARKET RISK. You should understand the risks of investing in securities
before purchasing units. These risks include the risk that the financial
condition of the company or the general condition of the stock market may worsen
and the value of the securities (and therefore units) will fall. Securities are
especially susceptible to general stock market movements. The value of
securities often rises or falls rapidly and unpredictably as market confidence
and perceptions of companies change. These perceptions are based on factors
including expectations regarding government economic policies, inflation,
interest rates, economic expansion or contraction, political climates and
economic or banking crises. The value of units of a trust will fluctuate with
the value of the securities in the trust and may be more or less than the price
you originally paid for your units. As with any investment, no one can guarantee
that the performance of a trust will be positive over any period of time.
Because each trust is unmanaged, the trustee will not sell securities in
response to market fluctuations as is common in managed investments. In
addition, because some trusts hold a relatively small number of securities, you
may encounter greater market risk than in a more diversified investment.

EQUITY SECURITIES. Investments in securities representing equity ownership
of a company are exposed to risks associated with the companies issuing the
securities, the sectors and geographic locations they are involved in and the
markets that such securities are traded on among other risks as described in
greater detail below.

-5-

FIXED INCOME SECURITIES. Investments in fixed income and similar
securities involve certain unique risks such as credit risk and interest rate
risk among other things as described in greater detail below.

DIVIDENDS. Stocks represent ownership interests in a company and are not
obligations of the company. Common stockholders have a right to receive
payments from the company that is subordinate to the rights of creditors,
bondholders or preferred stockholders of the company. This means that common
stockholders have a right to receive dividends only if a company's board of
directors declares a dividend and the company has provided for payment of all of
its creditors, bondholders and preferred stockholders. If a company issues
additional debt securities or preferred stock, the owners of these securities
will have a claim against the company's assets before common stockholders if the
company declares bankruptcy or liquidates its assets even though the common
stock was issued first. As a result, the company may be less willing or able to
declare or pay dividends on its common stock.

CREDIT RISK. Credit risk is the risk that a borrower is unable to meet its
obligation to pay principal or interest on a security. This could cause the
value of an investment to fall and may reduce the level of dividends an
investment pays which would reduce income.

INTEREST RATE RISK. Interest rate risk is the risk that the value of fixed
income securities and similar securities will fall if interest rates increase.
Bonds and other fixed income 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.

LIQUIDITY RISK. Liquidity risk is the risk that the value of a security
will fall if trading in the security is limited or absent. No one can guarantee
that a liquid trading market will exist for any security.

INVESTMENT IN OTHER INVESTMENT COMPANIES. As with other investments,
investments in other investment companies are subject to market and selection
risk. In addition, when a trust acquires shares of investment companies,
unitholders bear both their proportionate share of fees and expenses in the
trust and, indirectly, the expenses of the underlying investment companies.
Investment companies' expenses are subject to the risk of fluctuation including
in response to fluctuation in a fund's assets. Accordingly, a fund's actual
expenses may vary from what is indicated at the time of investment by a trust.
There are certain regulatory limitations on the ability of a trust to hold other
investment companies which may impact the trust's ability to invest in certain
funds, the weighting of the fund in a trust's portfolio and the trust's ability
to issue additional units in the future.

CLOSED-END FUNDS. Closed-end investment companies ("closed-end funds") are
actively managed investment companies registered under the Investment Company
Act of 1940 that invest in various types of securities. Closed-end funds issue
shares of common stock that are generally traded on a securities exchange
(although some closed-end fund shares are not listed on a securities exchange).
Closed-end funds are subject to various risks, including management's ability to
meet the closed-end fund's investment objective, and to manage the closed-end
fund portfolio when the underlying securities are redeemed or sold during
periods of market turmoil

-6-

and as investors' perceptions regarding closed-end funds or their underlying
investments change. If a trust invests in closed-end funds, you will bear not
only your share of the trust's expenses, but also the expenses of the underlying
funds. By investing in the other funds, a trust may incur greater expenses than
you would incur if you invested directly in the closed-end funds.

The net asset value of closed-end fund shares will fluctuate with changes
in the value of the underlying securities that 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. This risk is
separate and distinct from the risk that the net asset value of closed-end fund
shares may decrease. The amount of such discount from net asset value is
subject to change from time to time in response to various factors.

Certain closed-end funds employ the use of leverage in their portfolios
through the issuance of preferred stock, debt or other borrowings. While
leverage often serves to increase the yield of a closed-end fund, this leverage
also subjects the closed-end fund to increased risks. These risks may include
the likelihood of increased volatility and the possibility that the closed-end
fund's common share income will fall if the dividend rate on the preferred
shares or the interest rate on any borrowings rises.

Closed-end funds' governing documents 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 a 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 that 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 that
such a plan is implemented and shares owned by a trust are repurchased by a
fund, the trust's position in that fund will be reduced and the cash will be
distributed.

A trust may be prohibited from subscribing to a rights offering for shares
of any of the closed-end funds in which it invests. In the event of a rights
offering for additional shares of a fund, unitholders should expect that a trust
holding shares of the fund 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

-7-

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. Business development companies ("BDCs")
are closed-end investment companies that have elected to be treated as business
development companies under the Investment Company Act of 1940. BDCs are
required to at least 70% of their investments in eligible assets which include,
among other things, (i) securities of eligible portfolio companies (generally,
domestic companies that are not investment companies and that cannot have a
class of securities listed on a national securities exchange or have securities
that are marginable that are purchased from that company in a private
transaction), (ii) securities received by the BDC in connection with its
ownership of securities of eligible portfolio companies, or (iii) cash, cash
items, government securities, or high quality debt securities maturing one year
or less from the time of investment.

BDCs' ability to grow and their overall financial condition is impacted
significantly by their ability to raise capital. In addition to raising capital
through the issuance of common stock, BDCs may engage in borrowing. This may
involve using revolving credit facilities, the securitization of loans through
separate wholly-owned subsidiaries and issuing of debt and preferred securities.
BDCs are less restricted than other closed-end funds as to the amount of debt
they can have outstanding. Generally, a BDC may not issue any class of senior
security representing an indebtedness unless, immediately after such issuance or
sale, it will have asset coverage of at least 200%. (Thus, for example, if a
BDC has $5 million in assets, it can borrow up to $5 million, which would result
in assets of $10 million and debt of $5 million.) These borrowings, also known
as leverage, magnify the potential for gain or loss on amounts invested and,
accordingly, the risks associated with investing in BDC securities. While the
value of a BDC's assets increases, leveraging would cause the net value per
share of BDC common stock to increase more sharply than it would have had such
BDC not leveraged. However, if the value of a BDC's assets decreases, leveraging
would cause net asset value to decline more sharply than it otherwise would have
had such BDC not leveraged. In addition to decreasing the value of a BDC's
common stock, it could also adversely impact a BDC's ability to make dividend
payments. A BDC's credit rating may change over time which could adversely
affect their ability to obtain additional credit and/or increase the cost of
such borrowing. Agreements governing BDC's credit facilities and related funding
and service agreements may contain various covenants that limit the BDC's
discretion in operating its business along with other limitations. Any defaults
may restrict the BDC's ability to manage assets securing related assets which
may adversely impact the BDC's liquidity and operations.

BDCs compete with other BDCs along with a large number of investment funds,
investment banks and other sources of financing to make their investments.
Competitors may have lower costs or access to funding sources that cause BDCs to
lose prospective investments if they do not match competitors' pricing, terms
and structure. As a result of this competition, there is no assurance that a
BDC will be able to identify and take advantage of attractive investment
opportunities or that they will fully be able to invest available capital.

BDC investments are frequently not publicly traded and, as a result, there
is uncertainty as to the value and liquidity of those investments. BDCs may use
independent valuation firms to

-8-

value their investments and such valuations may be uncertain, be based on
estimates and/or differ materially from that which would have been used if a
ready market for those investments existed. The value of a BDC could be
adversely affected if its determinations regarding the fair value of investments
was materially higher than the value realized upon sale of such investments. Due
to the relative illiquidity of certain BDC investments, if a BDC is required to
liquidate all or a portion of its portfolio quickly, it may realize
significantly less than the value at which such investments are recorded.
Further restrictions may exist on the ability to liquidate certain assets to the
extent that subsidiaries or related parties have material non-public information
regarding such assets.

BDCs may enter into hedging transaction and utilize derivative instruments
such as forward contracts, options and swaps. Unanticipated movements and
improper correlation of hedging instruments may prevent a BDC from hedging
against exposure to risk of loss. BDCs are required to make available
significant managerial assistance to their portfolio companies. Significant
managerial assistance refers to any arrangement whereby a BDC provides
significant guidance and counsel concerning the management, operations, or
business objectives and policies of a portfolio company. Examples of such
activities include arranging financing, managing relationships with financing
sources, recruiting management personnel, and evaluating acquisition and
divestiture opportunities. BDCs are frequently externally managed by an
investment adviser which may also provide this external managerial assistance to
portfolio companies. Such investment adviser's liability may be limited under
their investment advisory agreement which may lead such investment adviser to
act in a riskier manner than it would were it investing for its own account.
Such investment advisers may be entitled to incentive compensation which may
cause such adviser to make more speculative and riskier investments than it
would if investing for its own account. Such compensation may be due even in the
case of declines to the value of a BDC's investments.

BDCs may issue options, warrants, and rights to convert to voting
securities to its officers, employees and board members. Any issuance of
derivative securities requires the approval of the company's board of directors
and authorization by the company's shareholders. A BDC may operate a profit-
sharing plan for its employees, subject to certain restrictions. BDCs frequently
have high expenses which may include, but are not limited to, the payment of
management fees, administration expenses, taxes, interest payable on debt,
governmental charges, independent director fees and expenses, valuation
expenses, and fees payable to third parties relating to or associated with
making investments. These expenses may fluctuate significantly over time.

If a BDC fails to maintain its status as a BDC it may be regulated as a
closed-end fund which would subject such BDC to additional regulatory
restrictions and significantly decrease its operating flexibility. In addition,
such failure could trigger an event of default under certain outstanding
indebtedness which could have a material adverse impact on its business.

EXCHANGE-TRADED FUNDS. Exchange-traded funds ("ETFs") are typically
investment companies registered under the Investment Company Act of 1940 that
have obtained exemptive relief from the Securities and Exchange Commission
allowing fund shares to trade on a securities exchange. Shares of ETFs may
trade at a discount from their net asset value in the secondary

-9-

market. This risk is separate and distinct from the risk that the net asset
value of ETFs may decrease. The amount of such discount from net asset value is
subject to change from time to time in response to various factors. ETFs are
subject to various risks, including management's ability to meet the ETF's
investment objective, and to manage the ETF 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. A
trust and any underlying ETFs have operating expenses. If a trust invests in
ETFs, you will bear not only your share of the trust's expenses, but also the
expenses of the underlying funds. By investing in the other funds, a trust may
incur greater expenses than you would incur if you invested directly in the
funds.

Most ETFs replicate the composition or returns of a securities index.
These ETFs face index correlation risk which is the risk that the performance of
an 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
funds use a technique called "representative sampling," which means that the
fund invests in a representative sample of securities in its target index rather
than all of the index securities. This could increase the risk of tracking
error.

Some ETFs are open-end funds. Open-end funds of this type can be actively-
managed or passively-managed investment companies that are registered under the
Investment Company Act of 1940. These open-end funds have received orders from
the Securities and Exchange Commission exempting them from various provisions of
the Investment Company Act of 1940. Regular open-end funds generally issue
redeemable securities that are issued and redeemed at a price based on the
fund's current net asset value and are not traded on a securities exchange.
Exchange-traded open-end funds, however, issue shares of common stock that are
traded on a securities exchange based on negotiated prices rather than the
fund's current net asset value. These funds only issue new shares and redeem
outstanding shares in very large blocks, often called "creation units," in
exchange for an in-kind distribution of the fund's portfolio securities. Due to
a variety of cost and administrative factors, a trust that invests in ETFs will
generally buy and sell shares of its underlying open-end fund ETFs on securities
exchanges rather than engaging in transactions in creation units. Shares of
exchange-traded open-end funds frequently trade at a discount from their net
asset value in the secondary market. This risk is separate and distinct from
the risk that the net asset value of open-end fund shares may decrease. The
amount of such discount from net asset value is subject to change from time to
time in response to various factors.

Some ETFs are UITs. UITs of this type are passively-managed investment
companies that are registered under the Investment Company Act of 1940. ETFs
that are UITs differ significantly from your trust in certain respects, even
though the UITs that may be held in the trust's portfolio and the trust itself
are registered UITs. UITs that are ETFs have received orders from the
Securities and Exchange Commission exempting them from various provisions of the
Investment Company Act of 1940. Regular UITs, such as your trust, generally
issue redeemable securities that are issued and redeemed at a price based on the
UIT's current net asset value and are not traded on a securities exchange. ETFs
that are UITs, however, issue units that are traded on a securities exchange
based on negotiated prices rather than the UIT's current net asset value. These
UITs only issue new shares and redeem outstanding shares in very large blocks,
often

-10-

called "creation units," in exchange for an in-kind distribution of the UIT's
portfolio securities. Due to a variety of cost and administrative factors, a
trust that invests in ETFs will generally buy and sell shares of its underlying
ETFs on securities exchanges rather than engaging in transactions in creation
units. Units of exchange-traded UITs 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 UIT units may decrease. The amount of
such discount from net asset value is subject to change from time to time in
response to various factors.

INVERSE ETFS. Certain ETFs may be "inverse" ETFs. An inverse ETF,
sometimes referred to as a "bear ETF" or "short ETF," is a special type of index
ETF that is designed to provide investment results that move in the opposite
direction of the daily price movement of the index to which it is benchmarked.
Put another way, an inverse ETF is designed to go up in value when its benchmark
index goes down in value, and go down in value when its benchmark index goes up
in value. Inverse ETFs can be used to establish a hedge position within an
investment portfolio to attempt to protect its value during market declines.
Though inverse ETFs may reduce downside risk and volatility in a down market,
they are not suitable for all investors. The value of an inverse investment may
tend to increase on a daily basis by the amount of any decrease in the index,
but the converse is also true that the value of the investment will also tend to
decrease on a daily basis by the amount of any increase in the index.

Investing in inverse ETFs involves certain risks, which may include
increased volatility due to the ETFs' possible use of short sales of securities
and derivatives such as options and futures. Inverse ETFs are subject to active
trading risks that may increase volatility and impact the ETFs' ability to
achieve their investment objectives. The use of leverage by an ETF increases the
risk to the ETF. The more an ETF invests in leveraged instruments, the more the
leverage will magnify any gains or losses on those investments. Most inverse
ETFs "reset" daily, meaning that they are designed to achieve their stated
objectives on a daily basis only and not over any longer time period. Due to
the effect of compounding, the performance of these ETFs over longer periods of
time can differ significantly from the inverse of the performance of the ETF's
underlying index or benchmark during the same period of time. This effect can
be magnified in volatile markets. Inverse ETFs typically are not suitable for
retail investors who plan to hold them for more than one trading session,
particularly in volatile markets.

LEVERAGED ETFS. Certain ETFs may be "leveraged" ETFs. These ETFs seek to
match a multiple or multiples of the performance, or the inverse of the
performance, of a benchmark index on a given day and not for greater periods of
time. This means that the return of a leveraged ETF for a period longer than a
single day will be the result of each day's returns compounded over the period
and not the point-to-point return of the index over the entire time period. As a
result, the use of leverage will very likely cause the performance of such an
ETF to be either greater than, or less than, the index performance times the
stated multiple in an ETF's investment objective. Investors should recognize
that the degree of volatility of the underlying index can have a dramatic effect
on an ETF's longer-term performance. The greater the volatility, given a
particular index return, the greater the downside deviation will be of the ETF's
longer-term performance from a simple multiple of its index's longer-term
return. Leveraged ETFs use investment techniques that may be considered
aggressive, including the use of futures contracts, options on futures
contracts, securities and indexes, forward contracts, swap agreements and

-11-

similar instruments. Leveraged ETFs are typically unsuitable for investors who
plan to hold them for longer than one trading session, particularly in volatile
markets.

NON-DIVERSIFICATION RISK. Certain funds held by a trust may be classified
as "non-diversified." Such funds may be more exposed to the risks associated
with and developments affecting an individual issuer, industry and/or asset
class than a fund that invests more widely.

FOREIGN ISSUERS. An investment in securities of non-U.S. issuers involves
certain investment risks that are different in some respects from an investment
in the securities of domestic issuers. These investment risks include future
political or governmental restrictions which might adversely affect the payment
or receipt of payment of dividends on the relevant securities, the possibility
that the financial condition of the issuers of the securities may become
impaired or that the general condition of the relevant stock market may worsen
(both of which would contribute directly to a decrease in the value of foreign
securities), the limited liquidity and relatively small market capitalization of
the relevant securities market, expropriation or confiscatory taxation, economic
uncertainties and foreign currency devaluations and fluctuations. In addition,
for foreign issuers that are not subject to the reporting requirements of the
Securities Exchange Act of 1934, there may be less publicly available
information than is available from a domestic issuer. In addition, 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
in foreign securities markets 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.

Securities issued by non-U.S. issuers generally pay income in foreign
currencies and principally trade in foreign currencies. Therefore, there is a
risk that the U.S. dollar value of these securities will vary with fluctuations
in the U.S. dollar foreign exchange rates for the various securities.

There can be no assurance that exchange control regulations might not be
adopted in the future which might adversely affect payment to a trust or a fund
held by a trust. The adoption of exchange control regulations and other legal
restrictions could have an adverse impact on the marketability of foreign
securities and on the ability to liquidate securities. 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 trust 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 a 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 (the "Securities Act") and may not be exempt from the registration
requirements of such Act. Sales

-12-

of non-exempt securities in the United States securities markets are subject to
severe restrictions and may not be practicable. Accordingly, sales of these
securities will generally be effected only in foreign securities markets.
Investors should realize that the securities might 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 securities will be
adversely affected if trading markets for the securities are limited or absent.

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 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 a trust or a fund held by a 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.

-13-

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.

DEPOSITARY RECEIPTS. Certain of the securities in a trust may be in
depositary receipt form, including American Depositary Receipts ("ADRs") or
Global Depositary Receipts ("GDRs"). Depositary receipts represent stock
deposited with a custodian in a depositary. Depositary receipts are issued by a
bank or trust company to evidence ownership of underlying securities issued by a
foreign corporation. These instruments may not necessarily be denominated in the
same currency as the securities into which they may be converted.

Depositary receipts may be sponsored or unsponsored. In an unsponsored
facility, the depositary initiates and arranges the facility at the request of
market makers and acts as agent for the depositary receipts holder, while the
company itself is not involved in the transaction. In a sponsored facility, the
issuing company initiates the facility and agrees to pay certain administrative
and shareholder-related expenses. Sponsored facilities use a single depositary
and entail a contractual relationship between the issuer, the shareholder and
the depositary; unsponsored facilities involve several depositaries with no
contractual relationship to the company. The depositary bank that issues
depositary receipts generally charges a fee, based on the price of the
depositary receipts, upon issuance and cancellation of the depositary receipts.
This fee would be in addition to the brokerage commissions paid upon the
acquisition or surrender of the security. In addition, the depositary bank
incurs expenses in connection with the conversion of dividends or other cash
distributions paid in local currency into U.S. dollars and such expenses are
deducted from the amount of the dividend or distribution paid to holders,
resulting in a lower payout per underlying shares represented by the depositary
receipts than would be the case if the underlying share were held directly.
Certain tax considerations, including tax rate differentials and withholding
requirements, arising from the application of the tax laws of one nation to
nationals of another and from certain practices in the depositary receipts
market may also exist with respect to certain depositary receipts. In varying
degrees, any or all of these factors may affect the value of the depositary
receipts compared with the value of the underlying shares in the local market.
In addition, the rights of holders of depositary receipts may be different than
those of holders of the underlying shares, and the market for depositary
receipts may be less liquid than that for the underlying shares. Depositary
receipts are registered securities pursuant to the Securities Act and may be
subject to the reporting requirements of the Securities Exchange Act of 1934.

For the securities that are depositary receipts, currency fluctuations will
affect the United States dollar equivalent of the local currency price of the
underlying domestic share and, as a result, are likely to affect the value of
the depositary receipts and consequently the value of the securities. The
foreign issuers of securities that are depositary receipts may pay dividends in
foreign currencies which must be converted into dollars. Most foreign currencies
have fluctuated widely in value against the United States dollar for many
reasons, including supply and demand of the respective currency, the soundness
of the world economy and the strength of the respective

-14-

economy as compared to the economies of the United States and other countries.
Therefore, for any securities of issuers (whether or not they are in depositary
receipt form) whose earnings are stated in foreign currencies, or which pay
dividends in foreign currencies or which are traded in foreign currencies, there
is a risk that their United States dollar value will vary with fluctuations in
the United States dollar foreign exchange rates for the relevant currencies.

CURRENCY RISK. A trust that invests in securities of non-U.S. issuers will
be subject to currency risk, which is the risk that an increase in the U.S.
dollar relative to the non-U.S. currency will reduce returns or portfolio value.
Generally, when the U.S. dollar rises in value relative to a non-U.S. currency,
a trust's investment in securities denominated in that currency will lose value
because its currency is worth fewer U.S. dollars. On the other hand, when the
value of the U.S. dollar falls relative to a non-U.S. currency, a trust's
investments denominated in that currency will tend to increase in value because
that currency is worth more U.S. dollars. The exchange rates between the U.S.
dollar and non-U.S. currencies depend upon such factors as supply and demand in
the currency exchange markets, international balance of payments, governmental
intervention, speculation and other economic and political conditions. A trust
may incur conversion costs when it converts its holdings to another currency.
Non-U.S. exchange dealers may realize a profit on the difference between the
price at which a trust buys and sells currencies. A trust may engage in non-U.S.
currency exchange transactions in connection with its portfolio investments. A
trust may also be subject to currency risk through investments in ADRs, GDRs and
other non-U.S. securities denominated in U.S. dollars.

FOREIGN GOVERNMENT SECURITIES RISK. The ability of a government issuer,
especially in an emerging market country, to make timely and complete payments
on its debt obligations will be strongly influenced by the government issuer's
balance of payments, including export performance, its access to international
credits and investments, fluctuations of interest rates and the extent of its
foreign reserves. A country whose exports are concentrated in a few commodities
or whose economy depends on certain strategic imports could be vulnerable to
fluctuations in international prices of these commodities or imports. If a
government issuer cannot generate sufficient earnings from foreign trade to
service its external debt, it may need to depend on continuing loans and aid
from foreign governments, commercial banks, and multinational organizations.
There are no bankruptcy proceedings similar to those in the United States by
which defaulted government debt may be collected. Additional factors that may
influence a government issuer's ability or willingness to service debt include,
but are not limited to, a country's cash flow situation, the ability of
sufficient foreign exchange on the date a payment is due (where applicable), the
relative size of its debt burden to the economy as a whole, and the issuer's
policy towards the International Monetary Fund, the International Bank for
Reconstruction and Development and other international agencies to which a
government debtor may be subject.

SUPRANATIONAL ENTITIES' SECURITIES. Certain securities are obligations
issued by supranational entities such as the International Bank for
Reconstruction and Development (the World Bank). The government members, or
"stockholders," usually make initial capital contributions to supranational
entities and in many cases are committed to make additional capital
contributions if a supranational entity is unable to repay its borrowings.
There is no guarantee that one or more stockholders of a supranational entity
will continue to make any

-15-

necessary additional capital contributions. If such contributions are not made,
the entity may be unable to pay interest or repay principal on its debt
securities, and an investor in such securities may lose money on such
investments.

SMALL-CAP AND MID-CAP COMPANIES. Smaller company stocks customarily
involve more investment risk than larger company stocks. Small-capitalization
and mid-capitalization 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 or mid-size 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 small-cap and mid-cap companies normally
have fewer shares outstanding and these shares trade less frequently than large
companies, it may be more difficult for a trust which contains these securities
to buy and sell significant amounts of such shares without an unfavorable impact
on prevailing market prices.

REAL ESTATE INVESTMENT TRUSTS. Many factors can have an adverse impact on
the performance of a particular real estate investment trust or other real
estate-related investments (a "REIT"), including its cash available for
distribution, the credit quality of a particular REIT or the real estate
industry generally. The success of REITs depends on various factors, including
the occupancy and rent levels, appreciation of the underlying property and the
ability to raise rents on those properties. Economic recession, overbuilding,
tax law changes, higher interest rates or excessive speculation can all
negatively impact REITs, their future earnings and share prices.

REITs are subject to risks associated with the direct ownership of real
estate which include, among other factors: general U.S. and global as well as
local economic conditions; decline in real estate values; the financial health
of tenants; overbuilding and increased competition for tenants; oversupply of
properties for sale; changing demographics; changes in interest rates, tax rates
and other operating expenses; changes in government regulations; changes in
zoning laws; the ability of the owner to provide adequate management,
maintenance and insurance; faulty construction and the ongoing need for capital
improvements; the cost of complying with the Americans with Disabilities Act;
regulatory and judicial requirements, including relating to liability for
environmental hazards; natural or man-made disasters; changes in the perception
of prospective tenants of the safety, convenience and attractiveness of the
properties changes in neighborhood values and buyer demand; and the
unavailability of construction financing or mortgage loans at rates acceptable
to developers.

Variations in rental income and space availability and vacancy rates in
terms of supply and demand are additional factors affecting real estate
generally and REITs in particular. Properties owned by a REIT may not be
adequately insured against certain losses and may be subject to significant
environmental liabilities, including remediation costs.

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You should also be aware that REITs may not be diversified and are subject
to the risks of financing projects. The real estate industry may be cyclical,
and, if a trust or a fund held by a trust acquires REIT securities at or near
the top of the cycle, there is increased risk of a decline in value of the REIT
securities and therefore the value of the units. REITs are also subject to
defaults by borrowers and the market's perception of the REIT industry
generally.

Because of their structure, and the legal requirement that they distribute
a certain percentage of their taxable income to shareholders annually, REITs
require frequent amounts of new funding, through both borrowing money and
issuing stock. Thus, REITs historically have frequently issued substantial
amounts of new equity shares (or equivalents) to purchase or build new
properties. This may have adversely affected REIT equity share market prices.
Both existing and new share issuances may have an adverse effect on these prices
in the future, especially when REITs continue to issue stock when real estate
prices are relatively high and stock prices are relatively low.

The value of REITs and other real-estate related investments may also be
affected by downturns in the housing and mortgage lending markets. In the past,
government authorities have engaged in administrative and legislative action
intended to address both short- and long-term difficulties facing the housing
and mortgage lending markets and the broader economy. No one can predict the
action that might be taken or the effect any action or inaction will have and it
is possible that any actions taken by government authorities will not address or
help improve the state of such difficulties as intended. Downturns in the
housing market and corresponding government action may have far reaching
consequences into many geographic regions and, consequently, the value of
securities may decline in response to such developments.

MASTER LIMITED PARTNERSHIPS. Master limited partnerships ("MLPs") are
limited partnerships or limited liability companies that are generally taxed as
partnerships whose interests are traded on securities exchanges. MLP ownership
generally consists of a general partner and limited partners. The general
partner manages the partnership, has an ownership stake in the partnership and
is eligible to receive an incentive distribution. The limited partners provide
capital to the partnership, have a limited (if any) role in the operation and
management of the partnership and receive cash distributions. Most MLPs
generally operate in the energy, natural resources or real estate sectors and
are subject to the risks generally applicable to companies in those sectors.
MLPs are also subject to the risk that authorities could challenge the tax
treatment of MLPs for federal income tax purposes which could have a negative
impact on the after-tax income available for distribution by the MLPs.

BOND QUALITY RISK. Bond quality risk is the risk that a bond will fall in
value if a rating agency decreases or withdraws the bond's rating.

PREPAYMENT RISK. When interest rates fall, among other factors, the issuer
of a fixed income security may prepay its obligations earlier than expected.
Such amounts will result in early distributions to an investor who may be unable
to reinvest such amounts at the yields originally invested which could adversely
impact the value of your investment. Certain bonds include call provisions
which expose such an investor to 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

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rates, in general, fall and the bond pays a higher interest rate or if it no
longer needs the money for the original purpose. If an issuer calls a bond, the
holder of such bond will receive principal but will not receive any future
interest distributions on the bond. Such investor might not be able to reinvest
this principal at as high a yield. A bond's call price could be less than the
price paid for the bond and could be below the bond's par value. Certain bonds
may also be subject to extraordinary optional or mandatory redemptions if
certain events occur, such as certain changes in tax laws, the substantial
damage or destruction by fire or other casualty of the project for which the
proceeds of the bonds were used, and various other events.

EXTENSION RISK. When interest rates rise, among other factors, issuers of
a security may pay off obligations more slowly than expected causing the value
of such obligations to fall.

"WHEN ISSUED" AND "DELAYED DELIVERY" BONDS. Certain debt obligations may
have been purchased on a "when, as and if issued" or "delayed delivery" basis.
The delivery of any such bonds may be delayed or may not occur. Interest on
these bonds begins accruing to the benefit of investors on their respective
dates of delivery. Investors will be "at risk" with respect to all "when, as
and if issued" and "delayed delivery" bonds (i.e., may derive either gain or
loss from fluctuations in the values of such bonds) from the date they purchase
their investment.

PREMIUM SECURITIES. Certain 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 by the fund 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.

MARKET DISCOUNT. Certain fixed income securities may have been acquired at
a market discount from par value at maturity. The coupon interest rates on
discount securities at the time of purchase are 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

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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.

ORIGINAL ISSUE DISCOUNT BONDS. Original issue discount bonds were
initially issued at a price below their face (or par) value. These bonds
typically pay a lower interest rate than comparable bonds that were issued at or
above their par value. In a stable interest rate environment, the market value
of these bonds tends to increase more slowly in early years and in greater
increments as the bonds approach maturity. The issuers of these bonds may be
able to call or redeem a bond before its stated maturity date and at a price
less than the bond's par value. Under current law, the original issue discount,
which is the difference between the stated redemption price at maturity and the
issue price of the bonds, is deemed to accrue on a daily basis and the accrued
portion is treated as taxable interest income for U.S. federal income tax
purposes.

ZERO COUPON BONDS. Certain bonds may be "zero coupon" bonds. Zero coupon
bonds are purchased at a deep discount because the buyer receives only the right
to receive a final payment at the maturity of the bond and does not receive any
periodic interest payments. The effect of owning deep discount bonds which do
not make current interest payments (such as the zero coupon bonds) is that a
fixed yield is earned not only on the original investment but also, in effect,
on all discount earned during the life of such obligation. This implicit
reinvestment of earnings at the same rate eliminates the risk of being unable to
reinvest the income on such obligation 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, zero coupon bonds
are subject to substantially greater price fluctuations during periods of
changing market interest rates than are securities of comparable quality which
pay interest.

RESTRICTED SECURITIES. Certain securities may only be resold pursuant to
Rule 144A under the Securities Act. Such securities may not be readily
marketable. Restricted securities may be sold only to purchasers meeting certain
eligibility requirements in privately negotiated transactions or in a public
offering with respect to which a registration statement is in effect under the
Securities Act. Where registration of such securities under the Securities Act
is required, an owner may be obligated to pay all or part of the registration
expenses and a considerable period may elapse between the time of the decision
to sell and the time an owner may be permitted to sell a security under an
effective registration statement. If, during such a period, adverse market
conditions were to develop, an owner might obtain a less favorable price than
that which prevailed when it decided to sell.

PREFERRED SECURITY RISKS. Preferred securities include preferred stocks,
trust preferred securities, subordinated or junior notes and debentures and
other similarly structured securities. Preferred securities combine some of the
characteristics of common stocks and bonds. Preferred securities generally pay
fixed or adjustable rate income in the form of dividends or interest to
investors. Preferred securities generally have preference over common stock in
the payment of income and the liquidation of a company's assets. However,
preferred securities are typically subordinated to bonds and other debt
instruments in a company's capital structure and therefore will be subject to
greater credit risk than those debt instruments. Because of their subordinated

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position in the capital structure of an issuer, the ability to defer dividend or
interest payments for extended periods of time without triggering an event of
default for the issuer, and certain other features, preferred securities are
often treated as equity-like instruments by both issuers and investors, as their
quality and value are heavily dependent on the profitability and cash flows of
the issuer rather than on any legal claims to specific assets. Most retail-
available preferred securities have a $25 par (or "face") value but can also
have par values of $50 or $1,000. Preferred securities are often callable at
their par value at some point in time after their original issuance date. Income
payments on preferred securities are generally stated as a percentage of these
par values although certain preferred securities provide for variable or
additional participation payments.

While some preferred securities are issued with a final maturity date,
others are perpetual in nature. In certain instances, a final maturity date may
be extended and/or the final payment of principal may be deferred at the
issuer's option for a specified time without triggering an event of default for
the issuer. Preferred securities generally may be subject to provisions that
allow an issuer, under certain conditions, to skip ("non-cumulative" preferred
securities) or defer ("cumulative" preferred securities) distributions. The
issuer of a non-cumulative preferred security does not have an obligation to
make up any arrearages to holders of such securities and non-cumulative
preferred securities can defer distributions indefinitely. Cumulative preferred
securities typically contain provisions that allow an issuer, at its discretion,
to defer distributions payments for up to 10 years. If a preferred security is
deferring its distribution, investors may be required to recognize income for
tax purposes while they are not receiving any income. In certain circumstances,
an issuer of preferred securities may redeem the securities during their life.
For certain types of preferred securities, a redemption may be triggered by a
change in federal income tax or securities laws. As with call provisions, a
redemption by the issuer may negatively impact the return of the security.
Preferred security holders generally have no voting rights with respect to the
issuing company except in very limited situations, such as if the issuer fails
to make income payments for a specified period of time or if a declaration of
default occurs and is continuing. Preferred securities may be substantially less
liquid than many other securities, such as U.S. government securities or common
stock. The federal income tax treatment of preferred securities may not be clear
or may be subject to recharacterization by the Internal Revenue Service. Issuers
of preferred securities may be in industries that are heavily regulated and that
may receive government funding. The value of preferred securities issued by
these companies may be affected by changes in government policy, such as
increased regulation, ownership restrictions, deregulation or reduced government
funding.

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comparable to those of the trust or special purpose entity securities. The trust
or special purpose entity, as the holder of the operating company's debt, has
priority with respect to the operating company's earnings and profits over the
operating company's common shareholders, but is typically subordinated to other
classes of the operating company's debt. Distribution payments of trust
preferred securities generally coincide with interest payments on the underlying
obligations. Distributions from trust preferred securities are typically treated
as interest rather than dividends for federal income tax purposes and therefore,
are not eligible for the dividends-received deduction or the lower federal tax
rates applicable to qualified dividends. Trust preferred securities generally
involve the same risks as traditional preferred stocks but are also subject to
unique risks, including risks associated with income payments only being made if
payments on the underlying obligations are made. Typically, a trust preferred
security will have a rating that is below that of its corresponding operating
company's senior debt securities due to its subordinated nature.

Subordinated or junior notes or debentures are securities that generally
have priority to common stock and other preferred securities in a company's
capital structure but are subordinated to other bonds and debt instruments in a
company's capital structure. As a result, these securities will be subject to
greater credit risk than those senior debt instruments and will not receive
income payments or return of principal in the event of insolvency until all
obligations on senior debt instruments have been made. Distributions from these
securities are typically treated as interest rather than dividends for federal
income tax purposes and therefore, are not eligible for the dividends-received
deduction or the lower federal tax rates applicable to qualified dividends.
Investments in subordinated or junior notes or debentures also generally involve
risks similar to risks of other preferred securities described above.

HIGH-YIELD SECURITIES. "High-yield" or "junk" securities, the generic
names for securities rated below BBB by Standard & Poor's or below Baa by
Moody's (or similar ratings of other rating agencies), 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. These obligations that are
considered below "investment grade" and should be considered speculative as such
ratings indicate a quality of less than investment grade. 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 that 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. The price at which the securities may be sold to
meet redemptions and the value of a trust may be adversely affected if trading
markets for the securities are limited or absent.

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An investment in "high-yield, high-risk" debt obligations or "junk"
obligations may include increased credit risks and the risk that the value of
the units will decline, and may decline precipitously, with increases in
interest rates. During certain periods there have been wide fluctuations in
interest rates and thus in the value of debt obligations generally. Certain
high-yield securities may be 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.

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 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 the 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 securities may fluctuate
more than the market value of higher-rated securities since these 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 debt-holders, 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.

Should the issuer of any security default in the payment of principal or
interest, the holders of such security may incur additional expenses seeking
payment on the defaulted security. Because the amounts (if any) recovered in
payment under the defaulted security may not be reflected in the value of a fund
held by a trust or units of a trust until actually received, and depending upon
when a unitholder purchases or sells his or her units, it is possible that a

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unitholder 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.

MUNICIPAL BONDS. Certain municipals bonds are "general obligation bonds"
and are general obligations of a governmental entity that are backed by the
taxing power of such entity. Other municipals bonds are "revenue bonds" payable
from the income of a specific project or authority and are not supported by the
issuer's power to levy taxes. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds, on the other hand, are payable only from
the revenues derived from a particular facility or class of facilities or, in
some cases, from the proceeds of a special excise tax or other specific revenue
source. There are, of course, variations in the security of the different bonds,
both within a particular classification and between classifications, depending
on numerous factors.

Certain municipal bonds may be obligations which derive their payments from
mortgage loans. Certain of such housing bonds may be FHA insured or may be
single family mortgage revenue bonds issued for the purpose of acquiring from
originating financial institutions notes secured by mortgages on residences
located within the issuer's boundaries and owned by persons of low or moderate
income. Mortgage loans are generally partially or completely prepaid prior to
their final maturities as a result of events such as sale of the mortgaged
premises, default, condemnation or casualty loss. Because these bonds are
subject to extraordinary mandatory redemption in whole or in part from such
prepayments of mortgage loans, a substantial portion of such bonds will probably
be redeemed prior to their scheduled maturities or even prior to their ordinary
call dates. Extraordinary mandatory redemption without premium could also result
from the failure of the originating financial institutions to make mortgage
loans in sufficient amounts within a specified time period. Additionally,
unusually high rates of default on the underlying mortgage loans may reduce
revenues available for the payment of principal of or interest on such mortgage
revenue bonds. These bonds were issued under provisions of the Internal Revenue
Code, which include certain requirements relating to the use of the proceeds of
such bonds in order for the interest on such bonds to retain its tax-exempt
status. In each case the issuer of the bonds has covenanted to comply with
applicable requirements and bond counsel to such issuer has issued an opinion
that the interest on the bonds is exempt from Federal income tax under

-23-

existing laws and regulations. Certain issuers of housing bonds have considered
various ways to redeem bonds they have issued prior to the stated first
redemption dates for such bonds.

Certain municipal bonds may be health care revenue bonds. Ratings of bonds
issued for health care facilities are often based on feasibility studies that
contain projections of occupancy levels, revenues and expenses. A facility's
gross receipts and net income available for debt service may be affected by
future events and conditions including, among other things, demand for services
and the ability of the facility to provide the services required, physicians'
confidence in the facility, management capabilities, competition with other
health care facilities, efforts by insurers and governmental agencies to limit
rates, legislation establishing state rate-setting agencies, expenses, the cost
and possible unavailability of malpractice insurance, the funding of Medicare,
Medicaid and other similar third party pay or programs, government regulation
and the termination or restriction of governmental financial assistance,
including that associated with Medicare, Medicaid and other similar third party
pay or programs.

Certain municipal bonds may be obligations of public utility issuers,
including those selling wholesale and retail electric power and gas. General
problems of such issuers would include the difficulty in financing large
construction programs in an inflationary period, the limitations on operations
and increased costs and delays attributable to environmental considerations, the
difficulty of the capital market in absorbing utility debt, the difficulty in
obtaining fuel at reasonable prices and the effect of energy conservation. In
addition, Federal, state and municipal governmental authorities may from time to
time review existing, and impose additional, regulations governing the
licensing, construction and operation of nuclear power plants, which may
adversely affect the ability of the issuers of certain bonds to make payments of
principal and/or interest on such bonds.

Certain municipal bonds may be obligations of issuers whose revenues are
derived from the sale of water and/or sewerage services. Such bonds are
generally payable from user fees. The problems of such issuers include the
ability to obtain timely and adequate rate increases, population decline
resulting in decreased user fees, the difficulty of financing large construction
programs, the limitations on operations and increased costs and delays
attributable to environmental considerations, the increasing difficulty of
obtaining or discovering new supplies of fresh water, the effect of conservation
programs and the impact of "no-growth" zoning ordinances.

Certain municipal bonds may be industrial revenue bonds ("IRBs"). IRBs have
generally been issued under bond resolutions pursuant to which the revenues and
receipts payable under the arrangements with the operator of a particular
project have been assigned and pledged to purchasers. In some cases, a mortgage
on the underlying project may have been granted as security for the IRBs.
Regardless of the structure, payment of IRBs is solely dependent upon the
creditworthiness of the corporate operator of the project or corporate
guarantor. Corporate operators or guarantors may be affected by many factors
which may have an adverse impact on the credit quality of the particular company
or industry. These include cyclicality of revenues and earnings, regulatory and
environmental restrictions, litigation resulting from accidents or
environmentally-caused illnesses, extensive competition and financial
deterioration resulting from a corporate restructuring pursuant to a leveraged
buy-out, takeover or otherwise. Such a

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restructuring may result in the operator of a project becoming highly leveraged
which may impact on such operator's creditworthiness which in turn would have an
adverse impact on the rating and/or market value of such bonds. Further, the
possibility of such a restructuring may have an adverse impact on the market for
and consequently the value of such bonds, even though no actual takeover or
other action is ever contemplated or effected.

Certain municipal bonds may be obligations that are secured by lease
payments of a governmental entity ("lease obligations"). Lease obligations are
often in the form of certificates of participation. Although the lease
obligations do not constitute general obligations of the municipality for which
the municipality's taxing power is pledged, a lease obligation is ordinarily
backed by the municipality's covenant to appropriate for and make the payments
due under the lease obligation. However, certain lease obligations contain "non-
appropriation" clauses which provide that the municipality has no obligation to
make lease payments in future years unless money is appropriated for such
purpose on a yearly basis. A governmental entity that enters into such a lease
agreement cannot obligate future governments to appropriate for and make lease
payments but covenants to take such action as is necessary to include any lease
payments due in its budgets and to make the appropriations therefor. A
governmental entity's failure to appropriate for and to make payments under its
lease obligation could result in insufficient funds available for payment of the
obligations secured thereby. Although "non-appropriation" lease obligations are
secured by the leased property, disposition of the property in the event of
foreclosure might prove difficult.

Certain municipal bonds may be obligations of issuers which are, or which
govern the operation of, schools, colleges and universities and whose revenues
are derived mainly from ad valorem taxes or for higher education systems, from
tuition, dormitory revenues, grants and endowments. General problems relating to
school bonds include litigation contesting the state constitutionality of
financing public education in part from ad valorem taxes, thereby creating a
disparity in educational funds available to schools in wealthy areas and schools
in poor areas. Litigation or legislation on this issue may affect the sources of
funds available for the payment of school bonds. General problems relating to
college and university obligations include the prospect of a declining
percentage of the population consisting of "college" age individuals, possible
inability to raise tuitions and fees sufficiently to cover increased operating
costs, the uncertainty of continued receipt of Federal grants and state funding,
and government legislation or regulations which may adversely affect the
revenues or costs of such issuers.

Certain municipal bonds may be obligations which are payable from and
secured by revenues derived from the ownership and operation of facilities such
as airports, bridges, turnpikes, port authorities, convention centers and
arenas. The major portion of an airport's gross operating income is generally
derived from fees received from signatory airlines pursuant to use agreements
which consist of annual payments for leases, occupancy of certain terminal space
and service fees. Airport operating income may therefore be affected by the
ability of the airlines to meet their obligations under the use agreements. From
time to time the air transport industry has experienced significant variations
in earnings and traffic, due to increased competition, excess capacity,
increased costs, deregulation, traffic constraints and other factors, and
several airlines have experienced severe financial difficulties. Similarly,
payment on bonds related to other facilities is dependent on revenues from the
projects, such as user fees from ports, tolls on

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turnpikes and bridges and rents from buildings. Therefore, payment may be
adversely affected by reduction in revenues due to such factors as increased
cost of maintenance, decreased use of a facility, lower cost of alternative
modes of transportation, scarcity of fuel and reduction or loss of rents.

Certain municipal bonds may be obligations which are payable from and
secured by revenues derived from the operation of resource recovery facilities.
Resource recovery facilities are designed to process solid waste, generate steam
and convert steam to electricity. Resource recovery bonds may be subject to
extraordinary optional redemption at par upon the occurrence of certain
circumstances, including but not limited to: destruction or condemnation of a
project; contracts relating to a project becoming void, unenforceable or
impossible to perform; changes in the economic availability of raw materials,
operating supplies or facilities necessary for the operation of a project or
technological or other unavoidable changes adversely affecting the operation of
a project; and administrative or judicial actions which render contracts
relating to the projects void, unenforceable or impossible to perform or impose
unreasonable burdens or excessive liabilities. No one can predict the causes or
likelihood of the redemption of resource recovery bonds prior to the stated
maturity of the bonds.

Certain municipal bonds may have been acquired at a market discount from
par value at maturity. A "tax-exempt" municipal bond purchased at a market
discount and held to maturity will have a larger portion of its total return in
the form of taxable income and capital gain and less in the form of tax-exempt
interest income than a comparable bond newly issued at current market rates.

Certain municipal bonds may be subject to redemption prior to their stated
maturity date pursuant to sinking fund provisions, call provisions or
extraordinary optional or mandatory redemption provisions or otherwise. A
sinking fund is a reserve fund accumulated over a period of time for retirement
of debt. A callable debt obligation 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 debt obligation is redeemed, at or before maturity, by the proceeds
of a new debt obligation. In general, call provisions are more likely to be
exercised when the offering side valuation is at a premium over par than when it
is at a discount from par. The exercise of redemption or call provisions will
(except to the extent the proceeds of the called bonds are used to pay for unit
redemptions) result in the distribution of principal and may result in a
reduction in the amount of subsequent interest distributions. Extraordinary
optional redemptions and mandatory redemptions result from the happening of
certain events. Generally, events that may permit the extraordinary optional
redemption of bonds or may require the mandatory redemption of bonds include,
among others: a final determination that the interest on the bonds is taxable;
the substantial damage or destruction by fire or other casualty of the project
for which the proceeds of the bonds were used; an exercise by a local, state or
Federal governmental unit of its power of eminent domain to take all or
substantially all of the project for which the proceeds of the bonds were used;
changes in the economic availability of raw materials, operating supplies or
facilities or technological or other changes which render the operation of the
project for which the proceeds of the bonds were used uneconomic; changes in law
or an administrative or judicial decree which renders the performance of the
agreement under which the proceeds of the bonds were made available to finance
the project impossible or which creates unreasonable burdens or which imposes

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excessive liabilities, such as taxes, not imposed on the date the bonds are
issued on the issuer of the bonds or the user of the proceeds of the bonds; an
administrative or judicial decree which requires the cessation of a substantial
part of the operations of the project financed with the proceeds of the bonds;
an overestimate of the costs of the project to be financed with the proceeds of
the bonds resulting in excess proceeds of the bonds which may be applied to
redeem bonds; or an underestimate of a source of funds securing the bonds
resulting in excess funds which may be applied to redeem bonds. The issuer of
certain bonds may have sold or reserved the right to sell, upon the satisfaction
of certain conditions, to third parties all or any portion of its rights to call
bonds in accordance with the stated redemption provisions of such bonds. In such
a case the issuer no longer has the right to call the bonds for redemption
unless it reacquires the rights from such third party. A third party pursuant to
these rights may exercise the redemption provisions with respect to a bond at a
time when the issuer of the bond might not have called a bond for redemption had
it not sold such rights. No one can predict all of the circumstances which may
result in such redemption of an issue of bonds. See also the discussion of
single family mortgage and multi-family revenue bonds above for more information
on the call provisions of such bonds.

CONVERTIBLE SECURITIES. Convertible securities are generally debt
obligations or preferred stock of a company that are convertible into another
security of the company, typically common stock. Convertible securities
generally offer lower interest or dividend yields than non-convertible fixed-
income securities of similar credit quality because of the potential for capital
appreciation. The market values of convertible securities tend to decline as
interest rates increase and, conversely, to increase as interest rates decline.
However, a convertible security's market value also tends to reflect the market
price of the common stock of the issuing company, particularly when the stock
price is greater than the convertible security's conversion price. The
conversion price is defined as the predetermined price or exchange ratio at
which the convertible security can be converted or exchanged for the underlying
common stock. As the market price of the underlying common stock declines below
the conversion price, the price of the convertible security tends to be
increasingly influenced more by the yield of the convertible security than by
the market price of the underlying common stock. Thus, it may not decline in
price to the same extent as the underlying common stock, and convertible
securities generally have less potential for gain or loss than common stocks.
However, mandatory convertible securities (as discussed below) generally do not
limit the potential for loss to the same extent as securities convertible at the
option of the holder. In the event of a liquidation of the issuing company,
holders of convertible securities would be paid before that company's common
stockholders. Consequently, an issuer's convertible securities generally entail
less risk than its common stock. However, convertible securities generally fall
below other debt obligations of the same issuer in order of preference or
priority in the event of a liquidation and are typically unrated or rated lower
than such debt obligations. In addition, contingent payment, convertible
securities allow the issuer to claim deductions based on its nonconvertible cost
of debt, which generally will result in deduction in excess of the actual cash
payments made on the securities (and accordingly, holders will recognize income
in amounts in excess of the cash payments received).

-27-

price (above or below par) paid. For these reasons, the risks associated with
investing in mandatory convertible securities most closely resemble the risks
inherent in common stocks. Mandatory convertible securities customarily pay a
higher coupon yield to compensate for the potential risk of additional price
volatility and loss upon conversion. Because the market price of a mandatory
convertible security increasingly corresponds to the market price of its
underlying common stock as the convertible security approaches its conversion
date, there can be no assurance that the higher coupon will compensate for the
potential loss.

SENIOR LOANS. Senior loans may be 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. Senior loans
generally are of below investment grade credit quality and may be unrated at the
time of investment. They generally are not registered with the Securities and
Exchange Commission or any state securities commission and generally are not
listed on any securities exchange.

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 an investment in senior loans will generally decline
in a falling interest rate environment and increase in a rising interest rate
environment.

The amount of public information available on senior loans generally will
be less extensive than that available for other types of assets. No reliable,
active trading market currently exists for many senior loans, although a
secondary market for certain senior loans does exist. Senior loans are thus
relatively illiquid. If a fund held by a trust invests in senior loans,
liquidity of a senior loan refers to the ability of the fund to sell the
investment in a timely manner at a price approximately equal to its value on the
fund's books. The illiquidity of senior loans may impair a fund's ability to
realized the full value of its assets in the event of a voluntary or involuntary
liquidation of such assets. Because of the lack of an active trading market,
illiquid securities are also difficult to value and prices provided by external
pricing services may not reflect the true value of the securities. However, many
senior loans are of a large principal amount and are held by financial
institutions. To the extent that a secondary market does exist for certain
senior loans, the market may be subject to irregular trading activity, wide
bid/ask spreads and extended trade settlement periods. The market for senior
loans could be disrupted in the event of an economic downturn or a substantial
increase or decrease in interest rates. This could result in increased
volatility in the market and in a trust's net asset value.

If legislation or state or federal regulators impose additional
requirements or restrictions on the ability of financial institutions to make
loans that are considered highly leveraged transactions, the availability of
senior loans for investment may be adversely affected. In addition, such
requirements or restrictions could reduce or eliminate sources of financing for
certain borrowers. This would increase the risk of default. If legislation or
federal or state

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regulators require financial institutions to dispose of senior loans that are
considered highly leveraged transactions or subject such senior loans to
increased regulatory scrutiny, financial institutions may determine to sell such
senior loans. Such sales could result in depressed prices. The price for the
senior loan may be adversely affected if sold at a time when a financial
institution is engaging in such a sale.

Some senior loans are subject to the risk that a court, pursuant to
fraudulent conveyance or other similar laws, could subordinate the senior loans
to presently existing or future indebtedness of the borrower or take other
action detrimental to lenders. Such court action could under certain
circumstances include invalidation of senior loans. Any lender, which could
include a fund held by a trust, is subject to the risk that a court could find
the lender liable for damages in a claim by a borrower arising under the common
laws of tort or contracts or anti-fraud provisions of certain securities laws
for actions taken or omitted to be taken by the lenders under the relevant terms
of a loan agreement or in connection with actions with respect to the collateral
underlying the senior loan.

FLOATING RATE INSTRUMENTS. A floating rate security is an instrument in
which the interest rate payable on the obligation fluctuates on a periodic basis
based upon changes in a benchmark, often related to interest rates. As a
result, the yield on such a security will generally decline with negative
changes to the benchmark, causing an investor to experience a reduction in the
income it receives from such securities. A sudden and significant increase in
the applicable benchmark may increase the risk of payment defaults and cause a
decline in the value of the security.

ASSET-BACKED SECURITIES. Asset-backed securities ("ABS") are securities
backed by pools of loans or other receivables. ABS are created from many types
of assets, including auto loans, credit card receivables, home equity loans, and
student loans. ABS are issued through special purpose vehicles that are
bankruptcy remote from the issuer of the collateral. The credit quality of an
ABS transaction depends on the performance of the underlying assets. To protect
ABS investors from the possibility that some borrowers could miss payments or
even default on their loans, ABS include various forms of credit enhancement.
Some ABS, particularly home equity loan transactions, are subject to interest
rate risk and prepayment risk. A change in interest rates can affect the pace
of payments on the underlying loans, which in turn, affects total return on the
securities. ABS also carry credit or default risk. If many borrowers on the
underlying loans default, losses could exceed the credit enhancement level and
result in losses to investors in an ABS transaction. Finally, ABS have
structure risk due to a unique characteristic known as early amortization, or
early payout, risk. Built into the structure of most ABS are triggers for early
payout, designed to protect investors from losses. These triggers are unique to
each transaction and can include: a big rise in defaults on the underlying
loans, a sharp drop in the credit enhancement level, or even the bankruptcy of
the originator. Once early amortization begins, all incoming loan payments
(after expenses are paid) are used to pay investors as quickly as possible based
upon a predetermined priority of payment.

MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are a type of ABS
representing direct or indirect participations in, or are secured by and payable
from, mortgage loans secured by real property and can include single- and
multi-class pass-through securities and collateralized mortgage obligations.
Mortgage-backed securities are based on different types of mortgages,

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including those on commercial real estate or residential properties. These
securities often have stated maturities of up to thirty years when they are
issued, depending upon the length of the mortgages underlying the securities.
In practice, however, unscheduled or early payments of principal and interest on
the underlying mortgages may make the securities' effective maturity shorter
than this. Rising interest rates tend to extend the duration of mortgage-backed
securities, making them more sensitive to changes in interest rates, and may
reduce the market value of the securities. In addition, mortgage-backed
securities are subject to prepayment risk, the risk that borrowers may pay off
their mortgages sooner than expected, particularly when interest rates decline.

SOVEREIGN DEBT. Sovereign debt instruments are subject to the risk that a
governmental entity may delay or refuse to pay interest or repay principal on
its sovereign debt, due, for example, to cash flow problems, insufficient
foreign currency reserves, political considerations, the relative size of the
governmental entity's debt position in relation to the economy or the failure to
put in place required economic reforms. If a governmental entity defaults, it
may ask for more time in which to pay or for further loans. There is no legal
process for collecting sovereign debt that a government does not pay nor are
there bankruptcy proceedings through which all or part of the sovereign debt
that a governmental entity has not repaid may be collected.

U.S. GOVERNMENT OBLIGATIONS RISK. Obligations of U.S. government agencies,
authorities, instrumentalities and sponsored enterprises have historically
involved little risk of loss of principal if held to maturity. However, not all
U.S. government securities are backed by the full faith and credit of the United
States. Obligations of certain agencies, authorities, instrumentalities and
sponsored enterprises of the U.S. government are backed by the full faith and
credit of the United States (e.g., the Government National Mortgage
Association); other obligations are backed by the right of the issuer to borrow
from the U.S. Treasury (e.g., the Federal Home Loan Banks) and others are
supported by the discretionary authority of the U.S. government to purchase an
agency's obligations. Still others are backed only by the credit of the agency,
authority, instrumentality or sponsored enterprise issuing the obligation. No
assurance can be given that the U.S. government would provide financial support
to any of these entities if it is not obligated to do so by law.

MONEY MARKET SECURITIES. Certain funds held by a trust may invest in money
market securities. If market conditions improve while a fund has temporarily
invested some or all of its assets in high quality money market securities, this
strategy could result in reducing the potential gain from the market upswing,
thus reducing a fund's opportunity to achieve its investment objective.

DERIVATIVES RISK. Certain funds held by a trust may engage in transactions
in derivatives. Derivatives are subject to counterparty risk which is the risk
that the other party in a transaction may be unable or unwilling to meet
obligations when due. Use of derivatives may increase volatility of a fund and
reduce returns. Fluctuations in the value of derivatives may not correspond
with fluctuations of underlying exposures. Unanticipated market movements could
result in significant losses on derivative positions including greater losses
than amounts originally invested and potentially unlimited losses in the case of
certain derivatives. There are no assurances that there will be a secondary
market available in any derivative position which

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could result in illiquidity and the inability of a fund to liquidate or
terminate positions as valued. Valuation of derivative positions may be
difficult and increase during times of market turmoil. Certain derivatives may
be used as a hedge against other securities positions, however, hedging can be
subject to the risk of imperfect alignment and there are no assurances that a
hedge will be achieved as intended which can pose significant loss to a fund.
Recent legislation has called for significant increases to the regulation of the
derivatives market. Regulatory changes and rulemaking is ongoing and the full
impact may not be known for some time. This increased regulation may make
derivatives more costly, limit the availability of derivatives or otherwise
adversely affect the value or performance of derivatives. Examples of increased
regulation include, but are not limited to, the imposition of clearing and
reporting requirements on transactions that fall within the definition of "swap"
and "security-based swap," increased recordkeeping and reporting requirements,
changing definitional and registration requirements, and changes to the way that
funds' use of derivatives is regulated. No one can predict the effects of any
new governmental regulation that may be implemented on the ability of a fund to
use any financial derivative product, and there can be no assurance that any new
governmental regulation will not adversely affect a fund's ability to achieve
its investment objective. The federal income tax treatment of a derivative may
not be as favorable as a direct investment in the asset that a derivative
provides exposure to, which may adversely impact the timing, character and
amount of income a fund realizes from its investment. The tax treatment of
certain derivatives is unsettled and may be subject to future legislation,
regulation or administrative pronouncements.

OPTIONS. A trust may hold a fund or funds that write (sell) or purchase
options as part of its investment strategy. In addition to general risks
associated with derivatives described above, options are considered speculative.
When a fund purchases an option, it may lose the premium paid for it if the
price of the underlying security or other assets decreases or remains the same
(in the case of a call option) or increases or remains the same (in the case of
a put option). If a put or call option purchased by a fund were permitted to
expire without being sold or exercised, its premium would represent a loss to a
fund. To the extent that a fund writes or sells an option, if the decline or
increase in the underlying asset is significantly below or above the exercise
price of the written option, a fund could experience substantial and potentially
unlimited losses.

There can be no assurance that a liquid market for the options will exist
when a fund seeks to close out an option position. Reasons for the absence of a
liquid secondary market on an exchange include the following: (i) there may be
insufficient trading interest in certain options; (ii) restrictions may be
imposed by an exchange on opening transactions or closing transactions or both;
(iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of options; (iv) unusual or unforeseen
of an exchange or The Options Clearing Corporation ("OCC") may not at all times
be adequate to handle current trading volume; or (vi) one or more exchanges
could, for economic or other reasons, decide or be compelled at some future date
to discontinue the trading of options (or a particular class or series of
options). If trading were discontinued, the secondary market on that exchange
(or in that class or series of options) would cease to exist. However,
outstanding options on that exchange that had been issued by the OCC as a result
of trades on that exchange would continue to be exercisable in accordance with
their terms. A fund's ability to terminate over-the-counter options is more
limited than with exchange-traded options and may involve the risk that broker-
dealers participating in such transactions will not fulfill their obligations.
If a fund were unable to close

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out a covered call option that it had written (sold) on a security, it would not
be able to sell the underlying security unless the option expired without
exercise.

The hours of trading for options may not conform to the hours during which
the underlying securities are traded. To the extent that the options markets
close before the markets for the underlying securities, significant price and
rate movements can take place in the underlying markets that cannot be reflected
in the options markets. Additionally, the exercise price of an option may be
adjusted downward before the option's expiration as a result of the occurrence
of certain corporate events affecting the underlying equity security, such as
extraordinary dividends, stock splits, merger or other extraordinary
distributions or events. In certain circumstances, a reduction in the exercise
price of an option could reduce a fund's capital appreciation potential on the
underlying security.

To the extent that a fund purchases options pursuant to a hedging strategy,
the fund will be subject to the following additional risks. If a put or call
option purchased by a fund is not sold when it has remaining value, and if the
market price of the underlying security remains equal to or greater than the
exercise price (in the case of a put), or remains less than or equal to the
exercise price (in the case of a call), the fund will lose its entire investment
in the option. Also, where a put or call option on a particular security is
purchased to hedge against price movements in a related security, the price of
the put or call option may move more or less than the price of the related
security. If restrictions on exercise were imposed, a fund might be unable to
exercise an option it had purchased. If a fund were unable to close out an
option that it had purchased on a security, it would have to exercise the option
in order to realize any profit or the option may expire worthless.

The writing (selling) and purchase of options is a highly specialized
activity which involves investment techniques and risks different from those
associated with ordinary portfolio securities transactions. The successful use
of options depends in part on the ability of a fund's adviser to predict future
price fluctuations and, for hedging transactions, the degree of correlation
between the options and securities or currency markets.

If a fund employs a covered call strategy, a fund will generally write
(sell) call options on a significant portion of the fund's managed assets. These
call options will give the option holder the right, but not the obligation, to
purchase a security from the fund at the strike price on or prior to the
option's expiration date. The ability to successfully implement the fund's
investment strategy depends on the fund adviser's ability to predict pertinent
market movements, which cannot be assured. Thus, the use of options may require
a fund to sell portfolio securities at inopportune times or for prices other
than current market values, may limit the amount of appreciation the fund can
realize on an investment, or may cause the fund to hold a security that it might
otherwise sell. The writer (seller) of an option has no control over the time
when it may be required to fulfill its obligation as a writer (seller) of the
option. Once an option writer (seller) has received an exercise notice, it
cannot effect a closing purchase transaction in order to terminate its
obligation under the option and must deliver the underlying security at the
exercise price. As the writer (seller) of a covered call option, a fund forgoes,
during the option's life, the opportunity to profit from increases in the market
value of the security underlying the call option above the sum of the premium
and the strike price of the call option, but has retained the risk of

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loss should the price of the underlying security decline. The value of the
options written (sold) by a fund will be affected by changes in the value and
dividend rates of the underlying equity securities, an increase in interest
rates, changes in the actual or perceived volatility of securities markets and
the underlying securities and the remaining time to the options' expirations.
The value of the options may also be adversely affected if the market for the
options becomes less liquid or smaller.

An option is generally considered "covered" if a fund owns the security
underlying the call option or has an absolute and immediate right to acquire
that security without additional cash consideration (or, if required, liquid
cash or other assets are segregated by the fund) upon conversion or exchange of
other securities held by the fund. In certain cases, a call option may also be
considered covered if a fund holds a call option on the same security as the
call option written (sold) provided that certain conditions are met. By writing
(selling) covered call options, a fund generally seeks to generate income, in
the form of the premiums received for writing (selling) the call options.
Investment income paid by a fund to its shareholders (such as a trust) may be
derived primarily from the premiums it receives from writing (selling) call
options and, to a lesser extent, from the dividends and interest it receives
from the equity securities or other investments held in the fund's portfolio and
short-term gains thereon. Premiums from writing (selling) call options and
dividends and interest payments made by the securities in a fund's portfolio can
vary widely over time.

SWAPS. Certain funds held by a trust may invest in swaps. In addition to
general risks associated with derivatives described above, swap agreements
involve the risk that the party with whom a fund has entered into the swap will
default on its obligation to pay a fund and the risk that a fund will not be
able to meet its obligations to pay the other party to the agreement. Swaps
entered into by a fund may include, but are not limited to, interest rate swaps,
total return swaps and/or credit default swaps. In an interest rate swap
transaction, two parties exchange rights to receive interest payments, such as
exchanging the right to receive floating rate payments based on a reference
interest rate for the right to receive fixed rate payments. In addition to the
general risks associated with derivatives and swaps described above, interest
rate swaps are subject to interest rate risk and credit risk. In a total return
swap transaction, one party agrees to pay another party an amount equal to the
total return on a reference asset during a specified period of time in return
for periodic payments based on a fixed or variable interest rate or on the total
return from a different reference asset. In addition to the general risks
associated with derivatives and swaps described above, total return swaps could
result in losses if the reference asset does not perform as anticipated and
these swaps can have the potential for unlimited losses. In a credit default
swap transaction, one party makes one or more payments over the term of the
contract to the counterparty, provided that no event of default with respect to
a specific obligation or issuer has occurred. In return, upon any event of
default, such party would receive from the counterparty a payment equal to the
par (or other agreed-upon) value of such specified obligation. In addition to
general risks associated with derivatives and swaps described above, credit
default swaps involve special risks because they are difficult to value, are
highly susceptible to liquidity and credit risk, and generally pay a return to
the party that has paid the premium only in the event of an actual default by
the issuer of the underlying obligation (as opposed to a credit downgrade or
other indication of financial difficulty).

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FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Certain funds held by a trust
may engage in forward foreign currency exchange transactions. Forward foreign
exchange transactions are contracts to purchase or sell a specified amount of a
specified currency or multinational currency unit at a price and future date set
at the time of the contract. Forward foreign currency exchange contracts do not
eliminate fluctuations in the value of non-U.S. securities but rather allow a
fund to establish a fixed rate of exchange for a future point in time. This
strategy can have the effect of reducing returns and minimizing opportunities
for gain.

INDEXED AND INVERSE SECURITIES. Certain funds held by a trust may invest
in indexed and inverse securities. In addition to general risks associated with
derivatives described above, indexed and inverse securities are subject to risk
with respect to the value of the particular index. These securities are subject
to leverage risk and correlation risk. Certain indexed and inverse securities
have greater sensitivity to changes in interest rates or index levels than other
securities, and a fund's investment in such instruments may decline
significantly in value if interest rates or index levels move in a way a fund's
management does not anticipate.

FUTURES. Certain funds held by a trust may engage in futures transactions.
In addition to general risks associated with derivatives described above, the
primary risks associated with the use of futures contracts and options are
(a) the imperfect correlation between the change in market value of the
instruments held by a fund and the price of the futures contract or option;
(b) possible lack of a liquid secondary market for a futures contract and the
resulting inability to close a futures contract when desired; (c) losses caused
by unanticipated market movements, which are potentially unlimited; (d) the
investment adviser's inability to predict correctly the direction of securities
prices, interest rates, currency exchange rates and other economic factors; and
(e) the possibility that the counterparty will default in the performance of its
obligations. While futures contracts are generally liquid instruments, under
certain market conditions they may become illiquid. Futures exchanges may
impose daily or intra-day price change limits and/or limit the volume of
trading. Additionally, government regulation may further reduce liquidity
through similar trading restrictions.

REPURCHASE AGREEMENT RISK. A repurchase agreement is a form of short-term
borrowing where a dealer sells securities to investors (usually on an overnight
basis) and buys them back the following day. If the other party to a repurchase
agreement defaults on its obligation under such agreement, a fund held by a
trust may suffer delays and incur costs or lose money in exercising its rights
under the agreement. If the seller fails to repurchase the security under a
repurchase agreement and the market value of such security declines, such fund
may lose money.

SHORT SALES RISK. Certain funds held by a trust may engage in short sales.
Because making short sales in securities that it does not own exposes a fund to
the risks associated with those securities, such short sales involve speculative
exposure risk. A fund will incur a loss as a result of a short sale if the
price of the security increases between the date of the short sale and the date
on which such fund replaces the security sold short. A fund will realize a gain
if the security declines in price between those dates. As a result, if a fund
makes short sales in securities that increase in value, it will likely
underperform similar funds that do not make short sales in securities they do
not own. There can be no assurance that a fund will be able to close

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out a short sale position at any particular time or at an acceptable price.
Although a fund's gain is limited to the amount at which it sold a security
short, its potential loss is limited only by the maximum attainable price of the
security, less the price at which the security was sold. Short sale
transactions involve leverage because they can provide investment exposure in an
amount exceeding the initial investment. A fund may also pay transaction costs
and borrowing fees in connection with short sales.

COMMODITIES. Certain funds held by a trust may have exposure to the
commodities market. This exposure could expose such funds and to greater
volatility than investment in other securities. The value of investments
providing commodity exposure may be affected by changes in overall market
movements, commodity index volatility, changes in interest rates, or factors
affecting a particular industry or commodity, such as drought, floods, weather,
embargoes, tariffs and international economic, political and regulatory
developments.

CONCENTRATION RISK. Concentration risk is the risk that the value of a
trust may be more susceptible to fluctuations based on factors that impact a
particular sector because the trust provides exposure to investments
concentrated within a particular sector or sectors.

CONSUMER DISCRETIONARY AND CONSUMER STAPLES SECTORS. The profitability of
companies that manufacture or sell consumer products or provide consumer
services will be affected by various factors including the general state of the
economy and consumer spending trends. In the past, there have been major changes
in the retail environment due to the declaration of bankruptcy by some of the
major corporations involved in the retail industry, particularly the department
store segment. The continued viability of the retail industry will depend on the
industry's ability to adapt and to compete in changing economic and social
conditions, to attract and retain capable management, and to finance expansion.
Weakness in the banking or real estate industry, a recessionary economic climate
with the consequent slowdown in employment growth, less favorable trends in
unemployment or a marked deceleration in real disposable personal income growth
could result in significant pressure on both consumer wealth and consumer
confidence, adversely affecting consumer spending habits. In addition,
competitiveness of the retail industry will require large capital outlays for
investment in the installation of automated checkout equipment to control
inventory, to track the sale of individual items and to gauge the success of
sales campaigns. Increasing employee and retiree benefit costs may also have an
adverse effect on the industry. In many sectors of the retail industry,
competition may be fierce due to market saturation, converging consumer tastes
and other factors. Many retailers are involved in entering global markets which
entail added risks such as sudden weakening of foreign economies, difficulty in
adapting to local conditions and constraints and added research costs.

ENERGY SECTOR. Energy companies may include but are not limited to
companies involved in: production, generation, transmission, marketing, control,
or measurement of energy; the provision of component parts or services to
companies engaged in the above activities; energy research or experimentation;
and environmental activities related to the solution of energy problems, such as
energy conservation and pollution control.

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The securities of companies in the energy field are subject to changes in
value and dividend yield which depend, to a large extent, on the price and
supply of energy fuels. Swift price and supply fluctuations may be caused by
events relating to international politics, energy conservation, the success of
exploration projects, and tax and other regulatory policies of various
governments. As a result of the foregoing, the securities issued by energy
companies may be subject to rapid price volatility.

Any future scientific advances concerning new sources of energy and fuels
or legislative changes relating to the energy sector or the environment could
have a negative impact on the petroleum products sector. While legislation has
been enacted to deregulate certain aspects of the oil sector, no assurances can
be given that new or additional regulations will not be adopted. Each of the
problems referred to could adversely affect the financial stability of the
issuers of any petroleum sector securities.

FINANCIALS SECTOR. Companies in the financials sector may include banks
and their holding companies, finance companies, investment managers, broker-
dealers, insurance and reinsurance companies and mortgage REITs. Banks and their
holding companies are especially subject to the adverse effects of economic
recession; volatile interest rates; portfolio concentrations in geographic
markets and in commercial and residential real estate loans; and competition
from new entrants in their fields of business. In addition, banks and their
holding companies are extensively regulated at both the federal and state level
and may be adversely affected by increased regulations. Banks face increased
competition from nontraditional lending sources as regulatory changes permit new
entrants to offer various financial products. Technological advances allow these
nontraditional lending sources to cut overhead and permit the more efficient use
of customer data. Banks are already facing tremendous pressure from mutual
funds, brokerage firms and other providers in the competition to furnish
services that were traditionally offered by banks.

Companies engaged in investment management and broker-dealer activities are
subject to volatility in their earnings and share prices that often exceeds the
volatility of the equity market in general. Adverse changes in the direction of
the stock market, investor confidence, equity transaction volume, the level and
direction of interest rates and the outlook of emerging markets could adversely
affect the financial stability, as well as the stock prices, of these companies.
Additionally, competitive pressures, including increased competition with new
and existing competitors, the ongoing commoditization of traditional businesses
and the need for increased capital expenditures on new technology could
adversely impact the profit margins of companies in the investment management
and brokerage industries. Companies involved in investment management and
broker-dealer activities are also subject to extensive regulation by government
agencies and self-regulatory organizations, and changes in laws, regulations or
rules, or in the interpretation of such laws, regulations and rules could
adversely affect the stock prices of such companies.

Companies involved in the insurance, reinsurance and risk management
industry underwrite, sell or distribute property, casualty and business
insurance. Many factors affect insurance, reinsurance and risk management
company profits, including but not limited to interest rate movements, the
imposition of premium rate caps, a misapprehension of the risks

-36-

involved in given underwritings, competition and pressure to compete globally,
weather catastrophes or other natural or man-made disasters and the effects of
client mergers. Individual companies may be exposed to material risks including
reserve inadequacy and the inability to collect from reinsurance carriers.
Insurance companies are subject to extensive governmental regulation, including
the imposition of maximum rate levels, which may not be adequate for some lines
of business. Proposed or potential tax law changes may also adversely affect
insurance companies' policy sales, tax obligations and profitability. In
addition to the foregoing, profit margins of these companies continue to shrink
due to the commoditization of traditional businesses, new competitors, capital
expenditures on new technology and the pressure to compete globally.

In addition to the normal risks of business, companies involved in the
insurance and risk management industry are subject to significant risk factors,
including those applicable to regulated insurance companies, such as: the
inherent uncertainty in the process of establishing property-liability loss
reserves, and the fact that ultimate losses could materially exceed established
loss reserves, which could have a material adverse effect on results of
operations and financial condition; the fact that insurance companies have
experienced, and can be expected in the future to experience, catastrophic
losses, which could have a material adverse impact on their financial
conditions, results of operations and cash flow; the inherent uncertainty in the
process of establishing property-liability loss reserves due to changes in loss
payment patterns caused by new claim settlement practices; the need for
insurance companies and their subsidiaries to maintain appropriate levels of
statutory capital and surplus, particularly in light of continuing scrutiny by
rating organizations and state insurance regulatory authorities, and in order to
maintain acceptable financial strength or claims-paying ability ratings; the
extensive regulation and supervision to which insurance companies are subject,
and various regulatory and other legal actions; the adverse impact that
increases in interest rates could have on the value of an insurance company's
investment portfolio and on the attractiveness of certain of its products; and
the uncertainty involved in estimating the availability of reinsurance and the
collectability of reinsurance recoverables.

The state insurance regulatory framework has, during recent years, come
under increased federal scrutiny, and certain state legislatures have considered
or enacted laws that alter and, in many cases, increase state authority to
regulate insurance companies and insurance holding company systems. Further, the
National Association of Insurance Commissioners ("NAIC") and state insurance
regulators are re-examining existing laws and regulations, specifically focusing
on insurance companies, interpretations of existing laws and the development of
new laws. In addition, Congress and certain federal agencies have investigated
the condition of the insurance industry in the United States to determine
whether to promulgate additional federal regulation. The Sponsor is unable to
predict whether any state or federal legislation will be enacted to change the
nature or scope of regulation of the insurance industry, or what effect, if any,
such legislation would have on the industry.

All insurance companies are subject to state laws and regulations that
require diversification of their investment portfolios and limit the amount of
investments in certain investment categories. Failure to comply with these laws
and regulations would cause non-

-37-

conforming investments to be treated as non-admitted assets for purposes of
measuring statutory surplus and, in some instances, would require divestiture.

Mortgage REITs engage in financing real estate, purchasing or originating
mortgages and mortgage-backed securities and earning income from the interest on
these investments. Such REITs face risks similar to those of other financial
firms, such as changes in interest rates, general market conditions and credit
risk, in addition to risks associated with an investment in real estate. Risk
associated with real estate investments include, among other factors, changes in
general U.S., global and local economic conditions, declines in real estate
values, changes in the financial health of tenants, overbuilding and increased
competition for tenants, oversupply of properties for sale, changing
demographics, changes in interest rates, tax rates and other operating expenses,
changes in government regulations, faulty construction and the ongoing need for
capital improvements, regulatory and judicial requirements including relating to
liability for environmental hazards, changes in neighborhood values and buyer
demand, and the unavailability of construction financing or mortgage loans at
rates acceptable to developers.

The financial services sector was adversely affected by global developments
over the last several years stemming from the financial crisis including
recessionary conditions, deterioration in the credit markets and recurring
concerns over sovereign debt. These events led to considerable write-downs in
the values of many assets held by financial services companies and a tightening
of credit markets that was marked by a general unwillingness of many entities to
extend credit. These factors caused a significant need for many financial
services companies to raise capital to meet obligations and to satisfy
regulatory and contractual capital requirements. Many well-established financial
services companies were forced to seek additional capital through issuances of
new preferred or common equity and certain companies were forced to agree to be
acquired by other companies (or sell some or all of their assets to other
companies). In some cases government assistance, guarantees or direct
participation in investments or acquisitions were necessary to facilitate these
transactions. In addition, concerns regarding these issues and their potential
negative impact to the U.S. and global economies resulted in extreme volatility
in securities prices and uncertain market conditions.

In response to these issues, government authorities in the U.S. and other
countries have initiated and may continue to engage in administrative and
legislative action, including the Dodd-Frank Wall Street Reform and Consumer
Protection Act and resulting rulemaking. These government actions include, but
are not limited to, restrictions on investment activities; increased oversight,
regulation and involvement in financial services company practices; adjustments
to capital requirements; the acquisition of interests in and the extension of
credit to private entities; and increased investigation efforts into the actions
of companies and individuals in the financial service industry. No one can
predict any action that might be taken or the effect any action or inaction will
have. It is possible that any actions taken by government authorities will not
address or help improve the state of these difficulties as intended. No one can
predict the impact that these difficulties will have on the economy, generally
or financial services companies. These difficulties and corresponding government
action or inaction may have far reaching consequences and your investment may be
adversely affected by such developments.

-38-

HEALTH CARE SECTOR. Healthcare companies involved in advanced medical
devices and instruments, drugs and biotech, managed care, hospital
management/health services and medical supplies have potential risks unique to
their sector of the healthcare field. These companies are subject to
governmental regulation of their products and services, a factor which could
have a significant and possibly unfavorable effect on the price and availability
of such products or services. Furthermore, such companies face the risk of
increasing competition from new products or services, generic drug sales,
termination of patent protection for drug or medical supply products and the
risk that technological advances will render their products obsolete. The
research and development costs of bringing a drug to market are substantial, and
include lengthy governmental review processes with no guarantee that the product
will ever come to market. Many of these companies may have losses and not offer
certain products for several years. Such companies may also have persistent
losses during a new product's transition from development to production, and
revenue patterns may be erratic. In addition, healthcare facility operators may
be affected by events and conditions including, among other things, demand for
services, the ability of the facility to provide the services required,
physicians' confidence in the facility, management capabilities, competition
with other hospitals, efforts by insurers and governmental agencies to limit
rates, legislation establishing state rate-setting agencies, expenses,
government regulation, the cost and possible unavailability of malpractice
insurance and the termination or restriction of governmental financial
assistance, including that associated with Medicare, Medicaid and other similar
third-party payor programs.

Legislative proposals concerning healthcare are proposed in Congress from
time to time. These proposals span a wide range of topics, including cost and
price controls (which might include a freeze on the prices of prescription
drugs), national health insurance incentives for competition in the provision of
healthcare services, tax incentives and penalties related to healthcare
insurance premiums and promotion of prepaid healthcare plans.

INDUSTRIALS SECTOR. General risks of industrials companies include the
general state of the economy, intense competition, consolidation, domestic and
international politics, excess capacity and consumer spending trends. In
addition, capital goods companies may also be significantly affected by overall
capital spending levels, economic cycles, technical obsolescence, delays in
modernization, limitations on supply of key materials, labor relations,
government regulations, government contracts and ecommerce initiatives.
Furthermore, certain companies involved in the industry have also faced scrutiny
for alleged accounting irregularities that may have led to the overstatement of
their financial results, and other companies in the industry may face similar
scrutiny.

Industrials companies may also be affected by factors more specific to
their individual industries. Industrial machinery manufacturers may be subject
to declines in commercial and consumer demand and the need for modernization.
Aerospace and defense companies may be influenced by decreased demand for new
equipment, aircraft order cancellations, disputes over or ability to obtain or
retain government contracts, or changes in government budget priorities, changes
in aircraft-leasing contracts and cutbacks in profitable business travel.

INFORMATION TECHNOLOGY SECTOR. Information technology companies generally
include companies involved in the development, design, manufacture and sale of
computers and

-39-

peripherals, software and services, data networking and communications
equipment, internet access and information providers, semiconductors and
semiconductor equipment and other related products, systems and services. The
market for these products, especially those specifically related to the
internet, may be characterized by rapidly changing technology, product
obsolescence, cyclical markets, evolving industry standards and frequent new
product introductions. The success of companies in this sector depends, in
substantial part, on the timely and successful introduction of new products. An
unexpected change in one or more of the technologies affecting a company's
products or in the market for products based on a particular technology could
have a material adverse effect on an issuer's operating results. Furthermore,
there can be no assurance that any particular company will be able to respond in
a timely manner to compete in the rapidly developing marketplace.

Factors such as announcements of new products or development of new
technologies and general conditions of the industry have caused and are likely
to cause the market price of high-technology common stocks to fluctuate
substantially. In addition, technology company stocks have experienced extreme
price and volume fluctuations that often have been unrelated to the operating
performance of such companies. Such market volatility may adversely affect the
market price of shares of these companies. Some key components of certain
products of technology issuers are currently available only from single sources.

There can be no assurance that in the future suppliers will be able to meet
the demand for components in a timely and cost effective manner. Accordingly, an
issuer's operating results and customer relationships could be adversely
affected by either an increase in price for, or an interruption or reduction in
supply of, any key components. Additionally, many technology issuers are
characterized by a highly concentrated customer base consisting of a limited
number of large customers who may require product vendors to comply with
rigorous industry standards. Any failure to comply with such standards may
result in a significant loss or reduction of sales. Because many products and
technologies of technology companies are incorporated into other related
products, such companies are often highly dependent on the performance of the
personal computer, electronics and telecommunications industries. There can be
no assurance that these customers will place additional orders, or that an
issuer will obtain orders of similar magnitude as past orders from other
customers. Similarly, the success of certain technology companies is tied to a
relatively small concentration of products or technologies. Accordingly, a
decline in demand of such products, technologies or from such customers could
have a material adverse impact on companies in this sector.

Many technology companies rely on a combination of patents, copyrights,
trademarks and trade secret laws to establish and protect their proprietary
rights in their products and technologies. There can be no assurance that the
steps taken to protect proprietary rights will be adequate to prevent
misappropriation of technology or that competitors will not independently
develop technologies that are substantially equivalent or superior to an
issuer's technology. In addition, due to the increasing public use of the
internet, it is possible that other laws and regulations may be adopted to
address issues such as privacy, pricing, characteristics, and quality of
internet products and services. The adoption of any such laws could have a
material adverse impact on the issuers of securities in the information
technology sector.

-40-

Like many areas of technology, the semiconductor business environment is
highly competitive, notoriously cyclical and subject to rapid and often
unanticipated change. Recent industry downturns have resulted, in part, from
weak pricing, persistent overcapacity, slowdown in Asian demand and a shift in
retail personal computer sales toward the low-end segment. Industry growth is
dependent upon several factors, including: the rate of global economic
expansion; demand for products such as personal computers and networking and
communications equipment; excess productive capacity and the resultant effect on
pricing; and the rate of growth in the market for low-priced personal computers.

MATERIALS SECTOR. Companies in the basic materials sector are engaged in
the manufacture, mining, processing, or distribution of raw materials and
intermediate goods used in the industrial sector. These may include materials
and products such as chemicals, commodities, forestry products, paper products,
copper, iron ore, nickel, steel, aluminum, precious metals, textiles, cement,
and gypsum. Basic materials companies may be affected by the volatility of
commodity prices, exchange rates, import controls, worldwide competition,
depletion of resources, and mandated expenditures for safety and pollution
control devices. In addition, they may be adversely affected by technical
progress, labor relations, and governmental regulation. These companies are also
at risk for environmental damage and product liability claims. Production of
industrial materials often exceeds demand as a result of over-building or
economic downturns, which may lead to poor investment returns.

REAL ESTATE SECTOR. Real estate companies include REITs and real estate
management and development companies. Companies in the real estate sector may
be exposed to the risks associated with the ownership of real estate which
include, among other factors, changes in general U.S., global and local economic
conditions, declines in real estate values, changes in the financial health of
tenants, overbuilding and increased competition for tenants, oversupply of
properties for sale, changing demographics, changes in interest rates, tax rates
and other operating expenses, changes in government regulations, faulty
construction and the ongoing need for capital improvements, regulatory and
judicial requirements including relating to liability for environmental hazards,
changes in neighborhood values and buyer demand, and the unavailability of
construction financing or mortgage loans at rates acceptable to developers.

-41-

in the value of such real estate and increase the risk of a decline in the value
of the securities. REITs are also subject to defaults by borrowers and the
market's perception of the REIT industry generally. Because of their structure,
and a current legal requirement that they distribute at least 90% of their
taxable income to shareholders annually, REITs require frequent amounts of new
funding, through both borrowing money and issuing stock. Thus, REITs
historically have frequently issued substantial amounts of new equity shares (or
equivalents) to purchase or build new properties. This may adversely affect REIT
equity share market prices. Both existing and new share issuances may have an
adverse effect on these prices in the future, especially if REITs issue stock
when real estate prices are relatively high and stock prices are relatively low.

Real estate management and development companies often are dependent upon
specialized management skills, have limited diversification and are subject to
risks inherent in operating and financing a limited number of projects. To the
extent such companies focus their business on a particular geographic region of
a country, they may be subject to greater risks of adverse developments in that
area. These companies may also be subject to heavy cash flow dependency and
defaults by borrowers. Certain real estate management and development companies
have a relatively small market capitalization, which may tend to increase the
volatility of the market price of these securities.

TELECOMMUNICATION SERVICES SECTOR. General risks of telecommunication
services companies include rapidly changing technology, rapid product
obsolescence, loss of patent protection, cyclical market patterns, evolving
industry standards and frequent new product introductions. Certain
communications/bandwidth companies are subject to substantial governmental
regulation, which among other things, regulates permitted rates of return and
the kinds of services that a company may offer. Such companies can also be
negatively impacted by any failure to obtain, or delays in obtaining, financial
or regulatory approval for new products or services. Companies in this sector
are subject to fierce competition for market share from existing competitors and
new market entrants. Such competitive pressures are intense and communications
stocks can experience extreme volatility.

Companies in the telecommunications sector may encounter distressed cash
flows and heavy debt burdens due to the need to commit substantial capital to
meet increasing competition, particularly in formulating new products and
services using new technology. Technological innovations may also make the
existing products and services of telecommunications companies obsolete. In
addition, companies in this sector can be impacted by a lack of investor or
consumer acceptance of new products, changing consumer preferences and lack of
standardization or compatibility with existing technologies making
implementation of new products more difficult.

UTILITIES SECTOR. General problems of utility companies include risks of
increases in fuel and other operating costs; restrictions on operations and
increased costs and delays as a result of environmental, nuclear safety and
other regulations; regulatory restrictions on the ability to pass increasing
wholesale costs along to the retail and business customer; energy conservation;
technological innovations which may render existing plants, equipment or
products obsolete; the effects of local weather, maturing markets and difficulty
in expanding to new markets due to regulatory and other factors; natural or
manmade disasters; difficulty obtaining adequate returns on invested capital;
the high cost of obtaining financing during periods of inflation; difficulties
of

-42-

the capital markets in absorbing utility debt and equity securities; and
increased competition. In addition, taxes, government regulation, international
politics, price and supply fluctuations, and volatile interest rates and energy
conservation may cause difficulties for utilities. All of such issuers
experience certain of these problems to varying degrees.

CALIFORNIA. The information provided below is only a brief summary of the
complex factors affecting the financial situation in California and is derived
from sources that are generally available to investors and are believed to be
accurate. Except where otherwise indicated, the information is based on
California's 2014-15 fiscal year running from July 1, 2014 to June 30, 2015. No
independent verification has been made of the accuracy or completeness of any of
the following information. It is based in part on information obtained from
various state and local agencies in California or contained in official
statements for various California municipal obligations.

Economic Outlook. The U.S. economy completed its sixth year of recovery as
California ended its fiscal year on June 30, 2015. California's income growth
outperformed that of the nation as a whole during the 2014-2015 fiscal year.
The state's total personal income increased 5.5% during the 2014-15 fiscal year,
compared to the 4.6% increase the nation experienced. Auto registrations
increased by 9.9% in California for a total of 1.9 million registered vehicles
for the 2014-15 fiscal year. The state's real estate market showed signs of
continued growth at the end of the 2014-15 fiscal year compared to the market a
year earlier. As of June 2015, prices for existing single-family homes were
7.0% higher and sales were up 11% compared to the prior year. Homebuilding
continued in California at an accelerated rate, with permits issued during the
2014-2015 fiscal year increasing by 10% to nearly 94,000 units. Nonresidential
construction increased by 4.1%, with the value of nonresidential permits
increasing to $23.5 billion.

California's labor market continued to add jobs during the 2014-2015 fiscal
year. Total employment for June 2015 rose to 17.8 million jobs, a gain of more
than 481,000 jobs from June 2014. Mirroring that increase, California's
unemployment rate fell from 7.5% at June 2014 to 6.3% at June 2015.

Net Assets. The primary government's net position as of the end of the
2014-15 fiscal year was a net deficit position of $41 billion. The total net
deficit position was reduced by $103.0 billion for net investment in capital
assets and by $31.1 billion for restricted net position, yielding a negative
unrestricted net position of $175.1 billion. Restricted net position is
dedicated for specified uses and is not available to fund current activities.
More than half of the negative $175.1 billion consisted of unfunded, employee-
related, long-term liabilities that are recognized as soon as an obligation has
been incurred, even though payment will occur over many future periods. Another
38.3% ($67.1 billion) consist of outstanding bonded debt issued to build capital
assets for school districts and other local governmental entities. The bonded
debt reduced the unrestricted net position; however, local governments, not the
state, own the capital assets that would offset this reduction.

The primary government's combined net deficit position (governmental and
business-type activities) as originally reported at June 30, 2014, decreased by
$48.3 (or more than 659%)

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to a negative $41.0 billion a year later, but increased $15.8 billion (27.8%)
when adjusted for restatements.

California General Fund. The state's main operating fund (the "California
General Fund") ended the 2014-15 fiscal year with assets of $22.2 billion;
liabilities and deferred inflows of resources of $24.4 billion; and non-
spendable, restricted, and committed fund balances of $53 million, $2.3 billion,
and $103 million, respectively, leaving the California General Fund with a
negative unassigned fund balance of $4.7 billion. Total assets of the
California General Fund increased by $2.8 billion (14.3%) over the 2013-14
fiscal year, while the total liabilities and deferred inflows of resources of
the California General Fund decreased by $2.4 billion (9.1%). Total net fund
deficit balance decreased by $5.2 billion (70.1%).

As of the end of the 2014-15 fiscal year, the California General Fund had
an excess of revenues over expenditures of $9.6 billion ($116.8 billion in
revenues and $107.2 billion in expenditures). Approximately $111.3 billion
(95.3%) of California General Fund revenue was derived from the state's largest
three taxes--personal income taxes ($76.9 billion), sales and use taxes ($23.6
billion), and corporation taxes ($10.8 billion). As a result of fund
classifications made to comply with governmental accounting standards, a total
of $336 million in revenue, essentially all from unemployment programs, was
included in the California General Fund. These revenues were not considered
California General Fund revenues for any budgetary purposes or for the state's
"Budgetary/Legal Basis Annual Report." During the 2014-15 fiscal year, total
California General Fund revenue increased by $12.6 billion (12.1%). The
increase was a result of increases in personal income taxes of $9.3 billion
(13.8%), sales and use taxes of $1.4 billion (6.1%), and corporation taxes of
$1.5 billion (16.6%).

California General Fund expenditures increased by $11.8 billion (12.4%)
during the 2014-15 fiscal year. The largest increases were in education and
general government expenditures, which were up $9.7 billion and $1 billion,
respectively. The California General Fund's deficit for the 2014-15 fiscal year
was $2.2 billion, an improvement of $5.2 billion from the prior year's restated
ending fund deficit of $7.4 billion.

Budget Outlook. California enacted Budget Act of 2015 (the "California
Budget Act") for the 2014-15 fiscal year on June 24, 2015. The California
Budget Act appropriated $167.6 billion: $115.4 billion from the California
General Fund, $45.7 billion from special funds and $6.5 billion from bond funds.
The California General Fund's budgeted expenditures increased $896 million
(0.8%) over the previous year's California General Fund budget. The California
Budget Act projected California General Fund's revenue to be $115.0 billion
after a projected $1.9 billion transfer to the "Budget Stabilization Account."
California General Fund revenue comes predominantly from taxes, personal income
taxes were projected to provide 66.5% of total revenue for 2015-16 fiscal year.
California's major taxes (personal income, sales and use, and corporation taxes)
were projected to supply approximately 96.9% of the California General Fund's
resources in the 2015-16 fiscal year.

The spending plan for 2015-2016 fiscal year implemented the first year of
Proposition 2, approved by voters in November 2014, which uses spikes in capital
gains to save money for the next recession and to pay down California's debts
and unfunded liabilities. Despite the projected

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$1.9 billion transfer to the Budget Stabilization Account and $1.9 billion
allocated for debt reduction, including special fund loan repayments and a
partial settle-up of Proposition 98 underfunding, the budget projected a surplus
in the California General Fund for the fourth consecutive year. The California
General Fund is projected to end the 2015-2016 fiscal year with $4.6 billion in
total reserves--$3.5 billion in the Budget Stabilization Account and $1.1
billion reserved for economic uncertainties.

Governor Brown released his proposed 2016-17 fiscal year budget on January
7, 2016. The budget restores some previous budget cuts and expands services,
but continues to place strong emphasis on building reserves, paying down
existing obligations, and restoring and upgrading California's infrastructure.
Although a strengthening economy continues to push revenues higher, the
Governor's budget includes provisions for the next recession, as history has
shown that the California General Fund's major revenue source, personal income
taxes, drops precipitously during economic downturns. The budget allocated a
significant portion of discretionary resources to increasing total reserves
beyond constitutional funding requirements such as those required by Proposition
2 and Proposition 98. The budget projects total reserves of $10.2 billion by
the end of the 2016-17 fiscal year--$6 billion in the Budget Stabilization
Account required under Proposition 2 and $2.2 billion in the California General
Fund's reserve for economic uncertainties, and an additional optional reserve of
$2.0 billion. In addition to the required transfer to the Budget Stabilization
Account, Proposition 2 requires an equivalent amount be used to pay down
existing debts and reduce unfunded liabilities in excess of current base
amounts. During the 2016-17 fiscal year, Governor Brown proposes to spend a
total of $1.6 billion to repay some of the California General Fund's loans from
special funds and transportation projects, to partially settle-up previous
Proposition 98 underfunding, and to reduce some of the University of California
employee pension liabilities.

The 2016-17 governor's budget projects that the California General Fund
revenues and transfers to be $120.6 billion and expenditures to be $122.6
billion, with an estimated $3.2 billion year-end balance, which includes the
$2.2 billion reserve for economic uncertainties. In the proposed budget, the
California General Fund began fiscal year 2015-16 with a surplus balance of $3.7
billion; it is projected to begin fiscal year 2016-17 with a surplus of
approximately $5.2 billion. The 2016-17 governor's budget estimated California
General Fund revenues and transfers to be 2.6% more than the revised 2015-16
estimate of $117.5 billion, while the fiscal year 2016-17 expenditures are
estimated to be 5.6% greater than the revised 2015-16 estimate of $116.1
billion.

Capital Assets. The state's investment in capital assets for its
governmental and business-type activities as of the end of the 2014-15 fiscal
year amounted to $132.4 billion (net of accumulated depreciation/amortization).
The state's capital assets include land, state highway infrastructure,
collections, buildings and other depreciable property, intangible assets, and
construction in progress. The buildings and other depreciable property account
includes buildings, improvements other than buildings, equipment, certain
infrastructure assets, certain books, and other capitalized and depreciable
property. Intangible assets include computer software, land use rights,
patents, copyrights, and trademarks. Infrastructure assets are items that
normally are immovable, such as roads and bridges, and can be preserved for a
greater number of years than can most capital assets.

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As of the end of 2014-15 fiscal year, the state's capital assets increased
$7.3 billion (5.8%) over the prior fiscal year. The majority of this increase
occurred in state highway infrastructure, buildings and other depreciable
property, and construction/development in progress. Included in the capital
assets increase is a $3.6 billion beginning balance restatement, primarily for
understated state highway infrastructure construction in progress.

Debt Administration. As of the end of 2014-15 fiscal year, the primary
government had total bonded debt outstanding of $112.2 billion. Of this amount,
$81.1 billion (72.3%) represents general obligation bonds, which are backed by
the full faith and credit of the state. Included in the $81.1 billion of
general obligation bonds is $944 million of Economic Recovery Bonds that are
secured by a pledge of revenues derived from dedicated sales and use taxes and
will be fully paid during fiscal year 2015-2016. As of the end of 2014-15
fiscal year, the current portion of general obligation bonds outstanding was
$3.0 billion and the long-term portion was $78.1 billion. The remaining $31.1
billion (27.7%) of bonded debt outstanding represents revenue bonds, which are
secured solely by specified revenue sources. As of the end of 2014-15 fiscal
year, the portion of revenue bonds outstanding was $1.7 billion and the long-
term portion was $29.4 billion. During the 2014-15 fiscal year, the state
issued $6.6 billion in new general obligation bonds for children's hospitals,
public primary, secondary, community college and university education
facilities, highway safety, traffic reduction, air quality and port security,
transportation, housing and emergency shelters, local and passenger rail
projects, safe drinking water, water quality and supply, flood control, river
and coastal protection, medical research, earthquake safety and public building
rehabilitation, veteran's homes, high-speed passenger train projects, and to
refund previously outstanding general obligation bonds and commercial paper.

Budgetary Control. The California state legislature prepares an annual
budget that contains estimates of revenues and expenditures for the ensuing
fiscal year. This budget is the result of negotiations between the governor and
the California legislature. Throughout the fiscal year, adjustments in the form
of budget revisions, executive orders, and financial legislation agreed to by
the governor and the California legislature are made to the budget. The
California State Controller's Office ("State Controller's Office") is
statutorily responsible for control over revenues due the primary government and
for expenditures of each appropriation contained in the budget. Budgeted
appropriations are the expenditure authorizations that allow state agencies to
purchase or create liabilities for goods and services.

The state's accounting system provides the State Controller's Office with a
centrally-controlled record system to fully account for each budgeted
appropriation, including its unexpended balance, and for all cash receipts and
disbursements. The accounting system is decentralized, meaning the detail of
each control account is maintained by each state agency. During the fiscal year,
the control accounts and the agency accounts are maintained and reconciled on a
cash basis. At the end of the fiscal year, each agency prepares annual accrual
reports for receivables and payables. The State Controller's Office combines
its control account balances with the agency accrual reports to prepare
California's Budgetary/Legal Basis Annual Report. State laws and regulations
that, in some cases, do not fully agree with Generally Accepted Accounting
Principals, govern the methods of accounting for expenditures and revenues in
these reports.

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Cash Management. As of the end of the 2014-2015 fiscal year, there were no
revenue anticipation notes outstanding.

Risk Management. The primary government has elected, with a few
exceptions, to be self-insured against loss or liability. The primary
government generally does not maintain reserves. Losses are covered by
appropriations from each fund responsible for payment in the year in which the
payment occurs. The state has been permissively self-insured and barring any
extraordinary catastrophic event, the potential amount of loss faced by the
state is not considered material in relation to the primary government's
financial position. Generally, the exceptions are when a bond resolution or a
contract requires the primary government to purchase commercial insurance for
coverage against property loss or liability. There have been no significant
reductions in insurance coverage in 2015 from the prior year. In addition, no
insurance settlement from 2012 to 2015 has exceeded insurance coverage. All
claim payments are on a "pay-as-you-go" basis, with workers' compensation
benefits for self-insured agencies initially being paid by California's "State
Compensation Insurance Fund."

The discounted liability for unpaid self-insurance claims of the primary
government was estimated to be $3.8 billion as of the end of the 2014-15 fiscal
year. This estimate was based primarily on actuarial reviews of the state's
workers' compensation program and included indemnity payments to claimants, as
well as all other costs of providing workers' compensation benefits, such as
medical care and rehabilitation. The estimate also included the liability for
unpaid services fees, industrial disability leave benefits, and
incurred-but-not-reported amounts. The estimated total liability of
approximately $5.4 billion was discounted to $3.8 billion using a 3.5% interest
rate. Of the total, $392 million was reported as a current liability, of which
$263 million was included in the California General Fund, $127 million in the
special revenue funds, and $2 million in the internal service funds. The
remaining $3.4 billion was reported as other noncurrent liabilities in the
government-wide statement of net position.

The University of California, a discretely presented component unit, is
self-insured or insured through a wholly-owned captive insurance company for
medical malpractice, workers' compensation, employee health care, and general
liability claims. These risks are subject to various claim and aggregate
limits, with excess liability coverage provided by an independent insurer.
Liabilities are recorded when it is probable that a loss has occurred and the
amount of the loss can be reasonably estimated. These losses include an
estimate for claims that have been incurred but not reported. The estimated
liabilities are based on an independent actuarial determination of the
anticipated future payments, discounted at rates ranging from 2% to 5%.

Ratings. As of October 21, 2016, all outstanding general obligation bonds
of the state of California were rated "AA-" by S&P Global Ratings, a division of
S&P Global, Inc., and "Aa3" by Moody's Investors Service, Inc. Any explanation
concerning the significance of such ratings must be obtained from the rating
agencies. There is no assurance that any ratings will continue for any period
of time or that they will not be revised or withdrawn.

Local Issuances. It should be noted that the creditworthiness of
obligations issued by local California issuers may be unrelated to the
creditworthiness of obligations issued by the state

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of California, and there is no obligation on the part of the state to make
payment on such local obligations in the event of default.

The foregoing information constitutes only a brief summary of some of the
general factors which may impact certain issuers of California bonds and does
not purport to be a complete or exhaustive description of all adverse conditions
to which the issuers of such obligations are subject. Additionally, many
factors including national economic, social and environmental policies and
conditions, which are not within the control of the issuers of such bonds, could
affect or could have an adverse impact on the financial condition of the state
and various agencies and political subdivisions thereof. The sponsor is unable
to predict whether or to what extent such factors or other factors may affect
the issuers of the bonds, the market value or marketability of such bonds or the
ability of the respective issuers of such bonds to pay interest on or principal
of such bonds.

NEW JERSEY. Economic Outlook. The State's economic recovery continued,
having added 64,500 new private sector jobs over the course of 2015. The
increase in payrolls was led by the following sectors - education and health
services; trade, transportation and utilities; and construction. The State
gained 222,000 new private sector jobs from the start of February 2010 through
the end of 2015. The State's unemployment rate continued to decline over the
course of 2015, falling from 6.3 percent in December 2014 to 5.1 percent in
December 2015. The national unemployment rate was 5.0 percent as of December
2015.

Other measures of the State's economy, also, showed signs of continued
improvement. The State's housing market continued to expand with existing home
sales in 2015 12.3 percent higher than a year ago and the number of residential
building permits issued by the State 10.4 percent higher than a year ago. New
car sales in 2015 were 5.2 percent higher than a year ago. Aggregate personal
income, which includes wage income as well as income from other sources such as
assets or transfers, grew for a tenth consecutive quarter and by the third
quarter of 2015 had reached an all-time high.

Revenues and Expenditures. During Fiscal Year 2015, State revenues,
including transfers, totaled $60.6 billion or an increase of $3.1 billion when
compared to the prior fiscal year. This increase in total revenues is primarily
attributable to an overall increase in general taxes, primarily the State's
Gross Income Tax and Corporate Business Tax resulting from a strengthening of
the economy. General taxes totaled $30.8 billion and accounted for 50.8 percent
of total State revenues for Fiscal Year 2015. The State's Gross Income Tax
totaled $13.3 billion, the Sales and Use Tax totaled $9.1 billion, and the
Corporation Business Tax totaled $2.7 billion. The State's three major taxes
comprised 81.6 percent of the total general taxes that were collected during
Fiscal Year 2015. The State's economy showed improvement, as indicated by the
$1.9 billion increase in general taxes when compared to Fiscal Year 2014.

Fiscal Year 2015 expenses totaled $66.7 billion, an increase of $5.5
billion in comparison to the prior fiscal year. State spending increased by
$3.4 billion in government direction, management, and control mainly due to the
increase in the pension expense based on the requirements of Governmental
Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial
Reporting for Pensions, $2.0 billion in physical and mental health

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predominately attributable to Medicaid expansion, and $778.6 million in
educational, cultural, and intellectual development.

New Jersey General Fund. The General Fund is the State's chief operating
fund and is the fund into which all State revenues, not otherwise restricted by
statute, are deposited. The General Fund's ending fund balance totaled $4.5
billion of which $806.4 million represented unassigned fund balance.

On a budgetary basis, general revenues of $35.2 billion were $3.0 billion
lower than the final budget. The negative variance was the result of unearned
federal and other grant revenues of $2.5 billion and declines of $0.5 billion in
other revenues. Federal and other grant revenues are not earned unless there
has been a grant award and eligible grant expenses incurred. To the extent that
federal and grant appropriations are made in anticipation of grant awards and
the incurrence of grant expenditures, grant revenues are budgeted.

Total expenditures were $3.3 billion lower than original appropriations as
set forth in the annual Appropriations Act plus supplemental appropriations
enacted during the fiscal year. A major cause for under-spending resulted from
the overestimate of federal funds. This practice allows the State to receive
the maximum federal dollars that become available. During Fiscal Year 2015, the
State's appropriation of federal funds and other grants exceeded expenditures by
$2.5 billion. These excess appropriations are available for use in future
years. From a Fiscal Year 2015 program perspective, under-spending transpired
in community development and environmental management ($857.3 million); physical
and mental health ($702.7 million); economic planning, development, and security
($496.8 million); public safety and criminal justice ($444.7 million);
government direction, management, and control ($325.5 million); educational,
cultural, and intellectual development ($186.4 million); special government
services ($180.1 million); and transportation programs ($105.4 million).

Net Assets. The primary government's assets and deferred outflows of
resources totaled $46.7 billion, an increase of $6.5 billion from the prior
fiscal year. As of June 30, 2015, liabilities and deferred inflows of resources
exceeded assets and deferred outflows of resources by $113.9 billion. The
State's unrestricted net position, which represents net assets that have no
statutory commitments and are available for discretionary use, totaled a
negative $127.9 billion. The negative balance is primarily a result of the
State implementing GASB Statement No. 68 and the State's recognition of other
postemployment benefits under GASB Statement No. 45, Accounting and Financial
Reporting by Employers for Postemployment Benefits Other than Pensions.
Financing activities that have contributed to the State's negative unrestricted
net position amount include liabilities from pension obligation bonds, the
funding of a portion of local elementary and high school construction, and the
securitization of a major portion of annual tobacco master settlement agreement
receipts with no corresponding assets.

Changes in Net Assets. The State's Fiscal Year 2015 net position decreased
by $6.1 billion. Approximately 50.8 percent of the State's total revenues came
from general taxes, while 29.0 percent was derived from operating grants.
Charges for services amounted to 18.2 percent of total revenues, while other
items such as capital grants and miscellaneous revenues accounted for the
remainder. State expenses cover a range of services. The largest expense, 24.7
percent,

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was for educational, cultural, and intellectual development, which includes
approximately $310.1 million disbursed by the New Jersey Schools Development
Authority (a blended component unit) to help finance school facilities
construction. Government direction, management, and control amounted to 22.7
percent of total expenses, while physical and mental health amounted to 22.4
percent. Other major expenditures focused on economic planning, development,
and security and public safety and criminal justice. During Fiscal Year 2015,
governmental activity expenses exceeded program revenues. This imbalance was
mainly funded through $32.9 billion of general revenues (mostly taxes and
transfers). The remaining $6.7 billion resulted in a decrease in net position.
Offsetting the governmental net position decrease, Business-type Activities
reflected a net position increase of $631.4 million as the Unemployment
Compensation Fund's available resources exceeded the need to pay claims.

Debt Administration. As of June 30, 2015, New Jersey's outstanding long-
term obligations for governmental activities totaled $153.5 billion, a $9.9
billion increase over the prior fiscal year. Of the $9.9 billion increase, $8.5
billion is attributable to increases in the Net Pension Liability and Net Other
Postemployment Benefits (OPEB) Obligation. Long-term bonded obligations totaled
$43.2 billion, while other long-term obligations totaled $110.3 billion. In
addition, the State has $4.8 billion of legislatively authorized bonding
capacity that has not yet been issued. As of June 30, 2015, the legislatively
authorized but unissued debt decreased by $2.3 billion. In fiscal year 2015,
the State implemented GASB Statement No. 68 which required the State to record
its proportionate share of the Net Pension Liability for all State retirement
systems. Only fiscal year 2014 was restated. Therefore, comparisons to fiscal
years 2011 to 2013 are incompatible. The State's long-term obligations for the
past five fiscal years are shown below.

Ratings. As of October 21, 2016 all outstanding general obligation bonds
of the State of New Jersey were rated "A" by S&P Global Ratings a division of
S&P Global, Inc. and "A2" by Moody's Investors Service, Inc. Any explanation
concerning the significance of such ratings must be obtained from the rating
agencies. There is no assurance that any ratings will continue for any period
of time or that they will not be revised or withdrawn.

Local Issuances. It should be noted that the creditworthiness of
obligations issued by local New Jersey issuers may be unrelated to the
creditworthiness of obligations issued by the State of New Jersey, and there is
no obligation on the part of the state to make payment on such local obligations
in the event of default.

The foregoing information constitutes only a brief summary of some of the
general factors which may impact certain issuers of bonds and does not purport
to be a complete or exhaustive description of all adverse conditions to which
the issuers of such obligations are subject. Additionally, many factors
including national economic, social and environmental policies and conditions,
which are not within the control of the issuers of such bonds, could affect or
could have an adverse impact on the financial condition of the state and various
agencies and political subdivisions thereof. The sponsor is unable to predict
whether or to what extent such factors or other factors may affect the issuers
of the bonds, the market value or marketability of such bonds or the ability of
the respective issuers of such bonds to pay interest on or principal of such
bonds.

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NEW YORK. The information provided below is only a brief summary of the
complex factors affecting the financial situation in New York and is derived
from sources that are generally available to investors and are believed to be
accurate. Except where otherwise indicated, the information is based on New
York's 2015-2016 fiscal year running from April 1, 2015 to March 31, 2016. No
independent verification has been made of the accuracy or completeness of any of
the following information. It is based in part on information obtained from
various state and local agencies in New York or contained in official statements
for various New York municipal obligations.

Economic Condition and Outlook. Overall economic activity, employment and
wages all rose in New York in 2015, but at rates below the nation's. The
nation's real gross domestic product grew by 2.4 percent, the same as in 2014.
In comparison, New York's real gross state product grew at a much slower rate of
1.4 percent. However, this economic growth was marginally stronger than the 1.2
percent gain in 2014. While job growth at the national level accelerated in
2015, increasing by 2.1 percent compared to 1.9 percent in 2014, New York
experienced a slight softening, with employment increasing by 1.7 percent as
compared to 1.8 percent in 2014. Total employment in New York increased to over
9.2 million. Wages at both the national and state levels increased in 2015.
Similar to job growth, gains in wages at the national level (4.6 percent) were
stronger than those in New York (4.1 percent) in 2015. However, both the nation
and New York realized a deceleration in wage growth from 2014 levels.

General Government Results. An operating deficit of $978 million is
reported in the state's general fund ("New York General Fund") for the 2015-2016
fiscal year. As a result, the New York General Fund now has an accumulated fund
balance of $5.1 billion. New York completed its 2015-2016 fiscal year with a
combined governmental funds operating surplus of $408 million as compared to a
combined governmental funds operating surplus in the 2014-2015 fiscal year of
$6.5 billion. The combined operating surplus of $408 million for the 2015-2016
fiscal year included an operating deficit in the New York General Fund of $978
million, an operating surplus in the "Federal Special Revenue Fund" of $1
million, an operating deficit in the "General Debt Service Fund" of $310 million
and an operating surplus in "Other Governmental Funds" of $1.695 billion.

New York's financial position as shown in its governmental funds balance
sheet as of March 31, 2016 includes a fund balance of $14.6 billion comprised of
$43.7 billion of assets less liabilities of $27 billion and deferred inflows of
resources of $2.1 billion. The governmental funds fund balance includes a $5.1
billion accumulated New York General Fund balance.

Overall Financial Position. In the 2015-2016 fiscal year, New York
reported net position of $32.8 billion, comprised of $157 billion in total
assets and $3.1 billion in deferred outflows of resources, less $126.7 billion
in total liabilities and $652 million in deferred inflows of resources.

Net position reported for governmental activities decreased in the
2015-2016 fiscal year by $15 million, decreasing to $32.5 billion from $32.6
billion in the 2014-2015 fiscal year. This decrease is the net result of a
$443 million decrease from 2015-2016 fiscal year operations and a $428 million
increase of beginning net position related to the adoption of Governmental

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Accounting Standards Board Statement (GASBS) No. 68. Unrestricted net position
for governmental activities--the part of net position that can be used to
finance day-to-day operations without constraints established by debt covenants,
enabling legislation, or other legal requirements--had a deficit of $40.9
billion at the end of the 2015-2016 fiscal year.

The net position deficit in unrestricted governmental activities, which
increased by $1.1 billion in 2016, exists primarily because New York has issued
debt for purposes not resulting in a capital asset related to New York
governmental activities, the obligation related to other postemployment benefits
($15.5 billion) and the net pension liability ($1.4 billion). Such outstanding
debt included: securitizing New York's future tobacco settlement receipts ($1.4
billion); eliminating the need for seasonal borrowing by the New York Local
Government Assistance Corporation ($2.1 billion); and borrowing for local
highway and bridge projects ($4 billion), local mass transit projects ($1.6
billion), and a wide variety of grants and other expenditures not resulting in
New York capital assets ($12.5 billion). This deficit in unrestricted net
position of governmental activities can be expected to continue for as long as
New York continues to have obligations outstanding for purposes other than the
acquisition of New York governmental capital assets.

The net position for business-type activities decreased by $546 million
(70.8 percent) to $225 million in 2016 as compared to $771 million in 2015. The
decrease in net position for business-type activities was due in part to the
restatement of net position related to the implementation of GASBS No. 68 and
GASBS No. 71 ($1.3 billion) as well as to the State University of New York
("SUNY") expenses exceeding operating revenues and state support ($427 million).
This was partially offset by employer contributions and other revenue exceeding
unemployment benefit payments for the Unemployment Insurance Fund ($1.1
billion), City University of New York Senior College operating revenues and
state support exceeding operating expenses ($132 million), and Lottery revenues
exceeding expenses, including education aid transfers ($9 million).

New York General Fund Budgetary Highlights. New York General Fund receipts
exceeded disbursements by $1.6 billion in 2015-2016. The New York General Fund
ended the 2015-2016 fiscal year with a closing cash fund balance of $8.9
billion, which consisted of approximately $1.8 billion in the state's rainy day
reserve funds ($1.3 billion in the "Tax Stabilization Reserve Account" and $540
million in the "Rainy Day Reserve Fund"), $63 million in the "Community Projects
Fund," $21 million in the "Contingency Reserve Fund," and $7.1 billion in the
"Refund Reserve Account." Total New York General Fund receipts for the 2015-
2016 fiscal year (including transfers from other funds) were approximately $69.7
billion. Total New York General Fund disbursements for the 2015-2016 fiscal
year (including transfers to other funds) were approximately $68.0 billion.

Net operating results for the 2015-2015 fiscal year were $5.4 billion more
favorable than anticipated in the original financial plan, with the original
plan projecting a net operating deficit of $3.8 billion. Total receipts and
transfers from other funds exceeded original financial plan estimates by $1.4
billion and total disbursements and transfers to other funds were less than
original financial plan estimates by $4.0 billion.

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The primary factor contributing to higher than projected total receipts was
$1.6 billion in unanticipated non-tax collections received as a result of
monetary settlements reached by the Department of Financial Services, the
Department of Law, and the Manhattan District Attorney's Office with banks,
insurance companies, and other financial institutions for violations of New York
banking and insurance laws. In addition, actual base tax growth for 2015-2016
finished at 5.4 percent, which was higher than the original financial plan
estimate of 4.5 percent. Other tax collections were higher than the original
plan as a result of extraordinary estate tax collections, while lower
collections for business taxes and consumption/use taxes partly offset overall
higher receipts.

Net operating results for the 2015-2016 fiscal year were $3.9 billion more
favorable than anticipated in the final financial plan, with the final financial
plan projecting a net operating deficit of $2.3 billion. Total receipts and
disbursements were lower than the final financial plan estimates (by $618
million and $4.5 billion, respectively). Lower receipts were primarily due to
lower than expected business tax collections related to lower audit receipts
driven by the corporate franchise tax, and lower personal income tax collections
reflecting weaker than projected withholding. Lower than projected total
disbursements occurred primarily as a result of lower than planned transfers to
the Other Governmental Fund--Dedicated Infrastructure Investment Fund, as well
as lower spending for local assistance and agency operations.

Capital Assets. As of the end of the 2015-2016 fiscal year, New York has
$102.5 billion invested in a broad range of capital assets, including equipment,
buildings, construction in progress, land preparation, and infrastructure, which
primarily includes roads and bridges. This amount represents a net increase
(including additions and deductions) of $642 million over the 2014-2015 fiscal
year.

Debt Administration. There are a number of methods by which New York may
incur debt. New York has obtained long-term financing in the form of
voter-approved General Obligation debt (voter-approved debt) and other
obligations that are authorized by legislation but not approved by the voters
(non-voter-approved debt), including lease purchase and contractual obligations
where New York's legal obligation to make payments is subject to and paid from
annual appropriations made by the New York State legislature or from assignment
of revenue in the case of tobacco settlement revenue bonds. Equipment capital
leases and mortgage loan commitments, which represent $275 million as of the end
of the 2015-2016 fiscal year, do not require legislative or voter approval.
Other obligations include certain bonds issued through New York public
authorities and certificates of participation. New York administers its
long-term financing needs as a single portfolio of New York-supported debt that
includes general obligation bonds and other obligations of both its governmental
activities and business-type activities. Most of the debt reported under
business-type activities, all of which was issued for capital assets used in
those activities, is supported by payments from resources generated by New
York's governmental activities--thus it is not expected to be repaid from
resource generated by business-type activities.

At the end of the 2015-2016 fiscal year, New York had $182 million in New
York-supported (net) variable rate bonds outstanding and $1.8 billion in
interest rate exchange agreements, in which New York issues variable rate bonds
and enters into a swap agreement that

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effectively converts the rate to a fixed rate. At the end of the 2015-2016
fiscal year, variable rate bonds, net of those subject to the fixed rate swaps,
were equal to 0.4 percent of the New York-supported debt portfolio. Variable
rate bonds that were converted to a synthetic fixed rate through swap agreements
of $1.8 billion were equal to 3.6 percent of the total New York-supported debt
portfolio.

At the end of the 2015-2016 fiscal year, New York had $56.7 billion in
bonds, notes, and other financing agreements outstanding compared with $57.4
billion in the 2014-2015 fiscal year, a decrease of $698 million.

In addition, New York reported $838 million for collateralized borrowings
($401 million in governmental activities and $437 million in business-type
activities) for which specific revenues have been pledged. In the 2014-2015
fiscal year, New York reported $870 million for collateralized borrowings ($430
million in governmental activities and $440 million in business-type
activities). During the 2015-2016 fiscal year, New York issued $7.9 billion in
bonds, of which $4.5 billion was for refunding and $3.4 billion was for new
borrowing.

The New York State Constitution, with exceptions for emergencies, limits
the amount of general obligation bonds that can be issued to that amount
approved by the voters for a single work or purpose in a general election. As
of the end of the 2015-2016 fiscal year, New York has $2.7 billion in authorized
but unissued bond capacity that can be used to issue bonds for specifically
approved purposes. New York may issue short-term debt without voter approval in
anticipation of the receipt of taxes and revenues or proceeds from duly
authorized but not issued general obligation bonds.

The state finance law, through the New York State Debt Reform Act of 2000
(the "New York Debt Reform Act"), also imposes phased-in caps on the issuance of
the new New York-supported debt and related debt service costs. The New York
Debt Reform Act also limits the use of debt to capital works and purposes, and
establishes a maximum term length for repayment of 30 years. The New York Debt
Reform Act applies to all New York-supported debt. The New York Debt Reform Act
does not apply to debt issued prior to April 1, 2000 or to other obligations
issued by public authorities where New York is not the direct obligor.

Litigation. The State of New York is a defendant in numerous legal
proceedings pertaining to matters incidental to the performance of routine
governmental operations. Such litigation includes, but is not limited to,
claims asserted against the State of New York arising from alleged torts,
alleged breaches of contracts, condemnation proceedings, and other alleged
violations of state and federal laws.

Included in New York's outstanding litigation are a number of cases
challenging the legality or the adequacy of a variety of significant social
welfare programs, primarily involving New York's Medicaid and mental health
programs. Adverse judgments in these matters generally could result in
injunctive relief coupled with prospective changes in patient care that could
require substantial increased financing of the litigated programs in the future.
With respect to pending and threatened litigation, New York has reported, in the
governmental activities, liabilities of $856 million, of which $656 million
pertains to SUNY, for awarded claims,

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anticipated unfavorable judgments, and incurred but not reported loss estimates
related to medical malpractice claims. In addition, the State of New York is
party to other claims and litigation that its legal counsel has advised may
result in possible adverse court decisions with estimated potential losses of
approximately $211 million.

Ratings. As of October 21, 2016 all outstanding general obligation bonds
of the State of New York were rated "AA+" by S&P Global Ratings a division of
S&P Global, Inc., and "Aa1" by Moody's Investors Service, Inc. Any explanation
concerning the significance of such ratings must be obtained from the rating
agencies. There is no assurance that any ratings will continue for any period
of time or that they will not be revised or withdrawn.

Local Issuances. It should be noted that the creditworthiness of
obligations issued by local New York issuers may be unrelated to the
creditworthiness of obligations issued by the State of New York, and there is no
obligation on the part of the state to make payment on such local obligations in
the event of default.

ADDITIONAL DEPOSITS. Each trust agreement authorizes the sponsor to
increase the size of a trust and the number of units thereof by the deposit of
additional securities, or cash (including a letter of credit or the equivalent)
with instructions to purchase additional securities, in such trust and the
issuance of a corresponding number of additional units. In connection with
these deposits, existing and new investors may experience a dilution of their
investments and a reduction in their anticipated income because of fluctuations
in the prices of the securities between the time of the deposit and the purchase
of the securities and because the trust will pay the associated brokerage fees
and other acquisition costs.

ADMINISTRATION OF THE TRUST

DISTRIBUTIONS TO UNITHOLDERS BY REGULATED INVESTMENT COMPANIES MAKING
SEMIANNUAL/QUARTERLY DISTRIBUTIONS OR GRANTOR TRUSTS. The discussion in this
section applies to all trusts other than trusts that are "regulated investment
companies" for tax purposes that have monthly distribution dates. Income
received by a trust is credited by the trustee to the Income Account for the
trust. All other receipts are credited by the trustee to a separate Capital
Account for the trust. The trustee will normally distribute any income received
by a trust on each distribution date or shortly thereafter to unitholders of
record on the preceding record date. A trust will also generally make required
distributions or distributions to avoid imposition of tax at

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the end of each year if it has elected to be taxed as a RIC for federal tax
purposes. Unitholders will receive an amount substantially equal to their pro
rata share of the available balance of the Income Account of the related trust.
All distributions will be net of applicable expenses. There is no assurance
that any actual distributions will be made since all dividends received may be
used to pay expenses. In addition, excess amounts from the Capital Account of a
trust, if any, will be distributed on each distribution date or shortly
thereafter to unitholders of record on the preceding record date, provided that
the trustee is not required to make a distribution from the Capital Account
unless the amount available for distribution is at least $1.00 per 100 units.
Proceeds received from the disposition of any of the securities after a record
date and prior to the following distribution date will be held in the Capital
Account and not distributed until the next distribution date applicable to the
Capital Account. Notwithstanding the foregoing, if a trust is designed to be a
grantor trust for tax purposes, the trustee is not required to make a
distribution from the Income Account or the Capital Account unless the total
cash held for distribution equals at least 0.1% of the trust's net asset value
as determined under the trust agreement, provided that the trustee is required
to distribute the balance of the Income Account and Capital Account on the
distribution date occurring in December of each year. The trustee is not
required to pay interest on funds held in the Capital or Income Accounts (but
may itself earn interest thereon and therefore benefits from the use of such
funds).

The distribution to the unitholders of a trust as of each record date will
be made on the following distribution date or shortly thereafter and shall
consist of an amount substantially equal to the unitholders' pro rata share of
the available balance of the Income Account of the trust after deducting
estimated expenses. Because dividends are not received by a trust at a constant
rate throughout the year, such distributions to unitholders are expected to
fluctuate.

DISTRIBUTIONS TO UNITHOLDERS BY REGULATED INVESTMENT COMPANIES MAKING
MONTHLY DISTRIBUTIONS. The discussion in this section applies if your trust is
a RIC that has monthly distribution dates. Income received by a trust is
credited by the trustee to the Income Account for the trust. All other receipts
are credited by the trustee to a separate Capital Account for the trust. The
trustee will normally distribute income received by a trust on each distribution
date or shortly thereafter to unitholders of record on the preceding record
date. The trust generally pays distributions from its Income Account (pro-rated
on an annual basis) along with any excess balance from the Capital Account on
each monthly distribution date to unitholders of record on the preceding record
date as described in greater detail below. All distributions will be net of
applicable expenses. The amount of your distributions will vary from time to
time as companies change their dividends or trust expenses change. The trust
will also generally make required distributions or distributions to avoid
imposition of tax at the end of each year if it has elected to be taxed as a RIC
for federal tax purposes. Excess amounts from the Capital Account of a trust,
if any, will be distributed at least annually to the unitholders then of record.
Proceeds received from the disposition of any of the securities after a record
date and prior to the following distribution date will be held in the Capital
Account and not distributed until the next distribution date applicable to the
Capital Account. The trustee shall not be required to make a distribution from
the Capital Account unless the cash balance on deposit therein available for
distribution shall be sufficient to distribute at least $1.00 per 100 units.
The trustee is not required to pay interest on funds held in the Capital or
Income Accounts (but may itself earn interest thereon and therefore benefits
from the use of such funds).

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The distribution to the unitholders as of each record date will be made on
the following distribution date or shortly thereafter. When the trust receives
dividends from a portfolio security, the trustee credits the dividends to the
trust's accounts. In an effort to make relatively regular income distributions,
the trust's distribution from the Income Account on each distribution date to
each unitholder is equal to such unitholder's pro rata share of the cash balance
in the Income Account calculated on the basis of a fraction (the numerator of
which is one and the denominator of which is the total number of distribution
dates per year) of the estimated annual income to the trust for the ensuing
twelve months computed as of the close of business on the record date
immediately preceding such distribution after deduction of (1) the fees and
expenses then deductible pursuant to the trust agreement and (2) the trustee's
estimate of other expenses properly chargeable to the Income Account pursuant to
the trust agreement which have accrued as of such record date or are otherwise
properly attributable to the period to which such distribution relates. Because
the trust does not receive dividends from the portfolio securities at a constant
rate throughout the year, the trust's income distributions to unitholders may be
more or less than the amount credited to the trust accounts as of the record
date. In the event that the amount on deposit in the Income Account is not
sufficient for the payment of the amount intended to be distributed to
unitholders on the basis of the computation described above, the trustee is
authorized to advance its own funds and cause to be deposited in and credited to
the Income Account such amounts as may be required to permit payment of the
related distribution to be made as described above. In such an event, the
trustee shall be entitled to be reimbursed, without interest, out of income
payments received by the trust subsequent to the date of such advance. Any such
advance shall be reflected in the Income Account until repaid.

GENERAL. Persons who purchase units will commence receiving distributions
only after such person becomes a record owner. A person will become the owner
of units, and thereby a unitholder of record, on the date of settlement provided
payment has been received. Notification to the trustee of the transfer of units
is the responsibility of the purchaser, but in the normal course of business the
selling broker-dealer provides such notice.

The trustee will periodically deduct from the Income Account of a trust
and, to the extent funds are not sufficient therein, from the Capital Account of
the trust amounts necessary to pay the expenses of the trust. The trustee also
may withdraw from said accounts such amounts, if any, as it deems necessary to
establish a reserve for any governmental charges payable out of a trust.
Amounts so withdrawn shall not be considered a part of the related trust's
assets until such time as the trustee shall return all or any part of such
amounts to the appropriate accounts. In addition, the trustee may withdraw from
the Income and Capital Accounts of a trust such amounts as may be necessary to
cover redemptions of units.

STATEMENTS TO UNITHOLDERS. With each distribution, the trustee will
furnish to each unitholder a statement of the amount of income and the amount of
other receipts, if any, which are being distributed, expressed in each case as a
dollar amount per unit.

The accounts of a trust are required to be audited annually, at the related
trust's expense, by independent public accountants designated by the sponsor,
unless the sponsor determines that such an audit is not required. The
accountants' report for any audit will be furnished by the trustee to any
unitholder upon written request. Within a reasonable period of time after the
end

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of each calendar year, the trustee shall furnish to each person who at any time
during the calendar year was a unitholder of a trust a statement, covering the
calendar year, setting forth for the trust:

(A) As to the Income Account:

(1) the amount of income received on the securities (including income
received as a portion of the proceeds of any disposition of
securities);

(2) the amounts paid for purchases of replacement securities or for
purchases of securities otherwise pursuant to the applicable
trust agreement, if any, and for redemptions;

(3) the deductions, if any, from the Income Account for payment into
the Reserve Account;

(4) the deductions for applicable taxes and fees and expenses of the
trustee, the sponsor, the evaluator, the supervisor, counsel,
auditors and any other expenses paid by the trust;

(5) the amounts reserved for purchases of contract securities, for
purchases made pursuant to replace failed contract securities or
for purchases of securities otherwise pursuant to the applicable
trust agreement, if any;

(6) the deductions for payment of the sponsor's expenses of
maintaining the registration of the trust units, if any;

(7) the aggregate distributions to unitholders; and

(8) the balance remaining after such deductions and distributions,
expressed both as a total dollar amount and as a dollar amount
per unit outstanding on the last business day of such calendar
year;

(B) As to the Capital Account:

(1) the net proceeds received due to sale, maturity, redemption,
liquidation or disposition of any of the securities, excluding
any portion thereof credited to the Income Account;

(2) the amount paid for purchases of replacement securities or for
purchases of securities otherwise pursuant to the applicable
trust agreement, if any, and for redemptions;

(3) the deductions, if any, from the Capital Account for payments
into the Reserve Account;

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(4) the deductions for payment of applicable taxes and fees and
expenses of the trustee, the sponsor, the evaluator, the
supervisor, counsel, auditors and any other expenses paid by the
trust;

(5) the deductions for payment of the sponsor's expenses of
organizing the trust;

(6) the amounts reserved for purchases of contract securities, for
purchases made pursuant to replace failed contract securities or
for purchases of securities otherwise pursuant to the trust
agreement, if any;

(7) the deductions for payment of deferred sales charge and creation
and development fee, if any;

(8) the deductions for payment of the sponsor's expenses of
maintaining the registration of the trust units, if any;

(9) the aggregate distributions to unitholders; and

(10) the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount
per unit outstanding on the last business day of such calendar
year; and

(1) a list of the securities held as of the last business day of such
calendar year and a list which identifies all securities sold or
other securities acquired during such calendar year, if any;

(2) the number of units outstanding on the last business day of such
calendar year;

(3) the unit value based on the last trust evaluation of such trust
made during such calendar year; and

(4) the amounts actually distributed during such calendar year from
the Income and Capital Accounts, separately stated, expressed
both as total dollar amounts and as dollar amounts per unit
outstanding on the record dates for such distributions.

RIGHTS OF UNITHOLDERS. The death or incapacity of any unitholder will not
operate to terminate a trust nor entitle legal representatives or heirs to claim
an accounting or to bring any action or proceeding in any court for partition or
winding up of the trust, nor otherwise affect the rights, obligations and
liabilities of the parties to the applicable trust agreement. By purchasing
units of a trust, each unitholder expressly waives any right he may have under
any rule of law, or the provisions of any statute, or otherwise, to require the
trustee at any time to account, in any

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manner other than as expressly provided in the applicable trust agreement, in
respect of the portfolio securities or moneys from time to time received, held
and applied by the trustee under the trust agreement. No unitholder shall have
the right to control the operation and management of a trust in any manner,
except to vote with respect to the amendment of the related trust agreement or
termination of the trust.

AMENDMENT. Each trust agreement may be amended from time to time by the
sponsor and trustee or their respective successors, without the consent of any
of the unitholders, (i) to cure any ambiguity or to correct or supplement any
provision which may be defective or inconsistent with any other provision
contained in the trust agreement, (ii) to change provision required by the
Security Exchange Commission or any successor governmental agency and (iii) to
make such other provision in regard to matters or questions arising under the
trust agreement as shall not materially adversely affect the interests of the
unitholders or (iv) to make such amendments as may be necessary (a) for a trust
to continue to qualify as a RIC for federal income tax purposes if the trust has
elected to be taxed as such under the United States Internal Revenue Code of
1986, or (b) to prevent a trust from being deemed an association taxable as a
corporation for federal income tax purposes if the trust has not elected to be
taxed as a RIC under the United States Internal Revenue Code of 1986. A trust
agreement may not be amended, however, without the consent of all unitholders of
the related trust then outstanding, so as (1) to permit, except in accordance
with the terms and conditions thereof, the acquisition hereunder of any
securities other than those specified in the schedules to the trust agreement or
(2) to reduce the percentage of units the holders of which are required to
consent to certain of such amendments. A trust agreement may not be amended so
as to reduce the interest in the trust represented by units without the consent
of all affected unitholders.

Except for the amendments, changes or modifications described above,
neither the sponsor nor the trustee may consent to any other amendment, change
or modification of a trust agreement without the giving of notice and the
obtaining of the approval or consent of unitholders representing at least 66
2/3% of the units then outstanding of the affected trust. No amendment may
reduce the aggregate percentage of units the holders of which are required to
consent to any amendment, change or modification of a trust agreement without
the consent of the unitholders of all of the units then outstanding of the
affected trust and in no event may any amendment be made which would (1) alter
the rights to the unitholders of the trust as against each other, (2) provide
the trustee with the power to engage in business or investment activities other
than as specifically provided in the trust agreement, (3) adversely affect the
tax status of the related trust for federal income tax purposes or result in the
units being deemed to be sold or exchanged for federal income tax purposes or
(4) unless a trust has elected to be taxed as a RIC for federal income tax
purposes, result in a variation of the investment of unitholders in the trust.
The trustee will notify unitholders of a trust of the substance of any such
amendment to the trust agreement for such trust.

TERMINATION. Each trust agreement provides that the related trust shall
terminate upon the maturity, liquidation, redemption, sale or other disposition
of the last of the securities held in the trust but in no event is it to
continue beyond the trust's mandatory termination date. If the value of a trust
shall be less than 40% of the total value of securities deposited in the trust
during the initial offering period, the trustee may, in its discretion, and
shall, when so directed by the

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sponsor, terminate the trust. A trust may be terminated at any time by the
holders of units representing 66 2/3% of the units thereof then outstanding. A
trust will be liquidated by the trustee in the event that a sufficient number of
units of the trust not yet sold are tendered for redemption by the sponsor, so
that the net worth of the trust would be reduced to less than 40% of the value
of the securities at the time they were deposited in the trust. If a trust is
liquidated because of the redemption of unsold units by the sponsor, the sponsor
will refund to each purchaser of units of the trust the entire sales charge paid
by such purchaser.

Beginning nine business days prior to, but no later than, the scheduled
termination date described in the prospectus for a trust, the trustee may begin
to sell all of the remaining underlying securities on behalf of unitholders in
connection with the termination of the trust. The sponsor may assist the
trustee in these sales and receive compensation to the extent permitted by
applicable law. The sale proceeds will be net of any incidental expenses
involved in the sales.

The sponsor will generally instruct the trustee to sell the securities as
quickly as practicable during the termination proceedings without in its
judgment materially adversely affecting the market price of the securities, but
it is expected that all of the securities will in any event be disposed of
within a reasonable time after a trust's termination. The sponsor does not
anticipate that the period will be longer than one month, and it could be as
short as one day, depending on the liquidity of the securities being sold. The
liquidity of any security depends on the daily trading volume of the security
and the amount that the sponsor has available for sale on any particular day.
Of course, no assurances can be given that the market value of the securities
will not be adversely affected during the termination proceedings.

Not less than thirty days prior to termination of a trust, the trustee will
notify unitholders thereof of the termination and provide a form allowing
qualifying unitholders to elect an in kind distribution, if applicable. If
applicable, a unitholder who owns the minimum number of units described in the
prospectus may request an in kind distribution from the trustee instead of cash.
The trustee will make an in kind distribution through the distribution of each
of the securities of a trust in book entry form to the account of the
unitholder's bank or broker-dealer at Depository Trust Company. The unitholder
will be entitled to receive whole shares of each of the securities comprising
the portfolio of the related trust and cash from the Capital Account equal to
the fractional shares to which the unitholder is entitled. The trustee may
adjust the number of shares of any security included in a unitholder's in kind
distribution to facilitate the distribution of whole shares. The sponsor may
terminate the in kind distribution option at any time upon sixty days notice to
the unitholders. Special federal income tax consequences will result if a
unitholder requests an in kind distribution.

Within a reasonable period after termination, the trustee will sell any
securities remaining in a trust not segregated for in kind distribution. After
paying all expenses and charges incurred by a trust, the trustee will distribute
to unitholders thereof their pro rata share of the balances remaining in the
Income and Capital Accounts of the trust.

The sponsor may, but is not obligated to, offer for sale units of a
subsequent series of a trust at approximately the time of the mandatory
termination date. If the sponsor does offer such

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units for sale, unitholders may be given the opportunity to purchase such units
at a public offering price that includes a reduced sales charge. There is,
however, no assurance that units of any new series of a trust will be offered
for sale at that time, or if offered, that there will be sufficient units
available for sale to meet the requests of any or all unitholders.

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
principal unit investment trust division offices at 2 Hanson Place, 12th Floor,
Brooklyn, New York 11217, (800) 848-6468. The Bank of New York Mellon is subject
to supervision and examination by the Superintendent of Banks of the State of
New York and the Board of Governors of the Federal Reserve System, and its
deposits are insured by the Federal Deposit Insurance Corporation to the extent
permitted by law.

Under each trust agreement, the trustee or any successor trustee may resign
and be discharged of the trust created by the trust agreement by executing an
instrument in writing and filing the same with the sponsor. If the trustee
merges or is consolidated with another entity, the resulting entity shall be the
successor trustee without the execution or filing of any paper instrument or
further act.

The trustee or successor trustee must mail a copy of the notice of
resignation to all unitholders then of record, not less than sixty days before
the date specified in such notice when such resignation is to take effect. The
sponsor upon receiving notice of such resignation is obligated to appoint a
successor trustee promptly. If, upon such resignation, no successor trustee has
been appointed and has accepted the appointment within thirty days after
notification, the retiring trustee may apply to a court of competent
jurisdiction for the appointment of a successor. In case at any time the
trustee shall not meet the requirements set forth in the trust agreement, or
shall become incapable of acting, or if a court having jurisdiction in the
premises shall enter a decree or order for relief in respect of the trustee in
an involuntary case, or the trustee shall commence a voluntary case, under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or any receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) for the trustee or for any substantial part of its
property shall be appointed, or the trustee shall generally fail to pay its
debts as they become due, or shall fail to meet such written standards for the
trustee's performance as shall be established from time to time by the sponsor,
or if the sponsor determines in good faith that there has occurred either (1) a
material deterioration in the creditworthiness of the trustee or (2) one or more
grossly negligent acts on the part of the trustee with respect to a trust, the
sponsor, upon sixty days' prior written notice, may remove the trustee and
appoint a successor trustee by written instrument, in duplicate, one copy of
which shall be delivered to the trustee so removed and one copy to the successor
trustee. Notice of such removal and appointment shall be mailed to each
unitholder by the successor trustee. Upon execution of a written acceptance of
such appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The trustee
must be a corporation organized under the laws of the United States, or any
state thereof, be authorized under such laws to exercise trust powers and have
at all times an aggregate capital, surplus and undivided profits of not less
than $5,000,000.

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THE SPONSOR. The sponsor of each trust is Advisors Asset Management, Inc.
The sponsor is a broker-dealer specializing in providing services to broker-
dealers, registered representatives, investment advisers and other financial
professionals. The sponsor's headquarters are located at 18925 Base Camp Road,
Monument, Colorado 80132. You can contact the Advisors Asset Management unit
investment trust division at 8100 East 22nd Street North, Building 800, Suite
102, Wichita, Kansas 67226 or by using the contacts listed on the back cover of
the prospectus. The sponsor is a registered broker-dealer and investment adviser
and a member of the Financial Industry Authority, Inc. (FINRA) and the
Securities Investor Protection Corporation (SIPC), and a registrant of the
Municipal Securities Rulemaking Board (MSRB).

Under each trust agreement, the sponsor may resign and be discharged of the
trust created by the trust agreement by executing an instrument in writing and
filing the same with the trustee. If the sponsor merges or is consolidated with
another entity, the resulting entity shall be the successor sponsor without the
execution or filing of any paper instrument or further act.

If at any time the sponsor shall resign or fail to undertake or perform any
of the duties which by the terms of a trust agreement are required by it to be
undertaken or performed, or the sponsor shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or a receiver of the sponsor or of
its property shall be appointed, or any public officer shall take charge or
control of the sponsor or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the trustee may (a) appoint a
successor sponsor at rates of compensation deemed by the trustee to be
reasonable and not exceeding such reasonable amounts as may be prescribed by the
Securities and Exchange Commission, (b) terminate the trust agreement and
liquidate the related trust as provided therein, or (c) continue to act as
trustee without appointing a successor sponsor and receive additional
compensation deemed by the trustee to be reasonable and not exceeding such
reasonable amounts as may be prescribed by the Securities and Exchange
Commission.

THE EVALUATOR AND SUPERVISOR. Advisors Asset Management, Inc., the
sponsor, also serves as evaluator and supervisor. The evaluator and supervisor
may resign or be removed by the sponsor and trustee in which event the sponsor
or trustee is to use its best efforts to appoint a satisfactory successor. Such
resignation or removal shall become effective upon acceptance of appointment by
the successor evaluator. If upon resignation of the evaluator no successor has
accepted appointment within thirty days after notice of resignation, the
evaluator may apply to a court of competent jurisdiction for the appointment of
a successor. Notice of such resignation or removal and appointment shall be
delivered by the trustee to each unitholder.

LIMITATIONS ON LIABILITY. The sponsor, evaluator, and supervisor are
liable for the performance of their obligations arising from their
responsibilities under the trust agreement but will be under no liability to any
trust or unitholders for taking any action or refraining from any action in good
faith pursuant to the trust agreement or for errors in judgment, or for
depreciation or loss incurred by reason of the purchase or sale of securities,
provided, however, that such parties will not be protected against any liability
to which they would otherwise be subjected by reason of their own willful
misfeasance, bad faith or gross negligence in the performance of their duties or
its reckless disregard for their duties under the trust agreement. Each trust
will

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indemnify, defend and hold harmless each of the sponsor, supervisor and
evaluator from and against any loss, liability or expense incurred in acting in
such capacity (including the cost and expenses of the defense against such loss,
liability or expense) other than by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under the applicable trust agreement.
Such parties are not under any obligation to appear in, prosecute or defend any
legal action which in their opinion may involve them in any expense or
liability. The trustee will be indemnified by each trust and held harmless
against any loss or liability accruing to it without gross negligence, bad faith
or willful misconduct on its part, arising out of or in connection with the
acceptance or administration of the trust, including the costs and expenses
(including counsel fees) of defending itself against any claim of liability in
the premises.

The trust agreement provides that the trustee shall be under no liability
for any action taken in good faith in reliance upon prima facie properly
executed documents or for the disposition of moneys, securities or certificates
except by reason of its own gross negligence, bad faith or willful misconduct,
nor shall the trustee be liable or responsible in any way for depreciation or
loss incurred by reason of the sale by the trustee of any securities. In the
event that the sponsor shall fail to act, the trustee may act and shall not be
liable for any such action taken by it in good faith. The trustee shall not be
personally liable for any taxes or other governmental charges imposed upon or in
respect of the securities or upon the interest thereof. In addition, the trust
agreement contains other customary provisions limiting the liability of the
trustee.

EXPENSES OF THE TRUST. The sponsor may receive a fee from your 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 amount of this "creation and development fee" is set forth in the
prospectus. The trustee will deduct this amount from your trust's assets as of
the close of the initial offering period. No portion of this fee is applied to
the payment of distribution expenses or as compensation for sales efforts. This
fee will not be deducted from proceeds received upon a repurchase, redemption or
exchange of units before the close of the initial public offering period.

For services performed under a trust's trust agreement the trustee shall be
paid a fee at an annual rate in the amount per unit set forth in such trust
agreement. The trustee shall charge a pro rated portion of its annual fee at the
times specified in such trust agreement, which pro rated portion shall be
calculated on the basis of the largest number of units in such trust at any time
during the primary offering period. After the primary offering period has
terminated, the fee shall accrue daily and be based on the number of units
outstanding on the first business day of each calendar year in which the fee is
calculated or the number of units outstanding at the end of the primary offering
period, as appropriate. The annual trustee fee shall be prorated for any
calendar year in which the trustee provides services during less than the whole
of such year. The trustee may from time to time adjust its compensation as set
forth above provided that total adjustment upward does not, at the time of such
adjustment, exceed the percentage of the total increase in consumer prices for
services as measured by the United States Department of Labor Consumer Price
Index entitled "All Services Less Rent of Shelter" or similar index, if such
index should no

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longer be published. The consent or concurrence of any unitholder shall not be
required for any such adjustment or increase. Such compensation shall be
calculated and paid in installments by the trustee against the Income and
Capital Accounts of each trust; provided, however, that such compensation shall
be deemed to provide only for the usual, normal and proper functions undertaken
as trustee pursuant to the trust agreement. The trustee shall also charge the
Income and Capital Accounts of each trust for any and all expenses and
disbursements incurred as provided in the trust agreement.

As compensation for portfolio supervisory services in its capacity as
supervisor, evaluation services in its capacity as evaluator and for providing
bookkeeping and other administrative services of a character described in
Section 26(a)(2)(C) of the Investment Company Act of 1940, as amended, the
sponsor shall be paid an annual fee in the amount per unit set forth in the
trust agreement for a trust. The sponsor shall receive a pro rated portion of
its annual fee from the trustee upon receipt of an invoice by the trustee from
the sponsor, upon which, as to the cost incurred by the sponsor of providing
such services the trustee may rely. Such fee shall be calculated on the basis of
the largest number of units in such trust at any time during the primary
offering period. After the primary offering period has terminated, the fee shall
accrue daily and be based on the number of units outstanding on the first
business day of each calendar year in which the fee is calculated or the number
of units outstanding at the end of the primary offering period, as appropriate.
Such annual fee shall be pro rated for any calendar year in which the sponsor
provides services during less than the whole of such year, but in no event shall
such compensation when combined with all compensation received from a trust for
providing such services in any calendar year exceed the aggregate cost to the
sponsor for providing such services, in the aggregate. Such compensation may,
from time to time, be adjusted provided that the total adjustment upward does
not, at the time of such adjustment, exceed the percentage of the total increase
in consumer prices for services as measured by the United States Department of
Labor Consumer Price Index entitled "All Services Less Rent of Shelter" or
similar index, if such index should no longer be published. The consent or
concurrence of any unitholder shall not be required for any such adjustment or
increase. Such compensation shall be charged against the Income and/or Capital
Accounts of a trust.

The following additional charges are or may be incurred by a trust in
addition to any other fees, expenses or charges described in the prospectus:
(a) fees for the trustee's extraordinary services; (b) expenses of the trustee
(including legal and auditing expenses and reimbursement of the cost of advances
to the trust for payment of expenses and distributions, but not including any
fees and expenses charged by an agent for custody and safeguarding of
securities) and of counsel, if any; (c) various governmental charges;
(d) expenses and costs of any action taken by the trustee to protect the trust
or the rights and interests of the unitholders; (e) indemnification of the
trustee for any loss or liability accruing to it without gross negligence, bad
faith or willful misconduct on its part arising out of or in connection with the
acceptance or administration of the trust; (f) indemnification of the sponsor
for any loss, liability or expense incurred in acting in that capacity other
than by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or its reckless disregard of its obligations and
duties under the trust agreement; (g) indemnification of the supervisor for any
loss, liability or expense incurred in acting as supervisor of the trust other
than by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations

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and duties under the trust agreement; (h) indemnification of the evaluator for
any loss, liability or expense incurred in acting as evaluator of the trust
other than by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of its reckless disregard of its
obligations and duties under the trust agreement; (i) expenditures incurred in
contacting unitholders upon termination of the trust; and (j) license fees for
the right to use trademarks and trade names, intellectual property rights or for
the use of databases and research owned by third party licensors. The sponsor
is authorized to obtain from Mutual Fund Quotation Service (or similar service
operated by The Nasdaq Stock Market, Inc. or its successor) a UIT ticker symbol
for each trust and to contract for the dissemination of the unit prices through
that service. A trust will bear any cost or expense incurred in connection with
the obtaining of the ticker symbol and the dissemination of unit prices. A
trust may pay the costs of updating its registration statement each year. All
fees and expenses are payable out of a trust and, when owing to the trustee, are
secured by a lien on the trust. If the balances in the Income and Capital
Accounts are insufficient to provide for amounts payable by the trust, the
trustee has the power to sell securities to pay such amounts. These sales may
result in capital gains or losses to unitholders.

Each trust will pay the costs of organizing the trust. These costs may
include, but are not limited to, the cost of the initial preparation and
typesetting of the registration statement, prospectuses (including preliminary
prospectuses), the trust agreement and other documents relating to the
applicable trust, Securities and Exchange Commission and state blue sky
registration fees, the costs of the initial valuation of the portfolio and audit
of a trust, the costs of a portfolio consultant, if any, one-time license fees,
if any, the initial fees and expenses of the trustee, and legal and other
out-of-pocket expenses related thereto but not including the expenses incurred
in the printing of prospectuses (including preliminary prospectuses), expenses
incurred in the preparation and printing of brochures and other advertising
materials and any other selling expenses. A trust will sell securities to
reimburse the sponsor for these costs at the end of the initial offering period
or after six months, if earlier. The value of the units will decline when a
trust pays these costs.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION. When a trust sells
securities, the composition and diversity of the securities in the trust may be
altered. In order to obtain the best price for a trust, it may be necessary for
the sponsor to specify minimum amounts in which blocks of securities are to be
sold. In effecting purchases and sales of a trust's portfolio securities, the
sponsor may direct that orders be placed with and brokerage commissions be paid
to brokers, including the sponsor or brokers which may be affiliated with the
trust, the sponsor, the trustee or dealers participating in the offering of
units.

-66-

CONTENTS OF REGISTRATION STATEMENT

This Amendment to the Registration Statement comprises the following:
The facing sheet
The prospectus and information supplement
The signatures
The consents of evaluator, independent auditors and legal counsel

The following exhibits:

1.1 Trust Agreement.

1.1.1 Standard Terms and Conditions of Trust. Reference is made to
Exhibit 1.1.1 to the Registration Statement on Form S-6 for Advisors
Disciplined Trust 1670 (File No. 333-210025) as filed on May 6, 2016.

1.2 Certificate of Amendment of Certificate of Incorporation and Certificate
of Merger of Advisors Asset Management, Inc. Reference is made to
Exhibit 1.2 to the Registration Statement on Form S-6 for Advisors
Disciplined Trust 647 (File No. 333-171079) as filed on January 6, 2011.

1.3 Bylaws of Advisors Asset Management, Inc. Reference is made to
Exhibit 1.3 to the Registration Statement on Form S-6 for Advisors
Disciplined Trust 647 (File No. 333-171079) as filed on January 6, 2011.

1.5 Form of Dealer Agreement. Reference is made to Exhibit 1.5 to the
Registration Statement on Form S-6 for Advisors Disciplined Trust 262
(File No. 333-150575) as filed of June 17, 2008.

2.2 Form of Code of Ethics. Reference is made to Exhibit 2.2 to the
Registration Statement on Form S-6 for Advisors Disciplined Trust 1737
(File No. 333-213361) as filed on November 3, 2016.

3.1 Opinion and consent of counsel as to legality of securities being
registered.

3.3 Opinion of counsel as to the Trustee and the Trust.

4.1 Consent of initial evaluator.

4.2 Consent of independent registered public accounting firm.

6.1 Directors and Officers of Advisors Asset Management, Inc. Reference is
made to Exhibit 6.1 to the Registration Statement on Form S-6 for
Advisors Disciplined Trust 1701 (File No. 333-211573) as filed on
August 5, 2016.

7.1 Power of Attorney. Reference is made to Exhibit 7.1 to the Registration
Statement on Form S-6 for Advisors Disciplined Trust 1485
(File No. 333-203629) as filed on May 15, 2015.

S-1

SIGNATURES

The Registrant, Advisors Disciplined Trust 1738, hereby identifies Matrix
Unit Trust, Series 1, Series 2, Series 3, Series 4, Series 5 and Series 8;
Advisor's Disciplined Trust, Series 10, Series 11 and Series 13; Advisor's
Disciplined Trust 23 and 40; and Advisors Disciplined Trust 256, 318, 404, 459,
460, 518, 533, 544, 560, 588, 595, 610, 625, 677, 678, 699, 731, 782, 785, 803,
814, 820, 830, 834, 833, 839, 847, 854, 855, 862, 863, 867, 879, 880, 888, 891,
897, 901, 910, 911, 931, 932, 936, 938, 949, 952, 967, 980, 981, 982, 990, 1000,
1006, 1015, 1049, 1102, 1146, 1198, 1258, 1309, 1341, 1516 and 1609 for
purposes of the representations required by Rule 487 and represents the
following:

(1) that the portfolio securities deposited in the series as to the
securities of which this Registration Statement is being filed do not differ
materially in type or quality from those deposited in such previous series;

(2) that, except to the extent necessary to identify the specific portfolio
securities deposited in, and to provide essential financial information for, the
series with respect to the securities of which this Registration Statement is
being filed, this Registration Statement does not contain disclosures that
differ in any material respect from those contained in the registration
statements for such previous series as to which the effective date was
determined by the Commission or the staff; and

(3) that it has complied with Rule 460 under the Securities Act of 1933.

Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Advisors Disciplined Trust 1738 has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Wichita and State of Kansas on November 8, 2016.

ADVISORS DISCIPLINED TRUST 1738

By ADVISORS ASSET MANAGEMENT, INC., DEPOSITOR

By: /s/ ALEX R. MEITZNER
-----------------------------
Alex R. Meitzner
Senior Vice President

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below on November 8, 2016 by the
following persons in the capacities indicated.

SIGNATURE TITLE

Scott I. Colyer Director of Advisors Asset )
Management, Inc. )

Lisa A. Colyer Director of Advisors Asset )
Management, Inc. )

James R. Costas Director of Advisors Asset )
Management, Inc. )

S-2

Christopher T. Genovese Director of Advisors Asset )
Management, Inc. )

Randy J. Pegg Director of Advisors Asset )
Management, Inc. )

R. Scott Roberg Director of Advisors Asset )
Management, Inc. )

Jack Simkin Director of Advisors Asset )
Management, Inc. )

Andrew Williams Director of Advisors Asset )
Management, Inc. )

Bart P. Daniel Director of Advisors Asset )
Management, Inc. )

By /s/ ALEX R MEITZNER
-----------------------------
Alex R. Meitzner
Attorney-in-Fact*

-------------------------------------------------------------------------------
*An executed copy of each of the related powers of attorney is filed
herewith or incorporated herein by reference as Exhibit 7.1.

S-3

EXHIBIT 1.1


                         ADVISORS DISCIPLINED TRUST 1738
                                        
                                 TRUST AGREEMENT
                                                                                
                                                         Dated: November 8, 2016
     
     This Trust Agreement among Advisors Asset Management, Inc., as Depositor,
Evaluator and Supervisor, and The Bank of New York Mellon, as Trustee, sets
forth certain provisions in full and incorporates other provisions by reference
to the document entitled "Standard Terms and Conditions of Trust For Advisors
Disciplined Trust, Effective for Unit Investment Trusts Investing in Equity
Securities Established On and After May 1, 2016" (the "Standard Terms and
Conditions of Trust") and such provisions as are set forth in full and such
provisions as are incorporated by reference constitute a single instrument.  All
references herein to Articles and Sections are to Articles and Sections of the
Standard Terms and Conditions of Trust.
                                        
                                WITNESSETH THAT:
     
     In consideration of the premises and of the mutual agreements herein
contained, the Depositor, Trustee, Evaluator and Supervisor agree as follows:
                                        
                                     PART I
                                        
                     STANDARD TERMS AND CONDITIONS OF TRUST
     
     Subject to the provisions of Part II hereof, all the provisions contained
in the Standard Terms and Conditions of Trust are herein incorporated by
reference in their entirety and shall be deemed to be a part of this instrument
as fully and to the same extent as though said provisions had been set forth in
full in this instrument.
                                        
                                     PART II
                                        
                      SPECIAL TERMS AND CONDITIONS OF TRUST
     
     The following special terms and conditions are hereby agreed to:

    1.  The Securities listed in the Schedules hereto have been deposited in
trust under this Trust Agreement.

    2.  The fractional undivided interest in and ownership of a Trust
represented by each Unit thereof is a fractional amount, the numerator of which
is one and the denominator of which is the amount set forth under "Understanding
Your Investment--Statement of Financial Condition--Number of Units" in the
Prospectus for the Trust.






    3.  The aggregate number of Units described in Section 2.03(a) for a Trust
is that number of Units set forth under "Understanding Your Investment--
Statement of Financial Condition--Number of Units" in the Prospectus for the
Trust.

    4.  The term "Deferred Sales Charge Payment Dates" for a Trust shall mean
the dates specified for deferred sales fee installments under "Investment
Summary--Fees and Expenses" in the Prospectus for the Trust.

    5.  The term "Distribution Date" for a Trust shall mean the "Distribution
dates" set forth under "Investment Summary--Essential Information" in the
Prospectus for the Trust.

    6.  The term "Mandatory Termination Date" for a Trust shall mean the
"Termination Date" set forth under "Investment Summary--Essential Information"
in the Prospectus for the Trust.

    7.  The term "Record Date" for a Trust shall mean the "Record dates" set
forth under "Investment Summary--Essential Information" in the Prospectus for
the Trust.

    8.  For purposes of the definition of the term "Income Distribution",
Section 3.05(b)(ii)(B) shall apply to any Trust that is a RIC that has monthly
Distribution and Record Dates and Section 3.05(b)(ii)(A) shall apply to all
other Trusts.

    9.  The Depositor's annual compensation as set forth under Section 3.13
shall be that dollar amount per 100 Units set forth under "Investment Summary--
Fees and Expenses--Annual operating expenses--Supervisory, evaluation and
administration fees" in the Prospectus for the Trust.

   10.  The Trustee's annual compensation as set forth under Section 7.04 shall
be $0.0105 per Unit.

   11.  Section 1.01(52) is replaced in its entirety with the following:
     
     "'Securities' shall mean the securities of corporations or other entities,
including Contract Securities, deposited in irrevocable trust and listed in the
schedule(s) to the Trust Agreement or which are deposited in or purchased on
behalf of a Trust pursuant to Section 2.01(b) or as otherwise permitted hereby,
and any securities received in exchange, substitution or replacement for such
securities, as may from time to time continue to be held as a part of the
Trusts."

   12.  The first sentence of Section 3.02 is replaced in its entirety with the
following:
     
     "The Trustee shall collect the dividends, interest and other similar income
distributions on the Securities in each Trust as such becomes payable (including
all moneys representing penalties for the failure to make timely payments on the
Securities, or as liquidated damages for default or breach of any condition or
term of the Securities or of the underlying instrument relating to any
Securities and other income attributable to a Failed Contract Security for which


                                       -2-


no Replacement Security has been obtained pursuant to Section 3.12) and credit
such income to a separate account for each Trust to be known as the 'Income
Account.'"

   13.  Section 3.07(a)(i) through (iv) is replaced in its entirety with the
following:
     
        "(i)   that there has been a default on any of the Securities in the
     payment of dividends, interest, principal or other payments, after declared
     and when due and payable;
     
        (ii)   that any action or proceeding has been instituted at law or
     equity seeking to restrain or enjoin the payment of dividends, interest,
     principal or other payments on Securities after declared and when due and
     payable, or that there exists any legal question or impediment affecting
     such Securities or the payment of dividends, interest, principal or other
     payments from the same;
     
       (iii)   that there has occurred any breach of covenant or warranty in any
     document relating to the issuer of the Securities which would adversely
     affect either immediately or contingently the payment of dividends,
     interest, principal, or other payments after declared and when due and
     payable, or the general credit standing of the issuer or otherwise impair
     the sound investment character of such Securities;
     
        (iv)   that there has been a default in the payment of dividends,
     interest, principal, income, premium or other similar payments, if any, on
     any other outstanding obligations of the issuer or guarantor of such
     Securities;"

   14.  Section 3.09 is replaced in its entirety with the following:
     
     "Notice and Sale by Trustee.  If at any time dividends, interest, principal
or other payments, after declared and when due and payable, on any of the
Securities shall not have been paid within thirty days, the Trustee shall notify
the Depositor thereof.  If within thirty days after such notification the
Depositor has not given any instruction to sell or to hold or has not taken any
other action in connection with such Securities, the Trustee may in its
discretion sell such Securities forthwith, and the Trustee shall not be liable
or responsible in any way for depreciation or loss incurred by reason of such
sale."




                                      -3-


     IN WITNESS WHEREOF, the undersigned have caused this Trust Agreement to be
executed; all as of the day, month and year first above written.
                                
                                
                                ADVISORS ASSET MANAGEMENT, INC.
                                
                                
                                By     /s/ ALEX R. MEITZNER
                                  ------------------------------
                                      Senior Vice President




                                THE BANK OF NEW YORK MELLON
                                
                                
                                By     /s/ GERARDO CIPRIANO
                                  -----------------------------
                                             Vice President


















                                        
                          SCHEDULE A TO TRUST AGREEMENT
                                        
                         SECURITIES INITIALLY DEPOSITED
                                        
                                       IN
                                        
                         ADVISORS DISCIPLINED TRUST 1738
                                        
Incorporated herein by this reference and made a part hereof is the schedule set
  forth under "Investment Summary--Portfolio" in the Prospectus for each Trust.

EXHIBIT 3.1


                                                         111 West Monroe Street
                                                         Chicago, IL 60603-4080

CHAPMAN AND CUTLER LLP                                   T 312.845.3000
----------------------------------------                 F 312.701.2361
Attorneys at Law - Focused on Finance(R)                 www.chapman.com




                                November 8, 2016
                                        

Advisors Asset Management, Inc.
18925 Base Camp Road
Monument, Colorado  80132
                                        
     Re:          Advisors Disciplined Trust 1738 (the "Fund")
                              (File No. 333-214051)

Ladies and Gentlemen:
     
     We have served as counsel for the Fund, in connection with the preparation,
execution and delivery of a trust agreement dated as of the date shown above
(the "Indenture") among Advisors Asset Management, Inc., as depositor,
supervisor and evaluator (the "Depositor") and The Bank of New York Mellon, as
trustee (the "Trustee"), pursuant to which the Depositor has delivered to and
deposited the securities listed in the schedule to the Indenture with the
Trustee and pursuant to which the Trustee has provided to or on the order of the
Depositor documentation evidencing ownership of units (the "Units") of
fractional undivided interest in and ownership of the unit investment trust of
the Fund (the "Trust"), created under said Indenture.
     
     In connection therewith we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable us
to express the opinions hereinafter set forth.  We have assumed the genuineness
of all agreements, instruments and documents submitted to us as originals and
the conformity to originals of all copies thereof submitted to us. We have also
assumed the genuineness of all signatures and the legal capacity of all persons
executing agreements, instruments and documents examined or relied upon by us.
     
     We have not reviewed the financial statements, compilation of the
securities to be acquired by the Trust, or other financial or statistical data
contained in the registration statement and the prospectus, as to which we
understand you have been furnished with the reports of the accountants appearing
in the registration statement and the prospectus. In addition, we have made no
specific inquiry as to whether any stop order or investigatory proceedings have
been commenced with respect to the registration statement or the Depositor nor
have we reviewed court or governmental agency dockets.
     
     Statements in this opinion as to the validity, binding effect and
enforceability of agreements, instruments and documents are subject: (i) to
limitations as to enforceability imposed by bankruptcy, reorganization,
moratorium, insolvency and other laws of general application relating to or
affecting the enforceability of creditors' rights, and (ii) to limitations under
equitable principles governing the availability of equitable remedies.
     
     The opinions expressed herein are limited to the laws of the State of New
York. No opinion is expressed as to the effect that the law of any other
jurisdiction might have upon the subject matter of the opinions expressed herein
under applicable conflicts of law principles, rules or regulations or otherwise.






     Based upon and subject to the foregoing, we are of the opinion that:
     
          1.   The execution and delivery of the Indenture and the
     execution and issuance of the Units in the Trust have been duly
     authorized; and
     
          2.   The Units in the Trust, when duly executed and delivered by
     the Depositor and the Trustee in accordance with the aforementioned
     Indenture, will constitute valid and binding obligations of such Trust
     and the Depositor and such Units, when issued and delivered in
     accordance with the Indenture against payment of the consideration set
     forth in the Fund prospectus, will be validly issued, fully paid and
     non-assessable.
     
     We hereby consent to the filing of this opinion as an exhibit to the
registration statement relating to the Units referred to above and to the use of
our name and to the reference to our firm in said registration statement and in
the related prospectus.  This opinion is intended solely for the benefit of the
addressee in connection with the issuance of Units of the Trust and may not be
relied upon in any other manner or by any other person without our express
written consent.
                                
                                Very truly yours,
                                
                                /s/ Chapman and Cutler LLP
                                CHAPMAN AND CUTLER LLP

SRA/lew



















                                     - 2 -

EXHIBIT 3.3


                                                            DORSEY
                                                            Dorsey & Whitney LLP




                                November 8, 2016

The Bank of New York Mellon          
as Trustee of
Advisors Disciplined Trust 1738
2 Hanson Place, 12th Floor
Brooklyn, NY  11217


Ladies and Gentlemen:

We are acting as your counsel in connection with the execution and delivery
by you of a certain Reference Trust Agreement (the "Trust Agreement"), dated as
of today's date, between Advisors Asset Management, Inc., as Depositor,
Evaluator and Supervisor (the "Depositor", "Evaluator" and "Supervisor"), and
you, as Trustee, establishing Advisors Disciplined Trust 1738; COHEN & STEERS
DYNAMIC INCOME PORTFOLIO, SERIES 2016-4 (the "Trust"), and the execution by you,
as Trustee under the Trust Agreement, of receipts for units evidencing ownership
of all of the units of fractional undivided interest (such receipts for units
and such aggregate units being herein respectively called "Receipts for Units"
and "Units") in the Trust, as set forth in the prospectus, (the "Prospectus")
included in the registration statement on Form S-6, as amended to the date
hereof (the "Registration Statement"), relating to the Trust.  The Trust
consists of the securities listed under "Portfolio" in the Prospectus, including
delivery statements relating to contracts for the purchase of certain securities
not yet delivered and cash, cash equivalents or an irrevocable letter or letters
of credit, or a combination thereof, in the amount required to pay for such
purchases upon the receipt of such securities (such securities, delivery
statements and cash, cash equivalents, letter or letters of credit being herein
called the "Portfolio Assets").

We have examined the Trust Agreement, and originals (or copies certified or
otherwise identified to our satisfaction) of such other instruments,
certificates and documents as we have deemed necessary or appropriate for the
purpose of rendering this opinion.  In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity to the original documents of all documents
submitted to us as copies.  As to any facts material to our opinion, we have,
when relevant facts were not independently established, relied upon the
aforesaid instruments, certificates and documents.

Based on the foregoing, we are of the opinion that:

1.   The Bank of New York Mellon is a corporation organized under the laws of
the State of New York with the powers of a trust company under the Banking Law
of the State of New York.

2.   The Trust Agreement and the Standard Terms are in proper form for execution
and delivery by you, as Trustee, and each has been duly executed and delivered
by you, as Trustee,


               DORSEY & WHITNEY LLP WWW.DORSEY.COM T 212 415.9200 F 212.953.7201
                               51 WEST 52ND STREET NEW YORK, NEW YORK 10019-6119

                                                  USA CANADA EUROPE ASIA PACIFIC

                                                                          DORSEY

November 8, 2016
Page 2



and assuming due authorization, execution and delivery by the Depositor, the
Trust Agreement and the Standard Terms are valid and legally binding obligations
of The Bank of New York Mellon.

3.   The Receipts for Units are in proper form for execution by you, as Trustee,
and have been duly executed by you, as Trustee, and pursuant to the Depositor's
instructions, the Trustee has registered on the registration books of the Trust
the ownership of the Units by Cede & Co., as nominee of the Depository Trust
Company where it has caused the Units to be credited to the account of the
Depositor.

In rendering the foregoing opinion we have not considered, among other things,
the merchantability of the Portfolio Assets, whether the Portfolio Assets have
been duly authorized and delivered or the tax status of the Portfolio Assets
under any federal, state or local laws.

The foregoing opinions are limited to the laws of the State of New York and the
federal laws of the United States of America.  This opinion is for your benefit
and may not be disclosed to or relied upon by any other person without our prior
written consent.

We hereby consent to the filing of this opinion letter as an exhibit to the
Registration Statement relating to the Units and to the use of our name and the
reference to our firm in the Registration Statement and in the Prospectus.

Very truly yours,


/s/ Dorsey & Whitney LLP

EXHIBIT 4.1


                        Advisors Asset Management, Inc.
                              18925 Base Camp Road
                           Monument, Colorado  80132


                                November 8, 2016
                                        
                                        
                                        

Advisors Disciplined Trust 1738
c/o The Bank of New York Mellon, as Trustee
BNY Atlantic Terminal
2 Hanson Place, 12th Floor
Brooklyn, New York 11217

     Re:          Advisors Disciplined Trust 1738 (the "Fund")


Ladies and Gentlemen:
     
     We have examined the Registration Statement File No. 333-214051 for the
above captioned Fund.  We hereby consent to the use in the Registration
Statement of the references to Advisors Asset Management, Inc. as evaluator.
     
     You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
                                
                             Very truly yours,
                                
                             Advisors Asset Management, Inc.
                                
                                
                             By     /s/ ALEX R. MEITZNER
                               ------------------------------
                                   Senior Vice President

EXHIBIT 4.2




            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     
     We have issued our report dated November 8, 2016, with respect to the
financial statement of Advisors Disciplined Trust 1738 contained in Amendment
No. 1 to the Registration Statement on Form S-6 (File No. 333-214051) and
related Prospectus. We consent to the use of the aforementioned report in the
Registration Statement and Prospectus, and to the use of our name as it appears
under the caption "Experts".
                                
                                
                                /s/ GRANT THORNTON LLP
                                

Chicago, Illinois
November 8, 2016

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