AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 2009
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 617
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:
KEVIN ROBINSON, ESQ. ERIC F. FESS
Senior Managing Director, General Chapman and Cutler LLP
Counsel and Secretary 111 West Monroe Street
Claymore Securities, Inc. Chicago, Illinois 60603
2455 Corporate West Drive (312) 845-3000
Lisle, Illinois 60532
(630) 505-3736
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 617
Income Closed-End & Treasury Allocation Portfolio, Series 5
[Claymore Logo]
PROSPECTUS PART A DATED ______ , 2009
A diversified portfolio containing securities
selected by Claymore Securities, Inc.
The Securities and Exchange Commission has not
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus.
Any representation to the contrary is a criminal offense.
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INVESTMENT SUMMARY
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 617 is a unit investment
trust that consists of the Income Closed-End & Treasury Allocation Portfolio,
Series 5 (the "trust"). Claymore Securities, Inc. ("Claymore" or the "sponsor")
serves as the sponsor of the trust.
The trust is scheduled to terminate in approximately 2 years.
Investment Objective
The trust seeks to provide high current income and the potential for
capital appreciation.
Principal Investment Strategy
Under normal circumstances, the trust will invest at least 80% of the value
of its assets in either shares of an exchange-traded fund ("ETF") which tracks a
U.S. Treasury bond index, or common stocks of closed-end investment companies
("Closed-End Funds") that invest in various income-oriented securities of
different asset classes. These asset classes may include, but are not limited
to:
o government bonds;
o mortgage-backed bonds;
o convertible bonds;
o preferred securities;
o corporate bonds;
o senior loans;
o high yield bonds; and
o international bonds.
Claymore, through proprietary research and strategic alliances, will strive
to select Closed-End Funds featuring the potential for current income,
diversification and overall liquidity.
See "Investment Policies" in Part B of the prospectus for additional
information.
Security Selection
The sponsor has selected for the portfolio Closed-End Funds and an ETF
believed to have the best potential to achieve the trust's investment objective.
As of the trust's initial date of deposit (the "Inception Date"), 100% of
the trust's portfolio is invested in either shares of an ETF which tracks a U.S.
Treasury bond index, or Closed-End Funds that invest in various income-oriented
securities of different asset classes.
When selecting Closed-End Funds for inclusion in this portfolio the sponsor
looks at numerous factors. These factors include, but are not limited to:
o Investment Objective. The sponsor favors funds that have a clear
investment objective in line with the trust's objective and, based upon
a review of publicly available information, appear to be maintaining
it.
o Premium/Discount. The sponsor favors funds that are trading at a
discount relative to their peers and relative to their long-term
average.
o Consistent Dividend. The sponsor favors funds that have a history of
paying a consistent and competitive dividend which, in the opinion of
the sponsor, can be maintained.
o Performance. The sponsor favors funds that have a history of strong
relative performance (based on market price and net asset value) when
compared to their peers and an applicable index.
The sponsor will seek to select an ETF for inclusion in the trust portfolio
which tracks a low duration U.S. Treasury bond index in an effort to dampen the
trust's duration sensitivity and lower the trust's overall volatility. When
selecting the ETF the sponsor looks at numerous factors. These factors include,
but are not limited to: duration, maturity and coupon rate. Due to the current
economic environment, U.S. Treasury bonds and ETFs that invest in U.S. Treasury
bonds are generating yields that are at historic lows. While U.S. Treasury bonds
are considered to be some of the most risk adverse securities available, if U.S.
Treasury bond yields remain at its current levels, the ETF included in the
trust's portfolio may not contribute to or may lower the trust's performance. As
of the Inception Date, the ETF comprised approximately 20% of the trust's
portfolio.
Exchange Traded-Funds
ETFs are investment pools that hold securities. ETFs provide an efficient
and relatively simple way to invest in that they offer investors the opportunity
to buy and sell an entire basket of securities with a single transaction
throughout the trading day. ETFs are built like an index fund, but trade like a
stock. They are generally designed to track a specific index and offer investors
lower costs and improved tax efficiency over traditional, actively managed
mutual funds. ETFs generally offer advantages similar to those found in index
funds such as low operating costs, performance designed to track an index, the
potential for high tax efficiency and consistent investment strategies. Unlike
conventional mutual funds, ETFs normally issue and redeem shares on a continuous
basis at their net asset value in large specified blocks of shares, known as
"creation units."
Future Trusts
The sponsor intends to create future trusts that follow the same investment
strategy. One such trust is expected to be available approximately six months
after the Inception Date and upon the trust's termination. If these future
trusts are available, you may be able to reinvest into one of the trusts at a
reduced sales charge. Each trust is designed to be part of a longer term
strategy.
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Essential Information
(as of the Inception Date)
Inception Date ______ , 2009
Unit Price $10.00
Termination Date _____ , 2011
Distribution Date 25th day of each month
(commencing _____ 25, 2009, if any)
Record Date 15th day of each month
(commencing _____ 15, 2009, if any)
CUSIP Numbers
Cash Distributions
Standard Accounts _____
Fee Account Cash _____
Reinvested Distributions
Standard Accounts _____
Fee Account Reinvest _____
Ticker CICEEX
Portfolio Diversification
Approximate
Sector Portfolio Percentage
------ --------------------
Closed-End Funds %
Exchange-Traded Fund
------
Total 100.00%
------
Minimum Investment
All accounts $250
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Principal Risks
As with all investments, you may lose some or all of your investment in the
trust. No assurance can be given that the trust's investment objective will be
achieved. The trust also might not perform as well as you expect. This can
happen for reasons such as these:
o Securities 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. Units of the
trust are not deposits of any bank and are not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government
agency.
o Due to the current state of the economy, the value of the securities
held by the trust may be subject to steep declines or increased
volatility due to changes in performance or perception of the issuers.
In the last year, economic activity has declined across all sectors of
the economy, and the United States is experiencing increased
unemployment. The current economic crisis has affected the global
economy with European and Asian markets also suffering historic losses.
Extraordinary steps have been taken by the governments of several
leading economic countries to combat the economic crisis; however, the
impact of these measures is not yet known and cannot be predicted.
o The trust includes an ETF. ETFs are investment pools that hold other
securities. ETFs are subject to various risks, including management's
ability to meet the fund's investment objective, and to manage the
fund's portfolio when the underlying securities are redeemed or sold,
during periods of market turmoil and as investors' perceptions
regarding ETFs or their underlying investments change. Shares of ETFs
may trade at a discount from their net asset value in the secondary
market. This risk is separate and distinct from the risk that the net
asset value of the ETF shares may decrease. The amount of such
discount from net asset value is subject to change from time to time
in response to various factors. The trust and the underlying funds
have management and operating expenses. You will bear not only your
share of the trust's expenses, but also the expenses of the underlying
funds. By investing in other funds, the trust incurs greater expenses
than you would incur if you invested directly in the funds.
o The ETF held by the trust invests in U.S. Treasury obligations. U.S.
Treasury obligations are direct obligations of the United States which
are backed by the full faith and credit of the United States. U.S.
Treasury obligations are generally not affected by credit risk, but
are subject to changes in market value resulting from changes in
interest rates. The value of U.S. Treasury obligations will be
adversely affected by decreases in bond prices and increases in
interest rates.
o The trust includes Closed-End Funds. Closed-End Funds are actively
managed investment companies that invest in various types of
securities. Closed-End Funds issue shares of common stock that are
traded on a securities exchange. Closed-End Funds are subject to
various risks, including management's ability to meet the Closed-End
Fund's investment objective and to manage the Closed-End Fund's
portfolio during periods of market turmoil and as investors'
perceptions regarding Closed-End Funds or their underlying investments
change. Closed-End Funds are not redeemable at the option of the
shareholder and they may trade in the market at a discount to their
net asset value. Closed-End Funds may also employ the use of leverage
which increases risk and volatility. Recent instability in the auction
rate preferred shares market may affect the volatility of certain
Closed-End Funds, especially those that use leverage or plan to use
leverage.
o The value of the fixed-income securities in the Closed-End Funds and
ETF will generally fall if interest rates, in general, rise. Typically,
fixed-income securities with longer periods before maturity are more
sensitive to interest rate changes.
o A Closed-End Fund, ETF or an issuer of securities held by a Closed-End
Fund or ETF 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 a Closed-End Fund, ETF or an issuer of
securities held by a Closed-End Fund or ETF 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 Certain Closed-End Funds held by the trust invest in preferred
securities. Preferred securities are typically subordinated to bonds
and other debt instruments in a company's capital structure in terms of
priority to corporate income and therefore will be subject to greater
credit risk than those debt instruments.
o Certain Closed-End Funds held by the trust invest in bonds that are
rated below investment-grade and are considered to be "junk"
securities. Below investment-grade obligations are considered to be
speculative and are subject to greater market and credit risks, and
accordingly, the risk of non-payment or default is higher than with
investment-grade securities. In addition, such securities may be more
sensitive to interest rate changes and more likely to receive early
returns of principal.
o Certain Closed-End Funds held by the trust invest in bonds that are
rated as investment-grade by only one rating agency. As a result, such
split-rated securities may have more speculative characteristics and
are subject to a greater risk of default than securities rated as
investment-grade by both Moody's and Standard & Poor's.
o Certain Closed-End Funds held by the trust invest in convertible
securities. Convertible securities generally offer lower interest or
dividend yields than non-convertible fixed-income securities of
similar credit quality because of the potential for capital
appreciation. The market values of convertible securities tend to
decline as interest rates increase and, conversely, to increase as
interest rates decline. However, a convertible security's market value
also tends to reflect the market price of the common stock of the
issuing company, particularly when that stock price is greater than
the convertible security's "conversion price." Convertible securities
fall below debt obligations of the same issuer in order of preference
or priority in the event of a liquidation and are typically unrated or
rated lower than such debt obligations.
o Certain Closed-End Funds held by the trust invest in foreign
securities. Investment in foreign securities presents additional risk.
Foreign risk is the risk that foreign securities will be more volatile
than U.S. securities due to such factors as adverse economic, currency,
political, social or regulatory developments in a country, including
government seizure of assets, excessive taxation, limitations on the
use or transfer of assets, the lack of liquidity or regulatory controls
with respect to certain industries or differing legal and/or accounting
standards.
o Certain Closed-End Funds held by the trust invest in securities issued
by entities located in emerging markets. Emerging markets are generally
defined as countries with low per capita income in the initial stages
of their industrialization cycles. The markets of emerging markets
countries are generally more volatile than the markets of developed
countries with more mature economies.
o Current economic conditions may lead to limited liquidity and greater
volatility. The markets for fixed-income securities, such as those
held by the Closed-End Funds and the ETF, have experienced periods of
illiquidity and volatility since the latter half of 2007. General
market uncertainty and consequent repricing risk have led to market
imbalances of sellers and buyers, which in turn have resulted in
significant valuation uncertainties in a variety of fixed-income
securities. These conditions resulted, and in many cases continue to
result in, greater volatility, less liquidity, widening credit spreads
and a lack of price transparency, with many debt securities remaining
illiquid and of uncertain value. These market conditions may make
valuation of some of the securities held by the Closed-End Fund and
the ETF uncertain and/or result in sudden and significant valuation
increases or declines in its holdings.
o Inflation may lead to a decrease in the value of assets or income from
investments.
o The sponsor does not actively manage the portfolio. The trust will
generally hold, and may continue to buy, the same securities even
though a security's outlook, rating, market value or yield may have
changed.
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 current income and asset class diversification;
o The trust represents only a portion of your overall investment
portfolio; and
o The trust is part of a longer term investment strategy that includes
the investment in subsequent trusts, if available.
You should not consider this investment if:
o You are unwilling to accept the risks involved with owning a multiple
asset class portfolio;
o You are unwilling to accept the risks involved with owning ETFs and
Closed-End Funds;
o You are seeking capital preservation as a primary investment
objective; or
o You are seeking a short-term investment or an investment to be used as
a trading vehicle.
Fees and Expenses
This table shows the fees and expenses you may pay, directly or indirectly,
when you invest in the portfolio.
Amount Per
$1,000
Invested
Percentage at a Public
of Public Offering
Offering Price of
Investor Fees Price (1) $10 Per Unit
------------ --------- -----------
Initial sales fee
paid on purchase 0.00% $ 0.00
Deferred sales fee (2) 3.95 34.50
Creation and
development fee (3) 0.50 5.00
----- -----
Maximum sales fees (1)(3)
(including creation
and development fee) 4.45% $39.50
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Estimated organization costs
(amount per 100 units paid
by the trust at the end of
the 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 0.0950% $0.950
Sponsor's supervisory fee 0.0300 0.300
Evaluator's fee 0.0350 0.350
Bookkeeping and
administrative fee 0.0350 0.350
Estimated other trust
operating expenses (5) 0.0320 0.320
Estimated acquired
Fund expenses (6) 0.9700 9.700
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Total 1.1970% $11.970
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(1) The maximum sales fee equals the sum of the deferred sales fee and the
creation and development fee ("C&D Fee") (as described below). Together the
deferred sales fee and the creation and development fee is a fixed dollar
amount equaling $0.395 per unit. Because of this, the maximum sales fee, as
a percentage of the Public Offering Price, will vary with changes in the
Public Offering Price. The percentages noted above do not assume a Public
Offering Price of $10 per unit. Assuming a Public Offering Price of $10 per
unit, the maximum sales fee will be 3.95% of the Public Offering Price per
unit. If the price you pay for your units exceeds $10 per unit, the maximum
sales fee will be less than 3.95%. If the price you pay for your units is
less than $10 per unit, the maximum sales fee will exceed 3.95%, but in no
event will the maximum sales fee exceed 4.45% of the Public Offering Price.
(2) The deferred sales fee is a fixed dollar amount equal to $0.345 per unit
which, as a percentage of the Public Offering Price, will vary over time.
At a Public Offering Price of $10 per unit, the deferred sales fee will be
3.45% of the Public Offering Price per unit. If the price you pay for your
units exceeds $10 per unit, the deferred sales fee will be less than 3.45%
of the Public Offering Price per unit. If the price you pay for your units
is less than $10 per unit, the deferred sales fee will exceed 3.45% of the
Public Offering Price per unit; however, in no event will the maximum sales
fee exceed 4.45% of the Public Offering Price per unit. The deferred sales
fee will be deducted in six monthly installments commencing _____ 2009 and
ending _____ 2010 ($0.0575 per unit on the last business day of each
month). If units are redeemed prior to the deferred sales fee period, the
entire deferred sales fee will be collected. If you purchase units after
the first deferred sales fee payment has been assessed, your maximum sales
fee will consist of an initial sales fee and the amount of any remaining
deferred sales fee payments. The initial sales fee, which you will pay at
the time of purchase, is equal to the difference between $0.345 per unit
and the remaining deferred sales fee. If you purchase units after the last
deferred sales fee payment has been assessed, your maximum sales fee will
consist of a one-time sales fee of $0.345 per unit.
(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
six months from the Inception Date. The percentages provided are based on a
$10 unit as of the Inception Date and the percentage amount will vary over
time. If the unit price exceeds $10.00 per unit, the C&D Fee will be less
than 0.50% 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. However, in no event will the maximum sales fee exceed 4.45% of a
unitholder's initial investment.
(4) Based on 100 units with a $10.00 per unit Public Offering Price as of the
Inception Date.
(5) The estimated trust operating expenses are based upon an estimated trust
size of approximately $__ million. Because certain of the operating
expenses are fixed amounts, if the trust does not reach such estimated size
or falls below the estimated size over its life, the actual amount of the
operating expenses may, in some cases greatly exceed the amounts reflected.
Other operating expenses do not include brokerage costs and other
transactional fees.
(6) Although not an actual trust operating expense, the trust, and therefore
the unitholders of the trust, will indirectly bear similar operating
expenses of the Closed-End Funds and ETF held by the trust in the estimated
amount provided above. Estimated Closed-End Fund and ETF expenses are based
upon the net asset value of the number of Closed-End Fund and ETF shares
held by the trust per unit multiplied by the Annual Operating Expenses of
the Closed-End Funds and ETF for the most recent fiscal year. Please note
that the sponsor or an affiliate may be engaged as a service provider to
certain Closed-End Funds held by your trust and therefore certain fees paid
by your trust to such Closed-End Funds will be paid to the sponsor or an
affiliate for its services to such Closed-End Funds.
Example
This example helps you compare the costs of this trust with other unit
trusts and mutual funds. In the example we assume that you reinvest your
investment in a new trust every other year, the expenses do not change and the
trust's annual return is 5%. Your actual returns and expenses will vary. Based
on these assumptions, you would pay these expenses for every $10,000 you invest:
1 year $
3 years
5 years
10 years
These amounts are the same regardless of whether you sell your investment
at the end of a period or continue to hold your investment. The example does not
consider any brokerage fees 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.
Trust Portfolio
Claymore Securities Defined Portfolios, Series 617
Income Closed-End & Treasury Allocation Portfolio, Series 5
The Trust Portfolio as of the Inception Date, ______ , 2009
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Percentage
of Aggregate Initial Per Share Cost To
Ticker Company Name (1) Offer Price Shares Price Portfolio (2)(3)
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----------
$
==========
(1) All securities are represented entirely by contracts to purchase
securities, which were entered into by the sponsor on _____ , 2009. 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 trustee was performed as of the Evaluation
Time on _____ , 2009. For securities quoted on a national exchange,
including the Nasdaq Stock Market, Inc., securities are generally valued at
the closing sales price using the market value per share. For foreign
securities traded on a foreign exchange, securities are generally valued at
their fair value. In accordance with Statement of Financial Accounting
Standards No. 157, "Fair Value Measurements," the trust's investments are
classified as Level 1, which refers to security prices determined using
quoted prices in active markets for identical securities.
(3) There was a $___ loss to the sponsor on the Inception Date.
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UNDERSTANDING YOUR INVESTMENT
How to Buy Units
You can buy units of your trust on any business day by contacting your
financial professional. Public offering prices of units are available daily on
the Internet at www.claymore.com. The unit price includes:
o the value of the securities,
o organization costs,
o the maximum sales fee (which includes an initial sales fee, a deferred
sales fee and the creation and development 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 Securities. The sponsor serves as the evaluator of your trust
(the "evaluator"). We cause the trustee to determine the value of the securities
as of the close of the New York Stock Exchange on each day that the exchange is
open (the "Evaluation Time").
Pricing the Securities. We generally determined the value of securities
using the last sale price for securities traded on a national or foreign
securities exchange or the Nasdaq Stock Market. In some cases we will price a
security 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 security 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 or the trustee determined the initial prices of the securities
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 securities to reimburse us for these costs at the end of
the initial offering period or after six months, at the discretion of the
sponsor. Organization costs will not exceed the estimate set forth under "Fees
and Expenses."
Transactional Sales Fee. You pay a fee when you buy units. We refer to this
fee as the "transactional sales fee." The transactional sales fee typically has
only a deferred component and is a fixed-dollar amount of $0.345 per unit which,
as a percentage of the Public Offering Price, will vary over time. At a Public
Offering Price of $10 per unit, the deferred sales fee will be 3.45% of the
Public Offering Price per unit. If the price you pay for your units exceeds $10
per unit, the deferred sales fee will be less than 3.45%. If the price you pay
for your units is less than $10 per unit, the deferred sales fee will exceed
3.45%; however, in no event will the maximum sales fee exceed 4.45% of the
Public Offering Price per unit.
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. Typically, the trust does not charge an initial sales
fee. However, if you purchase units after the first deferred sales fee payment
has been assessed, your maximum sales fee will consist of an initial sales fee
and the amount of any remaining deferred sales fee payments. The initial sales
fee, which you will pay at the time of purchase, is equal to the difference
between $0.345 per unit and the remaining deferred sales fee. If you purchase
units after the last deferred sales fee payment has been assessed, your maximum
sales fee will consist of a one-time sales fee of $0.345 per unit.
Deferred Sales Fee. To keep your money working longer, we defer payment of
the rest of the transactional sales fee through the deferred sales fee ($0.345
per unit).
Reducing Your Sales Fee. We offer a variety of ways for you to reduce the
maximum sales fee you pay. It is your financial professional's responsibility to
alert us of any discount when you order units. Since the deferred sales fee and
the C&D Fee are a fixed dollar amount per unit, your trust must charge the
deferred sales fee and the C&D Fee per unit regardless of any discounts.
However, when you purchase units of your trust, if you are eligible to receive a
discount such that your total maximum sales fee is less than the fixed dollar
amount of the deferred sales fee and the C&D Fee, we will credit you the
difference between your maximum sales fee and the sum of the deferred sales fee
and the C&D Fee at the time you buy units 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
Purchase Amount (amount per unit)
--------------- ---------------
Less than $50,000 $0.000
$50,000 - $99,999 0.025
$100,000 - $249,999 0.050
$250,000 - $499,999 0.075
$500,000 - $999,999 0.100
$1,000,000 or more 0.150
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. We eliminate your transactional sales fee for
purchases made through registered investment advisers, certified financial
planners or registered broker-dealers who charge periodic fees in lieu of
commissions or who charge for financial planning or for investment advisory or
asset management services or provide these services as part of an investment
account where a comprehensive "wrap fee" is imposed (a "Fee Account").
This discount applies during the initial offering period and in the
secondary market. Your financial professional may purchase units with the Fee
Account CUSIP numbers 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 fee by
investors whose frequent trading activity we determine to be detrimental to your
trust. We, as sponsor, will receive and you will pay the C&D Fee. See "Expenses
of the Trust" in Part B of the prospectus.
Exchange or Rollover Option. If you are buying units of the trust in the
primary market with redemption or termination proceeds from any other Claymore
unit trust, you may purchase units of the trust at a $0.10 per unit reduction.
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." An exchange or rollover is generally treated as a sale for federal
income tax purposes. See "Taxes" in Part B of the prospectus.
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. Only those broker-dealers that allow their
employees to participate in employee discount programs will be eligible for this
discount.
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:
Purchase Amount/ Concession
Form of Purchase per Unit
---------------- -----------
Less than $50,000 $0.300
$50,000 - $99,999 0.275
$100,000 - $249,999 0.250
$250,000 - $499,999 0.235
$500,000 - $999,999 0.225
$1,000,000 or more 0.175
Rollover Purchases 0.200
Fee Account and
Employee Purchases 0.000
We apply these amounts at the time of the transaction.
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 trust's prospectus. The additional payments will be equal to
0.10% of the value of eligible Claymore unit trusts sold in the primary market
during a calendar quarter so long as the broker-dealers or other firms sell at
least $25 million of eligible Claymore unit trusts during the calendar quarter.
Eligible unit trusts include all Claymore unit trusts sold in the primary
market. Redemptions of units during the primary offering period will reduce the
amount of units used to calculate the volume concessions. In addition, dealer
firms will not receive volume concessions on the sale of units which are not
subject to a transactional sales fee. 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.
In addition to the concessions described above, the sponsor may pay
additional compensation out of its own assets to broker-dealers that meet
certain sales targets and that have agreed to provide services relating to the
trust to their customers.
Other Compensation and Benefits to Broker-Dealers. The sponsor, at its own
expense and out of its own profits, may provide additional compensation and
benefits to broker-dealers who sell shares of units of your trust and other
Claymore products. This compensation is intended to result in additional sales
of Claymore products and/or compensate broker-dealers and financial advisors for
past sales. A number of factors are considered in determining whether to pay
these additional amounts. Such factors may include, but are not limited to, the
level or type of services provided by the intermediary, the level or expected
level of sales of Claymore products by the intermediary or its agents, the
placing of Claymore products on a preferred or recommended product list, access
to an intermediary's personnel, and other factors.
The sponsor makes these payments for marketing, promotional or related
expenses, including, but not limited to, expenses of entertaining retail
customers and financial advisers, advertising, sponsorship of events or
seminars, obtaining information about the breakdown of unit sales among an
intermediary's representatives or offices, obtaining shelf space in
broker-dealer firms and similar activities designed to promote the sale of the
sponsor's products. The sponsor may make such payments to many intermediaries
that sell Claymore products. The sponsor may also make certain payments to, or
on behalf of, intermediaries to defray a portion of their costs incurred for the
purpose of facilitating unit sales, such as the costs of developing trading or
purchasing trading systems to process unit trades.
Payments of such additional compensation, some of which may be
characterized as "revenue sharing," may create an incentive for financial
intermediaries and their agents to sell or recommend a Claymore product,
including your trust, over products offered by other sponsors or fund companies.
These arrangements will not change the price you pay for your units.
We generally register units for sale in various states in the U.S. We do
not register units for sale in any foreign country. 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 amounts set forth in "Trust Portfolio" on the
initial deposit of securities in 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.claymore.com or through your financial professional. We
often refer to the sale price of units as the "liquidation price." You pay any
remaining deferred sales fee when you sell or redeem your units. Certain
broker-dealers may charge a transaction fee for processing unit 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. If units of the trust are
redeemed prior to the deferred sales charge period, the entire deferred sales
charge will be collected.
Selling Units. We do not intend to but may 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 Mellon, 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 Part B of the
prospectus.) If your request is received after that time or is incomplete in any
way, you will receive the next price computed after the trustee receives your
completed request. Rather than contacting the trustee directly, your financial
professional may also be able to redeem your units by using the Investors
Voluntary Redemptions and Sales (IVORS) automated redemption service offered
through Depository Trust Company.
If you redeem your units, the trustee will generally send you a payment for
your units no later than three business days after it receives all necessary
documentation.
You can generally request an in-kind distribution of the securities
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 securities traded and held in the United States and is not available
within 30 business days of the trust's termination. 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 your 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 may need to meet certain criteria. We may
discontinue this option at any time.
For more complete information regarding selling or redeeming your units,
see "Purchase, Redemption and Pricing of Units" in Part B of the prospectus.
Distributions
Dividends. Your trust generally pays dividends from its net investment
income, if any, 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 three business days prior to 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.
Distributions will be made from the Income and Capital Accounts on the
distribution date provided the aggregate amount available for distribution
equals at least 0.1% of the net asset value of your trust. Undistributed money
in the Income and Capital Accounts will be distributed in the next month in
which the aggregate amount available for distribution equals or exceeds 0.1% of
the net asset value of your trust.
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. This reinvestment option may be subject
to availability or limitation by the broker-dealer or selling firm. In certain
circumstances, broker-dealers may suspend or terminate the offering of a
reinvestment option at any time.
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 securities in your trust. You should understand
these risks before you invest. You could lose some or all of your investment in
the trust. Recently, equity markets have experienced significant volatility. If
the value of the securities in your trust 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 the
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.
Even though we carefully supervise your portfolio, you should remember that
we do not manage your portfolio. Your trust will not sell a security solely
because the market value falls as is possible in a managed fund.
Current economic conditions risk. In December 2008, the National Bureau of
Economic Research officially announced that the U.S. economy has been in a
recession since December 2007. This announcement came months after U.S. stock
markets entered bear market territory after suffering losses of 20% or more from
their highs of October 2007. This recession began with problems in the housing
and credit markets, many of which were caused by defaults on "subprime"
mortgages and mortgage-backed securities, eventually leading to the failures of
some large financial institutions. Economic activity has now declined across all
sectors of the economy, and the United States is experiencing increased
unemployment. The current economic crisis has affected the global economy with
European and Asian markets also suffering historic losses. Due to the current
state of the economy, the value of the securities held by a trust may be subject
to steep declines or increased volatility due to changes in performance or
perception of the issuers. Extraordinary steps have been taken by the
governments of several leading economic countries to combat the economic crisis;
however, the impact of these measures is not yet known and cannot be predicted.
ETF risk. ETFs are investment pools that hold other securities. ETFs are
either open-end management investment companies or unit investment trusts
registered under the Investment Company Act of 1940. Unlike typical open-end
funds or unit investment trusts, ETFs generally do not sell or redeem their
individual shares at net asset value. In addition, securities exchanges list ETF
shares for trading, which allows investors to purchase and sell individual ETF
shares at current market prices throughout the day. ETFs therefore possess
characteristics of traditional open-end funds and unit investment trusts, which
issue redeemable shares, and of corporate common stocks or closed-end funds,
which generally issue shares that trade at negotiated prices on securities
exchanges and are not redeemable. ETFs are subject to various risks, including
management's ability to meet the fund's investment objective, and to manage the
fund's portfolio when the underlying securities are redeemed or sold, during
periods of market turmoil and as investors' perceptions regarding ETFs or their
underlying investments change. The trust and the underlying funds have
management and operating expenses. You will bear not only your share of the
trust's expenses, but also the expenses of the underlying funds. By investing in
other funds, the trust incurs greater expenses than you would incur if you
invested directly in the funds.
Shares of ETFs may trade at a discount from their net asset value in the
secondary market. This risk is separate and distinct from the risk that the net
asset value of the ETF shares may decrease. The amount of such discount from net
asset value is subject to change from time to time in response to various
factors.
Index correlation risk. Index correlation risk is the risk that the
performance of the ETF will vary from the actual performance of the fund's
target index, known as "tracking error." This can happen due to transaction
costs, market impact, corporate actions (such as mergers and spin-offs) and
timing variances. Some ETFs use a technique called "representative sampling,"
which means that the ETF invests in a representative sample of securities in its
target index rather than all of the index securities. This could increase the
risk of a tracking error.
Treasury bond risk. The ETF held by the trust includes U.S. Treasury bonds.
As with other fixed-income securities, U.S. Treasury bonds are subject to
interest rate risk and credit risk. Interest rate risk refers to fluctuations in
the value of a fixed-income security resulting from changes in the general level
of interest rates. When the general level of interest rates goes up, the prices
of most fixed-income securities go down. When the general level of interest
rates goes down, the prices of most fixed-income securities go up. Credit risk
refers to the possibility that the issuer of a security will be unable and/or
unwilling to make timely interest payments and/or repay the principal on its
debt. However, U.S. Treasury bonds are issued by the United States government
and are subject to limited credit risk.
Closed-End Fund risk. The trust invests in Closed-End Funds. Closed-End
Funds are subject to various risks, including management's ability to meet the
Closed-End Fund's investment objective and to manage the Closed-End Fund's
portfolio during periods of market turmoil and as investors' perceptions
regarding Closed-End Funds or their underlying investments change.
Shares of Closed-End Funds frequently trade at a discount from their net
asset value in the secondary market. This risk is separate and distinct from the
risk that the net asset value of Closed-End Fund shares may decrease. The amount
of such discount from net asset value is subject to change from time to time in
response to various factors.
Certain of the Closed-End Funds included in your trust may employ the use
of leverage in their portfolios through the issuance of preferred stock. While
leverage often serves to increase the yield of an Closed-End Fund, this leverage
also subjects the Closed-End Fund to increased risks, including the likelihood
of increased volatility and the possibility that the Closed-End Fund's common
share income will fall if the dividend rate on the preferred shares or the
interest rate on any borrowings rises. Recent instability in the auction rate
preferred shares market may affect the volatility of certain Closed-End Funds,
especially those that use leverage or plan to use leverage. In addition,
Closed-End Funds are subject to their own annual fees and expenses, including a
management fee. Such fees reduce the potential benefits associated with owning a
Closed-End Fund and are in addition to your trust's expenses.
Limited liquidity and volatility risk. The markets for fixed-income
securities, such as those held by the Closed-End Funds and the ETF, have
experienced periods of illiquidity and volatility since the latter half of 2007.
General market uncertainty and consequent repricing risk have led to market
imbalances of sellers and buyers, which in turn have resulted in significant
valuation uncertainties in a variety of fixed-income securities. These
conditions resulted, and in many cases continue to result in, greater
volatility, less liquidity, widening credit spreads and a lack of price
transparency, with many debt securities remaining illiquid and of uncertain
value. These market conditions may make valuation of some of the securities held
by the Closed-End Fund and the ETF uncertain and/or result in sudden and
significant valuation increases or declines in its holdings. In addition,
illiquidity and volatility in the credit markets may directly and adversely
affect the setting of dividend rates on the shares of the Closed-End Funds.
In response to the current national economic downturn, governmental cost
burdens may be reallocated among federal, state and local governments. In
addition, laws enacted in the future by Congress or state legislatures or
referenda could extend the time for payment of principal and/or interest, or
impose other constraints on enforcement of such obligations, or on the ability
of municipalities to levy taxes. Issuers of bonds and certain fixed-income
securities might seek protection under the bankruptcy laws.
In the event of bankruptcy of such an issuer, a Closed-End Fund could
experience delays in collecting principal and interest and the Closed-End Fund
may not, in all circumstances, be able to collect all principal and interest to
which it is entitled. To enforce its rights in the event of a default in the
payment of interest or repayment of principal, or both, the Closed-End Fund may
take possession of and manage the assets securing the issuer's obligations on
such securities, which may increase the Closed-End Fund's operating expenses.
Any income derived from the Closed-End Fund's ownership or operation of such
assets may not be tax-exempt.
If the recent market volatility and the current national economic downturn
becomes a prolonged deterioration, the ability of municipalities and other bond
issuers to collect revenue and service their obligations could be materially and
adversely affected. In particular, such a downturn would severely disrupt the
market for below investment grade municipal securities and have an adverse
impact on the value of and likelihood of default on such securities. Similarly,
an economic downturn could cause further contraction in the secondary market for
below investment grade municipal securities, and these instruments may become
illiquid. Consequently, the value of the trust's holdings in certain Closed-End
Funds may decline and result in the trust's diminished performance.
Interest rate risk. Interest rate risk is the risk that the value of
securities held by a Closed-End Fund or ETF in your trust will decline in value
because of a rise in interest rates. Generally, securities that pay fixed rates
of return will increase in value when interest rates decline and decrease in
value when interest rates rise. Typically, securities that pay fixed rates of
return with longer periods before maturity are more sensitive to interest rate
changes.
Credit and dividend payment risk. Credit risk is the risk that an issuer of
a security or a Closed-End Fund is unable or unwilling to make dividend and/or
principal payments. High-yield or "junk" securities that are rated below
investment-grade are generally more susceptible to this risk than
investment-grade securities.
Call risk. Call risk is the risk that securities held by a Closed-End Fund
in your trust can be prepaid or "called" by the issuer before their stated
maturity. If securities are called, your income will decline and you may not be
able to reinvest the money you receive at as high a yield. Also, an early call
at par of a security trading at a premium will reduce your return. Securities
held by the trust are more likely to be called when interest rates decline. This
would result in early returns of principal to the Closed-End Funds in your
trust. The securities may also be subject to special or extraordinary call
provisions and "mandatory put" features that may cause the securities to be
removed from a fund prior to maturity or stated call dates. High-yield or "junk"
securities that are rated below investment-grade are generally more susceptible
to this risk than investment-grade securities.
Security quality risk. Security quality risk is the risk that a reduction
in a security's rating may decrease its value, the value of a Closed-End Fund
and the value of your investment in your trust. Securities ratings may be
reduced at any time, including during the primary offering period of your trust.
Split ratings risk. Split-rated securities are those securities that, at
the time of investment, are rated below investment-grade by Moody's or Standard
& Poor's, so long as at least one rating agency rates such securities within the
four highest grades (i.e., investment-grade quality). This means that a
split-rated security may be regarded by one rating agency as having
predominately speculative characteristics with respect to the issuer's capacity
to pay interest and repay principal, and accordingly subject to a greater risk
of default. The prices of split-rated securities, in the view of one but not all
rating agencies, may be more sensitive than securities without a split-rating to
negative developments, such as a decline in the issuer's revenues or a general
economic downturn.
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 sectors 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.
High-yield securities risk. Certain of the Closed-End Funds held by your
trust invest in high-yield securities. High-yield, high risk securities are
subject to greater market fluctuations and risk of loss than securities with
higher investment ratings. The value of these securities will decline
significantly with increases in interest rates, not only because increase in
rates generally decrease values, but also because increased rates may indicate
an economic slowdown. An economic slowdown, or a reduction in an issuer's
creditworthiness, may affect an issuer's ability to make dividend payments.
High-yield or "junk" securities, the general names for securities rated
below the category of "BBB" by Standard & Poor's or the category of "Baa" by
Moody's, are frequently issued by corporations in the growth state of their
development or by established companies who are highly leveraged or whose
operations or industries are depressed. Obligations rated below investment-grade
should be considered speculative as these ratings indicate a quality of less
than investment-grade. Because high-yield securities are generally subordinated
obligations and are perceived by investors to be riskier than higher rated
securities, their prices tend to fluctuate more than higher rated securities and
are affected by short-term credit developments to a greater degree. Also, the
market for high-yield securities is generally smaller and less liquid than that
for investment-grade securities.
The market for high-yield bonds is smaller and less liquid than that for
investment-grade bonds. High-yield bonds are generally not listed on a national
securities exchange but trade in the over-the-counter markets. Due to the
smaller, less liquid market for high-yield bonds, the bid-offer spread on such
bonds is generally greater than it is for investment-grade bonds and the
purchase or sale of such bonds may take longer to complete.
Convertible securities risk. Certain of the Closed-End Funds held by your
trust invest in convertible securities. Convertible securities generally offer
lower interest or dividend yields than non-convertible fixed-income securities
of similar credit quality because of the potential for capital appreciation. The
market values of convertible securities tend to decline as interest rates
increase and, conversely, to increase as interest rates decline. However, a
convertible security's market value also tends to reflect the market price of
the common stock of the issuing company, particularly when that stock price is
greater than the convertible security's "conversion price." The conversion price
is defined as the predetermined price or exchange ratio at which the convertible
security can be converted or exchanged for the underlying common stock. As the
market price of the underlying common stock declines below the conversion price,
the price of the convertible security tends to be increasingly influenced more
by the yield of the convertible security. Thus, it may not decline in price to
the same extent as the underlying common stock. In the event of a liquidation of
the issuing company, holders of convertible securities would be paid before that
company's common stockholders. Consequently, an issuer's convertible securities
generally entail less risk than its common stock. However, convertible
securities fall below debt obligations of the same issuer in order of preference
or priority in the event of a liquidation and are typically un-rated or rated
lower than such debt obligations.
Mandatory convertible securities are distinguished as a subset of
convertible securities because the conversion is not optional and the conversion
price at maturity is based solely upon the market price of the underlying common
stock, which may be significantly less than par or the price (above or below
par) paid. For these reasons, the risks associated with investing in mandatory
convertible securities most closely resemble the risks inherent in common
stocks. Mandatory convertible securities customarily pay a higher coupon yield
to compensate for the potential risk of additional price volatility and loss
upon conversion. Because the market price of a mandatory convertible security
increasingly corresponds to the market price of its underlying common stock, as
the convertible security approaches its conversion date, there can be no
assurance that the higher coupon will compensate for a potential loss.
Preferred securities risk. Certain Closed-End Funds held by your trust
invest in preferred securities, such as preferred stock and trust preferred
securities.
Similar to bonds, preferred stocks typically offer a fixed rate of return
paid in the form of a dividend. Like common stock, most preferred stocks are
equity securities representing ownership in a company. Preferred stocks are
generally considered "senior securities" and preferred stockholders enjoy
preference over common stockholders with regard to dividends and liquidations.
For the prospect of a higher yield, preferred stockholders may forfeit or at
least be limited in their voting rights. Preferred stocks are generally traded
on major stock exchanges. Preferred securities are typically subordinated to
bonds and other debt instruments in a company's capital structure, in terms of
priority to corporate income and therefore will be subject to greater credit
risk than those debt instruments.
Trust preferred securities are limited-life securities typically issued by
corporations, generally in the form of interest-bearing notes or preferred
securities, or by an affiliated business trust of a corporation, generally in
the form of beneficial interests in subordinated debentures issued by the
corporation, or similarly structured securities. Dividend payments of the trust
preferred securities generally coincide with interest payments on the underlying
obligations. Trust preferred securities and the underlying subordinated
debentures typically rank senior to the company's common and preferred stock and
junior to the company's senior debt, subordinated debt and other indebtedness.
In addition to the risks set forth above, these securities are also subject
to the following risks:
o Trust preferred securities are designed to create the same business
risk for an investor as if the investor had bought the securities
underlying the trust preferred securities. A corporation's ability to
pay distributions on the trust preferred securities is generally
dependent on whether the corporation issuing the securities is able to
pay interest on the underlying securities.
o Unitholders have no right to accelerate the trust preferred securities
or the underlying securities for non-payment.
o A corporation issuing the underlying securities may elect to defer
interest payments on those securities at any time during the life of
the trust preferred securities for up to 20 consecutive quarters. If
such an election is made, distributions on the trust preferred
securities will not be made during the deferral period. During any
deferral period investors may be taxed as if the trust had received
current income. In such a case, unitholders will have income taxes due,
but will not have received income distributions to pay the taxes.
o Tax or regulatory changes may change the tax characterization of the
preferred securities or the underlying securities, and, as a result,
may effect the value of your units.
o Preferred securities may be subject to redemption after a certain call
date or as a result of certain tax or regulatory events. This may occur
prior to maturity.
Senior loan risk. Certain of the Closed-End Funds held by your trust invest
in senior loans. Senior loans in which the Closed-End Funds invest:
o generally are of below investment-grade credit quality;
o may be unrated at the time of investment;
o generally are not registered with the SEC or any state securities
commission; and
o generally are not listed on any securities exchange.
The amount of public information available on senior loans generally will
be less extensive than that available for other types of assets.
No reliable, active trading market currently exists for many senior loans,
although a secondary market for certain senior loans has developed over the past
several years. Senior loans are thus relatively illiquid. Liquidity relates to
the ability of a Closed-End Fund to sell an investment in a timely manner at a
price approximately equal to its value on the Closed-End Fund's books. The
illiquidity of senior loans may impair a Closed-End Fund's ability to realize
the full value of its assets in the event of a voluntary or involuntary
liquidation of such assets. Because of the lack of an active trading market,
illiquid securities are also difficult to value and prices provided by external
pricing services may not reflect the true value of the securities. However, many
senior loans are of a large principal amount and are held by a large number of
financial institutions. To the extent that a secondary market does exist for
certain senior loans, the market may be subject to irregular trading activity,
wide bid/ask spreads and extended trade settlement periods. The market for
senior loans could be disrupted in the event of an economic downturn or a
substantial increase or decrease in interest rates. This could result in
increased volatility in the market and in your trust's net asset value.
If legislation or state or federal regulators impose additional
requirements or restrictions on the ability of financial institutions to make
loans that are considered highly leveraged transactions, the availability of
senior loans for investment by the Closed-End Funds may be adversely affected.
In addition, such requirements or restrictions could reduce or eliminate sources
of financing for certain borrowers. This would increase the risk of default. If
legislation or federal or state regulators require financial institutions to
dispose of senior loans that are considered highly leveraged transactions or
subject such senior loans to increased regulatory scrutiny, financial
institutions may determine to sell such senior loans. Such sales could result in
depressed prices. If a Closed-End Fund attempts to sell a senior loan at a time
when a financial institution is engaging in such a sale, the price a Closed-End
Fund could get for the senior loan may be adversely affected.
Some senior loans are subject to the risk that a court, pursuant to
fraudulent conveyance or other similar laws, could subordinate the senior loans
to presently existing or future indebtedness of the borrower or take other
action detrimental to lenders. Such court action could under certain
circumstances include invalidation of senior loans. Any lender, which could
include a Closed-End Fund, is subject to the risk that a court could find the
lender liable for damages in a claim by a borrower arising under the common laws
of tort or contracts or anti-fraud provisions of certain securities laws for
actions taken or omitted to be taken by the lenders under the relevant terms of
a loan agreement or in connection with actions with respect to the collateral
underlying the senior loan.
Foreign securities risk. Certain Closed-End Funds held by your trust invest
in foreign securities. Securities of foreign issuers present risks beyond those
of domestic securities. The prices of foreign securities can be more volatile
than U.S. securities due to such factors as political, social and economic
developments abroad, the differences between the regulations to which U.S. and
foreign issuers and markets are subject, the seizure by the government of
company assets, excessive taxation, withholding taxes on dividends and interest,
limitations on the use or transfer of portfolio assets, and political or social
instability. Other risks include the following:
o Enforcing legal rights may be difficult, costly and slow in foreign
countries, and there may be special problems enforcing claims against
foreign governments.
o Foreign issuers may not be subject to accounting standards or
governmental supervision comparable to U.S. issuers, and there may be
less public information about their operations.
o Foreign markets may be less liquid and more volatile than U.S. markets.
o Foreign securities often trade in currencies other than the U.S.
dollar. Changes in currency exchange rates may affect a Closed-End
Fund's value, the value of dividends and interest earned, and gains and
losses realized on the sale of securities. An increase in the strength
of the U.S. dollar relative to these other currencies may cause the
value of the trust to decline. Certain foreign currencies may be
particularly volatile, and foreign governments may intervene in the
currency markets, causing a decline in value or liquidity in the
trust's foreign currency holdings.
o Future political and governmental restrictions which might adversely
affect the payment or receipt of income on the foreign securities.
Emerging market risk. Certain Closed-End Funds held by your trust may
invest in securities issued by entities located in emerging markets. Emerging
markets are generally defined as countries with low per capita income in the
initial stages of their industrialization cycles. The markets of emerging
markets countries are generally more volatile than the markets of developed
countries with more mature economies. All of the risks of investing in foreign
securities described above are heightened by investing in emerging markets
countries.
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.
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 your
trust under a trust agreement between Claymore Securities, Inc. (as sponsor,
evaluator and supervisor) and The Bank of New York Mellon (as trustee). To
create your trust, we deposited contracts to purchase securities with the
trustee along with an irrevocable letter of credit or other consideration to pay
for the securities. In exchange, the trustee delivered units of your trust to
us. Each unit represents an undivided interest in the assets of your trust.
These units remain outstanding until redeemed or until your trust terminates.
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 securities:
o to pay expenses,
o to issue additional units or redeem units,
o in limited circumstances to protect the trust,
o to avoid direct or indirect ownership of a passive foreign investment
company,
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 securities in its portfolio. However, if a public
tender offer has been made for a security or a merger or acquisition has been
announced affecting a security, your trust 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. 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.
Only the trustee may vote the shares of the Closed-End Funds held in your
trust. The trustee will vote the shares in the same general proportion as the
shares held by other shareholders of each Closed-End Fund.
We will increase the size of your trust as we sell units. When we create
additional units, we will seek to replicate the existing portfolio. When your
trust buys securities, it 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 securities. When your trust buys or sells securities, we may
direct that it place orders with and pay brokerage commissions to brokers that
sell units or are affiliated with your trust. We will not select firms to handle
these transactions on the basis of their sale of units of your trust. We cannot
guarantee that the trust will keep its present size and composition for any
length of time.
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 $1 million or less than 40% of the value of the securities in the trust at
the end of the initial offering period. At this size, the expenses of your trust
may create an undue burden on your investment. Investors owning two-thirds of
the units in your trust may also vote to terminate the trust early. We may also
terminate your trust in other limited circumstances.
The trustee will notify you of any termination and sell any remaining
securities. The trustee will send your final distribution to you within a
reasonable time following liquidation of all the securities after deducting
final expenses. Your termination distribution may be less than the price you
originally paid for your units.
See "Administration of the Trust" in Part B of the prospectus for
additional information.
General Information
Claymore. Claymore Securities, Inc. specializes in the creation,
development and distribution of investment solutions for advisors and their
valued clients. In November 2001, we changed our name from Ranson & Associates,
Inc. to Claymore Securities, Inc. During our history we have been active in
public and corporate finance, have underwritten closed-end funds and have
distributed bonds, mutual funds, closed-end funds, exchange-traded funds,
structured products and unit trusts in the primary and secondary markets. We are
a registered broker-dealer and member of the Financial Industry Regulatory
Authority (FINRA). 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 may
from time to time maintain a position in certain securities held by your 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 Mellon 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, 2 Hanson Place, 12th Fl., Brooklyn, New York
11217. 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 the sponsor as supervisor and evaluator for providing
portfolio supervisory services, evaluating your portfolio and performing
bookkeeping and administrative services. Our reimbursements may exceed the costs
of the services we provide to your trust but will not exceed the costs of
services provided to all Claymore unit investment trusts in any calendar year.
All of these fees may adjust for inflation without your approval.
Your trust will pay a fee to the sponsor for creating and developing the
trust, including determining the trust objective, policies, composition and
size, selecting service providers and information services, and for providing
other similar administrative and ministerial functions. Your trust pays this
"creation and development fee" of $0.05 per unit from the assets of the trust as
of the close of the initial public offering period. The sponsor does not use the
fee to pay distribution expenses or as compensation for sales efforts.
Your trust will also pay its general operating expenses, including any
licensing fees. Your trust may pay expenses such as trustee expenses (including
legal and auditing expenses), organization 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.
Your trust, and therefore the unitholders of your trust, will also
indirectly bear the expenses of the underlying Closed-End Funds and ETF. While
your trust will not pay these expenses directly out of its assets, these
expenses are shown under "Annual Fund Operating Expenses of the Trust" in the
"Fees and Expenses" section of the prospectus to illustrate the impact of these
expenses. Please note that the sponsor or an affiliate may be engaged as a
service provider to certain Closed-End Funds held by your trust and therefore
certain fees paid by your trust to such Closed-End Funds will be paid to the
sponsor or an affiliate for its services to such Closed-End Funds.
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 617
We have audited the accompanying statement of financial condition,
including the trust portfolio set forth on page 9 of this prospectus, of
Claymore Securities Defined Portfolios, Series 617, as of ______ , 2009, 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 the 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 Mellon, trustee, of
cash or an irrevocable letter of credit deposited for the purchase of securities
as shown in the statement of financial condition as of ______ , 2009. 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 617, as of ______ , 2009, in conformity
with accounting principles generally accepted in the United States of America.
Grant Thornton LLP
Chicago, Illinois
______ , 2009
Claymore Securities Defined Portfolios, Series 617
Statement of Financial Condition
as of the Inception Date, ______ , 2009
Investment in securities
Sponsor's contracts to purchase underlying securities 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 unitholders (5)
Less: initial sales fee (4)
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 and/or a letter of credit has been deposited with The Bank of New York
Mellon, trustee, covering the funds (aggregating $______) necessary for the
purchase of the securities in the trust, represented by purchase contracts.
(3) A portion of the Public Offering Price represents an amount sufficient to
pay for all or a portion of the costs incurred in establishing the trust.
These costs have been estimated at $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 C&D Fee. On the Inception Date, the total transactional sales
fee is $0.345 per unit (equivalent to 3.573% of the net amount invested).
The deferred sales fee is equal to $0.345 per unit.
(5) The aggregate cost to investors includes the applicable transactional sales
fee assuming no reduction of transactional sales fees for quantity
purchases.
(6) The trust is committed to pay a creation and development fee of $5.00 per
100 units at the close of the initial public offering period.
CLAYMORE SECURITIES DEFINED PORTFOLIOS
CLAYMORE PORTFOLIO PROSPECTUS
PART B DATED ______ , 2009
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 17
Expenses of the Trust 23
Portfolio Transactions and Brokerage Allocation 24
Purchase, Redemption and Pricing of Units 25
Taxes 30
Experts 32
Description of Ratings 33
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 Mellon (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 replicate, as closely as practicable, the portfolio
immediately prior to such deposits. 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, the issuer
having qualified as a passive foreign investment company under the Internal
Revenue Code 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. You
could lose some or all of your investment in the trust. 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.
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 nine 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.
Financial Sector Risks. If set forth in Part A of the prospectus, certain
of the issuers of securities in a trust may be involved in the financial sector.
An investment in units of a trust containing securities of such issuers should
be made with an understanding of the problems and risks inherent in the
financial sector in general.
Banks, thrifts and their holding companies are especially subject to the
adverse effects of economic recession; volatile interest rates; portfolio
concentrations in geographic markets, in commercial and residential real estate
loans or any particular segment or industry; and competition from new entrants
in their fields of business. Banks and thrifts are highly dependent on net
interest margin. Banks and thrifts traditionally receive a significant portion
of their revenues from consumer mortgage fee income as a result of activity in
mortgage and refinance markets. As home purchasing and refinancing activity has
subsided, this revenue has diminished. Economic conditions in the real estate
markets have deteriorated, leading to asset write-offs and decreased liquidity
in the credit markets, which can have a substantial negative effect upon banks
and thrifts because they generally have a portion of their assets invested in
loans secured by real estate. Difficulties in the mortgage and broader credit
markets have resulted in decreases in the availability of funds. Financial
performance of many banks and thrifts, especially in securities collateralized
by mortgage loans has deteriorated.
In response to recent market and economic conditions, the United States
Government, particularly the U.S. Department of the Treasury ("U.S. Treasury"),
the Federal Reserve Board ("FRB"), and the Federal Deposit Insurance Corporation
("FDIC") have taken a variety of extraordinary measures including capital
injections, guarantees of bank liabilities and the acquisition of illiquid
assets from banks designed to provide fiscal stimulus, restore confidence in the
financial markets and to strengthen financial institutions. The recently enacted
Emergency Economic Stabilization Act of 2008 ("EESA") gave the U.S. Treasury
$700 billion to purchase bad mortgage-related securities that caused much of the
difficulties experienced by financial institutions and the credit markets in
general. Additionally, the American Recovery and Reinvestment Act of 2009
("ARRA") was signed into law in February, 2009. The EESA and ARRA, along with
the U.S. Treasury's Capital Purchase Program (which provides for direct
purchases by the U.S. Treasury of equity from financial institutions), contain
provisions limiting the way banks and their holding companies are able pay
dividends, purchase their own common stock, and compensate officers.
Furthermore, participants have been subject to forward looking stress tests to
determine if they have sufficient capital to withstand certain economic
scenarios, including situations more severe than the current recession. As a
result of these stress tests, some financial institutions were required to
increase their level of capital through a combination of asset sales, additional
equity offerings and the conversion of preferred shares into common stock. The
long-term effects of the EESA, ARRA, and the stress tests are not yet known and
cannot be predicted. This uncertainty may cause increased costs and risks for
the firms associated with the respective programs.
Banks, thrifts and their holding companies are subject to extensive federal
regulation and, when such institutions are state-chartered, to state regulation
as well. Such regulations impose strict capital requirements and limitations on
the nature and extent of business activities that banks and thrifts may pursue.
Furthermore, bank regulators have a wide range of discretion in connection with
their supervisory and enforcement authority and may substantially restrict the
permissible activities of a particular institution if deemed to pose significant
risks to the soundness of such institution or the safety of the federal deposit
insurance fund. Regulatory actions, such as increases in the minimum capital
requirements applicable to banks and thrifts and increases in deposit insurance
premiums required to be paid by banks and thrifts to the FDIC, can negatively
impact earnings and the ability of a company to pay dividends. Neither federal
insurance of deposits nor governmental regulations, however, insures the
solvency or profitability of banks or their holding companies, or insures
against any risk of investment in the securities issued by such institutions.
In light of the current credit market difficulties, the U.S. Government is
considering changes to the laws and regulatory structure. New legislation and
regulatory changes could cause business disruptions, result in significant loss
of revenue, limit financial firms' ability to pursue business opportunities,
impact the value of business assets and impose additional costs that may
adversely affect business. There can be no assurance as to the actual impact
these laws and their implementing regulations, or any other governmental
program, will have on the financial markets. Currently the FRB, FDIC, Securities
and Exchange Commission, Office of Comptroller of the Currency (a bureau of the
U.S. Treasury which regulates national banks), and the U.S. Commodities Futures
Trading Commission (which oversees commodity futures and option markets) all
play a role in the supervision of the financial markets. Proposed legislation
calls for swift government intervention which includes the creation of new
federal agencies that will have a direct impact on the financial, banking and
insurance industries. Proposals include the creation of a Financial Oversight
Council to advise the FRB on the identification of firms who failure could pose
a threat to financial stability due to their combination of size, leverage, and
interconnectedness. Additionally, these financial firms would be subject to
increased scrutiny concerning their capital, liquidity, and risk management
standards. Legislation regarding the banking industry has also been proposed
which would create a the National Bank Supervisor to conduct prudential
supervision regulation of all federally chartered depository institutions, and
all federal branches and agencies of foreign banks. This proposed single
regulator would oversee the entire banking industry, thereby leading to
potential risks, costs and unknown impacts on the entire financial sector.
The statutory requirements applicable to and regulatory supervision of
banks, thrifts and their holding companies have increased significantly and have
undergone substantial change in the recent past. To a great extent, these
changes are embodied in the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, the Federal Deposit Insurance Corporation Improvement
Act of 1991, the Resolution Trust Corporation Refinancing, Restructuring, and
Improvement Act of 1991, the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 and the regulations promulgated under these laws. In
1999, the Gramm-Leach-Bliley Act repealed most of the barriers set up by the
1933 Glass-Steagall Act which separated the banking, insurance and securities
industries. Banks and thrifts now face significant competition from other
financial institutions such as mutual funds, credit unions, mortgage banking
companies and insurance companies. Banks, insurance companies and securities
firms can merge to form one-stop financial conglomerates marketing a wide range
of financial service products to investors. This legislation has resulted in
increased merger activity and heightened competition among existing and new
participants in the field. Efforts to expand the ability of federal thrifts to
branch on an interstate basis have been initially successful through
promulgation of regulations and legislation to liberalize interstate banking has
been signed into law. Under the legislation, banks are able to purchase or
establish subsidiary banks in any state. Since mid-1997, banks have been allowed
to turn existing banks into branches, thus leading to continued consolidation.
The Securities and Exchange Commission and the Financial Accounting
Standards Board ("FASB") require the expanded use of market value accounting by
banks and have imposed rules requiring mark-to-market accounting for investment
securities held in trading accounts or available for sale. Adoption of
additional such rules may result in increased volatility in the reported health
of the industry, and mandated regulatory intervention to correct such problems.
Recently, Statement of Financial Accounting Standards No. 157 (Accounting
Standards Codification 820), "Fair Value Measurements" changed the requirements
of mark-to-market accounting and determining fair value when the volume and
level of activity for the asset or liability has significantly decreased. These
changes and other potential changes in financial accounting rules and valuation
techniques may have a significant impact on the banking and financial services
industries in terms of accurately pricing assets or liabilities. Additional
legislative and regulatory changes may be forthcoming. For example, the bank
regulatory authorities have proposed substantial changes to the Community
Reinvestment Act and fair lending laws, rules and regulations, and there can be
no certainty as to the effect, if any, that such changes would have on the
securities in a trust's portfolio. In addition, from time to time the deposit
insurance system is reviewed by Congress and federal regulators, and proposed
reforms of that system could, among other things, further restrict the ways in
which deposited moneys can be used by banks or change the dollar amount or
number of deposits insured for any depositor. On October 3, 2008, EESA increased
the maximum amount of federal deposit insurance coverage payable as to any
certificate of deposit from $100,000 to $250,000 per depositor until December
31, 2009. The maximum coverage limit will return to $100,000 per certificate of
deposit on January 1, 2010, absent further legislation. The impact of this
reform is unknown and could reduce profitability as investment opportunities
available to bank institutions become more limited and as consumers look for
savings vehicles other than bank deposits. The Sponsor makes no prediction as to
what, if any, manner of bank and thrift regulatory actions might ultimately be
adopted or what ultimate effect such actions might have on a trust's portfolio.
The Federal Bank Holding Company Act of 1956 ("BHC Act") generally
prohibits a bank holding company from (1) acquiring, directly or indirectly,
more than 5% of the outstanding shares of any class of voting securities of a
bank or bank holding company, (2) acquiring control of a bank or another bank
holding company, (3) acquiring all or substantially all the assets of a bank, or
(4) merging or consolidating with another bank holding company, without first
obtaining FRB approval. In considering an application with respect to any such
transaction, the FRB is required to consider a variety of factors, including the
potential anti-competitive effects of the transaction, the financial condition
and future prospects of the combining and resulting institutions, the managerial
resources of the resulting institution, the convenience and needs of the
communities the combined organization would serve, the record of performance of
each combining organization under the Community Reinvestment Act and the Equal
Credit Opportunity Act, and the prospective availability to the FRB of
information appropriate to determine ongoing regulatory compliance with
applicable banking laws. In addition, the federal Change In Bank Control Act and
various state laws impose limitations on the ability of one or more individuals
or other entities to acquire control of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends by
bank holding companies in which the FRB expressed its view that a bank holding
company experiencing earnings weaknesses should not pay cash dividends which
exceed its net income or which could only be funded in ways that would weaken
its financial health, such as by borrowing. The FRB also may impose limitations
on the payment of dividends as a condition to its approval of certain
applications, including applications for approval of mergers and acquisitions.
The sponsor makes no prediction as to the effect, if any, such laws will have on
the securities in a trust or whether such approvals, if necessary, will be
obtained.
Companies engaged in investment banking/brokerage and investment management
include brokerage firms, broker/ dealers, investment banks, finance companies
and mutual fund companies. Earnings and share prices of companies in this
industry are quite volatile, and often exceed the volatility levels of the
market as a whole. Negative economic events in the credit markets have led some
firms to declare bankruptcy, forced short-notice sales to competing firms, or
required government intervention by the FDIC or through an infusions of Troubled
Asset Relief Program funds. Consolidation in the industry and the volatility in
the stock market have negatively impacted investors.
Additionally, government intervention has required many financial
institutions to become bank holding companies under the BHC Act. Under the
system of functional regulation established under the BHC Act, the FRB
supervises bank holding companies as an umbrella regulator. The BHC Act and
regulations generally restrict bank holding companies from engaging in business
activities other than the business of banking and certain closely related
activities. The FRB and FDIC have also issued substantial risk-based and
leverage capital guidelines applicable to U.S. banking organizations. The
guidelines define a three-tier framework, requiring depository institutions to
maintain certain leverage ratios depending on the type of assets held. If any
depository institution controlled by a financial or bank holding company ceases
to meet capital or management standards, the FRB may impose corrective capital
and/ or managerial requirements on the company and place limitations on its
ability to conduct broader financial activities. Furthermore, proposed
legislation will allow the Treasury and the FDIC to create a resolution regime
to "take over" bank and financial holding companies. The "taking over" would be
based on whether the firm is in default or in danger of defaulting and whether
such a default would have a serious adverse affect on the financial system or
the economy. This mechanism would only be used by the government in exceptional
circumstances to mitigate these effects. This type of intervention has unknown
risks and costs associated with it, which may cause unforeseeable harm in the
industry.
Companies involved in the insurance industry are engaged in underwriting,
reinsuring, selling, distributing or placing of property and casualty, life or
health insurance. Other growth areas within the insurance industry include
brokerage, reciprocals, claims processors and multi-line insurance companies.
Interest rate levels, general economic conditions and price and marketing
competition affect insurance company profits. Property and casualty insurance
profits may also be affected by weather catastrophes and other disasters. Life
and health insurance profits may be affected by mortality and morbidity rates.
Individual companies may be exposed to material risks including reserve
inadequacy and the inability to collect from reinsurance carriers. Insurance
companies are subject to extensive governmental regulation, including the
imposition of maximum rate levels, which may not be adequate for some lines of
business. Proposed or potential tax law changes may also adversely affect
insurance companies' policy sales, tax obligations, and profitability. In
addition to the foregoing, profit margins of these companies continue to shrink
due to the commoditization of traditional businesses, new competitors, capital
expenditures on new technology and the pressures to compete globally.
In addition to the normal risks of business, companies involved in the
insurance industry are subject to significant risk factors, including those
applicable to regulated insurance companies, such as: (i) the inherent
uncertainty in the process of establishing property-liability loss reserves,
particularly reserves for the cost of environmental, asbestos and mass tort
claims, and the fact that ultimate losses could materially exceed established
loss reserves which could have a material adverse effect on results of
operations and financial condition; (ii) the fact that insurance companies have
experienced, and can be expected in the future to experience, catastrophe losses
which could have a material adverse impact on their financial condition, results
of operations and cash flow; (iii) the inherent uncertainty in the process of
establishing property-liability loss reserves due to changes in loss payment
patterns caused by new claims settlement practices; (iv) the need for insurance
companies and their subsidiaries to maintain appropriate levels of statutory
capital and surplus, particularly in light of continuing scrutiny by rating
organizations and state insurance regulatory authorities, and in order to
maintain acceptable financial strength or claims-paying ability rating; (v) the
extensive regulation and supervision to which insurance companies' subsidiaries
are subject, various regulatory initiatives that may affect insurance companies,
and regulatory and other legal actions; (vi) the adverse impact that increases
in interest rates could have on the value of an insurance company's investment
portfolio and on the attractiveness of certain of its products; (vii) the need
to adjust the effective duration of the assets and liabilities of life insurance
operations in order to meet the anticipated cash flow requirements of its
policyholder obligations; (viii) the uncertainty involved in estimating the
availability of reinsurance and the collectibility of reinsurance recoverables;
and (ix) proposed legislation that would establish the Office of National
Insurance within the Treasury. This proposed federal agency would gather
information, develop expertise, negotiate international agreements, and
coordinate policy in the insurance sector. This enhanced oversight into the
insurance industry may pose unknown risks to the sector as a whole.
The state insurance regulatory framework has, during recent years, come
under increased federal scrutiny, and certain state legislatures have considered
or enacted laws that alter and, in many cases, increase state authority to
regulate insurance companies and insurance holding company systems. Further, the
National Association of Insurance Commissioners ("NAIC") and state insurance
regulators are re-examining existing laws and regulations, specifically focusing
on insurance companies, interpretations of existing laws and the development of
new laws. In addition, Congress and certain federal agencies have investigated
the condition of the insurance industry in the United States to determine
whether to promulgate additional federal regulation. The Sponsor is unable to
predict whether any state or federal legislation will be enacted to change the
nature or scope of regulation of the insurance industry, or what effect, if any,
such legislation would have on the industry.
All insurance companies are subject to state laws and regulations that
require diversification of their investment portfolios and limit the amount of
investments in certain investment categories. Failure to comply with these laws
and regulations would cause non-conforming investments to be treated as
non-admitted assets for purposes of measuring statutory surplus and, in some
instances, would require divestiture.
Environmental pollution clean-up is the subject of both federal and state
regulation. By some estimates, there are thousands of potential waste sites
subject to clean up. The insurance industry is involved in extensive litigation
regarding coverage issues. The Comprehensive Environmental Response Compensation
and Liability Act of 1980 ("Superfund") and comparable state statutes
("mini-Superfund") govern the clean-up and restoration by "Potentially
Responsible Parties" ("PRPs"). Superfund and the mini-Superfunds ("Environmental
Clean-up Laws" or "ECLs") establish a mechanism to pay for clean-up of waste
sites if PRPs fail to do so, and to assign liability to PRPs. The extent of
liability to be allocated to a PRP is dependent on a variety of factors. The
extent of clean-up necessary and the assignment of liability has not been fully
established. The insurance industry is disputing many such claims. Key coverage
issues include whether Superfund response costs are considered damages under the
policies, when and how coverage is triggered, applicability of pollution
exclusions, the potential for joint and several liability and definition of an
occurrence. Similar coverage issues exist for clean up and waste sites not
covered under Superfund. To date, courts have been inconsistent in their rulings
on these issues. An insurer's exposure to liability with regard to its insureds
which have been, or may be, named as PRPs is uncertain. Superfund reform
proposals have been introduced in Congress, but none have been enacted. There
can be no assurance that any Superfund reform legislation will be enacted or
that any such legislation will provide for a fair, effective and cost-efficient
system for settlement of Superfund related claims.
While current federal income tax law permits the tax-deferred accumulation
of earnings on the premiums paid by an annuity owner and holders of certain
savings-oriented life insurance products, no assurance can be given that future
tax law will continue to allow such tax deferrals. If such deferrals were not
allowed, consumer demand for the affected products would be substantially
reduced. In addition, proposals to lower the federal income tax rates through a
form of flat tax or otherwise could have, if enacted, a negative impact on the
demand for such products.
Major determinants of future earnings of companies in the financial
services sector are the direction of the stock market, investor confidence,
equity transaction volume, the level and direction of long-term and short-term
interest rates, and the outlook for emerging markets. Negative trends in any of
these earnings determinants could have a serious adverse effect on the financial
stability, as well as the stock prices, of these companies. Furthermore, there
can be no assurance that the issuers of the securities included in the trust
will be able to respond in a timely manner to compete in the rapidly developing
marketplace. In addition to the foregoing, profit margins of these companies
continue to shrink due to the commoditization of traditional businesses, new
competitors, capital expenditures on new technology and the pressures to compete
globally.
Foreign Securities Risk. If set forth in Part A of the prospectus, a trust,
or issuers of securities held by a trust, may invest in foreign issuers, and
therefore, an investment in such a trust involves some investment risks that are
different in some respects from an investment in a trust that invests entirely
in securities of domestic issuers. Those investment risks include future
political and governmental restrictions which might adversely affect the payment
or receipt of payment of dividends on the relevant securities, currency exchange
rate fluctuations, exchange control policies, and the limited liquidity and
small market capitalization of such foreign countries' securities markets. In
addition, for foreign issuers that are not subject to the reporting requirements
of the Securities Exchange Act of 1934, there may be less publicly available
information than is available from a domestic issuer. Also, foreign issuers are
not necessarily subject to uniform accounting, auditing and financial reporting
standards, practices and requirements comparable to those applicable to domestic
issuers. However, due to the nature of the issuers of the securities included in
the trust, the sponsor believes that adequate information will be available to
allow the sponsor to provide portfolio surveillance.
Certain of the securities in the trust may be in ADR or GDR form. ADRs,
American Depositary Receipts and GDRs, Global Depositary Receipts, represent
common stock deposited with a custodian in a depositary. American Depositary
Receipts and Global Depositary Receipts (collectively, the "Depositary
Receipts") are issued by a bank or trust company to evidence ownership of
underlying securities issued by a foreign corporation. These instruments may not
necessarily be denominated in the same currency as the securities into which
they may be converted. For purposes of the discussion herein, the terms ADR and
GDR generally include American Depositary Shares and Global Depositary Shares,
respectively.
Depositary Receipts may be sponsored or unsponsored. In an unsponsored
facility, the depositary initiates and arranges the facility at the request of
market makers and acts as agent for the Depositary Receipts holder, while the
company itself is not involved in the transaction. In a sponsored facility, the
issuing company initiates the facility and agrees to pay certain administrative
and shareholder-related expenses. Sponsored facilities use a single depositary
and entail a contractual relationship between the issuer, the shareholder and
the depositary; unsponsored facilities involve several depositaries with no
contractual relationship to the company. The depositary bank that issues
Depositary Receipts generally charges a fee, based on the price of the
Depositary Receipts, upon issuance and cancellation of the Depositary Receipts.
This fee would be in addition to the brokerage commissions paid upon the
acquisition or surrender of the security. In addition, the depositary bank
incurs expenses in connection with the conversion of dividends or other cash
distributions paid in local currency into U.S. dollars and such expenses are
deducted from the amount of the dividend or distribution paid to holders,
resulting in a lower payout per underlying shares represented by the Depositary
Receipts than would be the case if the underlying share were held directly.
Certain tax considerations, including tax rate differentials and withholding
requirements, arising from the application of the tax laws of one nation to
nationals of another and from certain practices in the Depositary Receipts
market may also exist with respect to certain Depositary Receipts. In varying
degrees, any or all of these factors may affect the value of the Depositary
Receipts compared with the value of the underlying shares in the local market.
In addition, the rights of holders of Depositary Receipts may be different than
those of holders of the underlying shares, and the market for Depositary
Receipts may be less liquid than that for the underlying shares. Depositary
Receipts are registered securities pursuant to the Securities Act of 1933 and
may be subject to the reporting requirements of the Securities Exchange Act of
1934.
For the securities that are Depositary Receipts, currency fluctuations will
affect the United States dollar equivalent of the local currency price of the
underlying domestic share and, as a result, are likely to affect the value of
the Depositary Receipts and consequently the value of the securities. The
foreign issuers of securities that are Depositary Receipts may pay dividends in
foreign currencies which must be converted into dollars. Most foreign currencies
have fluctuated widely in value against the United States dollar for many
reasons, including supply and demand of the respective currency, the soundness
of the world economy and the strength of the respective economy as compared to
the economies of the United States and other countries. Therefore, for any
securities of issuers (whether or not they are in Depositary Receipt form) whose
earnings are stated in foreign currencies, or which pay dividends in foreign
currencies or which are traded in foreign currencies, there is a risk that their
United States dollar value will vary with fluctuations in the United States
dollar foreign exchange rates for the relevant currencies.
On January 1, 1999, Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, the Netherlands, Portugal and Spain (eleven of the fifteen
member states of the European Union ("EU"), as of such date) established fixed
conversion rates between their existing sovereign currencies and the Euro. On
such date the Euro became the official currency of these eleven countries. The
participating countries do not control their own monetary policies by directing
independent interest rates for their currencies. Greece, Slovenia, Cyprus and
Malta have also adopted the Euro as their official currency. In these member
states, the authority to direct monetary policy, including money supply and
official interest rates for the Euro, is exercised by the European Central Bank.
The conversion of the national currencies of the participating countries to the
Euro could negatively impact the market rate of the exchange between such
currencies (or the Euro) and the U.S. dollar. As of January 1, 2009, there were
27 member states in the EU.
In addition, European corporations, and other entities with significant
markets or operations in Europe (whether or not in the participating countries),
face strategic challenges as these entities adapt to a single transnational
currency. The Euro conversion may have a material impact on revenues, expenses
or income from operations; increase competition due to the increased price
transparency of EU markets; effect issuers' currency exchange rate risk and
derivatives exposure; disrupt current contracts; cause issuers to increase
spending on information technology updates required for the conversion; and
result in potential adverse tax consequences. The sponsor is unable to predict
what impact, if any, the Euro conversion will have on any of the issuers of
securities contained in a trust.
Preferred Stock Risks. If set forth in Part A of the prospectus, a trust,
or issuers of securities held by a trust, may invest in preferred stock. If this
is the case, an investment in units should be made with an understanding of the
risks which an investment in preferred stocks entails, including the risk that
the financial condition of the issuers of the securities or the general
condition of the preferred stock market may worsen, and the value of the
preferred stocks and therefore the value of the units may decline. Preferred
stocks may be susceptible to general stock market movements and to volatile
increases and decreases of 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, market
liquidity, and global or regional political, economic or banking crises.
Preferred stocks are also vulnerable to congressional reductions in the
dividends-received deduction which would adversely affect the after-tax return
to the investors who can take advantage of the deduction. Such a reduction might
adversely affect the value of preferred stocks in general. Holders of preferred
stocks, as owners of the entity, have rights to receive payments from the
issuers of those preferred stocks that are generally subordinate to those of
creditors of, or holders of debt obligations or, in some cases, other senior
preferred stocks of, such issuers. Preferred stocks do not represent an
obligation of the issuer and, therefore, do not offer any assurance of income or
provide the same degree of protection of capital as do debt securities. The
issuance of additional debt securities or senior preferred stocks will create
prior claims for payment of principal and interest and senior dividends which
could adversely affect the ability and inclination of the issuer to declare or
pay dividends on its preferred stock or the rights of holders of preferred stock
with respect to assets of the issuer upon liquidation or bankruptcy. The value
of preferred stocks is subject to market fluctuations for as long as the
preferred stocks remain outstanding, and thus the value of the securities may be
expected to fluctuate over the life of the trust to values higher or lower than
those prevailing on the initial date of deposit.
Trust Preferred Securities Risks. If set forth in Part A of the prospectus,
a trust, or issuers of securities held by a trust, may invest in trust preferred
securities. Holders of trust preferred securities incur risks in addition to or
slightly different than the typical risks of holding preferred stocks. Trust
preferred securities are limited-life preferred securities that are typically
issued by corporations, generally in the form of interest-bearing notes or
preferred securities issued by corporations, or by an affiliated business trust
of a corporation, generally in the form of beneficial interests in subordinated
debentures issued by the corporation, or similarly structured securities. The
maturity and dividend rate of the trust preferred securities are structured to
match the maturity and coupon interest rate of the interest-bearing notes,
preferred securities or subordinated debentures. Trust preferred securities
usually mature on the stated maturity date of the interest-bearing notes,
preferred securities or subordinated debentures and may be redeemed or
liquidated prior to the stated maturity date of such instruments for any reason
on or after their stated call date or upon the occurrence of certain
circumstances at any time. Trust preferred securities generally have a yield
advantage over traditional preferred stocks, but unlike preferred stocks,
distributions on the trust preferred securities are generally treated as
interest rather than dividends for federal income tax purposes. Unlike most
preferred stocks, distributions received from trust preferred securities are
generally not eligible for the dividends-received deduction. Certain of the
risks unique to trust preferred securities include: (i) distributions on trust
preferred securities will be made only if interest payments on the
interest-bearing notes, preferred securities or subordinated debentures are
made; (ii) a corporation issuing the interest-bearing notes, preferred
securities or subordinated debentures may defer interest payments on these
instruments for up to 20 consecutive quarters and if such election is made,
distributions will not be made on the trust preferred securities during the
deferral period; (iii) certain tax or regulatory events may trigger the
redemption of the interest-bearing notes, preferred securities or subordinated
debentures by the issuing corporation and result in prepayment of the trust
preferred securities prior to their stated maturity date; (iv) future
legislation may be proposed or enacted that may prohibit the corporation from
deducting its interest payments on the interest-bearing notes, preferred
securities or subordinated debentures for tax purposes, making redemption of
these instruments likely; (v) a corporation may redeem the interest-bearing
notes, preferred securities or subordinated debentures in whole at any time or
in part from time to time on or after a stated call date; (vi) trust preferred
securities holders have very limited voting rights; and (vii) payment of
interest on the interest-bearing notes, preferred securities or subordinated
debentures, and therefore distributions on the trust preferred securities, is
dependent on the financial condition of the issuing corporation.
Convertible Securities Risks. If set forth in Part A of the prospectus, a
trust, or issuers of securities held by a trust, may invest in convertible
securities.
Convertible securities generally offer lower interest or dividend yields
than non-convertible fixed-income securities of similar credit quality because
of the potential for capital appreciation. The market values of convertible
securities tend to decline as interest rates increase and, conversely, to
increase as interest rates decline. However, a convertible security's market
value also tends to reflect the market price of the common stock of the issuing
company, particularly when the stock price is greater than the convertible
security's conversion price. The conversion price is defined as the
predetermined price or exchange ratio at which the convertible security can be
converted or exchanged for the underlying common stock. As the market price of
the underlying common stock declines below the conversion price, the price of
the convertible security tends to be increasingly influenced more by the yield
of the convertible security than by the market price of the underlying common
stock. Thus, it may not decline in price to the same extent as the underlying
common stock, and convertible securities generally have less potential for gain
or loss than common stocks. However, mandatory convertible securities (as
discussed below) generally do not limit the potential for loss to the same
extent as securities convertible at the option of the holder. In the event of a
liquidation of the issuing company, holders of convertible securities would be
paid before that company's common stockholders. Consequently, an issuer's
convertible securities generally entail less risk than its common stock.
However, convertible securities fall below debt obligations of the same issuer
in order of preference or priority in the event of a liquidation and are
typically unrated or rated lower than such debt obligations. In addition,
contingent payment, convertible securities allow the issuer to claim deductions
based on its nonconvertible cost of debt, which generally will result in
deduction in excess of the actual cash payments made on the securities (and
accordingly, holders will recognize income in amounts in excess of the cash
payments received).
Mandatory convertible securities are distinguished as a subset of
convertible securities because the conversion is not optional and the conversion
price at maturity is based solely upon the market price of the underlying common
stock, which may be significantly less than par or the price (above or below
par) paid. For these reasons, the risks associated with investing in mandatory
convertible securities most closely resemble the risks inherent in common
stocks. Mandatory convertible securities customarily pay a higher coupon yield
to compensate for the potential risk of additional price volatility and loss
upon conversion. Because the market price of a mandatory convertible security
increasingly corresponds to the market price of its underlying common stock as
the convertible security approaches its conversion date, there can be no
assurance that the higher coupon will compensate for the potential loss.
Senior Loan Risks. If set forth in Part A of the prospectus, a trust, or
issuers of securities held by a trust, may invest in senior loans.
Senior loans in which a Closed-End Fund may invest:
o generally are of below investment-grade credit quality;
o may be unrated at the time of investment;
o generally are not registered with the SEC or any state securities
commission; and
o generally are not listed on any securities exchange.
The amount of public information available on senior loans generally will
be less extensive than that available for other types of assets.
No reliable, active trading market currently exists for many senior loans,
although a secondary market for certain senior loans has developed over the past
several years. Senior loans are thus relatively illiquid. Liquidity relates to
the ability of a Closed-End Fund to sell an investment in a timely manner at a
price approximately equal to its value on the Closed-End Fund's books. The
illiquidity of senior loans may impair a Closed-End Fund's ability to realized
the full value of its assets in the event of a voluntary or involuntary
liquidation of such assets. Because of the lack of an active trading market,
illiquid securities are also difficult to value and prices provided by external
pricing services may not reflect the true value of the securities. However, many
senior loans are of a large principal amount and are held by a large number of
financial institutions. To the extent that a secondary market does exist for
certain senior loans, the market may be subject to irregular trading activity,
wide bid/ask spreads and extended trade settlement periods. The market for
senior loans could be disrupted in the event of an economic downturn or a
substantial increase or decrease in interest rates. This could result in
increased volatility in the market and in the trusts' net asset value.
If legislation or state or federal regulators impose additional
requirements or restrictions on the ability of financial institutions to make
loans that are considered highly leveraged transactions, the availability of
senior loans for investment by the Closed-End Funds may be adversely affected.
In addition, such requirements or restrictions could reduce or eliminate sources
of financing for certain borrowers. This would increase the risk of default. If
legislation or federal or state regulators require financial institutions to
dispose of senior loans that are considered highly leveraged transactions or
subject such senior loans to increased regulatory scrutiny, financial
institutions may determine to sell such senior loans. Such sales could result in
depressed prices. If a Closed-End Fund attempts to sell a senior loan at a time
when a financial institution is engaging in such a sale, the price a Closed-End
Fund could get for the senior loan may be adversely affected.
Some senior loans are subject to the risk that a court, pursuant to
fraudulent conveyance or other similar laws, could subordinate the senior loans
to presently existing or future indebtedness of the borrower or take other
action detrimental to lenders. Such court action could under certain
circumstances include invalidation of senior loans. Any lender, which could
include a Closed-End Fund, is subject to the risk that a court could find the
lender liable for damages in a claim by a borrower arising under the common laws
of tort or contracts or anti-fraud provisions of certain securities laws for
actions taken or omitted to be taken by the lenders under the relevant terms of
a loan agreement or in connection with actions with respect to the collateral
underlying the senior loan.
Small-Capitalization and Mid-Capitalization Stocks Risk. If set forth in
Part A of the prospectus, a trust may invest in small-capitalization or
mid-capitalization stocks. Investing in small-capitalization stocks or
mid-capitalization stocks may involve greater risk than investing in
large-capitalization stocks, since they can be subject to more abrupt or erratic
price movements. Many small market capitalization companies ("Small-Cap
Companies") or middle market capitalization companies ("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 or 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. However, if set forth in Part A of the prospectus that the trust
will prorate distributions on an annual basis ("Income Averaging"), then income
received by the trust will be distributed on a prorated basis of one-twelfth of
the estimated annual income to the trust for the ensuing 12 months. 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. However, if the trust uses Income Averaging, the trust prorates the
income distribution on an annual basis and annual income distributions are
expected to vary from year to year. If the amount on deposit in the Income
Account is insufficient for payment of the amount of income to be distributed on
a monthly basis, the trustee shall advance out of its own funds and cause to be
deposited in and credited to such Income Account such amount as may be required
to permit payment of the monthly income distribution. The trustee shall be
entitled to be reimbursed by the trust, without interest, out of income received
by the trust subsequent to the date of such advance and subject to the condition
that any such reimbursement shall be made only if it will not reduce the funds
in or available for the Income Account to an amount less than required for the
next ensuing distribution. 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) or dividends, if any, 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 Mellon. All inquiries concerning
participating in distribution reinvestment should be directed to The Bank of New
York Mellon at its Unit Investment Trust Division office.
Statements to Unitholders. With each distribution, the trustee will furnish
to each registered holder a statement of the amount of income and the amount of
other receipts, if any, which are being distributed, expressed in each case as a
dollar amount per unit.
The accounts of a trust will not be audited annually unless the sponsor
determines that such an audit would be in the best interest of the unitholders
of the trust. If an audit is conducted, it will be done at the related trust's
expense, by independent public accountants designated by the sponsor. The
accountants' report will be furnished by the trustee to any unitholder upon
written request. Within a reasonable period of time after the end of each
calendar year, the trustee shall furnish to each person who at any time during
the calendar year was a unitholder of a trust a statement, covering the calendar
year, generally setting forth for the trust:
(A) As to the Income Account:
(1) Income received;
(2) Deductions for applicable taxes and for fees and expenses of the
trust and for redemptions of units, if any; and
(3) The balance remaining after such distributions and deductions,
expressed in each case both as a total dollar amount and as a
dollar amount representing the pro rata share of each unit
outstanding on the last business day of such calendar year; and
(B) As to the Capital Account:
(1) The dates of disposition of any securities and the net proceeds
received therefrom;
(2) Deductions for payment of applicable taxes and fees and expenses
of the trust; and
(3) The balance remaining after such distributions and deductions
expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each unit outstanding on the
last business day of such calendar year; and
(C) The following information:
(1) A list of the securities as of the last business day of such
calendar year;
(2) The number of units outstanding on the last business day of such
calendar year;
(3) The redemption price based on the last evaluation made during
such calendar year; and
(4) The amount actually distributed during such calendar year from
the Income and Capital Accounts separately stated, expressed both
as total dollar amounts and as dollar amounts per unit
outstanding on the record dates for each such distribution.
Rights of Unitholders. A unitholder may at any time tender units to the
trustee for redemption. The death or incapacity of any unitholder will not
operate to terminate a trust nor entitle legal representatives or heirs to claim
an accounting or to bring any action or proceeding in any court for partition or
winding up of a trust. No unitholder shall have the right to control the
operation and management of a trust in any manner, except to vote with respect
to the amendment of the trust agreement or termination of a trust.
Amendment and Termination. The trust agreement may be amended by the
trustee and the sponsor without the consent of any of the unitholders: (1) to
cure any ambiguity or to correct or supplement any provision which may be
defective or inconsistent; (2) to change any provision thereof as may be
required by the Securities and Exchange Commission or any successor governmental
agency; (3) to make such provisions as shall not materially adversely affect the
interests of the unitholders; or (4) to make such other amendments as may be
necessary for a trust to qualify as a regulated investment company, in the case
of a trust which has elected to qualify as such. 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, to permit the acquisition of any securities in addition to or in
substitution for those initially deposited in the trust or to adversely affect
the characterization of a trust as a regulated investment company for federal
income tax purposes, 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, 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.
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 Mellon, a trust company
organized under the laws of New York. The Bank of New York Mellon has its Unit
Investment Trust Division offices at 2 Hanson Place, 12th Fl., Brooklyn, New
York 11217, telephone 1-800-701-8178. The Bank of New York Mellon is subject to
supervision and examination by the Superintendent of Banks of the State of New
York and the Board of Governors of the Federal Reserve System, and its deposits
are insured by the Federal Deposit Insurance Corporation to the extent permitted
by law.
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 Mellon, 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, has underwritten closed-end funds and has sold bonds, mutual
funds, closed-end funds, exchange-traded funds, structured products and unit
investment trusts and maintained secondary market activities relating thereto.
At present, Claymore Securities, Inc. which is a member of the Financial
Industry Regulatory Authority (FINRA), 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.
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. As evaluator, Claymore Securities, Inc. utilizes the trustee to
perform certain evaluation services.
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 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 paid 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 paid monthly and are based on the largest number of units of a trust
outstanding at any time during the primary offering period. After the primary
offering period, their fees shall accrue daily and be based on the number of
units outstanding on the first business day of each calendar year in which a fee
is calculated or the number of units outstanding at the end of the primary
offering period, as appropriate. 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, fees paid to a portfolio
consultant for assisting the sponsor in selecting the trust's portfolio, 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 FINRA 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 an in-kind
distribution (a "Distribution In Kind") from the trustee in lieu of cash
redemption. A unitholder may request a Distribution In Kind of an amount and
value of securities per unit equal to the redemption price per unit as
determined as of the evaluation time next following the tender, provided that
the tendering unitholder is (1) entitled to receive at least $25,000 of proceeds
as part of his or her distribution or if he paid at least $25,000 to acquire the
units being tendered and (2) the unitholder has elected to redeem at least
thirty business 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.
Unitholders of a trust that holds closed-end funds or other investment
company securities who request a Distribution In Kind will be subject to any
12b-1 Fees or other service or distribution fees applicable to the underlying
securities.
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.
Notwithstanding the foregoing, the evaluator or its designee, will generally
value foreign securities primarily traded on foreign exchanges at their fair
value which may be other than their market price. If the trust holds securities
denominated in a currency other than U.S. dollars, the evaluation of such
security is based upon 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 the trust. This section is current as of the
date of this prospectus. Tax laws and interpretations change frequently, and
these summaries do not describe all of the tax consequences to all taxpayers.
For example, these summaries generally do not describe your situation if you are
a corporation, a non-U.S. person, a broker/dealer, or other investor with
special circumstances. In addition, this section does not describe your state,
local or foreign tax consequences.
This federal income tax summary is based in part on the advice 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 (the "RIC
Shares") in funds qualifying as regulated investment companies ("RICs") that are
treated as interests in regulated investment companies 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, 2011. For later periods, if you are an
individual, the maximum marginal federal tax rate for net capital gain is
generally 20% (10% for certain taxpayers in the 10% and 15% tax brackets). The
20% rate is reduced to 18% and the 10% rate is reduced to 8% for long-term
capital gains from most property acquired after December 31, 2000 with a holding
period of more than five years.
Net capital gain equals net long-term capital gain minus net short-term
capital loss for the taxable year. Capital gain or loss is long-term if the
holding period for the asset is more than one year and is short-term if the
holding period for the asset is one year or less. You must exclude the date you
purchase your 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 RIC Shares. Some dividends on the RIC Shares may be
designated as "capital gain dividends," generally taxable to you as long-term
capital gains. Other dividends on the RIC Shares will generally be taxable to
you as ordinary income. Certain ordinary income dividends from a RIC 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 and provided
the dividends are attributable to qualifying dividends received by the RIC
itself. These special rules relating to the taxation of ordinary income
dividends from regulated investment companies generally apply to taxable years
beginning before January 1, 2011. RICs are required to provide notice to their
shareholders of the amount of any distribution that may be taken into account as
a dividend that is eligible for the capital gains tax rates. If you hold a unit
for six months or less or if your trust holds a RIC Share for six months or
less, any loss incurred by you will be treated as a long-term capital loss to
the extent of any long-term capital gain distributions received (or deemed to
have been received) with respect to such RIC Share. Distributions of income or
capital gains declared on the RIC Shares in October, November or December will
be deemed to have been paid to you on December 31 of the year they are declared,
even when paid by the RIC during the following January.
Dividends Received Deduction. A corporation that owns units will generally
not be entitled to the dividends received deduction with respect to many
dividends received by your trust, because the dividends received deduction is
generally not available for dividends from most foreign corporations or from
RICs. However, certain dividends on the RIC Shares that are attributable to
dividends received by the RIC itself from certain domestic corporations may be
designated by the RIC as being eligible for the dividends received deduction.
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 at any time prior to 30 business days before your trust's
termination. However, this ability to request an in-kind distribution will
terminate at any time that the number of outstanding units has been reduced to
10% or less of the highest number of units issued by the trust. 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. 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.
Under certain circumstances, a RIC may elect to pass through to its
shareholders certain foreign taxes paid by the RIC. If the RIC makes this
election with respect to RIC Shares, you must include in your income for federal
income tax purposes your portion of such taxes and you may be entitled to a
credit or deduction for such taxes.
New York Tax Status. Based on the advice of Dorsey & Whitney 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 trust and has passed upon the legality
of the units.
Independent Registered Public Accounting Firm. The statement of financial
condition, including the Trust Portfolio, appearing herein, has been audited by
Grant Thornton LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and is included in reliance on such report given on
the authority of such firm as experts in accounting and auditing.
Description of Ratings
Standard & Poor's Issue Credit Ratings
A Standard & Poor's issue credit rating is a current opinion of the
credit-worthiness of an obligor with respect to a specific financial obligation,
a specific class of financial obligations, or a specific financial program
(including ratings on medium term note programs and commercial paper programs).
It takes into consideration the creditworthiness of guarantors, insurers, or
other forms of credit enhancement on the obligation and takes into account the
currency in which the obligation is denominated. The issue credit rating is not
a recommendation to purchase, sell, or hold a financial obligation, inasmuch as
it does not comment as to market price or suitability for a particular investor.
Issue credit ratings are based on current information furnished by the obligors
or obtained by Standard & Poor's from other sources it considers reliable.
Standard & Poor's does not perform an audit in connection with any credit rating
and may, on occasion, rely on unaudited financial information. Credit ratings
may be changed, suspended, or withdrawn as a result of changes in, or
unavailability of, such information, or based on other circumstances.
Long-term issue credit ratings
Issue credit ratings are based, in varying degrees, on the following
considerations:
o Likelihood of payment-capacity and willingness of the obligor to meet
its financial commitment on an obligation in accordance with the terms
of the obligation;
o Nature of and provisions of the obligation;
o Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization, or other arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.
The issue rating definitions are expressed in terms of default risk. As
such, they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations, to reflect the lower priority in
bankruptcy, as noted above. (Such differentiation applies when an entity has
both senior and subordinated obligations, secured and unsecured obligations, or
operating company and holding company obligations). Accordingly, in the case of
junior debt, the rating may not conform exactly with the category definition.
AAA An obligation rated "AAA" has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial
commitment on the obligation is extremely strong.
AA An obligation rated "AA" differs from the highest rated
obligations only in small degree. The obligor's capacity to meet
its financial commitment on the obligation is very strong.
A An obligation rated "A" is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher rated categories. However,
the obligor's capacity to meet its financial commitment on the
obligation is still strong.
BBB An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity of
the obligor to meet its financial commitment on the obligation.
Obligations rated "BB," "B," "CCC," "CC," and "C" are regarded as
having significant speculative characteristics. "BB" indicates
the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties
or major exposures to adverse conditions.
BB An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to the obligor's inadequate
capacity to meet its financial commitment on the obligation.
B An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the
capacity to meet its financial commitment on the obligation.
Adverse business, financial, or economic conditions will likely
impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.
CCC An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic
conditions for the obligor to meet its financial commitment on
the obligation. In the event of adverse business, financial, or
economic conditions, the obligor is not likely to have the
capacity to meet its financial commitment on the obligation.
CC An obligation rated "CC" is currently highly vulnerable to
nonpayment.
CA A subordinated debt or preferred stock obligation rated "C" is
CURRENTLY HIGHLY VULNERABLE to nonpayment. The "C" rating may be
used to cover a situation where a bankruptcy petition has been
filed or similar action taken, but payments on this obligation
are being continued. A "C" also will be assigned to a preferred
stock issue in arrears on dividends or sinking fund payments, but
that is currently paying.
D An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on
the date due even if the applicable grace period has not expired,
unless Standard & Poor's believes that such payments will be made
during such grace period. The "D" rating also will be used upon
the filing of a bankruptcy petition or the taking of a similar
action if payments on an obligation are jeopardized.
Plus (+) or minus (-) The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
r This symbol is attached to the ratings of instruments with
significant noncredit risks. It highlights risks to principal or
volatility of expected returns which are not addressed in the
credit rating.
NR This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that
Standard & Poor's does not rate a particular obligation as a
matter of policy.
Moody's Ratings
Aaa Bonds and preferred stock which are rated Aaa are judged to be of
the best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of
such issues.
Aa Bonds and preferred stock which are rated Aa are judged to be of
high quality by all standards. Together with the Aaa group they
comprise what are generally known as high-grade bonds. They are
rated lower than the best bonds because margins of protection may
not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other
elements present which make the long-term risk appear somewhat
larger than the Aaa securities.
A Bonds and preferred stock which are rated A possess many
favorable investment attributes and are to be considered as
upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment some time
in the future.
Baa Bonds and preferred stock which are rated Baa are considered as
medium-grade obligations (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security
appear adequate for the present but certain protective elements
may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack out standing investment
characteristics and in fact have speculative characteristics as
well.
Ba Bonds and preferred stock which are rated Ba are judged to have
speculative elements; their future cannot be considered as
well-assured. Often the protection of interest and principal
payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B Bonds and preferred stock which are rated B generally lack
characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms
of the contract over any long period of time may be small.
Caa Bonds and preferred stock which are rated Caa are of poor
standing. Such issues may be in default or there may be present
elements of danger with respect to principal or interest.
Ca Bonds and preferred stock which are rated Ca represent
obligations which are speculative in a high degree. Such issues
are often in default or have other marked shortcomings.
C Bonds and preferred stock which are rated C are the lowest rated
class of bonds, and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment
standing.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic
rating classification from Aa through Caa. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the
lower end of that generic rating category.
CLAYMORE SECURITIES DEFINED PORTFOLIOS
CLAYMORE INDEX PORTFOLIO PROSPECTUS-PART B
______ , 2009
Where to Learn More
You can contact us for free information about this and other investments.
Visit us on the Internet
http://www.claymore.com
By e-mail
invest@claymore.com
Call Claymore
(800) 345-7999
Pricing Line (888) 248-4954
Call the Bank of New York Mellon
(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 Room
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 Room)
When units of the trust are no longer available, we may use this
prospectus as a preliminary prospectus for future trusts. In this case you
should note that:
The information in this prospectus is not complete with respect to
future trusts and may be changed. No one may sell units of a future trust
until a registration statement is filed with the Securities and Exchange
Commission and is effective. This prospectus is not an offer to sell units
and is not soliciting an offer to buy units in any state where the offer or
sale is not permitted.
Contents
Investment Summary
--------------------------------------------------------------------------------
A concise 2 Overview
description 2 Investment Objective
of essential 2 Principal Investment Strategy
information 2 Security Selection
about the 3 Exchange Traded Funds
portfolio 3 Future Trusts
4 Essential Information
4 Portfolio Diversification
4 Principal Risks
7 Who Should Invest
7 Fees and Expenses
8 Example
9 Trust Portfolio
Understanding Your Investment
--------------------------------------------------------------------------------
Detailed 10 How to Buy Units
information 14 How to Sell Your Units
to help you 15 Distributions
understand 16 Investment Risks
your 24 How the Trust Works
investment 25 General Information
26 Expenses
27 Report of Independent Registered Public
Accounting Firm
28 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.claymore.com
these investments. By e-mail
invest@claymore.com
Call Claymore (800) 345-7999
Pricing Line (888) 248-4954
Call The Bank of New York Mellon
(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 Room, 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 Room)
Refer to:
Claymore Securities Defined Portfolios, Series 617
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.
Prospectus
Income Closed-End & Treasury Allocation Portfolio, Series 5
Claymore Securities
Defined Portfolios
Series 617
DATED ______ , 2009
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. 2 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 617 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 6th day of
August, 2009.
CLAYMORE SECURITIES DEFINED PORTFOLIOS, SERIES 617
Registrant
By: CLAYMORE SECURITIES, INC.
Depositor
By: /s/ Kevin Robinson
------------------------
Kevin Robinson
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below on August 6, 2009 by the following persons, who
constitute a majority of the Board of Directors of Claymore Securities, Inc.
SIGNATURE* TITLE*** DATE
CHRISTIAN MAGOON** President ) By: /s/ Kevin Robinson
------------------
) Kevin Robinson
) Attorney-in-Fact*
)
DAVID HOOTEN* Chief Executive Officer and ) August 6, 2009
Chairman of the Board of )
Directors )
MICHAEL RIGERT* Vice Chairman ) August 6, 2009
ANTHONY DILEONARDI* Vice Chairman ) August 6, 2009
BRUCE ALBELDA* Chief Financial Officer and August 6, 2009
Director
/s/ Kevin Robinson
KEVIN ROBINSON Senior Managing Director, August 6, 2009
General Counsel and Secretary
------------------
* An executed copy of the related power of attorney was filed as Exhibit
6.0 to Registration Statement No. 333-149523 on April 9, 2008.
** An executed copy of the related power of attorney was filed as Exhibit
6.0 to Registration Statement No. 333-150840 on June 2, 2008.
*** 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 DORSEY & WHITNEY LLP
The consent of Dorsey & Whitney 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 617
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
August 6, 2009