AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 18, 2017
1933 ACT FILE NO. 333-219894
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 1664
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 September 18, 2017, Subject to Completion
Guggenheim Defined Portfolios, Series 1664
European High Dividend Portfolio, Series 9
GUGGENHEIM LOGO
PROSPECTUS PART A DATED __________, 2017
A portfolio containing securities selected by
Guggenheim Funds Distributors, LLC with the assistance of Guggenheim Partners
Investment Management, LLC
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
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Use this Investment Summary to help you decide whether an investment in
this trust is right for you. More detailed information can be found later in
this prospectus.
Overview
Guggenheim Defined Portfolios, Series 1664 is a unit investment trust that
consists of the European High Dividend Portfolio, Series 9 (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 15 months.
Investment Objective
The trust seeks to provide total return through capital appreciation and
dividend income.
Principal Investment Strategy
Under normal circumstances, the trust invests at least 80% of the value of
its assets in dividend-paying common stocks of European companies. The strategy
will invest in a portfolio of companies that are included in the Russell
Developed Europe Index (the "Index"), that distribute significant dividends and
that have attractive dividend payout ratios that the sponsor believes are
sustainable. The sponsor believes that companies that distribute significant
dividends on a consistent basis generally demonstrate strong financial strength
and positive performance relative to their peers.
Security Selection
In constructing the trust's portfolio, 30 securities were selected ___
business days prior to the initial date of deposit (the "Security Selection
Date") using the following rules-based criteria. Except as set forth herein, the
investment strategy utilizes information provided by FactSet Research Systems,
Inc. ("FactSet").
1. Initial Universe: Start with an initial universe of equity securities
that are included in the Index (common shares or depositary receipts
referencing common shares of index constituents), and which also meet
the following criteria as of the Security Selection Date:
o Exclude securities with a market capitalization less than $250
million. Market capitalization is determined by the closing price
as of the Security Selection Date. If the security is not U.S.
dollar-denominated, the currency exchange rates provided by
WM/Reuters are used for conversion.
o Exclude securities with daily trading liquidity of less than $0.5
million. Liquidity is calculated as the median value of daily
trading volume in U.S. dollars looking back for the prior 90 days
from the Security Selection Date (i.e., trading volume in shares
multiplied by the closing price for the day, with currency
exchange rates provided by WM/Reuters when share price is
non-U.S. dollar-denominated).
o For companies with multiple listings, only one security is
included. Preference is given to an ADR traded on a U.S.
exchange, if available, or to the most liquid security, as
determined by the above calculation, if the company is only
traded on non-U.S. exchanges.
2. Rank on Fundamentals: Rank every company identified in the initial
universe against other companies in the same sector, as determined in
the Global Industry Classification Standard provided by MSCI and S&P
("GICS"), using the financial metrics below. Each ranking is
determined as of the Security Selection Date using the most recently
reported information and uses a scale of 1 through 10 (1 representing
the highest scoring 10% in the sector and 10 representing the lowest
scoring 10% in the sector):
o Return on assets calculated as latest four quarters of reported
operating income divided by the average of most recent reported
total assets and year ago reported total assets.
o Earnings before interest and taxes for the latest four quarters
divided by enterprise value. Enterprise value is determined by
adding the equity market capitalization as of the most recent
closing price with the total outstanding long term and short-term
debt as determined by the most recently available balance sheet,
and then subtracting any cash and short-term investments as
determined by the most recently available balance sheet.
o Year-over-year growth in sales per share. Trailing year-over-year
growth is the percentage change in sales per-share for the
trailing 12 months versus the sales-per-share from the prior 12
months. Sales per-share is the trailing 12 months of sales from
the most recent trailing quarterly or semi-annual filings,
whichever is most current, divided by the end of period reported
count of common shares outstanding used to calculate basic
earnings per share.
Each financial metric will create a separate score so that every
company will have three scores. These three scores are averaged
together to create one composite score for each company. This
composite score is used to rank the companies in the next step in
order to determine the sub-universe of securities.
3. Define Sub-Universe: Reduce the initial universe of securities to a
sub-universe that meets the following requirements, with each
requirement being applied independently to the initial universe from
the other requirements in this step, as of the Security Selection
Date:
o Exclude all Small Caps, as categorized by Russell Global Index
Methodology, which was $143.6 million to $4.4 billion as of the
June 2017 reconstitution.
o Exclude all securities that have not paid dividends in the prior
year from Security Selection Date.
o Exclude the lowest ranked 25% of securities from the initial
universe determined by the average of the three financial
rankings described in "Rank on Fundamentals" step.
o Exclude the 20% of the initial universe with the lowest trailing
six-month total return.
o Exclude the 20% of the initial universe with the highest dividend
payout ratio. Factset calculates this metric as the trailing year
of dividends paid per share divided by the trailing year of
reported earnings per share.
o Exclude the 20% of the initial universe with the lowest
three-year dividend growth rate, as calculated by the compound
annual growth rate for dividends per share paid between the
period 4 years ago and 3 years ago from Security Selection Date,
to the period from 1 year ago to Security Selection Date. If the
security initiated its first dividend during the last 3 years
(did not pay dividends 4 years ago) -- then the security is
assigned the median growth rate calculated amongst all other
dividend paying names.
o Exclude securities that have a pending cash or stock merger and
acquisition or bankruptcy which will lead to delisting the
security from the qualifying exchanges above. Such events will be
determined by reviewing the announced merger and acquisition data
from Bloomberg and if the announced date falls before the
Security Selection Date, an announcement of an agreement to be
acquired in whole for cash or stock from an acquiring company or
bankruptcy filing will cause exclusion.
4. Selection: Select from the sub-universe the 30 top dividend yielding
securities (as determined by the trailing year of dividends per share
divided by current price) and equally weight these securities as of
the Security Selection Date. Selected securities must adhere to
following portfolio limits as of the Security Selection Date:
o GICS Sector weight must remain within +/- 10% of the same sector
weight within the Index.
o Country weight (as categorized by Russell Global Index
Methodology) must remain within +/- 10% of the same country
weight within the Index.
Once an investment limitation has been reached, additional securities
of that type will not be included in the trust and the next highest
yielding security will be used. Please note that due to the
fluctuating nature of security prices, the weighting of an individual
security or sector in the trust portfolio may change after the
Security Selection Date.
Guggenheim Partners Investment
Management, LLC
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. One such trust is expected to be available approximately
three months after the Inception Date and upon the trust's termination. Each
trust is designed to be part of a longer term strategy.
Hypothetical Performance Information
The hypothetical returns are not the actual returns of the trust and are
not guaranteed. Simulated returns are hypothetical, meaning that they do not
represent actual trading, and thus, may not reflect material economic and market
factors, such as liquidity constraints, that may have had an impact on actual
decision making. The hypothetical performance is the retroactive application of
the strategy designed with the full benefit of hindsight.
The following table compares the hypothetical performance information for
the trust's security selection strategy (the "Strategy") to the actual
performance of the Russell Developed Europe Index[R], in each of the full years
listed below (and as of the most recent month-end). The hypothetical strategy is
identical to the Strategy. Hypothetical performance of the Strategy is based on
the assumption that the Strategy is used to select a hypothetical portfolio on
the last business day of each year, the hypothetical portfolio is held for a one
year term and then sold, and then a new hypothetical portfolio is selected by
the Strategy. In the following table, Strategy stocks for a given year consist
of the common stocks selected by applying the Strategy as of the last business
day of each year, for example, the Strategy stocks for 2013 were selected by
applying the Strategy as of December 31, 2012 (and not the date the trust
actually sells units). These hypothetical returns should not be used to predict
future performance of the trust. Hypothetical returns from the trust will differ
from its selection strategy for several reasons, including the following:
o Hypothetical Total Return figures shown do not reflect commissions
paid by the trust on the purchase of the securities or taxes incurred
by you.
o Hypothetical Strategy returns are for calendar years (and through the
most recent month), while the trust begins and ends on various dates.
o Extraordinary market events that are not expected to be repeated and
may have affected performance.
o Hypothetical Strategy returns are based on hypothetical portfolios
selected according to the Strategy on the last business day of each
calendar year, while the trust has a maturity of approximately 15
months.
o The trust may not be fully invested at all times or weighted in all
securities according to the Strategy at all times. This may happen
because the trust may purchase additional securities to create units
and such purchases may not exactly replicate the portfolio. In
addition, the trust may sell securities to pay expenses, meet
redemptions or to protect the trust and the sale of such securities
may cause the trust to vary from the Strategy.
o Securities may be purchased or sold by the trust at prices different
from the closing prices used in buying and selling units.
You should note that the trust is not designed to parallel movements in
any index, and it is not expected that it will do so. In fact, the Strategy
underperformed its comparative index in certain years, and the sponsor cannot
guarantee that the trust will outperform its respective index over the life of
the trust or over consecutive rollover periods, if available.
Russell Developed Europe Index[R]. The Russell Developed Europe Index[R]
comprises large and mid-cap stocks providing coverage of developed markets in
Europe. Indices are statistical composites and their returns do not include
payment of any sales charges or fees an investor would pay to purchase the
securities they represent. Such costs would lower performance. The Index is
unmanaged and it is not possible to invest directly in the Index. The
historical performance of the Index is shown for illustrative purposes only; it
is not meant to forecast, imply or guarantee the future performance of any
particular investment or the trust, which will vary. Securities in which the
trust invests may differ from those in the Index. The trust will not try to
replicate the performance of these indices and will not necessarily invest any
substantial portion of its assets in securities in the Index. There is no
guarantee that the perceived intrinsic value of a security will be realized.
Hypothetical Comparison of Total Return
Russell
Developed
Hypothetical Europe
Strategy Index[R]
Total Total
Year Returns Returns
-------------------- ------------ ------------
2000 -0.87% -7.56%
2001 -1.45% -20.24%
2002 -3.34% -17.21%
2003 43.25% 40.80%
2004 31.63% 21.68%
2005 15.60% 10.60%
2006 40.82% 35.19%
2007 9.37% 12.63%
2008 -51.54% -47.33%
2009+ 59.29% 38.65%
2010 6.80% 5.95%
2011 -10.31% -12.22%
2012 14.72% 20.02%
2013 30.07% 27.14%
2014 -0.57% -5.73%
2015 -3.57% -1.08%
2016 -3.50% -0.81%
2017 (thru 7/31) 21.76% 19.57%
+ These returns are the result of extraordinary market events and are not
expected to be repeated.
Hypothetical Comparison of Average
Annual Return for Periods
Ending December 31, 2016
Russell
Developed
Hypothetical Europe
Strategy Index[R]
Average Average
Annual Annual
Period Return Return
------------- ------------ ------------
1 Year -3.50% -0.81%
5 Year 6.66% 7.13%
10 Year 1.11% 0.77%
Life of model
(12/31/99) 7.15% 3.13%
PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS.
Past performance of the Strategy is hypothetical and does not represent any
actual trust and is not guaranteed. The trust's actual performance may be
materially different from the hypothetical performance. It is shown for
illustrative purposes only and is not intended to indicate the future
performance of any investment, including the trust. The hypothetical performance
data has been calculated by Factset. The hypothetical performance data has not
been verified or audited by a third party. Hypothetical Strategy figures reflect
the deduction of the maximum sales charge, the estimated trust operating
expenses and the estimated organization costs. The hypothetical Strategy total
return figures have not been reduced by estimated brokerage commissions and
other transaction costs paid by the trust in acquiring the securities or any
taxes incurred by unitholders.
Hypothetical total return represents the sum of the change in market value
of each group of stocks between the first and last trading day of a period plus
the total dividends paid on each group of stocks during such period divided by
the opening market value of each group of stocks as of the first trading day of
a period. The source of the pricing information for the hypothetical total
return calculation is FactSet. Hypothetical total return figures assume that
all dividends are reinvested monthly.
Securities are selected through application of the Strategy as of the last
business day of each year. If a security which is selected by the Strategy is
merged out of existence, de-listed or suffers a similar fate during the period
in which the hypothetical Strategy performance is being measured, such security
will not be replaced by another security during that period and the return of
such security will not be annualized in the calculation of the hypothetical
returns.
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Essential Information
(as of the Inception Date)
Inception Date __________, 2017
Unit Price $10.00
Termination Date __________, 2019
Distribution Date 25th day of each month
(commencing ________ 25, 2017, if any)
Record Date 15th day of each month
(commencing ________ 15, 2017, if any)
CUSIP Numbers
Cash Distributions
Standard Accounts
Fee Account Cash
Reinvested Distributions
Standard Accounts
Fee Account Reinvest
Ticker CEUHIX
Portfolio Diversification
Approximate
Sector Portfolio Percentage
------------------------ --------------------
%
--------------------
Total 100.00%
====================
Country/Territory Approximate
(Headquartered) Portfolio Percentage
------------------------ --------------------
%
--------------------
Total 100.00%
====================
Market Approximate
Capitalization Portfolio Percentage
------------------ --------------------
%
--------------------
Total 100.00%
====================
Minimum Investment
All accounts 1 unit
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Principal Risks
As with all investments, you may lose some or all of your investment in
the trust. No assurance can be given that the trust's investment objective will
be achieved. The trust also might not perform as well as you expect. This can
happen for reasons such as these:
o Securities prices can be volatile. The value of your investment may
fall over time. Market value fluctuates in response to various
factors. These can include stock market movements, purchases or sales
of securities by the trust, government policies, litigation, and
changes in interest rates, inflation, the financial condition of the
securities' issuer or even perceptions of the issuer. Units of the
trust are not deposits of any bank and are not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government
agency.
o Securities selected according to this strategy may not perform as
intended. The trust is exposed to additional risk due to its policy of
investing in accordance with an investment strategy. Although the
trust's investment strategy is designed to achieve the trust's
investment objective, the strategy may not prove to be successful. The
investment decisions may not produce the intended results and there is
no guarantee that the investment objective will be achieved.
o The trust invests in foreign securities listed on a foreign exchange,
a U.S.-listed foreign security and ADRs. The trust's investment in
foreign securities listed on a foreign exchange, a U.S.-listed foreign
security and ADRs presents additional risk. ADRs are issued by a bank
or trust company to evidence ownership of underlying securities issued
by foreign corporations. 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 The trust includes securities whose value may be dependent on currency
exchange rates. The U.S. dollar value of these securities may vary
with fluctuations in foreign exchange rates. Most foreign currencies
have fluctuated widely in value against the U.S. dollar for various
economic and political reasons such as the activity level of large
international commercial banks, various central banks, speculators,
hedge funds and other buyers and sellers of foreign currencies.
o The trust is concentrated in securities issued by European companies.
As a result, political, economic or social developments in Europe may
have a significant impact on the securities included in the trust.
Furthermore, the European sovereign debt crisis and the related
austerity measures in certain countries have had, and continue to
have, a significant negative impact on the economies of certain
European countries and their future economic outlooks.
o [The trust is concentrated in securities issued by companies
headquartered in the United Kingdom. As a result, political, economic
or social developments in the United Kingdom may have a significant
impact on the securities included in the trust.
Additionally, the effect of the June 2016 United Kingdom referendum to
leave the European Union ("EU") is still developing. The referendum
has resulted in depreciation in the value of the British pound, short
term declines in the stock markets and ongoing economic and political
uncertainty. The United Kingdom's withdrawal from the EU may take an
extended period, and there is considerable uncertainty about the
potential trade, economic and market consequences of the exit.]
o The trust invests in securities issued by mid-capitalization
companies. These securities customarily involve more investment risk
than securities of large-capitalization companies. Mid-capitalization
companies may have limited product lines, markets or financial
resources and may be more vulnerable to adverse general market or
economic developments.
o Share prices or dividend rates on the securities in the trust may
decline during the life of the trust. There is no guarantee that share
prices of the securities in the trust will not decline and that the
issuers of the securities will declare dividends in the future and, if
declared, whether they will remain at current levels or increase over
time.
o Inflation may lead to a decrease in the value of assets or income from
investments.
o The sponsor does not actively manage the portfolio. The trust will
generally hold, and may, when creating additional units, continue to
buy, the same securities even though a security's outlook, market
value or yield may have changed.
See "Investment Risks" in Part A of the prospectus and "Risk Factors" in
Part B of the prospectus for additional information.
Who Should Invest
You should consider this investment if:
o The trust represents only a portion of your overall investment
portfolio;
o The trust is part of a longer-term investment strategy that may
include the investment in subsequent portfolios, if available; and
o The trust is combined with other investment vehicles to provide
diversification of method to your overall portfolio.
You should not consider this investment if:
o You are uncomfortable with the trust's investment strategy of
significantly investing in European securities;
o You are uncomfortable with the risks of an unmanaged investment in
securities; or
o You want capital preservation.
Fees and Expenses
The amounts below are estimates of the direct and indirect fees and
expenses that you may incur based on a $10 unit price. Actual expenses may vary.
Percentage
of Public
Offering Amount Per
Investor Fees Price (4) 100 Units
-------------------------------- ------------ ------------
Initial sales fee
paid on purchase (1) 0.00% $ 0.00
Deferred sales fee (2) 1.35 13.50
Creation and
development fee (3) 0.50 5.00
------------ ------------
Maximum sales fees
(including creation
and development fee) 1.85% $ 18.50
============ ============
Estimated organization costs
(amount per 100 units as a
percentage of the public
offering price) 0.80% $ 8.00
============ ============
Approximate
Annual Fund % of Public
Operating Offering Amount Per
Expenses Price (4) 100 Units
------------------------- ------------ ------------
Trustee's fee 0.1050% $ 1.050
Sponsor's supervisory fee 0.0300 0.300
Evaluator's fee 0.0350 0.350
Bookkeeping and
administrative fee 0.0350 0.350
Estimated other trust
operating expenses (5)
------------ ------------
Total % $ _____
============ ============
(1) The initial sales fee provided above is based on the unit price on the
Inception Date. The combination of the initial and deferred sales charge
comprises what we refer to as the "transactional sales charge." The initial
sales charge is equal to the difference between the maximum sales charge
and the sum of any remaining deferred sales charge and creation and
development fee ("C&D Fee"). The percentage and dollar amount of the
initial sales fee will vary as the unit price varies and after deferred
fees begin. When the Public Offering Price per unit equals $10, there is no
initial sales charge. If the price you pay for your units exceeds $10 per
unit, you will pay an initial sales charge. Despite the variability of the
initial sales fee, each unitholder is obligated to pay the entire
applicable maximum sales fee.
(2) The deferred sales charge is a fixed dollar amount equal to $0.135 per unit
and is deducted in monthly installments of $0.045 per unit on the last
business day of ________ 2018 through ________ 2018. The percentage
provided is based on a $10 per unit Public Offering Price as of the
Inception Date and the percentage amount will vary over time. If the price
you pay for your units exceeds $10 per unit, the deferred sales fee will be
less than 1.35% of the Public Offering Price unit. If the price you pay for
your units is less than $10 per unit, the deferred sales fee will exceed
1.35% of the Public Offering Price. If units are redeemed prior to the
deferred sales fee period, the entire deferred sales fee will be collected.
If you purchase units after the first deferred sales fee payment has been
assessed, your maximum sales fee will consist of an initial sales fee and
the amount of any remaining deferred sales fee payments.
(3) The C&D Fee compensates the sponsor for creating and developing your trust.
The actual C&D Fee is $0.050 per unit and is paid to the sponsor at the
close of the initial offering period, which is expected to be approximately
three months from the Inception Date. The percentages provided are based on
a $10 unit as of the Inception Date and the percentage amount will vary
over time. If the unit price exceeds $10 per unit, the C&D Fee will be less
than 0.50% of the Public Offering Price; if the unit price is less than $10
per unit, the C&D Fee will exceed 0.50% of the Public Offering Price.
However, in no event will the maximum sales fee exceed 1.85% of a
unitholder's initial investment.
(4) Based on 100 units with a $10 per unit Public Offering Price as of the
Inception Date.
(5) The estimated trust operating expenses are based upon an estimated trust
size of approximately $___ million. Because certain of the operating
expenses are fixed amounts, if the trust does not reach such estimated size
or falls below the estimated size over its life, the actual amount of the
operating expenses may 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 you reinvest your
investment in a new trust every year with the maximum sales fees, 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
10 years
These amounts are the same regardless of whether you sell your investment
at the end of a period or continue to hold your investment. The example does
not consider any brokerage fees the trust pays or any transaction fees that
broker-dealers may charge for processing redemption requests.
See "Expenses of the Trust" in Part B of the prospectus for additional
information.
Trust Portfolio
Guggenheim Defined Portfolios, Series 1664
European High Dividend Portfolio, Series 9
The Trust Portfolio as of the Inception Date, __________, 2017
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Percentage
of Aggregate Initial Per Share Cost To
Ticker Company Name (1) Offer Price Shares Price Portfolio (2)(3)
--------------------------------------------------------------------------------------------------------
COMMON STOCKS (100.00%)
Trust Portfolio (continued)
Guggenheim Defined Portfolios, Series 1664
European High Dividend Portfolio, Series 9
The Trust Portfolio as of the Inception Date, __________, 2017
--------------------------------------------------------------------------------------------------------
Percentage
of Aggregate Initial Per Share Cost To
Ticker Company Name (1) Offer Price Shares Price Portfolio (2)(3)
--------------------------------------------------------------------------------------------------------
COMMON STOCKS (continued)
----------------
$
================
(1) All securities are represented entirely by contracts to purchase
securities, which were entered into by the sponsor on ________, 2017. All
contracts for securities are expected to be settled by the initial
settlement date for the purchase of units.
(2) Valuation of securities by the trustee was performed as of the Evaluation
Time on ________, 2017. For securities quoted on a national exchange,
including the NASDAQ Stock Market, Inc., securities are generally valued at
the closing sale price using the market value per share. For foreign
securities traded on a foreign exchange, if any, securities are generally
valued at the closing sale price on the applicable exchange converted into
U.S. dollars. The trust's investments are classified as Level 1, which
refers to security prices determined using quoted prices in active markets
for identical securities.
(3) There was a $___ loss to the sponsor on the Inception Date.
The following footnotes only apply when noted.
(4) Non-income producing security.
(5) U.S.-listed foreign security based on the country of incorporation, which
may differ from the way the company is classified for investment purposes
and portfolio diversification purposes.
(6) American Depositary Receipt ("ADR")/Global Depositary Receipt ("GDR")/CHESS
Depositary Interest ("CDI")/New York Registry Share.
(7) Foreign security listed on a foreign exchange, which may differ from the
way the company is classified for investment purposes and portfolio
diversification purposes.
(8) Common stock of a real estate investment trust ("REIT").
(9) Common stock of a master limited partnership ("MLP").
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UNDERSTANDING YOUR INVESTMENT
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How to Buy Units
You can buy units of your trust on any business day by contacting your
financial professional. Public offering prices of units are available daily on
the Internet at www.guggenheiminvestments.com. The unit price includes:
o the value of the securities,
o organization costs,
o the maximum sales fee (which includes an initial sales fee, if
applicable, a deferred sales fee and the creation and development
fee), and
o cash and other net assets in the portfolio.
We often refer to the purchase price of units as the "offer price" or the
"Public Offering Price." We must receive your order to buy units prior to the
close of the New York Stock Exchange (normally 4:00 p.m. Eastern time) to give
you the price for that day. If we receive your order after this time, you will
receive the price computed on the next business day.
Value of the Securities. The sponsor serves as the evaluator of the trust
(the "evaluator"). We cause the trustee to determine the value of the
securities as of the close of the New York Stock Exchange on each day that the
exchange is open (the "Evaluation Time").
Pricing the Securities. The value of securities is generally determined by
using the last sale price for securities traded on a national or foreign
securities exchange or the NASDAQ Stock Market. In some cases we will price a
security based on the last asked or bid price in the over-the-counter market or
by using other recognized pricing methods. We will only do this if a security is
not principally traded on a national or foreign securities exchange or the
NASDAQ Stock Market, or if the market quotes are unavailable or inappropriate.
If applicable, the trustee or its designee will value foreign securities
primarily traded on foreign exchanges at their fair value which may be other
than their market prices if the market quotes are unavailable or
inappropriate.
The trustee determined the initial prices of the securities shown in
"Trust Portfolio" for your trust in this prospectus. Such prices were
determined as described above at the close of the New York Stock Exchange on
the business day before the date of this prospectus. On the first day we sell
units we will compute the unit price as of the close of the New York Stock
Exchange or the time the registration statement filed with the Securities and
Exchange Commission becomes effective, if later.
Organization Costs. During the initial offering period, part of your
purchase price includes a per unit amount sufficient to reimburse us for some
or all of the costs of creating your trust. These costs include the costs of
preparing the registration statement and legal documents, legal fees, federal
and state registration fees, the portfolio consulting fee, if applicable, and
the initial fees and expenses of the trustee. Your trust will sell securities
to reimburse us for these costs at the end of the initial offering period or
after six months, at the discretion of the sponsor. Organization costs will not
exceed the estimate set forth under "Fees and Expenses."
Transactional Sales Fee. You pay a fee when you buy units. We refer to
this fee as the "transactional sales fee." The transactional sales fee for the
trust typically has only a deferred component of 1.35% of the Public Offering
Price, based on a $10 unit. This percentage amount of the transactional sales
fee is based on the unit price on the Inception Date. Because the transactional
sales fee equals the difference between the maximum sales fee and the C&D Fee,
the percentage and dollar amount of the transactional sales fee will vary as
the unit price varies.
The transactional sales fee does not include the C&D Fee which is
described in "Fees and Expenses" in Part A of the prospectus and under
"Expenses of the Trust" in Part B of the prospectus.
Initial Sales Fee. On the date of deposit, the trust does not charge an
initial sales fee. However, you will be charged an initial sales fee if you
purchase your units after the first deferred sales fee payment has been
assessed or if the price you pay for your units exceeds $10 per unit. The
initial sales fee, which you will pay at the time of purchase, is equal to the
difference between the maximum sales fee (1.85% of the Public Offering Price)
and the sum of the maximum remaining deferred sales fee and the C&D Fee
(initially $0.185 per unit). The dollar amount and percentage amount of the
initial sales fee will vary over time.
Deferred Sales Fee. We defer payment of the rest of the transactional
sales fee through the deferred sales fee ($0.135 per unit). You pay any
remaining deferred sales fee when you sell or redeem units. The trust may sell
securities to meet the trust's obligations with respect to the deferred sales
fee. Thus, no assurance can be given that the trust will retain its present
size and composition for any length of time.
In limited circumstances and only if deemed in the best interests of
unitholders, the sponsor may delay the payment of the deferred sales fee from
the dates listed under "Fees and Expenses."
When you purchase units of the trust, if your total maximum sales fee is
less than the fixed dollar amount of the deferred sales fee and the C&D Fee,
the sponsor will credit you the difference between your maximum sales fee and
the sum of the deferred sales fee and the C&D Fee at the time you buy units by
providing you with additional units.
Advisory and Fee Accounts. We eliminate your transactional sales fee for
purchases made through registered investment advisers, certified financial
planners or registered broker-dealers who charge periodic fees in lieu of
commissions or who charge for financial planning or for investment advisory or
asset management services or provide these services as part of an investment
account where a comprehensive "wrap fee" is imposed (a "Fee Account").
This discount applies during the initial offering period and in the
secondary market. Your financial professional may purchase units with the Fee
Account CUSIP numbers to facilitate purchases under this discount, however, we
do not require that you buy units with these CUSIP numbers to qualify for the
discount. If you purchase units with these special CUSIP numbers, you should be
aware that you may have the distributions automatically reinvest into
additional units of your trust or receive cash distributions. We reserve the
right to limit or deny purchases of units not subject to the transactional
sales fee by investors whose frequent trading activity we determine to be
detrimental to your trust. We, as sponsor, will receive and you will pay the
C&D Fee. See "Expenses of the Trust" in Part B of the prospectus for additional
information.
Employees. We do not charge the portion of the transactional sales fee
that we would normally pay to your financial professional for purchases made by
officers, directors and employees and their family members (spouses, children
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. Such
purchases are also subject to the C&D Fee. This discount applies during the
initial offering period and in the secondary market. Only those broker-dealers
that allow their employees to participate in employee discount programs will be
eligible for this discount.
Dividend Reinvestment Plan. We do not charge any transactional sales fee
when you reinvest distributions from your trust into additional units of the
trust. Since the deferred sales fee is a fixed dollar amount per unit, your
trust must charge the deferred sales fee per unit regardless of this discount.
If you elect the distribution reinvestment plan, we will credit you with
additional units with a dollar value sufficient to cover the amount of any
remaining deferred sales fee that will be collected on such units at the time
of reinvestment. The dollar value of these units will fluctuate over time. This
discount applies during the initial offering period and in the secondary market.
See "Purchase, Redemption and Pricing of Units" in Part B of the
prospectus for more information regarding buying units.
How We Distribute Units. We sell units to the public through broker-dealers
and other firms. We pay part of the sales fee you pay to these distribution
firms when they sell units. The distribution fee paid is 1.25% of the Public
Offering Price per unit.
Eligible dealer firms and other selling agents who, during the previous
consecutive 12-month period through the end of the most recent month, sold
primary market units of Guggenheim Funds unit investment trusts in the dollar
amounts shown below will be entitled to up to the following additional sales
concession on primary market sales of units during the current month of unit
investment trusts sponsored by us:
Additional
Total Sales (in millions) Concession
--------------------------- ----------
$25 but less than $100 0.035%
$100 but less than $150 0.050%
$150 but less than $250 0.075%
$250 but less than $1,000 0.100%
$1,000 but less than $5,000 0.125%
$5,000 but less than $7,500 0.150%
$7,500 or more 0.175%
The additional sales concessions accrued by such eligible dealer firms and
other selling agents will be paid out on a quarterly basis.
Eligible unit trusts include all Guggenheim Funds unit trusts sold in the
primary market. Redemptions of units during the primary offering period will
reduce the amount of units used to calculate the volume concessions. In
addition, dealer firms will not receive volume concessions on the sale of units
which are not subject to a transactional sales fee. However, such sales will be
included in determining whether a firm has met the sales level breakpoints for
volume concessions.
Guggenheim Funds reserves the right to modify or terminate the volume
concession program at any time. The sponsor may also pay to certain dealers an
administrative fee for information or service used in connection with the
distribution of trust units. Such amounts will be in addition to any concessions
received for the sale of units.
In addition to the concessions described above, the sponsor may pay
additional compensation out of its own assets to broker-dealers that meet
certain sales targets and that have agreed to provide services relating to 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. For example, we lost the amount set forth in the "Trust
Portfolio" on the initial deposit of securities into the trust.
See "Purchase, Redemption and Pricing of Units" in Part B of the
prospectus for additional information.
How to Sell Your Units
You can sell your units on any business day by contacting your financial
professional or, in some cases, the trustee. Unit prices are available daily on
the Internet at www.guggenheiminvestments.com or through your financial
professional. We often refer to the sale price of units as the "liquidation
price." You pay any remaining deferred sales fee when you sell or redeem your
units. Certain broker-dealers may charge a transaction fee for processing unit
redemptions or sale requests.
Until the end of the initial offering period or six months after the
Inception Date, at the discretion of the sponsor, the price at which the
trustee will redeem units and the price at which the sponsor may repurchase
units include estimated organization costs. After such period, the amount paid
will not include such estimated organization costs. If units of the trust are
redeemed prior to the deferred sales fee period, the entire deferred sales fee
will be collected.
Selling Units. We do not intend to but may maintain a secondary market for
units. This means that if you want to sell your units, we may buy them at the
current price which is based on their net asset value. We may then resell the
units to other investors at the Public Offering Price or redeem them for the
redemption price. Our secondary market repurchase price is generally the same
as the redemption price. Certain broker-dealers might also maintain a secondary
market in units. You should contact your financial professional for current
unit prices to determine the best price available. We may discontinue our
secondary market at any time without notice. Even if we do not make a market,
you will be able to redeem your units with the trustee on any business day for
the current price.
Redeeming Units. You may also be able to redeem your units directly with
the trustee, The Bank of New York Mellon, on any day the New York Stock
Exchange is open. The trustee must receive your completed redemption request
prior to the close of the New York Stock Exchange for you to receive the unit
price for a particular day. (For what constitutes a completed redemption
request, see "Purchase, Redemption and Pricing of Units--Redemption" in Part B
of the prospectus.) If your request is received after that time or is
incomplete in any way, you will receive the next price computed after the
trustee receives your completed request. Rather than contacting the trustee
directly, your financial professional may also be able to redeem your units by
using the Investors' Voluntary Redemptions and Sales (IVORS) automated
redemption service offered through Depository Trust Company.
If you redeem your units, the trustee will generally send you a payment
for your units no later than three business days after it receives all
necessary documentation. 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 securities
underlying your units if you own units worth at least $25,000 or you originally
paid at least that amount for your units. This option is generally available
only for securities traded and held in the United States and is not available
within 30 business days of the trust's termination. We may modify or
discontinue this option at any time without notice.
For more complete information regarding selling or redeeming your units,
see "Purchase, Redemption and Pricing of Units" in Part B of the prospectus.
Distributions
Dividends. Your trust generally pays dividends from its net investment
income, if any, along with any excess capital on each distribution date to
unitholders of record on the preceding record date. You can elect to:
o reinvest distributions in additional units of your trust at no fee, or
o receive distributions in cash.
You may change your election by contacting your financial professional or
the trustee. Once you elect to participate in a reinvestment program, the
trustee will automatically reinvest your distributions into additional units at
their net asset value three business days prior to the distribution date. We
waive the sales fee for reinvestments into units of your trust. We cannot
guarantee that units will always be available for reinvestment. If units are
unavailable, you will receive cash distributions. We may discontinue these
options at any time without notice.
In some cases, your trust might pay a special distribution if it holds an
excessive amount of principal pending distribution. For example, this could
happen as a result of a merger or similar transaction involving a company whose
security is in your portfolio. In addition, your trust may pay a special
distribution 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 tax on undistributed
income in the trust. The amount of your distributions will vary from time to
time as companies change their dividends or default on interest payments, trust
expenses change or as a result of changes in the trust's portfolio.
Reinvest in Your Trust. You can keep your money working by electing to
reinvest your distributions in additional units of your trust. The easiest way
to do this is to have your financial professional purchase units with one of
the Reinvestment CUSIP numbers listed in the "Investment Summary" section of
this prospectus. You may also make or change your election by contacting your
financial professional or the trustee. This reinvestment option may be subject
to availability or limitation by the broker-dealer or selling firm. In certain
circumstances, broker-dealers may suspend or terminate the offering of a
reinvestment option at any time.
Reports. The trustee will send your financial professional a statement
showing income and other receipts of your trust for each distribution. Each
year the trustee will also provide an annual report on your trust's activity
and certain tax information. You can request copies of security evaluations to
enable you to complete your tax forms and audited financial statements for your
trust, if available.
See "Administration of the Trust" in Part B of the prospectus for
additional information.
Investment Risks
All investments involve risk. This section describes the main risks that
can impact the value of the securities in your trust. You should understand
these risks before you invest. You could lose some or all of your investment in
the trust. Recently, equity markets have experienced significant volatility. If
the value of the securities in your trust falls, the value of your units will
also fall. We cannot guarantee that your trust will achieve its objective or
that your investment return will be positive over any period.
Market risk. Market risk is the risk that a particular security in the
trust, the trust itself or securities in general may fall in value. Market
value may be affected by a variety of factors including:
o General securities markets movements;
o Changes in the financial condition of an issuer or a sector;
o Changes in perceptions about an issuer or a sector;
o Interest rates and inflation;
o Governmental policies and litigation; and
o Purchases and sales of securities by the trust.
Even though we carefully supervise the portfolio, you should remember that
we do not manage the portfolio. The trust will not sell a security solely
because the market value falls as is possible in a managed fund.
Investment strategy risk. The trust is exposed to additional risk due to
its policy of investing in accordance with an investment strategy. Although the
trust's investment strategy is designed to achieve the trust's investment
objective, the strategy may not prove to be successful. The investment
decisions may not produce the intended results and there is no guarantee that
the investment objective will be achieved.
Foreign securities risk. The trust invests in foreign securities listed on
a foreign exchange, a U.S.-listed foreign security and ADRs. ADRs are issued by
a bank or trust company to evidence ownership of underlying securities issued
by foreign corporations. 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 your trust's
value, the value of dividends and interest earned, and gains and
losses realized on the sale of securities. An increase in the strength
of the U.S. dollar relative to these other currencies may cause the
value of your 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 your
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.
Currency risk. The trust includes securities whose value is dependent on
currency exchange rates. The U.S. dollar value of these securities will vary
with fluctuations in foreign exchange rates. Most foreign currencies have
fluctuated widely in value against the U.S. dollar for various economic and
political reasons such as the activity level of large international commercial
banks, various central banks, speculators, hedge funds and other buyers and
sellers of foreign currencies.
European risk. The trust is concentrated in securities issued by European
companies, which may expose unitholders to additional risks that may be
associated with Europe or the European securities markets. In addition,
political, economic or social developments in Europe may have a significant
impact on the securities included in the trust. A significant number of
countries in Europe are member states in the EU, and the member states no
longer control their own monetary policies by directing independent interest
rates for their currencies. In these member states, the authority to direct
monetary policies, including money supply and official interest rates for the
Euro, is exercised by the European Central Bank. Furthermore, the European
sovereign debt crisis and the related austerity measures in certain countries
have had, and continue to have, a significant negative impact on the economies
of certain European countries and their future economic outlooks.
[United Kingdom risk. The European Capital Strength Trust is concentrated
in companies that are headquartered or incorporated in the United Kingdom,
which may expose unitholders to additional risks that may be associated with
the United Kingdom and United Kingdom's securities markets.
Additionally, the effect of the June 2016 United Kingdom referendum to
leave the EU is still developing. The referendum has resulted in depreciation
in the value of the British pound, short term declines in the stock markets and
ongoing economic and political uncertainty. The United Kingdom's withdrawal
from the EU may take an extended period, and there is considerable uncertainty
about the potential trade, economic and market consequences of the exit. Other
countries may also depart the EU, voluntarily or otherwise. The negative impact
of the United Kingdom's departure from the EU, as well as any future departures
by other countries, could be significant, not only to the United Kingdom and
European economies, but also to the broader global economy. Such departures
could potentially result in increased market volatility and illiquidity, and
lower economic growth for companies that rely significantly on Europe for their
business activities and revenues, which could negatively impact the value of
the trust's investments.]
Mid-capitalization company risk. The trust includes securities issued by
mid-capitalization companies. These securities customarily involve more
investment risk than large-capitalization companies. These additional risks are
due in part to the following factors. Mid-capitalization companies may:
o Have limited product lines, markets or financial resources;
o Be new and developing companies which seek to develop and utilize new
and/or emerging technologies. These technologies may be slow to
develop or fail to develop altogether;
o Have less publicly available information;
o Lack management depth or experience;
o Be less liquid;
o Be more vulnerable to adverse general market or economic developments;
and
o Be dependent upon products that were recently brought to market or key
personnel.
REIT risk. The trust invests in REITs. A REIT is a company that buys,
develops, finances and/or manages income-producing real estate. Such securities
may concentrate their investments in specific geographic areas or in specific
property types, such as hotels, shopping malls, residential complexes and office
buildings. The value of the real estate securities and the ability of such
securities to distribute income may be adversely affected by several factors,
including: rising interest rates; changes in the global and local economic
climate and real estate conditions; perceptions of prospective tenants of the
safety, convenience and attractiveness of the properties; the ability of the
owner to provide adequate management, maintenance and insurance; the cost of
complying with the Americans with Disabilities Act; increased competition from
new properties; the impact of present or future environmental legislation and
compliance with environmental laws; changes in real estate taxes and other
operating expenses; adverse changes in governmental rules and fiscal policies;
adverse changes in zoning laws; declines in the value of real estate; the
downturn in the subprime mortgage lending market in the United States; and other
factors beyond the control of the issuer of the security.
Passive foreign investment companies ("PFICs") risk. The trust may invest
in companies that are considered to be PFICs. In general, PFICs are certain
non-U.S. corporations that receive at least 75% of their annual gross income
from passive sources (such as interest, dividends, certain rents and royalties
or capital gains) or that hold at least 50% of their assets in investments
producing such passive income. As a result of an investment in PFICs, your
trust could be subject to U.S. federal income tax and additional interest
charges on gains and certain distributions with respect to those securities,
even if all the income or gain is timely distributed to its unitholders. Your
trust will not be able to pass through to its unitholders any credit or
deduction for such taxes. Your trust may be able to make an election that could
ameliorate these adverse tax consequences. In this case, your trust would
recognize as ordinary income any increase in the value of such PFIC shares, and
as ordinary loss any decrease in such value to the extent it did not exceed
prior increases included in income. Under this election, your trust might be
required to recognize in a year income in excess of its distributions from
PFICs and its proceeds from dispositions of PFIC stock during that year, and
such income would nevertheless be subject to the distribution requirement and
would be taken into account for purposes of the 4% excise tax. Dividends paid
by PFICs will not be treated as qualified dividend income.
Litigation and legislation risk. Your trust is also subject to litigation
and legislation risk. From time to time, various legislative initiatives are
proposed in the United States and abroad which may have a negative impact on
certain issuers represented in the trust. In addition, litigation regarding any
of the issuers of the securities or of the sectors represented by these issuers,
may raise potential bankruptcy concerns and may negatively impact the share
prices of these securities. We cannot predict what impact any pending or
threatened litigation or any bankruptcy concerns will have on the prices of the
securities.
Inflation risk. Inflation risk is the risk that the value of assets or
income from investments will be less in the future as inflation decreases the
value of money.
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.
See "Risk Factors" in Part B of the prospectus for additional information.
How the Trust Works
Your Trust. Your trust is a unit investment trust registered under the
Investment Company Act of 1940 and the Securities Act of 1933. We created the
trust under a trust agreement between Guggenheim Funds Distributors, LLC (as
sponsor, evaluator and supervisor) and The Bank of New York Mellon (as
trustee). To create your trust, we deposited contracts to purchase securities
with the trustee along with an irrevocable letter of credit or other
consideration to pay for the securities. In exchange, the trustee delivered
units of your trust to us. Each unit represents an undivided interest in the
assets of your trust. These units remain outstanding until redeemed or until
your trust terminates.
Changing Your Portfolio. Your trust is not a managed fund. Unlike a managed
fund, we designed your portfolio to remain relatively fixed after its inception.
Your trust will generally buy and sell securities:
o to pay expenses,
o to issue additional units or redeem units,
o in limited circumstances to protect the trust,
o to avoid direct or indirect ownership of a passive foreign investment
company,
o to make required distributions or avoid imposition of taxes on the
trust,
o to maintain the qualification of the trust as a regulated investment
company, or
o as permitted by the trust agreement.
You will not be able to dispose of or vote any of the securities in your
trust. As the holder of the securities, the trustee will vote the securities
and will endeavor to vote the securities such that the securities are voted as
closely as possible in the same manner and the same general proportion as are
the securities held by owners other than your trust. However, the trustee may
not be able to vote the securities in your trust that are traded on foreign
exchanges.
In the event that an issuer of any of the securities in the trust offers to
issue new securities, or to exchange securities for trust securities, the
trustee will, at the direction of the sponsor, accept or reject such offer or
vote for or against any offer for new or exchanged securities or property in
exchange for a trust security. Should any issuance, exchange or substitution
take place, any securities, cash or property received will be deposited and
promptly sold by the trustee pursuant to the sponsor's direction, unless the
sponsor advises the trustee to keep such securities or property.
We will increase the size of your trust as we sell units. When we create
additional units, we will seek to replicate the existing portfolio. In certain
cases, the trustee may need additional time to acquire the securities necessary
to create units and consequently, the trust may not be fully invested at all
times, which may impact the trust's performance. When your trust buys
securities, it will pay brokerage or other acquisition fees. You could
experience a dilution of your investment because of these fees and fluctuations
in security prices between the time we create units and the time your trust
buys the securities. When your trust buys or sells securities, we, acting in an
agency capacity, may direct that the trust places orders with and pays
brokerage commissions to brokers that sell units or are affiliated with your
trust. We will not select firms to handle these transactions on the basis of
their sale of units of your trust or any other products sponsored by us. We
cannot guarantee that the trust will keep its present size and composition for
any length of time.
Termination of Your Trust. Your trust will terminate no later than the
termination date listed in the "Investment Summary" section of this prospectus.
The trustee may terminate your trust early if the value of the trust is less
than $1 million or less than 40% of the value of the securities in the trust at
the end of the initial offering period. At this size, the expenses of your trust
may create an undue burden on your investment. Investors owning two-thirds of
the units in your trust may also vote to terminate the trust early. We may also
terminate your trust in other limited circumstances.
The trustee will notify you of any termination and sell any remaining
securities. The trustee will send your final distribution to you within a
reasonable time following liquidation of all the securities after deducting
final expenses. Your termination distribution may be less than the price you
originally paid for your units.
See "Administration of the Trust" in Part B of the prospectus for
additional information.
General Information
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.
See "Administration of the Trust" in Part B of the prospectus for
additional information.
The Trustee. The Bank of New York Mellon is the trustee of your trust. It
is a trust company organized under New York law. You can contact the trustee by
calling the telephone number on the back cover of this prospectus or write to
Unit Investment Trust Division, 2 Hanson Place, 12th Fl., Brooklyn, New York
11217. We may remove and replace the trustee in some cases without your
consent. The trustee may also resign by notifying the sponsor and investors.
See "Administration of the Trust" in Part B of the prospectus for
additional information.
Expenses
Your trust will pay various expenses to conduct its operations. The
"Investment Summary" section of this prospectus shows the estimated amount of
these expenses.
Your trust will pay a fee to the trustee for its services. The trustee also
benefits when it holds cash for your trust in non-interest bearing accounts.
Your trust will reimburse the sponsor as supervisor and evaluator for providing
portfolio supervisory services, evaluating your portfolio and performing
bookkeeping and administrative services. Our reimbursements may exceed the costs
of the services we provide to your trust but will not exceed the costs of
services provided to all Guggenheim Funds unit investment trusts in any calendar
year. In addition, the trustee may reimburse the sponsor out of its own assets
for services performed by employees of the sponsor in connection with the
operation of your trust. All of these fees may adjust for inflation without your
approval.
Your trust will pay a fee to the sponsor for creating and developing the
trust, including determining the trust's objective, policies, composition and
size, selecting service providers and information services, and for providing
other similar administrative and ministerial functions. Your trust pays this
"creation and development fee" of $0.05 per unit from the assets of the trust
as of the close of the initial public offering period. The sponsor does not use
the fee to pay distribution expenses or as compensation for sales efforts.
Your trust will also pay its general operating expenses, including any
licensing fees. Your trust may also pay expenses such as trustee expenses
(including legal and auditing expenses), organization expenses, various
governmental charges, fees for extraordinary trustee services, costs of taking
action to protect your trust, costs of indemnifying the trustee and Guggenheim
Funds, legal fees and expenses, expenses incurred in contacting you and costs
incurred to reimburse the trustee for advancing funds to meet distributions.
Your trust may pay the costs of updating its registration statement each year.
The trustee may sell securities to pay trust expenses.
See "Expenses of the Trust" in Part B of the prospectus for additional
information.
Report of Independent Registered Public Accounting Firm
Unitholders
Guggenheim Defined Portfolios, Series 1664
We have audited the accompanying statement of financial condition,
including the trust portfolio set forth on pages 12 and 13 of this prospectus,
of Guggenheim Defined Portfolios, Series 1664, as of __________, 2017, the
initial date of deposit. This statement of financial condition is the
responsibility of the trust's sponsor. Our responsibility is to express an
opinion on this statement of financial condition based on our audit.
We conducted our audit in accordance with the auditing standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the statement of financial condition is free of material misstatement.
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 cash or an irrevocable letter of
credit deposited for the purchase of securities as shown in the statement of
financial condition as of __________, 2017. 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 1664, as of __________, 2017, in conformity with
accounting principles generally accepted in the United States of America.
Grant Thornton LLP
Chicago, Illinois
__________, 2017
Guggenheim Defined Portfolios, Series 1664
Statement of Financial Condition
as of the Inception Date, __________, 2017
Investment in securities
Sponsor's contracts to purchase underlying securities backed by
letter of credit (1)(2) $
------------
$
============
Liabilities and interest of unitholders
Liabilities:
Organization costs (3) $
Creation and development fee (6)
Deferred sales fee (4)
------------
------------
Interest of unitholders:
Cost to unitholders (5)
Less: initial sales fee (4)
Less: organization costs, C&D and deferred sales fees (3)(4)(5)(6)
------------
Net interest of unitholders
------------
Total $
============
Number of units
============
Net Asset Value per Unit $
============
----------------------
(1) Aggregate cost of the securities is based on the closing sale price
evaluations as determined by the trustee.
(2) A letter of credit has been deposited with The Bank of New York Mellon,
trustee, covering the funds (aggregating $______) necessary for the
purchase of the securities in the trust, represented by purchase contracts.
(3) A portion of the Public Offering Price represents an amount sufficient to
pay for all or a portion of the costs incurred in establishing the trust.
These costs have been estimated at $8.00 per 100 units of the trust. A
distribution will be made as of the close of the initial offering period or
six months after the initial date of deposit (at the discretion of the
sponsor) to an account maintained by the trustee from which this obligation
of the investors will be satisfied. Organization costs will not be assessed
to units that are redeemed prior to the close of the initial offering
period or six months after the initial date of deposit (at the discretion
of the sponsor). To the extent that actual organization costs are greater
than the estimated amount, only the estimated organization costs added to
the Public Offering Price will be deducted from the assets of the trust.
(4) The aggregate cost to unitholders includes a maximum sales fee, which
consists of an initial sales fee, if applicable, a deferred sales fee and a
creation and development fee. If units are purchased after the first
deferred sales fee has been assessed or if the price you pay for your units
exceeds $10 per unit, an initial sales fee is charged, which is equal to
the difference between the maximum sales fee and the sum of the remaining
deferred sales fee and the creation and development fee. On the Inception
Date, the maximum sales fee is 1.85% of the Public Offering Price
(equivalent to 1.85% of the net amount invested). The deferred sales fee is
equal to $0.135 per unit.
(5) The aggregate cost to investors includes the applicable sales fee, assuming
no reduction of sales fees.
(6) The trust is committed to pay a creation and development fee of $5.00 per
100 units at the close of the initial public offering period. The creation
and development fee will not be assessed to units that are redeemed prior
to the close of the initial offering period.
GUGGENHEIM DEFINED PORTFOLIOS
GUGGENHEIM PORTFOLIO PROSPECTUS
PART B DATED __________, 2017
The prospectus for a Guggenheim Defined Portfolio (a "trust") is divided
into two parts. Part A of the prospectus relates exclusively to a particular
trust or trusts and provides specific information regarding each trust's
portfolio, strategies, investment objectives, expenses, financial highlights,
income and capital distributions, hypothetical performance information, risk
factors and optional features. Part B of the prospectus provides more general
information regarding the Guggenheim Defined Portfolios. You should read both
parts of the prospectus and retain them for future reference. Except as provided
in Part A of the prospectus, the information contained in this Part B will apply
to each trust.
Contents
General Information 2
Investment Policies 2
Risk Factors 3
Administration of the Trust 16
Expenses of the Trust 22
Portfolio Transactions and Brokerage Allocation 24
Purchase, Redemption and Pricing of Units 24
Taxes 28
Experts 31
General Information
Each trust is one of a series of separate unit investment trusts created
under the name Guggenheim Defined Portfolios and registered under the
Investment Company Act of 1940 and the Securities Act of 1933. Each trust was
created as a common law trust on the inception date described in the prospectus
under the laws of the state of New York. Each trust was created under a trust
agreement among Guggenheim Funds Distributors, LLC (as sponsor, evaluator and
supervisor) and The Bank of New York Mellon (as trustee).
When your trust was created, the sponsor delivered to the trustee
securities or contracts for the purchase thereof for deposit in the trust and
the trustee delivered to the sponsor documentation evidencing the ownership of
units of the trust. After your trust is created, the sponsor may deposit
additional securities in the trust, contracts to purchase additional securities
along with cash (or a bank letter of credit in lieu of cash) to pay for such
contracted securities or cash (including a letter of credit) with instructions
to purchase additional securities. Such additional deposits will be in amounts
which will seek to replicate, as closely as practicable, the portfolio
immediately prior to such deposits. If the sponsor deposits cash, existing and
new investors may experience a dilution of their investments and a reduction in
their anticipated income because of fluctuations in the prices of the
securities between the time of the cash deposit and the purchase of the
securities and because the trust will pay the associated brokerage fees.
A trust consists of (i) the securities listed under "Trust Portfolio" in
the prospectus as may continue to be held from time to time in the trust; (ii)
any additional securities acquired and held by the trust pursuant to the
provisions of the trust agreement; and (iii) any cash held in the accounts of
the trust. Neither the sponsor nor the trustee shall be liable in any way for
any failure in any of the securities. However, should any contract for the
purchase of any of the securities initially deposited in a trust fail, the
sponsor will, unless substantially all of the moneys held in the trust to cover
such purchase are reinvested in substitute securities in accordance with the
trust agreement, refund the cash and sales charge attributable to such failed
contract to all unitholders on the next distribution date.
Investment Policies
The trust is a unit investment trust and is not an "actively managed"
fund. Traditional methods of investment management for a managed fund typically
involve frequent changes in a portfolio of securities on the basis of economic,
financial and market analysis. The portfolio of a trust, however, will not be
actively managed and therefore the adverse financial condition of an issuer
will not necessarily require the sale of its securities from a portfolio.
Unitholders will not be able to dispose of or vote any of the securities
in a trust. As the holder of the securities, the trustee will vote the
securities and will endeavor to vote the securities such that the securities
are voted as closely as possible in the same manner and the same general
proportion as are the securities held by owners other than such trust. However,
the trustee may not be able to vote the securities in a trust that are traded
on foreign exchanges.
The trust agreement provides that the sponsor may (but need not) direct
the trustee to dispose of a security in certain events such as the issuer
having defaulted on the payment on any of its outstanding obligations, the
issuer having qualified as a passive foreign investment company under the
Internal Revenue Code or the price of a security has declined to such an extent
or other such credit factors exist so that in the opinion of the sponsor the
retention of such securities would be detrimental to the trust. If a public
tender offer has been made for a security or a merger or acquisition has been
announced affecting a security, the trustee may either sell the security or
accept a tender offer for cash if the supervisor determines that the sale or
tender is in the best interest of unitholders. The trustee will distribute any
cash proceeds to unitholders. Pursuant to the trust agreement and with limited
exceptions, the trustee may sell any securities or other properties acquired in
exchange for securities such as those acquired in connection with a merger or
other transaction. If offered such new or exchanged securities or property
other than cash, the trustee shall reject the offer. However, in the event such
securities or property are nonetheless acquired by the trust, they may be
accepted for deposit in a trust and either sold by the trustee or held in a
trust pursuant to the direction of the sponsor. Proceeds from the sale of
securities (or any securities or other property received by the trust in
exchange for securities) are credited to the Capital Account for distribution
to unitholders or to meet redemptions.
Except as stated in the trust agreement, or in the prospectus, the
acquisition by the trust of any securities other than the portfolio securities
is prohibited. The trustee may sell securities, designated by the sponsor, from
the trust for the purpose of redeeming units of a trust tendered for redemption
and the payment of expenses and for such other purposes as permitted under the
trust agreement.
Notwithstanding the foregoing, the trustee is authorized to reinvest any
funds held in the Capital or Income Accounts, pending distribution, in U.S.
Treasury obligations which mature on or before the next applicable distribution
date. Any obligations so acquired must be held until they mature and proceeds
therefrom may not be reinvested.
Proceeds from the sale of securities (or any securities or other property
received by a trust in exchange for securities) are credited to the Capital
Account of a trust for distribution to unitholders or to meet redemptions.
Except for failed securities and as provided in the prospectus or in the trust
agreement, the acquisition by a trust of any securities other than the
portfolio securities is prohibited. The trustee may sell securities from a
trust for limited purposes, including redeeming units tendered for redemption
and the payment of expenses.
Risk Factors
Stocks. An investment in units of a trust should be made with an
understanding of the risks inherent in an investment in equity securities,
including the risk that the financial condition of issuers of the securities may
become impaired or that the general condition of the stock market may worsen
(both of which may contribute directly to a decrease in the value of the
securities and thus, in the value of the units) or the risk that holders of
common stock have a right to receive payments from the issuers of those stocks
that is generally inferior to that of creditors of, or holders of debt
obligations issued by, the issuers and that the rights of holders of common
stock generally rank inferior to the rights of holders of preferred stock. You
could lose some or all of your investment in the trust. Common stocks are
especially susceptible to general stock market movements and to volatile
increases and decreases in value as market confidence in and perceptions of the
issuers change. These perceptions are based on unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises.
Holders of common stock incur more risk than the holders of preferred
stocks and debt obligations because common stockholders, as owners of the
entity, have generally inferior rights to receive payments from the issuer in
comparison with the rights of creditors of, or holders of debt obligations or
preferred stock issued by the issuer. Holders of common stock of the type held
by a trust have a right to receive dividends only when and if, and in the
amounts, declared by the issuer's board of directors and to participate in
amounts available for distribution by the issuer only after all other claims on
the issuer have been paid or provided for. By contrast, holders of preferred
stock have the right to receive dividends at a fixed rate when and as declared
by the issuer's board of directors, normally on a cumulative basis, but do not
participate in other amounts available for distribution by the issuing
corporation. Cumulative preferred stock dividends must be paid before common
stock dividends and any cumulative preferred stock dividend omitted is added to
future dividends payable to the holders of cumulative preferred stock.
Preferred stocks are also entitled to rights on liquidation which are senior to
those of common stocks. Moreover, common stocks do not represent an obligation
of the issuer and therefore do not offer any assurance of income or provide the
degree of protection of capital debt securities. Indeed, the issuance of debt
securities or even preferred stock will create prior claims for payment of
principal, interest, liquidation preferences and dividends which could
adversely affect the ability and inclination of the issuer to declare or pay
dividends on its common stock or the rights of holders of common stock with
respect to assets of the issuer upon liquidation or bankruptcy. Further, unlike
debt securities which typically have a stated principal amount payable at
maturity (whose value, however, will be subject to market fluctuations prior
thereto), common stocks have neither a fixed principal amount nor a maturity
and have values which are subject to market fluctuations for as long as the
stocks remain outstanding. The value of the securities in a portfolio thus may
be expected to fluctuate over the entire life of a trust to values higher or
lower than those prevailing at the time of purchase.
The sponsor's buying and selling of the securities, especially during the
initial offering of units of the trust or to satisfy redemptions of units may
impact upon the value of the underlying securities and the units. The
publication of the list of the securities selected for the trust may also cause
increased buying activity in certain of the stocks comprising the portfolio.
After such announcement, investment advisory and brokerage clients of the
sponsor and its affiliates may purchase individual securities appearing on the
list during the course of the initial offering period or may purchase warrants
issued by the sponsor or its affiliates which are based on the performance of
the securities on the list. The sponsor or its affiliates may also purchase
securities as a hedge against its risk on the warrants (although generally the
sponsor and its affiliates will not purchase securities for their own account
until after the trust portfolio has been acquired). Such buying activity in the
stock of these companies or issuance of the warrants prior to the purchase of
the securities by the trust may cause the trust to purchase stocks at a higher
price than those buyers who effect purchases by the trust.
Fixed Portfolio. Investors should be aware that the trust is not "managed"
and as a result, the adverse financial condition of a company will not result in
the elimination of its securities from the portfolio of the trust except under
extraordinary circumstances. Investors should note in particular that the
securities were selected on the basis of the criteria set forth in the
prospectus and that the trust may continue to purchase or hold securities
originally selected through this process even though the evaluation of the
attractiveness of the securities may have changed. A number of the securities in
the trust may also be owned by other clients of the sponsor. However, because
these clients may have differing investment objectives, the sponsor may sell
certain securities from those accounts in instances where a sale by the trust
would be impermissible, such as to maximize return by taking advantage of market
fluctuations. In the event a public tender offer is made for a security or a
merger or acquisition is announced affecting a security, the sponsor may
instruct the trustee to tender or sell the security on the open market when, in
its opinion, it is in the best interest of the unitholders of the unit to do so.
Although the portfolio is regularly reviewed and evaluated and the sponsor may
instruct the trustee to sell securities under certain limited circumstances,
securities will not be sold by the trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. As a result, the
amount realized upon the sale of the securities may not be the highest price
attained by an individual security during the life of the trust. The prices of
single shares of each of the securities in the trust vary widely, and the effect
of a dollar of fluctuation, either higher or lower, in stock prices will be much
greater as a percentage of the lower-price stocks' purchase price than as a
percentage of the higher-price stocks' purchase price.
Closed-End Fund Risks. If set forth in Part A of the prospectus, a trust
may invest in the common stock of closed-end funds ("Closed-End Funds").
Closed-End Funds are actively managed investment companies which invest in
various types of securities. Closed-End Funds issue shares of common stock that
are traded on a securities exchange. Closed-End Funds are subject to various
risks, including management's ability to meet the Closed-End Fund's investment
objective, and to manage the Closed-End Fund portfolio when the underlying
securities are redeemed or sold, during periods of market turmoil and as
investors' perceptions regarding Closed-End Funds or their underlying
investments change.
Shares of Closed-End Funds frequently trade at a discount from their net
asset value in the secondary market. This risk is separate and distinct from
the risk that the net asset value of Closed-End Fund shares may decrease. The
amount of such discount from net asset value is subject to change from time to
time in response to various factors.
Certain of the Closed-End Funds included in a trust may employ the use of
leverage in their portfolios through the issuance of preferred stock. While
leverage often serves to increase the yield of a Closed-End Fund, this leverage
also subjects the Closed-End Fund to increased risks, including the likelihood
of increased volatility and the possibility that the Closed-End Fund's common
share income will fall if the dividend rate on the preferred shares or the
interest rate on any borrowing rises.
Exchange-Traded Fund Risks. If set forth in Part A of the prospectus, a
trust may invest in the common stock of exchange-traded funds ("ETFs"). ETFs are
investment pools that hold other securities. ETFs are either open-end management
investment companies or unit investment trusts registered under the Investment
Company Act of 1940. Unlike typical open-end funds or unit investment trusts,
ETFs generally do not sell or redeem their individual shares at net asset value.
In addition, securities exchanges list ETF shares for trading, which allows
investors to purchase and sell individual ETF shares at current market prices
throughout the day. ETFs therefore possess characteristics of traditional
open-end funds and unit investment trusts, which issue redeemable shares, and of
corporate common stocks or closed-end funds, which generally issue shares that
trade at negotiated prices on securities exchanges and are not redeemable. ETFs
are subject to various risks, including management's ability to meet the fund's
investment objective. The underlying ETF has management and operating expenses.
You will bear not only your share of the trust's expenses, but also the expenses
of the underlying ETF. By investing in an ETF, the trust incurs greater expenses
than you would incur if you invested directly in the ETF.
Shares of ETFs may trade at a discount from their net asset value in the
secondary market. This risk is separate and distinct from the risk that the net
asset value of the ETF shares may decrease. The amount of such discount from
net asset value is subject to change from time to time in response to various
factors.
Market Discounts or Premiums. Certain of the securities may have been
deposited at a market discount or premium principally because their dividend
rates are lower or higher than prevailing rates on comparable securities. The
current returns of market discount securities are lower than comparably rated
securities selling at par because discount securities tend to increase in
market value as they approach maturity. The current returns of market premium
securities are higher than comparably rated securities selling at par because
premium securities tend to decrease in market value as they approach maturity.
Because part of the purchase price is returned through current income payments
and not at maturity, an early redemption at par of a premium security will
result in a reduction in yield to the trust. Market premium or discount
attributable to dividend rate changes does not indicate market confidence or
lack of confidence in the issue.
Liquidity. Whether or not the securities are listed on a national
securities exchange, the principal trading market for the securities may be in
the over-the-counter market. As a result, the existence of a liquid trading
market for the securities may depend on whether dealers will make a market in
the securities. There can be no assurance that a market will be made for any of
the securities, that any market for the securities will be maintained or of the
liquidity of the securities in any markets made. In addition, a trust is
restricted under the Investment Company Act of 1940 from selling securities to
the sponsor. The price at which the securities may be sold to meet redemptions
and the value of a trust will be adversely affected if trading markets for the
securities are limited or absent.
Additional Deposits. The trust agreement authorizes the sponsor to
increase the size of a trust and the number of units thereof by the deposit of
additional securities, or cash (including a letter of credit) with instructions
to purchase additional securities, in such trust and the issuance of a
corresponding number of additional units. If the sponsor deposits cash,
existing and new investors may experience a dilution of their investments and a
reduction in their anticipated income because of fluctuations in the prices of
the securities between the time of the cash deposit and the purchase of the
securities and because a trust will pay the associated brokerage fees. To
minimize this effect, the trusts will attempt to purchase the securities as
close to the evaluation time or as close to the evaluation prices as possible.
Some of the securities may have limited trading volume. The trustee, with
directions from the sponsor, will endeavor to purchase securities with deposited
cash as soon as practicable reserving the right to purchase those securities
over the 20 business days following each deposit in an effort to reduce the
effect of these purchases on the market price of those stocks. This could,
however, result in the trusts' failure to participate in any appreciation of
those stocks before the cash is invested. If any cash remains at the end of this
period (and such date is within the 90-day period following the inception date)
and cannot be invested in one or more stocks, at what the sponsor considers
reasonable prices, it intends to use that cash to purchase each of the other
securities in the original proportionate relationship among those securities.
Similarly, at termination of the trust, the sponsor reserves the right to sell
securities over a period of up to nine business days to lessen the impact of its
sales on the market price of the securities. The proceeds received by
unitholders following termination of the trust will reflect the actual sales
proceeds received on the securities, which will likely differ from the closing
sale price on the termination date.
Litigation and Legislation. At any time litigation may be initiated on a
variety of grounds, or legislation may be enacted with respect to the
securities in a trust or the issuers of the securities. There can be no
assurance that future litigation or legislation will not have a material
adverse effect on the trust or will not impair the ability of issuers to
achieve their business goals.
Financial Sector Risks. If set forth in Part A of the prospectus, certain
of the issuers of securities in a trust may be involved in the financial
sector. An investment in units of a trust containing securities of such issuers
should be made with an understanding of the problems and risks inherent in the
financial sector in general.
Banks, thrifts and their holding companies are especially subject to the
adverse effects of economic recession; volatile interest rates; portfolio
concentrations in geographic markets, in commercial and residential real estate
loans or any particular segment or industry; and competition from new entrants
in their fields of business. Banks and thrifts are highly dependent on net
interest margin. Banks and thrifts traditionally receive a significant portion
of their revenues from consumer mortgage fee income as a result of activity in
mortgage and refinance markets.
Banks, thrifts and their holding companies are subject to extensive
federal regulation and, when such institutions are state-chartered, to state
regulation as well. Such regulations impose strict capital requirements and
limitations on the nature and extent of business activities that banks and
thrifts may pursue. Furthermore, bank regulators have a wide range of
discretion in connection with their supervisory and enforcement authority and
may substantially restrict the permissible activities of a particular
institution if deemed to pose significant risks to the soundness of such
institution or the safety of the federal deposit insurance fund. Regulatory
actions, such as increases in the minimum capital requirements applicable to
banks and thrifts and increases in deposit insurance premiums required to be
paid by banks and thrifts to the FDIC, can negatively impact earnings and the
ability of a company to pay dividends. Neither federal insurance of deposits
nor governmental regulations, however, insures the solvency or profitability of
banks or their holding companies, or insures against any risk of investment in
the securities issued by such institutions.
The statutory requirements applicable to and regulatory supervision of
banks, thrifts and their holding companies have increased significantly and
have undergone substantial change in the recent past.
The Securities and Exchange Commission and the Financial Accounting
Standards Board ("FASB") require the expanded use of market value accounting by
banks and have imposed rules requiring mark-to-market accounting for investment
securities held in trading accounts or available for sale. Adoption of
additional such rules may result in increased volatility in the reported health
of the industry, and mandated regulatory intervention to correct such problems.
Accounting Standards Codification 820, "Fair Value Measurements and Disclosures"
changed the requirements of mark-to-market accounting and determining fair value
when the volume and level of activity for the asset or liability has
significantly decreased. These changes and other potential changes in financial
accounting rules and valuation techniques may have a significant impact on the
banking and financial services industries in terms of accurately pricing assets
or liabilities. Additional legislative and regulatory changes may be
forthcoming. For example, the bank regulatory authorities have proposed
substantial changes to the Community Reinvestment Act and fair lending laws,
rules and regulations, and there can be no certainty as to the effect, if any,
that such changes would have on the securities in a trust's portfolio. In
addition, from time to time the deposit insurance system is reviewed by Congress
and federal regulators, and proposed reforms of that system could, among other
things, further restrict the ways in which deposited moneys can be used by banks
or change the dollar amount or number of deposits insured for any depositor. On
October 3, 2008, EESA increased the maximum amount of federal deposit insurance
coverage payable as to any certificate of deposit from $100,000 to $250,000 per
depositor. The impact of this reform is unknown and could reduce profitability
as investment opportunities available to bank institutions become more limited
and as consumers look for savings vehicles other than bank deposits. The sponsor
makes no prediction as to what, if any, manner of bank and thrift regulatory
actions might ultimately be adopted or what ultimate effect such actions might
have on a trust's portfolio.
The Federal Bank Holding Company Act of 1956 ("BHC Act") generally
prohibits a bank holding company from (i) acquiring, directly or indirectly,
more than 5% of the outstanding shares of any class of voting securities of a
bank or bank holding company; (ii) acquiring control of a bank or another bank
holding company; (iii) acquiring all or substantially all the assets of a bank;
or (iv) merging or consolidating with another bank holding company, without
first obtaining FRB approval. In considering an application with respect to any
such transaction, the FRB is required to consider a variety of factors,
including the potential anti-competitive effects of the transaction, the
financial condition and future prospects of the combining and resulting
institutions, the managerial resources of the resulting institution, the
convenience and needs of the communities the combined organization would serve,
the record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the prospective
availability to the FRB of information appropriate to determine ongoing
regulatory compliance with applicable banking laws. In addition, the federal
Change In Bank Control Act and various state laws impose limitations on the
ability of one or more individuals or other entities to acquire control of
banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends by
bank holding companies in which the FRB expressed its view that a bank holding
company experiencing earnings weaknesses should not pay cash dividends which
exceed its net income or which could only be funded in ways that would weaken
its financial health, such as by borrowing. The FRB also may impose limitations
on the payment of dividends as a condition to its approval of certain
applications, including applications for approval of mergers and acquisitions.
The sponsor makes no prediction as to the effect, if any, such laws will have on
the securities in a trust or whether such approvals, if necessary, will be
obtained.
Companies engaged in investment banking/brokerage and investment
management include brokerage firms, broker/dealers, investment banks, finance
companies and mutual fund companies. Earnings and share prices of companies in
this industry are quite volatile, and often exceed the volatility levels of the
market as a whole. Negative economic events in the credit markets have led some
firms to declare bankruptcy, forced short-notice sales to competing firms, or
required government intervention by the FDIC or through an infusions of
Troubled Asset Relief Program funds. Consolidation in the industry and the
volatility in the stock market have negatively impacted investors.
Additionally, government intervention has required many financial
institutions to become bank holding companies under the BHC Act. Under the
system of functional regulation established under the BHC Act, the FRB
supervises bank holding companies as an umbrella regulator. The BHC Act and
regulations generally restrict bank holding companies from engaging in business
activities other than the business of banking and certain closely related
activities. The FRB and FDIC have also issued substantial risk-based and
leverage capital guidelines applicable to U.S. banking organizations. The
guidelines define a three-tier framework, requiring depository institutions to
maintain certain leverage ratios depending on the type of assets held. If any
depository institution controlled by a financial or bank holding company ceases
to meet capital or management standards, the FRB may impose corrective capital
and/or managerial requirements on the company and place limitations on its
ability to conduct broader financial activities. Furthermore, proposed
legislation will allow the Treasury and the FDIC to create a resolution regime
to "take over" bank and financial holding companies. The "taking over" would be
based on whether the firm is in default or in danger of defaulting and whether
such a default would have a serious adverse effect on the financial system or
the economy. This mechanism would only be used by the government in exceptional
circumstances to mitigate these effects. This type of intervention has unknown
risks and costs associated with it, which may cause unforeseeable harm in the
industry.
Companies involved in the insurance industry are engaged in underwriting,
reinsuring, selling, distributing or placing of property and casualty, life or
health insurance. Other growth areas within the insurance industry include
brokerage, reciprocals, claims processors and multi-line insurance companies.
Interest rate levels, general economic conditions and price and marketing
competition affect insurance company profits. Property and casualty insurance
profits may also be affected by weather catastrophes and other disasters. Life
and health insurance profits may be affected by mortality and morbidity rates.
Individual companies may be exposed to material risks including reserve
inadequacy and the inability to collect from reinsurance carriers. Insurance
companies are subject to extensive governmental regulation, including the
imposition of maximum rate levels, which may not be adequate for some lines of
business. Proposed or potential tax law changes may also adversely affect
insurance companies' policy sales, tax obligations, and profitability. In
addition to the foregoing, profit margins of these companies continue to shrink
due to the commoditization of traditional businesses, new competitors, capital
expenditures on new technology and the pressures to compete globally.
In addition to the normal risks of business, companies involved in the
insurance industry are subject to significant risk factors, including those
applicable to regulated insurance companies, such as: (i) the inherent
uncertainty in the process of establishing property-liability loss reserves,
particularly reserves for the cost of environmental, asbestos and mass tort
claims, and the fact that ultimate losses could materially exceed established
loss reserves which could have a material adverse effect on results of
operations and financial condition; (ii) the fact that insurance companies have
experienced, and can be expected in the future to experience, catastrophe losses
which could have a material adverse impact on their financial condition, results
of operations and cash flow; (iii) the inherent uncertainty in the process of
establishing property-liability loss reserves due to changes in loss payment
patterns caused by new claims settlement practices; (iv) the need for insurance
companies and their subsidiaries to maintain appropriate levels of statutory
capital and surplus, particularly in light of continuing scrutiny by rating
organizations and state insurance regulatory authorities, and in order to
maintain acceptable financial strength or claims-paying ability rating; (v) the
extensive regulation and supervision to which insurance companies' subsidiaries
are subject, various regulatory initiatives that may affect insurance companies,
and regulatory and other legal actions; (vi) the adverse impact that increases
in interest rates could have on the value of an insurance company's investment
portfolio and on the attractiveness of certain of its products; (vii) the need
to adjust the effective duration of the assets and liabilities of life insurance
operations in order to meet the anticipated cash flow requirements of its
policyholder obligations; and (viii) the uncertainty involved in estimating the
availability of reinsurance and the collectability of reinsurance recoverables.
This enhanced oversight into the insurance industry may pose unknown risks to
the sector as a whole.
The state insurance regulatory framework has, during recent years, come
under increased federal scrutiny, and certain state legislatures have considered
or enacted laws that alter and, in many cases, increase state authority to
regulate insurance companies and insurance holding company systems. Further, the
National Association of Insurance Commissioners ("NAIC") and state insurance
regulators are re-examining existing laws and regulations, specifically focusing
on insurance companies, interpretations of existing laws and the development of
new laws. In addition, Congress and certain federal agencies have investigated
the condition of the insurance industry in the United States to determine
whether to promulgate additional federal regulation. The sponsor is unable to
predict whether any state or federal legislation will be enacted to change the
nature or scope of regulation of the insurance industry, or what effect, if any,
such legislation would have on the industry.
All insurance companies are subject to state laws and regulations that
require diversification of their investment portfolios and limit the amount of
investments in certain investment categories. Failure to comply with these laws
and regulations would cause non-conforming investments to be treated as
non-admitted assets for purposes of measuring statutory surplus and, in some
instances, would require divestiture.
Environmental pollution clean-up is the subject of both federal and state
regulation. By some estimates, there are thousands of potential waste sites
subject to clean up. The insurance industry is involved in extensive litigation
regarding coverage issues. The Comprehensive Environmental Response Compensation
and Liability Act of 1980 ("Superfund") and comparable state statutes
("mini-Superfund") govern the clean-up and restoration by "Potentially
Responsible Parties" ("PRPs"). Superfund and the mini-Superfunds ("Environmental
Clean-up Laws" or "ECLs") establish a mechanism to pay for clean-up of waste
sites if PRPs fail to do so, and to assign liability to PRPs. The extent of
liability to be allocated to a PRP is dependent on a variety of factors. The
extent of clean-up necessary and the assignment of liability has not been fully
established. The insurance industry is disputing many such claims. Key coverage
issues include whether Superfund response costs are considered damages under the
policies, when and how coverage is triggered, applicability of pollution
exclusions, the potential for joint and several liability and definition of an
occurrence. Similar coverage issues exist for clean up and waste sites not
covered under Superfund. To date, courts have been inconsistent in their rulings
on these issues. An insurer's exposure to liability with regard to its insureds
which have been, or may be, named as PRPs is uncertain. Superfund reform
proposals have been introduced in Congress, but none have been enacted. There
can be no assurance that any Superfund reform legislation will be enacted or
that any such legislation will provide for a fair, effective and cost-efficient
system for settlement of Superfund related claims.
While current federal income tax law permits the tax-deferred accumulation
of earnings on the premiums paid by an annuity owner and holders of certain
savings-oriented life insurance products, no assurance can be given that future
tax law will continue to allow such tax deferrals. If such deferrals were not
allowed, consumer demand for the affected products would be substantially
reduced. In addition, proposals to lower the federal income tax rates through a
form of flat tax or otherwise could have, if enacted, a negative impact on the
demand for such products.
Major determinants of future earnings of companies in the financial
services sector are the direction of the stock market, investor confidence,
equity transaction volume, the level and direction of long-term and short-term
interest rates, and the outlook for emerging markets. Negative trends in any of
these earnings determinants could have a serious adverse effect on the
financial stability, as well as the stock prices, of these companies.
Furthermore, there can be no assurance that the issuers of the securities
included in the trust will be able to respond in a timely manner to compete in
the rapidly developing marketplace. In addition to the foregoing, profit
margins of these companies continue to shrink due to the commoditization of
traditional businesses, new competitors, capital expenditures on new technology
and the pressures to compete globally.
Foreign Securities Risk. If set forth in Part A of the prospectus, a trust,
or issuers of securities held by a trust, may invest in foreign issuers, and
therefore, an investment in such a trust involves some investment risks that are
different in some respects from an investment in a trust that invests entirely
in securities of domestic issuers. Those investment risks include future
political and governmental restrictions which might adversely affect the payment
or receipt of payment of dividends on the relevant securities, currency exchange
rate fluctuations, exchange control policies, and the limited liquidity and
small market capitalization of such foreign countries' securities markets. In
addition, for foreign issuers that are not subject to the reporting requirements
of the Securities Exchange Act of 1934, there may be less publicly available
information than is available from a domestic issuer. Also, foreign issuers are
not necessarily subject to uniform accounting, auditing and financial reporting
standards, practices and requirements comparable to those applicable to domestic
issuers. However, due to the nature of the issuers of the securities included in
the trust, the sponsor believes that adequate information will be available to
allow the sponsor to provide portfolio surveillance.
Certain of the securities in the trust may be in ADR or GDR form. ADRs,
American Depositary Receipts and GDRs, Global Depositary Receipts, represent
common stock deposited with a custodian in a depositary. American Depositary
Receipts and Global Depositary Receipts (collectively, the "Depositary
Receipts") are issued by a bank or trust company to evidence ownership of
underlying securities issued by a foreign corporation. These instruments may not
necessarily be denominated in the same currency as the securities into which
they may be converted. For purposes of the discussion herein, the terms ADR and
GDR generally include American Depositary Shares and Global Depositary Shares,
respectively.
Depositary Receipts may be sponsored or unsponsored. In an unsponsored
facility, the depositary initiates and arranges the facility at the request of
market makers and acts as agent for the Depositary Receipts holder, while the
company itself is not involved in the transaction. In a sponsored facility, the
issuing company initiates the facility and agrees to pay certain administrative
and shareholder-related expenses. Sponsored facilities use a single depositary
and entail a contractual relationship between the issuer, the shareholder and
the depositary; unsponsored facilities involve several depositaries with no
contractual relationship to the company. The depositary bank that issues
Depositary Receipts generally charges a fee, based on the price of the
Depositary Receipts, upon issuance and cancellation of the Depositary Receipts.
This fee would be in addition to the brokerage commissions paid upon the
acquisition or surrender of the security. In addition, the depositary bank
incurs expenses in connection with the conversion of dividends or other cash
distributions paid in local currency into U.S. dollars and such expenses are
deducted from the amount of the dividend or distribution paid to holders,
resulting in a lower payout per underlying shares represented by the Depositary
Receipts than would be the case if the underlying share were held directly.
Certain tax considerations, including tax rate differentials and withholding
requirements, arising from the application of the tax laws of one nation to
nationals of another and from certain practices in the Depositary Receipts
market may also exist with respect to certain Depositary Receipts. In varying
degrees, any or all of these factors may affect the value of the Depositary
Receipts compared with the value of the underlying shares in the local market.
In addition, the rights of holders of Depositary Receipts may be different than
those of holders of the underlying shares, and the market for Depositary
Receipts may be less liquid than that for the underlying shares. Depositary
Receipts are registered securities pursuant to the Securities Act of 1933 and
may be subject to the reporting requirements of the Securities Exchange Act of
1934.
For the securities that are Depositary Receipts, currency fluctuations will
affect the United States dollar equivalent of the local currency price of the
underlying domestic share and, as a result, are likely to affect the value of
the Depositary Receipts and consequently the value of the securities. The
foreign issuers of securities that are Depositary Receipts may pay dividends in
foreign currencies which must be converted into United States dollars. Most
foreign currencies have fluctuated widely in value against the United States
dollar for many reasons, including supply and demand of the respective currency,
the soundness of the world economy and the strength of the respective economy as
compared to the economies of the United States and other countries. Therefore,
for any securities of issuers (whether or not they are in Depositary Receipt
form) whose earnings are stated in foreign currencies, or which pay dividends in
foreign currencies or which are traded in foreign currencies, there is a risk
that their United States dollar value will vary with fluctuations in the United
States dollar foreign exchange rates for the relevant currencies.
Preferred Stock Risks. If set forth in Part A of the prospectus, a trust,
or issuers of securities held by a trust, may invest in preferred stock. If this
is the case, an investment in units should be made with an understanding of the
risks which an investment in preferred stocks entails, including the risk that
the financial condition of the issuers of the securities or the general
condition of the preferred stock market may worsen, and the value of the
preferred stocks and therefore the value of the units may decline. Preferred
stocks may be susceptible to general stock market movements and to volatile
increases and decreases of value as market confidence in and perceptions of the
issuers change. These perceptions are based on unpredictable factors, including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, market
liquidity, and global or regional political, economic or banking crises.
Preferred stocks are also vulnerable to congressional reductions in the
dividends-received deduction which would adversely affect the after-tax return
to the investors who can take advantage of the deduction. Such a reduction might
adversely affect the value of preferred stocks in general. Holders of preferred
stocks, as owners of the entity, have rights to receive payments from the
issuers of those preferred stocks that are generally subordinate to those of
creditors of, or holders of debt obligations or, in some cases, other senior
preferred stocks of, such issuers. Preferred stocks do not represent an
obligation of the issuer and, therefore, do not offer any assurance of income or
provide the same degree of protection of capital as do debt securities. The
issuance of additional debt securities or senior preferred stocks will create
prior claims for payment of principal and interest and senior dividends which
could adversely affect the ability and inclination of the issuer to declare or
pay dividends on its preferred stock or the rights of holders of preferred stock
with respect to assets of the issuer upon liquidation or bankruptcy. The value
of preferred stocks is subject to market fluctuations for as long as the
preferred stocks remain outstanding, and thus the value of the securities may be
expected to fluctuate over the life of the trust to values higher or lower than
those prevailing on the initial date of deposit.
Trust Preferred Securities Risks. If set forth in Part A of the
prospectus, a trust, or issuers of securities held by a trust, may invest in
trust preferred securities. Holders of trust preferred securities incur risks
in addition to or slightly different than the typical risks of holding
preferred stocks. Trust preferred securities are limited-life preferred
securities that are typically issued by corporations, generally in the form of
interest-bearing notes or preferred securities issued by corporations, or by an
affiliated business trust of a corporation, generally in the form of beneficial
interests in subordinated debentures issued by the corporation, or similarly
structured securities. The maturity and dividend rate of the trust preferred
securities are structured to match the maturity and coupon interest rate of the
interest-bearing notes, preferred securities or subordinated debentures. Trust
preferred securities usually mature on the stated maturity date of the
interest-bearing notes, preferred securities or subordinated debentures and may
be redeemed or liquidated prior to the stated maturity date of such instruments
for any reason on or after their stated call date or upon the occurrence of
certain circumstances at any time. Unlike preferred stocks, distributions on
the trust preferred securities are generally treated as interest rather than
dividends for federal income tax purposes. Unlike most preferred stocks,
distributions received from trust preferred securities are generally not
eligible for the dividends-received deduction. Certain of the risks unique to
trust preferred securities include: (i) distributions on trust preferred
securities will be made only if interest payments on the interest-bearing
notes, preferred securities or subordinated debentures are made; (ii) a
corporation issuing the interest-bearing notes, preferred securities or
subordinated debentures may defer interest payments on these instruments for up
to 20 consecutive quarters and if such election is made, distributions will not
be made on the trust preferred securities during the deferral period; (iii)
certain tax or regulatory events may trigger the redemption of the
interest-bearing notes, preferred securities or subordinated debentures by the
issuing corporation and result in prepayment of the trust preferred securities
prior to their stated maturity date; (iv) future legislation may be proposed or
enacted that may prohibit the corporation from deducting its interest payments
on the interest-bearing notes, preferred securities or subordinated debentures
for tax purposes, making redemption of these instruments likely; (v) a
corporation may redeem the interest-bearing notes, preferred securities or
subordinated debentures in whole at any time or in part from time to time on or
after a stated call date; (vi) trust preferred securities holders have very
limited voting rights; and (vii) payment of interest on the interest-bearing
notes, preferred securities or subordinated debentures, and therefore
distributions on the trust preferred securities, is dependent on the financial
condition of the issuing corporation.
Convertible Securities Risks. If set forth in Part A of the prospectus, a
trust, or issuers of securities held by a trust, may invest in convertible
securities.
Convertible securities generally offer lower interest or dividend yields
than non-convertible fixed-income securities of similar credit quality because
of the potential for capital appreciation. The market values of convertible
securities tend to decline as interest rates increase and, conversely, to
increase as interest rates decline. However, a convertible security's market
value also tends to reflect the market price of the common stock of the issuing
company, particularly when the stock price is greater than the convertible
security's conversion price. The conversion price is defined as the
predetermined price or exchange ratio at which the convertible security can be
converted or exchanged for the underlying common stock. As the market price of
the underlying common stock declines below the conversion price, the price of
the convertible security tends to be increasingly influenced more by the yield
of the convertible security than by the market price of the underlying common
stock. Thus, it may not decline in price to the same extent as the underlying
common stock, and convertible securities generally have less potential for gain
or loss than common stocks. However, mandatory convertible securities (as
discussed below) generally do not limit the potential for loss to the same
extent as securities convertible at the option of the holder. In the event of a
liquidation of the issuing company, holders of convertible securities would be
paid before that company's common stockholders. Consequently, an issuer's
convertible securities generally entail less risk than its common stock.
However, convertible securities fall below debt obligations of the same issuer
in order of preference or priority in the event of a liquidation and are
typically unrated or rated lower than such debt obligations. In addition,
contingent payment, convertible securities allow the issuer to claim deductions
based on its nonconvertible cost of debt, which generally will result in
deduction in excess of the actual cash payments made on the securities (and
accordingly, holders will recognize income in amounts in excess of the cash
payments received).
Mandatory convertible securities are distinguished as a subset of
convertible securities because the conversion is not optional and the
conversion price at maturity is based solely upon the market price of the
underlying common stock, which may be significantly less than par or the price
(above or below par) paid. For these reasons, the risks associated with
investing in mandatory convertible securities most closely resemble the risks
inherent in common stocks. Mandatory convertible securities customarily pay a
higher coupon yield to compensate for the potential risk of additional price
volatility and loss upon conversion. Because the market price of a mandatory
convertible security increasingly corresponds to the market price of its
underlying common stock as the convertible security approaches its conversion
date, there can be no assurance that the higher coupon will compensate for the
potential loss.
Senior Loan Risks. If set forth in Part A of the prospectus, a trust, or
issuers of securities held by a trust, may invest in senior loans.
Senior loans in which a Closed-End Fund or an ETF may invest:
o generally are of below investment-grade or "junk" credit quality;
o may be unrated at the time of investment;
o generally are not registered with the SEC or any state securities
commission; and
o generally are not listed on any securities exchange.
The amount of public information available on senior loans generally will
be less extensive than that available for other types of assets.
No reliable, active trading market currently exists for many senior loans,
although a secondary market for certain senior loans has developed over the
past several years. Senior loans are thus relatively illiquid. Liquidity
relates to the ability of a Closed-End Fund or an ETF to sell an investment in
a timely manner at a price approximately equal to its value on the Closed-End
Fund's or the ETF's books. The illiquidity of senior loans may impair a
Closed-End Fund's or an ETF's ability to realize the full value of its assets
in the event of a voluntary or involuntary liquidation of such assets. Because
of the lack of an active trading market, illiquid securities are also difficult
to value and prices provided by external pricing services may not reflect the
true value of the securities. However, many senior loans are of a large
principal amount and are held by a large number of financial institutions. To
the extent that a secondary market does exist for certain senior loans, the
market may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods. The market for senior loans could be
disrupted in the event of an economic downturn or a substantial increase or
decrease in interest rates. This could result in increased volatility in the
market and in the trusts' net asset value.
If legislation or state or federal regulators impose additional
requirements or restrictions on the ability of financial institutions to make
loans that are considered highly leveraged transactions, the availability of
senior loans for investment by the Closed-End Funds or the ETFs may be
adversely affected. In addition, such requirements or restrictions could reduce
or eliminate sources of financing for certain borrowers. This would increase
the risk of default. If legislation or federal or state regulators require
financial institutions to dispose of senior loans that are considered highly
leveraged transactions or subject such senior loans to increased regulatory
scrutiny, financial institutions may determine to sell such senior loans. Such
sales could result in depressed prices. If a Closed-End Fund or an ETF attempts
to sell a senior loan at a time when a financial institution is engaging in
such a sale, the price a Closed-End Fund or an ETF could get for the senior
loan may be adversely affected.
Some senior loans are subject to the risk that a court, pursuant to
fraudulent conveyance or other similar laws, could subordinate the senior loans
to presently existing or future indebtedness of the borrower or take other
action detrimental to lenders. Such court action could under certain
circumstances include invalidation of senior loans. Any lender, which could
include a Closed-End Fund or an ETF, is subject to the risk that a court could
find the lender liable for damages in a claim by a borrower arising under the
common laws of tort or contracts or anti-fraud provisions of certain securities
laws for actions taken or omitted to be taken by the lenders under the relevant
terms of a loan agreement or in connection with actions with respect to the
collateral underlying the senior loan.
Floating-Rate Securities Risk. If set forth in Part A of the prospectus, a
trust, or issuers of securities held by a trust may invest in floating-rate
securities. Certain Closed-End Funds or ETFs held by the trust may invest in
securities that are structured as floating-rate instruments in which the
interest rate payable on the obligations fluctuates on a periodic basis based
upon changes in a base lending rate. As a result, the yield on these securities
will generally decline in a falling interest rate environment, causing the
Closed-End Funds or the ETFs to experience a reduction in the income they
receive from these securities. A sudden and significant increase in market
interest rates may increase the risk of payment defaults and cause a decline in
the value of these investments and the value of the Closed-End Funds or the ETFs
held by the trust.
Small-Capitalization and Mid-Capitalization Stocks Risk. If set forth in
Part A of the prospectus, a trust may invest in small-capitalization or
mid-capitalization stocks. Investing in small-capitalization stocks or
mid-capitalization stocks may involve greater risk than investing in
large-capitalization stocks, since they can be subject to more abrupt or erratic
price movements. Many small market capitalization companies ("Small-Cap
Companies") or middle market capitalization companies ("Mid-Cap Companies") will
have had their securities publicly traded, if at all, for only a short period of
time and will not have had the opportunity to establish a reliable trading
pattern through economic cycles. The price volatility of Small-Cap Companies and
Mid-Cap Companies is relatively higher than larger, older and more mature
companies. The greater price volatility of Small-Cap Companies and Mid-Cap
Companies may result from the fact that there may be less market liquidity, less
information publicly available or fewer investors who monitor the activities of
these companies. In addition, the market prices of these securities may exhibit
more sensitivity to changes in industry or general economic conditions. Some
Small-Cap Companies or Mid-Cap Companies will not have been in existence long
enough to experience economic cycles or to demonstrate whether they are
sufficiently well managed to survive downturns or inflationary periods. Further,
a variety of factors may affect the success of a company's business beyond the
ability of its management to prepare or compensate for them, including domestic
and international political developments, government trade and fiscal policies,
patterns of trade and war or other military conflict which may affect industries
or markets or the economy generally.
Administration of the Trust
Distributions to Unitholders. Income received by a trust is credited by
the trustee to the Income Account of the trust. Other receipts are credited to
the Capital Account of a trust. Income received by a trust will be distributed
on or shortly after the distribution dates each year shown in the prospectus on
a pro rata basis to unitholders of record as of the preceding record date shown
in the prospectus. However, if set forth in Part A of the prospectus that the
trust will prorate distributions on an annual basis ("Income Averaging"), then
income received by the trust will be distributed on a prorated basis of
one-twelfth of the estimated annual income to the trust for the ensuing 12
months. All distributions will be net of applicable expenses. There is no
assurance that any actual distributions will be made since all dividends
received may be used to pay expenses. In addition, excess amounts from the
Capital Account of a trust, if any, will be distributed at least annually to
the unitholders then of record. Proceeds received from the disposition of any
of the securities after a record date and prior to the following distribution
date will be held in the Capital Account and not distributed until the next
distribution date applicable to the Capital Account. The trustee shall be
required to make a distribution from the Capital Account if the cash balance on
deposit therein available for distribution shall be sufficient to distribute at
least $1.00 per 100 units. The trustee is not required to pay interest on funds
held in the Capital or Income Accounts (but may itself earn interest thereon
and therefore benefits from the use of such funds). The trustee is authorized
to reinvest any funds held in the Capital or Income Accounts, pending
distribution, in U.S. Treasury obligations which mature on or before the next
applicable distribution date. Any obligations so acquired must be held until
they mature and proceeds therefrom may not be reinvested.
The distribution to the unitholders as of each record date will be made on
the following distribution date or shortly thereafter and shall consist of an
amount substantially equal to such portion of the unitholders' pro rata share of
the dividend distributions then held in the Income Account after deducting
estimated expenses. Because dividends are not received by a trust at a constant
rate throughout the year, such distributions to unitholders are expected to
fluctuate. However, if the trust uses Income Averaging, the trust prorates the
income distribution on an annual basis and annual income distributions are
expected to vary from year to year. If the amount on deposit in the Income
Account is insufficient for payment of the amount of income to be distributed on
a monthly basis, the trustee shall advance out of its own funds and cause to be
deposited in and credited to such Income Account such amount as may be required
to permit payment of the monthly income distribution. The trustee shall be
entitled to be reimbursed by the trust, without interest, out of income received
by the trust subsequent to the date of such advance and subject to the condition
that any such reimbursement shall be made only if it will not reduce the funds
in or available for the Income Account to an amount less than required for the
next ensuing distribution. Persons who purchase units will commence receiving
distributions only after such person becomes a record owner. A person will
become the owner of units, and thereby a unitholder of record, on the date of
settlement provided payment has been received. Notification to the trustee of
the transfer of units is the responsibility of the purchaser, but in the normal
course of business such notice is provided by the selling broker-dealer.
The trustee will periodically deduct from the Income Account of a trust
and, to the extent funds are not sufficient therein, from the Capital Account
of a trust amounts necessary to pay the expenses of a trust. The trustee also
may withdraw from said accounts such amounts, if any, as it deems necessary to
establish a reserve for any governmental charges payable out of a trust.
Amounts so withdrawn shall not be considered a part of a trust's assets until
such time as the trustee shall return all or any part of such amounts to the
appropriate accounts. In addition, the trustee may withdraw from the Income and
Capital Accounts of a trust such amounts as may be necessary to cover
redemptions of units.
Distribution Reinvestment. Unitholders may elect to have distributions of
capital (including capital gains) or dividends, if any, or both automatically
invested into additional units of their trust without a sales fee.
Your trust will pay any deferred sales fee per unit regardless of any
sales fee discounts. However, if you elect to have distributions on your units
reinvested into additional units of your trust, you will be credited the amount
of any remaining deferred sales charge on such additional units at the time of
reinvestment.
Unitholders who are receiving distributions in cash may elect to
participate in distribution reinvestment by filing with the Program Agent an
election to have such distributions reinvested without charge. Such election
must be received by the Program Agent at least ten days prior to the record
date applicable to any distribution in order to be in effect for such record
date. Any such election shall remain in effect until a subsequent notice is
received by the Program Agent.
The Program Agent is The Bank of New York Mellon. All inquiries concerning
participating in distribution reinvestment should be directed to The Bank of
New York Mellon at its Unit Investment Trust Division office.
Statements to Unitholders. With each distribution, the trustee will
furnish to each registered holder a statement of the amount of income and the
amount of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per unit.
The accounts of a trust will not be audited annually unless the sponsor
determines that such an audit would be in the best interest of the unitholders
of the trust. If an audit is conducted, it will be done at the related trust's
expense, by independent public accountants designated by the sponsor. The
accountants' report will be furnished by the trustee to any unitholder upon
written request. Within a reasonable period of time after the end of each
calendar year, the trustee shall furnish to each person who at any time during
the calendar year was a unitholder of a trust a statement, covering the
calendar year, generally setting forth for the trust:
(A) As to the Income Account:
(1) Income received;
(2) Deductions for applicable taxes and for fees and expenses of the trust
and for redemptions of units, if any; and
(3) The balance remaining after such distributions and deductions,
expressed in each case both as a total dollar amount and as a dollar
amount representing the pro rata share of each unit outstanding on the
last business day of such calendar year; and
(B) As to the Capital Account:
(1) The dates of disposition of any securities and the net proceeds
received therefrom;
(2) Deductions for payment of applicable taxes and fees and expenses of
the trust; and
(3) The balance remaining after such distributions and deductions
expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each unit outstanding on the last
business day of such calendar year; and
(C) The following information:
(1) A list of the securities as of the last business day of such calendar
year;
(2) The number of units outstanding on the last business day of such
calendar year;
(3) The redemption price based on the last evaluation made during such
calendar year; and
(4) The amount actually distributed during such calendar year from the
Income and Capital Accounts separately stated, expressed both as total
dollar amounts and as dollar amounts per unit outstanding on the
record dates for each such distribution.
Rights of Unitholders. A unitholder may at any time tender units to the
trustee for redemption. The death or incapacity of any unitholder will not
operate to terminate a trust nor entitle legal representatives or heirs to claim
an accounting or to bring any action or proceeding in any court for partition or
winding up of a trust. No unitholder shall have the right to control the
operation and management of a trust in any manner, except to vote with respect
to the amendment of the trust agreement or termination of a trust.
Amendment and Termination. The trust agreement may be amended by the
trustee and the sponsor without the consent of any of the unitholders: (i) to
cure any ambiguity or to correct or supplement any provision which may be
defective or inconsistent; (ii) to change any provision thereof as may be
required by the Securities and Exchange Commission or any successor
governmental agency; (iii) to make such provisions as shall not materially
adversely affect the interests of the unitholders; or (iv) to make such other
amendments as may be necessary for a trust to qualify as a regulated investment
company, in the case of a trust which has elected to qualify as such. The trust
agreement with respect to any trust may also be amended in any respect by the
sponsor and the trustee, or any of the provisions thereof may be waived, with
the consent of the holders of units representing 66 2/3% of the units then
outstanding of the trust, provided that no such amendment or waiver will reduce
the interest of any unitholder thereof without the consent of such unitholder
or reduce the percentage of units required to consent to any such amendment or
waiver without the consent of all unitholders of the trust. In no event shall
the trust agreement be amended to increase the number of units of a trust
issuable thereunder, to permit the acquisition of any securities in addition to
or in substitution for those initially deposited in the trust or to adversely
affect the characterization of a trust as a regulated investment company for
federal income tax purposes, except in accordance with the provisions of the
trust agreement. The trustee shall promptly notify unitholders of the substance
of any such amendment.
The trust agreement provides that a trust shall terminate upon the
liquidation, redemption or other disposition of the last of the securities held
in the trust but in no event is it to continue beyond the mandatory termination
date set forth in Part A of the prospectus. If the value of a trust shall be
less than the applicable minimum value stated in the prospectus, the trustee
may, in its discretion, and shall, when so directed by the sponsor, terminate
the trust. A trust may be terminated at any time by the holders of units
representing 66 2/3% of the units thereof then outstanding. In addition, the
sponsor may terminate a trust if it is based on a security index and the index
is no longer maintained.
Beginning nine business days prior to, but no later than, the mandatory
termination date described in the prospectus, the trustee may begin to sell all
of the remaining underlying securities on behalf of unitholders in connection
with the termination of the trust. The sponsor may assist the trustee in these
sales and receive compensation to the extent permitted by applicable law. The
sale proceeds will be net of any incidental expenses involved in the sales.
The trustee will attempt to sell the securities as quickly as it can
during the termination proceedings without, in its judgment, materially
adversely affecting the market price of the securities, but it is expected that
all of the securities will in any event be disposed of within a reasonable time
after a trust's termination. The sponsor does not anticipate that the period
will be longer than one month, and it could be as short as one day, depending
on the liquidity of the securities being sold. The liquidity of any security
depends on the daily trading volume of the security and the amount that the
sponsor has available for sale on any particular day. Of course, no assurances
can be given that the market value of the securities will not be adversely
affected during the termination proceedings.
Within a reasonable period after termination, the trustee will sell any
securities remaining in a trust and, after paying all expenses and charges
incurred by the trust, will distribute to unitholders thereof their pro rata
share of the balances remaining in the Income and Capital Accounts of the
trust.
The sponsor currently intends, but is not obligated, to offer for sale
units of a subsequent series of certain trusts at approximately one year after
the inception date of such trusts. If the sponsor does offer such units for
sale, unitholders may be given the opportunity to purchase such units at a
public offering price. There is, however, no assurance that units of any new
series of a trust will be offered for sale at that time, or if offered, that
there will be sufficient units available for sale to meet the requests of any
or all unitholders.
The Trustee. The trustee is The Bank of New York Mellon, a trust company
organized under the laws of New York. The Bank of New York Mellon has its Unit
Investment Trust Division offices at 2 Hanson Place, 12th Fl., Brooklyn, New
York 11217, telephone 1-800-701-8178. The Bank of New York Mellon is subject to
supervision and examination by the Superintendent of Banks of the State of New
York and the Board of Governors of the Federal Reserve System, and its deposits
are insured by the Federal Deposit Insurance Corporation to the extent
permitted by law.
The trustee, whose duties are ministerial in nature, has not participated
in selecting the portfolio of any trust. In accordance with the trust
agreement, the trustee shall keep records of all transactions at its office.
Such records shall include the name and address of, and the number of units
held by, every unitholder of a trust. Such books and records shall be open to
inspection by any unitholder at all reasonable times during usual business
hours. The trustee shall make such annual or other reports as may from time to
time be required under any applicable state or federal statute, rule or
regulation. The trustee shall keep a certified copy or duplicate original of
the trust agreement on file in its office available for inspection at all
reasonable times during usual business hours by any unitholder, together with a
current list of the securities held in each trust. Pursuant to the trust
agreement, the trustee may employ one or more agents for the purpose of custody
and safeguarding of securities comprising a trust.
Under the trust agreement, the trustee or any successor trustee may resign
and be discharged of a trust created by the trust agreement by executing an
instrument in writing and filing the same with the sponsor. The trustee or
successor trustee must mail a copy of the notice of resignation to all
unitholders then of record, not less than sixty days before the date specified
in such notice when such resignation is to take effect. The sponsor upon
receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within thirty days after
notification, the retiring trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The sponsor may at any time
remove the trustee, with or without cause, and appoint a successor trustee as
provided in the trust agreement. Notice of such removal and appointment shall
be mailed to each unitholder by the sponsor. Upon execution of a written
acceptance of such appointment by such successor trustee, all the rights,
powers, duties and obligations of the original trustee shall vest in the
successor. The trustee must be a corporation organized under the laws of the
United States, or any state thereof, be authorized under such laws to exercise
trust powers and have at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
The Sponsor. Guggenheim Funds Distributors, LLC specializes in the
creation, development and distribution of investment solutions for advisors and
their valued clients. Guggenheim Funds Distributors, LLC was created as Ranson
& Associates, Inc. in 1995 and is the successor sponsor to unit investment
trusts formerly sponsored by EVEREN Unit Investment Trusts, a service of EVEREN
Securities, Inc. Guggenheim Funds Distributors, LLC is also the sponsor and
successor sponsor of Series of Ranson Unit Investment Trusts and The Kansas
Tax-Exempt Trust and Multi-State Series of The Ranson Municipal Trust. On
October 29, 2001, Ranson & Associates, Inc. was acquired by Claymore Group LLC.
The sale to Claymore Group LLC was financed by a loan from The Bank of New York
Mellon, the trustee. In November 2001, the sponsor changed its name from Ranson
& Associates, Inc. to Claymore Securities, Inc. On October 14, 2009, Guggenheim
Partners, LLC acquired Claymore Securities, Inc. Since the finalization of the
acquisition, Claymore Securities, Inc. has been operating as a subsidiary of
Guggenheim Partners, LLC. On September 27, 2010, Claymore Securities, Inc.
officially changed its name to Guggenheim Funds Distributors, LLC.
Guggenheim Funds Distributors, LLC has been active in public and corporate
finance, has underwritten closed-end funds and has sold bonds, mutual funds,
closed-end funds, exchange-traded funds, structured products and unit
investment trusts and maintained secondary market activities relating thereto.
At present, Guggenheim Funds Distributors, LLC which is a member of the
Financial Industry Regulatory Authority (FINRA), is the sponsor to each of the
above-named unit investment trusts. The sponsor's offices are located at 2455
Corporate West Drive, Lisle, Illinois 60532.
If at any time the sponsor shall fail to perform any of its duties under
the trust agreement or shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or shall have its affairs taken over by public
authorities, then the trustee may (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 Supervisor and the Evaluator. Guggenheim Funds Distributors, LLC, the
sponsor, also serves as evaluator and supervisor. The evaluator and supervisor
may resign or be removed by the trustee in which event the trustee is to use
its best efforts to appoint a satisfactory successor. Such resignation or
removal shall become effective upon acceptance of appointment by the successor
evaluator. If upon resignation of the evaluator no successor has accepted
appointment within thirty days after notice of resignation, the evaluator may
apply to a court of competent jurisdiction for the appointment of a successor.
Notice of such registration or removal and appointment shall be mailed by the
trustee to each unitholder. As evaluator, Guggenheim Funds Distributors, LLC
utilizes the trustee to perform certain evaluation services.
Limitations on Liability. The sponsor is liable for the performance of its
obligations arising from its responsibilities under the trust agreement, but
will be under no liability to the unitholders for taking any action or
refraining from any action in good faith pursuant to the trust agreement or for
errors in judgment, except in cases of its own gross negligence, bad faith or
willful misconduct or its reckless disregard for its duties thereunder. The
sponsor shall not be liable or responsible in any way for depreciation or loss
incurred by reason of the sale of any securities.
The trust agreement provides that the trustee shall be under no liability
for any action taken in good faith in reliance upon prima facie properly
executed documents or for the disposition of moneys, securities or certificates
except by reason of its own gross negligence, bad faith or willful misconduct,
or its reckless disregard for its duties under the trust agreement, nor shall
the trustee be liable or responsible in any way for depreciation or loss
incurred by reason of the sale by the trustee of any securities. In the event
that the sponsor shall fail to act, the trustee may act and shall not be liable
for any such action taken by it in good faith. The trustee shall not be
personally liable for any taxes or other governmental charges imposed upon or
in respect of the securities or upon the interest thereof. In addition, the
trust agreement contains other customary provisions limiting the liability of
the trustee.
The unitholders may rely on any evaluation furnished by the evaluator and
shall have no responsibility for the accuracy thereof. The trust agreement
provides that the determinations made by the evaluator shall be made in good
faith upon the basis of the best information available to it, provided,
however, that the evaluator shall be under no liability to the trustee or
unitholders for errors in judgment, but shall be liable for its gross
negligence, bad faith or willful misconduct or its reckless disregard for its
obligations under the trust agreement.
Expenses of the Trust
The sponsor does not charge a trust an annual advisory fee. The sponsor
will receive a portion of the sale commissions paid in connection with the
purchase of units and will share in profits, if any, related to the deposit of
securities in the trust. The sponsor and/or its affiliates do, also, receive an
annual fee as set forth in Part A of the prospectus for maintaining
surveillance over the portfolio and for performing certain administrative
services for the trust (the "Sponsor's Supervisory Fee"). In providing such
supervisory services, the sponsor may purchase research from a variety of
sources, which may include dealers of the trusts. If so provided in Part A of
the prospectus, the sponsor may also receive an annual fee for providing
bookkeeping and administrative services for a trust (the "Bookkeeping and
Administrative Fee"). Such services may include, but are not limited to, the
preparation of various materials for unitholders and providing account
information to the unitholders. If so provided in Part A of the prospectus, the
evaluator may also receive an annual fee for performing evaluation services for
the trusts (the "Evaluator's Fee"). In addition, if so provided in Part A of
the prospectus, a trust may be charged an annual licensing fee to cover
licenses for the use of service marks, trademarks, trade names and intellectual
property rights and/or for the use of databases and research. The trust will
bear all operating expenses. Estimated annual trust operating expenses are as
set forth in Part A of the prospectus; if actual expenses are higher than the
estimate, the excess will be borne by the trust. The estimated expenses include
listing fees but do not include the brokerage commissions and other
transactional fees payable by the trust in purchasing and selling securities.
The trustee receives for its services that fee set forth in Part A of the
prospectus. The trustee's fee, which is paid monthly, is based on the largest
number of units of a trust outstanding at any time during the primary offering
period. After the primary offering period, the fee shall accrue daily and be
based on the number of units outstanding on the first business day of each
calendar year in which the fee is calculated or the number of units outstanding
at the end of the primary offering period, as appropriate. The Sponsor's
Supervisory Fee, the Bookkeeping and Administrative Fee and the Evaluator's Fee
are paid monthly and are based on the largest number of units of a trust
outstanding at any time during the primary offering period. After the primary
offering period, these fees shall accrue daily and be based on the number of
units outstanding on the first business day of each calendar year in which a fee
is calculated or the number of units outstanding at the end of the primary
offering period, as appropriate. The trustee benefits to the extent there are
funds for future distributions, payment of expenses and redemptions in the
Capital and Income Accounts since these Accounts are non-interest bearing and
the amounts earned by the trustee are retained by the trustee. Part of the
trustee's compensation for its services to a trust is expected to result from
the use of these funds. In addition, the Sponsor's Supervisory Fee, Bookkeeping
and Administrative Fee, Evaluator's Fee and the Trustee's Fee may be adjusted in
accordance with the cumulative percentage increase of the United States
Department of Labor's Consumer Price Index entitled "All Services Less Rent"
since the establishment of the trust. In addition, with respect to any fees
payable to the sponsor or an affiliate of the sponsor for providing bookkeeping
and other administrative services, supervisory services and evaluation services,
such individual fees may exceed the actual costs of providing such services for
a trust, but at no time will the total amount received for such services, in the
aggregate, rendered to all unit investment trusts of which Guggenheim Funds
Distributors, LLC is the sponsor in any calendar year exceed the actual cost to
the sponsor or its affiliates of supplying such services, in the aggregate, in
such year. In addition, the trustee may reimburse the sponsor out of its own
assets for services performed by employees of the sponsor in connection with the
operation of your trust.
The trust will also pay a fee to the sponsor for creating and developing
the trust, including determining the trust's objective, policies, composition
and size, selecting service providers and information services, and for
providing other similar administrative and ministerial functions. Your trust
pays this "creation and development fee" as a fixed dollar amount at the close
of the initial offering period. The sponsor does not use the fee to pay
distribution expenses or as compensation for sales efforts.
The following additional charges are or may be incurred by the trust: (i)
fees for the trustee's extraordinary services; (ii) expenses of the trustee
(including legal and auditing expenses, but not including any fees and expenses
charged by an agent for custody and safeguarding of securities) and of counsel,
if any; (iii) various governmental charges; (iv) expenses and costs of any
action taken by the trustee to protect the trust or the rights and interests of
the unitholders; (v) indemnification of the trustee for any loss, liability or
expense incurred by it in the administration of the trust not resulting from
gross negligence, bad faith or willful misconduct on its part; (vi)
indemnification of the sponsor for any loss, liability or expense incurred in
acting in that capacity without gross negligence, bad faith or willful
malfeasance or its reckless disregard for its obligations under the trust
agreement; (vii) any offering costs incurred after the end of the initial
offering period; and (viii) expenditures incurred in contacting unitholders
upon termination of the trust. The fees and expenses set forth herein are
payable out of a trust and, when owing to the trustee, are secured by a lien on
the trust. Since the securities are all stocks, and the income stream produced
by dividend payments, if any, is unpredictable, the sponsor cannot provide any
assurance that dividends will be sufficient to meet any or all expenses of a
trust. If the balances in the Income and Capital Accounts are insufficient to
provide for amounts payable by the trust, the trustee has the power to sell
securities to pay such amounts. These sales may result in capital gains or
losses to unitholders. It is expected that the income stream produced by
dividend payments may be insufficient to meet the expenses of a trust and,
accordingly, it is expected that securities will be sold to pay all of the fees
and expenses of the trust.
The trust shall also bear the expenses associated with updating the
trust's registration statement and maintaining registration or qualification of
the units and/or a trust under federal or state securities laws subsequent to
initial registration. Such expenses shall include legal fees, accounting fees,
typesetting fees, electronic filing expenses and regulatory filing fees. The
expenses associated with updating registration statements have been
historically paid by a unit investment trust's sponsor.
Portfolio Transactions and Brokerage Allocation
When a trust sells securities, the composition and diversity of the
securities in the trust may be altered. In order to obtain the best price for a
trust, it may be necessary for the supervisor to specify minimum amounts (such
as 100 shares) in which blocks of securities are to be sold. In effecting
purchases and sales of a trust's portfolio securities, the sponsor may direct
that orders be placed with and brokerage commissions be paid to brokers,
including brokers which may be affiliated with the trust, the sponsor or
dealers participating in the offering of units.
Purchase, Redemption and Pricing of Units
Public Offering Price. Units of a trust are offered at the public offering
price (which is based on the aggregate underlying value of the securities in
the trust and includes the initial sales fee, if applicable, plus a pro rata
share of any accumulated amounts in the accounts of the trust). The initial
sales fee is equal to the difference between the maximum sales fee and the sum
of the remaining deferred sales fee and the creation and development fee ("C&D
Fee"). The maximum sales fee is set forth in Part A of the prospectus. The
deferred sales fee and the C&D Fee will be collected as described in this
prospectus. Units purchased subsequent to the initial deferred sales fee
payment will be subject to the initial sales fee, the remaining deferred sales
fee payments and the C&D Fee. Units sold or redeemed prior to such time as the
entire applicable deferred sales fee has been collected will be assessed the
remaining deferred sales fee at the time of such sale or redemption. During the
initial offering period, a portion of the public offering price includes an
amount of securities to pay for all or a portion of the costs incurred in
establishing a trust ("organization costs"). These organization costs include
the cost of preparing the registration statement, the trust indenture and other
closing documents, registering units with the Securities and Exchange
Commission and states, the initial audit of the trust portfolio, legal fees,
fees paid to a portfolio consultant for assisting the sponsor in selecting the
trust's portfolio, and the initial fees and expenses of the trustee. These
costs will be deducted from a trust as of the end of the initial offering
period or after six months, at the discretion of the sponsor. As indicated
above, the initial public offering price of the units was established by
dividing the aggregate underlying value of the securities by the number of
units outstanding. Such price determination as of the opening of business on
the date a trust was created was made on the basis of an evaluation of the
securities in the trust prepared by the evaluator. After the opening of
business on this date, the evaluator will appraise or cause to be appraised
daily the value of the underlying securities as of the close of the New York
Stock Exchange on days the New York Stock Exchange is open and will adjust the
public offering price of the units commensurate with such valuation. Such
public offering price will be effective for all orders properly received at or
prior to the close of trading on the New York Stock Exchange on each such day.
Orders received by the trustee, sponsor or any dealer for purchases, sales or
redemptions after that time, or on a day when the New York Stock Exchange is
closed, will be held until the next determination of price.
The value of the securities is determined on each business day by the
evaluator based on the closing sale prices on a national securities exchange or
the NASDAQ National Market System or by taking into account the same factors
referred to under "Computation of Redemption Price."
Public Distribution of Units. During the initial offering period, units of
a trust will be distributed to the public at the public offering price thereof.
Upon the completion of the initial offering, units which remain unsold or which
may be acquired in the secondary market may be offered at the public offering
price determined in the manner provided above.
The sponsor intends to qualify units of a trust for sale in a number of
states. Units will be sold through dealers who are members of FINRA and through
others. Broker-dealers and others will be allowed a concession or agency
commission in connection with the distribution of units during the initial
offering period as set forth in the prospectus.
The sponsor reserves the right to reject, in whole or in part, any order
for the purchase of units.
Sponsor Profits. The sponsor will receive gross sales fees equal to the
percentage of the public offering price of the units of a trust described in the
prospectus. In addition, the sponsor may realize a profit (or sustain a loss) as
of the date a trust is created resulting from the difference between the
purchase prices of the securities to the sponsor and the cost of such securities
to the trust. Thereafter, on subsequent deposits the sponsor may realize profits
or sustain losses from such deposits. The sponsor may realize additional profits
or losses during the initial offering period on unsold units as a result of
changes in the daily market value of the securities in the trust.
Market for Units. After the initial offering period, the sponsor may
maintain a market for units of a trust offered hereby and continuously offer to
purchase said units at prices, determined by the evaluator, based on the value
of the underlying securities. Unitholders who wish to dispose of their units
should inquire of their broker as to current market prices in order to
determine whether there is in existence any price in excess of the redemption
price and, if so, the amount thereof. Unitholders who sell or redeem units
prior to such time as the entire deferred sales fee on such units has been
collected will be assessed the amount of the remaining deferred sales fee at
the time of such sale or redemption. The offering price of any units resold by
the sponsor will be in accord with that described in the currently effective
prospectus describing such units. Any profit or loss resulting from the resale
of such units will belong to the sponsor. If the sponsor decides to maintain a
secondary market, it may suspend or discontinue purchases of units of the trust
if the supply of units exceeds demand, or for other business reasons.
Redemption. A unitholder who does not dispose of units in the secondary
market described above may cause units to be redeemed by the trustee by making a
written request to the trustee at its Unit Investment Trust Division office in
the city of New York. Unitholders must sign the request, and such transfer
instrument, exactly as their names appear on the records of the trustee. If the
amount of the redemption is $500 or less and the proceeds are payable to the
unitholder(s) of record at the address of record, no signature guarantee is
necessary for redemptions by individual account owners (including joint owners).
Additional documentation may be requested, and a signature guarantee is always
required, from corporations, executors, administrators, trustees, guardians or
associations. The signatures must be guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other signature
guaranty program in addition to, or in substitution for, STAMP, as may be
accepted by the trustee.
Redemption shall be made by the trustee no later than the third business
day following the day on which a tender for redemption is received (the
"Redemption Date") by payment of cash equivalent to the redemption price,
determined as set forth below under "Computation of Redemption Price," as of
the close of the New York Stock Exchange next following such tender, multiplied
by the number of units being redeemed. Any units redeemed shall be canceled and
any undivided fractional interest in the related trust extinguished. The price
received upon redemption might be more or less than the amount paid by the
unitholder depending on the value of the securities in the trust at the time of
redemption. Unitholders who sell or redeem units prior to such time as the
entire deferred sales fee on such units has been collected will be assessed the
amount of the remaining deferred sales fee at the time of such sale or
redemption. Certain broker-dealers may charge a transaction fee for processing
redemption requests.
Under regulations issued by the Internal Revenue Service, the trustee is
required to withhold a specified percentage of the principal amount of a unit
redemption if the trustee has not been furnished the redeeming unitholder's tax
identification number in the manner required by such regulations. Any amount so
withheld is transmitted to the Internal Revenue Service and may be recovered by
the unitholder only when filing a tax return. Under normal circumstances the
trustee obtains the unitholder's tax identification number from the selling
broker. However, any time a unitholder elects to tender units for redemption,
such unitholder should make sure that the trustee has been provided a certified
tax identification number in order to avoid this possible "back-up
withholding." In the event the trustee has not been previously provided such
number, one must be provided at the time redemption is requested. Any amounts
paid on redemption representing unpaid dividends shall be withdrawn from the
Income Account of a trust to the extent that funds are available for such
purpose. All other amounts paid on redemption shall be withdrawn from the
Capital Account for a trust.
Unitholders tendering units for redemption may request an in-kind
distribution (a "Distribution In Kind") from the trustee in lieu of cash
redemption. A unitholder may request a Distribution In Kind of an amount and
value of securities per unit equal to the redemption price per unit as
determined as of the evaluation time next following the tender, provided that
the tendering unitholder is (i) entitled to receive at least $25,000 of proceeds
as part of his or her distribution or if he paid at least $25,000 to acquire the
units being tendered; and (ii) the unitholder has elected to redeem at least
thirty business days prior to the termination of the trust. If the unitholder
meets these requirements, a Distribution In Kind will be made by the trustee
through the distribution of each of the securities of the trust in book entry
form to the account of the unitholder's bank or broker-dealer at Depository
Trust Company. The tendering unitholder shall be entitled to receive whole
shares of each of the securities comprising the portfolio of the trust and cash
from the Capital Account equal to the fractional shares to which the tendering
unitholder is entitled. The trustee shall make any adjustments necessary to
reflect differences between the redemption price of the units and the value of
the securities distributed in kind as of the date of tender. If funds in the
Capital Account are insufficient to cover the required cash distribution to the
tendering unitholder, the trustee may sell securities. The in-kind redemption
option may be terminated by the sponsor at any time. The trustee is empowered to
sell securities in order to make funds available for the redemption of units. To
the extent that securities are sold or redeemed in kind, the size of a trust
will be, and the diversity of a trust may be, reduced but each remaining unit
will continue to represent approximately the same proportional interest in each
security. Sales may be required at a time when securities would not otherwise be
sold and may result in lower prices than might otherwise be realized. The price
received upon redemption may be more or less than the amount paid by the
unitholder depending on the value of the securities in the portfolio at the time
of redemption.
Unitholders of a trust that holds closed-end funds or other investment
company securities who request a Distribution In Kind will be subject to any
12b-1 Fees or other service or distribution fees applicable to the underlying
securities.
The right of redemption may be suspended and payment postponed for more
than three business days following the day on which tender for redemption is
made (i) for any period during which the New York Stock Exchange is closed,
other than customary weekend and holiday closings, or during which (as
determined by the Securities and Exchange Commission) trading on the New York
Stock Exchange is restricted; (ii) for any period during which an emergency
exists as a result of which disposal by the trustee of securities is not
reasonably practicable or it is not reasonably practicable to fairly determine
the value of the underlying securities in accordance with the trust agreement;
or (iii) for such other period as the Securities and Exchange Commission may by
order permit. The trustee is not liable to any person in any way for any loss
or damage which may result from any such suspension or postponement.
Computation of Redemption Price. The redemption price per unit (as well as
the secondary market public offering price) will generally be determined on the
basis of the last sale price of the securities in a trust. The redemption price
per unit is the pro rata share of each unit in a trust determined generally on
the basis of (i) the cash on hand in the trust or moneys in the process of
being collected; and (ii) the value of the securities in the trust less (a)
amounts representing taxes or other governmental charges payable out of the
trust, (b) any amount owing to the trustee for its advances and (c) the accrued
expenses or remaining deferred sales fees of the trust. During the initial
offering period, the redemption price and the secondary market repurchase price
will also include estimated organizational costs. The evaluator may determine
the value of the securities in the trust in the following manner: if the
securities are listed on a national or foreign securities exchange or the
NASDAQ National Market System, such evaluation shall generally be based on the
last available sale price on or immediately prior to the Evaluation Time on the
exchange or NASDAQ National Market System which is the principal market
therefor, which shall be deemed to be the New York Stock Exchange if the
securities are listed thereon (unless the evaluator deems such price
inappropriate as a basis for evaluation) or, if there is no such available sale
price on such exchange, at the last available bid prices (offer prices for
primary market purchases) of the securities. Securities not listed on the New
York Stock Exchange but principally traded on the NASDAQ National Market System
will be valued at the NASDAQ National Market System's official closing price.
If the securities are not so listed or, if so listed, the principal market
therefor is other than on such exchange or there is no such available sale
price on such exchange, such evaluation shall generally be based on the
following methods or any combination thereof whichever the evaluator deems
appropriate: (i) on the basis of the current bid price (offer prices for
primary market purchases) for comparable securities (unless the evaluator deems
such price inappropriate as a basis for evaluation); (ii) by determining the
valuation of the securities on the bid side (offer side for primary market
purchases) of the market by appraisal; or (iii) by any combination of the
above. Notwithstanding the foregoing, the evaluator or its designee, will
generally value foreign securities primarily traded on foreign exchanges at
their fair value which may be other than their market price. If the trust holds
securities denominated in a currency other than U.S. dollars, the evaluation of
such security is based upon U.S. dollars based on current bid side (offer side
for primary market purchases) exchange rates (unless the evaluator deems such
prices inappropriate as a basis for valuation).
Retirement Plans. A trust may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other qualified retirement
plans. Generally, capital gains and income received under each of the foregoing
plans are deferred from federal taxation. All distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible for
special income averaging or tax deferred rollover treatment. Investors
considering participation in any such plan should review specific tax laws
related thereto and should consult their attorneys or tax advisers with respect
to the establishment and maintenance of any such plan. Such plans are offered
by brokerage firms and other financial institutions. The trust will lower the
minimum investment requirement for IRA accounts to 1 unit. Fees and charges
with respect to such plans may vary.
Ownership of Units. Ownership of units will not be evidenced by
certificates. All evidence of ownership of units will be recorded in book entry
form at Depository Trust Company ("DTC") through an investor's brokers'
account. Units held through DTC will be registered in the nominee name of Cede
& Co. Individual purchases of beneficial ownership interest in the trust will
be made in book entry form through DTC. Ownership and transfer of units will be
evidenced and accomplished by book entries made by DTC and its participants.
DTC will record ownership and transfer of the units among DTC participants and
forward all notices and credit all payments received in respect of the units
held by the DTC participants. Beneficial owners of units will receive written
confirmation of their purchases and sale from the broker dealer or bank from
whom their purchase was made. Units are transferable by making a written
request properly accompanied by a written instrument or instruments of transfer
which should be sent registered or certified mail for the protection of the
unitholder. Record holders must sign such written request exactly as their
names appear on the records of the trust. The signatures must be guaranteed by
a participant in the STAMP or such other signature guaranty program in addition
to, or in substitution for, STAMP, as may be acceptable by the trustee.
Units may be purchased in denominations of one unit or any multiple
thereof, subject to the minimum investment requirement. Fractions of units, if
any, will be computed to three decimal places.
Taxes
This section summarizes some of the main U.S. federal income tax
consequences of owning units of the trust. This section is current as of the
date of this prospectus. Tax laws and interpretations change frequently, and
these summaries do not describe all of the tax consequences to all taxpayers.
For example, these summaries generally do not describe your situation if you
are a corporation, a non-U.S. person, a broker/dealer, or other investor with
special circumstances. In addition, this section does not describe your state,
local or foreign tax consequences.
This federal income tax summary is based in part on the advice of counsel
to the sponsor. The Internal Revenue Service could disagree with any
conclusions set forth in this section. In addition, our counsel was not asked
to review, and has not reached a conclusion with respect to the federal income
tax treatment of the assets to be deposited in the trust. This may not be
sufficient for you to use for the purpose of avoiding penalties under federal
tax law.
As with any investment, you should seek advice based on your individual
circumstances from your own tax advisor.
Trust Status. 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 your trust's
distributions into two categories, ordinary income distributions and capital
gains dividends. Ordinary income distributions are generally taxed at your
ordinary tax rate, however, as further discussed below, certain ordinary income
distributions received from the trust may be taxed at the capital gains tax
rates. Generally, you will treat all capital gains dividends as long-term
capital gains regardless of how long you have owned your units. To determine
your actual tax liability for your capital gains dividends, you must calculate
your total net capital gain or loss for the tax year after considering all of
your other taxable transactions, as described below. In addition, the trust may
make distributions that represent a return of capital for tax purposes and thus
will generally not be currently taxable to you. The tax status of your
distributions from your trust is not affected by whether you reinvest your
distributions in additional units or receive them in cash. The income from your
trust that you must take into account for federal income tax purposes is not
reduced by amounts used to pay a deferred sales fee, if any. The tax laws may
require you to treat distributions made to you in January as if you had
received them on December 31 of the previous year. Income from the trust may
also be subject to a 3.8 percent "medicare tax." This tax generally applies to
your net investment income if your adjusted gross income exceeds certain
threshold amounts, which are $250,000 in the case of married couples filing
joint returns and $200,000 in the case of single individuals.
Dividends Received Deduction. A corporation that owns units generally will
not be entitled to the dividends received deduction with respect to many
dividends received from the trust because the dividends received deduction is
generally not available for distributions from regulated investment companies.
Sale or Redemption of Shares. If you sell or redeem your units, you will
generally recognize a taxable gain or loss. To determine the amount of this
gain or loss, you must subtract your tax basis in your units from the amount
you receive in the transaction. Your tax basis in your units is generally equal
to the cost of your units, generally including sales charges. In some cases,
however, you may have to adjust your tax basis after you purchase your units.
Capital Gains and Losses and Certain Ordinary Income Dividends. If you are
an individual, the maximum marginal 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. Some capital gains, including some portion of your capital
gains dividends, may be taxed at a higher stated tax rate. Capital gain
received from assets held for more than one year that is considered
"unrecaptured section 1250 gain" (which may be the case, for example, with some
capital gains attributable to the REITs included in the trust) is taxed at a
maximum stated tax rate of 25%. In the case of capital gains dividends, the
determination of which portion of the capital gains dividend, if any, is
subject to the 25% tax rate, will be made based on rules prescribed by the
United States Treasury. 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.
Ordinary income dividends received by an individual unitholder from a
regulated investment company such as the trust are generally taxed at the same
rates that apply to net capital gain (as discussed above), provided certain
holding period requirements are satisfied and provided the dividends are
attributable to qualifying dividends received by the trust itself. Dividends
from REITs such as those held by the trust are qualifying dividends only in
limited circumstances. The trust will provide notice to its unitholders of the
amount of any distribution which may be taken into account as a dividend which
is eligible for the capital gains tax rates.
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 when your trust terminates. 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.
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. Because your trust invests in 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 unit of the taxes your trust paid to other countries. You may be
able to deduct or receive a tax credit for your unit of these taxes.
Investments in Certain Foreign Corporations. If the trust holds an equity
interest in any "passive foreign investment companies" ("PFICs"), which are
generally certain foreign corporations that receive at least 75% of their annual
gross income from passive sources (such as interest, dividends, certain rents
and royalties or capital gains) or that hold at least 50% of their assets in
investments producing such passive income, the trust could be subject to U.S.
federal income tax and additional interest charges on gains and certain
distributions with respect to those equity interests, even if all the income or
gain is timely distributed to its unitholders. The trust will not be able to
pass through to its unitholders any credit or deduction for such taxes. The
trust may be able to make an election that could ameliorate these adverse tax
consequences. In this case, the trust would recognize as ordinary income any
increase in the value of such PFIC units, and as ordinary loss any decrease in
such value to the extent it did not exceed prior increases included in income.
Under this election, the trust might be required to recognize in a year income
in excess of its distributions from PFICs and its proceeds from dispositions of
PFIC stock during that year, and such income would nevertheless be subject to
the distribution requirement and would be taken into account for purposes of the
4% excise tax. Dividends paid by PFICs are not treated as qualified dividend
income.
Foreign Investors. If you are a foreign investor (i.e., an investor other
than a U.S. citizen or resident or a U.S. corporation, partnership, estate or
trust), you should be aware that, generally, subject to applicable tax treaties,
distributions from the trust will be characterized as dividends for federal
income tax purposes (other than dividends which the trust 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 from the
trust that are properly reported by the trust as an interest-related dividend
attributable to certain interest income received by the trust or as a short-term
capital gain dividend attributable to certain net short-term capital gain income
received by the trust may not be subject to U.S. federal income taxes, including
withholding taxes when received by certain foreign investors, provided that the
trust makes certain elections and certain other conditions are met. In addition,
distributions 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, 2018.
Experts
Legal Matters. Chapman and Cutler LLP, 111 West Monroe Street, Chicago,
Illinois 60603, acts as counsel for the trust and has passed upon the legality
of the units.
Independent Registered Public Accounting Firm. The statement of financial
condition, including the Trust Portfolio, appearing herein, has been audited by
Grant Thornton LLP, an independent registered public accounting firm, as set
forth in their report thereon appearing elsewhere herein, and is included in
reliance on such report given on the authority of such firm as experts in
accounting and auditing.
GUGGENHEIM DEFINED PORTFOLIOS
GUGGENHEIM PORTFOLIO PROSPECTUS-PART B
__________, 2017
Where to Learn More
You can contact us for free information about this and other investments.
Visit us on the Internet
http://www.guggenheiminvestments.com
Call Guggenheim Funds
(800) 345-7999
Pricing Line (888) 248-4954
Call The Bank of New York Mellon
(800) 701-8178 (investors)
(800) 647-3383 (brokers)
Additional Information
This prospectus does not contain all information filed with the Securities
and Exchange Commission. To obtain a copy of this information (a duplication fee
may be required):
E mail: publicinfo@sec.gov
Write: Public Reference Room
Washington, D.C. 20549-0102
Visit: http://www.sec.gov (EDGAR Database)
Call: 1-202-942-8090 (only for information on the operation of the Public
Reference Room)
When units of the trust are no longer available, we may use this
prospectus as a preliminary prospectus for a future trust. In this case you
should note that:
The information in this prospectus is not complete with respect to future
trusts and may be changed. No one may sell units of a future trust until a
registration statement is filed with the Securities and Exchange Commission and
is effective. This prospectus is not an offer to sell units and is not
soliciting an offer to buy units in any state where the offer or sale is not
permitted.
Contents
Investment Summary
--------------------------------------------------------
A concise 2 Overview
description 2 Investment Objective
of essential 2 Principal Investment Strategy
information 2 Security Selection
about the 5 Future Trusts
portfolio 5 Hypothetical Performance Information
7 Essential Information
7 Portfolio Diversification
8 Principal Risks
9 Who Should Invest
10 Fees and Expenses
11 Example
12 Trust Portfolio
Understanding Your Investment
--------------------------------------------------------
Detailed 14 How to Buy Units
information 18 How to Sell Your Units
to help you 19 Distributions
understand 19 Investment Risks
your 23 How the Trust Works
investment 24 General Information
25 Expenses
27 Report of Independent Registered Public
Accounting Firm
28 Statement of Financial Condition
For the Table of Contents of Part B, see Part B of the prospectus.
Where to Learn More
--------------------------------------------------------------------------------
You can contact us for Visit us on the Internet
free information about http://www.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 Room, Washington, D.C. 20549-0102
Visit: http://www.sec.gov (EDGAR Database)
Call: 1-202-942-8090 (only for information on
the operation of the Public Reference Room)
Refer to:
Guggenheim Defined Portfolios, Series 1664
Securities Act file number: 333-219894
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
European High Dividend Portfolio, Series 9
LOGO UNIT INVESTMENT TRUSTS
Guggenheim Defined Portfolios Series 1664
DATED __________, 2017
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. 2 to the Registration Statement on Form S-6 for
Claymore Securities Defined Portfolios, Series 116 (File No.
333-72828) filed on December 18, 2001).
2.1 Code of Ethics (Reference is made to Exhibit 2.1 to the Registration
Statement on Form S-6 for Claymore Securities Deferred Portfolios,
Series 213 (File No. 333-122184) filed on February 9, 2005).
3.1 Opinion of counsel as to legality of the securities being registered
including a consent to the use of its name in the Registration
Statement (to be supplied by amendment).
3.2 Opinion of counsel as to 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 1601
(File No. 333-217117) filed on April 3, 2017).
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Guggenheim Defined Portfolios, Series 1664 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
18th day of September, 2017.
GUGGENHEIM DEFINED PORTFOLIOS, SERIES 1664,
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
) Attorney-in-Fact*
DONALD C. CACCIAPAGLIA* Chief Executive Officer and )
President of Guggenheim Funds ) September 18, 2017
Distributors, LLC )
)
DOMINICK COGLIANDRO* Chief Operating Officer of ) September 18, 2017
Guggenheim Funds Distributors, )
LLC )
)
JULIE JACQUES* Treasurer of Guggenheim Funds ) September 18, 2017
Distributors, LLC )
)
JULIE JACQUES* Principal Financial Officer of ) September 18, 2017
Guggenheim Funds Distributors, )
LLC )
FARHAN SHARAFF Chief Investment Officer of
Guggenheim Funds Distributors,
LLC
/s/ Amy Lee Vice President and Secretary of September 18, 2017
------------------- 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 1601
on April 3, 2017.
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 1664
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 December 18, 2001 relative to Claymore Securities
Defined Portfolios, Series 116.
CHAPMAN AND CUTLER LLP
Chicago, Illinois
September 18, 2017