**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**____**

**FORM** **10-K**

**FOR ANNUAL AND TRANSITION REPORTS**

**PURSUANT TO SECTIONS** **13 OR 15(d) OF THE**

**SECURITIES EXCHANGE ACT OF 1934**

(Mark            One)

|   | x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                            SECURITIES EXCHANGE ACT OF 1934 |
|--------|---|-----------------------------------------------------------------------------------------------------------------|

For the fiscal year ended December 31, 2007

or

|   | o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)                            OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|---|--------------------------------------------------------------------------------------------------------------------------|

For the transition period from ________ to ________

Commission File Number of issuing entity: 333-135656-03,            001-33605

STRATS(SM) Trust for AMBAC Financial Group, Inc. Securities, Series            2007-1

______________________________________________________

(Exact name of issuing entity as specified in its charter)

Commission File Number of depositor and sponsor: 333-131889,            001-31818

Synthetic Fixed-Income Securities, Inc.

______________________________________________________

(Exact name of depositor and sponsor as specified in its            charter)

| Delaware                                                                       | 52-2316339                           |
|--------------------------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporationor organization)                  | (I.R.S. Employer Identification No.) |
|                                                                           |                                 |
|                                                                           |                                 |
| 301 South College Street, Charlotte, North                            Carolina | 28288                                |
| (Address of principal executive offices)                                       | (Zip Code)                           |
|                                                                           |                                 |

Registrant's telephone number, including area code: (704)            715-8400

Securities registered pursuant to Section 12(b) of the            Act:

| Title of each class                    | Name of Registered exchange on which                            registered |
|----------------------------------------|----------------------------------------------------------------------------|
|                                   |                                                                       |
| STRATS(SM) Certificates, Series 2007-1 | New York Stock Exchange ("NYSE")                                           |

 

 

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| Securities registered pursuant to Section 12(g) of                            the Act: | None |
|---------------------------------------------------------------------------------------------|------|

Indicate by check mark if the registrant is a well-known seasoned            issuer, as defined in Rule 405 of the Securities Act.

Yes            o No x

Indicate by check mark if the registrant is not required            to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No            x

Indicate by check mark whether the            registrant: (1) Has filed all reports required to be filed by section 13 or            15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for            such shorter period that the registrant was required to file such reports), and            (2) has been subject to such filing requirements for the past 90            days.

Yes            x No            o

Indicate by check mark if disclosure of            delinquent filers pursuant to Item 405 of Regulation S-K is not contained            herein, and will not be contained, to the best of registrant's knowledge, in definitive            proxy or information statements incorporated by reference in Part III of this            Form 10-K or any amendment to this Form 10-K.

Not applicable.

Indicate by check mark whether the            registrant is large accelerated filer, an accelerated filer or a non-accelerated filer.            See the definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of            the Exchange Act. (check one):

| Large accelerated filer                            o | Accelerated filer                            o | Non- accelerated filer                            x |
|------------------------------------------------------|------------------------------------------------|-----------------------------------------------------|

Indicate by check mark whether the            registrant is a shell company (as defined in Rule 12b-2 of the            Act).

Yes o No            x

State the aggregate market            value of the voting and non-voting common equity held by non-affiliates computed by            reference to the price at which the common equity was last sold, or the average bid and            asked price of such common equity, as of the last business day of the registrant's most            recently completed second fiscal quarter:

The registrant has no            voting stock or class of common stock that is held by            non-affiliates.

**DOCUMENTS INCORPORATED            BY REFERENCE**

The following documents are            incorporated by reference into Part IV of this Annual Report: The distribution            reports to security holders filed on Form 10-D during the fiscal year, in lieu of            reports on Form 10-Q, which include the reports filed on Form 10-D listed in            Item 15(a) hereto.

**Introductory            Note**

Synthetic Fixed-Income            Securities, Inc. (the "Depositor") is the Depositor in respect of the STRATS(SM) Trust            for AMBAC Financial Group, Inc. Securities, Series 2007-1 (the "Trust"), a common law            trust formed pursuant to the Base Trust Agreement, dated as of September 8, 2006,            between the Depositor and U.S. Bank Trust National Association, as trustee (the            "Trustee"), as supplemented by the STRATS(SM) Certificates Series Supplement 2007-1            (the "Series Supplement") dated as of July 16, 2007 in respect of the Trust. The            Trust's assets consist solely of notes issued by News Corporation. The Certificates do            not represent obligations of or interests in the Depositor or the            Trustee.

Pursuant to staff            administrative positions established in Corporate Asset Backed Corporation (available            August 9, 1995), the Trust is not required to respond to various items of            Form 10-K. Such items are designated herein as "Not Applicable." Distribution            reports detailing receipts and distributions by the Trust are filed after each            distribution date on Form 10-D in lieu of reports on Form 10-Q. AMBAC            Financial Group, Inc., the issuer of the underlying securities, is subject to the            information reporting requirements of the Securities Exchange Act of 1934            (the

 

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"Exchange Act"). For            information on AMBAC Financial Group, Inc. please see its periodic and current reports            filed with the Securities and Exchange Commission (the "Commission") under its Exchange            Act file number, 001-10777. The Commission maintains a site on the World Wide Web at            "http://www.sec.gov" at which users can view and download copies of reports, proxy and            information statements and other information filed electronically through the            Electronic Data Gathering, Analysis and Retrieval system, or "EDGAR." Periodic and            current reports and other information required to be filed pursuant to the Exchange Act            by AMBAC Financial Group, Inc. may be accessed on this site. You can request copies of            these documents, upon payment of a duplicating fee, by writing to the SEC. The public            may read and copy any materials filed with the Commission at the Commission's Public            Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain            information on the operation of the Public Reference Room by calling the Commission at            1-800-SEC-0330.  Please call the SEC at (800) SEC-0330 for further            information on the operation of the SEC's public reference rooms. In addition, such            reports and other information can be inspected at the offices of the New York Stock            Exchange at 20 Broad Street, New York, New York 10005. Neither Synthetic Fixed-Income            Securities, Inc. nor the Trustee has participated in the preparation of such reporting            documents, or made any due diligence investigation with respect to the information            provided therein. Neither Synthetic Fixed-Income Securities, Inc. nor the Trustee has            verified the accuracy or completeness of such documents or reports. There can be no            assurance that events affecting the issuer of the underlying securities or the            underlying securities themselves have not occurred or have not yet been publicly            disclosed which would affect the accuracy or completeness of the publicly available            documents described above.

 

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**PART            I**

**The following Items have            been omitted in accordance with General Instruction J to Form            10-K:**

Item 1.            Business.

Item 1A. Risk            Factors.

Item 2.            Properties.

Item 3. Legal            Proceedings.

Item 4. Submission of            Matters to a Vote of Security Holders.

 

Item 1B. Unresolved            Staff Comments.

Not            Applicable

**PART            II**

**The following Items have            been omitted in accordance with General Instruction J to Form            10-K:**

Item 5. Market for            Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity            Securities.

Item 6. Selected Financial            Data.

Item 7. Management's            Discussion and Analysis of Financial Condition and Results of            Operations.

Item 7A. Quantitative and            Qualitative Disclosures About Market Risk.

Item 8. Financial            Statements and Supplementary Data.

Item 9. Changes in and            Disagreements With Accountants on Accounting and Financial            Disclosure.

Item 9A. Controls and            Procedures.

 

Item 9B. Other            Information.

None

**PART            III**

**The following Items have            been omitted in accordance with General Instruction J to Form            10-K:**

Item 10. Directors and            Executive Officers of the Registrant.

Item 11. Executive            Compensation.

Item 12. Security Ownership            of Certain Beneficial Owners and Management and Related Stock            Matters.

Item 13. Certain            Relationships and Related Transactions.

Item 14. Principal            Accounting Fees and Services.

 

 

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**SUBSTITUTE INFORMATION            PROVIDED IN ACCORDANCE WITH GENERAL INSTRUCTION J(2) TO FORM            10-K.**

 

| **Item 1112(b) of Regulation AB.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | **Significant Obligors of Pool Assets (Financial                            Information).**                                                                                                                                           |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| The primary asset of the issuing entity is the                            underlying securities, $37,500,000 of 6.15% corporate bonds due                            February 15, 2037 issued by AMBAC Financial Group, Inc. The issuer of                            the underlying securities, therefore, may be considered a significant                            obligor. The issuer of the underlying securities is subject to the                            information reporting requirements of the Securities Exchange Act of                            1934 (the "Exchange Act"). For information on the issuer of the                            underlying securities please see its periodic and current reports filed                            with the Securities and Exchange Commission (the "Commission") under                            its Exchange Act file number, 001-10777.

                              |
| **Item 1114(b)(2) of Regulation AB.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | **Credit Enhancement and Other Support, Except for                            Certain Derivatives**

**Instruments (Information Regarding Significant                            Enhancement**

**Providers Financial Information).** |
| Based on the standards set forth in Item 1114(b)(2)                            of Regulation AB, no information is required in response to this                            Item.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **Item 1115(b) of Regulation AB.**

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | **Certain Derivatives Instruments (Financial                            Information).**                                                                                                                                               |
| Based on the standards set forth in Item 1115(b) of                            Regulation AB, no information is required in response to this                            Item.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **Item 1117 of Regulation AB.**

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **Legal Proceedings.**                                                                                                                                                                                                                |
| Based on the standards set forth in Item 1117 of                            Regulation AB no information is required in response to this                            Item.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Item 1119 of Regulation AB.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | **Affiliations and Certain Relationships and Related                            Transactions.**                                                                                                                                       |
| Based on the standards set forth in Item 1119 of                            Regulation AB, no information is required in response to this                            Item.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **Item 1122 of Regulation AB.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | **Compliance with Applicable Servicing                            Criteria**                                                                                                                                                          |

U.S. Bank Trust National Association has been identified by the            registrant as a party participating in the servicing function with respect to the pool            assets held by STRATS(SM) Trust for AMBAC Financial Group, Inc. Securities, Series            2007-1. U.S. Bank Trust National Association has completed a report on an assessment of            compliance with the servicing criteria applicable (the "Report on Assessment") as of            March 28, 2008 and for a period beginning January 1, 2007 through and including            December 31, 2007, which Report on Assessment is attached as an exhibit to this            Form 10-K. In addition, U.S. Bank Trust National Association has provided an            attestation report (the "Attestation Report") by a registered independent public            accounting firm regarding its related Report on Assessment. The Attestation Report is            attached as an exhibit to this Form 10-K. Neither the Report on Assessment or the            related Attestation Report has identified any material instances of noncompliance with            the servicing criteria described in the Report on Assessment as being applicable to            U.S. Bank Trust National Association.

| **Item 1123 of Regulation AB.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | **Servicer Compliance Statement.** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|
| U.S. Bank Trust National Association has provided a                            statement of compliance (the "Compliance Statement") for the period                            from and including January 1, 2007 through and including                            December 31, 2007, which has been signed by an authorized officer                            of U.S. Bank Trust National Association. The Compliance Statement of                            U.S. Bank Trust National Association is attached as an exhibit to this                            Form 10-K. |

 

 

 

 

 

 

 

 

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**PART            IV**

Item 15. Exhibits,            Financial Statement            Schedules.

| (a) | The following documents have been filed as part of this                            report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.  | Trustee's Distribution Statements documented on                            Form 10-D of STRATS(SM) Trust for   AMBAC Financial                            Group, Inc. Securities, Series 2007-1 to the certificateholders for the                            period from January 1, 2007 through and including December 31, 2007                            have been filed with the Securities and Exchange Commission and are                            hereby incorporated by reference. Filing dates are listed                            below: |

 

 

| Trust Description                                                                                     | Distribution Date | Filed on        |
|-------------------------------------------------------------------------------------------------------|-------------------|-----------------|
| STRATS(SM) Trust for AMBAC Financial Group, Inc.                            Securities, Series 2007-1 | August 15, 2007   | August 29, 2007 |

 

| 2.     | None                                                                                                                                                                                                                                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.     | Exhibits                                                                                                                                                                                                                                                                                     |
|   | 31.1 – Certification by Director of the Registrant                            pursuant to 15 U.S.C. Section 7241, as adopted pursuant to                            Section 302 of the Sarbanes-Oxley Act of 2002.                                                           |
|   | 33.1 – Report on Assessment of Compliance with                            Servicing Criteria for U.S. Bank Trust National Association for the                            period from and including January 1, 2007 through and including                            December 31, 2007. |
|   | 34.1 – Attestation Report of Ernst & Young LLP                            on Assessment of Compliance with Servicing Criteria relating to U.S.                            Bank Trust National Association.                                                                         |
|   | 35.1 – Servicer Compliance Statement of U.S. Bank                            Trust National Association for the period from and including January 1,                            2007 through and including December 31, 2007.                                                          |
|   | 99.1 - Registrant's Current Report on Form 10-D filed                            with the Securities and Exchange Commission on August 29, 2007, as                            further described in Item 15(a)(1) above, is incorporated herein by                            reference.     |
| (b)    | See Item 15(a) above.                                                                                                                                                                                                                                                                   |
| (c)    | Not Applicable.                                                                                                                                                                                                                                                                              |

             

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SIGNATURE

Pursuant to the            requirements of Section 13 or 15 (d) the Securities Exchange Act of 1934, the            registrant has duly caused this report to be signed on its behalf by the undersigned            thereunto duly authorized.

Synthetic Fixed-Income            Securities, Inc.,

as Depositor for the            Trust

             

By: /s/ James            Whang                          

Name: James            Whang

                                                                                                                 Title:    Director

(senior officer in charge            of the securitizations of the depositor)

Dated: March 28,            2008

 

 

 

 

 

 

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**EXHIBIT            INDEX**

| Exhibit Number in this Form 10-K | Description of Exhibits                                                                                                                                                                                                                                                           |
|---------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1                                  | Certification by Director of the Registrant pursuant to                            15 U.S.C. Section 7241, as adopted pursuant to Section 302 of                            the Sarbanes-Oxley Act of 2002.                                                             |
| 33.1                                  | Report on Assessment of Compliance with Servicing                            Criteria for U.S. Bank Trust National Association for the period from                            and including January 1, 2007 through and including December 31,                            2007.   |
| 34.1                                  | Attestation Report of Ernst & Young LLP on                            Assessment of Compliance with Servicing Criteria relating to U.S. Bank                            Trust National Association.                                                                           |
| 35.1                                  | Servicer Compliance Statement of U.S. Bank Trust                            National Association for the period from and including January 1, 2007                            through and including December 31, 2007.                                                            |
| 99.1                                  | Registrant's Current Report on Form 10-D filed with the                            Securities and Exchange Commission on August 29, 2007, as further                            described in Item 15(a)(1) above, is incorporated herein by                            reference. |

 

 

 

 

 

 

 

 

 

 

 

 

 

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