AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 17, 2015
1933 ACT FILE NO. 333-204275
1940 ACT FILE NO. 811 - 03763
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
REGISTRATION STATEMENT ON
FORM S-6
AMENDMENT NO. 1
________________________
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 1328
B. NAME OF DEPOSITOR: GUGGENHEIM FUNDS DISTRIBUTORS, LLC
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
Guggenheim Funds Distributors, LLC
2455 Corporate West Drive
Lisle, Illinois 60532
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
Copies to:
AMY LEE, ESQ. ERIC F. FESS, ESQ.
Vice President and Secretary Chapman and Cutler LLP
Guggenheim Funds Distributors, LLC 111 West Monroe Street
2455 Corporate West Drive Chicago, Illinois 60603
Lisle, Illinois 60532 (312) 845-3000
(630) 505-3700
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)(1)
[_] on (date) pursuant to paragraph (a)(1) of rule 485
[_] 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 August 17, 2015, Subject to Completion
Guggenheim Defined Portfolios, Series 1328
Guggenheim Investment Grade Corporate Trust 3-7 Year, Series 1
GUGGENHEIM LOGO
A portfolio primarily containing investment-grade corporate debt
obligations selected by Guggenheim Funds Distributors, LLC with the assistance
of Guggenheim Partners Investment Management, LLC
Prospectus
Dated ______, 2015
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 Portfolio, Series 1328, is a unit investment trust that
consists of Guggenheim Investment Grade Corporate Trust 3-7 Year, Series 1 (the
"trust"). Guggenheim Funds Distributors, LLC ("Guggenheim Funds" or the
"sponsor") serves as the sponsor of the trust.
The trust is scheduled to terminate in approximately ___ years.
Investment Objective
The trust seeks to provide a high level of current income and to preserve
capital.
Principal Investment Strategy
The trust will primarily invest in a portfolio of investment-grade
corporate debt obligations maturing approximately 3-7 years from the trust's
initial date of deposit (the "Inception Date"). The sponsor will select debt
obligations that it believes have the best chance to meet the trust's investment
objective over its life.
The portfolio of the trust consists primarily of corporate debt obligations
and may also include U.S. government bonds, corporate bonds, sovereign foreign
bonds, mortgage- and asset-backed securities and loan participations. Corporate
debt obligations are fully taxable debt obligations issued by corporations to
finance their operations. As of the Inception Date, at least 80% of the value of
the trust's assets consists of investment-grade corporate debt obligations
maturing in approximately 3-7 years. The trust intends to invest 100% of the
value of its assets in investment-grade corporate debt obligations maturing in
approximately 3-7 years. Investment-grade securities will be those securities
rated investment-grade quality by at least one nationally recognized statistical
rating organization or, if unrated, deemed to be of comparable credit
characteristics by the sponsor. Such rating relates to the underlying securities
and not the trust or the value of the units, which will fluctuate. For purposes
of the trust's 80% policy, the sponsor believes that any unrated corporate debt
obligation held by the trust would have been rated investment-grade if it was
rated by a nationally recognized statistical rating organization. There can be
no assurance that any security contained in the trust will retain an
investment-grade rating for the life of the trust. See "Description of Bond
Rating" for additional information.
The sponsor has selected Guggenheim Partners Investment Management, LLC
("GPIM"), a subsidiary of Guggenheim Partners, LLC, to assist the sponsor with
the selection of the trust's portfolio.
Debt Obligation Selection
The sponsor considered the following factors, among others, in selecting
the debt obligations:
o All ratings provided for the debt obligations must be rated as
investment-grade or above by at least one nationally recognized
statistical rating organization or in the case of a debt obligation
with no issued ratings, such a debt obligation has credit
characteristics similar to those of comparable debt obligations that
were rated so as to be acceptable for acquisition by the trust in the
opinion of the sponsor. For purposes of the trust's 80% policy, the
sponsor believes that any unrated corporate debt obligation held by
the trust would have been rated investment-grade if it was rated by a
nationally recognized statistical rating organization;
o The price of the debt obligations relative to other debt obligations
with comparable characteristics;
o The diversification of debt obligations with respect to the issuer
with no one issuer comprising more than 20% of the final portfolio;
o Attractiveness of the interest payments relative to debt obligations
with similar characteristics; and
o The potential for early return of principal or any event risk which
could have a negative impact on the price of the debt obligations.
The portfolio generally consists of taxable debt obligations maturing
approximately 3-7 years from the Inception Date. Following the Inception Date,
a debt obligation may cease to be rated or its rating may be reduced, even to
below investment-grade, and the trust could continue to hold such debt
obligation.
Guggenheim Partners Investment Management, LLC (GPIM)
Guggenheim Partners Investment Management, LLC is a subsidiary of
Guggenheim Partners, LLC and an affiliate of the sponsor, which offers financial
services expertise within its asset management, investment advisory, capital
markets, institutional finance and merchant banking business lines. Clients
consist of a mix of individuals, family offices, endowments, foundations,
insurance companies, pension plans and other institutions that together have
entrusted the firm with supervision of more than $100 billion in assets. A
global diversified financial services firm, Guggenheim Partners, LLC office
locations include New York, Chicago, Los Angeles, Miami, Boston, Philadelphia,
St. Louis, Houston, London, Dublin, Geneva, Hong Kong, Singapore, Mumbai and
Dubai.
The sponsor is also a subsidiary of Guggenheim Partners, LLC. See "General
Information" for additional information.
Future Trusts
The sponsor may create future trusts that follow the same general
investment strategy. If these future trusts are available, you may be able to
reinvest into one of the trusts at a reduced sales charge. Each trust is
designed to be part of a longer term strategy.
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Essential Information
(as of the Inception Date)
Inception Date
(Initial Date of Deposit) ______, 2015
First Settlement Date ______, 2015
Public Offering Price $_____
Mandatory
Termination Date
Distribution Date 25th day of each month
(commencing ____ 25, 2015, if any)
Record Date 15th day of each month
(commencing ____ 15, 2015, if any)
Evaluation Time As of the close of trading of
the New York Stock Exchange
(normally 4:00 p.m. Eastern Time).
(However, on the first day units are
sold the Evaluation Time will be as
of the close of trading on the New
York Stock Exchange or the time the
registration statement filed with the
Securities and Exchange Commission
becomes effective, if later.)
CUSIP Numbers
Cash Distributions
Standard Accounts
Fee Account Cash
Ticker CGIGAX
Dollar Weighted Average Maturity
of Bonds in the Trust years
Minimum Principal Distributions $1.00 per unit
Minimum Par Value of the Bonds
in the Trust under which the
Trust Agreement may be
Terminated $200 per unit
Types of Bonds
Approximate
Type of Issuer/Sectors Portfolio Percentage*
---------------------- ----------------------
%
------
Total 100.00%
======
Countries
Approximate
Country/Territory Portfolio Percentage*
---------------------- ----------------------
%
------
Total 100.00%
======
Bond Ratings
Approximate
Standard & Poor's Portfolio Percentage*
---------------------- ----------------------
%
------
Total 100.00%
======
Minimum Investment
All accounts 1 unit
* Based upon fair value.
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Guggenheim Investment Grade Corporate Trust 3-7 Year, Series 1
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
As of the Inception Date, ______, 2015
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Principal Amount of Bonds in Trust(1): $
Number of Units:
Fractional Undivided Interest in Trust per Unit:
Principal Amount of Bonds per Unit(1): $
Public Offering Price:
Aggregate Offering Price of Bonds in the Portfolio: $
Aggregate Offering Price of Bonds per Unit: $
Organization Costs per Unit(2): $
Sales Charge of 1.95% of Public Offering Price per Unit: $
Public Offering Price per Unit: $
Redemption Price per Unit(3): $
Excess of Public Offering Price Over Redemption Price per Unit: $
Estimated Annual Interest Income per Unit
(includes cash income accrual only): $
Less Estimated Annual Expenses per Unit: $
---------------
Estimated Net Annual Interest Income per Unit(4): $
---------------
Estimated Daily Rate of Net Interest Accrual per Unit: $
Estimated Current Return Based on Public Offering Price
(includes cash income accrual only)(5): %
Estimated Long-Term Return(5): %
Estimated Interest Distributions per Unit(6):
o Date of First Distribution: _____ 25, 2015
o Amount of First Distribution: $
o Record Date of First Distribution: _____ 15, 2015
o Date of Regular Distribution: 25th of each Month
o Amount of Regular Distribution: $
o Record Date of Regular Distribution: 15th of each Month
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(1) Represents the principal amount of the underlying bonds held in the trust
as of the Inception Date and does not take into account the impact of the
sale of bonds to pay any expenses of the trust. Bonds will be sold to meet
redemptions, to pay expenses and in other limited circumstances. The sale
of bonds will affect the principal amount of bonds included in the trust
and the principal amount of bonds per unit. Units of the trust, when
redeemed or upon termination, may be worth more or less than their original
cost and there can be no assurance that a unitholder will receive the
principal amount of bonds at any particular point in time.
(2) During the initial offering period, a portion of the Public Offering Price
represents an amount of cash deposited to pay all or a portion of the costs
of organizing the trust.
(3) Based upon the bid prices of the bonds plus the organization costs per
unit. Upon tender for redemption, the price to be paid will include accrued
interest as described in "How to Sell Your Units--Redemption--Computation
of Redemption Price per Unit."
(4) Estimated Net Annual Interest Income per Unit will vary with changes in
fees and expenses of the trustee and the evaluator and with principal
prepayment, redemption, maturity, exchange or sale of bonds.
(5) See "Estimated Current Return and Estimated Long-Term Return to
Unitholders" for an explanation of estimated current return and estimated
long-term return.
(6) Distributions, if any, will be made monthly commencing ____ 25, 2015. The
amount of distributions of the trust may be lower or greater than the above
stated amounts due to certain factors that may include, but are not limited
to, changes in distributions paid by issuers, deduction of trust expenses
or the sale or maturity of trust securities in the portfolio. Fees and
expenses of the trust may vary as a result of a variety of factors
including the trust's size, redemption activity, brokerage and other
transaction costs and extraordinary expenses.
Principal Risks
As with all investments, you may lose some or all of your investment in
the trust. 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. 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 Corporate bonds are fixed rate debt obligations that generally decline
in value with increases in interest rates. Foreign and U.S. interest
rates may rise or fall by differing amounts and, as a result, the
trust's investment in foreign securities may expose the trust to
additional risks. Generally, bonds with longer periods before maturity
are more sensitive to interest rate changes. The trust may be subject
to greater risk of rising interest rates than would normally be the
case due to the current period of historically low rates.
o Corporate bonds are subject to credit risk in that an issuer of a bond
may be unable to make interest and principal payments when due. In
general, lower rated bonds carry greater credit risk.
o Because the trust holds intermediate-term debt obligations, it is
exposed to higher interest rate risk than a trust that holds
short-term debt obligations. Interest rate risk is the risk that debt
obligation prices will decline because of rising interest rates. The
prices of intermediate term debt obligations are more sensitive to
interest rate changes than the prices of short-term debt obligations.
As a result, the value of the trust will have greater price
sensitivity than if the Trust had held short-term debt obligations.
o There is no assurance that the trust portfolio will retain for any
length of time its present size and diversity. As indicated in the
"Trust Portfolio," a number of the bonds in the trust may be called
prior to their stated maturity date and will remain callable
throughout the life of the trust. A call provision is more likely to
be exercised by the issuer when the offering price valuation of a bond
is higher than its call price. Such price valuation is likely to be
higher in periods of declining interest rates. In such cases, the
proceeds from such redemptions will be distributed to unit holders.
The Estimated Current Return and Estimated Long-Term Return of the
units may be adversely affected by such sales or redemptions. As
stated below, the size and diversity of the trust may also be affected
by the trust's sale of bonds to meet redemptions, for credit issues
and in other circumstances.
o The sponsor does not actively manage the portfolio. Because the
portfolio is fixed and not managed, in general, the trust only sells
bonds at the trust's termination or in order to meet redemptions, for
tax purposes, for credit issues or to pay sales charges and expenses.
As a result, the price at which a bond is sold may not be the highest
price the trust could have received during the life of the trust.
o No assurance can be given that the trust's investment objective will
be achieved. This objective is subject to the continuing ability of
the respective issuers of the bonds to meet their obligations.
o The trust is subject to market risk. Market value fluctuates in
response to various factors. These can include changes in interest
rates, inflation, the financial condition of a bond's issuer,
perceptions of the issuer, ratings on a bond, or political or economic
events affecting the issuer.
o An issuer or an insurer of the bonds may be unwilling or unable to
make principal payments and/or interest payments in the future, may
call a security before its stated maturity or may reduce the level of
payments made. In addition, there is no guarantee that the issuers
will be able to satisfy their interest or principal payment
obligations to the trust over the life of the trust. This may result
in a reduction in the value of your units.
o The trust includes restricted bonds. Restricted bonds are issued under
Rule 144A of the Securities Act of 1933, as amended, and may only be
resold in privately negotiated transactions pursuant to federal
securities laws or in a public offering with respect to which a
registration statement is in effect under the Securities Act. As a
result, such bonds may not be readily marketable. In addition, certain
restricted bonds may be illiquid.
o The financial condition of an issuer or an insurer of the bonds may
worsen or its credit ratings may drop, resulting in a reduction in the
value of your units. This may occur at any point in time, including
during the primary offering period. There can be no assurance that any
security contained in the trust will retain an investment-grade rating
for the life of the trust.
o The income generated by the trust may be reduced over time in response
to bond sales, changes in distributions paid by issuers, unit
redemptions and expenses.
o The trust invests in foreign securities. The trust's investment in
foreign securities presents additional risk. Securities of foreign
issuers present risks beyond those of domestic securities. More
specifically, foreign risk is the risk that foreign securities will be
more volatile than U.S. securities due to such factors as adverse
economic, currency, political, social or regulatory developments in a
country, including government seizure of assets, excessive taxation,
limitations on the use or transfer of assets, the lack of liquidity or
regulatory controls with respect to certain industries or differing
legal and/or accounting standards.
o Certain debt obligations may be rated as investment-grade by only one
rating agency. As a result, such split-rated securities may have more
speculative characteristics and are subject to a greater risk of
default than securities rated as investment-grade by more than one
rating agency.
o Certain bonds in the trust may have been purchased by the sponsor on a
"when issued" basis. Bonds purchased on a "when issued" basis have not
yet been issued by the issuer on the Inception Date (although such
issuer has committed to issue such bonds). The effect of the trust
holding a "when issued" bond is that unitholders who purchase their
units prior to the delivery date of such bond may have to make a
downward adjustment in the tax basis of their units. Such downward
adjustment may be necessary to account for interest accruing on such
"when issued" bond during the time between their purchase of units and
delivery of such bonds to the trust.
o The trust may sell bonds to meet redemptions, to pay expenses, for
credit issues and in other circumstances. Accordingly, the size,
diversity, composition, returns and income generated by the trust may
be adversely affected. In addition, such sales of bonds may be at a
loss. If such sales are substantial enough, provisions of the trust's
indenture could cause a complete and unexpected liquidation of the
trust before its scheduled maturity, resulting in unanticipated losses
for investors.
o Certain bonds included in the trust may be original issue discount
bonds or "zero coupon" bonds, as noted in "Trust Portfolio." These
bonds may be subject to greater price fluctuations with changing
interest rates and contain additional risks.
o Certain bonds in the trust may be subject to liquidity risk. The
principal trading market for the bonds in the trust will generally be
in the over-the-counter market. As a result, the existence of a liquid
trading market for the bonds may depend on whether dealers will make a
market in the bonds. There can be no assurance that a market will be
made for any of the bonds, that any market for the bonds will be
maintained or of the liquidity of the bonds in any markets made. The
price at which the bonds may be sold to meet redemptions and the value
of the trust will be adversely affected if trading markets for the
bonds are limited or absent.
o Inflation may lead to a decrease in the value of assets or income from
investments.
See "Investment Risks" for additional information.
Taxes
Distributions from the trust are generally subject to federal income taxes
for U.S. investors. The distributions may also be subject to state and local
taxes.
For non-resident aliens, certain income from the trust will be exempt from
withholding for U.S. federal income tax, provided certain conditions are met.
Consult your tax advisor with respect to the conditions that must be met in
order to be exempt for U.S. tax purposes.
See "Tax Status" for further tax information.
Distributions
Holders of units will receive interest payments, if any, from the trust
each month. The interest distribution to the unitholders of the trust as of each
record date will be made on the following distribution date or shortly
thereafter. The trust prorates the interest distributed on an annual basis by
distributing one-twelfth of the estimated annual interest income after the first
prorated initial payment and after deducting estimated costs and expenses that
are expected to be incurred. For example, if the estimated annual interest
income after deducting estimated costs and expenses is $60 per unit, a
unitholder will receive $5 on the distribution date of each month after the
first prorated distribution that is for a period less than a month, even if the
trust receives the interest income in various amounts and at various times
throughout the year. Annual interest distributions are expected to vary from
year to year. For the purpose of minimizing fluctuation in the distributions
from the Interest Account, the trustee is authorized in certain circumstances to
advance such amounts as may be necessary to provide interest distributions of
approximately equal amounts. The trustee shall be reimbursed, without interest,
for any such advances from funds in the Interest Account on the ensuing record
date. Furthermore, investors may receive principal distributions from bonds
being called or sold prior to their maturity or as bonds mature.
As of the Inception Date, each unit of the trust represents the fractional
undivided interest in the principal amount of underlying bonds set forth in the
"Trust Portfolio" and net income of the trust.
Market for Units
The sponsor currently intends to repurchase units from unitholders who
want to redeem their units. These redemptions will generally be at prices based
upon the aggregate bid price of the underlying bonds. The sponsor is not
obligated to maintain a market and may stop doing so without prior notice for
any business reason. If the sponsor stops repurchasing units, a unitholder may
dispose of its units by redemption through The Bank of New York Mellon, which
serves as the trustee of the trust (the "trustee"). The price received from the
trustee by the unitholder for units being redeemed is generally based upon the
aggregate bid price of the underlying bonds.
Until six months after the Inception Date or the end of the initial
offering period, at the discretion of the sponsor, the price at which the
trustee will redeem units and the price at which the sponsor may repurchase
units generally includes estimated organization costs. After such period, the
amount paid will not include such estimated organization costs.
Who Should Invest
You should consider this investment if:
o You want to own a defined portfolio of investment-grade corporate
bonds;
o The trust is part of a longer-term investment strategy; and
o The trust represents only a portion of your overall investment
portfolio.
You should not consider this investment if:
o You are uncomfortable with the risks associated with a defined
portfolio of investment-grade securities; or
o You are uncomfortable with the risks of an unmanaged investment in
securities.
Fees and Expenses
The amounts below are estimates of the direct and indirect fees and
expenses that you may incur for primary market purchases based on a $1,000 unit
price. Actual expenses may vary.
Percentage Amount
of Public Per Unit
Offering (based on
Investor Fees Price (1) $1,000 Unit)
------------------------------ ----------- ------------
Maximum sales fee
paid on purchase 1.95% $19.50
=========== ============
Estimated organization
costs (2) $___
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Approximate
Annual Fund % Per
Operating $1,000 Amount
Expenses invested Per Unit
------------------------------ ----------- ------------
Trustee's fee (3)(4) 0.092% $0.92
Sponsor's supervisory fee (3) 0.030 0.30
Evaluator's fee (3) 0.035 0.35
Bookkeeping and
administrative fee (3) 0.035 0.35
Estimated other trust
operating expenses (5)
----------- ------------
Total % $____
============
(1) The maximum sales fee consists entirely of an initial sales fee deducted at
the time of purchase. Investors will be assessed a sales fee on the portion
of their units represented by cash to pay the trust's organization costs.
(2) The estimated organization costs include the amount per unit paid by the
trust at the end of the initial offering period or after six months, at the
discretion of the sponsor.
(3) The trustee's fees and the sponsor's evaluation fee are based on the
principal amount of the bonds in the trust on a monthly basis. Because such
fees are based on the principal amount of the bonds in the trust, rather
than the trust's net asset value, the fees will represent a greater
percentage of the trust's net asset value if the bonds in the trust, on
average, are valued below par. The sponsor's supervisory fee and the
bookkeeping and administrative fee are based on the largest number of units
in the trust at any time during that period. Because these fees are based
on the largest number of units during a particular period, these fees will
represent a greater percentage of the trust's net asset value as the number
of units decrease during that period. The sponsor serves as the evaluator.
(4) During the first year the trustee may reduce its fee by a nominal amount
that relates to the estimated interest to be earned prior to the expected
delivery dates for the "when, as and if issued" or "delayed delivery"
bonds. Should the interest exceed this amount, the trustee will reduce its
fee up to its annual fee. After the first year, the trustee's fee will be
the amount indicated above.
(5) The estimated trust operating expenses are based upon an estimated trust
size of approximately $___ million. Because certain of the operating
expenses are fixed amounts, if the trust does not reach such estimated size
or falls below the estimated size over its life, the actual amount of the
operating expenses may 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.
Example
This example helps you compare the costs 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 the trust's annual return is 5%. Your actual returns
and expenses will vary. Based on these assumptions, you would pay these
expenses for every $10,000 you invest:
1 year $
3 years
5 years
__ years (life of trust)
These amounts are the same regardless of whether you sell your investment
at the end of a period or continue to hold your investment. The example does
not consider any transaction fees paid by the trust or that broker-dealers may
charge for processing redemption requests.
Trust Portfolio
Guggenheim Defined Portfolios, Series 1328
Guggenheim Investment Grade Corporate Trust 3-7 Year, Series 1
As of the Inception Date, ______, 2015
-------------------------------------------------------------------------------
1st Optional
Aggregate Redemption Cost To
Principal Issuer Name (1) Provisions (2) S&P (3) Portfolio (4)(5)(6)
-------------------------------------------------------------------------------
Trust Portfolio (continued)
Guggenheim Defined Portfolios, Series 1328
Guggenheim Investment Grade Corporate Trust 3-7 Year, Series 1
As of the Inception Date, ______, 2015
--------------------------------------------------------------------------------
1st Optional
Aggregate Redemption Cost To
Principal Issuer Name (1) Provisions (2) S&P (3) Portfolio (4)(5)(6)
--------------------------------------------------------------------------------
--------- -------------------
$ $
========= ===================
The below footnotes only apply when noted.
(1) Bonds of these issuers are all represented by "regular way" or "when
issued" contracts to purchase bonds. All contracts to purchase the bonds
were entered into on ______, 2015 through _____, 2015. All contracts are
expected to be settled prior to or on _____, 2015.
(2) If applicable, this heading shows the year in which each issue of bonds is
initially redeemable and the redemption price for that year unless
otherwise indicated. Each such issue generally continues to be redeemable
at declining prices thereafter, but not below par. "S.F." indicates a
sinking fund has been or will be established with respect to an issue of
bonds. In addition, certain bonds in the trust may be redeemed in whole or
in part other than by operation of the stated optional call or sinking fund
provisions under certain unusual or extraordinary circumstances specified
in the instruments setting forth the terms and provisions of such bonds. A
sinking fund is a reserve fund accumulated over a period of time for the
retirement of debt. A sinking fund may be estimated based upon various
factors or may be mandatory.
Redemption pursuant to call provisions generally will, and redemption
pursuant to sinking fund provisions may, occur at times when the redeemed
bonds have an offering side valuation which represents a premium over par.
To the extent that the bonds were deposited in the trust at a price higher
than the price at which they are redeemed, this will represent a loss of
capital when compared with the original Public Offering Price of the units.
Conversely, to the extent that the bonds were acquired at a price lower
than the redemption price, this will represent an increase in capital when
compared with the original Public Offering Price of the units.
Distributions generally will be reduced by the amount of the income which
would otherwise have been paid with respect to redeemed bonds and there
will be distributed to unitholders the principal amount and any premium
received on such redemption. The estimated current return in this event may
be affected by such redemptions. The tax effect on unitholders of such
redemptions and resultant distributions is described in the section
entitled "Tax Status."
(3) The Standard & Poor's corporate bond ratings are a current assessment of
the creditworthiness of an obligor with respect to a specific obligation.
This assessment of creditworthiness may take into consideration obligors
such as guarantors, insurers or lessees. The bond rating is not a
recommendation to purchase, sell or hold a bond, inasmuch as it does not
comment as to market price or suitability for a particular investor. A
brief description of the rating symbols and their meanings is set forth
under "Description of Bond Ratings."
(4) See Note (1) to "Statement of Financial Condition" regarding cost of bonds.
The prices used to determine the Cost to Portfolio were determined as of
the open of trading on the Inception Date. The sponsor is responsible for
initially acquiring the bonds that it selects for the trust and will
deliver the bonds or arrange for the delivery of the bonds to the trust on
the Inception Date at a price determined by the evaluator based upon the
"offered side" prices provided by Standard & Poor's Securities Evaluations,
an independent, industry-recognized corporate bond pricing service. The
sponsor may acquire bonds from Guggenheim Capital Markets, LLC, a
subsidiary of Guggenheim Partners, LLC and affiliate of the sponsor, and
GPIM, who may accumulate such bonds at the request of the sponsor. The
offering prices are greater than the current bid prices of the bonds which
are the basis on which redemption price per unit is determined for purposes
of redemption of units (see the first paragraphs under "Public
Offering--Offering Price" and "How to Sell Your Units--
Redemption--Computation of Redemption Price Per Unit"). The cost to sponsor
and the resulting profit or loss to sponsor may include the gain or loss on
certain futures contracts entered into by the sponsor in an effort to hedge
the impact of interest rate fluctuations on the value of certain of the
bonds. Other information regarding the bonds is as follows:
Cost to Sponsor Profit (Loss) to Sponsor
(on the deposit (on the deposit
of the bonds) of the bonds)
--------------- ------------------------
$_____ $______
(5) Estimated annual interest income to the trust is $______ (unaudited).
(6) In accordance with Accounting Standards Codification 820, "Fair Value
Measurements and Disclosures" ("ASC 820"), fair value is defined as the
price that the trust would receive upon selling an investment in a orderly
transaction to an independent buyer in the principal or most advantageous
market of the investment. ASC 820 established a three-tier hierarchy to
maximize the use of the observable market data and minimize the use of
unobservable inputs and to establish classification of the fair value
measurements for disclosure purposes. Inputs refer broadly to the
assumptions that market participants would use in pricing the asset or
liability, including the technique or pricing model used to measure fair
value and the risk inherent in the inputs to the valuation technique.
Inputs may be observable or unobservable. Observable inputs are inputs that
reflect the assumptions market participants would use in pricing the asset
or liability, developed based on market data obtained from sources
independent of the reporting entity. Unobservable inputs are inputs that
reflect the reporting entity's own assumptions about the assumptions market
participants would use in pricing the asset or liability, developed based
on the best information available in the circumstances. The three-tier
hierarchy of inputs is summarized in the three broad levels. Level 1 which
represents quoted prices in active markets for identical investments. Level
2 which represents fair value based on other significant observable inputs
(including quoted prices for similar investments, interest rates,
prepayment speeds, credit risks, etc.). Level 3 which represents fair value
based on significant unobservable inputs (including the trust's own
assumptions in determining the fair value of investments). At the Inception
Date, all of the trust's investments are classified as Level 2 as the
securities are transacted through a dealer network.
(7) This bond has a "make whole" call option and is redeemable in whole or in
part at any time at the option of the issuer at a redemption price that is
generally equal to the sum of the principal amount of the bonds, a "make
whole" amount, and any accrued and unpaid interest to the date of
redemption. The "make whole" amount is generally equal to the excess, if
any, of (i) the aggregate present value as of the date of redemption of
principal being redeemed and the amount of interest (exclusive of interest
accrued to the date of redemption) that would have been payable if
redemption had not been made, determined by discounting the remaining
principal and interest at a specified rate (which varies from bond to bond
and is generally equal to an average of yields on U.S. Treasury obligations
with maturities corresponding to the remaining life of the bond plus a
premium rate) from the dates on which the principal and interest would have
been payable if the redemption had not been made; over (ii) the aggregate
principal amount of the bonds being redeemed. In addition, the bonds may
also be subject to redemption without premium at any time pursuant to
extraordinary optional or mandatory redemptions if certain events occur.
(8) This bond is rated investment-grade quality by a nationally recognized
statistical rating organization other than Standard & Poor's.
(9) This security is a restricted bond which only may be resold pursuant to
Rule 144A under the Securities Act of 1933, as amended. See "Investment
Risks" for additional information.
(10) This security is a direct obligation of, or guaranteed by, the government
noted. See "Investment Risks" for additional information.
(11) The issuer of this security may elect to pay interest in kind in lieu of
cash.
(12) This security represents the corporate debt obligation of a foreign
company.
(13) This bond was issued at an original discount. See "Investment Risks" for
additional information.
================================================================================
UNDERSTANDING YOUR INVESTMENT
The Trust
Organization. The trust is one of a series of similar but separate unit
investment trusts created under the laws of the State of New York by a Trust
Indenture and Agreement (the "Trust Agreement"). The Trust Agreement is dated
as of the Inception Date and is between Guggenheim Funds Distributors, LLC, as
sponsor and as evaluator ("evaluator"), and The Bank of New York Mellon, as
trustee. The evaluator determines the value of the bonds held in the trust
generally based upon prices provided by a pricing service. On the Inception
Date, the sponsor deposited bonds, contracts and/or funds (represented by cash
or a certified check(s) and/or an irrevocable letter(s) of credit issued by a
major commercial bank) for the purchase of certain interest-bearing
obligations. After the deposit of the bonds and the creation of the trust, the
trustee delivered to the sponsor the units (the "units") comprising the
ownership of the trust. These units are now being offered pursuant to this
prospectus.
Units. Each unit represents the fractional undivided interest in the
principal and net income of the trust. If any units of the trust are redeemed
after the Inception Date, the fractional undivided interest in the trust
represented by each unredeemed unit will increase. Units will remain
outstanding until redeemed or until the termination of the Trust Agreement for
the related trust.
Public Offering
Offering Price. The sponsor will serve as the trust's principal
underwriter. The price of the units of the trust as of the Inception Date was
determined by adding to the evaluator's determination of the aggregate offering
price of the bonds per unit, based upon prices provided by Standard & Poor's
Securities Evaluations, cash and other net assets in the portfolio, and a pro
rata portion of estimated organization costs. Included within the Public
Offering Price is also a sales charge. During the initial public offering
period, for sales of at least $100,000 or 100 units investors will be entitled
to a volume discount from the sales charge as described below. For purchases
settling after the First Settlement Date, a proportionate share of accrued and
undistributed interest on the bonds at the date of delivery of the units to the
purchaser is also added to the Public Offering Price. However, after the initial
offering period or six months after the Inception Date, at the discretion of the
sponsor, the Public Offering Price of the units will not include a pro rata
portion of estimated organizational costs.
During the initial offering period the aggregate offering price of the
bonds in the trust is determined by the evaluator. To determine such prices,
the evaluator utilizes prices received from Standard & Poor's Securities
Evaluations. Standard & Poor's Securities Evaluations determines such offering
prices (i) on the basis of current offering prices for the bonds; (ii) if
offering prices are not available for any bonds, on the basis of current
offering prices for comparable bonds; (iii) by making an appraisal of the value
of the bonds on the basis of offering prices in the market; or (iv) by any
combination of the above. On or after the Inception Date, such determinations
are made each business day during the initial public offering period as of the
Evaluation Time set forth in "Essential Information," effective for all sales
made subsequent to the last preceding determination. For information relating
to the calculation of the redemption price, which is based upon the aggregate
bid price of the underlying bonds and which is expected to be less than the
aggregate offering price, see "How to Sell Your Units--Redemption."
Organization Costs. During the initial offering period, part of your
purchase price includes a per unit amount sufficient to reimburse us for some
or all of the costs of creating your trust. These costs include the costs of
preparing the registration statement and legal documents, legal fees, federal
and state registration fees, and the initial fees and expenses of the trustee.
Cash has been deposited in the trust for purposes of the payment of
organization costs. Organization costs will not exceed the estimate set forth
under "Fees and Expenses."
Transactional Sales Fee. You pay a sales fee when you buy units. We refer
to this fee as the "transactional sales fee." The maximum transactional sales
fee equals 1.95% of the Public Offering Price per unit (equivalent to ___% of
the net amount invested plus cash deposited to pay the trust's organization
costs). After the end of the initial offering period, the maximum sales fee for
secondary market transactions will be a maximum of 1.95% of the Public Offering
Price per unit at the time of purchase.
Reducing Your Sales Fee. We offer a variety of ways for you to reduce the
maximum sales fee you pay. It is your financial professional's responsibility
to alert us of any discount when you order units.
Large Purchases. During the primary offering period, you can reduce your
maximum sales fee by increasing the size of your investment.
Investors who make large purchases during the primary offering period are
entitled to the following sales charge reductions:
Sales Charge
Purchase Amount Reductions
--------------------------------
Less than 100 units 0.00%
100 - 249 units 0.15%
250 - 499 units 0.25%
500 - 999 units 0.35%
1,000 or more units 0.50%
The quantity discount levels also apply on a dollar basis using a $1,000
unit equivalent. For example, if you purchase between $250,000 and $499,999,
your sales charge reduction will be 0.25%.
Aggregate unit purchases of any Guggenheim Funds trust by the same person
on any single day from any one broker-dealer qualify for a purchase level. You
can include these purchases as your own for purposes of this aggregation:
o purchases by your spouse or children under the age of 21 living in the
same household, and
o purchases by your trust estate or fiduciary accounts.
The discounts described above apply only during the primary 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 reduce your 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"). If you purchase units for
a Fee Account, you will pay the Public Offering Price less the maximum
applicable concession the sponsor typically allows to broker-dealers for
non-breakpoint trades.
This discount applies during the initial offering period. 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
receive cash distributions. We reserve the right to limit or deny purchases of
units with this discount by investors whose frequent trading activity we
determine to be detrimental to your trust. See "Rights of Unitholders--Expenses
and Fees" in this prospectus.
Exchange or Rollover Option. If you are buying units of your trust in the
primary market with redemption or termination proceeds from any unit trust, you
may purchase units with a reduction of 0.50% from the maximum Public Offering
Price, which may include an upfront sales fee. To qualify for this sales charge
reduction, the termination or redemption proceeds being used to purchase units
of the trust must be no more than 30 days old. Such purchases entitled to this
sales charge reduction may be classified as "Rollover Purchases." An exchange
or rollover is generally treated as a sale for federal income tax purposes. See
"Tax Status" and "Rights of Unitholders--Expenses and Fees" in this prospectus.
Employees. We do not charge the portion of the 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 under the
age of 21 living in the same household and parents) of Guggenheim Funds and its
affiliates, or by employees of selling firms and their family members (spouses,
children under the age of 21 living in the same household and parents). You pay
only the portion of the fee that the sponsor retains. This discount applies
during the initial offering period. Only those broker-dealers that allow their
employees to participate in employee discount programs will be eligible for this
discount.
Distribution of 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. For units sold during the primary offering period,
the distribution fee paid for a given transaction is as follows:
Purchase Amount/
Form of Purchase Concession
------------------------------
Less than 100 units 1.10%
100 - 249 units 1.00%
250 - 499 units 0.90%
500 - 999 units 0.80%
1,000 or more units 0.75%
Rollover Purchases 0.75%
The distribution fee levels also apply on a dollar basis using a $1,000
unit equivalent. For example, if you sell between $250,000 and $499,999, your
concession will be 0.90%.
We apply these amounts at the time of the transaction. Firms that are
serving as underwriters are entitled to additional compensation as described in
"Underwriting Concessions" below. For secondary market sales, the dealer
concession will be 80% of the applicable sales charge.
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.
Underwriters other than the sponsor will sell units of the trust to other
broker-dealers and selling agents at the Public Offering Price per unit less a
concession or agency commission not in excess of the underwriter concession
allowed to the underwriters by the sponsor as described in "Underwriting
Concessions" below.
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 the
trust to their customers.
Other Compensation and Benefits to Broker-Dealers. The sponsor, at its own
expense and out of its own profits, may provide additional compensation and
benefits to broker-dealers who sell shares of units of this 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 the 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 in the amounts set forth in the "Trust Portfolio."
Additional Units. After your trust is created, additional units of the
trust may be issued by depositing in the trust bonds and/or cash (or a bank
letter of credit in lieu of cash) with instructions to purchase bonds,
contracts to purchase bonds or additional bonds.
Underwriting Concessions
The sponsor has entered into an Agreement Among Underwriters pursuant to
which it shall serve as the principal underwriter for units of the trust. The
Agreement Among Underwriters provides that a public offering of the units of
the trust will be made at the Public Offering Price described in the
prospectus. Units may also be sold to or through dealers and other selling
agents during the initial offering period and in the secondary market at prices
representing a concession as described in "Public Offering--Distribution of
Units."
In lieu of the concessions provided in "Public Offering--Distribution of
Units," the entities that have executed the Agreement Among Underwriters and
acquired at least 500 units of the trust from the sponsor on the first day
units are sold publicly (the "Underwriters") will receive from the sponsor the
maximum dealer concession contained in the following table:
Maximum
Dealer
Purchase Amount Concession
-----------------------------
500 - 999 units 1.15%
1,000 - 2,999 1.25%
3,000 or more units 1.30%
The dealer concession levels also apply on a dollar basis using a $1,000
unit equivalent. For example, if you underwrite between $500,000 and $999,999,
your concession will be 1.15%.
Following the first day that units are sold publicly, Underwriters that
sell 499 units or less in units of the trust on a given day will be entitled to
a maximum dealer concession of 1.15% of the Public Offering Price, and
Underwriters that sell at least 500 units on a given day will be entitled to a
maximum dealer concession per unit equal to the amount received for sales
occurring on the first day units are sold publicly.
The dealer concessions provided above represent the maximum compensation
available for dealer firms for non-breakpoint trades. For breakpoint trades by
investors, the compensation received by dealer firms for a given transaction
will be reduced by the amount of the sales charge reduction provided to the
investor purchasing units. (See "Public Offering--Large Purchases" in the
prospectus for the Sales Charge Reductions schedule.)
In addition to any other benefits, the sponsor will share with the
Underwriters, on a pro rata basis, 50% of the net gain, if any, represented by
the difference between the sponsor's cost of the securities in connection with
their acquisition (including the cost of insurance obtained by the sponsor
prior to the Inception Date for individual securities, if any, and including
the effects of portfolio hedging gains and losses and portfolio hedging
transaction costs, if any) and the aggregate offering price thereof on the
Inception Date (the "acquisition profit") less a charge for acquiring the bonds
in the portfolio and for the sponsor maintaining a secondary market for the
units. For purposes of determining the acquisition profit, the sponsor will
utilize the prices of the bonds derived from Standard & Poor's Securities
Evaluations. All units created by the sponsor on the Inception Date will be
eligible for the purpose of determining the acquisition profit. Dealers who are
Underwriters will be eligible for a portion of such acquisition profit, if
any.
Underwriting
Number
Name and Address of Units
---------------------------------- --------
Sponsor and Underwriter:
Guggenheim Funds Distributors, LLC
2455 Corporate West Drive
Lisle, Illinois 60532
Underwriters:
--------
Total:
========
Sponsor's and Dealers' Profits. As set forth under "Public
Offering--Offering Price," the sponsor and the dealers will receive gross
commissions equal to the specified percentages of the Public Offering Price of
the units of the trust.
Also, any difference between the sponsor's cost to purchase the securities
and the price at which it sells them to the trust is considered profit or loss.
In offering units of the trust the sponsor and dealers will also realize
profits or sustain losses in the amount of any difference between the price at
which they acquire or buy units and the price at which they resell or redeem
such units and to the extent they earn sales charges on purchases.
Investment Risks
All investments involve risk. This section describes the main risks that
can impact the value of the bonds in your trust. You should understand these
risks before you invest. You could lose some or all of your investment in the
trust. Recently, securities markets have experienced significant volatility. If
the value of the bonds 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.
Failure of Issuers or Insurers to Pay Interest and/or Principal. The
primary risk associated with an investment in bonds is that the issuer or
insurer of a bond may default on principal and/or interest payments when due on
the bond. Such a default would have the effect of lessening the income
generated by the trust and/or the value of the bonds and the trust's units. The
bond ratings assigned by major rating organizations are an indication of the
issuer's ability to make interest and principal payments when due on its bonds.
Subsequent to the Inception Date the rating assigned to a bond may decline.
Neither the sponsor nor the trustee shall be liable in any way for any default,
failure or defect in any bond or responsible for a decline in the rating of any
bond in the portfolio.
Market Risk. Market risk is the risk that the value of the bonds in the
trust will fluctuate. Market value fluctuates in response to various factors.
These can include changes in interest rates, inflation, the financial condition
of a bonds' issuer, perceptions of the issuer, ratings on a bond, or political
or economic events affecting the issuer. Because the trust is not managed, the
trustee will not sell bonds in response to or in anticipation of market
fluctuations, as is common in managed investments.
Income Risk. The income from the trust's portfolio may decline for a
variety of reasons including, but not limited to, falling market interest
rates, bonds that are sold from the trust's portfolio and increased expenses.
Interest rate risk. Interest rate risk is the risk that the value of
securities held by your trust will decline in value because of a rise in
interest rates. Generally, securities that pay fixed rates of return will
increase in value when interest rates decline and decrease in value when
interest rates rise. Typically, securities that pay fixed rates of return with
longer periods before maturity are more sensitive to interest rate changes. The
trust may be subject to greater risk of rising interest rates than would
normally be the case due to the current period of historically low rates.
Intermediate-term debt obligation risk. Because the trust holds
intermediate-term debt obligations, it is exposed to higher interest rate risk
than a trust that holds short-term debt obligations. Interest rate risk is the
risk that debt obligation prices will decline because of rising interest rates.
The prices of intermediate-term debt obligations are more sensitive to interest
rate changes than the prices of short-term debt obligations. As a result, the
value of the trust will have greater price sensitivity than if the trust had
held short-term debt obligations.
Price Volatility of Fixed-Rate Bonds. An investment in units of the trust
should be made with an understanding of the risks entailed in investments in
fixed-rate bonds, including the risk that the value of such bonds (and,
therefore, of the units) will decline with increases in interest rates.
Inflation and the overall economy are two of the major factors, among others,
which contribute to fluctuations in interest rates and the values of fixed-rate
bonds. Bonds are also subject to the risk that their values may decline if the
issuer's financial condition worsens or if perceptions of the issuer's financial
condition change.
Split-ratings risk. Split-rated securities are those securities that, at
the time of investment, are rated by only one rating agency. This means that a
split-rated security may be regarded by one rating agency as having
predominately speculative characteristics with respect to the issuer's capacity
to pay interest and repay principal, and accordingly subject to a greater risk
of default. The prices of split-rated securities, in the view of one but not
all rating agencies, may be more sensitive than securities without a
split-rating to negative developments, such as a decline in the issuer's
revenues or a general economic downturn.
Original Issue Discount Bonds and Zero Coupon Bonds. Certain bonds in the
trust may be original issue discount bonds and/or zero coupon bonds. Original
issue discount bonds are bonds originally issued at less than the market
interest rate.
Zero coupon bonds are original issue discount bonds that do not provide
for the payment of any current interest. Zero coupon bonds are subject to
substantially greater price fluctuations during periods of changing market
interest rates than bonds of comparable quality that pay current income.
Original issue discount bonds typically pay a lower interest rate than
comparable bonds that were issued at or above their par value. Under current
law, the original issue discount, which is the difference between the stated
redemption price at maturity and the issue price of the bonds, is deemed to
accrue on a daily basis. The trust may also pay a premium when it buys a bond,
even a bond issued with original issue discount. The trust may be required to
amortize the premium over the term of the bond and reduce its basis for the bond
even though it does not get any deduction for the amortization. Therefore,
sometimes the trust may have a taxable gain when it sells a bond for an amount
equal to or less than its original tax basis.
On sale or redemption, unitholders may receive ordinary income dividends
from the trust if the trust sells or redeems bonds that were acquired at a
market discount, or sells bonds at a short-term capital gain. In general, the
Internal Revenue Service will treat bonds as market discount bonds when the
cost of the bond, plus any original issue discount that has not yet accrued, is
less than the amount due to be paid at the maturity of the bond. Any gain
realized that is in excess of the earned portion of original issue discount
will be taxable as capital gain unless the gain is attributable to market
discount in which case the accretion of market discount is taxable as ordinary
income.
The current value of an original issue discount bond reflects the present
value of its stated redemption price at maturity. In a stable interest rate
environment, the market value of these bonds tends to increase more slowly in
early years and greater increments as the bonds approach maturity. The issuers
of these bonds may be able to call or redeem a bond before its stated maturity
date and at a price less than the bond's par value. See "Tax Status" herein.
"When Issued" and "Delayed Delivery" Bonds. Certain bonds in the trust may
have been purchased by the sponsor on a "when issued" basis. Bonds purchased on
a "when issued" basis have not yet been issued by the issuer on the Inception
Date (although such issuer had committed to issue such bonds). In the case of
these and/or certain other bonds, the delivery of the bonds may be delayed
("delayed delivery") or may not occur. The effect of the trust containing
"delayed delivery" or "when issued" bonds is that unitholders who purchased
their units prior to the date such bonds are actually delivered to the trustee
may have to make a downward adjustment in the tax basis of their units. Such
downward adjustment may be necessary to account for interest accruing on such
"when issued" or "delayed delivery" bonds during the time between their purchase
of units and delivery of such bonds to the trust.
Restricted Bonds. The trust invests in bonds that may only be resold
pursuant to Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"). Such bonds may not be readily marketable and certain
restricted bonds may be illiquid.
Restricted bonds may be sold only in privately negotiated transactions or
in a public offering with respect to which a registration statement is in
effect under the Securities Act. Where registration is required, the trust may
be obligated to pay all or part of the registration expenses and a considerable
period may elapse between the time of the decision to sell and the time the
trust may be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to develop,
the trust might obtain a less favorable price than that which prevailed when it
decided to sell.
Redemption or Sale Prior to Maturity. As of the Inception Date, a number of
the bonds in the portfolio of the trust may be called prior to their stated
maturity date pursuant to sinking fund or call provisions. A call provision is
more likely to be exercised by an issuer when the offering price valuation of a
bond is higher than its call price. Such price valuation is likely to be higher
in periods of declining interest rates. Certain of the bonds may be sold or
otherwise mature. In such cases, the proceeds from such events will be
distributed to unitholders. Thus, no assurance can be given that the trust will
retain for any length of time its present size and composition.
The trust may contain bonds that have "make whole" call options that
generally cause the bonds to be redeemable at any time at a designated price.
Such bonds are generally more likely to be subject to early redemption and may
result in the reduction of income received by the trust and the early
termination of the trust.
To the extent that a bond was deposited in the trust at a price higher
than the price at which it is redeemable, or at a price higher than the price
at which it is sold, a sale or redemption will result in a loss in the value of
units. Distributions will generally be reduced by the amount of the income
which would otherwise have been paid with respect to sold or redeemed bonds.
The Estimated Current Return and Estimated Long-Term Return of the units may be
adversely affected by such sales or redemptions.
Market Discount. The portfolio of the trust may consist of some bonds
whose current market values were below principal value on the Inception Date. A
primary reason for the market value of such bonds being less than principal
value at maturity is that the interest rate of such bonds is at lower rates
than the current market interest rate for comparably rated bonds. Bonds selling
at market discounts tend to increase in market value as they approach maturity.
Because the trust is not actively managed, the trustee will not sell bonds in
response to or in anticipation of market discounts or fluctuations.
Failure of a Contract to Purchase Bonds and Substitution of Bonds. In the
event of a failure to deliver any bond that has been purchased for the trust
under a contract ("failed bonds"), the sponsor is authorized to purchase other
bonds ("replacement bonds"). The trustee shall pay for replacement bonds out of
funds held in connection with the failed bonds and will accept delivery of such
bonds to make up the original principal of the trust. The replacement bonds must
be purchased within 20 days after delivery of the notice of the failed contract,
and the purchase price (exclusive of accrued interest) may not exceed the
principal attributable to the failed bonds. Whenever a replacement bond has been
acquired for the trust, the trustee shall, within five days thereafter, notify
all unitholders of the trust of the acquisition of the replacement bond and
shall, on the next 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 bond exceeded the cost of the replacement bond. In addition, a
replacement bond must (at the time of purchase):
o be a corporate debt obligation;
o have a fixed maturity or disposition date comparable to that of the
failed bond it replaces;
o be purchased at a price that results in a yield to maturity and in a
current return which is approximately equivalent to the yield to
maturity and current return of the failed bond which it replaces; and
o be of comparable credit quality to the failed bond.
If the right of limited substitution described above shall not be used to
acquire replacement bonds in the event of a failed contract, the sponsor will
refund the sales charge attributable to such failed bonds to all unitholders of
the trust, and distribute the principal attributable to such failed bonds on the
next monthly distribution date which is more than 30 days thereafter. In the
event a replacement bond is not acquired by the trust, the Estimated Net Annual
Interest Income per unit for the trust would be reduced and the Estimated
Current Return thereon might be lowered.
Concentration Risk. The trust is considered to be "concentrated'' in a
particular category when the bonds in that category constitute 25% or more of
the aggregate value of the portfolio. This makes the trust subject to more
market risk.
Foreign Securities Risk. Your trust invests in foreign securities.
Securities of foreign issuers present risks beyond those of domestic
securities. The prices of foreign securities can be more volatile than U.S.
securities due to such factors as political, social and economic developments
abroad, the differences between the regulations to which U.S. and foreign
issuers and markets are subject, the seizure by the government of company
assets, excessive taxation, withholding taxes on dividends and interest,
limitations on the use or transfer of portfolio assets, and political or social
instability. Other risks include the following:
o Enforcing legal rights may be difficult, costly and slow in foreign
countries, and there may be special problems enforcing claims against
foreign governments.
o Foreign issuers may not be subject to accounting standards or
governmental supervision comparable to U.S. issuers, and there may be
less public information about their operations.
o Foreign markets may be less liquid and more volatile than U.S.
markets.
o Foreign securities often trade in currencies other than the U.S.
dollar. Changes in currency exchange rates may affect the trust's net
asset value, the value of dividends and interest earned, and gains and
losses realized on the sale of securities. An increase in the strength
of the U.S. dollar relative to these other currencies may cause the
value of the trust to decline. Certain foreign currencies may be
particularly volatile, and foreign governments may intervene in the
currency markets, causing a decline in value or liquidity in the
trust's foreign security holdings.
o Future political and governmental restrictions which might adversely
affect the payment or receipt of income on the foreign securities.
Risk Inherent in an Investment in Different Types of Bonds.
Corporate Debt Obligations. An investment in units of the trust should be
made with an understanding of the risks that an investment in fixed rate,
investment-grade corporate debt obligations may entail, including the risk that
the value of the units will decline with increases in interest rates.
Generally, bonds with longer maturities will fluctuate in value more than bonds
with shorter maturities.
A slowdown in the economy, or a development adversely affecting an issuer's
creditworthiness, may result in the issuer being unable to maintain earnings or
sell assets at the rate and at the prices, respectively, that are required to
produce sufficient cash flow to meet its interest and principal requirements and
accordingly such issuer may not be able to meet its obligations to make
principal and income payments. In addition, a slowdown in the economy or a
development adversely affecting an issuer's creditworthiness may also result in
the ratings of the bonds and the value of the underlying portfolio being
reduced. The trust may consist of corporate debt obligations that, in many
cases, do not have the benefit of covenants that would prevent the issuer from
engaging in capital restructurings or borrowing transactions in connection with
corporate acquisitions, leveraged buyouts or restructurings that could have the
effect of reducing the ability of the issuer to meet its obligations and might
also result in the ratings of the bonds and the value of the underlying
portfolio being reduced.
Should the issuer of any corporate debt obligation default in the payment
of principal or interest, the trust may incur additional expenses seeking
payment on the defaulted bond. Because amounts recovered by the trust in
payment under the defaulted corporate debt obligation, if any, may not be
reflected in the value of the units until actually received by the trust, and
depending upon when a unitholder purchases or sells his or her units, it is
possible that a unitholder would bear a portion of the cost of recovery without
receiving a portion of any payment recovered.
U.S. Government Bonds. Certain of the debt obligations in the portfolio may
be U.S. government bonds, which are securities issued or guaranteed by various
agencies of the U.S. government, or by various instrumentalities which have been
established or sponsored by the U.S. government. Such securities may or may not
be backed by the full faith and credit of the U.S. government. If a security is
not backed by the full faith and credit of the United States, the agency or
instrumentality issuing or guaranteeing the security is responsible for ultimate
repayment and an investor may not be able to assert a claim against the United
States in the event that the agency or instrumentality does not meet its
commitment.
Sovereign Debt Obligations. Your trust invests in sovereign debt
obligations of foreign countries. A sovereign debtor's willingness or ability
to repay principal and interest in a timely manner may be affected by a number
of factors, including its cash-flow situation, the extent of its foreign
reserves, the availability of sufficient foreign exchange on the date a payment
is due, the relative size of the debt service burden to the economy as a whole,
the sovereign debtor's policy toward principal international lenders and the
political constraints to which it may be subject.
Liquidity. The bonds in the trust may not have been registered under the
Securities Act and may not be exempt from the registration requirements of the
Securities Act. Many of the bonds may not be listed on a securities exchange.
Whether or not the bonds are listed, the principal trading market for the bonds
will generally be in the over-the-counter market. As a result, the existence of
a liquid trading market for the bonds may depend on whether dealers will make a
market in the bonds. There can be no assurance that a market will be made for
any of the bonds, that any market for the bonds will be maintained or of the
liquidity of the bonds in any markets made. The price at which the bonds may be
sold to meet redemptions and the value of a trust will be adversely affected if
trading markets for the bonds are limited or absent. The trust may also contain
non-exempt bonds in registered form which have been purchased on a private
placement basis. Sales of these bonds may not be practicable outside the United
States, but can generally be made to U.S. institutions in the private placement
market which may not be as liquid as the general U.S. securities market. Since
the private placement market is less liquid, the prices received may be less
than would have been received had the markets been broader.
Litigation and Legislation. To the best knowledge of the sponsor, there is
no litigation pending as of the Inception Date in respect of any bonds which
might reasonably be expected to have a material adverse effect upon the trust.
Nevertheless, lawsuits involving the bonds included in the trust or their
issuers may exist. At any time after the Inception Date, litigation may be
initiated on a variety of grounds, or legislation may be enacted, with respect
to bonds in the trust. The outcome of litigation of this nature can never be
entirely predicted. In addition, other factors may arise from time to time
which potentially may impair the ability of issuers to make payments due on the
bonds.
Significant unitholders risk. There may be unitholders of the trust who
hold a significant portion of the trust and, as result, a redemption by such
significant holder may have a material impact on the size, expenses and
viability of the trust.
The Secondary Market
Although it is not obligated to do so, the sponsor intends to maintain a
market for the units of the trust and continuously to offer to purchase units
of the trust during the initial offering period at prices based upon the
aggregate offering price of the securities in the trust, and thereafter at
prices based on the aggregate bid price of the related securities. After the
initial offering period, the sponsor's repurchase price shall be not less than
the redemption price plus accrued interest through the expected date of
settlement. See "How to Sell Your Units--Redemption--Computation of Redemption
Price per Unit." Any units repurchased by the sponsor may be reoffered to the
public by the sponsor at the Public Offering Price at such time, plus accrued
interest.
If the supply of units of any series exceeds demand, or for some other
business reason, the sponsor may discontinue purchases of units of such series
at prices based on the aggregate bid price of the securities. The sponsor does
not in any way guarantee the enforceability, marketability, or price of any
security in the portfolio or of the units of the trust. In the event that a
market is not maintained or for some other business reason, the sponsor may
discontinue purchases of units of such series at prices based on the aggregate
bid price of the underlying securities. In the event that a market is not
maintained for the units of the trust, a unitholder may be able to dispose
units by tendering such units to the trustee for redemption at the redemption
price, which is based upon the aggregate bid price of the underlying
securities. The aggregate bid price of the securities in the trust may be
expected to be less than the aggregate offering price. A unitholder should
inquire of the sponsor as to current market prices prior to making a tender for
redemption to the trustee. See "How to Sell Your Units--Redemption" and
"General Information--Guggenheim Funds."
Estimated Current Return and Estimated Long-Term Return to Unitholders
The rate of return on each unit is measured in terms of both Estimated
Current Return and Estimated Long-Term Return. The Estimated Current Return per
unit and Estimated Long-Term Return per unit, each as of the Inception Date, is
set forth under "Summary of Essential Financial Information." Information
regarding the estimated distributions of principal and interest to unitholders
of the trust is available from the sponsor on request.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per unit by the Public Offering Price. Estimated Net Annual
Interest Income per unit will vary with changes in fees and expenses of the
trustee and the evaluator and with principal prepayment, redemption, maturity,
exchange or sale of bonds. The Estimated Net Annual Interest Income per unit
also assumes that such sales of securities will be made on a pro rata basis.
Non-pro rata sales may impact the net annual interest income a unitholder
receives. The Public Offering Price per unit will vary with changes in the
offering price of the bonds. Estimated Current Return takes into account only
the interest payable on the bonds and does not involve a computation of yield to
maturity or to an earlier redemption date nor does it reflect any amortization
of premium or discount from principal value on the bond's purchase price.
Moreover, because interest rates on bonds purchased at a premium are generally
higher than current interest rates on newly issued bonds of a similar type with
comparable ratings, the Estimated Current Return per unit may be affected
adversely if such bonds are redeemed prior to their maturity. Therefore, there
is no assurance that the Estimated Current Return as set forth under "Summary of
Essential Financial Information" will be realized in the future.
Estimated Long-Term Return is calculated using a formula that (i) takes
into consideration, and determines and factors in the relative weightings of,
the market values, yields (taking into account the amortization of premiums and
the accretion of discounts) and estimated retirements of all the bonds in the
trust; and (ii) takes into account the expenses and sales charge associated with
each unit of the trust. The Estimated Long-Term Return assumes that each bond is
retired on its pricing life date (i.e., that date which produces the lowest
dollar price when yield price calculations are done for each optional call date
and the maturity date of a callable bond). If the bond is retired on any
optional call or maturity date other than the pricing life date, the yield to
the holder of that bond may be different than the initial quoted yield.
Estimated Long-Term Return is an estimate and may assume call or retirement
activity that is different from actual circumstances. In such cases, the
Estimated Long-Term Return set forth under "Summary of Essential Information"
may overestimate actual return.
Since the market values and estimated retirements of the bonds, the
expenses of the trust and the Net Annual Interest Income and Public Offering
Price per unit may change, there is no assurance that the Estimated Long-Term
Return as set forth under "Summary of Essential Financial Information" will be
realized in the future. Contact the sponsor, as indicated on the back page of
the Prospectus, for information regarding the estimated principal and interest
distribution schedule of the trust.
Tax Status
This section summarizes some of the main U.S. federal income tax
consequences of owning units of your 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. 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 taxes.
Distributions. Trust distributions are generally taxable. After the end of
each year, you will receive a tax statement that separates the trust's
distributions into two categories, ordinary income distributions and capital
gains dividends. Ordinary income distributions are generally taxed at your
ordinary tax rate. 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, the
trust may make distributions that represent a return of capital for tax purposes
and thus will generally not be taxable to you. The tax status of 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 deferred sales fees, 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 the 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 dividends
received from the trust because the dividends received deduction is generally
not available for distributions from regulated investment companies.
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. If you are an individual, the maximum marginal
stated federal tax rate for net capital gain is generally 20% for taxpayers in
the 39.6% tax bracket, 15% for taxpayers in the 25%, 28%, 33% and 35% tax
brackets and 0% for taxpayers in the 10% and 15% tax brackets. Capital gains
may also be subject to the Medicare tax described above.
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.
In-Kind Distributions. Under certain circumstances, as described in this
prospectus, you may receive an in-kind distribution of trust securities when
you redeem units or up to 30 business days before your trust terminates. By
electing to receive an in-kind distribution, you will receive trust securities
plus, possibly, cash. This distribution will be treated as a sale for federal
income tax purposes and you will generally recognize gain or loss, generally
based on the value at that time of the securities and the amount of cash
received. The Internal Revenue Service could however assert that a loss could
not be currently deducted.
Exchanges. If you elect to have your proceeds from your trust rolled over
into a future 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. Some individuals may also
be subject to further limitations on the amount of their itemized deductions,
depending on their income.
Foreign Tax Credit. If your trust invests in any foreign securities, the
tax statement that you receive may include an item showing foreign taxes your
trust paid to other countries. In this case, dividends taxed to you will
include your share of the taxes your trust paid to other countries. You may be
able to deduct or receive a tax credit for your share of these taxes.
Foreign Investors. If you are a foreign investor (i.e., an investor other
than a U.S. citizen or resident or a U.S. corporation, partnership, estate or
trust), you should be aware that, generally, subject to applicable tax
treaties, distributions from the trust will be characterized as dividends for
federal income tax purposes (other than dividends which the trust 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 the 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. Distributions in
respect of units 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 are not resident in a jurisdiction that has entered
into such an agreement with the U.S. Treasury; and (ii) certain other non-U.S.
entities that do not provide certain certifications and information about the
entity's U.S. owners. Dispositions of units by such persons may be subject to
such withholding after December 31, 2016.
Rights of Unitholders
Ownership of Units. Ownership of units of the trust 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
broker's account. Units held through DTC will be registered in the nominee name
Cede & Co. Individual purchases of beneficial ownership interest in the trust
will be made in book-entry form through DTC. Ownership and transfer of
book-entry 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 book-entry 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 to the
trustee. Record holders must sign such written request exactly as their names
appear on the records of the trustee.
Fractions of units, if any, will be computed to three decimal places.
Distribution of Interest and Principal. Unitholders will receive interest
distributions on a monthly basis. Principal, including capital gains, and
interest will be distributed on the distribution date; provided, however, that,
other than for purposes of redemption, no distribution need be made from the
Principal Account if the balance therein is less than $1.00 per unit then
outstanding. If such condition exists, the trustee shall, on the next succeeding
distribution date, distribute the unitholder's pro rata share of the balance of
the Principal Account. Interest received by the trust will be distributed on
each applicable distribution date to unitholders of record of the trust as of
the preceding applicable Record Date who are entitled to such distributions at
that time. All distributions will be net of applicable expenses and funds
required for the redemption of units. See "Essential Information," "Rights of
Unitholders--Expenses and Fees" and "How to Sell Your Units--Selling Units."
The trustee will credit to the Interest Account for the trust all interest
received by the trust, including that part of the proceeds of any disposition
of bonds which represents accrued interest. Other receipts of the trust will be
credited to the Principal Account for the trust. The pro rata share of the
Interest Account of the trust and the pro rata share of cash in the Principal
Account (other than amounts representing failed contracts as previously
discussed) represented by each unit thereof will be computed by the trustee
each applicable Record Date. See "Essential Information." The trustee is not
required to pay interest on funds held in the Principal or Interest Accounts
(but may itself earn interest thereon and therefore benefits from the use of
such funds). Proceeds received from the disposition of any of the bonds
subsequent to a monthly Record Date and prior to the next succeeding monthly
distribution date will be held in the Principal Account for the trust and will
not be distributed until the second succeeding monthly distribution date.
Because interest on the bonds is not received by the trust at a constant rate
throughout the year, any particular interest distribution may be more or less
than the amount credited to the Interest Account of the trust as of the
applicable Record Date. See "Essential Information." 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.
The difference between the estimated net interest accrued to the first
Record Date and to the related distribution date is an asset of the respective
unitholder and will be realized in subsequent distributions or upon the earlier
of the sale of such units or the maturity, redemption or sale of bonds in the
trust.
Record dates for interest and principal distributions will be the 15th day
of the month. All unitholders, however, who purchase units during the initial
public offering period and who hold them of record on the first Record Date
will receive the first distribution of interest. Details of estimated interest
distributions, on a per unit basis, appear in the "Summary of Essential
Financial Information." The amount of the regular distributions will generally
change when bonds are redeemed, mature or are sold, or when fees and expenses
increase or decrease, or if issuers or insurers are unwilling or unable to pay
distributions when due.
As of the last business day of each month, the trustee will deduct from the
Interest Account and, to the extent funds are not sufficient therein, from the
Principal Account, amounts necessary to pay the expenses of the trust. See
"Rights of Unitholders--Expenses and Fees." The trustee also may withdraw from
said accounts such amounts, if any, as it deems necessary to establish a reserve
for any governmental charges payable out of the trust. Amounts so withdrawn
shall not be considered a part of the trust's assets until such time as the
trustee shall return all or any part of such amounts to the appropriate account.
In addition, the trustee may withdraw from the Interest Account and the
Principal Account such amounts as may be necessary to cover redemption of units
by the trustee. See "How to Sell Your Units--Redemption." Funds which are
available for future distributions, payments of expenses and redemptions are in
accounts which are non-interest bearing to the unitholders and are available for
use by the trustee pursuant to normal banking procedures.
Because interest on bonds in the trust is payable at varying intervals,
usually in semiannual installments, the interest accruing to the trust will not
be equal to the amount of money received and available for distribution from
the Interest Account to unitholders. Therefore, on each applicable 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. In order to eliminate fluctuations in interest distributions
resulting from such variances during the first year of the trust, the trustee
is required by the Trust Agreement to advance such amounts as may be necessary
to provide interest distributions of approximately equal amounts. In addition,
the trustee has agreed to advance sufficient funds to the trust in order to
reduce the amount of time before distributions of interest to unitholders
commence. The trustee will be reimbursed, without interest, for any such
advances from funds available from the Interest Account of the trust. The
trustee's fee takes into account the costs attributable to the outlay of
capital needed to make such advances.
In order to acquire certain of the bonds subject to contract, it may be
necessary to pay on the settlement dates for delivery of such bonds amounts
covering accrued interest on such bonds which exceed the amounts paid by
unitholders. The trustee has agreed to pay for any amounts necessary to cover
any such excess and will be reimbursed therefor (without interest) when funds
become available from interest payments on the particular bonds with respect to
which such payments may have been made.
In addition, because of the varying interest payment dates of the bonds
comprising the trust portfolio, accrued interest at any point in time,
subsequent to the recovery of any advancements of interest made by the trustee,
will be greater than the amount of interest actually received by the trust and
distributed to unitholders.
Therefore, there will usually remain an item of accrued interest that is
added to the value of the units. If a unitholder sells 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. Similarly, if a unitholder redeems
all or a portion of his units, the redemption price per unit which he is
entitled to receive from the trustee will also include accrued interest on the
bonds. Thus, the accrued interest attributable to a unit will not be entirely
recovered until the unitholder either redeems or sells such unit or until the
trust is terminated.
Expenses and Fees. Investors will bear all or a portion of the costs
incurred in organizing the trust -- including costs of preparing the
registration statement, the trust indenture and other closing documents,
registering units with the Securities and Exchange Commission and the states,
the initial audit of the trust's portfolio, legal expenses, payment of closing
fees and any other out-of-pocket expenses. During the initial public offering
period only, a pro rata portion of such organization costs will be charged upon
the investor's purchase of units.
The trustee's, sponsor's supervisory, bookkeeping and administrative and
sponsor's evaluation fees are set forth under "Fees and Expenses." The trustee's
fee and the sponsor's evaluation fee, which is earned for portfolio evaluation
services, are based on the principal amount of bonds on a monthly basis. Because
such fees are based on the principal amount of the bonds in the trust, rather
than the trust's net asset value, the fees will represent a greater percentage
of the trust's net asset value if the bonds in the trust, on average, are valued
below par. The sponsor's supervisory fee, which is earned for portfolio
supervisory services, and the bookkeeping and administrative fees are based on
the largest number of units in the trust at any time during such period. Because
these fees are based on the largest number of units during a particular period,
these fees will represent a greater percentage of the trust's net asset value as
the number of units decreased during that period. The sponsor's supervisory fee,
bookkeeping and administrative and sponsor's evaluation fee, which are not to
exceed the maximum amount set forth under "Fees and Expenses" for the trust, may
exceed the actual costs of providing portfolio supervisory, bookkeeping and
administrative or evaluation services for the trust, but at no time will the
total amount the sponsor receives for portfolio supervisory services,
bookkeeping and administrative or evaluation services rendered to all series of
Guggenheim Defined Portfolios in any calendar year exceed the aggregate cost to
them of supplying such services in such year. 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 the trust.
The trustee will receive for its ordinary recurring services to the trust
an annual fee in the amount set forth under "Fees and Expenses" for the trust.
There is no minimum fee and, except as hereinafter set forth, no maximum fee.
For a discussion of certain benefits derived by the trustee from the trust's
funds, see "Rights of Unitholders--Distribution of Interest and Principal." For
a discussion of the services performed by the trustee pursuant to its
obligations under the Trust Agreement, reference is made to the material set
forth under "Rights of Unitholders."
The trustee's fee, bookkeeping and administrative fees and the sponsor's
fees are payable monthly, each from the Interest Account to the extent funds
are available and then from the Principal Account. These fees may be increased
without approval of the unitholders by amounts not exceeding proportionate
increases in consumer prices for services as measured by the United States
Department of Labor's Consumer Price Index entitled "All Services Less Rent."
If the balances in the Principal and Interest Accounts are insufficient to
provide for amounts payable by the trust, or amounts payable to the trustee
which are secured by its prior lien on the trust, the trustee is permitted to
sell bonds to pay such amounts.
Other Charges. The following additional charges are or may be incurred by
the trust: all expenses (including audit and counsel fees) of the trustee
incurred in connection with its activities under the Trust Agreement, including
annual audit expenses by independent public accountants selected by the sponsor,
the expenses and costs of any action undertaken by the trustee to protect the
trust and the rights and interests of the unitholders; fees of the trustee for
any extraordinary services performed under the Trust Agreement; indemnification
of the trustee for any loss or liability accruing to it without willful
misconduct, bad faith, or gross negligence on its part, arising out of or in
connection with its acceptance or administration of the trust; and all taxes and
other governmental charges imposed upon the bonds or any part of the trust (no
such taxes or charges are being levied or made or, to the knowledge of the
sponsor, contemplated). To the extent lawful, the trust shall bear the expenses
associated with updating the trust's registration statement and maintaining
registration or qualification of the units and/or the 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. All direct distribution expenses of the
trusts (including the costs of maintaining the secondary market for the trusts),
such as printing and distributing prospectuses, and preparing, printing and
distributing any advertisements or sales literature will be paid at no cost to
the trust. Any payments received by the sponsor reimbursing it for payments made
to update the trust's registration statement will not exceed the costs incurred
by the sponsor. The above expenses, including the trustee's fee, when paid by or
owing to the trustee, are secured by a lien on the trust. The trustee is
empowered to sell bonds in order to make funds available to pay all expenses.
Thus, no assurance can be given that the trust will retain for any length of
time its present size and composition.
Reports and Records. The trustee shall furnish unitholders of a trust in
connection with each distribution a statement of the amount of interest, if any,
and the amount of other receipts, if any, which are being distributed, expressed
in each case as a dollar amount per unit. Within a reasonable time after the end
of each calendar year, the trustee will furnish to each person who at any time
during the calendar year was a unitholder of record, a statement providing the
following information: (i) as to the Interest Account: interest received
(including amounts representing interest received upon any disposition of bonds
and any earned original issue discount), deductions for payment of applicable
taxes and for fees and expenses of the trust, redemptions of units and 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; (ii) as to
the Principal Account: the dates of disposition of any bonds and the net
proceeds received therefrom (excluding any portion representing interest),
deductions for payments of applicable taxes and for fees and expenses of the
trust, purchase of replacement bonds, redemptions of units, the amount of any
"when issued" interest treated as a return of capital and 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; (iii) a list of the bonds held
and the number of units outstanding on the last business day of such calendar
year; (iv) the redemption price per unit based upon the last computation thereof
made during such calendar year; and (v) amounts actually distributed during such
calendar year from the Interest Account and from the Principal Account,
separately stated, expressed both as total dollar amounts and as dollar amounts
representing the pro rata share of each unit outstanding.
The trustee shall keep available for inspection by unitholders at all
reasonable times during usual business hours, books of record and account of
its transactions as trustee including a current list of bonds in the trust and
a copy of the Trust Agreement.
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.guggenheiminvestments.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.
Until the end of the initial offering period or six months after the
Inception Date, at the discretion of the sponsor, the price at which the trustee
will redeem units and the price at which the sponsor may repurchase units
include estimated organization costs. After such period, the amount paid will
not include such estimated organization costs.
Selling Units. We intend to, but are not obligated to, maintain a
secondary market for units. This means that if you want to sell your units, we
may buy them at the current price which is based on their net asset value. We
may then resell the units to other investors at the Public Offering Price or
redeem them for the redemption price. Our secondary market repurchase price is
generally the same as the redemption price. Certain broker-dealers might also
maintain a secondary market in units. You should contact your financial
professional for current unit prices to determine the best price available. We
may discontinue our secondary market at any time without notice. Even if we do
not make a market, you will be able to redeem your units with the trustee on
any business day for the current price.
Redemption. Tender of Units. Units may be tendered to The Bank of New York
Mellon, the trustee, for redemption at its Unit Investment Trust Division
offices at 2 Hanson Place, 12th Fl., Brooklyn, New York 11217, on any day the
New York Stock Exchange is open. At the present time there are no specific
taxes related to the redemption of the units. No redemption fee will be charged
by the sponsor or the trustee. Units redeemed by the trustee will be canceled.
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. If your request is received after that time or is incomplete in
any way, you will receive the next price computed after the trustee receives
your completed request. Rather than contacting the trustee directly, your
financial professional may also be able to redeem your units by using the
Investors' Voluntary Redemptions and Sales (IVORS) automated redemption service
offered through Depository Trust Company.
Within three business days following such tender, the unitholder will be
entitled to receive in cash an amount for each unit tendered equal to the
redemption price per unit computed as of the Evaluation Time set forth under
"Essential Information" as of the next subsequent Evaluation Time. See "How to
Sell Your Units--Redemption--Computation of Redemption Price per Unit." The
"date of tender" is deemed to be the date on which units are properly received
by the trustee, except that with regard to units received after the Evaluation
Time on the New York Stock Exchange, the date of tender is the next day on
which such Exchange is open for trading and such units will be deemed to have
been tendered to the trustee on such day for redemption at the redemption price
computed on that day.
Accrued interest paid on redemption shall be withdrawn from the Interest
Account, or, if the balance therein is insufficient, from the Principal
Account. All other amounts paid on redemption shall be withdrawn from the
Principal Account. The trustee is empowered to sell securities in order to make
funds available for redemption. Such sales, if required, could result in a sale
of bonds by the trustee at a loss. To the extent bonds are sold, the size and
diversity of the trust may be reduced.
The trustee reserves the right to suspend the right of redemption and to
postpone the date of payment of the redemption price per unit for any period
during which the New York Stock Exchange is closed, other than weekend and
holiday closings, or during which trading on that Exchange is restricted (as
determined by the Securities and Exchange Commission by rule or regulation) or
during which an emergency exists as a result of which disposal or evaluation of
the underlying bonds is not reasonably practicable, or for such other periods as
the Securities and Exchange Commission has by order permitted.
At the sponsor's discretion, certain redemptions may be made by an in-kind
distribution of the securities underlying the units in lieu of cash. You can
generally request an in-kind distribution of the bonds underlying your units if
you own units worth at least $1,000,000 or you originally paid at least that
amount for your units. This option is generally available only for bonds traded
and held in the United States and is not available within 30 business days of
the trust's termination. In-kind distribution requests that occur during the
primary offering period will only be granted if approved by the sponsor. We may
modify or discontinue this option at any time without notice. If you request an
in-kind distribution of the bonds underlying units of your trust, you may incur
any distribution or service fees (Rule 12b-1 fees) applicable to those bonds.
Computation of Redemption Price per Unit. The redemption price per unit is
determined by the trustee on the basis of the bid prices of the bonds in the
trust, while the Public Offering Price of units during the initial offering
period is determined on the basis of the offering prices of the bonds, both as
of the Evaluation Time on the day any such determination is made. The bid prices
of the securities may be expected to be less than the offering prices. This
redemption price per unit is each unit's pro rata share, determined by the
trustee, of: (i) the aggregate value of the bonds in the trust (determined by
the evaluator, generally based upon prices provided by a pricing service as set
forth below); (ii) cash on hand in the trust (other than cash covering contracts
to purchase bonds); and (iii) accrued and unpaid interest on the bonds as of the
date of computation, less (a) amounts representing taxes or governmental charges
payable out of the trust, (b) the accrued expenses of a trust, (c) cash held for
distribution to unitholders of record as of a date prior to the evaluation and
(d) unpaid organization costs. The evaluator, generally based upon prices
provided by a pricing service, may determine the value of the bonds in the trust
(i) on the basis of current bid prices for the bonds; (ii) if bid prices are not
available for any bonds, on the basis of current bid prices for comparable
bonds; (iii) by appraisal; or (iv) by any combination of the above.
Until six months after the Inception Date or the end of the initial
offering period, at the discretion of the sponsor, the price at which the
trustee will redeem units and the price at which the sponsor may repurchase
units includes estimated organization costs. After such period, the amount paid
will not include such estimated organization costs.
The difference between the bid and offer prices of bonds with
characteristics consistent with the objectives of the trust are expected to be
0.90% to 1.00% of the principal value of the bonds. This value can fluctuate
depending on liquidity and the balance of supply and demand for the individual
issues. Immediately prior to the deposit of the trust, the aggregate bid side
evaluation was lower than the aggregate offering side evaluation. For this
reason, among others, the price at which units may be redeemed could be less
than the price paid by the unitholder.
Purchase by the Sponsor of Units Tendered for Redemption. The Trust
Agreement requires that the trustee notify the sponsor of any tender of units
for redemption. So long as the sponsor maintains a bid in the secondary market,
the sponsor, prior to the close of business on the second succeeding business
day, may purchase any units tendered to the trustee for redemption at the price
so bid by making payment therefor to the unitholder in an amount not less than
the redemption price on the date of tender not later than the day on which the
units would otherwise have been redeemed by the trustee (see "Public
Offering--Offering Price"). Units held by the sponsor may be tendered to the
trustee for redemption as any other units. In addition, the sponsor may tender
units for redemption that were initially allocated to the sponsor on the
Inception Date if the sponsor was unable to sell such units. Such redemption may
impact the size, composition, returns, expenses and longevity of the trust.
The offering price of any units resold by the sponsor will be the Public
Offering Price determined in the manner provided in this Prospectus (see
"Public Offering--Offering Price"). Any profit resulting from the resale of
such units will belong to the sponsor which likewise will bear any loss
resulting from a lower offering or redemption price subsequent to their
acquisition of such units (see "Public Offering--Other Compensation and
Benefits to Broker-Dealers").
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.
General Information
Guggenheim Funds. Guggenheim Funds Distributors, LLC 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,
LLC. 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.
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 to
be bankrupt or insolvent or shall have its affairs taken over by public
authorities, then the trustee may (i) 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; (ii) terminate the Trust Agreement and liquidate any trust as
provided therein; or (iii) continue to act as trustee without terminating the
Trust Agreement.
The foregoing information with regard to the sponsor relates to the
sponsor only and not to the trust. Such information is included in this
prospectus only for the purpose of informing investors as to the financial
responsibility of the sponsor and its ability to carry out its contractual
obligations with respect to the trust. More comprehensive financial information
can be obtained upon request from the sponsor.
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 or for errors in judgment; nor will
they be responsible in any way for depreciation or loss incurred by reason of
the sale of any bonds, except in cases of their willful misconduct, bad faith,
gross negligence or reckless disregard for their obligations and duties.
Responsibility. The trustee shall sell, for the purpose of redeeming units
tendered by any unitholder and for the payment of expenses for which funds are
not available, such of the bonds in a list furnished by the sponsor as the
trustee in its sole discretion may deem necessary. The sponsor may also instruct
the trustee to sell bonds in order to maintain the qualification of the trust as
a regulated investment company or to provide funds to make any distribution for
a taxable year in order to avoid imposition of any income or excise taxes on
undistributed income in the trust.
It is the responsibility of the sponsor to instruct the trustee to reject
any offer made by an issuer of any of the bonds to issue new obligations in
exchange and substitution for any bonds pursuant to a refunding or refinancing
plan, except that the sponsor may instruct the trustee to accept such an offer
or to take any other action with respect thereto as the sponsor may deem proper
if the issuer is in default with respect to such bonds or in the judgment of
the sponsor the issuer will probably default in respect to such bonds in the
foreseeable future.
Any obligations 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 bonds originally deposited thereunder. Within five days after
the deposit of obligations in exchange or substitution for underlying bonds,
the trustee is required to give notice thereof to each unitholder, identifying
the obligations eliminated and the bonds substituted therefor. Except as stated
in the Trust Agreement or in this and the preceding paragraph and in the
discussion under "Investment Risks--Failure of a Contract to Purchase Bonds and
Substitution of Bonds" regarding the substitution of replacement bonds for
failed bonds, the acquisition by a trust of any bonds other than the bonds
initially deposited is prohibited.
The sponsor may direct the trustee to dispose of bonds in certain limited
circumstances, including upon default in the payment of principal or interest,
institution of certain legal proceedings or the existence of certain other
impediments to the payment of bonds, default under other documents which may
adversely affect debt service, default in the payment of principal or interest
on other obligations of the same issuer, decline in projected income pledged for
debt service on revenue bonds, 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 bonds in a trust would be detrimental to the
interest of the unitholders. The proceeds from any such sales will be credited
to the Principal Account for distribution to the unitholders.
Resignation. If the sponsor resigns or becomes unable to perform its
duties under the Trust Agreement, and no express provision is made for action
by the trustee in such event, the trustee may appoint a successor sponsor,
terminate the Trust Agreement and liquidate the trusts or continue to act as
Trustee.
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. The sponsor may remove and replace the trustee in some cases without
your consent. The trustee may also resign by notifying the sponsor and
investors.
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 the 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 or available for
inspection at all reasonable times during usual business hours by any
unitholder, together with a current list of the bonds held in the trust.
Pursuant to the Trust Agreement, the trustee may employ one or more agents for
the purpose of custody and safeguarding of bonds comprising the trust.
Limitations on Liability. The trustee shall not be liable or responsible
in any way for depreciation or loss incurred by reason of the disposition of
any monies, bonds or certificates or in respect of any evaluation or for any
action taken in good faith reliance on prima facie properly executed documents
except, generally, in cases of its willful misconduct, lack of good faith or
gross negligence. In addition, the trustee shall not be personally liable for
any taxes or other governmental charges imposed upon or in respect of the trust
which the trustee may be required to pay under current or future law of the
United States or any other taxing authority having jurisdiction. See "Trust
Portfolio."
Responsibility. For information relating to the responsibilities of the
trustee under the Trust Agreement, reference is made to the material set forth
under "Rights of Unitholders" and "General Information--Guggenheim
Funds--Resignation."
Resignation. 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 Evaluator. The sponsor will serve as the evaluator of the bonds in the
trust, and as such will appraise the bonds or cause the bonds to be appraised.
To appraise the bonds, the evaluator generally utilizes prices received from
Standard & Poor's Securities Evaluations.
Limitations on Liability. The trustee and the sponsor may rely on any
evaluation furnished by the evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the evaluator under the Trust Agreement
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, the sponsor or unitholders for errors in judgment. However, this
provision shall not protect the evaluator in cases of its willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations and
duties.
Responsibility. The Trust Agreement requires the evaluator to evaluate the
bonds on the basis of their bid prices on each business day after the initial
offering period, when any unit is tendered for redemption and on any other day
such evaluation is desired by the trustee or is requested by the sponsor. For
information relating to the responsibility of the evaluator to evaluate the
bonds on the basis of their offering prices, see "Public Offering--Offering
Price."
Resignation. The evaluator may resign or may be removed by the sponsor and
the trustee, and the sponsor and the trustee are to use their best efforts to
appoint a satisfactory successor. Such resignation or removal shall become
effective upon the 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.
Amendment and Termination of the Trust Agreement
The sponsor and the trustee have the power to amend the Trust Agreement
without the consent of any of the unitholders when such an amendment is (i) to
cure any ambiguity or to correct or supplement any provision of the Trust
Agreement which may be defective or inconsistent with any other provision
contained therein; (ii) to change any provision required to be changed by the
Securities and Exchange Commission; (iii) to maintain the qualification of the
trust as a regulated investment company; or (iv) to make such other provisions
as shall not adversely affect the interest of the unitholders. The sponsor and
the trustee may amend the Trust Agreement with the consent of unitholders
representing 66 2/3% of the units then outstanding, provided that no such
amendment will reduce the interest in the trust of any unitholder without the
consent of such unitholder or reduce the percentage of units required to consent
to any such amendment without the consent of all the unitholders. In no event
shall the Trust Agreement be amended to permit the deposit or acquisition of
bonds either in addition to or in substitution for any of the bonds initially
deposited in a trust, except in accordance with the provisions of each Trust
Agreement. In the event of any amendment, the trustee is obligated to notify
promptly all unitholders of the substance of such amendment. The Trust Agreement
specifies other limitations on amending the Trust Agreement.
A trust shall terminate upon the maturity, redemption, sale or other
disposition, as the case may be, of the last of the bonds. The sponsor may
direct the trustee to terminate the trust if the par value of the trust falls
below $200 per unit. The trustee shall notify the sponsor when the par value of
the bonds in a trust is less than $2,000,000. A trust may also be terminated
(i) by the consent of 66 2/3% of the units; or (ii) by the trustee in certain
circumstances. In addition, the sponsor may direct the trustee to terminate the
trust if the sponsor is unable to sell more than 60% of the units initially
authorized and the net worth of the trust is reduced to less than 40% of the
aggregate value of the bonds in the trust. In no event, however, may a trust
continue beyond the Mandatory Termination Date set forth herein. In the event
of termination, written notice thereof will be sent by the trustee to all
unitholders. Within a reasonable period after termination, the trustee will
sell any remaining bonds, and, after paying all expenses and charges incurred
by the trust, will distribute to each unitholder, upon surrender of his units,
his pro rata share of the balances remaining in the Interest and Principal
Accounts of the trust.
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, have 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.
Description of Bond Ratings
Standard & Poor's Rating. A Standard & Poor's issue credit rating is a
forward-looking opinion about the creditworthiness of an obligor with respect to
a specific financial obligation, a specific class of financial obligations, or a
specific financial program (including ratings on medium-term note programs and
commercial paper programs). It takes into consideration the creditworthiness of
guarantors, insurers, or other forms of credit enhancement on the obligation and
takes into account the currency in which the obligation is denominated. The
opinion reflects Standard & Poor's view of the obligor's capacity and
willingness to meet its financial commitments as they come due, and may assess
terms, such as collateral security and subordination, which could affect
ultimate payment in the event of default. The issue credit rating is not a
recommendation to purchase, sell, or hold a financial obligation, inasmuch as it
does not comment as to market price or suitability for a particular investor.
Issue credit ratings are based on current information furnished by the obligors
or obtained by Standard & Poor's from other sources it considers reliable.
Standard & Poor's does not perform an audit in connection with any credit rating
and may, on occasion, rely on unaudited financial information. Credit ratings
may be changed, suspended, or withdrawn as a result of changes in, or
unavailability of, such information, or based on other circumstances.
Issue credit ratings are based, in varying degrees, on the following
considerations:
o Likelihood of payment--capacity and willingness of the obligor to meet
its financial commitment on an obligation in accordance with the terms
of the obligation;
o Nature of and provisions of the obligation; and
o Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization, or other arrangement under
the laws of bankruptcy and other laws affecting creditors' rights.
Issue ratings are an assessment of default risk, but may incorporate an
assessment of relative seniority or ultimate recovery in the event of default.
Junior obligations are typically rated lower than senior obligations, to
reflect the lower priority in bankruptcy, as noted above. (Such differentiation
may apply when an entity has both senior and subordinated obligations, secured
and unsecured obligations, or operating company and holding company
obligations.)
AAA -- An obligation rated "AAA" has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
AA -- An obligation rated "AA" differs from the highest rated obligations
only in small degree. The obligor's capacity to meet its financial commitment
on the obligation is very strong.
A -- An obligation rated "A" is somewhat susceptible to the adverse
economic conditions and changes in circumstances.
BBB -- An obligation rated "BBB" exhibits adequate capacity to meet
financial commitments, but more subject to adverse economic condition.
BBB- -- Considered the lowest investment-grade by market participants.
Obligations rated "BB," "B," "CCC," "CC," and "C" are regarded as having
significant speculative characteristics. "BB" indicates the least degree of
speculation and "C" the highest. While such obligations will likely have
some quality and protective characteristics, these may be outweighed by
large uncertainties or major exposures to adverse conditions.
BB+ -- Considered highest speculative grade by market participants.
BB -- An obligation rated "BB" is less vulnerable in the near-term but
faces major ongoing uncertainties or exposure to adverse business, financial
and economic conditions.
B -- An obligation rated "B" is more vulnerable to adverse business,
financial and economic conditions but currently has the capacity to meet
financial commitments.
CCC -- An obligation rated "CCC" is currently vulnerable and dependent upon
favorable business, financial and economic conditions to meet its financial
commitments.
CC -- An obligation rated "CC" is currently highly vulnerable.
C -- A "C" rating is assigned to obligations that are currently highly
vulnerable to nonpayment, obligations that have payment arrearages allowed by
the terms of the documents, or obligations of an issuer that is the subject of
a bankruptcy petition or similar action which have not experienced a payment
default. Among others, the "C" rating may be assigned to subordinated debt,
preferred stock or other obligations on which cash payments have been suspended
in accordance with the instrument's terms or when preferred stock is the
subject of a distressed exchange offer, whereby some or all of the issue is
either repurchased for an amount of cash or replaced by other instruments
having a total value that is less than par.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition or the taking
of a similar action if payments on an obligation are jeopardized.
Plus (+) or minus (-) -- The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
NR -- This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular obligation as a matter of policy.
Report of Independent Registered Public Accounting Firm
Unitholders
Guggenheim Defined Portfolios, Series 1328
We have audited the accompanying statement of financial condition,
including the trust portfolio set forth on pages 11, 12 and 13 of this
prospectus, of Guggenheim Defined Portfolios, Series 1328, as of ______, 2015,
the Inception Date. 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.
We were not engaged to perform an audit of the trust's 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 securities owned, cash or an
irrevocable letter of credit deposited for the purchase of securities as shown
in the statement of financial condition as of ______, 2015, by correspondence
with the trustee. 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 1328, as of ______, 2015, in conformity with
accounting principles generally accepted in the United States of America.
Grant Thornton LLP
Chicago, Illinois
______, 2015
Guggenheim Defined Portfolios, Series 1328
Statement of Financial Condition
as of the Inception Date, ______, 2015
Investment in bonds
Sponsor's contracts to purchase underlying securities backed by
letter of credit (1)(2) $
Cash (3)
Accrued interest receivable (4) --------
Total $
========
Liabilities and interest of unitholders
Liabilities:
Amount due to Trustee (4) $
Organization costs and transactional sales fee
Total
--------
Interest of unitholders:
Cost to unitholders (5)
Less: transactional sales fee (6)
Less: organization costs (7)
--------
Net interest of unitholders
--------
Total $
========
Number of units
========
Net Asset Value per Unit $
========
----------------
(1) Aggregate cost to the trust of the bonds listed under "Trust Portfolio" are
based on offering side valuations determined by the evaluator, based upon
prices provided by Standard & Poor's Securities Evaluations, on the basis
set forth under "Public Offering--Offering Price."
(2) An irrevocable letter of credit issued by The Bank of New York Mellon has
been deposited with the trustee as collateral, covering the monies
necessary for the purchase of the underlying securities according to their
purchase contracts and accrued interest from the Inception Date to the
expected dates of delivery.
(3) During the initial offering period, a portion of the Public Offering Price
represents an amount of cash deposited to pay all or a portion of the costs
of organizing the trust. 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 basis set forth under "Rights of Unitholders--Distribution of
Interest and Principal" the trustee will advance an amount equal to the
accrued interest on the bonds as of the "First Settlement Date," plus any
cash received by the trustee with respect to interest on the bonds 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.
(5) Aggregate Public Offering Price (exclusive of interest) is computed on the
number of units set forth above under "Public Offering--Offering Price."
(6) On the Inception Date, the maximum transactional sales fee is 1.95% of the
Public Offering Price.
(7) A portion of the Public Offering Price consists of an amount sufficient to
pay for all or a portion of the costs of establishing the trust. These
costs have been estimated at $____ per unit for the trust and will not be
assessed to units that are redeemed prior to the close of the initial
offering period.
Contents
Investment Summary
-----------------------------------------------------------
A concise 2 Overview
description 2 Investment Objective
of essential 2 Principal Investment Strategy
information 3 Guggenheim Partners Investment Management,
about the LLC (GPIM)
portfolio 3 Future Trusts
4 Essential Information
4 Types of Bonds
4 Countries
4 Bond Ratings
5 Summary of Essential Financial Information
6 Principal Risks
8 Taxes
8 Distributions
9 Market for Units
9 Who Should Invest
9 Fees and Expenses
10 Example
11 Trust Portfolio
Understanding Your Investment
-----------------------------------------------------------
Detailed 14 The Trust
information 14 Public Offering
to help you 18 Underwriting Concessions
understand 19 Underwriting
your 20 Investment Risks
investment 25 The Secondary Market
26 Estimated Current Return and Estimated
Long-Term Return to Unitholders
27 Tax Status
29 Rights of Unitholders
33 How to Sell Your Units
36 General Information
39 Amendment and Termination
of the Trust Agreement
40 Experts
40 Description of Bond Ratings
43 Report of Independent Registered Public
Accounting Firm
44 Statement of Financial Condition
Where to Learn More
-----------------------------------------------------------
You can contact us for Visit us on the Internet
free information about http://www.guggenheiminvestments.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 Section, Washington, D.C. 20549-0102
Visit: http://www.sec.gov (EDGAR Database)
Call: 1-202-942-8090 (only for information on
the operation of the Public Reference Section)
Refer to:
Guggenheim Defined Portfolios, Series 1328
Securities Act file number: 333-204275
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
Guggenheim Investment Grade Corporate Trust 3-7 Year, Series 1
UNIT INVESTMENT TRUSTS LOGO
Guggenheim Defined Portfolios Series 1328
DATED ______, 2015
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
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
5692790 $4,000,000
This Amendment to the Registration Statement comprises the following
papers and documents.
The Facing Sheet
The Prospectus
The Signatures
Consents of Counsel
Exhibits
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).
6.0 Powers of Attorney authorizing Amy Lee to execute the Registration
Statement. (Reference is made to Exhibit 6.0 to the Registration
Statement on Form S-6 for Guggenheim Defined Portfolios, Series 1301
(File No. 333-202306) filed on February 26, 2015).
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Guggenheim Defined Portfolios, Series 1328 has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of Lisle, and State of
Illinois, on the 17th day of August, 2015.
GUGGENHEIM DEFINED PORTFOLIOS, SERIES 1328, Registrant
By: GUGGENHEIM FUNDS DISTRIBUTORS, LLC, Depositor
By: /s/ Amy Lee
---------------
Amy Lee
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:
SIGNATURE* TITLE DATE
)
) By: /s/ Amy Lee
) -----------
) Amy Lee
DONALD C. CACCIAPAGLIA* Chief Executive Officer and ) Attorney-in-Fact*
President of Guggenheim Funds )
Distributors, LLC ) August 17, 2015
)
DOMINICK COGLIANDRO* Chief Operating Officer of ) August 17, 2015
Guggenheim Funds Distributors, )
LLC )
)
JULIE JACQUES* Treasurer of Guggenheim Funds ) August 17, 2015
Distributors, LLC )
)
JULIE JACQUES* Principal Financial Officer of ) August 17, 2015
Guggenheim Funds Distributors, )
LLC )
FARHAN SHARAFF Chief Investment Officer of
Guggenheim Funds Distributors,
LLC
/s/ Amy Lee Vice President and Secretary of August 17, 2015
----------- Guggenheim Funds Distributors,
AMY LEE LLC
-------------------------
* Executed copies of the related powers of attorney were filed as Exhibit
6.0 to the Registration Statement of Guggenheim Defined Portfolios, Series
1301 on February 26, 2015.
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 1328
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 Guggenheim Defined
Portfolios, Series 718 (and subsequent series) (File No. 333-169214).
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
August 17, 2015