AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 31, 2006
1933 ACT FILE NO. 333-______
1940 ACT FILE NO. 811 - 03763
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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REGISTRATION STATEMENT ON
FORM S-6
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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 306
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.
Claymore Securities Defined Portfolios, Series 306
Peroni Growth Portfolio, Summer 2006 Series
[Claymore Logo]
PROSPECTUS PART A DATED ________ , 2006
A portfolio of 20 stocks selected by Eugene E. Peroni, Jr.
through the application of the Peroni Method.
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.
INVESTMENT SUMMARY
Use this Investment Summary to help you decide whether an investment in
this trust is right for you. More detailed information can be found later in
this prospectus.
Overview
Claymore Securities Defined Portfolios, Series 306 is a unit investment
trust that consists of the Peroni Growth Portfolio, Summer 2006 Series (the
"trust"). The trust seeks to provide capital appreciation by investing in common
stocks of companies selected by Eugene E. Peroni, Jr. ("Mr. Peroni") through the
application of the Peroni Method. Claymore Securities, Inc. ("Claymore" or the
"sponsor") serves as the sponsor of the trust.
The trust is scheduled to terminate in approximately 15 months.
Investment Objective
The trust seeks to provide capital appreciation.
Principal Investment Strategy
The trust consists of the stocks of 20 companies selected by Mr. Peroni
through the application of the Peroni Method. The sponsor believes that the
Peroni Method identifies stocks whose trading behavior provides strong clues to
future upside potential. The sponsor further believes that the Peroni Method is
rooted in discipline, perseverance and a heritage of uncommon insight, and has
been tested by a wide range of financial climates.
The Peroni Method is an intensive, bottom-up methodology, tracking over
1,000 stocks on a daily basis. It is heavily, but not exclusively, based on
proprietary technical analysis. Generally, the methodology focuses on attractive
fundamental factors such as price-earnings ratios, dividend growth and cash
flows when selecting stocks for the trust. The Peroni Method also takes into
account technical factors, including how a stock behaves relative to general
market trends, which can play an important role in investment success. Mr.
Peroni believes that identifying a stock's accumulation characteristics can aid
in increasing portfolio returns, but that it is only one of many factors used to
choose the portfolio.
The Peroni Method embraces the principle that in an inherently volatile
stock market environment, the best strategy may be a disciplined approach, and
that investors who hold a balanced portfolio of quality investments and maintain
a long-term posture may have a much better chance of achieving their financial
goals. The trust uses a buy-and-hold approach to help achieve its investment
objective and accordingly, the stocks included are expected to remain in the
trust until termination. The trust's buy-and-hold philosophy relies on patience
and discipline and eliminates the temptation to respond hastily to market
factors outside of an investor's control.
See "Investment Policies" in Part B of the prospectus for more information.
Security Selection
Mr. Peroni utilizes the Peroni Method of technical analysis to select the
trust's portfolio. The Peroni Method is based on primarily proprietary technical
analysis. While fundamental factors such as the price/earnings ratio and free
cash flow can be important considerations, technical factors such as price
patterns and accumulation trends can play an important role in investment
decisions as well. Mr. Peroni believes that the manner in which a stock has
behaved historically can provide insights as to its future growth prospects. The
Peroni Method of technical analysis examines numerous technical, psychological
and fundamental data.
The data may include:
o a stock's historical price architecture;
o net money flow trends in individual stocks;
o the relative behavior of a stock's price performance compared to other
stocks in the same sector;
o sentiment readings such as the volatility index and the put/call ratio;
o fiscal and monetary factors; and
o geopolitical events and their impact on specific sectors.
Mr. Peroni selects the stocks that he believes are best suited to the
trust's investment objective of capital appreciation over a defined time period.
According to Mr. Peroni, "the Peroni Method" has been used to analyze
individual stock patterns and general market trends over five decades. Its
reliance on both proprietary and broadly disseminated technical data has proven
highly effective, especially during times of tumultuous market conditions. The
current environment of corporate misdeeds and Wall Street research scrutiny have
brought technical research to the foreground as a less biased means of
deciphering a stock's practical underlying potential in the marketplace." You
should note, however, that past performance is no guarantee of future
performance or returns.
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 (the "Inception Date"). 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.
Essential Information
(as of the Inception Date)
Inception Date _______ , 2006
Unit Price $10.00
Termination Date _________
Distribution Date _________
Record Date _________
CUSIP Numbers
Cash Distributions
Standard Accounts __________
Fee Account Cash __________
Reinvested Distributions
Standard Accounts __________
Fee Account Reinvest __________
Ticker ________
Portfolio Diversification
Approximate
Sector Portfolio Percentage
_____ __________________
%
______
Total 100.00%
______
______
Market Approximate
Capitalization Portfolio Percentage
____________ __________________
Small Capitalization %
Mid Capitalization
Large Capitalization
______
Total 100.00%
______
______
Minimum Investment
All accounts $250
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. 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
securities' issuer or even perceptions of the issuer.
o The sponsor does not actively manage the portfolio. The trust will
generally hold, and may continue to buy, the same stocks even though
the stock's outlook, market value or yield may have changed.
o The Peroni Method may not identify stocks that will satisfy the
trust's investment objective.
o An issuer may be unwilling or unable to make principal payments and/or
to declare dividends in the future, may call a security before its
stated maturity, or may reduce the level of dividends declared. This
may result in a reduction in the value of your units.
o The financial condition of an issuer may worsen or its credit ratings
may drop, resulting in a reduction in the value of your units. This may
occur at any point in time, including during the primary offering
period.
o The trust is considered to be concentrated in stocks issued by
companies in the industrials sector. A concentration makes the trust
subject to more risk.
o The trust is considered to be concentrated in securities issued by
small-cap and mid-cap companies. These stocks customarily involve more
risk than large-cap or more seasoned stocks.
o Inflation may decrease the value of money. Inflation may lead to a
decrease in the value of assets or income from investments.
See "Investment Risks" in Part A of the prospectus and "Risk Factors" in
Part B of the prospectus for additional information.
Who Should Invest
You should consider this investment if:
o You want to own a defined portfolio of stocks selected through the
Peroni Method.
o You seek capital appreciation.
o The trust represents only a portion of your overall investment
portfolio.
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 or the Peroni Method.
o You are uncomfortable with the risks of an unmanaged investment in
stocks.
o You want high current income or capital preservation.
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
____________ _________ _________
Initial sales firm
paid on purchase (1) 1.00% $10.00
Deferred sales fee (2) 1.45 14.50
Creation and
development Fee (3) 0.50 5.00
_____ _____
Maximum sales fees
(including creation
and development fee) 2.95% $29.50
_____ _____
_____ _____
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) $8.00
_____
_____
Approximate
Annual Fund % of Public
Operating Offering Amount Per
Expenses Price (4) 100 Units
____________ _________ _________
Trustee's fee 0.095% $0.950
Sponsor's supervisory fee 0.030 0.300
Evaluator's fee 0.035 0.350
Bookkeeping and
administrative fee 0.035 0.350
Estimated other trust
operating expenses (5) 0.027 0.270
_____ _____
Total 0.222% $2.220
_____ _____
_____ _____
(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 $0.145 per unit and is deducted in
monthly installments of $0.048 per unit on the last business day of ____
2006 and _____ 2006 and $0.049 in ______ 2006. 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 approximately
___________ 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% of the Public Offering Price; if the unit price is less
than $10.00 per unit, the C&D Fee will exceed 0.50% of the Public Offering
Price.
(4) Based on 100 units with a $10.00 per unit Public Offering Price as of the
Inception Date. (5) Other operating expenses do not include brokerage costs
and other transactional 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 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 the trust pays or any 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 $ ______ 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 estimated 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.
Trust Portfolio
Claymore Securities Defined Portfolios, Series 306
Peroni Growth Portfolio, Summer 2006 Series
The Trust Portfolio as of the Inception Date, ______ , 2006
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Initial Per Share Cost To
Ticker Company Name (1) Sector Shares Price Portfolio (2)(3)
- ----------------------------------------------------------------------------------------------------------------------------
$
__________
$
__________
__________
(1) All securities are represented entirely by contracts to purchase
securities, which were entered into by the sponsor on ______ , 2006. 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 ______ , 2006. For securities quoted
on a national securities exchange or the Nasdaq Stock Market, securities
are generally valued at the closing sales price.
(3) There was a $___ loss to the sponsor on the Inception Date.
* American Depositary Receipt ("ADR").
** U.S. listed foreign securities.
*** Foreign security listed on a foreign exchange.
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 "offer price" or the
"Public Offering 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 your 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 2.45% 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 (2.95% of the Public Offering Price) and the sum of the maximum remaining
deferred sales fees and the C&D Fee (initially $0.195 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 ($0.145
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, the sponsor 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 by providing you with additional 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 Charge
Reductions (as a
% of the Public
Purchase Amount (1) Offering Price)
_________________ ______________
Less than $50,000 0.00%
$50,000 - $99,999 0.25
$100,000 - $249,999 0.50
$250,000 - $499,999 0.75
$500,000 - $999,999 1.00
$1,000,000 or more 1.50
Rollover Purchases 1.00
(1) 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.
The discounts described above apply only during the initial offering
period.
There can be no assurance that the sponsor will create future trusts with
investment strategies similar to your trust or that may fit within your
investment parameters.
Advisory and Fee Accounts. If you purchase units of the trust through
registered investment advisers, certified financial planners or registered
broker-dealers that, in lieu of charging you a commission in connection with
your purchase of units, charge you for their services through a comprehensive
"wrap fee" (a "Fee Account"), you are eligible to purchase units of the trust
without paying the transactional sales fee.
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 these CUSIP numbers to qualify for the
discount. If you purchase units with these special CUSIP numbers, you should be
aware that you may have the distributions automatically reinvest into additional
units of your trust or receive cash distributions. We reserve the right to limit
or deny purchases of units not subject to the transactional sales charge by
investors whose frequent trading activity we determine to be detrimental to the
trust. We, as sponsor, will receive and you will pay the C&D Fee. See the
"Expenses of the Trust" in Part B of the prospectus.
Exchange or Rollover Option. If you are buying units of your 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 that
trust is scheduled to terminate within 30 days of redemption. To qualify for
this sales charge reduction, the termination or redemption proceeds being used
to purchase units of the trust must be no more than 30 days old. 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 2.25%
$50,000 - $99,999 2.00
$100,000 - $249,999 1.75
$250,000 - $499,999 1.50
$500,000 - $999,999 1.25
$1,000,000 or more 0.75
Rollover Purchases 1.30
Wrap 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 1.75% of the unit price.
Broker-dealers and other firms that sell units of certain Claymore unit
trusts are eligible to receive additional compensation for volume sales. Such
payments will be in addition to the regular concessions paid to dealer firms as
set forth in the applicable trust's prospectus. The additional concession is
based on total sales of eligible Claymore unit trusts during a calendar quarter
as set forth in the following table:
Additional Volume
Concession
(as a percentage
Primary Offering of the value of
Period Sales During units sold over
Calendar Quarter $3 million)
_______________ ______________
$0 but less than $3 million 0.00%
$3 million
but less than $20 million 0.05
$20 million or more 0.10
Eligible unit trusts include all Claymore unit trusts, other than Claymore
municipal portfolios, sold in the primary market. Dealer firms will not receive
additional compensation for the first $3 million sold in units during a calendar
quarter. For example, if a dealer firm sells $4 million of eligible units in a
calendar quarter, the dealer firm will receive additional compensation of 0.05%
of $1 million. Also, if a dealer firm sells $26 million of eligible units in a
calendar quarter, the dealer firm will receive additional compensation of 0.10%
of $23 million. In addition, dealer firms will not receive volume concessions on
the sale of units which are not subject to a transactional sales charge.
However, such sales will be included in determining whether a firm has met the
sales level breakpoints for volume concessions.
Claymore reserves the right to modify or terminate the volume concession
program at any time. The sponsor may also pay to certain dealers an
administrative fee for information or service used in connection with the
distribution of trust units. Such amounts will be in addition to any concessions
received for the sale of units.
We generally register units for sale in various states in the U.S. We do
not register units for sale in any foreign country. 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 the amount set forth in the "Trust Portfolio" on the
initial deposit of securities 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 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. If you request an in-kind distribution
of the securities underlying units of the trust, you will incur any distribution
or service fees (Rule 12b-1 fees) applicable to those securities.
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 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 a particular security in a trust,
the trust itself or securities in general may fall in value. Market value may be
affected by a variety of factors including:
o General securities markets movements;
o Changes in the financial condition of an issuer or a sector;
o Changes in perceptions about an issuer or a sector;
o Interest rates and inflation;
o Governmental policies and litigation; and
o Purchases and sales of securities by the trust.
Interest rate risk. Interest rate risk is the risk that securities in a
trust will decline in value because of a rise in interest rates.
Credit and dividend payment risk. Credit risk is the risk that an issuer of
a security in a trust is unable or unwilling to make dividend and/or principal
payments.
Security quality risk. Security quality risk is the risk that a reduction
in a securities rating may decrease its value and the value of your investment
in a trust. Securities ratings may be reduced at any time, including during the
primary offering period of a trust.
Litigation and legislation risk. Your 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 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.
Inflation risk. Inflation risk is the risk that the value of assets or
income from investments will be less in the future as inflation decreases the
value of money.
Concentration risk. When securities in a particular sector make up 25% or
more of a trust, it is said to be "concentrated" in that sector which makes the
trust subject to more market risk. The trust is concentrated in the securities
of industrial companies. See "Industrial company risk" for a description of the
risks associated with a concentration in the securities of industrial companies.
Industrial company risk. The trust is considered to be concentrated in
common stocks of industrial companies. The profitability of industrial companies
will be affected by various factors including the general state of the economy,
intense competition, domestic and international politics, excess capacity and
spending trends.
The Internet may also influence the industrial market. Customers' desire
for better pricing and convenience, as well as manufacturers' desire to boost
profitability by finding new avenues of sales growth and productivity gains, may
drive many industrial manufacturers to invest heavily in Internet hardware and
software. Because the Internet allows manufacturers to take orders directly from
customers, thus eliminating the middlemen from both supply chains and
distributors, industrial makers may no longer need traditional third-party
outfits to distribute their products. In addition, the Internet may also allow
industrial manufacturers to cut inventory levels, by enabling customers to
tailor their orders to their specific needs.
Industrial companies may also be affected by factors more specific to their
individual industries. For example, industrial machinery manufacturers may be
subject to declines in consumer demand and the need for modernization.
Agricultural equipment businesses may be influenced by fluctuations in farm
income, farm commodity prices, government subsidies and weather conditions. The
number of housing starts, levels of public and non-residential construction
including weakening demand for new office and retail space, and overall
construction spending may adversely affect construction equipment manufacturers,
while overproduction, consolidation and weakening global economies may lead to
deteriorating sales for truck makers.
Mid-cap and small-cap companies risk. The trust includes stocks issued by
small-capitalization and mid-capitalization companies. These stocks customarily
involve more investment risk than larger capitalization or more seasoned stocks.
These additional risks are due in part to the following factors.
Small-capitalization and mid-capitalization companies may:
o Have limited product lines, markets or financial resources;
o Be new and developing companies which seek to develop and utilize new
and/or emerging technologies. These technologies may be slow to develop
or fail to develop altogether;
o Have less publicly available information;
o Lack management depth or experience;
o Be less liquid;
o Be more vulnerable to adverse general market or economic developments;
and
o Be dependent upon products that were recently brought to market or key
personnel.
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. Your trust is not a managed fund. Unlike a managed
fund, we designed your portfolio to remain relatively fixed after its inception.
Your trust will generally buy and sell stocks:
o to pay expenses,
o to issue additional units or redeem units,
o in limited circumstances to protect the trust,
o to make required distributions or avoid imposition of taxes on the
trust, or
o as permitted by the trust agreement.
Your trust will generally reject any offer for securities or property other
than cash in exchange for the stocks in its portfolio. However, if a public
tender offer has been made for a stock or a merger or acquisition has been
announced affecting a stock, your trust may either sell the stock or accept a
tender offer for cash if the supervisor determines that the sale or tender is in
the best interest of unitholders. The trustee will distribute any cash proceeds
to unitholders. If your trust receives securities or property other than cash,
it may either hold the securities or property in its portfolio or sell the
securities or property and distribute the proceeds. For example, this could
happen in a merger or similar transaction.
We will increase the size of your trust as we sell units. When we create
additional units, we will seek to replicate the existing portfolio. When your
trust buys 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 will not select firms to handle these
transactions on the basis of their sale of units of the trust.
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 will 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
Eugene E. Peroni, Jr. Mr. Peroni serves as Senior Managing Director, Equity
Research for Claymore Securities, Inc. Mr. Peroni's insights have been published
in the Peroni Report, a strategy letter offering stock market forecasts and
specific stock recommendations for both short and longer-term investments and
Mr. Peroni has selected the popular "Peroni's Top Ten Picks" since 1988. Mr.
Peroni previously served as Managing Director for Equity Research for Nuveen
Investments. Mr. Peroni began training in the field of technical research at age
16 with his father, Eugene E. Peroni, Sr., who founded the Peroni Method more
than 50 years ago. Mr. Peroni learned from his father the importance of a
disciplined "hand-picked" approach to investing. Mr. Peroni has more than 25
years of experience in his field. The Peroni Method uses a bottom-up approach,
emphasizing the technical merits of an individual stock.
Mr. Peroni regularly appears on CNBC, CBS MarketWatch, PBS Nightly Business
Report, KYW News Radio in Philadelphia, CNNfn and Bloomberg TV, and is quoted
often in publications as The Wall Street Journal, The New York Times, U.S. News
and World Report and Investors Business Daily. According to Mr. Peroni, "[a]s
surely as the seasons will come and go, financial markets will continue to fall
in and out of favor. Through all of this change it is rewarding to me to know
that my family's method will continue to provide investors with uncommon insight
and unique opportunities."
The equity universe from which Gene Peroni builds his research library is
comprised of mostly exchange-traded stocks. His library of approximately 1,000
hand-charted stocks is the result of extensive technical research and is
regularly refreshed to include new opportunities gleaned through ticker tape
analysis, news outlets, corporate developments and practical observations.
Careful study and continuous updating of these hand-drawn charts is the
cornerstone of his bottom-up approach.
Charts with attractive price architecture are noted and stocks are ranked
and screened on a regular basis. Historical characteristics are analyzed for
price and volume shifts and evaluations are made using money flow and relative
strength trends. Sector relative strength is then determined by unbiased
groupings of attractive stocks. Portfolio construction progresses as weightings
are determined by analyzing individual stock price behavior, economic factors,
monetary trends and psychological oscillators. Those stocks with the best
technical characteristics in strong or emerging leadership sectors are
candidates for inclusion in the portfolio while also taking into consideration
appropriate diversification.
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, have underwritten closed-end funds and have
distributed bonds, mutual funds, closed-end 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 2455 Corporate West Drive, Lisle, Illinois
60532 or by using the contacts listed on the back cover of this prospectus.
Claymore personnel, including Mr. Peroni, 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 $0.050 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. 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 306
We have audited the accompanying statement of financial condition,
including the trust portfolio set forth on page 7 of this prospectus, of
Claymore Securities Defined Portfolios, Series 306 as of ________ , 2006, 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 of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
statement of financial condition is free of material misstatement. The trust is
not required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the trust's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement of financial condition, assessing the accounting principles used
and significant estimates made by the sponsor, as well as evaluating the overall
statement of financial condition presentation. Our procedures included
confirmation with The Bank of New York, trustee, of cash or an irrevocable
letter of credit deposited for the purchase of securities as shown in the
statement of financial condition as of ________ , 2006. 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 306 as of _______ , 2006, in conformity
with accounting principles generally accepted in the United States of America.
Grant Thornton LLP
Chicago, Illinois
_______ , 2006
Claymore Securities Defined Portfolios, Series 306
Statement of Financial Condition
as of the Inception Date, ________ , 2006
Investment in stocks
Sponsor's contracts to purchase underlying stocks
backed by cash deposited (1)(2) $
_________
$
_________
_________
Liabilities and interest of unitholders Liabilities:
Organization costs (3) $
Creation and development fee (6)
Deferred sales fee (4)
_________
_________
Interest of unitholders:
Cost to investors (5)
Less: initial sales fee
Less: organization costs, C&D and deferred sales fees (3)(4)(5)(6)
_________
Net interest of unitholders
_________
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 has been deposited with The Bank of New York, trustee, covering the
trust (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 $8.00 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 creation and development fee. On the Inception Date, the total
transactional sales fee is 2.45% of the Public Offering Price (equivalent
to 2.512% of the net amount invested) for the trust. The deferred sales fee
is equal to $0.145 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 PORTFOLIO
PROSPECTUS PART B DATED ________ , 2006
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 ...................................... 2
Risk Factors ............................................. 3
Administration of the Trust .............................. 6
Expenses of the Trust .................................... 13
Portfolio Transactions and Brokerage Allocation .......... 14
Purchase, Redemption and Pricing of Units ................ 14
Taxes .................................................... 19
Experts .................................................. 22
Performance Information .................................. 22
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).
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. After your trust is created, the sponsor may deposit
additional securities in the trust, contracts to purchase additional securities
along with cash (or a bank letter of credit in lieu of cash) to pay for such
contracted securities or cash (including a letter of credit) with instructions
to purchase additional securities. Such additional deposits will be in amounts
which will seek to maintain, for the first 90 days, as closely as possible the
same original percentage relationship among the number of shares of each
security in the trust established by the initial deposit of securities and,
thereafter, the same percentage relationship that existed immediately prior to
such deposit. 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 the trust
will pay the associated brokerage fees.
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 agreement provides that the sponsor may (but need not) direct the
trustee to dispose of a security in certain events such as the issuer having
defaulted on the payment on any of its outstanding obligations or the price of a
security has declined to such an extent or other such credit factors exist so
that in the opinion of the sponsor the retention of such securities would be
detrimental to the trust. If a public tender offer has been made for a security
or a merger or acquisition has been announced affecting a security, the trustee
may either sell the security or accept a tender offer for cash if the supervisor
determines that the sale or tender is in the best interest of unitholders. The
trustee will distribute any cash proceeds to unitholders. Pursuant to the trust
agreement and with limited exceptions, the trustee may sell any securities or
other properties acquired in exchange for securities such as those acquired in
connection with a merger or other transaction. If offered such new or exchanged
securities or property other than cash, the trustee shall reject the offer.
However, in the event such securities or property are nonetheless acquired by
the trust, they may be accepted for deposit in a trust and either sold by the
trustee or held in a trust pursuant to the direction of the sponsor. Proceeds
from the sale of securities (or any securities or other property received by the
trust in exchange for securities) are credited to the Capital Account for
distribution to unitholders or to meet redemptions.
Except as stated in the trust agreement, or in the prospectus, the
acquisition by the trust of any securities other than the portfolio securities
is prohibited. The trustee may sell securities, designated by the sponsor, from
the trust for the purpose of redeeming units of a trust tendered for redemption
and the payment of expenses and for such other purposes as permitted under the
trust agreement.
Notwithstanding the foregoing, 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.
Proceeds from the sale of securities (or any securities or other property
received by a trust in exchange for securities) are credited to the Capital
Account of a trust for distribution to unitholders or to meet redemptions.
Except for failed securities and as provided in the prospectus or in the trust
agreement, the acquisition by a trust of any securities other than the portfolio
securities is prohibited. The trustee may sell securities from a trust for
limited purposes, including redeeming units tendered for redemption and the
payment of expenses.
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.
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.
Industrial Company Risk. If set forth in Part A of the prospectus, the
trust may contain industrial stocks. General risks of industrial companies
include the general state of the economy, intense competition, consolidation,
domestic and international politics, excess capacity and consumer spending
trends. In addition, they may also be significantly affected by overall capital
spending levels, economic cycles, technical obsolescence, delays in
modernization, labor relations, government regulations and ecommerce
initiatives.
Industrial companies may also be affected by factors more specific to their
individual industries. Industrial machinery manufacturers may be subject to
declines in consumer demand and the need for modernization. Aerospace and
defense companies may be influenced by decreased demand for new equipment,
aircraft order cancellations, changes in aircraft-leasing contracts and cutbacks
in profitable business travel. Agricultural equipment businesses may be
influenced by fluctuations in farm income, farm commodity prices, government
subsidies and weather conditions. The number of housing starts, levels of public
and non-residential construction including weakening demand for new office and
retail space, and overall construction spending may adversely affect
construction equipment manufacturers, while overproduction, consolidation and
weakening global economies may lead to deteriorating sales for auto and truck
makers and their suppliers.
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.
Small-Capitalization and Mid-Capitalization Stocks Risk. If set forth in
Part A of the prospectus, a trust may invest in small- or mid-capitalization
stocks. Investing in small- or mid- capitalization stocks may involve greater
risk than investing in large capitalization stocks because they can be subject
to more abrupt or erratic price movements. Small market capitalization companies
("Small-Cap Companies") are those with market capitalizations of approximately
less than $3.1 billion at the time of a trust's investment and middle market
capitalization companies ("Mid-Cap Companies") are those with market
capitalization of approximately greater than $3.1 billion and less than $10.1
billion at the time of the trust's investment. Many Small-Cap Companies and
Mid-Cap Companies will have had their securities publicly traded, if at all, for
only a short period of time and will not have had the opportunity to establish a
reliable trading pattern through economic cycles. The price volatility of
Small-Cap Companies and Mid-Cap Companies is relatively higher than larger,
older and more mature companies. The greater price volatility of Small-Cap
Companies and Mid-Cap Companies may result from the fact that there may be less
market liquidity, less information publicly available or fewer investors who
monitor the activities of these companies. In addition, the market prices of
these securities may exhibit more sensitivity to changes in industry or general
economic conditions. Some Small-Cap Companies and Mid-Cap Companies will not
have been in existence long enough to experience economic cycles or to
demonstrate whether they are sufficiently well managed to survive downturns or
inflationary periods. Further, a variety of factors may affect the success of a
company's business beyond the ability of its management to prepare or compensate
for them, including domestic and international political developments,
government trade and fiscal policies, patterns of trade and war or other
military conflict which may affect industries or markets or the economy
generally.
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. 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.
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.
Distribution Reinvestment. Unitholders may elect to have distributions of
capital (including capital gains, if any) or dividends or both automatically
invested into additional units of their trust without a sales fee.
Your trust will pay any deferred sales fee per unit regardless of any sales
fee discounts. However, if you elect to have distributions on your units
reinvested into additional units of your trust, you will be credited the amount
of any remaining deferred sales charge on such additional units at the time of
reinvestment.
Unitholders who are receiving distributions in cash may elect to
participate in distribution reinvestment by filing with the Program Agent an
election to have such distributions reinvested without charge. Such election
must be received by the Program Agent at least ten days prior to the record date
applicable to any distribution in order to be in effect for such record date.
Any such election shall remain in effect until a subsequent notice is received
by the Program Agent.
The Program Agent is The Bank of New York. All inquiries concerning
participating in distribution reinvestment should be directed to The Bank of New
York at its Unit Investment Trust Division office.
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; or (3) to make such provisions as shall not adversely affect the
interests of the unitholders. 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. In no event shall the trust agreement be amended to
increase the number of units of a trust issuable thereunder or to permit the
acquisition of any securities in addition to or in substitution for those
initially deposited in the trust, except in accordance with the provisions of
the trust agreement. 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 five 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 2455 Corporate West Drive, Lisle, Illinois 60532 and at 101 W. Elm
Street, Suite 310, Conshohoken, Pennsylvania 19428.
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 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.
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&D Fee 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 System 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 "Computation 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 five 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 National Market System,
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 National
Market System 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. Securities
not listed on the New York Stock Exchange but principally traded on the Nasdaq
National Market System will be valued at the Nasdaq National Market System's
official closing price. 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.
TAXES
This section summarizes some of the main U.S. federal income tax
consequences of owning units of a trust. This section is current as of the date
of this prospectus. Tax laws and interpretations change frequently, and these
summaries do not describe all of the tax consequences to all taxpayers. For
example, these summaries generally do not describe your situation if you are a
corporation, a non-U.S. person, a broker/dealer, or other investor with special
circumstances. In addition, this section does not describe your state, local or
foreign tax consequences.
This federal income tax summary is based in part on the advice and opinion
of counsel to the sponsor. The Internal Revenue Service could disagree with any
conclusions set forth in this section. In addition, our counsel was not asked to
review, and has not reached a conclusion with respect to the federal income tax
treatment of the assets to be deposited in the trust. This may not be sufficient
for you to use for the purpose of avoiding penalties under federal tax law.
As with any investment, you should seek advice based on your individual
circumstances from your own tax advisor.
ASSETS OF THE TRUST. The trust is expected to hold shares of stock in
corporations (the "Stocks") that are treated as equity for federal income tax
purposes. It is possible that the trust will also hold other assets, including
assets that are treated differently for federal income tax purposes from those
described above, in which case you will have federal income tax consequences
different from or in addition to those described in this section. All of the
assets held by the trust constitute the "Trust Assets". Neither our counsel nor
we have analyzed the proper federal income tax treatment of the Trust Assets and
thus neither our counsel nor we have reached a conclusion regarding the federal
income tax treatment of the Trust Assets.
TRUST STATUS. If the trust is at all times operated in accordance with the
documents establishing the trust and certain requirements of federal income tax
law are met, the trust will not be taxed as a corporation for federal income tax
purposes. As a unit owner, you will be treated as the owner of a pro rata
portion of each of the Trust Assets, and as such you will be considered to have
received a pro rata share of income (e.g., dividends and capital gains, if any)
from each Trust Asset when such income would be considered to be received by you
if you directly owned the Trust Assets. This is true even if you elect to have
your distributions reinvested into additional units. In addition, the income
from Trust Assets that you must take into account for federal income tax
purposes is not reduced by amounts used to pay sales charges or trust expenses.
YOUR TAX BASIS AND INCOME OR LOSS UPON DISPOSITION. If your trust disposes
of Trust Assets, you will generally recognize gain or loss. If you dispose of
your units or redeem your units for cash, you will also generally recognize gain
or loss. To determine the amount of this gain or loss, you must subtract your
tax basis in the related Trust Assets from your share of the total amount
received in the transaction. You can generally determine your initial tax basis
in each Trust Asset by apportioning the cost of your units, including sales
charges, among the Trust Assets ratably according to their values on the date
you acquire your units. In certain circumstances, however, you may have to
adjust your tax basis after you acquire your units (for example, in the case of
certain dividends that exceed a corporation's accumulated earnings and profits,
as discussed below).
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 capital gains rates are generally effective for taxable
years beginning before January 1, 2009.
Net capital gain equals net long-term capital gain minus net short-term
capital loss for the taxable year. Capital gain or loss is long-term if the
holding period for the asset is more than one year and is short-term if the
holding period for the asset is one year or less. You must exclude the date you
purchase your units to determine your holding period. The tax rates for capital
gains realized from assets held for one year or less are generally the same as
for ordinary income. The Internal Revenue Code, however, treats certain capital
gains as ordinary income in special situations.
DIVIDENDS FROM STOCKS. Certain dividends received with respect to the
Stocks may qualify to be taxed at the same rates that apply to net capital gain
(as discussed above), provided certain holding period requirements are
satisfied. These special rules relating to the taxation of dividends at capital
gains rates generally apply to taxable years beginning before January 1, 2009.
DIVIDENDS RECEIVED DEDUCTION. Generally, a domestic corporation owning
units in a trust may be eligible for the dividends received deduction with
respect to such unit owner's pro rata portion of certain types of dividends
received by the trust. However, a corporation generally will not be entitled to
the dividends received deduction with respect to dividends from most foreign
corporations.
IN-KIND DISTRIBUTIONS. Under certain circumstances as described in this
prospectus, you may request an In-Kind Distribution of Trust Assets when you
redeem your units or at your trust's termination. By electing to receive an
In-Kind Distribution, you will receive Trust Assets plus, possibly, cash. You
will not recognize gain or loss if you only receive whole Trust Assets in
exchange for the identical amount of your pro rata portion of the same Trust
Assets held by your trust. However, if you also receive cash in exchange for a
Trust Asset or a fractional portion of a Trust Asset, you will generally
recognize gain or loss based on the difference between the amount of cash you
receive and your tax basis in such Trust Asset or fractional portion.
EXCHANGES. If you elect to have your proceeds from your trust rolled over
into a future series of the trust, it is considered a sale for federal income
tax purposes and any gain on the sale will be treated as a capital gain, and any
loss will be treated as a capital loss. However, any loss you incur in
connection with the exchange of your units of your trusts for units of the next
series will generally be disallowed with respect to this deemed sale and
subsequent deemed repurchase, to the extent the two trusts have substantially
identical Trust Assets under the wash sale provisions of the Internal Revenue
Code.
LIMITATIONS ON THE DEDUCTIBILITY OF TRUST EXPENSES. Generally, for federal
income tax purposes, you must take into account your full pro rata share of your
trust's income, even if some of that income is used to pay trust expenses. You
may deduct your pro rata share of each expense paid by your trust to the same
extent as if you directly paid the expense. You may be required to treat some or
all of the expenses of your trust as miscellaneous itemized deductions.
Individuals may only deduct certain miscellaneous itemized deductions to the
extent they exceed 2% of adjusted gross income.
Foreign Taxes. Distributions by your trust that are treated as U.S. source
income (e.g., dividends received on stocks of domestic corporations) will
generally be subject to U.S. income taxation and withholding in the case of
Units held by nonresident alien individuals, foreign corporations or other
non-U.S. persons, subject to any applicable treaty. 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 may not be subject to U.S.
federal income taxes, including withholding taxes, on some or all of the income
from your trust or on any gain from the sale or redemption of your Units,
provided that certain conditions are met. You should consult your tax advisor
with respect to the conditions you must meet in order to be exempt for U.S. tax
purposes. You should also consult your tax advisor with respect to other U.S.
tax withholding and reporting requirements.
Some distributions by your trust may be subject to foreign withholding
taxes. Any income withheld will still be treated as income to you. Under the
grantor trust rules, you are considered to have paid directly your share of any
foreign taxes that are paid. Therefore, for U.S. tax purposes, you may be
entitled to a foreign tax credit or deduction for those foreign taxes.
New York Taxes. Based on the advice of Emmet, Marvin & Martin LLP, special
counsel to the trust for New York tax matters, under the existing income tax
laws of the State and City of New York, your trust will not be taxed as a
corporation, and the income of your trust will be treated as the income of the
unit holders in the same manner as for federal income tax purposes. You should
consult your tax advisor regarding potential foreign, state or local taxation
with respect to your units.
Experts
Legal Matters. Chapman and Cutler LLP, 111 West Monroe Street, Chicago,
Illinois 60603, acts as counsel for the trusts and has passed upon the legality
of the units.
Independent Registered Public Accounting Firm. The statements of financial
condition, including the Trust Portfolios, appearing herein, have been audited
by Grant Thornton LLP, independent registered public accounting firm, as set
forth in their report thereon appearing elsewhere herein, and are 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
PROSPECTUS-PART B
_________ , 2006
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 3 Security Selection
about the 3 Future Trusts
portfolio 4 Essential Information
4 Portfolio Diversification
4 Principal Risks
5 Who Should Invest
5 Fees and Expenses
6 Example
6 Estimated Annual Income Distributions
7 Trust Portfolio
Understanding Your Investment
- --------------------------------------------------------------------------------
Detailed 8 How to Buy Units
information 12 How to Sell Your Units
to help you 13 Distributions
understand 14 Investment Risks
your 15 How the Trust Works
investment 17 General Information
18 Expenses
19 Report of Independent Registered Public
Accounting Firm
20 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 for Visit 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 306
Securities Act file number: 333-__________
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.
[photo of sword]
Claymore Securities
Defined Portfolios
Series 306
Prospectus
Dated ________ , 2006
Peroni Growth Portfolio,
Summer 2006 Series
[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 306 has duly caused
this 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
31st day of May, 2006.
CLAYMORE SECURITIES DEFINED PORTFOLIOS, SERIES 306,
Registrant
By: CLAYMORE SECURITIES, INC., Depositor
By: /s/ Nicholas Dalmaso
--------------------
Nicholas Dalmaso
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on May 31, 2006 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 ) May 31, 2006
Directors )
)
/S/ STEVEN HILL Chief Financial Officer May 31, 2006
- ---------------------
STEVEN HILL
/S/ NICHOLAS DALMASO General Counsel May 31, 2006
- ---------------------
NICHOLAS DALMASO
- -----------------
* 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 306
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
May 31, 2006