AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 8, 2011
1933 ACT FILE NO. 333-
1940 ACT FILE NO. 811-03763
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
REGISTRATION STATEMENT ON
FORM S-6
------------------------
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
A. EXACT NAME OF TRUST: GUGGENHEIM DEFINED PORTFOLIOS, SERIES 807
B. NAME OF DEPOSITOR: GUGGENHEIM FUNDS DISTRIBUTORS, INC.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
Guggenheim Funds Distributors, 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
Guggenheim Funds Distributor, 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.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
Preliminary Prospectus Dated July 8, 2011, Subject to Completion
Guggenheim Defined Portfolios, Series 807
GNMA Portfolio, Series 18
GUGGENHEIM LOGO
PROSPECTUS PART A DATED ______ , 2011
A portfolio of mortgage-backed securities
seeking current interest income and principal distributions.
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
Guggenheim Defined Portfolios, Series 807 is a unit investment trust that
consists of the GNMA Portfolio, Series 18 (the "trust"). Guggenheim Funds
Distributors, Inc. ("Guggenheim Funds" or the "sponsor") serves as the sponsor
of the trust.
The trust is scheduled to terminate in approximately 30 years.
Investment Objective
The trust seeks to provide current interest income and principal
distributions.
Principal Investment Strategy
The trust seeks to provide monthly distributions of interest income and
principal by investing in a portfolio primarily consisting of fixed-rate
mortgage-backed securities representing pools of mortgages on 1- to 4-family
dwellings issued by the Government National Mortgage Association (known as
"Ginnie Mae"). The trust may also hold U.S. Treasury securities. The sponsor
generally considered the following factors, among others, in selecting the
securities:
o the types of Ginnie Mae securities available,
o the prices and yields of the securities relative to other comparable
securities, including the extent to which the securities were trading
at a premium or discount from their principal value, and
o the maturities of the securities.
Ginnie Mae was created in 1968 as a government-owned corporation within
the United States Department of Housing and Urban Development. The securities
in the portfolio are backed by the full faith and credit of the U.S.
government. This means that Ginnie Mae guarantees that the principal and
interest will be paid on the securities. However, Ginnie Mae does not guarantee
price or yield on the securities. The units in the trust are not guaranteed by
Ginnie Mae or the U.S. government in any way.
See "Investment Policies" in Part B of the prospectus for more
information.
Essential Information
(as of the Inception Date)
Inception Date
(Initial Date of Deposit) _____ , 2011
Unit Price (Public Offering Price) $10.00
Number of units ______
Principal amount of securities in trust $_____
Fractional undivided interest
in trust per unit $1/_____
Principal amount of securities per unit $_____
First settlement date _____ , 2011
Mandatory termination date _____ , 2041
Estimated current return ___%
Estimated long-term return ___%
Type of Ginnie Mae securities Long-term
Estimated average life of securities ___ years
Minimum value of the 40% of the principal
trust under which the amount of the securities
trust agreement may deposited in the trust at
be terminated the end of the initial
offering period
Evaluation time Close of trading of the
New York Stock Exchange
(normally 4:00 p.m. Eastern Time)
Estimated initial
distribution date _____ , 2011
Estimated initial
record date _____ , 2011
Distribution dates 25th day of each month
Record dates 15th day of each month
CUSIP Numbers
Cash Distributions
Standard Accounts __________
Fee Account Cash __________
Ticker CGNMQX
Minimum investment
All Accounts 1 unit
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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.
Starting in December 2007, economic activity declined across all
sectors of the economy, and most countries experienced increased
unemployment. The economic crisis affected the global economy with
European and Asian markets also suffering historic losses.
Extraordinary steps have been taken by the governments of several
leading countries to combat the economic crisis; however, the impact
of these measures is not yet fully known and cannot be predicted.
o The value of the securities will generally fall if interest rates, in
general, rise. No one can predict whether interest rates will rise or
fall in the future.
o Since mortgage-backed securities represent an interest in mortgage
loans made to finance purchases of homes, the trust will receive
scheduled principal payments each month during its life and it is also
likely that the trust will receive unscheduled prepayments of
principal prior to a security's scheduled maturity date. As a result,
you might not be able to reinvest these principal payments and
prepayments in other investments with the same return as the trust. In
addition, the trust will not retain its present size and composition.
o The trust could terminate earlier than anticipated due to unscheduled
principal prepayments on the underlying loans.
o While the interest and principal payments are backed by the full faith
and credit of the U.S. government, neither the units in the trust nor
the market value of the securities are guaranteed.
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, when creating additional units, continue to
buy, the same securities even though a security's outlook, 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 to own securities representing interests in pools of mortgage
loans on 1- to 4-family dwellings in a single investment; and
o You want the potential to receive monthly distributions of income and
principal.
You should not consider this investment if:
o You are uncomfortable with the risks of an unmanaged investment in
mortgage- backed securities;
o You are uncomfortable with the risks of an unmanaged investment in
securities; or
o You want capital appreciation.
Fees and Expenses
The amounts below are estimates of the direct and indirect expenses that
you may incur based on a $10 unit price. Actual expenses may vary.
Percentage
of Public Amount Per
Offering $1,000
Investor Fees Price (3) Invested
------------------------ ---------- ---------
Maximum sales fees
(including creation
and development fee) (1) 3.95% $ 39.50
======= ========
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) $
=======
Approximate
Annual Fund % of Public
Operating Offering Amount Per
Expenses Price (3) 100 Units
------------------------ ---------- ----------
Trustee's fee 0.1050% $ 1.050
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 (2)
-------- ---------
Total % $
======== =========
(1) The creation and development fee ("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.
(2) 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 exceed the amounts reflected. In some cases, the
actual amount of the operating expenses may greatly exceed the amounts
reflected. Other operating expenses do not include brokerage costs and
other transactional fees.
(3) Based on 100 units with a $10.00 per unit Public Offering Price as of the
Inception Date.
Example
This example helps you compare the cost of this trust with other unit
trusts and mutual funds. In the example we assume that the trust's operating
expenses do not change and that the trust's annual return is 5%. Your actual
returns and expenses will vary. Based on these assumptions, you would pay these
expenses for every $10,000 you invest in the trust:
1 year $
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. This 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
Guggenheim Defined Portfolios, Series 807
GNMA Portfolio, Series 18
The Trust Portfolio as of the Inception Date, _____ , 2011
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Range
Principal Interest of Stated Cost to
Amount Issuer (1) Coupon Maturities (2) Portfolio (3)
--------------------------------------------------------------------------------------------------------
$ ___% ____ to ____ $
____ to ____
-------------- -------------
$ $
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(1) Securities of these issuers are all represented by contracts to purchase
securities. All contracts to purchase the securities were entered into on
______ , 2011. All contracts for securities are expected to be settled
prior to or on ______ , 2011.
(2) The principal amount of securities listed as having the range of maturities
shown is an aggregate of individual securities having varying ranges of
maturities within that shown. They are listed as one category of securities
with a single range of maturities because current market conditions accord
no difference in price among the securities grouped together on the basis
of the difference in their maturity ranges. At some time in the future,
however, the difference in maturity ranges could affect the market value of
the individual securities.
(3) Some securities may be represented by contracts to purchase such
securities. During the initial offering period, evaluations of securities
are made on the basis of current offering side evaluations of the
securities. The aggregate offering price is greater than the aggregate bid
price of the securities, which is the basis on which redemption prices will
be determined for purposes of redemption of units after the initial
offering period.
(4) In addition to the information as to the Ginnie Mae modified pass-through
mortgage-backed securities shown above, the trustee will furnish
unitholders a statement listing the name of issuer, pool number, interest
rate, maturity date and principal amount for each security in the portfolio
upon written request.
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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.guggenheimfunds.com. The unit price includes:
o the value of the securities,
o organization costs,
o the maximum sales fee (which includes the creation and development
fee),
o accrued interest on the securities, and
o cash and other net assets in the portfolio.
We often refer to the purchase price of units as the "Public Offering
Price" or "offer price." We must receive your order to buy units prior to the
close of the New York Stock Exchange (normally 4:00 p.m. Eastern time) to give
you the price for that day. If we receive your order after this time, you will
receive the price computed on the next business day.
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, the initial fees and expenses of the trustee and
the initial audit. Your trust will sell securities to reimburse us for these
costs at the end of the initial offering period or after six months, in the
discretion of the sponsor.
Value of the Securities. We determine the value of the securities as of
the close of the New York Stock Exchange on each day that the exchange is
open.
We generally determine the value of securities during the initial offering
period based on the aggregate institutional offering side evaluations of the
securities determined (a) on the basis of current offering prices of the
securities, (b) if offering prices are not available for any particular
security, on the basis of current offering prices for comparable securities,
(c) by determining the value of securities on the offer side of the market by
appraisal, or (d) by any combination of the above. After the initial offering
period ends, we generally determine the value of the securities as described in
the preceding sentence based on the institutional bid side evaluations rather
than the offering side evaluations. The offering side price generally
represents the price at which investors in the market are willing to sell a
security and the bid side evaluation generally represents the price that
investors in the market are willing to pay to buy a security. The bid side
evaluation is lower than the offering side evaluation.
There is a period of a few days (usually five business days), beginning on
the first day of each month, during which the total amount of payments
(including prepayments, if any) of principal for the preceding month of the
various mortgages underlying each security will not yet have been reported by
the issuer to Ginnie Mae. During this period, the precise principal amount of
the securities will not be known. For purposes of determining the aggregate
underlying value of the securities and the accrued interest on the units during
this period, the evaluator will base its valuation and calculations upon the
average monthly principal distribution for the preceding twelve month period.The
sponsor does not expect the differences in such principal amounts from month to
month to be material. The sponsor will, however, adopt procedures to minimize
the impact of such differences when necessary.
The trustee determined the initial prices of the securities shown in
"Trust Portfolio" for your trust in this prospectus. Such prices were
determined 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.
Accrued Interest. Accrued interest is the accumulation of unpaid interest
on a security from the last day on which interest was paid. Ginnie Mae
securities generally pay interest monthly but the trust accrues this interest
daily. As a result, the trust always has an amount of interest earned but not
yet collected by the trustee. For this reason, with respect to unit orders made
after the inception date of the trust, the unit price will have added to it the
proportionate share of accrued interest to the date of settlement. On the next
distribution date, you will receive the amount of any accrued interest paid on
your units. In an effort to reduce the amount of accrued interest which you
would otherwise have to pay on your units, the trustee will advance the amount
of accrued interest as of the first settlement date (generally three business
days after the trust's inception date) and will distribute this amount to
Guggenheim Funds as the unitholder of record as of that date. Consequently, the
amount of accrued interest to be added to your unit price will include only
accrued interest from the first settlement date to the date of settlement of
your unit trade, less any interest distributions after the first settlement
date. Because of the varying interest payment dates of the securities, accrued
interest at any point in time will be greater than the amount of interest
actually received by the trust and distributed to unitholders. Therefore, there
will always remain an item of accrued interest that is added to the unit price.
If you sell or redeem units, the proportionate share of the accrued interest
will be included in your unit price.
Sales Fee. You pay a fee when you buy units. We refer to this fee as the
"sales fee." The total sales fee equals 3.95% of the Public Offering Price
(excluding organization costs) at the time of purchase. This is equivalent to
4.112% of the net amount invested.
Reducing Your Sales Fee. We offer a variety of ways for you to reduce the
fee you pay. It is your financial professional's responsibility to alert us of
any discount when you order units.
Large Purchases. You can reduce your sales fee by increasing the size of
your investment.
Investors who make large purchases are entitled to the following sales
charge reductions:
Sales Charge
Reductions (as a
% of the Public
Purchase Amount Offering Price)
------------------- ----------------
Less than $50,000 0.00%
$50,000 - $99,999 0.25
$100,000 - $249,999 0.50
$250,000 - $499,999 0.75
$500,000 - $999,999 1.00
$1,000,000 or more 1.50
We apply these fees as a percent of the unit price at the time of
purchase. We also apply the different purchase levels on a unit basis using a
$10 unit equivalent. For example, if you purchase between 10,000 and 24,999
units, your sales charge reduction is 0.50% . For secondary market purchases
the sales fee is 3.95% of the Public Offering Price.
You may aggregate unit purchases of any Guggenheim Funds trust 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.
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 Guggenheim Funds 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.
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 during the
initial offering period paid for a given transaction is as follows:
Concession
per Unit (as a
Purchase Amount/ % of the Public
Form of Purchase Offering Price)
------------------- ---------------
Less than $50,000 3.10%
$50,000 - $99,999 2.85
$100,000 - $249,999 2.60
$250,000 - $499,999 2.35
$500,000 - $999,999 2.25
$1,000,000 or more 1.80
Rollover Purchases 2.20
Fee Account and
Employee Purchases 0.00
We apply these amounts as a percent of the unit price per transaction at
the time of the transaction. We also apply the different distribution levels on
a unit basis using a $10 unit equivalent. For example, if a firm executes a
transaction between 10,000 and 24,999 units, it earns 2.60% of the unit price.
Broker-dealers and other firms that sell units of certain Guggenheim Funds
unit trusts are eligible to receive additional compensation for volume sales.
Such payments will be in addition to the regular concessions paid to dealer
firms as set forth in the applicable trust's prospectus. The additional
payments will be as follows:
Primary Offering Additional
Period Sales During Volume
Calendar Quarter Concession
--------------------------- ----------
$0 but less than $10 million 0.000%
$10 million but
less than $25 million 0.075
$25 million but
less than $50 million 0.100
$50 million or more 0.125
Eligible unit trusts include all Guggenheim Funds 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.
Guggenheim Funds 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 your
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
Guggenheim Funds products. This compensation is intended to result in
additional sales of Guggenheim Funds 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 Guggenheim Funds products
by the intermediary or its agents, the placing of Guggenheim Funds 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 Guggenheim Funds 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 Guggenheim Funds
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 United
States. We do not register units for sale in any foreign country. It is your
financial professional's responsibility to make sure that units are registered
or exempt from registration if you are a foreign investor or if you want to buy
units in another country. This prospectus does not constitute an offer of units
in any state or country where units cannot be offered or sold lawfully. We may
reject any order for units in whole or in part.
We may gain or lose money when we hold units in the primary or secondary
market due to fluctuations in unit prices. The gain or loss is equal to the
difference between the price we pay for units and the price at which we sell or
redeem them. We may also gain or lose money when we deposit securities to
create units. For example, we lost the amount set forth in the "Trust
Portfolio" on the initial deposit of securities into the trust.
See "Purchase, Redemption and Pricing of Units" in Part B of the
prospectus for additional information.
How to Sell Your Units
You can sell your units on any business day by contacting your financial
professional or, in some cases, the trustee. Unit prices are available daily on
the Internet at www.guggenheimfunds.com or through your financial professional.
We often refer to the sale price of units as the "liquidation price." Certain
broker-dealers may charge a transaction fee for processing unit redemptions or
sale requests.
During the initial offering period the sponsor collects organization
costs, the price at which the trustee will redeem units and the price at which
the sponsor may repurchase units include estimated organization costs. After
such period, the amount paid will not include such estimated organization
costs.
Selling Units. We 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 unit 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.
Exchange Option. You may be able to exchange your units for units of other
Guggenheim Funds unit trusts at a reduced sales fee. You can contact your
financial professional or Guggenheim Funds 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
Monthly Distributions. Your trust generally pays interest from its net
investment income along with any principal paid or prepaid on the securities on
each monthly distribution date to unitholders of record on the preceding record
date. You will receive distributions in cash.
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 if underlying mortgages are paid prior to the scheduled termination of
the related loans. The amount of your distributions will vary from time to time
as mortgage loans are paid or trust expenses change.
Reports. The trustee will make available to 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
security 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
your trust. Recently, equity markets have experienced significant volatility.
If the value of the securities falls, the value of your units will also fall.
We cannot guarantee that your trust will achieve its objective or that your
investment return will be positive over any period.
Market risk. Market risk is the risk that 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 trust portfolio, you should
remember that we do not manage the 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. The U.S. economy's recession began in
December 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 declined across all sectors of the
economy, and most countries experienced increased unemployment. The economic
crisis affected the global economy with European and Asian markets also
suffering historic losses. Due to the current state of uncertainty in 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. 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 fully known and cannot be predicted.
Interest rate risk. Interest rate risk is the risk that the value of
securities will fall if interest rates increase. The securities in your trust
typically fall in value when interest rates rise and rise in value when
interest rates fall. Securities with longer periods before maturity are often
more sensitive to interest rate changes.
Credit risk. Credit risk is the risk that a security's issuer is unable to
meet its obligation to pay principal or interest on the security. While
interest and principal payments on Ginnie Mae securities are backed by the full
faith and credit of the U.S. government, the trust and the units are not
guaranteed or insured by the U.S. government or any government agency. In
addition, neither the U.S. government nor Ginnie Mae guarantees the market
value or yield on Ginnie Mae securities.
Prepayment risk. Prepayment risk is the chance that borrowers prepay their
mortgage loans earlier than expected. This reduces the trust's life and future
interest income. Any payment of mortgage debt before it is due is called
"prepayment." Most mortgage loans may be prepaid at any time by the borrower
without penalty. Each mortgage-backed security payment includes a return of
principal as well as interest. Prepayments of the entire mortgage occur when
borrowers refinance or sell their homes. They may refinance to consolidate
debts or take advantage of lower interest rate mortgages. Extra monthly
principal payments made near the trust's inception may significantly reduce the
interest amount paid by the borrower to the lender and, therefore, the future
amount received by the trust.
Your trust will distribute prepayments of principal to you but your future
interest distributions will fall as a result of the prepaid principal. You also
might not be able to reinvest this principal at as high a yield. This means that
you could receive less than the amount you paid for your units. If enough
principal is prepaid on the securities in your trust, your trust could terminate
earlier than expected.
Concentration risk. Concentration risk is the risk that your trust is less
diversified because it concentrates in a particular type of security. When a
certain type of security makes up 25% or more of a trust, the trust is
considered to be "concentrated" in that security type. Your portfolio
concentrates in mortgage-backed securities. You should understand these
securities before you invest.
o These securities represent an ownership interest in mortgage loans
made by banks and other financial institutions to finance purchases of
homes. Individual loans are "pooled" together for sale to investors.
As the underlying loans are paid off, investors receive principal and
interest payments.
o The securities represent a pool of loans that pay a fixed rate of
interest over the life of the loan.
o The value of fixed-rate securities generally falls when interest rates
rise.
o Individual loans may be paid off early for various reasons, such as a
sale of the home, foreclosure on the mortgage, or a home owner's
desire to pay off the loan early to reduce debt. This involves
"prepayment risk" discussed above.
We describe these securities in more detail in the next section titled
"Ginnie Mae Securities."
Reduced diversification risk. Reduced diversification risk is the risk that
your trust will become smaller and less diversified as securities or their
underlying mortgage loans are sold, are prepaid or mature. This could increase
your risk of loss and increase your share of trust expenses.
Liquidity risk. Liquidity risk is the risk that the value of a security
will fall if trading in the security is limited or absent. No one can guarantee
that a liquid trading market will exist for any security because these
securities generally trade in the over-the-counter market (they are not listed
on a securities exchange).
Zero coupon securities. Certain of the securities in the trust may be zero
coupon securities. Zero coupon securities are original issue discount
securities that do not provide for the payment of any current interest. Zero
coupon securities are subject to substantially greater price fluctuations
during periods of changing market interest rates than securities of comparable
quality that pay current income.
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.
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.
Ginnie Mae Securities
The trust primarily invests in Ginnie Mae securities. These securities are
backed by mortgage loans. These securities represent an ownership interest in
mortgage loans made by banks and other financial institutions to finance
purchases of homes. Individual loans are pooled together by Ginnie Mae-approved
issuers for sale to investors. Commonly referred to as "pass-through"
certificates, these securities entitle an investor to an undivided interest in
the underlying mortgage loan pool. The investor receives a proportionate share
of the interest (reduced by servicing and guaranty fees) and principal on the
underlying mortgage loans.
Payments on Ginnie Mae securities to investors occur monthly. These
payments are called "modified pass-through" payments because, through Ginnie
Mae's MBS program, money is passed from the borrower through to the investors
in the Ginnie Mae securities. It is "modified" because if the amount collected
from the borrowers is less than the amount due, the issuer modifies the
pass-through to add on an amount from its corporate funds to make the payment
complete.
Each group of Ginnie Mae securities shown in the "Trust Portfolio" under a
specified range of maturities includes individual mortgage-backed securities
which have varying ranges of maturities within each range. We show each group of
securities as one category of securities because current market conditions
accord no difference in price among the individual Ginnie Mae securities within
each group on the basis of the difference in the maturity dates of each
security. As long as this market condition prevails, a purchase of Ginnie Mae
securities with the same coupon rate and a maturity date within the related
range will be considered an acquisition of the same security. In the future,
however, the difference in maturity ranges could affect the market value of the
individual Ginnie Mae securities. If this happens, any additional purchases by
your trust will take into account the maturities of the individual securities.
The Government National Mortgage Association, known as Ginnie Mae, was
created in 1968 as a wholly owned corporation within the Department of Housing
and Urban Development. Through its mortgage-backed securities program, Ginnie
Mae seeks to increase the liquidity and efficiency of mortgage loan funding,
making more capital available to low and moderate-income homeowners at
competitive interest rates.
The primary function of Ginnie Mae is to operate its mortgage-backed
securities (MBS) program. Ginnie Mae helps to ensure mortgage funds are
available throughout the United States including in rural and urban areas in
which it has been harder to borrow money to buy a home. Ginnie Mae securities
are issued by Ginnie Mae-approved private institutions. The mortgages are
insured by the Federal Housing Administration, or by the Rural Housing Service,
or they are guaranteed by the Department of Veterans Affairs.
Because of the Ginnie Mae guaranty, investors in Ginnie Mae securities are
assured timely payments of scheduled principal and interest due on the pooled
mortgages that back their securities. The payments also include any prepayments
and early recoveries of principal on the pooled mortgages. These payments are
guaranteed even if borrowers or issuers default on their obligation. If the
issuer fails to make the payment, Ginnie Mae will make the payment to the
investor. Neither Ginnie Mae nor the U.S. government guarantees or insures (1)
the market value or yields of Ginnie Mae securities, (2) the trust or (3) the
units of the trust in any way.
See "Ginnie Mae Securities" in Part B of the prospectus for additional
information.
How the Trust Works
Your Trust. Your trust is a unit investment trust registered under the
Investment Company Act of 1940 and the Securities Act of 1933. We created the
trust under a trust agreement between Guggenheim Funds Distributors, 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. 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 other
property in exchange for the securities in its portfolio. If your trust
receives securities or other property, it will either hold the securities or
property in the portfolio or sell the securities or property and distribute the
proceeds.
We will increase the size of your trust as we sell units. When we create
additional units, we will seek to maintain a portfolio that replicates the
maturity ranges of the securities in the portfolio. When your trust buys
securities, it may pay brokerage or other acquisition fees. You could
experience a dilution of your investment because of these fees and fluctuations
in security prices between the time we create units and the time your trust
buys the securities. When your trust buys or sells securities, we may direct
that it place orders with and pay brokerage commissions to brokers that sell
units or are affiliated with 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 a trust will keep its present size and composition for any
length of time.
Estimated Current and Long-term Returns. Estimated current return shows the
estimated cash you should receive each year divided by the unit price. Estimated
long-term return shows the estimated return over the estimated life of your
trust. We base this estimate on an average of the security yields over their
estimated life.
This estimate also reflects the sales charge and estimated expenses. We
derive the average yield for your portfolio by weighting each security's yield
by its value and estimated life. Unlike estimated current return, estimated long
term return attempts to account for maturities, discounts and premiums of the
securities. These estimates show a comparison rather than a prediction of
returns. No return calculation can predict your actual return. Your actual
return will vary from these estimates. This will especially be the case if a
sizable amount of principal on the underlying mortgage loans is paid early. We
will provide you with estimated cash flows for the trust at no charge upon your
request.
In order to calculate the estimated returns, we determined an estimated
prepayment rate for the remaining term of the trust's mortgage loan pool. Each
of the primary market makers in Ginnie Mae securities uses sophisticated
computer models to determine the estimated prepayment rate. These models take
into account a number of factors and assumptions including actual prepayment
data reported by Ginnie Mae for recent periods on a particular pool, the impact
of aging on the prepayment of mortgage pools, the current interest rate
environment, the coupon, the housing environment, historical trends on Ginnie
Mae securities as a group, geographical factors and general economic trends. In
determining the estimated life of the securities in the trust, we have relied
on estimates of prepayment rates determined by primary market makers. No one
can be certain that these estimates will prove accurate or whether prepayment
rates determined by other market makers would have provided a better estimate.
Any difference between the estimate we use and the actual prepayment rate will
affect the estimated long-term return of the trust.
Termination of Your Trust. Your trust will terminate upon the maturity,
payment, prepayment, sale or other liquidation of all of the securities in the
portfolio, but in no event will your trust continue after the mandatory
termination date listed in 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
Guggenheim Funds. Guggenheim Funds Distributors, 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. ("Claymore"). On September 27,
2010, Claymore officially changed its name to Guggenheim Funds Distributors,
Inc. This change follows the acquisition of Claymore by Guggenheim Partners,
LLC on October 14, 2009. Since the finalization of the acquisition, we have
been operating as a subsidiary of Guggenheim Partners, LLC.
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.
Guggenheim Funds personnel may from time to time maintain a position in certain
securities held by your trust.
Guggenheim Funds and your trust have adopted a code of ethics requiring
Guggenheim Funds' 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 the sponsor and investors.
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 Guggenheim Funds unit investment trusts in any calendar
year. In addition, the trustee may reimburse the sponsor out of its own assets
for services performed by employees of the sponsor in connection with the
operation of your trust. 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's objective, policies, composition and
size, selecting service providers and information services, and for providing
other similar administrative and ministerial functions. Your trust pays this
"creation and development fee" of $0.050 per unit from the assets of the trust
as of the close of the initial public offering period. The sponsor does not use
the fee to pay distribution expenses or as compensation for sales efforts.
Your trust will also pay its general operating expenses, including any
licensing fees. Your trust may also 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 Guggenheim
Funds, legal fees and expenses, expenses incurred in contacting you and costs
incurred to reimburse the trustee for advancing funds to meet distributions.
Your trust may pay the costs of updating its registration statement each year.
The trustee may sell securities to pay trust expenses.
See "Expenses of the Trust" in Part B of the prospectus for additional
information.
Report of Independent Registered Public Accounting Firm
Unitholders
Guggenheim Defined Portfolios, Series 807
We have audited the accompanying statement of financial condition,
including the trust portfolio set forth on page 6 of this prospectus, of
Guggenheim Defined Portfolios, Series 807, as of ______ , 2011, 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 financial statement 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 ______ , 2011. 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 Guggenheim
Defined Portfolios, Series 807, as of ______ , 2011, in conformity with
accounting principles generally accepted in the United States of America.
Grant Thornton LLP
Chicago, Illinois
______ , 2011
Guggenheim Defined Portfolios, Series 807
Statement of Financial Condition
as of the Inception Date, _____ , 2011
Investment in securities
Sponsor's contracts to purchase underlying securities backed by
letter of credit (1) $
Accrued interest receivable (2)
----------
Total $
==========
Liabilities and interest of unitholders
Liabilities:
Amount due to trustee (2)
Organization costs (3) $
----------
Total Liabilities
----------
Interest of unitholders:
Cost to unitholders (5)
Less: organization costs (3)
Less: maximum sales fee (4)(5)
----------
Net interest of unitholders
----------
Total $
==========
Number of units
==========
Net Asset Value per Unit $
==========
---------------
(1) Aggregate cost of the securities is based on the "offer" side price
evaluations as determined by the sponsor. Aggregate cost to the trust of
the securities listed under "Trust Portfolio" is based on offering side
valuation determined by the evaluator. The aggregate bid side evaluation of
the securities in the portfolio, as determined by the evaluator, as of the
Inception Date was $_____ . 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.
(2) The trustee will advance an amount equal to the accrued interest on the
securities as of the First Settlement Date, plus any cash received by the
trustee with respect to interest on the securities prior to such date, and
the same will be distributed to the sponsor on the First Settlement Date.
Consequently, the amount of interest accrued on a unit to be added to the
public offering price thereof will include only such accrued interest from
the First Settlement Date to the date of settlement, less all withdrawals
and deductions from the Interest Account subsequent to the First Settlement
Date made with respect to the unit.
(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 $___ per 100 units of 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. Organization costs will not be assessed
to units that are redeemed prior to the close of the initial offering
period or six months after the initial date of deposit (at the discretion
of the sponsor). 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) On the Inception Date, the maximum sales fee is 3.95% of the public
offering price (equivalent to 4.112% of the net amount invested).
(5) The aggregate cost to investors includes the applicable sales fee assuming
no reduction of sales fees for quantity purchases.
GUGGENHEIM DEFINED PORTFOLIOS
GUGGENHEIM PORTFOLIO PROSPECTUS
PART B DATED ______ , 2011
The prospectus for a Guggenheim 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 Guggenheim 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
Ginnie Mae Securities 5
Risk Factors 8
Administration of the Trust 11
Expenses of the Trust 15
Portfolio Transactions and Brokerage Allocation 17
Purchase, Redemption and Pricing of Units 17
Taxation 24
Experts 26
Performance Information 26
General Information
Each trust is one of a series of separate unit investment trusts created
under the name Guggenheim 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 Guggenheim Funds Distributors, 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 intends to qualify as a "regulated investment company"
under the federal tax laws. If the trust qualifies as a regulated investment
company and distributes its income as required by the tax law, the trust
generally will not pay federal income tax. (See "Taxation").
The sponsor may not alter the portfolio of a trust by the purchase, sale
or substitution of securities, except in the special circumstances discussed
herein or provided for in the trust agreement.
The sponsor may direct the trustee to dispose of securities the value of
which has been affected by certain adverse events including institution of
certain legal proceedings or decline in price or the occurrence of other market
factors, including advance refunding, so that in the opinion of the sponsor the
retention of such securities in a trust would be detrimental to the interest of
the unitholders. The proceeds from any such sales, exclusive of any portion
which represents accrued interest, will be credited to the Principal Account of
such trust for distribution to the unitholders.
The sponsor is required to instruct the trustee to reject any offer made
by an issuer of securities to issue new obligations in exchange or substitution
for any of such securities pursuant to a refunding financing plan, except that
the sponsor may instruct the trustee to accept or reject such an offer or to
take any other action with respect thereto as the sponsor may deem proper if
(1) the issuer is in default with respect to such securities or (2) in the
written opinion of the sponsor the issuer will probably default with respect to
such securities in the reasonably foreseeable future. Any obligation so
received in exchange or substitution will be held by the trustee subject to the
terms and conditions of the trust agreement to the same extent as securities
originally deposited thereunder. Within five days after deposit of obligations
in exchange or substitution for underlying securities, the trustee is required
to give notice thereof to each unitholder, identifying the securities
eliminated and the securities substituted therefor.
The trustee may also sell securities, designated by the sponsor, from a
trust for the purpose of redeeming units of such trust tendered for redemption
and the payment of expenses. In addition, the trustee may dispose of certain
securities and take such further action as may be needed from time to time to
ensure that a trust continues to satisfy the qualifications of a regulated
investment company, including the requirements with respect to diversification
under Section 851 of the Internal Revenue Code, and as may be needed from time
to time to avoid the imposition of any excise tax on a trust as a regulated
investment company.
Proceeds from the sale of securities (or any securities or other property
received by a trust in exchange for securities) are credited to the Principal
Account of a trust for distribution to unitholders, to pay expenses or to meet
redemptions. Except for failed securities and as provided herein, in the
prospectus or in the trust agreement, the acquisition by a trust of any
securities other than the portfolio securities is prohibited.
Because certain of the securities in certain of the trusts may from time
to time under certain circumstances be sold or redeemed or will mature in
accordance with their terms and because the proceeds from such events will be
distributed to unitholders and will not be reinvested, no assurance can be
given that a trust will retain for any length of time its present size and
composition. Neither the sponsor nor the trustee shall be liable in any way for
any default, failure or defect in any security. In the event of a failure to
deliver any security that has been purchased for a trust under a
contract,including those securities purchased on a "when, as and if issued"
basis ("Failed Securities"), the sponsor is authorized under the trust
agreement to direct the trustee to acquire other securities ("Replacement
Securities") to make up the original corpus of such trust.
Securities in certain of the trusts may have been purchased on a "when, as
and if issued" or delayed delivery basis with delivery expected to take place
after the first settlement date. Accordingly, the delivery of such securities
may be delayed or may not occur. Interest on these securities begins accruing
to the benefit of unitholders on their respective dates of delivery.
Unitholders of all trusts will be "at risk" with respect to any "when, as and
if issued" or "delayed delivery" securities included in their respective trust
(i.e., may derive either gain or loss from fluctuations in the evaluation of
such securities) from the date they commit for units.
The Replacement Securities must be purchased within 20 days after delivery
of the notice that a contract to deliver a security will not be honored and the
purchase price may not exceed the amount of funds reserved for the purchase of
the Failed Securities. The Replacement Securities (i) must be payable in United
States currency, (ii) must be purchased at a price that results in a yield to
maturity and a current return at least equal to that of the Failed Securities
as of the trust's inception date, (iii) shall not be "when, as and if issued"
or restricted securities and (iv) must satisfy any rating criteria for
securities originally included in such trust. Whenever a Replacement Security
is acquired for a trust, the trustee shall, within five days thereafter, notify
all unitholders of the trust of the acquisition of the Replacement Security and
shall, on the next monthly distribution date which is more than 30 days
thereafter, make a pro rata distribution of the amount, if any, by which the
cost to the trust of the Failed Security exceeded the cost of the Replacement
Security. Once all of the securities in a trust are acquired, the trustee will
have no power to vary the investments of the trust, i.e., the trustee will have
no managerial power to take advantage of market variations to improve a
unitholder's investment.
If the right of limited substitution described in the preceding paragraphs
is not utilized to acquire Replacement Securities in the event of a failed
contract, the sponsor will refund the sales charge attributable to such Failed
Securities to all unitholders of the trust and the trustee will distribute the
principal and accrued interest attributable to such Failed Securities not more
than 30 days after the date on which the trustee would have been required to
purchase a Replacement Security. In addition, unitholders should be aware
that,at the time of receipt of such principal, they may not be able to reinvest
such proceeds in other securities at a yield equal to or in excess of the yield
which such proceeds would have earned for unitholders of such trust.
Whether or not a Replacement Security is acquired, an amount equal to the
accrued interest (at the coupon rate of the Failed Securities) will be paid to
unitholders of the trust to the date the sponsor removes the Failed Securities
from the trust if the sponsor determines not to purchase a Replacement Security
or to the date of substitution if a Replacement Security is purchased. All such
interest paid to unitholders which accrued after the date of settlement for a
purchase of units will be paid by the sponsor. In the event a Replacement
Security could not be acquired by a trust, the net annual interest income per
unit for such trust would be reduced and the estimated current return and
estimated long-term return might be lowered.
Subsequent to the trust's inception, a security may cease to be rated or
its rating may be reduced below any minimum required as of the trust's
inception. Neither event requires the elimination of such investment from a
trust, but may be considered in the sponsor's determination to direct the
trustee to dispose of such investment.
The sponsor may not alter the portfolio of a trust except upon the
happening of certain extraordinary circumstances. Certain of the securities may
be subject to optional call or mandatory redemption pursuant to sinking fund
provisions, in each case prior to their stated maturity. A bond subject to
optional call is one which is subject to redemption or refunding prior to
maturity at the option of the issuer, often at a premium over par. A refunding
is a method by which a bond issue is redeemed, at or before maturity, by the
proceeds of a new bond issue. A bond subject to sinking fund redemption is one
which is subject to partial call from time to time at par with proceeds from a
fund accumulated for the scheduled retirement of a portion of an issue to
maturity. Special or extraordinary redemption provisions may provide for
redemption at par of all or a portion of an issue upon the occurrence of certain
circumstances. Redemption pursuant to optional call provisions is more likely to
occur, and redemption pursuant to special or extraordinary redemption provisions
may occur, when the securities have an offering side evaluation which represents
a premium over par, that is, when they are able to be refinanced at a lower
cost. The proceeds from any such call or redemption pursuant to sinking fund
provisions, as well as proceeds from the sale of securities and from securities
which mature in accordance with their terms from a trust, unless utilized to pay
for units tendered for redemption, will be distributed to unitholders of such
trust and will not be used to purchase additional securities for such
trust.Accordingly, any such call, redemption, sale or maturity will reduce the
size and diversity of a trust and the net annual interest income of such trust
and may reduce the estimated current return and the estimated long-term return.
The call, redemption, sale or maturity of securities also may have tax
consequences to a unitholder.
Certain of the securities in certain of the trusts may have been acquired
at a market discount from par value at maturity. The coupon interest rates on
the discount securities at the time they were purchased and deposited in the
trusts were lower than the current market interest rates for newly issued bonds
of comparable rating and type. If such interest rates for newly issued
comparable securities increase, the market discount of previously issued
securities will become greater, and if such interest rates for newly issued
comparable securities decline, the market discount of previously issued
securities will be reduced, other things being equal. Investors should also
note that the value of securities purchased at a market discount will increase
in value faster than securities purchased at a market premium if interest rates
decrease. Conversely, if interest rates increase, the value of securities
purchased at a market discount will decrease faster than securities purchased
at a market premium. In addition, if interest rates rise, the prepayment risk
of higher yielding, premium securities and the prepayment benefit for lower
yielding, discount securities will be reduced. Market discount attributable to
interest changes does not indicate a lack of market confidence in the issue.
Neither the sponsor nor the trustee shall be liable in any way for any default,
failure or defect in any of the securities.
Ginnie Mae Securities
The Ginnie Mae securities included in the trust are backed by the
indebtedness secured by underlying mortgage pools of up to 30 year mortgages on
1- to 4-family dwellings. The securities are often referred to simply as
"Ginnie Maes". The pool of mortgages which is to underlie a particular new
issue of Ginnie Mae securities is assembled by the proposed issuer of such
Ginnie Mae securities. The issuer is typically a mortgage banking firm, and in
every instance must be a mortgagee approved by and in good standing with the
Federal Housing Administration ("FHA"). In addition, Ginnie Mae imposes its own
criteria on the eligibility of issuers, including a net worth requirement.
The mortgages which are to comprise a new Ginnie Mae pool may have been
originated by the issuer itself in its capacity as a mortgage lender or may be
acquired by the issuer from a third party, such as another mortgage banker, a
banking institution, the Veterans Administration ("VA") (which in certain
instances acts as a direct lender and thus originates its own mortgages) or one
of several other governmental agencies. All mortgages in any given pool will be
insured under the National Housing Act, as amended ("FHA-insured"), or Title V
of the Housing Act of 1949 ("FMHA Insured") or guaranteed under the Servicemen's
Readjustment Act of 1944, as amended, or Chapter 37 of Title 38, U.S.C.
("VA-guaranteed"). Such mortgages will have a date for the first scheduled
monthly payment of principal that is not more than one year prior to the date on
which Ginnie Mae issues its guaranty commitment as described below, will have
comparable interest rates and maturity dates, and will meet additional criteria
of Ginnie Mae. All mortgages in the pools backing the Ginnie Mae securities
contained in the trust are mortgages on 1- to 4-family dwellings (having a
stated maturity of up to 30 years for securities in the trust but generally an
estimated average life of considerably less). In general, the mortgages in these
pools provide for equal monthly payments over the life of the mortgage (aside
from prepayments) designed to repay the principal of the mortgage over such
period, together with interest at the fixed rate on the unpaid balance.
To obtain Ginnie Mae approval of a new pool of mortgages, the issuer will
file with Ginnie Mae an application containing information concerning
itself,describing generally the pooled mortgages, and requesting that Ginnie
Mae approve the issue and issue its commitment (subject to Ginnie Mae's
satisfaction with the mortgage documents and other relevant documentation) to
guarantee the timely payment of principal of and interest on the Ginnie Mae
securities to be issued by the issuer. If the application is in order, Ginnie
Mae will issue its commitment and will assign a Ginnie Mae pool number to the
pool. Upon completion of the required documentation (including detailed
information as to the underlying mortgages, a custodial agreement with a
Federal or state regulated financial institution satisfactory to Ginnie Mae
pursuant to which the underlying mortgages will be held in safekeeping, and a
detailed guaranty agreement between Ginnie Mae and the issuer), the issuance of
the Ginnie Mae securities is permitted. When the Ginnie Mae securities are
issued, Ginnie Mae will endorse its guarantee thereon. The aggregate principal
amount of Ginnie Mae securities issued will be equal to the then aggregate
unpaid principal balances of the pooled mortgages. The interest rate borne by
the Ginnie Mae securities is currently fixed at 1/2 of 1% below the interest
rate of the pooled 1- to 4-family mortgages, the differential being applied to
the payment of servicing and custodial charges as well as Ginnie Mae's guaranty
fee.
Ginnie Mae IIs consist of jumbo pools of mortgages from more than one
issuer. By allowing pools to consist of multiple issuers, it allows for larger
and more geographically diverse pools. Unlike Ginnie Mae Is, which have a
minimum pool size of $1 million, Ginnie Mae IIs have a minimum pool size of $7
million. In addition, the interest rates on the mortgages within the Ginnie Mae
II pools will vary unlike the mortgages within pools in Ginnie Mae Is which all
have the same rate. The rates on the mortgages will vary from 1/2 of 1% to
1.50% above the coupon rate on the Ginnie Mae bond, which is allowed for
servicing and custodial fees as well as the Ginnie Mae's guaranty fee. The
major advantage of Ginnie Mae IIs lies in the fact that a central paying agent
sends one check to the holder on the required payment date. This greatly
simplifies the current procedure of collecting distributions from each issuer
of a Ginnie Mae, since such distributions are often received late.
All of the Ginnie Mae securities in the trust, including the Ginnie Mae
IIs, are of the "fully modified pass-through" type, i.e., they provide for
timely monthly payments to the registered holders thereof (including the
trust)of their pro rata share of the scheduled principal payments on the
underlying mortgages, whether or not collected by the issuers, including, on a
pro rata basis, any prepayments of principal of such mortgages received and
interest (net of the servicing and other charges described above) on the
aggregate unpaid principal balance of such Ginnie Mae securities, whether or
not the interest on the underlying mortgages has been collected by the
issuers.
The Ginnie Mae securities in the trust are guaranteed as to timely payment
of principal and interest by Ginnie Mae. Funds received by the issuers on
account of the mortgages backing the Ginnie Mae securities in the trust are
intended to be sufficient to make the required payments of principal of and
interest on such Ginnie Mae securities but, if such funds are insufficient for
that purpose, the guaranty agreements between the issuers and Ginnie Mae
require the issuers to make advances sufficient for such payments. If the
issuers fail to make such payments, Ginnie Mae will do so.
Ginnie Mae is authorized by Section 306(g) of Title III of the National
Housing Act to guarantee the timely payment of and interest on securities which
are based on or backed by a trust or pool composed of mortgages insured by FHA,
the Farmers' Home Administration ("FMHA") or guaranteed by the VA. Section
306(g) provides further that the full faith and credit of the United States is
pledged to the payment of all amounts which may be required to be paid under
any guaranty under such subsection. An opinion of an Assistant Attorney General
of the United States, dated December 9, 1969, states that such guaranties
"constitute general obligations of the United States backed by its full faith
and credit." Any statement in this prospectus that a particular security is
backed by the full faith and credit of the United States is based upon the
opinion of an assistant attorney general of the United States and should be so
construed. Ginnie Mae is empowered to borrow from the United States Treasury to
the extent necessary to make any payments of principal and interest required
under such guaranties.
Ginnie Mae securities are backed by the aggregate indebtedness secured by
the underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages and, except
to the extent of funds received by the issuers on account of such mortgages,
Ginnie Mae securities do not constitute a liability of nor evidence any
recourse against such issuers, but recourse thereon is solely against Ginnie
Mae. Holders of Ginnie Mae securities (such as the trust) have no security
interest in or lien on the underlying mortgages.
The Ginnie Mae guaranties referred to herein relate only to payment of
principal of and interest on the Ginnie Mae securities in the trust and not to
the units offered hereby.
Monthly payments of principal will be made, and additional prepayments of
principal may be made, to each trust in respect of the mortgages underlying the
Ginnie Mae securities in the trust. All of the mortgages in the pools relating
to the Ginnie Mae securities in the trust are subject to prepayment without any
significant premium or penalty at the option of the mortgagors. While the
mortgages on 1- to 4-family dwellings underlying the Ginnie Mae securities have
a stated maturity of up to 30 years for the trust, it has been the experience
of the mortgage industry that the average life of comparable mortgages, owing
to prepayments, refinancings and payments from foreclosures, is considerably
less.
In the mid-1970's, published yield tables for Ginnie Mae securities
utilized a 12-year average life assumption for Ginnie Mae pools of 26-30 year
mortgages on 1- to 4-family dwellings. This assumption was derived from the FHA
experience relating to prepayments on such mortgages during the period from the
mid-1950's to the mid-1970's. This 12-year average life assumption was
calculated in respect of a period during which mortgage lending rates were
fairly stable. The assumption is no longer an accurate measure of the average
life of Ginnie Mae securities or their underlying single family mortgage pools.
Recently it has been observed that mortgages issued at high interest rates have
experienced accelerated prepayment rates which would indicate a significantly
shorter average life than 12 years. Today, research analysts use complex
formulae to scrutinize the prepayments of mortgage pools in an attempt to
predict more accurately the average life of Ginnie Mae securities.
A number of factors, including homeowner's mobility, change in family size
and mortgage market interest rates will affect the average life of the Ginnie
Mae securities in the trust. For example, Ginnie Mae securities issued during a
period of high interest rates will be backed by a pool of mortgage loans bearing
similarly high rates. In general, during a period of declining interest
rates,new mortgage loans with interest rates lower than those charged during
periods of high rates will become available. To the extent a homeowner has an
outstanding mortgage with a high rate, he may refinance his mortgage at a lower
interest rate or he may rapidly repay his old mortgage. Should this happen, a
Ginnie Mae issued with a high interest rate may experience a rapid prepayment of
principal as the underlying mortgage loans prepay in whole or in
part.Accordingly, there can be no assurance that the prepayment levels which
will be actually realized will conform to the estimates or experience of the
FHA, other mortgage lenders, dealers or market makers or other Ginnie Mae
investors. It is not possible to meaningfully predict prepayment levels
regarding the Ginnie Mae securities in the trust. The termination of the trust
might be accelerated as a result of prepayments made as described herein.
Risk Factors
An investment in units of the trust should be made with an understanding
of the risks which an investment in fixed rate long-term debt obligations may
entail, including the risk that the value of the underlying securities and
hence of the units will decline with increases in interest rates. The value of
the underlying securities will fluctuate inversely with changes in interest
rates.In addition, the potential for appreciation of the underlying securities,
which might otherwise be expected to occur as a result of a decline in interest
rates,may be limited or negated by increased principal prepayments in respect
of the underlying mortgages. For example, the high inflation during certain
periods, together with the fiscal measures adopted to attempt to deal with it,
has resulted in wide fluctuations in interest rates and, thus, in the value of
fixed rate long-term debt obligations generally. The sponsor cannot predict
whether such fluctuations will continue in the future.
The portfolio of the trust includes Ginnie Mae securities (or contracts to
purchase Ginnie Mae securities) fully guaranteed as to payments of principal
and interest by Ginnie Mae. Each group of Ginnie Mae securities described
herein as having a specified range of maturities includes individual
mortgage-backed securities which have varying ranges of maturities within each
range set forth in "The Trust Portfolio" in Part A of the prospectus. Current
market conditions accord little or no difference in price among individual
Ginnie Mae securities with the same coupon within certain ranges of stated
maturity dates on the basis of the difference in the maturity dates of each
Ginnie Mae security. A purchase of Ginnie Mae securities with the same coupon
rate and maturity date within such range will be considered an acquisition of
the same security for additional deposits. In the future, however, the
difference in maturity ranges could affect market value of the individual
Ginnie Mae securities. At such time, any additional purchases by the trust will
take into account the maturities of the individual securities. The mortgages
underlying the Ginnie Mae securities in the trust have an original stated
maturity of up to 30 years.
The trust may contain securities which were acquired at a market discount.
Such securities trade at less than par value because the interest coupons
thereon are lower than interest coupons on comparable debt securities being
issued at currently prevailing interest rates. If such interest rates for newly
issued and otherwise comparable securities increase, the market discount of
previously issued securities will become greater, and if such interest rates for
newly issued comparable securities decline, the market discount of previously
issued securities will be reduced, other things being equal. Investors should
also note that the value of Ginnie Mae securities purchased at a market discount
will increase in value faster than Ginnie Mae securities purchased at a market
premium if interest rates decrease. Conversely, if interest rates increase, the
value of Ginnie Mae securities purchased at a market discount will decrease
faster than Ginnie Mae securities purchased at a premium. In addition, if
interest rates rise, the prepayment risk of higher yielding, premium Ginnie Mae
securities and the prepayment benefit for lower yielding, discount Ginnie Mae
securities will be reduced. Market discount attributable to interest changes
does not indicate a lack of market confidence in the issue.
Neither the sponsor nor the trustee shall be liable in any way for any
default, failure or defect in any of the securities. The trust may contain
securities which were acquired at a market premium. Such securities trade at
more than par value because the interest coupons thereon are higher than
interest coupons on comparable debt securities being issued at currently
prevailing interest rates. If such interest rates for newly issued and
otherwise comparable securities decrease, the market premium of previously
issued securities will be increased, and if such interest rates for newly
issued comparable securities increase, the market premium of previously issued
securities will be reduced, other things being equal. The current returns of
securities trading at a market premium are initially higher than the current
returns of comparably rated debt securities of a similar type issued at
currently prevailing interest rates because premium securities tend to decrease
in market value as they approach maturity when the face amount becomes payable.
Because part of the purchase price is thus returned not at maturity but through
current income payments, early redemption of a premium security at par or early
prepayments of principal will result in a reduction in yield. Prepayments of
principal on securities purchased at a market premium are more likely than
prepayments on securities purchased at par or at a market discount and the
level of prepayments will generally increase if interest rates decline. Market
premium attributable to interest changes does not indicate market confidence in
the issue.
The mortgages underlying a Ginnie Mae security may be prepaid at any time
without penalty. A lower or higher current return on units may occur depending
on a variety of factors such as whether the price at which the respective
Ginnie Mae securities were acquired by the trust is lower or higher than par.
During periods of declining interest rates, prepayments of Ginnie Mae
securities may occur with increasing frequency because, among other reasons,
mortgagors may be able to refinance their outstanding mortgages at lower
interest rates. In such a case, principal will be distributed to unitholders
who may not be able to reinvest such principal distributions in other
securities at an attractive yield.
Certain of the securities in the trust may be "zero coupon" bonds, i.e.,
an original issue discount bond that does not provide for the payment of
current interest. Zero coupon bonds are purchased at a deep discount because
the buyer receives only the right to receive a final payment at the maturity of
the bond and does not receive any periodic interest payments. The effect of
owning deep discount bonds which do not make current interest payments (such as
the zero coupon bonds) is that a fixed yield is earned not only on the original
investment but also, in effect, on all discount earned during the life of such
obligation. This implicit reinvestment of earnings at the same rate eliminates
the risk of being unable to reinvest the income on such obligation at a rate as
high as the implicit yield on the discount obligation, but at the same time
eliminates the holder's ability to reinvest at higher rates in the future. For
this reason, zero coupon bonds are subject to substantially greater price
fluctuations during periods of changing market interest rates than are
securities of comparable quality which pay interest currently. Unitholders of a
trust which contains U.S. Treasury Strips should note that these securities are
sold at a deep discount because the buyer of those securities obtains only the
right to receive a future fixed payment on the security and not any right to
periodic interest payments thereon. Purchasers of these securities acquire, in
effect, discount obligations that are economically identical to the "zero
coupon bonds" that have been issued by corporations.
To the best of the sponsor's knowledge, there is no litigation pending as
of the trust's inception in respect of any security which might reasonably be
expected to have a material adverse effect on the trust. At any time after the
trust's inception, litigation may be instituted on a variety of grounds with
respect to the securities. The sponsor is unable to predict whether any such
litigation may be instituted, or if instituted, whether such litigation might
have a material adverse effect on the trust. The sponsor and the trustee shall
not be liable in any way for any default, failure or defect in any security.
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.
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.
Administration of the Trust
Distributions to Unitholders. Interest received by a trust, including any
portion of the proceeds from a disposition of securities which represents
accrued interest, is credited by the trustee to the Interest Account for the
trust. All other receipts are credited by the trustee to a separate Principal
Account for the trust. The trustee normally has no cash for distribution to
unitholders until it receives interest payments on the securities in the trust.
Since interest usually is paid monthly, during the initial months of the trust,
the Interest Account consisting of accrued but uncollected interest and
collected interest (cash), will be predominantly the uncollected accrued
interest that is not available for distribution. On the dates set forth under
"Essential Information" in the prospectus, the trustee will commence
distributions, in part from funds advanced by the trustee.
Thereafter, assuming the trust retains its original size and
composition,after deduction of the fees and expenses of the trustee, the
sponsor and evaluator and reimbursements (without interest) to the trustee for
any amounts advanced to a trust, the trustee will normally distribute any
income and principal received by the trust on each distribution date or shortly
thereafter to unitholders of record on the preceding Record Date. However,
interest earned at any point in time will be greater than the amount actually
received by the trustee and distributed to the unitholders. Therefore, there
will always remain an item of accrued interest that is added to the daily value
of the units. If unitholders sell or redeem all or a portion of their units,
they will be paid their proportionate share of the accrued interest to, but not
including, the third business day after the date of a sale or to the date of
tender in the case of a redemption.
Persons who purchase units between a record date and a distribution date
will receive their first distribution on the second distribution date following
their purchase of units. Since interest on securities in the trust is payable
at varying intervals and distributions are made to unitholders at different
intervals from receipt of interest, the interest accruing to a trust may not be
equal to the amount of money received and available for distribution from the
Interest Account. Therefore, on each distribution date the amount of interest
actually deposited in the Interest Account and available for distribution may
be slightly more or less than the interest distribution made.
The trustee will distribute on each distribution date or shortly
thereafter, to each unitholder of record on the preceding record date, an
amount substantially equal to such holder's pro rata share of the cash balance,
if any, in the Principal Account computed as of the close of business on the
preceding record date. However, no distribution will be required if the balance
in the Principal Account is less than $0.001 per unit.
The terms of the Ginnie Mae securities provide for payment to the holders
thereof (including a trust) on the fifteenth day of each month of amounts
collected by or due to the issuers thereof with respect to the underlying
mortgages during the preceding month. The trustee will collect the interest due
a trust on the securities therein as it becomes payable and credit such
interest to a separate Interest Account for such trust created by the trust
agreement. Distributions will be made to each unitholder of record of a trust
on the appropriate distribution date.
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 Interest 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 Principal 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 Interest and Principal 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
maturity, 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. If the value of a trust shall be less than the
applicable minimum value stated in the prospectus (generally 40% of the total
value of securities deposited in the trust during the initial offering period),
the trustee may, in its discretion, and shall, when so directed by the
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.
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 Interest and Principal Accounts of the trust.
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. Guggenheim Funds Distributors, Inc. specializes in the
creation, development and distribution of investment solutions for advisors and
their valued clients. Guggenheim Funds Distributors, 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. Guggenheim Funds Distributors, 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. On October 14, 2009, Guggenheim
Partners, LLC acquired Claymore Securities, Inc. Since the finalization of the
acquisition, Claymore Securities, Inc. has been operating as a subsidiary of
Guggenheim Partners, LLC. On September 27, 2010, Claymore Securities, Inc.
officially changed its name to Guggenheim Funds Distributors, Inc.
Guggenheim Funds Distributors, 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, Guggenheim Funds Distributors, 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. Guggenheim Funds Distributors, 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, Guggenheim Funds Distributors, 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, these 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
Principal and Interest 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
Guggenheim Funds Distributors, Inc. 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. In addition, the trustee may reimburse the sponsor
out of its own assets for services performed by employees of the sponsor in
connection with the operation of your trust.
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. If the balances in the Interest and Principal 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.
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 thereof. During the initial offering period, the public offering price per
unit is equal to the aggregate of the offering side evaluations of the
securities in such trust, plus or minus a pro rata share of cash, if any, in the
Principal Account held or owned by such trust plus accrued interest plus the
applicable sales charge referred to in the prospectus divided by the number of
outstanding units of such trust. During the initial offering period, a portion
of the public offering price includes an amount of securities to pay for all or
a portion of the costs incurred in establishing a trust ("organization costs").
These organization costs include the cost of preparing the registration
statement, the trust indenture and other closing documents, registering units
with the Securities and Exchange Commission and states, the initial audit of the
trust portfolio, legal fees and the initial fees and expenses of the trustee.
These costs will be deducted from a trust as of the end of the initial offering
period or after six months, at the sponsor's discretion. The public offering
price for secondary market transactions, on the other hand, is based on the
aggregate bid side evaluations of the securities in a trust, plus or minus cash,
if any, in the Principal Account held or owned by such trust, plus accrued
interest plus a sales charge based upon the dollar weighted average maturity of
such trust.
Had units of a trust been available for sale at the opening of business on
the inception date of the trust, the public offering price would have been as
shown under "Essential Information" in the prospectus. The public offering
price per unit of a trust on the date of the prospectus or on any subsequent
date will vary from the amount stated under "Essential Information" in the
prospectus in accordance with fluctuations in the prices of the underlying
securities and the amount of accrued interest on the units. The aggregate bid
and offering side evaluations of the securities shall be determined (a) on the
basis of current bid or offering prices of the securities, (b) if bid or
offering prices are not available for any particular security, on the basis of
current bid or offering prices for comparable securities, (c) by determining
the value of securities on the bid or offer side of the market by appraisal, or
(d) by any combination of the above.
There is a period of a few days (usually five business days), beginning on
the first day of each month, during which the total amount of payments
(including prepayments, if any) of principal for the preceding month of the
various mortgages underlying each security will not yet have been reported by
the issuer to Ginnie Mae. During this period, the precise principal amount of
the securities will not be known. For purposes of determining the aggregate
underlying value of the securities and the accrued interest on the units during
this period, the evaluator will base its valuation and calculations upon the
average monthly principal distribution for the preceding twelve month period.
We don't expect the differences in such principal amounts from month to
month to be material. We will, however, adopt procedures to minimize the impact
of such differences when necessary.
The foregoing evaluations and computations shall be made as of the
evaluation time stated under "Essential Information" in the prospectus, on each
business day commencing with the trust's inception date of the securities,
effective for all sales made during the preceding 24-hour period.
The interest on the securities deposited in a trust, less the related
estimated fees and expenses, will accrue daily. The amount of net interest
income which accrues per unit may change as securities mature or are redeemed,
exchanged or sold, or as the expenses of a trust change or the number of
outstanding units of a trust changes.
Although payment is normally made three business days following the order
for purchase, payments may be made prior thereto. A person will become the
owner of units on the date of settlement provided payment has been received.
Cash, if any, made available to the sponsor prior to the date of settlement for
the purchase of units may be used in the sponsor's business and may be deemed
to be a benefit to the sponsor, subject to the limitations of the Securities
Exchange Act of 1934. If a unitholder desires to have certificates representing
units purchased, such certificates will be delivered as soon as possible
following his written request therefor.
Accrued Interest. Accrued interest is the accumulation of unpaid interest
on a security from the last day on which interest thereon was paid. Interest on
securities generally is paid semi-annually (monthly in the case of Ginnie Mae
securities, if any) although a trust accrues such interest daily. Because of
this, a trust always has an amount of interest earned but not yet collected by
the trustee. For this reason, with respect to sales settling subsequent to the
first settlement date, the public offering price of units will have added to it
the proportionate share of accrued interest to the date of settlement.
Unitholders will receive on the next distribution date of a trust the amount,
if any, of accrued interest paid on their units.
In an effort to reduce the amount of accrued interest which would
otherwise have to be paid in addition to the public offering price in the sale
of units to the public, the trustee will advance the amount of accrued interest
as of the first settlement date and the same will be distributed to the sponsor
as the unitholder of record as of the first settlement date. Consequently, the
amount of accrued interest to be added to the public offering price of units
will include only accrued interest from the first settlement date to the date
of settlement, less any distributions from the Interest Account subsequent to
the first settlement date.
Because of the varying interest payment dates of the securities, accrued
interest at any point in time will be greater than the amount of interest
actually received by the trusts and distributed to unitholders. Therefore,
there will always remain an item of accrued interest that is added to the value
of the units. If a unitholder sells or redeems all or a portion of his units,
he will be entitled to receive his proportionate share of the accrued interest
from the purchaser of his units. Since the trustee has the use of the funds
held in the Interest Account for distributions to unitholders and since such
account is noninterest-bearing to unitholders, the trustee benefits thereby.
Comparison of Public Offering Price and Redemption Price. While the
initial public offering price of units will be determined on the basis of the
current offering prices of the securities in a trust, the redemption price per
unit (as well as the secondary market price per unit) at which units may be
redeemed will be determined on the basis of the current bid prices of the
securities. As of the opening of business on the trust's inception date, the
public offering price per unit (based on the offering prices of the securities
in a trust and including the sales charge) exceeded the redemption price at
which units could have been redeemed (based upon the current bid prices of the
securities in a trust). Under current market conditions the bid prices for U.S.
Treasury obligations are expected to be approximately 1/8 to 1/4 of 1% lower
than the offer price of such obligations. In the past, bid prices on securities
similar to those in the trust have been lower than the offering prices thereof
by as much as 5% or more of principal amount in the case of inactively traded
bonds or as little as 1/2 of 1% in the case of actively traded bonds, but the
difference between such offering and bid prices may be expected to average 3%
to 4% of principal amount. For this reason, among others (including
fluctuations in the market prices of the securities and the fact that the
public offering price includes a sales charge), the amount realized by a
unitholder upon any redemption of units may be less than the price paid for
such units.
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 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 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, while not obligated to
do so, the sponsor may, subject to change at any time, maintain a market for
units of the trust offered hereby and to continuously offer to purchase said
units at prices, determined by the evaluator, based on the aggregate bid prices
of the underlying securities in the trust, together with accrued interest to the
expected dates of settlement. To the extent that a market is maintained during
the initial offering period, the prices at which units will be repurchased will
be based upon the aggregate offering side evaluation of the securities in the
trust. The aggregate bid prices of the underlying securities in each trust are
expected to be less than the related aggregate offering prices (which is the
evaluation method used during the initial public offering period). Accordingly,
unitholders who wish to dispose of their units should inquire of their bank or
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.
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. The sponsor may suspend or discontinue purchases of units of
any 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.
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 interest shall be withdrawn from the Interest
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 Principal Account
for a trust.
The trustee is empowered to sell securities in order to make funds
available for the redemption of units. To the extent that securities are sold or
redeemed in kind, the size of a trust will be, and the diversity of a trust may
be, reduced but each remaining unit will continue to represent approximately the
same proportional interest in each security. Sales may be required at a time
when securities would not otherwise be sold and may result in lower prices than
might otherwise be realized. The price received upon redemption may be more or
less than the amount paid by the unitholder depending on the value of the
securities in the portfolio at the time of redemption.
The securities to be sold for purposes of redeeming units will be selected
from a list supplied by the sponsor. The securities will be chosen for this
list by the sponsor on the basis of such market and credit factors as it may
determine are in the best interests of such trusts. Provision is made under the
related trust agreements for the sponsor to specify minimum face amounts in
which blocks of securities are to be sold in order to obtain the best price
available. While such minimum amounts may vary from time to time in accordance
with market conditions, it is anticipated that the minimum face amounts which
would be specified would range from $25,000 to $100,000. Sales may be required
at a time when the securities would not otherwise be sold and might result in
lower prices than might otherwise be realized. Moreover, due to the minimum
principal amount in which U.S. Treasury Obligations and Ginnie Mae securities
may be required to be sold, the proceeds of such sales may exceed the amount
necessary for payment of units redeemed. To the extent not used to meet other
redemption requests in such trusts, such excess proceeds will be distributed
pro rata to all remaining unitholders of record of such trusts, unless
reinvested in substitute securities.
The trustee is irrevocably authorized in its discretion, if the sponsor
does not elect to purchase any unit tendered for redemption, in lieu of
redeeming such units, to sell such units in the over-the-counter market for the
account of tendering unitholders at prices which will return to the unitholders
amounts in cash, net after brokerage commissions, transfer taxes and other
charges, equal to or in excess of the redemption price for such units. In the
event of any such sale, the trustee shall pay the net proceeds thereof to the
unitholders on the day they would otherwise be entitled to receive payment of
the redemption price.
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 for units of each
trust is computed by the evaluator as of the evaluation time stated in the
prospectus next occurring after the tendering of a unit for redemption and on
any other business day desired by it, by:
A. adding: (1) the cash on hand in the trust other than cash deposited in
the trust to purchase securities not applied to the purchase of such
securities; (2) the aggregate value of each issue of the securities
(including "when issued" contracts, if any) held in the trust as
determined by the evaluator on the basis of bid prices therefor; and
(3) interest accrued and unpaid on the securities in the trust as of
the date of computation;
B. deducting therefrom (1) amounts representing any applicable taxes or
governmental charges payable out of the trust and for which no
deductions have been previously made for the purpose of additions to
the Reserve Account; (2) an amount representing estimated accrued
expenses of the trust, including but not limited to fees and expenses
of the trustee (including legal and auditing fees and any insurance
costs), the evaluator,the sponsor and bond counsel, if any; (3) cash
held for distribution to unitholders of record as of the business day
prior to the evaluation being made; and (4) other liabilities incurred
by the trust including organization costs; and
C. finally dividing the results of such computation by the number of
units of the trust outstanding as of the date thereof.
During the initial offering period, the redemption price and secondary
market repurchase price will also include estimated organization costs.
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 1 unit. 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 at Depository Trust Company ("DTC") through an investor's brokers'
account. 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. Ownership and transfer of units will be
evidenced and accomplished by book entries made by DTC and its participants.
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. Record holders 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 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.
Trust Status. Your trust intends to qualify as a "regulated investment
company" under the federal tax laws. If your trust qualifies as a regulated
investment company and distributes its income as required by the tax law, the
trust generally will not pay federal income taxes.
Distributions. Trust distributions are generally taxable. After the end of
each year, you will receive a tax statement that separates your trust's
distributions into two categories, ordinary income distributions and capital
gains dividends. Ordinary income distributions are generally taxed at your
ordinary tax rate, however, as further discussed below, certain ordinary income
distributions received from the trust may be taxed at the capital gains tax
rates. Generally, you will treat all capital gains dividends as long-term
capital gains regardless of how long you have owned your units. To determine
your actual tax liability for your capital gains dividends, you must calculate
your total net capital gain or loss for the tax year after considering all of
your other taxable transactions, as described below. In addition, your trust
may make distributions that represent a return of capital for tax purposes and
thus will generally not be taxable to you. The tax status of your distributions
from your trust is not affected by whether you reinvest your distributions in
additional units or receive them in cash. The income from your trust that you
must take into account for federal income tax purposes is not reduced by
amounts used to pay a deferred sales fee, if any. The tax laws may require you
to treat distributions made to you in January as if you had received them on
December 31 of the previous year. Under the "Health Care and Education
Reconciliation Act of 2010," income from a trust may also be subject to a new
3.8% "Medicare tax" imposed for taxable years beginning after 2012. This tax
will generally apply to your net investment income if your adjusted gross
income exceeds certain threshold amounts, which are $250,000 in the case of
married couples filing joint returns and $200,000 in the case of single
individuals.
Dividends Received Deduction. A corporation that owns units generally will
not be entitled to the dividends received deduction with respect to many
dividends received from the trust because the dividends received deduction is
generally not available for distributions from regulated investment companies.
However, certain ordinary income dividends on units that are attributable to
qualifying dividends received by the trust from certain corporations may be
reported by the trust as being eligible for the dividends received deduction.
Sale or Redemption of Units. If you sell or redeem your units, you will
generally recognize a taxable gain or loss. To determine the amount of this
gain or loss, you must subtract your tax basis in your units from the amount
you receive in the transaction. Your tax basis in your units is generally equal
to the cost of your units, generally including sales charges. In some cases,
however, you may have to adjust your tax basis after you purchase your units.
Capital Gains and Losses and Certain Ordinary Income Dividends. If you are
an individual, the maximum marginal federal tax rate for net capital gain is
generally 15% (generally 0% for certain taxpayers in the 10% and 15% tax
brackets). These capital gains rates are generally effective for taxable years
beginning before January 1, 2013. 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% for net capital gains from most property acquired after December
31, 2000 with a holding period of more than five years, and the 10% rate is
reduced to 8% for net capital gains from most property (regardless of when
acquired) with a holding period of more than five years. A portion of the
capital gains dividends from the trust may be subject to a 25% tax rate.
Net capital gain equals net long-term capital gain minus net short-term
capital loss for the taxable year. Capital gain or loss is long-term if the
holding period for the asset is more than one year and is short-term if the
holding period for the asset is one year or less. You must exclude the date you
purchase your Units to determine your holding period. However, if you receive a
capital gain dividend from your trust and sell your unit at a loss after
holding it for six months or less, the loss will be recharacterized as
long-term capital loss to the extent of the capital gain dividend received. The
tax rates for capital gains realized from assets held for one year or less are
generally the same as for ordinary income. The Internal Revenue Code treats
certain capital gains as ordinary income in special situations.
Ordinary income dividends received by an individual unitholder from a
regulated investment company such as the trust are generally taxed at the same
rates that apply to net capital gain (as discussed above), provided certain
holding period requirements are satisfied and provided the dividends are
attributable to qualifying dividends received by the trust itself.
Exchanges. If you elect to have your proceeds from your trust rolled over
into a future series of the trust, the exchange would generally be considered a
sale for federal income tax purposes.
Deductibility of Trust Expenses. Expenses incurred and deducted by your
trust will generally not be treated as income taxable to you. In some cases,
however, you may be required to treat your portion of these trust expenses as
income. In these cases you may be able to take a deduction for these expenses.
However, certain miscellaneous itemized deductions, such as investment
expenses, may be deducted by individuals only to the extent that all of these
deductions exceed 2% of the individual's adjusted gross income.
Foreign Investors. If you are a foreign investor (i.e., an investor other
than a U.S. citizen or resident or a U.S. corporation, partnership, estate or
trust), you should be aware that, generally, subject to applicable tax
treaties, distributions from your trust will be characterized as dividends for
federal income tax purposes (other than dividends which the trust properly
reports as capital gain dividends) and will be subject to U.S. income taxes,
including withholding taxes, subject to certain exceptions described below.
However, distributions received by a foreign investor from your trust that are
properly reported by the trust as capital gain dividends may not be subject to
U.S. federal income taxes, including withholding taxes, provided that the trust
makes certain elections and certain other conditions are met. In the case of
dividends with respect to taxable years of the trust beginning prior to 2012,
distributions from the trust that are properly reported by the trust as an
interest-related dividend attributable to certain interest income received by
the trust or as a short-term gain dividend attributable to certain net
short-term capital gain income received by the trust may not be subject to U.S.
federal income taxes, including withholding taxes when received by certain
foreign investors, provided that the trust makes certain elections and certain
other conditions are met. Distributions after December 31, 2012 may be subject
to a U.S. withholding tax of 30% in the case of distributions to (i) certain
non-U.S. financial institutions that have not entered into an agreement with
the U.S. Treasury to collect and disclose certain information, and (ii) certain
other non-U.S. entities that do not provide certain certifications and
information about the entity's U.S. owners.
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, an independent registered public accounting firm, as set
forth in their report thereon appearing elsewhere herein, and is included in
reliance on such report given on the authority of such firm as experts in
accounting and auditing.
Performance Information
Interest, Estimated Long-term Return and Estimated Current Return. As of
the opening of business on the trust's inception date, the estimated long-term
return and the estimated current return, if applicable, for each trust were as
set forth in the "Essential Information" for each trust in the prospectus.
Estimated current return is calculated by dividing the estimated net annual
interest income per unit by the public offering price. The estimated net annual
interest income per unit will vary with changes in fees and expenses of the
trustee, the sponsor and the evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of the securities while the public
offering price will vary with changes in the offering price of the underlying
securities and accrued interest; therefore, there is no assurance that the
present estimated current return will be realized in the future. Estimated
long-term return is calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums and
the accretion of discounts) and estimated retirements or average life of all of
the securities in a trust and (2) takes into account the expenses and sales
charge associated with each trust unit. Since the market values and estimated
retirements of the securities and the expenses of a trust will change, there is
no assurance that the present estimated long-term return will be realized in the
future. Estimated current return and estimated long-term return are expected to
differ because the calculation of estimated long-term return reflects the
estimated date and amount of principal returned while estimated current return
calculations include only net annual interest income and public offering price.
GUGGENHEIM DEFINED PORTFOLIOS
GUGGENHEIM PORTFOLIO PROSPECTUS-PART B
______ , 2011
Where to Learn More
You can contact us for free information about this and other investments.
Visit us on the Internet
http://www.guggenheimfunds.com
Call Guggenheim Funds
(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 a future trust. In this case you
should note that:
The information in this prospectus is not complete with respect to future
trusts and may be changed. No one may sell units of a future trust until a
registration statement is filed with the Securities and Exchange Commission and
is effective. This prospectus is not an offer to sell units and is not
soliciting an offer to buy units in any state where the offer or sale is not
permitted.
Contents
Investment Summary
------------------------------------------------------------------
A concise 2 Overview
description 2 Investment Objective
of essential 3 Principal Investment Strategy
information 3 Essential Information
about the 3 Principal Risks
portfolio 4 Who Should Invest
4 Fees and Expenses
5 Example
6 Trust Portfolio
Understanding Your Investments
------------------------------------------------------------------
Detailed 7 How to Buy Units
information 11 How to Sell Your Units
to help you 12 Distributions
understand 12 Investment Risks
your 15 Ginnie May Securities
investment 16 How the Trust Works
17 General Information
18 Expenses
20 Report of Independent Registered Public
Accounting Firm
21 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.guggenheimfunds.com
these investments. Call Guggenheim Funds (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:
Guggenheim Defined Portfolios, Series 807
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.
GUGGENHEIM LOGO
PROSPECTUS
GNMA Portfolio, Series 18
Guggenheim
Defined Portfolios
Series 807
DATED ______ , 2011
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 $4,000,000
5692790
This Registration Statement comprises the following papers and documents.
The Facing Sheet
The Prospectus
The Signatures
Consents of Counsel
The following exhibits:
1.1 Reference Trust Agreement (to be supplied by amendment).
1.1.1 Standard Terms and Conditions of Trust (Reference is made to Exhibit
1.1.1 to Amendment No. 1 to the Registration Statement on Form S-6 for
Claymore Securities Defined Portfolios, Series 118 (File No.
333-81826) filed on February 6, 2002).
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 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,
Guggenheim Defined Portfolios, Series 807 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 8th day of July,
2011.
GUGGENHEIM DEFINED PORTFOLIOS, SERIES 807
Registrant
By: GUGGENHEIM FUNDS DISTRIBUTORS, 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 July 8, 2011 by the following persons, who
constitute a majority of the Board of Directors of Guggenheim Funds
Distributors, Inc.
SIGNATURE* TITLE*** DATE
)
) By: /s/ Kevin Robinson
-------------------
) Kevin Robinson
Attorney-in-Fact*
)
DAVID HOOTEN* Chief Executive Officer and ) July 8, 2011
Chairman of the Board of )
Directors )
MICHAEL RIGERT** Vice Chairman ) July 8, 2011
ANTHONY DILEONARDI* Vice Chairman ) July 8, 2011
BRUCE ALBELDA* Chief Financial Officer and July 8, 2011
Director
/s/ Kevin Robinson
KEVIN ROBINSON Senior Managing Director, July 8, 2011
General Counsel and Secretary
--------------
* An executed copy of the related power of attorney was filed as Exhibit
6.0 to Registration Statement No. 333-167997 on September 24, 2010.
** An executed copy of the related power of attorney was filed as Exhibit
6.0 to Registration Statement No. 333-168383 on October 7, 2010.
*** The titles of the persons named herein represent their capacity in and
relationship to Guggenheim Funds Distributors, 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
opinion to be filed as Exhibit 3.1 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 opinion to be
filed as Exhibit 3.2 to the Registration Statement.
MEMORANDUM
Re: Guggenheim Defined Portfolios, Series 807
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 118 (and subsequent series) (File No. 333-81826).
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 February 6, 2002 relative to Claymore Securities
Defined Portfolios, Series 118.
CHAPMAN AND CUTLER LLP
Chicago, Illinois
July 8, 2011