The Convertible & Income Portfolio of Funds, Series 18 ("Trust") seeks to provide current income and the potential for capital appreciation.
Past performance is no guarantee of future results. Investment returns and principal value will fluctuate with changes in market conditions. Investors' units, when redeemed, may be worth more or less than their original cost.
This information does not constitute an offer to sell or a solicitation of any offer to buy: nor shall there be any sale of these securities in any state where the offer, solicitation, or sale is not permitted.
Principal Investment Strategy
Under normal circumstances, the Trust will invest at least 80% of the value of its assets in common shares of closed-end investment companies (“Closed-End Funds”) that invest substantially all of their assets in convertible securities and/or income-producing securities and shares of an exchange-traded fund (“ETF”) that invests substantially all of its assets in convertible securities.
The Closed-End Funds and ETF included in the Trust’s portfolio invest in a wide range of convertible securities and debt securities rated below-investment grade through investment grade. High-yield, below-investment grade securities or “junk” bonds are considered to be speculative and are subject to greater market and credit risks than investment-grade securities.
Please see “Principal Risks” and “Investment Risks” for additional information concerning the risks associated with investing in high-yield securities or “junk” bonds.
The Closed-End Funds and ETF included in the Trust’s portfolio invest in convertible securities and debt securities, which may include senior loans and debt securities with short-term, medium-term and long-term maturities. Typically, fixed-income securities with longer periods before maturity are more sensitive to interest rate changes. The Sponsor will also consider the duration of the securities held by the Closed-End Funds included in the Trust’s portfolio. The duration of a bond is a measure of its price sensitivity to changes in interest rates based on the weighted average term to maturity of its interest and principal cash flows. In general, rising interest rates may lead to a decline in bond prices and declining interest rates may lead to a rise in bond prices. For example, if a bond has a duration of 3 years and interest rates go up by 1%, it can be expected that the bond price will move down by 3%. See “Principal Risks” and “Investment Risks” for additional information concerning the risks associated with investing in fixed-income securities of short, medium, and long-term durations.
In addition, certain of the Closed-End Funds and the ETF invest in foreign securities, including securities issued by companies located in emerging markets.
Guggenheim Funds, through proprietary research and strategic alliances, will strive to select Closed-End Funds and an ETF featuring the potential for current income, diversification and overall liquidity.
See “Investment Policies” in Part B of the prospectus for additional information.
The Sponsor has selected for the portfolio Closed-End Funds and an ETF believed to have the best potential to achieve the Trust’s investment objective.
As of the Trust’s initial date of deposit (the “Inception Date”), 100% of the Trust’s portfolio is invested in a combination of shares of Closed-End Funds that invest substantially all of their assets in convertible securities and/or income-producing securities including but not limited to high-yield securities or “junk” bonds and preferred securities, and an ETF that invests substantially all of its assets in convertible securities.
When selecting Closed-End Funds for inclusion in this portfolio the Sponsor looks at numerous factors. These factors include, but are not limited to:
• Investment Objective. The Sponsor favors funds that have a clear investment objective in line with the Trust’s objective and, based upon a review of publicly available information, appear to be maintaining it.
The Sponsor will seek to select an ETF for inclusion in the Trust portfolio that invests substantially all of its assets in convertible securities. When selecting the ETF the Sponsor looks at numerous factors. These factors include, but are not limited to: duration, maturity and liquidity. As of the Inception Date, the ETF comprised approximately 20% of the Trust’s portfolio.
ETFs are investment pools that hold securities. ETFs provide an efficient and relatively simple way to invest in that they offer investors the opportunity to buy and sell an entire basket of securities with a single transaction throughout the trading day. ETFs are built like an index fund, but trade like a stock. They are generally designed to track a specific index and offer investors lower costs and improved tax efficiency over traditional, actively managed mutual funds. ETFs generally offer advantages similar to those found in index funds such as low operating costs, performance designed to track an index, the potential for high tax efficiency and consistent investment strategies. Unlike conventional mutual funds, ETFs normally issue and redeem shares on a continuous basis at their net asset value in large specified blocks of shares, known as “creation units.” Market makers, large investors and institutions deal in creation units. The Trust will buy shares of the ETF on the exchanges and will incur brokerage costs.
Risks and Other Considerations
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:
• 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.
See “Investment Risks” in Part A of the prospectus and “Risk Factors” in Part B of the prospectus for additional information.
Please see the Trust prospectus for more complete risk information.
Unit Investment Trusts are fixed, not actively managed and should be considered as part of a long-term strategy. Investors should consider their ability to invest in successive portfolios, if available, at the applicable sales charge. UITs are subject to annual fund operating expenses in addition to the sales charge. Investors should consult an attorney or tax advisor regarding tax consequences associated with an investment from one series to the next, if available, and with the purchase or sale of units. Guggenheim Funds Distributors, LLC does not offer tax advice.
Read a prospectus and summary prospectus (if available) carefully before investing. It contains the investment objective, risks charges, expenses and the other information, which should be considered carefully before investing. To obtain a prospectus and summary prospectus (if available) click here or call 800.820.0888.
Investing involves risk, including the possible loss of principal.
Guggenheim Investments represents the following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Partners Advisors, LLC, Guggenheim Corporate Funding, LLC, Guggenheim Partners Europe Limited, Guggenheim Partners Fund Management (Europe) Limited, Guggenheim Partners Japan Limited, GS GAMMA Advisors, LLC, and Guggenheim Partners India Management. Securities offered through Guggenheim Funds Distributors, LLC.
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