AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 1, 2005
1933 ACT FILE NO. 333-______
1940 ACT FILE NO. 811 - 03763
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
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: CLAYMORE SECURITIES DEFINED PORTFOLIOS,
SERIES 217
B. NAME OF DEPOSITOR: CLAYMORE SECURITIES, INC.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
Claymore Securities, Inc.
2455 Corporate West Drive
Lisle, Illinois 60532
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
Copies to:
NICHOLAS DALMASO, ESQ. ERIC F. FESS
Senior Managing Director and
General Counsel
Claymore Securities, Inc. Chapman and Cutler LLP
2455 Corporate West Drive 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
(630) 505-3736 (312) 845-3000
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / on (date) pursuant to paragraph (a) of rule 485 or 486
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
E. TITLE OF SECURITIES BEING REGISTERED: Units of fractional undivided
beneficial interest.
F. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC: As soon as practicable
after the effective date of the Registration Statement.
/ / Check box if it is proposed that this filing will become effective on
(date) at (time) pursuant to Rule 487.
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The registration hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
Preliminary Prospectus Dated March 1, 2005 Subject to Completion
CLAYMORE SECURITIES DEFINED PORTFOLIOS, SERIES 217
S&P 100 INDEX PORTFOLIO, SERIES 12
[Claymore Logo]
PROSPECTUS PART A DATED ________ , 2005
A portfolio of the stocks in the Standard & Poor's 100 Index(R) seeking
capital appreciation.
The Securities and Exchange Commission has not approved or disapproved of
these securities or passed upon the adequacy or accuracy of this prospectus.
Any representation to the contrary is a criminal offense.
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INVESTMENT SUMMARY
OVERVIEW
Claymore Securities Defined Portfolios, Series 174 is a unit investment
trust that consists of the S&P 100 Index Portfolio, Series 11 (the "trust"). The
trust contains the common stocks of in the Standard & Poor's 100 Index(R) (the
"S&P 100 Index") one business day prior to the initial date of deposit (the
"Inception Date"). Claymore Securities, Inc. ("Claymore" or the "sponsor")
serves as the sponsor of the trust.
The trust is scheduled to terminate in approximately six years.
INVESTMENT OBJECTIVE
The trust seeks to provide investment results that correspond to the total
return of the stocks in the S&P 100 Index over its life. Total return includes
any increase or decrease in the value of stocks plus any dividend income.
PRINCIPAL INVESTMENT STRATEGY
The trust seeks to replicate the S&P 100 Index by holding all, or a
representative sample, of the stocks that comprise the index. The index includes
stocks of 100 major, blue chip companies across diverse industry groups. Under
normal market conditions, the performance correlation between the portfolio and
the index will be between 97% and 99%. The sponsor may adjust the portfolio
stocks periodically to match any changes in the index. The portfolio will
include at least 95% of the stocks in the index. In an effort to lower trust
expenses, the sponsor may initially deposit an equal number shares of each stock
in the portfolio. Within 30 days the sponsor will align the portfolio with the
index composition as it creates additional units. The sponsor will then maintain
the portfolio as described above.
"Standard & Poor's(R)", "S&P(R)", "S&P 100(R)" and "Standard & Poor's 100
Index(R)" are trademarks of the McGraw-Hill Companies, Inc. and have been
licensed for use by Claymore Securities, Inc. The trust is not sponsored,
endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the trust.
See "Investment Policies" in Part B of the prospectus for more information.
SECURITY SELECTION
The sponsor will seek to create an initial portfolio that substantially
replicates the S&P 100 Index (the "Index"); however, this initial deposit into
the trust may consist of an equal number of shares of each of the stocks which
comprise the Index. In either case, during the first 30 days of the trust's
life, the sponsor intends to create and maintain the trust that duplicates, to
the extent practicable, the weightings of stocks that comprise the Index. The
sponsor anticipates that within the initial 30-day adjustment period, the trust
portfolio will comprise the stocks in the Index in substantially the same
weightings as in such Index. Of course, there is no guarantee that this will
occur during the first 30 days of the trust's life. In connection with any
deposit of securities, purchase and sale transactions will be effected in
accordance with computer program output showing which securities are under- or
over-represented in the trust portfolio. Precise duplication of the relationship
among the securities in the Index may not be achieved because it may be
economically impracticable or impossible to acquire very small numbers of shares
of certain stocks and because of other procedural policies of the trust, but
correlation between the performance of the Index and the related trust portfolio
is expected to be between 97% and 99% over the term of the trust.
By investing a substantially all of the stocks, in substantially the same
proportions, which comprise the Index, the trust seeks to produce investment
results that generally correspond to the price and yield performance of the
securities represented by the index over the term of the trust. Due to various
factors discussed below, there can be no assurance that this objective will be
met. An investment in units should be made with an understanding that the trust
includes payments of sales fees and expenses which may not be considered in
public statements of the total return of the Index.
THE S&P 100 INDEX
The S&P 100 Index is a capitalization-weighted index based on 100 highly
capitalized stocks for which options are listed on the Chicago Board Options
Exchange. As of April 6, 2004, the companies in the S&P 100 Index were listed on
the following stock exchanges in the amounts indicated: New York Stock Exchange
(93%) and Nasdaq National Market System (7%). At present, the mean market
capitalization of the companies in the S&P 100 Index is approximately $5.8
billion with a total market value of $5.8 trillion. The weightings of stocks in
the S&P 100 Index are primarily based on each stock's relative total market
value; that is, its market price per share times the number of shares
outstanding. In addition to market value, the general guidelines for holding
stocks to S&P indices include the following:
o INDUSTRY GROUP CLASSIFICATION: Companies selected for the S&P indices
represent a broad range of industry segments within the U.S. economy.
o CAPITALIZATION: Ownership of a company's outstanding common shares is
carefully analyzed in order to screen out closely-held companies.
o TRADING ACTIVITY: The trading volume of a company's stock is analyzed
on a daily, monthly, and annual basis to ensure ample liquidity and
efficient share pricing.
o FUNDAMENTAL ANALYSIS: Both the financial and operating condition of a
company are rigorously analyzed. The goal is to add companies to the
indices that are relatively stable and will keep turnover low.
o EMERGING INDUSTRIES: Companies in emerging industries and/or new
industry groups (industry groups currently not represented in the
indices) are candidates as long as they meet the guidelines listed
above. Stocks are generally selected for the trust in the order of
their weightings in the S&P 100 Index, beginning with the
heaviest-weighted stocks.
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"),
has established procedures for, and controls over, substitution of stocks in the
Index. It may make changes in the stocks and the eligibility criteria
periodically. The general guidelines for removing stock from S&P indices include
the following:
o MERGER, ACQUISITION, LEVERAGED BUYOUT: A company is removed from the
indices as close as possible to the actual transaction date.
o BANKRUPTCY: A company is removed from the indices immediately after
Chapter 11 filing or as soon as an alternative recapitalization plan
that changes the company's debt/equity mix is approved by shareholders.
o RESTRUCTURING: Each company's restructuring plan is analyzed in depth.
The restructured company as well as any spin-offs are reviewed for
Index or exclusion.
o LACK OF REPRESENTATION: A company can be removed from the indices
because it no longer meets current criteria for inclusion and/or is no
longer representative of its industry group.
FUTURE TRUSTS
The sponsor intends to create future trusts that follow the same investment
strategy. One such trust is expected to be available approximately one year
after the trust's Inception Date and upon the trust's termination. If these
future trusts are available, you may be able to reinvest into one of the trusts
at a reduced sales charge. Each trust is designed to be part of a longer term
strategy.
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ESSENTIAL INFORMATION
(AS OF THE INCEPTION DATE)
INCEPTION DATE _______ , 2005
UNIT PRICE $10.00
TERMINATION DATE _________
DISTRIBUTION DATE 25th day of each
January and July
(commencing ________ , 2005)
RECORD DATE 15th day of each
January and July
(commencing ________ , 2005)
CUSIP NUMBERS
CASH DISTRIBUTIONS
All Accounts
REINVESTED DISTRIBUTIONS
Standard Accounts
Fee Account Reinvest
TICKER
PORTFOLIO DIVERSIFICATION
APPROXIMATE
SECTOR PORTFOLIO PERCENTAGE
----- ------------------
------
Total 100.00%
------
MINIMUM INVESTMENT
Standard accounts $1,000/100 units
Retirement accounts and
custodial accounts
for minors $1,000/100 units
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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:
o STOCK PRICES CAN BE VOLATILE. The value of your investment may fall over
time.
o THE SPONSOR DOES NOT ACTIVELY MANAGE THE PORTFOLIO. The trust will seek
to replicate the S&P 100 Index even if the index performance declines.
o The performance of the trust may not sufficiently correspond with the
performance of the index. This is due to a variety of factors that
include:
-- the impracticability of owning each of the securities in the
index with the exact weightings at any given time;
-- the possibility of tracking errors;
-- the time that elapses between a change in the index and a change
in the trust; and
-- sales charges and expenses.
See "Risk Factors" in Part B of the prospectus and "Investment Risks" in
Part A of the prospectus for additional information.
WHO SHOULD INVEST
You should consider this investment if:
o You want to own stocks in the S&P 100 Index in a single investment.
o You want the potential to increase the value of your money over the
long-term.
o The trust is part of a longer-term investment strategy that includes
the investment in subsequent portfolios, if available.
o The trust is combined with other investment vehicles to provide
diversification of method to your overall portfolio.
You should not consider this investment if:
o You are uncomfortable with the trust's strategy.
o You are uncomfortable with the risks of unmanaged investment in stocks.
o You want current income, capital preservation or a short term
investment.
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.
PERCENTAGE
OF PUBLIC AMOUNT PER
OFFERING $1,000
INVESTOR FEES PRICE INVESTED (4)
- ------------ --------- ---------
INITIAL SALES FIRM
PAID ON PURCHASE (1) 1.00% $10.00
DEFERRED SALES FEE (2) 3.45 34.50
CREATION AND
DEVELOPMENT FEE (3) 0.50 5.00
----- -----
MAXIMUM SALES FEES
(including creation
and development fee) 4.95% $49.50
===== =====
INVESTOR FEES
ESTIMATED ORGANIZATION COSTS
(amount per 100 units paid
by trust at end of initial
offering period or after six
months, at the discretion
of the sponsor) $5.00
=====
APPROXIMATE
ANNUAL FUND % OF PUBLIC
OPERATING OFFERING AMOUNT PER
EXPENSES PRICE (4) 100 UNITS
- ------------ --------- ---------
Trustee's fee 0.0950% $0.950
Sponsor's supervisory fee 0.0300 0.300
Evaluator's fee 0.0350 0.350
Bookkeeping and
administrative fee 0.0350 0.350
Estimated other trust
operating expenses (5) 0.0350 0.350
------ -----
Total 0.3395% $3.395
====== =====
(1) The initial sales fee provided above is based on the unit price on the
Inception Date. Because the initial sales fee equals the difference between
the maximum sales fee and the sum of the remaining deferred sales fee and
the creation and development fee ("C&D Fee") (as described below), the
percentage and dollar amount of the initial sales fee will vary as the unit
price varies and after deferred charges begin. Despite the variability of
the initial sales fee, each investor is obligated to pay the entire
applicable maximum sales fee.
(2) The deferred sales fee is fixed at $0.345 per unit and is deducted in
monthly installments of $0.115 per unit on the last business day of each
month from January, 2005 through March, 2005. The percentage provided is
based on a $10 unit as of the Inception Date and the percentage amount will
vary over time.
(3) The C&D Fee compensates the sponsor for creating and developing your trust.
The actual C&D Fee is $0.05 per unit and is paid to the sponsor at the
close of the initial offering period, which is expected to be four months
from the Inception Date. The percentages provided are based on a $10 unit
as of the Inception Date and the percentage amount will vary over time. If
the unit price exceeds $10.00 per unit, the C&D Fee will be less than
0.50%; if the unit price is less than $10.00 per unit, the C&D Fee will
exceed 0.50%.
(4) Based on 100 units with a $10 per unit Public Offering Price as of the
Inception Date.
(5) Other operating expenses include a licensing fee paid to S&P for use of
trademarks, tradenames or other intellectual property rights but do not
include brokerage cost and other transaction
al fees.
EXAMPLE
This example helps you compare the costs of this trust with other unit
trusts and mutual funds. In the example we assume that you reinvest your
investment in a new trust every other year, the expenses do not change and 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:
1 year $
3 years
5 years
10 years
These amounts are the same regardless of whether you sell your investment
at the end of a period or continue to hold your investment. The example does not
consider any brokerage fees or transaction fees that broker-dealers may charge
for processing redemption requests.
See "Expenses of the Trust" in Part B of the prospectus for additional
information.
ESTIMATED ANNUAL INCOME DISTRIBUTIONS
The portfolio's estimated annual income distributions are $0.134 per unit
for the first year. The amount of distributions may increase or decrease as
securities in the portfolio mature, are called or are sold, as the dividends
received change or as fees and expenses increase or decrease.
Estimated distributions assume that all of the securities and expected
dividends are delivered to the portfolio. These figures are estimates as of the
business day prior to the Inception Date; actual payments may vary.
See "Expenses of the Trust" in Part B of the prospectus for additional
information.
THE S&P 100 INDEX HISTORICAL PERFORMANCE
This table shows historical data for the Index (not this trust or any
previous series). This information is not meant to indicate your future return.
Your investment return will differ from the past returns of the Index. Returns
have fluctuated significantly in the past and have not always been positive.
CHANGE IN
YEAR-END INDEX
YEAR-END INDEX VALUE* FOR YEAR
--------- ------------ ----------
1987 119.13 --
1988 131.93 10.74%
1989 164.68 24.82%
1990 155.22 (5.74)%
1991 192.78 24.20%
1992 198.32 2.87%
1993 214.73 8.27%
1994 214.32 (0.19)%
1995 292.96 36.69%
1996 359.99 22.80%
1997 459.94 27.76%
1998 604.03 31.33%
1999 792.83 31.26%
2000 686.45 (13.42)%
2001 584.28 (14.88)%
2002 444.75 (23.88)%
2003 550.78 23.84%
through 3/31/04 551.13 0.06%
* The table above does not reflect the sales fee or expenses you pay on your
units. It also does not reflect the effect of taxes. As with any index
portfolio, your return may differ from that of the actual index. For
example, this could happen because the trust may not be fully invested at
all times, the trust will bear brokerage commissions in buying and selling
stocks, and the weightings of stocks in the trust may not replicate their
weightings in the index at all times. Source: Standard & Poor's. The index
was developed with a base value of 50 as of January 2, 1976. As of November
24, 1997, the index split 2-for-1.
When reviewing any historical performance information, you should keep in
mind that past performance cannot guarantee future results. Many stocks,
especially those issued by technology companies, exhibited above-average price
appreciation and extreme volatility in recent years during a period of a
generally rising stock market. No one can assure you that this will continue or
that the performance of stocks will replicate the performance exhibited in the
past.
The information in the prospectus has been taken from publicly available
sources provided by S&P. The sponsor believes this information to be accurate as
of the date of this prospectus but has not independently reviewed the accuracy
of this information. The manner in which the Index level is calculated, index
eligibility criteria, the annual ranking review and the process for rebalancing
the Index may change in the future. These factors are solely within the control
of S&P and may change without consideration of or notice to the trust or the
sponsor.
TRUST PORTFOLIO
CLAYMORE SECURITIES DEFINED PORTFOLIOS, SERIES 217
S&P 100 INDEX PORTFOLIO, SERIES 12
THE TRUST PORTFOLIO AS OF THE INCEPTION DATE, _______ , 2005
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INITIAL PERCENTAGE PER SHARE COST TO
TICKER COMPANY NAME (1) SHARES OF PORTFOLIO PRICE PORTFOLIO (2)(3)
- -------------------------------------------------------------------------------------------------------------------
TRUST PORTFOLIO (CONTINUED)
CLAYMORE SECURITIES DEFINED PORTFOLIOS, SERIES 217
S&P 100 INDEX PORTFOLIO, SERIES 12
THE TRUST PORTFOLIO AS OF THE INCEPTION DATE, _______ , 2005
- -------------------------------------------------------------------------------------------------------------------
INITIAL PERCENTAGE PER SHARE COST TO
TICKER COMPANY NAME (1) SHARES OF PORTFOLIO PRICE PORTFOLIO (2)(3)
- -------------------------------------------------------------------------------------------------------------------
--------
$
========
(1) All securities are represented entirely by contracts to purchase
securities, which were entered into by the sponsor on ________ , 2005. All
contracts for securities are expected to be settled by the initial
settlement date for the purchase of units.
(2) Valuation of securities by the evaluator was made using the market value
per share as of the Evaluation Time on ________ , 2005. For securities
quoted on a national or foreign securities exchange or Nasdaq National
Market System, securities are generally valued at the closing sales price.
(3) There was a $____ loss to the sponsor on the Inception Date.
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UNDERSTANDING YOUR INVESTMENT
HOW TO BUY UNITS
You can buy units of your trust on any business day by contacting your
financial professional. Public offering prices of units are available daily on
the Internet at WWW.CLAYMORESECURITIES.COM. The unit price includes:
o the value of the stocks,
o the initial sales fee, and
o cash and other net assets in the portfolio.
We often refer to the purchase price of units as the "Public Offering
Price" or "offer price." We must receive your order to buy units prior to the
close of the New York Stock Exchange (normally 4:00 p.m. Eastern time) to give
you the price for that day. If we receive your order after this time, you will
receive the price computed on the next business day.
VALUE OF THE STOCKS. The sponsor serves as the evaluator of the trust (the
"Evaluator"). We determine the value of the stocks as of the close of the New
York Stock Exchange on each day that the exchange is open (the "Evaluation
Time").
PRICING THE STOCKS. We generally determine the value of stocks using the
last sale price for stocks traded on a national or foreign securities exchange
or the Nasdaq Stock Market. In some cases we will price a stock based on the
last asked or bid price in the over-the-counter market or by using other
recognized pricing methods. We will only do this if a stock is not principally
traded on a national or foreign securities exchange or the Nasdaq Stock Market,
or if the market quotes are unavailable or inappropriate.
The sponsor determined the initial prices of the stocks shown in "Trust
Portfolio" for your trust in this prospectus. The sponsor determined these
initial prices as described above at the close of 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 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 your
purchase price includes a per unit amount sufficient to reimburse us for some or
all of the costs of creating your trust. These costs include the costs of
preparing the registration statement and legal documents, legal fees, federal
and state registration fees and the initial fees and expenses of the trustee.
Your trust will sell stocks to reimburse us for these costs at the end of the
initial offering period or after six months, at the discretion of the sponsor.
TRANSACTIONAL SALES FEE. You pay a fee when you buy units. We refer to this
fee as the "transactional sales fee." The transaction sales fee has both an
initial and a deferred component and is 4.45% of the Public Offering Price based
on a $10 unit. This percentage amount of the transactional sales fee is based on
the unit price on the Inception Date. Because the transactional sales fee equals
the difference between the maximum sales fee and the C&D Fee, the percentage and
dollar amount of the transactional sales fee will vary as the unit price varies.
The transactional sales fee does not include the C&D Fee which is described
under "Expenses of the Trust" in Part B of the prospectus and in "Fees and
Expenses" in Part A of the prospectus.
INITIAL SALES FEE. Based on a $10 unit, the initial sales fee is initially
1% of the Public Offering Price. The initial sales fee, which you will pay at
the time of purchase, is equal to the difference between the maximum sales
charge (4.95% of the Public Offering Price) and the sum of the maximum remaining
deferred sales fees and the C&D Fee (initially $0.395 per unit). The dollar
amount and percentage amount of the initial sales fee will vary over time.
DEFERRED SALES FEE. To keep your money working longer, we defer payment of
the rest of the transactional sales fee through the deferred sales fee ($0.345
per unit).
REDUCING YOUR SALES FEE. We offer a variety of ways for you to reduce the
maximum sales fee you pay. It is your financial professional's responsibility to
alert us of any discount when you order units. Since the deferred sales fee and
the C&D Fee are a fixed dollar amount per unit, your trust must charge the
deferred sales fee and the C&D Fee per unit regardless of any discounts.
However, if you are eligible to receive a discount such that your total maximum
sales fee is less than the fixed dollar amount of the deferred sales fee and the
C&D Fee, we will credit you the difference between your maximum sales fee and
the sum of the deferred sales fee and the C&D Fee at the time you buy units.
LARGE PURCHASES. You can reduce your maximum sales fee by increasing the
size of your investment.
Investors who make large purchases are entitled to the following sales
charge reductions:
Sales Fee
(as a % of Public
Purchase Amount Offering Price)
- ----------------- --------------
Less than $50,000 %
$50,000 - $99,999
$100,000 - $249,999
$250,000 - $499,999
$500,000 - $999,999
$1,000,000 or more
(4) Sales charge reductions are computed both on a dollar basis and on the
basis of the number of units purchased, at any point of purchase, using the
equivalent of 5,000 units to $50,000, 10,000 units to $100,000 etc., and
will be applied on that basis which is more favorable to you.
You may AGGREGATE unit purchases by the same person on any single day from
any one broker-dealer to qualify for a purchase level. You can include these
purchases as your own for purposes of this aggregation:
o purchases by your spouse or minor
children and
o purchases by your trust estate or
fiduciary accounts.
You may also use a LETTER OF INTENT to combine purchases over time to
qualify for a purchase level. Under this option, you must give us a letter of
intent to purchase a specified amount of units of any Claymore unit trust over a
specified time period. The letter must specify a time period of no more than 13
months. Once you sign a letter of intent, we will reduce your fee based on your
total purchase commitment as shown in the table above. If your purchases exceed
the level specified in your letter, you will still receive the additional fee
reduction for your purchases shown in the table above (we will not cap your
discount). If your total purchases are less than the level specified in your
letter, you must pay the fee difference to us. We reserve the right to redeem
your units if you do not pay the difference.
The discounts described above apply only during the initial offering
period.
ADVISORY AND FEE ACCOUNTS. We eliminate your transactional sales fee for
purchases made through registered investment advisers, certified financial
planners or registered broker-dealers who charge periodic fees in lieu of
commissions or who charge for financial planning or for investment advisory or
asset management services or provide these services as part of an investment
account where a comprehensive "wrap fee" is imposed (a "Fee Account").
This discount applies during the initial offering period and in the
secondary market. Your financial professional may purchase units with the Fee
Account CUSIP number to facilitate purchases under this discount, however, we do
not require that you buy units with this CUSIP number to qualify for the
discount. If you purchase units with this special CUSIP number, you should be
aware that all distributions will automatically reinvest into additional units
of your trust. We reserve the right to limit or deny purchases of units not
subject to the transactional sales charge by investors whose frequent trading
activity we determine to be detrimental to your trust. We, as sponsor, will
receive and you will pay the C&D Fee. See "Expenses of the Trust" in Part B of
the Prospectus.
EXCHANGE OR ROLLOVER OPTION. If you are buying units of the trust in the
primary market with redemption or termination proceeds from any other Claymore
unit trust, you may purchase units at 99% of the maximum Public Offering Price,
which may include an up-front sales charge and a deferred sales charge. You may
also buy units with this reduced sales fee if you are purchasing units in the
primary market with (1) the termination proceeds from a non-Claymore unit trust
with a similar investment strategy or (2) the redemption proceeds from a
non-Claymore trust if such trust has a similar investment strategy and the
corresponding Claymore trust provides a periodic update of that investment
strategy. Such purchases entitled to this sales charge reduction may be
classified as "Rollover Purchases."
Rollover Purchases are also subject to the C&D Fee. See "Expenses of the
Trust" in Part B of the prospectus.
EMPLOYEES. We do not charge the portion of the transactional sales fee that
we would normally pay to your financial professional for purchases made by
officers, directors and employees and their family members (spouses, children
and parents) of Claymore and its affiliates, or by registered representatives of
selling firms and their family members (spouses, children and parents). You pay
only the portion of the fee that the sponsor retains. Such purchases are also
subject to the C&D Fee. This discount applies during the initial offering period
and in the secondary market.
DIVIDEND REINVESTMENT PLAN. We do not charge any transactional sales fee
when you reinvest distributions from your trust into additional units of the
trust. Since the deferred sales fee is a fixed dollar amount per unit, your
trust must charge the deferred sales fee 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 that will be collected on such units at the time of
reinvestment. The dollar value of these units will fluctuate over time. This
discount applies during the initial offering period and in the secondary market.
See "Purchase, Redemption and Pricing of Units" in Part B of the prospectus
for more information regarding buying units.
HOW WE DISTRIBUTE UNITS. We sell units to the public through broker-dealers
and other firms. We pay part of the sales fee you pay to these distribution
firms when they sell units. The distribution fee paid for a given transaction is
as follows:
Concession per Unit
Purchase Amount/ (as a % of Public
Form of Purchase Offering Price)
- ---------------- -----------------
Less than $50,000 %
$50,000 - $99,999
$100,000 - $249,999
$250,000 - $499,999
$500,000 - $999,999
$1,000,000 or more
Rollover Purchases
Fee Account and
Employee Purchases 0.00
We apply these amounts as a percent of the unit price per transaction at
the time of the transaction. We also apply the different distribution levels on
a unit basis using a $10 unit equivalent. For example, if a firm executes a
transaction between 10,000 and 24,999 units, it earns ____% of the unit price.
We generally register units for sale in various states in the U.S. We do
not register units for sale in any foreign country. It is your financial
professional's responsibility to make sure that units are registered or exempt
from registration if you are a foreign investor or if you want to buy units in
another 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. For example, we lost $112 on the initial deposit of stocks into the
trust.
See "Purchase, Redemption and Pricing of Units" in Part B of the prospectus
for additional information.
HOW TO SELL YOUR UNITS
You can sell your units on any business day by contacting your financial
professional or, in some cases, the trustee. Unit prices are available daily on
the Internet at WWW.CLAYMORESECURITIES.COM or through your financial
professional. We often refer to the sale price of units as the "bid 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 redemptions or
sale requests.
Until the end of the initial offering period or six months after the
Inception Date, at the discretion of the sponsor, the price at which the trustee
will redeem units and the price at which the sponsor may repurchase units
include estimated organization costs. After such period, the amount paid will
not include such estimated organization costs.
SELLING UNITS. We intend to, but are not obligated to, maintain a secondary
market for units. This means that if you want to sell your units, we may buy
them at the current price which is based on their net asset value. 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 generally 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 unit 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 price.
REDEEMING UNITS. You may also be able to redeem your units directly with
the trustee, The Bank of New York, on any day the New York Stock Exchange is
open. The trustee must receive your completed redemption request prior to the
close of the New York Stock Exchange for you to receive the unit price for a
particular day. (For what constitutes a completed redemption request, see
"Purchase, Redemption and Pricing of Units--Redemption" in the Part B of the
prospectus.) If your request is received after that time or is incomplete in any
way, you will receive the next price computed after the trustee receives your
completed request. Rather than contacting the trustee directly, your financial
professional may also be able to redeem your units by using the Investors'
Voluntary Redemptions and Sales (IVORS) automated redemption service offered
through Depository Trust Company.
If you redeem your units, the trustee will generally send you a payment for
your units no later than three business days after it receives all necessary
documentation.
You can generally request an in-kind distribution of the stocks underlying
your units if you own units worth at least $25,000 or you originally paid at
least that amount for your units. This option is generally available only for
stocks traded and held in the United States. You may not request this option in
the last five business days of your trust's life. We may modify or discontinue
this option at any time without notice.
EXCHANGE OPTION. Exchange Option. You may be able to exchange your units
for units of other Claymore unit trusts at a reduced sales fee. You can contact
your financial professional or Claymore 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. To qualify for a reduced sales fee, you must purchase units in
a subsequent trust on the same day that you redeem units of your current trust.
We may discontinue this option at any time.
For more complete information regarding selling or redeeming your units,
see "Purchase, Redemption and Pricing of Units" in Part B of the prospectus.
DISTRIBUTIONS
DIVIDENDS. Your trust generally pays dividends from its net investment
income along with any excess capital on each distribution date to unitholders of
record on the preceding record date. You can elect to:
o reinvest distributions in additional units of your trust at no fee, or
o receive distributions in cash.
You may change your election by contacting your financial professional or
the trustee. Once you elect to participate in a reinvestment program, the
trustee will automatically reinvest your distributions into additional units at
their net asset value on the distribution date. We waive the sales fee for
reinvestments into units of your trust. We cannot guarantee that units will
always be available for reinvestment. If units are unavailable, you will receive
cash distributions. We may discontinue these options at any time without notice.
In some cases, your trust might pay a special distribution if it holds an
excessive amount of principal 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 amount of your distributions will vary from time
to time as companies change their dividends or trust expenses change.
REINVEST IN YOUR TRUST. You can keep your money working by electing to
reinvest your distributions in additional units of your trust. The easiest way
to do this is to have your financial professional purchase units with one of the
Reinvestment CUSIP numbers listed in the "Investment Summary" section of this
prospectus. You may also make or change your election by contacting your
financial professional or the trustee.
REPORTS. The trustee will send your financial professional 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 stock evaluations to enable
you to complete your tax forms and audited financial statements for your trust,
if available.
See "Administration of the Trust" in Part B of the prospectus for
additional information.
INVESTMENT RISKS
ALL INVESTMENTS INVOLVE RISK. This section describes the main risks that
can impact the value of the stocks in your trust. You should understand these
risks before you invest. Recently, equity markets have experienced significant
volatility. If the value of the stocks 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 stocks will
fluctuate. This could cause the value of your units to fall below your purchase
price. Market value fluctuates in response to various factors. These can include
stock market movements, purchases or sales of securities by the trust,
government policies, litigation, and changes in interest rates, inflation, the
financial condition of the stock's issuer or even perceptions of the issuer.
Even though we carefully supervise your portfolio, you should remember that we
do not manage your portfolio. Your trust will not sell a stock solely because
the market value falls as is possible in a managed fund.
LITIGATION AND LEGISLATION RISK. The trust is also subject to litigation
and legislation risk. 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 companies represented in the trust. In addition, litigation
regarding any of the issuers of the securities such as that concerning Altria
Group, Incorporated, or of the industries represented by these issuers, may
raise potential bankruptcy concerns and may negatively impact the share prices
of these securities. We cannot predict what impact any pending or threatened
litigation or any bankruptcy concerns will have on the share prices of the
securities.
See "Risk Factors" in Part B of the prospectus for additional information.
HOW THE TRUST WORKS
YOUR TRUST. Your trust is a unit investment trust registered under the
Investment Company Act of 1940 and the Securities Act of 1933. We created the
trust under a trust agreement between Claymore Securities, Inc. (as sponsor,
evaluator and supervisor) and The Bank of New York (as trustee). To create your
trust, we deposited contracts to purchase stocks with the trustee along with an
irrevocable letter of credit or other consideration to pay for the stocks. 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.
CHANGING YOUR PORTFOLIO. The trust employs an indexing strategy and will
attempt to track the performance of a specific market index. There can be no
assurance that the trust will be able to track the performance of the index
because it may be impracticable for the trust to duplicate or maintain precisely
the relative weightings of the common stocks which comprise the related stock
index or to purchase all of such stocks. Additionally, an investment in units of
the trust includes payment of sales charges, fees and expenses which are not
considered in the total return of the related stock index.
We will increase the size of your trust as we sell units. When your trust
buys stocks, it will pay brokerage or other acquisition fees. You could
experience a dilution of your investment because of these fees and fluctuations
in stock prices between the time we create units and the time your trust buys
the stocks. When your trust buys or sells stocks, we may direct that it place
orders with and pay brokerage commissions to brokers that sell units or are
affiliated with your trust. We may consider whether a firm sells units of our
trusts when we select firms to handle these transactions.
TERMINATION OF YOUR TRUST. Your trust will terminate no later than the
termination date listed in the "Investment Summary" section of this prospectus.
The trustee may terminate your trust early if the value of the trust is less
than 20% of the value of the stocks in the trust at the end of the initial
offering period. 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. We may also terminate your
trust in other limited circumstances.
The trustee will notify you of any termination and sell any remaining
stocks. The trustee will send your final distribution to you within a reasonable
time following liquidation of all the stocks after deducting final expenses.
Your termination distribution may be less than the price you originally paid for
your units. You may be able to request an in-kind distribution of the stocks
underlying your units at termination. Please refer to the section entitled "How
to Sell Your Units--Redeeming Units" for information on in-kind distributions.
See "Administration of the Trust" in Part B of the prospectus for
additional information.
GENERAL INFORMATION
CLAYMORE. Claymore Securities, Inc. specializes in the creation,
development and distribution of investment solutions for advisors and their
valued clients. In November 2001, we changed our name from Ranson & Associates,
Inc. to Claymore Securities, Inc. During our history we have been active in
public and corporate finance and have distributed bonds, mutual funds and unit
trusts in the primary and secondary markets. We are a registered broker-dealer
and member of the National Association of Securities Dealers, Inc. 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. You can contact us at our headquarters at 210 North Hale Road, Wheaton,
Illinois 60187 or by using the contacts listed on the back cover of this
prospectus. Claymore personnel may from time to time maintain a position in
certain stocks held by the trust.
Claymore and your trust have adopted a code of ethics requiring Claymore's
employees who have access to information on trust transactions to report
personal securities transactions. The purpose of the code is to avoid potential
conflicts of interest and to prevent fraud, deception or misconduct with respect
to your trust.
See "Administration of the Trust" in Part B of the prospectus for
additional information.
THE TRUSTEE. The Bank of New York is the trustee of your trust. It is a
trust company organized under New York law. You can contact the trustee by
calling the telephone number on the back cover of this prospectus or write to
Unit Investment Trust Division, 101 Barclay Street, 20th Fl., New York, New York
10286. We may remove and replace the trustee in some cases without your consent.
The trustee may also resign by notifying Claymore and investors.
See "Administration of the Trust" in Part B of the prospectus for
additional information.
EXPENSES
Your trust will pay various expenses to conduct its operations. The
"Investment Summary" section of this prospectus shows the estimated amount of
these expenses.
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 and evaluator for providing portfolio
supervisory services and for evaluating your portfolio. 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 Claymore unit investment trusts in any
calendar year. All of these fees may adjust for inflation without your approval.
Your trust will pay a fee to the sponsor for creating and developing the
trust, including determining the trust objective, policies, composition and
size, selecting service providers and information services, and for providing
other similar administrative and ministerial functions. Your trust pays this
"creation and development fee" of $0.05 per unit from the assets of the trust as
of the close of the initial public offering period. The sponsor does not use the
fee to pay distribution expenses or as compensation for sales efforts.
Your trust will also pay its general operating expenses, including any
licensing fees. 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 Claymore, legal fees and expenses,
expenses incurred in contacting you and costs incurred to reimburse the trustee
for advancing funds to meet distributions. Your trust may pay the costs of
updating its registration statement each year. The trustee may sell securities
to pay trust expenses.
See "Expenses of the Trust" in Part B of the prospectus for additional
information.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
UNITHOLDERS
CLAYMORE SECURITIES DEFINED PORTFOLIOS, SERIES 217
We have audited the accompanying statement of financial condition,
including the trust portfolio set forth on pages 8 and 9 of this prospectus, of
Claymore Securities Defined Portfolios, Series 217, as of ______ , 2005, the
initial date of deposit. This 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 generally
accepted in the United States of America. 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. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement of financial condition. Our procedures included confirmation with
The Bank of New York, trustee, of cash deposited for the purchases of
securities, as shown in the statement of financial condition as of ______ ,
2005. An audit also includes assessing the accounting principles used and
significant estimates made by the sponsor, as well as evaluating the overall
statement of financial condition presentation. 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 Claymore
Securities Defined Portfolios, Series 217 as of ______ , 2005, in conformity
with accounting principles generally accepted in the United States of America.
Grant Thornton LLP
Chicago, Illinois
_______, 2005
CLAYMORE SECURITIES DEFINED PORTFOLIOS, SERIES 217
STATEMENT OF FINANCIAL CONDITION
AS OF THE INCEPTION DATE, _______ , 2005
INVESTMENT IN STOCKS
Sponsor's contracts to purchase underlying stocks
backed by cash deposited (1)(2) $
---------
$
=========
LIABILITIES AND INTEREST OF INVESTORS
Liabilities:
Organization costs (3) $
Deferred sales fee (4)
---------
---------
Interest of investors:
Cost to investors (5)
Less: gross underwriting commission
and organization costs (3)(4)(5)(6)
---------
Net interest of investors
---------
Total $
=========
Number of units
=========
Net Asset Value per Unit $
=========
- --------------------------------------------------------------------------------
(1) Aggregate cost of the securities is based on the closing sale price
evaluations as determined by the trustee.
(2) Cash and/or a letter of credit has been deposited with The Bank of New
York, trustee, covering the funds (aggregating $_______ ) necessary for the
purchase of the 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 the trust.
These costs have been estimated at $5.00 per 100 units for the trust. A
distribution will be made as of the close of the initial offering period or
six months after the initial date of deposit (at the discretion of the
sponsor) to an account maintained by the trustee from which this obligation
of the investors will be satisfied. To the extent that actual organization
costs are greater than the estimated amount, only the estimated
organization costs added to the public offering price will be deducted from
the assets of the trust.
(4) The total transactional sales fee consists of an initial sales fee and a
deferred sales 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 C&D Fee. On the Inception Date, the total transactional sales
fee is 4.45% (equivalent to 4.657% of the net amount invested). The
deferred sales fee is equal to $0.345 per unit.
(5) The aggregate cost to investors includes the applicable transactional sales
fee assuming no reduction of transactional sales fees for quantity
purchases.
(6) The trust is committed to pay a creation and development fee of $5.00 per
100 units at the close of the initial public offering period.
CLAYMORE SECURITIES DEFINED PORTFOLIOS
CLAYMORE INDEX PORTFOLIO PROSPECTUS PROSPECTUS
PART B DATED _______ , 2005
The prospectus for a Claymore Securities Defined Portfolio (a "trust") is
divided into two parts. Part A of the prospectus relates exclusively to a
particular trust or trusts and provides specific information regarding each
trust's portfolio, strategies, investment objectives, expenses, financial
highlights, income and capital distributions, hypothetical performance
information, risk factors and optional features. Part B of the prospectus
provides more general information regarding the Claymore Securities Defined
Portfolios. You should read both parts of the prospectus and retain them for
future reference. Except as provided in Part A of the prospectus, the
information contained in this Part B will apply to each trust.
CONTENTS
General Information 2
Investment Policies 3
Ginnie Mae Securities 5
Risk Factors 8
Administration of the Trust 10
Portfolio Transactions and Brokerage Allocation 16
Purchase, Redemption and Pricing of Units 17
Taxation 23
Experts 25
Performance Information 25
GENERAL INFORMATION
Each trust is one of a series of separate unit investment trusts created
under the name Claymore Securities Defined Portfolios and registered under the
Investment Company Act of 1940 and the Securities Act of 1933. Each trust was
created as a common law trust on the inception date described in the prospectus
under the laws of the state of New York. Each trust was created under a trust
agreement among Claymore Securities, Inc. (as sponsor, evaluator and supervisor)
and The Bank of New York (as trustee).
Each trust employs an indexing strategy and attempt to track the
performance of a specific market index. There can be no assurance that a trust
will be able to track the performance of an index because it may be
impracticable for the trust to duplicate or maintain precisely the relative
weightings of the common stocks which comprise the related stock index or to
purchase all of such stocks. Additionally, an investment in units of the trusts
includes payment of sales charges, fees and expenses which are not considered in
the total return of the related stock index.
When your 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. Additional units of each 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. 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 cash deposit and the
purchase of the securities and because the trust will pay the associated
brokerage fees.
Each unit initially offered represents an undivided interest in the trust.
To the extent that any units are redeemed by the trustee or additional units are
issued as a result of additional securities being deposited by the sponsor, the
fractional undivided interest in a trust represented by each unredeemed unit
will increase or decrease accordingly, although the actual interest in such
trust represented by such fraction will remain unchanged. Units will remain
outstanding until redeemed upon tender to the trustee by unitholders, which may
include the sponsor, or until the termination of the trust agreement.
A trust consists of (a) the securities listed under "Trust Portfolio" in
the prospectus as may continue to be held from time to time in the trust, (b)
any additional securities acquired and held by the trust pursuant to the
provisions of the trust agreement and (c) any cash held in the accounts of the
trust. 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
The trust is a unit investment trust 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. The trust
intends to qualify as a "regulated investment company" under the federal tax
laws. If the trust qualifies as a regulated investment company and distributes
its income as required by the tax law, the trust generally will not pay federal
income tax. (See "Taxes.")
On the inception date of your trust, the sponsor delivered to the trustee
securities or contracts for the purchase thereof for deposit in the trusts. This
initial deposit into each trust consisted of shares of each of the stocks which
comprise the related stock index. During an initial adjustment period, the
sponsor will continue to deposit securities in a trust (contracts for the
purchase thereof), or cash (or a letter of credit) with instructions to purchase
such securities, until at the end of such period when the trust contains
substantially all of the stocks in the related stock index, in substantially the
same weightings as in such index (the "Initial Adjustment Period"). The sponsor
estimates that the Initial Adjustment Period will last no longer than 30 days
following the inception date of the trust and could last as little as one day.
During the Initial Adjustment Period, the sponsor intends to create and maintain
a trust portfolio that generally corresponds to the index. In connection with
any deposit of securities, purchase and sale transactions will generally be
effected in accordance with a computer optimization program.
Precise duplication of the relationship among the securities in the related
stock index may not be achieved because it may be economically impracticable or
impossible to acquire very small numbers of shares of certain stocks and because
of other procedural policies of the trusts, but correlation between the related
stock index and each trust portfolio is expected to be between .97 and .99 over
the life of the trusts. Correlation is a measure of the extent to which the
price of a trust fluctuates with the price of the index. If a portfolio held all
the securities in the index with exactly the same weightings as the index at all
times, the correlation would be 1.00. Since a trust's holdings and weightings
will differ for a variety of reasons, the correlation will be less than 1.00.
Although correlation is indirectly related to performance, it is not a measure
of the extent to which the performance of a trust will match the performance of
the index.
By investing in those securities determined by the optimization model in
substantially the same proportions which comprise the related stock index, each
trust seeks to produce investment results that generally correspond to the price
and yield performance of the equity securities represented by such index over
the terms of such trust. Due to various factors that include, among others: (1)
price movements of the various securities will not duplicate one another,
(2) the sponsor's current intention to purchase shares of the securities in
round lot quantities only, (3) reinvestment of excess proceeds not needed to
meet redemptions of units may not be sufficient to acquire equal round lots of
all of the securities in a trust and (4) reinvestment of proceeds received from
securities which are no longer components of the related stock index might not
result in the purchase of an equal number of shares in any replacement security,
there can be no assurance that this goal will be satisfied. An investment in
units of a trust should be made with an understanding that each trust includes
payments of sales charges, fees and expenses which may not be considered in
public statements of the total return of the related stock index.
As a general rule, purchases and sales that will be made with respect to a
trust's portfolio will be those that seek to maintain, to the extent feasible, a
portfolio which reflects the current components of the stock index, taking into
consideration redemptions, sales of additional units, cash flows, expenses and
the other factors referred to elsewhere in this prospectus. Such purchases and
sales will generally be made in accordance with the computer program utilized to
maintain the related portfolio, the trust agreement and procedures to be
specified by the sponsor. The sponsor or its designated agent may direct the
trustee to dispose of securities and either to acquire other securities through
the use of the proceeds of such disposition in order to make changes in a
portfolio, or to distribute the proceeds of such disposition to unitholders (i)
as necessary to reflect any additions to or deletions from the stock index, (ii)
as may be necessary to establish a closer correlation between the trust
portfolio and the stock index, (iii) as may be required for purposes of
distributing to unitholders, when required, their pro rata share of any net
realized capital gains or income, or (iv) as the sponsor may otherwise
determine. In the event the trustee receives any securities or other properties
relating to the securities (other than normal dividends) acquired in exchange
for securities such as those acquired in connection with a reorganization,
recapitalization, merger or other transaction, the trustee is directed to sell
such securities or other property. However, if the securities received are
components of the applicable index, the sponsor may advise the trustee to keep
such securities. Any proceeds received in an exchange shall, as the sponsor or
its designee may direct, be reinvested into any securities included in the
applicable index, or distributed to unitholders. In addition, the sponsor will
instruct the trustee to dispose of certain securities and to take such further
action as may be needed from time to time to ensure that the trust continues to
satisfy the qualifications of a regulated investment company, including the
requirements with respect to diversification under Section 851 of the Internal
Revenue Code, and as may be needed from time to time to avoid the imposition of
any excise or income tax on the trust as a regulated investment company. All
purchases and sales are made by the trustee at the direction of the sponsor or
its designated agent. The trustee has no responsibility for the composition of
the trust portfolio or for loss resulting from any transaction directed by the
sponsor or its agent. When directed by the sponsor, the trustee, or an
affiliate, will enter into foreign exchange transactions with the trust and may
benefit from such transactions in the ordinary course of its foreign exchange
business.
Proceeds from the sale of securities (or any securities or other property
received by a trust in exchange for securities) are generally credited to the
Capital Account for distribution to unitholders, to meet redemptions or for
reinvestment into additional securities in accordance with the optimization
program. The trustee may also sell securities, designated by the sponsor or its
designated agent, from a trust for the purpose of redeeming units of the trust
tendered for redemption and the payment of expenses. The sponsor may consider
sales of units of unit investment trusts which it sponsors in making
recommendations to the trustee as to the selection of broker/dealers to execute
a trust's portfolio transactions.
Each trust portfolio will consist of as many of the components of the
related stock index as is feasible in order to seek to achieve the respective
trust's goal of attempting to provide investment results that duplicate
substantially the total return of the index. Following the Initial Adjustment
Period, each trust is expected to be invested in no less than 95% of the stocks
comprising the related index. Although it may be impracticable for a trust to
own certain of such stocks at any time, the sponsor expects to maintain a
correlation between each trust portfolio and that of the related index of
between .97 and .99. Adjustments to a trust portfolio will generally be made on
an ongoing basis in accordance with a computer optimization program which uses a
number of factors, including cash flows, risk, historical correlation between
the underlying stocks in the applicable index and the index itself and
transaction costs in an attempt to produce the optimal correlation with the
applicable index. The trust may invest in new securities in several
circumstances, that include, in connection with the creation of additional
units, as companies are dropped from or added to such index, and as securities
are sold to meet redemptions or to pay for sales charges and expenses. These
adjustments will be made as practicable generally in accordance with computer
program output showing which of the securities are under- or over-represented in
a trust portfolio. Adjustments may also be made from time to time to maintain
the appropriate correlation between a trust and the related index. The proceeds
from any sale may be distributed or invested in those securities which the
computer program indicates are under-represented based upon the computer
optimization program.
Due to changes in the composition of the applicable index, adjustments to a
trust portfolio may be made from time to time. It is anticipated that most of
such changes in the applicable indices will occur as a result of merger or
acquisition activity. In such cases, a trust, as a shareholder of an issuer
which is the object of such merger or acquisition activity, will presumably
receive various offers from potential acquirers of the issuer. The trustee is
not permitted to accept any such offers until such time as the issuer has been
removed from the related index. Since, in most cases, an issuer is removed from
an index only after the consummation of a merger or acquisition, it is
anticipated that the trusts will generally acquire, in exchange for the stock of
the deleted issuer, the consideration that is being offered to shareholders of
that issuer who have not tendered their shares prior to that time. Any cash
received as consideration in such transactions will generally be reinvested in
the securities as determined by the computer program output. Any securities
received as consideration which are not included in the related index will
generally be sold as soon as practicable and will also generally be reinvested
in accordance with the computer optimization program.
The sponsor does not anticipate purchasing or selling stock in quantities
which are not economically practicable. In addition, certain securities may not
be available in the quantities specified by the computer program. For these
reasons, among others, precise duplication of the proportionate relationships in
the related index may not be possible.
RISK FACTORS
STOCKS. An investment in units of a trust should be made with an
understanding of the risks inherent in an investment in equity securities,
including the risk that the financial condition of issuers of the securities may
become impaired or that the general condition of the stock market may worsen
(both of which may contribute directly to a decrease in the value of the
securities and thus, in the value of the units) or the risk that holders of
common stock have a right to receive payments from the issuers of those stocks
that is generally inferior to that of creditors of, or holders of debt
obligations issued by, the issuers and that the rights of holders of common
stock generally rank inferior to the rights of holders of preferred stock.
Common stocks are especially susceptible to general stock market movements and
to volatile increases and decreases in value as market confidence in and
perceptions of the issuers change. These perceptions are based on unpredictable
factors including expectations regarding government, economic, monetary and
fiscal policies, inflation and interest rates, economic expansion or
contraction, and global or regional political, economic or banking crises.
Holders of common stock incur more risk than the holders of preferred
stocks and debt obligations because common stockholders, as owners of the
entity, have generally inferior rights to receive payments from the issuer in
comparison with the rights of creditors of, or holders of debt obligations or
preferred stock issued by the issuer. Holders of common stock of the type held
by a trust have a right to receive dividends only when and if, and in the
amounts, declared by the issuer's board of directors and to participate in
amounts available for distribution by the issuer only after all other claims on
the issuer have been paid or provided for. By contrast, holders of preferred
stock have the right to receive dividends at a fixed rate when and as declared
by the issuer's board of directors, normally on a cumulative basis, but do not
participate in other amounts available for distribution by the issuing
corporation. Cumulative preferred stock dividends must be paid before common
stock dividends and any cumulative preferred stock dividend omitted is added to
future dividends payable to the holders of cumulative preferred stock. Preferred
stocks are also entitled to rights on liquidation which are senior to those of
common stocks. Moreover, common stocks do not represent an obligation of the
issuer and therefore do not offer any assurance of income or provide the degree
of protection of capital debt securities. Indeed, the issuance of debt
securities or even preferred stock will create prior claims for payment of
principal, interest, liquidation preferences and dividends which could adversely
affect the ability and inclination of the issuer to declare or pay dividends on
its common stock or the rights of holders of common stock with respect to assets
of the issuer upon liquidation or bankruptcy. Further, unlike debt securities
which typically have a stated principal amount payable at maturity (whose value,
however, will be subject to market fluctuations prior thereto), common stocks
have neither a fixed principal amount nor a maturity and have values which are
subject to market fluctuations for as long as the stocks remain outstanding. The
value of the securities in a portfolio thus may be expected to fluctuate over
the entire life of a trust to values higher or lower than those prevailing at
the time of purchase.
The sponsor's buying and selling of the securities, especially during the
initial offering of units of the trust or to satisfy redemptions of units may
impact upon the value of the underlying securities and the units. The
publication of the list of the securities selected for the trust may also cause
increased buying activity in certain of the stocks comprising the portfolio.
After such announcement, investment advisory and brokerage clients of the
sponsor and its affiliates may purchase individual securities appearing on the
list during the course of the initial offering period or may purchase warrants
issued by the sponsor or its affiliates which are based on the performance of
the securities on the list. The sponsor or its affiliates may also purchase
securities as a hedge against its risk on the warrants (although generally the
sponsor and its affiliates will not purchase securities for their own account
until after the trust portfolio has been acquired). Such buying activity in the
stock of these companies or issuance of the warrants prior to the purchase of
the securities by the trust may cause the trust to purchase stocks at a higher
price than those buyers who effect purchases by the trust.
FIXED PORTFOLIO. Investors should be aware that the trust is not "managed"
and as a result, the adverse financial condition of a company will not result in
the elimination of its securities from the portfolio of the trust except under
extraordinary circumstances. Investors should note in particular that the
securities were selected on the basis of the criteria set forth in the
prospectus and that the trust may continue to purchase or hold securities
originally selected through this process even though the evaluation of the
attractiveness of the securities may have changed. A number of the securities in
the trust may also be owned by other clients of the sponsor. However, because
these clients may have differing investment objectives, the sponsor may sell
certain securities from those accounts in instances where a sale by the trust
would be impermissible, such as to maximize return by taking advantage of market
fluctuations. In the event a public tender offer is made for a security or a
merger or acquisition is announced affecting a security, the sponsor may
instruct the trustee to tender or sell the security on the open market when, in
its opinion, it is in the best interest of the unitholders of the unit to do so.
Although the portfolio is regularly reviewed and evaluated and the sponsor may
instruct the trustee to sell securities under certain limited circumstances,
securities will not be sold by the trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. As a result, the
amount realized upon the sale of the securities may not be the highest price
attained by an individual security during the life of the trust. The prices of
single shares of each of the securities in the trust vary widely, and the effect
of a dollar of fluctuation, either higher or lower, in stock prices will be much
greater as a percentage of the lower-price stocks' purchase price than as a
percentage of the higher-price stocks' purchase price.
INDEX REPLICATION. An investment in the trust should also be made with an
understanding that the trust will not be able to replicate exactly the
performance of its target index because the total return generated by the
securities will be reduced by transaction costs incurred in adjusting the actual
balance of the securities and other trust expenses, whereas such transaction
costs and expenses are not included in the calculation of an index. It is also
possible that for short periods of time, the trust may not fully replicate the
performance of its target index due to the temporary unavailability of certain
index securities in the secondary market or due to other extraordinary
circumstances. Such events are unlikely to continue for an extended period of
time because the trustee is required to correct such imbalances by means of
adjusting the composition of the securities. It is also possible that the
composition of the trust may not exactly replicate the composition of its target
index if the trust has to adjust its portfolio holdings in order to continue to
qualify as a "regulated investment company" under the federal tax laws.
LIQUIDITY. Whether or not the securities are listed on a national
securities exchange, the principal trading market for the securities may be in
the over-the-counter market. As a result, 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. In addition, a trust is
restricted under the Investment Company Act of 1940 from selling securities to
the sponsor. The price at which the securities may be sold to meet redemptions
and the value of a trust will be adversely affected if trading markets for the
securities are limited or absent.
ADDITIONAL DEPOSITS. The 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) with instructions to purchase
additional securities, in such trust and the issuance of a corresponding number
of additional units. If the sponsor deposits cash, 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 cash deposit and the purchase of the securities and
because a trust will pay the associated brokerage fees. To minimize this effect,
the trusts will attempt to purchase the securities as close to the evaluation
time or as close to the evaluation prices as possible.
Some of the securities may have limited trading volume. The trustee, with
directions from the sponsor, will endeavor to purchase securities with deposited
cash as soon as practicable reserving the right to purchase those securities
over the 20 business days following each deposit in an effort to reduce the
effect of these purchases on the market price of those stocks. This could,
however, result in the trusts' failure to participate in any appreciation of
those stocks before the cash is invested. If any cash remains at the end of this
period (and such date is within the 90-day period following the inception date)
and cannot be invested in one or more stocks, at what the sponsor considers
reasonable prices, it intends to use that cash to purchase each of the other
securities in the original proportionate relationship among those securities.
Similarly, at termination of the trust, the sponsor reserves the right to sell
securities over a period of up to 20 business days to lessen the impact of its
sales on the market price of the securities. The proceeds received by
unitholders following termination of the trust will reflect the actual sales
proceeds received on the securities, which will likely differ from the closing
sale price on the termination date.
LITIGATION AND LEGISLATION. At any time litigation may be initiated on a
variety of grounds, or legislation may be enacted with respect to the securities
in a trust or the issuers of the securities. There can be no assurance that
future litigation or legislation will not have a material adverse effect on the
trust or will not impair the ability of issuers to achieve their business goals.
TOBACCO INDUSTRY. Certain of the issuers of securities in the trust may be
involved in the manufacture, distribution and sale of tobacco products. Pending
litigation proceedings against such issuers in the United States and abroad
cover a wide range of matters including product liability and consumer
protection. Damages claimed in such litigation alleging personal injury (both
individual and class actions), and in health cost recovery cases brought by
governments, labor unions and similar entities seeking reimbursement for health
care expenditures, aggregate many billions of dollars.
In November 1998, certain companies in the U.S. tobacco industry entered
into a negotiated settlement with several states which would result in the
resolution of significant litigation and regulatory issues affecting the tobacco
industry generally. The proposed settlement, while extremely costly to the
tobacco industry, would significantly reduce uncertainties facing the industry
and increase stability in business and capital markets. Future litigation and/or
legislation could adversely affect the value, operating revenues and financial
position of tobacco companies. The sponsor is unable to predict the outcome of
litigation pending against tobacco companies or how the current uncertainty
concerning regulatory and legislative measures will ultimately be resolved.
These and other possible developments may have a significant impact upon both
the price of such securities and the value of units of a trust containing such
securities.
ADMINISTRATION OF THE TRUST
DISTRIBUTIONS TO UNITHOLDERS. Income received by a trust is credited by the
trustee to the Income Account of the trust. Other receipts are credited to the
Capital Account of a trust. Income received by a trust will be distributed on or
shortly after the distribution dates each year shown in the prospectus on a pro
rata basis to unitholders of record as of the preceding record date shown in the
prospectus. 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 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 unless such amounts are reinvested into
additional securities. The trustee shall be required to make a distribution from
the Capital Account if 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). The trustee is authorized to reinvest any funds held in the
Capital or Income Accounts, pending distribution, in U.S. Treasury obligations
which mature on or before the next applicable distribution date. Any obligations
so acquired must be held until they mature and proceeds therefrom may not be
reinvested. A unitholder's pro rata portion of the Capital Account, less
expenses, will be distributed as part of the final liquidation distribution. In
addition, because the trusts have elected to be taxed as "regulated investment
companies," the trustee may make such distributions to unitholders as may be
necessary or desirable to maintain the status of the trusts as regulated
investment companies or to avoid the imposition of any excise or income tax on a
trust.
The distribution to the unitholders 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 such portion of the unitholders' pro rata share of
the dividend distributions then held in the Income Account 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. 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
such notice is provided by the selling broker-dealer.
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
a trust amounts necessary to pay the expenses of a 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 a 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 will not be audited annually unless the sponsor
determines that such an audit would be in the best interest of the unitholders
of the trust. If an audit is conducted, it will be done at the related trust's
expense, by independent public accountants designated by the sponsor. The
accountants' report will be furnished by the trustee to any unitholder upon
written request. Within a reasonable period of time after the end 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, generally setting forth for the trust:
(A) As to the Income Account:
(1) Income received;
(2) Deductions for applicable taxes and for fees and expenses of the
trust and for redemptions of units, if any; and
(3) The balance remaining after such distributions and deductions,
expressed in each case both as a total dollar amount and as a
dollar amount representing the pro rata share of each unit
outstanding on the last business day of such calendar year; and
(B) As to the Capital Account:
(1) The dates of disposition of any securities and the net proceeds
received therefrom;
(2) Deductions for payment of applicable taxes and fees and expenses
of the trust; and
(3) The balance remaining after such distributions and deductions
expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each unit outstanding on the
last business day of such calendar year; and
(C) The following information:
(1) A list of the securities as of the last business day of such
calendar year;
(2) The number of units outstanding on the last business day of such
calendar year;
(3) The redemption price based on the last evaluation made during
such calendar year; and
(4) The amount 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 each such distribution.
RIGHTS OF UNITHOLDERS. A unitholder may at any time tender units to the
trustee for redemption. 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 a trust. 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 trust agreement or termination of a trust.
AMENDMENT AND TERMINATION. The trust agreement may be amended by the
trustee and the sponsor without the consent of any of the unitholders: (1) to
cure any ambiguity or to correct or supplement any provision which may be
defective or inconsistent; (2) to change any provision thereof as may be
required by the Securities and Exchange Commission or any successor governmental
agency; (3) to make such provisions as shall not adversely affect the interests
of the unitholders; or (4) to make such arrangements as may be necessary for a
trust to continue to qualify as a regulated investment company for federal tax
purposes. The trust agreement with respect to any trust may also be amended in
any respect by the sponsor and the trustee, or any of the provisions thereof may
be waived, with the consent of the holders of units representing 66 2/3% of the
units then outstanding of the trust, provided that no such amendment or waiver
will reduce the interest of any unitholder thereof without the consent of such
unitholder or reduce the percentage of units required to consent to any such
amendment or waiver without the consent of all unitholders of the trust. The
trustee shall promptly notify unitholders of the substance of any such
amendment.
The trust agreement provides that a trust shall terminate upon the
liquidation, redemption or other disposition of the last of the securities held
in the trust but in no event is it to continue beyond the mandatory termination
date set forth in Part A of the prospectus. If the value of a trust shall be
less than the applicable minimum value stated in the prospectus (generally 20%
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 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. In addition, the sponsor may terminate a trust if it is based on a
security index and the index is no longer maintained.
Beginning nine business days prior to, but no later than, the mandatory
termination date described in the prospectus, 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 trustee will attempt to sell the securities as quickly as it can 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.
Approximately thirty days prior to termination of certain trusts, the
trustee will notify unitholders of the termination and provide a form allowing
qualifying unitholders to elect an in-kind distribution (a "Distribution In
Kind"). A unitholder who owns the minimum number of units shown in Part A of the
prospectus may request a Distribution In Kind from the trustee instead of cash.
The trustee will make a Distribution In Kind through the distribution of each of
the securities of the 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 a 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 Distribution In
Kind to facilitate the distribution of whole shares. The sponsor may terminate
the Distribution In Kind option at any time upon notice to the unitholders.
Special federal income tax consequences will result if a unitholder requests a
Distribution In Kind.
Within a reasonable period after termination, the trustee will sell any
securities remaining in a trust and, after paying all expenses and charges
incurred by the trust, will distribute to unitholders thereof (upon surrender
for cancellation of certificates for units, if issued) their pro rata share of
the balances remaining in the Income and Capital Accounts of the trust.
The sponsor currently intends, but is not obligated, to offer for sale
units of a subsequent series of certain trusts at approximately one year after
the inception date of such trusts. If the sponsor does offer such units for
sale, unitholders may be given the opportunity to purchase such units at a
public offering price which includes a reduced sales fee. 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, a trust company organized
under the laws of New York. The Bank of New York has its Unit Investment Trust
Division offices at 101 Barclay Street, 20th Fl., New York, New York 10286,
telephone 1-800-701-8178. The Bank of New York is subject to supervision and
examination by the Superintendent of Banks of the State of New York and the
Board of Governors of the Federal Reserve System, and its deposits are insured
by the Federal Deposit Insurance Corporation to the extent permitted by law.
The trustee, whose duties are ministerial in nature, has not participated
in selecting the portfolio of any trust. In accordance with the trust agreement,
the trustee shall keep records of all transactions at its office. Such records
shall include the name and address of, and the number of units held by, every
unitholder of a trust. Such books and records shall be open to inspection by any
unitholder at all reasonable times during usual business hours. The trustee
shall make such annual or other reports as may from time to time be required
under any applicable state or federal statute, rule or regulation. The trustee
shall keep a certified copy or duplicate original of the trust agreement on file
in its office available for inspection at all reasonable times during usual
business hours by any unitholder, together with a current list of the securities
held in each trust. Pursuant to the trust agreement, the trustee may employ one
or more agents for the purpose of custody and safeguarding of securities
comprising a trust.
Under the trust agreement, the trustee or any successor trustee may resign
and be discharged of a trust created by the trust agreement by executing an
instrument in writing and filing the same with the sponsor. 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. The sponsor may at any time remove the trustee, with or without
cause, and appoint a successor trustee as provided in the trust agreement.
Notice of such removal and appointment shall be mailed to each unitholder by the
sponsor. 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.
THE SPONSOR. Claymore Securities, Inc. specializes in the creation,
development and distribution of investment solutions for advisors and their
valued clients. Claymore Securities, Inc. was created as Ranson & Associates,
Inc., in 1995 and is the successor sponsor to unit investment trusts formerly
sponsored by EVEREN Unit Investment Trusts, a service of EVEREN Securities, Inc.
Claymore Securities, Inc. is also the sponsor and successor sponsor of Series of
Ranson Unit Investment Trusts and The Kansas Tax-Exempt Trust and Multi-State
Series of The Ranson Municipal Trust. On October 29, 2001, Ranson & Associates,
Inc. was acquired by Claymore Group LLC. The sale to Claymore Group LLC was
financed by a loan from The Bank of New York, the trustee. In November 2001, the
sponsor changed its name from Ranson & Associates, Inc. to Claymore Securities,
Inc. Claymore Securities, Inc. has been active in public and corporate finance
and has sold bonds and unit investment trusts and maintained secondary market
activities relating thereto. At present, Claymore Securities, Inc. which is a
member of the National Association of Securities Dealers, Inc., is the sponsor
to each of the above-named unit investment trusts. The sponsor's offices are
located at 210 North Hale Street, Wheaton, Illinois 60187, at 1952 McDowell
Road, Suite 340, Naperville, Illinois 60563 and at 620 West Germantown Pike,
Suite 440, Plymouth Meeting, Pennsylvania 19462.
If at any time the sponsor shall fail to perform any of its duties under
the trust agreement or shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or shall have its affairs taken over by public
authorities, 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, or (b) terminate the trust agreement and liquidate any trust as
provided therein, or (c) continue to act as trustee without terminating the
trust agreement.
THE SUPERVISOR AND THE EVALUATOR. Claymore Securities, Inc., the sponsor,
also serves as evaluator and supervisor. The evaluator and supervisor may resign
or be removed by the trustee in which event the 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
registration or removal and appointment shall be mailed by the trustee to each
unitholder.
LIMITATIONS ON LIABILITY. The sponsor is liable for the performance of its
obligations arising from its responsibilities under the trust agreement, but
will be under no liability to the unitholders for taking any action or
refraining from any action in good faith pursuant to the trust agreement or for
errors in judgment, except in cases of its own gross negligence, bad faith or
willful misconduct or its reckless disregard for its duties thereunder. The
sponsor shall not be liable or responsible in any way for depreciation or loss
incurred by reason of the sale of any securities.
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,
or its reckless disregard for its duties under the trust agreement, 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.
The trustee and unitholders may rely on any evaluation furnished by the
evaluator and shall have no responsibility for the accuracy thereof. The trust
agreement provides that the determinations made by the evaluator shall be made
in good faith upon the basis of the best information available to it, provided,
however, that the evaluator shall be under no liability to the trustee or
unitholders for errors in judgment, but shall be liable for its gross
negligence, bad faith or willful misconduct or its reckless disregard for its
obligations under the trust agreement.
EXPENSES OF THE TRUST
The sponsor does not charge a trust an annual advisory fee. The sponsor
will receive a portion of the sale commissions paid in connection with the
purchase of units and will share in profits, if any, related to the deposit of
securities in the trust. The sponsor and/or its affiliates do, also, receive an
annual fee as set forth in Part A of the prospectus for maintaining surveillance
over the portfolio and for performing certain administrative services for the
Trust (the "Sponsor's Supervisory Fee"). In providing such supervisory services,
the sponsor may purchase research from a variety of sources, which may include
dealers of the trusts. If so provided in Part A of the prospectus, the sponsor
may also receive an annual fee for providing bookkeeping and administrative
services for a trust (the "Bookkeeping and Administrative Fee"). Such services
may include, but are not limited to, the preparation of various materials for
unitholders and providing account information to the unitholders. If so provided
in Part A of the prospectus, the evaluator may also receive an annual fee for
performing evaluation services for the trusts (the "Evaluator's Fee"). In
addition, if so provided in Part A of the prospectus, a trust may be charged an
annual licensing fee to cover licenses for the use of service marks, trademarks,
trade names and intellectual property rights and/or for the use of databases and
research. The trust will bear all operating expenses. Estimated annual trust
operating expenses are as set forth in Part A of the prospectus; if actual
expenses are higher than the estimate, the excess will be borne by the trust.
The estimated expenses include listing fees but do not include the brokerage
commissions and other transactional fees payable by the trust in purchasing and
selling securities.
The trustee receives for its services that fee set forth in Part A of the
prospectus. The trustee's fee, which is calculated monthly, is based on the
largest number of units of a trust outstanding at any time during the primary
offering period. After the primary offering period, 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
Sponsor's Supervisory Fee, the Bookkeeping and Administrative Fee and the
Evaluator's Fee are calculated monthly and are based on the largest number of
units outstanding at any time during the period for which such compensation is
being computed. The trustee benefits to the extent there are funds for future
distributions, payment of expenses and redemptions in the Capital and Income
Accounts since these Accounts are non-interest bearing and the amounts earned by
the trustee are retained by the trustee. Part of the trustee's compensation for
its services to a trust is expected to result from the use of these funds. In
addition, the Sponsor's Supervisory Fee, Bookkeeping and Administrative Fee,
Evaluator's Fee and the Trustee's Fee may be adjusted in accordance with the
cumulative percentage increase of the United States Department of Labor's
Consumer Price Index entitled "All Services Less Rent" since the establishment
of the trust. In addition, with respect to any fees payable to the sponsor or an
affiliate of the sponsor for providing bookkeeping and other administrative
services, supervisory services and evaluation services, such individual fees may
exceed the actual costs of providing such services for a trust, but at no time
will the total amount received for such services, in the aggregate, rendered to
all unit investment trusts of which Claymore is the sponsor in any calendar year
exceed the actual cost to the sponsor or its affiliates of supplying such
services, in the aggregate, in such year.
The trust will also will pay a fee to the sponsor for creating and
developing the trust, including determining the trust objective, policies,
composition and size, selecting service providers and information services, and
for providing other similar administrative and ministerial functions. Your trust
pays this "creation and development fee" as a fixed dollar amount at the close
of the initial offering period. The sponsor does not use the fee to pay
distribution expenses or as compensation for sales efforts.
The following additional charges are or may be incurred by the trust: (a)
fees for the trustee's extraordinary services; (b) expenses of the trustee
(including legal and auditing expenses, 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, liability or
expense incurred by it in the administration of the trust not resulting from
gross negligence, bad faith or willful misconduct on its part; (f)
indemnification of the sponsor for any loss, liability or expense incurred in
acting in that capacity without gross negligence, bad faith or willful
malfeasance or its reckless disregard for its obligations under the trust
agreement; (g) any offering costs incurred after the end of the initial offering
period; and (h) expenditures incurred in contacting unitholders upon termination
of the trust. The fees and expenses set forth herein are payable out of a trust
and, when owing to the trustee, are secured by a lien on the trust. Since the
securities are all stocks, and the income stream produced by dividend payments,
if any, is unpredictable, the sponsor cannot provide any assurance that
dividends will be sufficient to meet any or all expenses of a 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. It is expected that the income stream produced by dividend payments
may be insufficient to meet the expenses of a trust and, accordingly, it is
expected that securities will be sold to pay all of the fees and expenses of the
trust.
The trust shall also bear the expenses associated with updating the trust's
registration statement and maintaining registration or qualification of the
units and/or a trust under federal or state securities laws subsequent to
initial registration. Such expenses shall include legal fees, accounting fees,
typesetting fees, electronic filing expenses and regulatory filing fees. The
expenses associated with updating registration statements have been historically
paid by a unit investment trust's sponsor.
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 supervisor to specify minimum amounts (such
as 100 shares) 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 brokers which may be affiliated with the trust, the sponsor or dealers
participating in the offering of units. In addition, in selecting among firms to
handle a particular transaction, the sponsor may take into account whether the
firm has sold or is selling products which it sponsors.
PURCHASE, REDEMPTION AND PRICING OF UNITS
PUBLIC OFFERING PRICE. Units of a trust are offered at the public offering
price (which is based on the aggregate underlying value of the securities in the
trust and includes the initial sales fee plus a pro rata share of any
accumulated amounts in the accounts of the trust). 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 creation and development fee ("C&D Fee").
The maximum sales fee is set forth in Part A of the prospectus. The deferred
sales fee and the C&DFee will be collected as described in this prospectus.
Units purchased subsequent to the initial deferred sales fee payment will be
subject to the initial sales fee, the remaining deferred sales fee payments and
the C&D Fee. Units sold or redeemed prior to such time as the entire applicable
deferred sales fee has been collected will be assessed the remaining deferred
sales fee at the time of such sale or redemption. During the initial offering
period, a portion of the public offering price includes an amount of securities
to pay for all or a portion of the costs incurred in establishing a trust
("organization costs"). These organization costs include the cost of preparing
the registration statement, the trust indenture and other closing documents,
registering units with the Securities and Exchange Commission and states, the
initial audit of the trust portfolio, legal fees and the initial fees and
expenses of the trustee. These costs will be deducted from a trust as of the end
of the initial offering period or after six months, at the discretion of the
sponsor. As indicated above, the initial public offering price of the units was
established by dividing the aggregate underlying value of the securities by the
number of units outstanding. Such price determination as of the opening of
business on the date a trust was created was made on the basis of an evaluation
of the securities in the trust prepared by the evaluator. After the opening of
business on this date, the evaluator will appraise or cause to be appraised
daily the value of the underlying securities as of the close of the New York
Stock Exchange on days the New York Stock Exchange is open and will adjust the
public offering price of the units commensurate with such valuation. Such public
offering price will be effective for all orders properly received at or prior to
the close of trading on the New York Stock Exchange on each such day. Orders
received by the trustee, sponsor or any dealer for purchases, sales or
redemptions after that time, or on a day when the New York Stock Exchange is
closed, will be held until the next determination of price.
The value of the securities is determined on each business day by the
evaluator based on the closing sale prices on a national securities exchange or
The Nasdaq National Market or by taking into account the same factors referred
to under "Computation of Redemption Price."
PUBLIC DISTRIBUTION OF UNITS. During the initial offering period, units of
a trust will be distributed to the public at the public offering price thereof.
Upon the completion of the initial offering, units which remain unsold or which
may be acquired in the secondary market may be offered at the public offering
price determined in the manner provided above.
The sponsor intends to qualify units of a trust for sale in a number of
states. Units will be sold through dealers who are members of the National
Association of Securities Dealers, Inc. and through others. Broker-dealers and
others will be allowed a concession or agency commission in connection with the
distribution of units during the initial offering period as set forth in the
prospectus.
Certain commercial banks may be making units of a trust available to their
customers on an agency basis. Furthermore, as a result of certain legislative
changes effective November 1999, banks are no longer prohibited from certain
affiliations with securities firms. This new legislation grants banks new
authority to conduct certain authorized activity, such as sales of Units,
through financial subsidiaries. A portion of the sales charge discussed above is
retained by or remitted to the banks or their financial subsidiaries for these
agency and brokerage transactions. The sponsor reserves the right to change the
concessions or agency commissions set forth in the prospectus from time to time.
In addition to such concessions or agency commissions, the sponsor may, from
time to time, pay or allow additional concessions or agency commissions, in the
form of cash or other compensation, to dealers employing registered
representatives who sell, during a specified time period, a minimum dollar
amount of units of unit investment trusts underwritten by the sponsor. At
various times the sponsor may implement programs under which the sales force of
a broker or dealer may be eligible to win nominal awards for certain sales
efforts, or under which the sponsor will reallow to any such broker or dealer
that sponsors sales contests or recognition programs conforming to criteria
established by the sponsor, or participates in sales programs sponsored by the
sponsor, an amount not exceeding the total applicable sales charges on the sales
generated by such person at the public offering price during such programs.
Also, the sponsor in its discretion may from time to time pursuant to objective
criteria established by the sponsor pay fees to qualifying brokers or dealers
for certain services or activities which are primarily intended to result in
sales of units of a trust. Such payments are made by the sponsor out of its own
assets, and not out of the assets of any trust. These programs will not change
the price unitholders pay for their units or the amount that a trust will
receive from the units sold. The difference between the discount and the sales
charge will be retained by the sponsor.
The sponsor reserves the right to reject, in whole or in part, any order
for the purchase of units.
SPONSOR PROFITS. The sponsor will receive gross sales fees equal to the
percentage of the public offering price of the units of a trust described in the
prospectus. In addition, the sponsor may realize a profit (or sustain a loss) as
of the date a trust is created resulting from the difference between the
purchase prices of the securities to the sponsor and the cost of such securities
to the trust. Thereafter, on subsequent deposits the sponsor may realize profits
or sustain losses from such deposits. The sponsor may realize additional profits
or losses during the initial offering period on unsold units as a result of
changes in the daily market value of the securities in the trust.
MARKET FOR UNITS. After the initial offering period, the sponsor may
maintain a market for units of a trust offered hereby and continuously offer to
purchase said units at prices, determined by the evaluator, based on the value
of the underlying securities. Unitholders who wish to dispose of their units
should inquire of their broker as to current market prices in order to determine
whether there is in existence any price in excess of the redemption price and,
if so, the amount thereof. Unitholders who sell or redeem units prior to such
time as the entire deferred sales fee on such units has been collected will be
assessed the amount of the remaining deferred sales fee at the time of such sale
or redemption. The offering price of any units resold by the sponsor will be in
accord with that described in the currently effective prospectus describing such
units. Any profit or loss resulting from the resale of such units will belong to
the sponsor. If the sponsor decides to maintain a secondary market, it may
suspend or discontinue purchases of units of the trust if the supply of units
exceeds demand, or for other business reasons.
REDEMPTION. A unitholder who does not dispose of units in the secondary
market described above may cause units to be redeemed by the trustee by making a
written request to the trustee at its Unit Investment Trust Division office in
the city of New York. Unitholders must sign the request, and such transfer
instrument, exactly as their names appear on the records of the trustee. If the
amount of the redemption is $500 or less and the proceeds are payable to the
unitholder(s) of record at the address of record, no signature guarantee is
necessary for redemptions by individual account owners (including joint owners).
Additional documentation may be requested, and a signature guarantee is always
required, from corporations, executors, administrators, trustees, guardians or
associations. The signatures must be guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other signature
guaranty program in addition to, or in substitution for, STAMP, as may be
accepted by the trustee.
Redemption shall be made by the trustee no later than the third business
day following the day on which a tender for redemption is received (the
"Redemption Date") by payment of cash equivalent to the redemption price,
determined as set forth below under of Redemption Price," as of the close of the
New York Stock Exchange next following such tender, multiplied by the number of
units being redeemed. Any units redeemed shall be canceled and any undivided
fractional interest in the related trust extinguished. The price received upon
redemption might be more or less than the amount paid by the unitholder
depending on the value of the securities in the trust at the time of redemption.
Unitholders who sell or redeem units prior to such time as the entire deferred
sales fee on such units has been collected will be assessed the amount of the
remaining deferred sales fee at the time of such sale or redemption. Certain
broker-dealers may charge a transaction fee for processing redemption requests.
Under regulations issued by the Internal Revenue Service, the trustee is
required to withhold a specified percentage of the principal amount of a unit
redemption if the trustee has not been furnished the redeeming unitholder's tax
identification number in the manner required by such regulations. Any amount so
withheld is transmitted to the Internal Revenue Service and may be recovered by
the unitholder only when filing a tax return. Under normal circumstances the
trustee obtains the unitholder's tax identification number from the selling
broker. However, any time a unitholder elects to tender units for redemption,
such unitholder should make sure that the trustee has been provided a certified
tax identification number in order to avoid this possible "back-up withholding."
In the event the trustee has not been previously provided such number, one must
be provided at the time redemption is requested. Any amounts paid on redemption
representing unpaid dividends shall be withdrawn from the Income Account of a
trust to the extent that funds are available for such purpose. All other amounts
paid on redemption shall be withdrawn from the Capital Account for a trust.
Unitholders tendering units for redemption may request a Distribution In
Kind from the trustee in lieu of cash redemption. A unitholder may request a
Distribution In Kind of an amount and value of securities per unit equal to the
redemption price per unit as determined as of the evaluation time next following
the tender, provided that the tendering unitholder is (1) entitled to receive at
least $25,000 of proceeds as part of his or her distribution or if he paid at
least $25,000 to acquire the units being tendered and (2) the unitholder has
elected to redeem at least thirty days prior to the termination of the trust. If
the unitholder meets these requirements, a Distribution In Kind will be made by
the trustee through the distribution of each of the securities of the trust in
book entry form to the account of the unitholder's bank or broker-dealer at
Depository Trust Company. The tendering unitholder shall be entitled to receive
whole shares of each of the securities comprising the portfolio of the trust and
cash from the Capital Account equal to the fractional shares to which the
tendering unitholder is entitled. The trustee shall make any adjustments
necessary to reflect differences between the redemption price of the units and
the value of the securities distributed in kind as of the date of tender. If
funds in the Capital Account are insufficient to cover the required cash
distribution to the tendering unitholder, the trustee may sell securities. The
in-kind redemption option may be terminated by the sponsor at any time. The
trustee is empowered to sell securities in order to make funds available for the
redemption of units. To the extent that securities are sold or redeemed in kind,
the size of a trust will be, and the diversity of a trust may be, reduced but
each remaining unit will continue to represent approximately the same
proportional interest in each security. Sales may be required at a time when
securities would not otherwise be sold and may result in lower prices than might
otherwise be realized. The price received upon redemption may be more or less
than the amount paid by the unitholder depending on the value of the securities
in the portfolio at the time of redemption.
The right of redemption may be suspended and payment postponed for more
than three business days following the day on which tender for redemption is
made (1) for any period during which the New York Stock Exchange is closed,
other than customary weekend and holiday closings, or during which (as
determined by the Securities and Exchange Commission) trading on the New York
Stock Exchange is restricted; (2) for any period during which an emergency
exists as a result of which disposal by the trustee of securities is not
reasonably practicable or it is not reasonably practicable to fairly determine
the value of the underlying securities in accordance with the trust agreement;
or (3) for such other period as the Securities and Exchange Commission may by
order permit. The trustee is not liable to any person in any way for any loss or
damage which may result from any such suspension or postponement.
COMPUTATION OF REDEMPTION PRICE. The redemption price per unit (as well as
the secondary market public offering price) will generally be determined on the
basis of the last sale price of the securities in a trust. The redemption price
per unit is the pro rata share of each unit in a trust determined generally on
the basis of (i) the cash on hand in the trust or moneys in the process of being
collected and (ii) the value of the securities in the trust less (a) amounts
representing taxes or other governmental charges payable out of the trust, (b)
any amount owing to the trustee for its advances and (c) the accrued expenses or
remaining deferred sales fees of the trust. During the initial offering period,
the redemption price and the secondary market repurchase price will also include
estimated organizational costs. The evaluator may determine the value of the
securities in the trust in the following manner: if the securities are listed on
a national or foreign securities exchange or the Nasdaq Stock Market, such
evaluation shall generally be based on the last available sale price on or
immediately prior to the Evaluation Time on the exchange or Nasdaq which is the
principal market therefor, which shall be deemed to be the New York Stock
Exchange if the securities are listed thereon (unless the evaluator deems such
price inappropriate as a basis for evaluation) or, if there is no such available
sale price on such exchange, at the last available bid prices (offer prices for
primary market purchases) of the securities. If the securities are not so listed
or, if so listed, the principal market therefor is other than on such exchange
or there is no such available sale price on such exchange, such evaluation shall
generally be based on the following methods or any combination thereof whichever
the evaluator deems appropriate: (i) on the basis of the current bid price
(offer prices for primary market purchases) for comparable securities (unless
the evaluator deems such price inappropriate as a basis for evaluation), (ii) by
determining the valuation of the securities on the bid side (offer side for
primary market purchases) of the market by appraisal or (iii) by any combination
of the above. If the trust holds securities denominated in a currency other than
U.S. dollars, the evaluation of such security shall be converted to U.S. dollars
based on current bid side (offer side for primary market purchases) exchange
rates (unless the evaluator deems such prices inappropriate as a basis for
valuation).
RETIREMENT PLANS. A trust may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other qualified retirement
plans. Generally, capital gains and income received under each of the foregoing
plans are deferred from federal taxation. All distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible for
special income averaging or tax deferred rollover treatment. Investors
considering participation in any such plan should review specific tax laws
related thereto and should consult their attorneys or tax advisers with respect
to the establishment and maintenance of any such plan. Such plans are offered by
brokerage firms and other financial institutions. The trust will lower the
minimum investment requirement for IRA accounts to $250. Fees and charges with
respect to such plans may vary.
OWNERSHIP OF UNITS. Ownership of units will not be evidenced by
certificates. All evidence of ownership of units will be recorded in book entry
form either at Depository Trust Company ("DTC") through an investor's brokers'
account or through registration of the units on the books of the trustee. Units
held through DTC will be registered in the nominee name of Cede & Co. Individual
purchases of beneficial ownership interest in the trust will be made in book
entry form through DTC or the trustee. Ownership and transfer of units will be
evidenced and accomplished by book entries made by DTC and its participants if
the units are evidenced at DTC, or otherwise will be evidenced and accomplished
by book entries made by the trustee. DTC will record ownership and transfer of
the units among DTC participants and forward all notices and credit all payments
received in respect of the units held by the DTC participants. Beneficial owners
of units will receive written confirmation of their purchases and sale from the
broker dealer or bank from whom their purchase was made. Units are transferable
by making a written request properly accompanied by a written instrument or
instruments of transfer which should be sent registered or certified mail for
the protection of the unitholder. Unitholders must sign such written request
exactly as their names appear on the records of the trust. The signatures must
be guaranteed by a participant in the STAMP or such other signature guaranty
program in addition to, or in substitution for, STAMP, as may be acceptable by
the trustee.
Units may be purchased in denominations of one unit or any multiple
thereof, subject to the minimum investment requirement. Fractions of units, if
any, will be computed to three decimal places.
TAXATION
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
this summary does not describe all of the tax consequences to all taxpayers. For
example, this summary generally does 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 taxes. As with any investment, you should consult your own tax
professional about your particular consequences. In addition, the Internal
Revenue Service issued new withholding and reporting regulations effective
January 1, 2001. Foreign investors should consult their own tax advisors
regarding the tax consequences of these regulations.
In the opinion of Chapman and Cutler LLP, counsel for the trust, under
existing law:
TRUST STATUS. The trust intends to qualify as a "regulated investment
company" under the federal tax laws. If the trust qualifies as a regulated
investment company and distributes its income as required by the tax law, the
trust generally will not pay federal income tax.
DISTRIBUTIONS. Trust distributions are generally taxable. After the end of
each year, you will receive a tax statement that separates trust distributions
into two categories, ordinary income distributions and capital gains dividends.
Ordinary income distributions are generally taxed at your ordinary tax rate,
however, as further discussed below, under the recently enacted "Jobs and Growth
Tax Relief Reconciliation Act of 2003" (the "Tax Act"), certain ordinary income
distributions received from the trust may be taxed at new tax rates equal to
those applicable to net capital gains. Generally, you will treat all capital
gains dividends as long-term capital gain regardless of how long you have owned
your units. To determine your actual tax liability for your capital gains
dividends, you must calculate your total net capital gain or loss for the tax
year after considering all of your other taxable transactions, as described
below. In addition, the trust may make distributions that represent a return of
capital for tax purposes and thus will generally not be taxable to you. The tax
status of distributions from the trust is not affected by whether you reinvest
your distributions in additional units or receive them in cash. The income from
the trust that you must take into account for federal income tax purposes is not
reduced by amounts used to pay a deferred sales 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.
DIVIDENDS RECEIVED DEDUCTION. . A corporation that owns units generally
will not be entitled to the dividends received deduction with respect to many
dividends received from the trust because the dividends received deduction is
generally not available for distribution from regulated investment companies.
However, certain ordinary income dividends or units that are attributable to
dividends received by the trust from certain domestic corporations may be
designated by the trust as being eligible for the dividends received deduction.
IF YOU SELL OR REDEEM 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.
TAXATION OF CAPITAL GAINS AND LOSSES AND CERTAIN ORDINARY INCOME DIVIDENDS.
Under the Tax Act, if you are an individual, the maximum marginal federal tax
rate for net capital gain is generally 15% (generally 5% for certain taxpayers
in the 10% and 15% tax brackets). These new capital gains rates are generally
effective for taxable years ending on or after May 6, 2003 and beginning before
January 1, 2009. However, special effective date provisions are set forth in the
Tax Act. For example, there are special transition rules provided with respect
to gain properly taken into account for the portion of the taxable year before
May 6, 2003. For periods not covered by the Tax Act, if you are an individual,
the maximum marginal federal tax rate for capital gains is generally 20% (10%
for certain taxpayers in the 10% and 15% tax brackets). The 20% rate is reduced
to 18% and the 10% rate is reduced to 8% for long-term gains from most property
acquired after December 31, 2000, with a holding period of more than five years.
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 shares to determine your holding period. However, if you receive a
capital gain dividend from a trust and sell your share 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. In addition, the Internal Revenue Code treats
certain capital gains as ordinary income in special situations.
Pursuant to the Tax Act, ordinary income dividends received by an
individual shareholder from a regulated investment company such as the trust are
generally taxed at the same new rates that apply to net capital gain (as
discussed above), but only if certain holding period requirements are satisfied
and the dividends are attributable to qualifying dividends received by the trust
itself. These special rules relating to the taxation of ordinary income
dividends from regulated investment companies generally apply to taxable years
beginning after December 31, 2002 and beginning before January 1, 2009. The
trust will provide notice to its shareholders of the amount of any distribution
which may be taken into account as a dividend which is eligible for the new
capital gains tax rates.
DEDUCTIBILITY OF TRUST EXPENSES. Expenses incurred and deducted by the
trust will generally not be treated as income taxable to you. In some cases,
however, you may be required to treat your portion of these trust expenses as
income. In these cases you may be able to take a deduction for these expenses.
However, certain miscellaneous itemized deductions, such as investment expenses,
may be deducted by individuals only to the extent that all of these deductions
exceed 2% of the individual's adjusted gross income.
FOREIGN INVESTORS. If you are a foreign investor (i.e., an investor other
than a U.S. citizen or resident or a U.S. corporation, partnership, estate or
trust), you should be aware that, generally, subject to applicable tax treaties,
distributions from the trust will be characterized as dividends for federal
income tax purposes (other than dividends which the trust designates as capital
gain dividends) and will be subject to U.S. income taxes, including withholding
taxes. However, distributions received by a foreign investor from the trust that
are designated by the trust as capital gain dividends may not be subject to U.S.
federal income taxes, including withholding taxes, provided that the trust makes
certain elections and certain other conditions are met. Foreign investors should
consult their tax advisors with respect to U.S. tax consequences of ownership of
units.
S&P 100(R) INDEX LICENSING AGREEMENT
The trust has entered into a license agreement with Standard & Poor's (the
"License Agreement"), under which the trust is granted licenses to use the
trademark and tradename "S&P 100" and other trademarks and tradenames, to the
extent the sponsor deems appropriate and desirable under federal and state
securities laws to indicate the source of the index as a basis for determining
the composition of the trust's portfolio. The License Agreement permits the
trust to substitute another index for the S&P 100 Index in the event that
Standard & Poor's ceases to compile and publish that index. In addition, if the
index ceases to be compiled or made available or the anticipated correlation
between the trust and the index is not maintained, the Sponsor may direct that
the trust continue to be operated using the S&P 100 Index as it existed on the
last date on which it was available or may direct that the tust agreement be
terminated.
Neither the trust nor the unitholders are entitled to any rights whatsoever
under the foregoing licensing arrangements or to use any of the covered
trademarks or to use the S&P 100 Index, except as specifically described in this
Prospectus or as may be specified in the trust agreement.
S&P's only relationship to the sponsor is the licensing of certain
trademarks and trade names of S&P and of the S&P 100 Index which is determined,
composed and calculated by S&P without regard to the sponsor or the trust. S&P
has no obligation to take the needs of the sponsor or the unitholders into
consideration in determining, composing or calculating the S&P 100 Index. S&P is
not responsible for and has not participated in the determination of the prices
and amount of the trust or the timing of the issuance or sale of the trust or in
the determination or calculation of the equation by which the trust is to be
converted into cash. S&P has no obligation or liability in connection with the
administration, marketing or trading of the trust.
S&P does not guarantee the accuracy and/or the completeness of the S&P 100
Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Sponsor, the trust, any person or
any entity from the use of the S&P 100 Index or any data included therein. S&P
makes no express or implied warranties, and expressly disclaims all warranties
of merchantability or fitness for a particular purpose or use, with respect to
the S&P 100 Index or any data included therein. Without limiting any of the
foregoing, in no event shall S&P have any liability for any special, punitive,
indirect, or consequential damage (including lost profits), even if notified of
the possibility of such damages.
EXPERTS
LEGAL MATTERS. Chapman and Cutler LLP, 111 West Monroe Street, Chicago,
Illinois 60603, acts as counsel for the trust and has passed upon the legality
of the units.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. The statement of financial
condition, including the Trust Portfolio, appearing herein, has been audited by
Grant Thornton LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and is included in reliance on such report given on
the authority of such firm as experts in accounting and auditing.
PERFORMANCE INFORMATION
Information contained in the prospectus, as it currently exists or as
further updated, may also be included from time to time in other prospectuses or
in advertising material. Information on the performance of a trust strategy or
the actual performance of a trust may be included from time to time in other
prospectuses or advertising material and may reflect sales charges and expenses
of a trust. The performance of a trust may also be compared to the performance
of money managers as reported in SEI Fund Evaluation Survey or of mutual funds
as reported by Lipper Analytical Services Inc. (which calculates total return
using actual dividends on ex-dates accumulated for the quarter and reinvested at
quarter end), Money Magazine Fund Watch (which rates fund performance over a
specified time period after sales charge and assuming all dividends reinvested)
or Wiesenberger Investment Companies Service (which states fund performance
annually on a total return basis) or of the New York Stock Exchange Composite
Index, the American Stock Exchange Index (unmanaged indices of stocks traded on
the New York and American Stock Exchanges, respectively), the Dow Jones
Industrial Average (an index of 30 widely traded industrial common stocks) or
the Standard & Poor's 500 Index (an unmanaged diversified index of 500 stocks)
or similar measurement standards during the same period of time.
CLAYMORE SECURITIES DEFINED PORTFOLIOS
CLAYMORE INDEX PORTFOLIO PROSPECTUS-PART B
______ , 2005
WHERE TO LEARN MORE
You can contact us for free information about this and other investments.
VISIT US ON THE INTERNET
http://www.claymoresecurities.com
BY E-MAIL
invest@claymoresecurities.com
CALL CLAYMORE
(800) 345-7999
Pricing Line
(888) 248-4954
CALL THE BANK OF NEW YORK
(800) 701-8178 (investors)
(800) 647-3383 (brokers)
ADDITIONAL INFORMATION
This prospectus does not contain all information filed with the
Securities and Exchange Commission. To obtain a copy of this information (a
duplication fee may be required):
E MAIL: publicinfo@sec.gov
WRITE: Public Reference Section
Washington, D.C. 20549-0102
VISIT: http://www.sec.gov (EDGAR Database)
CALL: 1-202-942-8090 (only for information on the operation of the
Public Reference System)
When units of the trust are no longer available, we may use this
prospectus as a preliminary prospectus for a future trust. In this case you
should note that:
The information in this prospectus is not complete with respect to
future trusts and may be changed. No one may sell units of a future trust
until a registration statement is filed with the Securities and Exchange
Commission and is effective. This prospectus is not an offer to sell units
and is not soliciting an offer to buy units in any state where the offer or
sale is not permitted.
CONTENTS
Investment Summary
- --------------------------------------------------------------------------------
A concise 2 Overview
description 2 Investment Objective
of essential 2 Principal Investment Strategy
information 2 Security Selection
about the 3 S&P 100 Index
portfolio 4 Future Trusts
4 Essential Information
4 Portfolio Diversification
4 Principal Risks
4 Who Should Invest
5 Fees and Expenses
6 Example
6 Estimated Annual Income Distributions
7 The S&P 100 Index Historical Performance
8 Trust Portfolio
Understanding Your Investments
- --------------------------------------------------------------------------------
Detailed 10 How to Buy Units
information 13 How to Sell Your Units
to help you 14 Distributions
understand 15 Investment Risks
your 15 How the Trust Works
investment 16 General Information
17 Expenses
18 Report of Independent Registered Public
Accounting Firm
19 Statement of Financial Condition
For the Table of Contents of Part B, See Part B of the prospectus.
Where to Learn More
- --------------------------------------------------------------------------------
You can contact us forVISIT US ON THE INTERNET
free information about http://www.claymoresecurities.com
---------------------------------
these investments. BY E-MAIL
invest@claymoresecurities.com CALL CLAYMORE (800)
345-7999 Pricing Line (888) 248-4954 CALL THE BANK
OF NEW YORK (800) 701-8178 (investors) (800)
647-3383 (brokers)
Additional Information
- --------------------------------------------------------------------------------
This prospectus does not contain all information filed with the
Securities and Exchange Commission. To obtain or copy this information
(a duplication fee may be required):
E-MAIL: publicinfo@sec.gov
WRITE: Public Reference Section, Washington, D.C. 20549-0102
VISIT: http://www.sec.gov (EDGAR Database)
CALL: 1-202-942-8090 (only for information on
the operation of the Public Reference Section)
REFER TO:
CLAYMORE SECURITIES DEFINED PORTFOLIOS, SERIES 217
Securities Act file number: _______
Investment Company Act file number: 811-03763
When units of the trust are no longer available, we may use this
prospectus as a preliminary prospectus for a future trust. In this case
you should note that: The information in this prospectus is not complete
with respect to future trusts and may be changed. No one may sell units
of a future trust until a registration statement is filed with the
Securities and Exchange Commission and is effective. This prospectus is
not an offer to sell units and is not soliciting an offer to buy units
in any state where the offer or sale is not permitted.
CLAYMORE SECURITIES
DEFINED PORTFOLIOS
SERIES 197
Prospectus
Dated __________ , 2005
GNMA PORTFOLIO,
SERIES 16
[Claymore logo]
CONTENTS OF REGISTRATION STATEMENT
A. Bonding Arrangements of Depositor:
The Depositor has obtained the following Securities Dealer Blanket Bond
for its officers, directors and employees:
INSURER/POLICY NO. AMOUNT
National Union Fire Insurance
Company of Pittsburgh, Pennsylvania $250,000
959-9000
This Registration Statement comprises the following papers and
documents.
The Facing Sheet
The Prospectus
The Signatures
Consents of Counsel
The following exhibits:
1.1 Reference Trust Agreement (to be supplied by amendment).
1.1.1 Standard Terms and Conditions of Trust (Reference is made to Exhibit
1.1.1 to Amendment No.1 to the Registration Statement on Form S-6 for
Claymore Securities Defined Portfolios, Series 116 (File No. 333-72828
filed on December 18, 2001).
2.1 Code of Ethics (Reference is made to Exhibit 2.1 to the Registration
Statement on Form S-6 for Claymore Securities Deferred Portfolios,
Series 213 (File No. 333-122184 filed on February 9, 2005).
3.1 Opinion of counsel as to legality of the securities being registered
including a consent to the use of its name in the Registration
Statement (to be supplied by amendment).
3.2 Opinion of counsel as to Federal Income tax status of the securities
being registered including a consent to the use of its name in the
Registration Statement (to be supplied by amendment).
3.3 Opinion of counsel as to New York Income tax status of the securities
being registered including a consent to the use of its name in the
Registration Statement (to be supplied by amendment).
3.4 Opinion of counsel as to the Trustee and the Trust (s) including a
consent to the use of its name in the Registration Statement (to be
supplied by amendment).
4.1 Consent of Independent Registered Public Accounting Firm (to be
supplied by amendment).
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Claymore Securities Defined Portfolios, Series 217 has duly caused
this to the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in the City of Lisle, and State of Illinois, on the
1st day of March, 2005.
CLAYMORE SECURITIES DEFINED PORTFOLIOS, SERIES 217,
Registrant
By: CLAYMORE SECURITIES, INC., Depositor
By: /s/ Nicholas Dalmaso
-----------------------
Nicholas Dalmaso
Pursuant to the requirements of the Securities Act of 1933, this
amended Registration Statement has been signed below on March 1, 2005 by the
following persons, who constitute a majority of the Board of Directors of
Claymore Securities, Inc.
SIGNATURE* TITLE** DATE
) By: /s/ Nicholas Dalmaso
--------------------
) Nicholas Dalmaso
) Attorney-in-Fact*
)
DAVID HOOTEN* Chairman of the Board of ) March 1, 2005
Directors )
)
/S/ CHARLES MILLINGTON Chief Financial Officer March 1, 2005
- ----------------------
CHARLES MILLINGTON
/S/ NICHOLAS DALMASO Executive Vice President, March 1, 2005
- --------------------
NICHOLAS DALMASO Secretary, Treasurer and
Director
- --------
* An executed copy of the related power of attorney was filed as Exhibit 6.0
to Registration Statement No. 333-98345 on August 22, 2002.
** The titles of the persons named herein represent their capacity in and
relationship to Claymore Securities, Inc., the Depositor.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The consent of Grant Thornton LLP to the use of its report and to the
reference to such firm in the Prospectus included in the Registration Statement
will be filed as Exhibit 4.1 to the Registration Statement.
CONSENT OF CHAPMAN AND CUTLER LLP
The consent of Chapman and Cutler LLP to the use of its name in the
Prospectus included in the Registration Statement will be contained in its
opinions to be filed as Exhibits 3.1 and 3.2 to the Registration Statement.
CONSENT OF EMMET, MARVIN & MARTIN LLP
The consent of Emmet, Marvin & Martin LLP to the use of its name in the
Prospectus included in the Registration Statement will be contained in its
opinions to be filed as Exhibits 3.3 and 3.4 to the Registration Statement.
MEMORANDUM
Re: Claymore Securities Defined Portfolios, Series 217
The list of securities comprising the trust of the fund, the
evaluation, record and distribution dates and other changes pertaining
specifically to the new series, such as size and number of units of the trust in
the fund and the statement of financial condition of the new fund will be filed
by amendment.
1940 ACT
FORMS N-8A AND N-8B-2
Form N-8A and Form N-8B-2 were filed in respect of Claymore Securities
Defined Portfolios, Series 116 (and subsequent series) (File No. 811-03763).
1933 ACT
THE INDENTURE
The form of the proposed Standard Terms and Conditions of Trust is
expected to be in all respects consistent with the form of the Standard Terms
and Conditions of Trust dated December 18, 2001 relative to Claymore Securities
Defined Portfolios, Series 116.
CHAPMAN AND CUTLER LLP
Chicago, Illinois
March 1, 2005