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Guggenheim Build America Bonds Trust Series 5

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Investment Objective

The Guggenheim Build America Bonds Trust, Series 5 ("Trust") seeks to provide a high level of current income and to preserve capital by investing in a portfolio of long-term investment-grade taxable municipal bonds that are principally Build America Bonds.

Principal Investment Strategy

Selection Criteria

Risks and Other Considerations

Portfolio Information

Daily Data

Offer Price N/A
Wrap Fee Price N/A
Liquidation Price $709.00
Estimated Current Return (ECR) 3.82%
Estimated Long Term Return (ELTR) 2.40%
Estimated Current Return (Wrap Fee) 3.82%
Estimated Long Term Return (Wrap Fee) 2.40%
Accrued Interest $0.23
Principal Amount of Bonds* $532.83
Average Maturity 18.4 Years
Estimated Annual Income $27.0800

CUSIPs

Monthly-Cash 40167C488
Monthly-Fee/Cash 40167C496

 

Deposit Information

Inception Date 10/7/2010
Non-Reoffered Date 11/16/2010
Ticker Symbol CGBAEX
Trust Structure RIC
Inception Unit Price $1,001.07
Inception Liquidation Price $952.07
Deferred Sales Charge Dates Feb 2011
Mar 2011
Apr 2011
May 2011

Estimated Annual Income per Unit does take into account the impact of the sale of bonds to pay for the deferred sales charge. Estimated Annual Income per Unit is computed by dividing the estimated annual income of the underlying bonds by the number of units outstanding. The amount may be lower or greater than the above-stated amount due to certain factors that may include, but are not limited to, the selling of bonds to pay for the deferred sales charge, a change in Trust expenses or the sale or maturity of securities in the portfolio. Fees and expenses of the Trust may vary as a result of a variety of factors including the Trust's size, redemption activity, brokerage and other transaction costs and extraordinary expenses.

* Represents the principal amount of the underlying bonds and any cash held in the Trust and does not take into account the impact of the sale of bonds to pay the deferred sales charge or any expenses of the Trust. Bonds will be sold to pay the deferred sales charges, to meet redemptions, to pay expenses and in other limited circumstances. The sale of bonds will affect the principal amount of bonds included in the Trust and the principal amount of bonds per unit. Units of the Trust, when redeemed or upon termination, may be worth more or less than their original cost and there can be no assurance that a unitholder will receive the principal amount of bonds at any particular point in time.

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.


Principal Investment Strategy

As of the Trust’s initial date of deposit (the “Inception Date”), the Trust will invest in a portfolio of taxable municipal bonds, of which at least 80% of its assets will be invested in Build America Bonds. The Sponsor will select bonds that it believes have the best chance to meet the Trust’s investment objective over its life.

Municipal bonds are debt instruments issued by state and local governments to raise money for various public works projects such as highways, airports and schools.

With the signing into law of the American Recovery and Reinvestment Act of 2009 (the “Recovery Act”), an entirely new type of taxable municipal bond, known as “Build America Bonds,” was created. Build America Bonds are largely similar to traditional tax-exempt municipal bonds except that the interest is taxable at the federal, and possibly state and local, levels and they provide a government subsidy feature to the issuer. The federal government reimburses the municipality for 35% (45% in the case of certain bonds) of the interest paid on Build America Bonds issued through 2010. More specifically, a Build America Bond is defined as any obligation (other than a private activity bond) if (i) the interest on such obligation would, but for the new provisions, be excludable from gross income under Section 103 of the Internal Revenue Code, (ii) such obligation is issued before January 1, 2011 and (iii) the issuer makes an irrevocable election to have the new tax credit provision apply. The subsidy provided by the government will allow issuers to offer higher interest rates on bonds than they do on their tax-free debt, while offsetting some or all of the additional financing burden. The available subsidy for any applicable bond in the portfolio will be paid to the bond issuers only; neither the Trust nor unitholders will be entitled to a tax credit.

The Build America Bonds market is smaller and less diverse than the broader municipal bonds market. In addition, because Build America Bonds are a new form of municipal financing and because bonds issued after December 31, 2010 currently will not qualify as Build America Bonds unless the relevant provisions of the Recovery Act are extended, it is difficult to predict the extent to which a market for such bonds will develop. Therefore, Build America Bonds may experience greater illiquidity than other types of municipal bonds.

As of the Inception Date, all of the bonds in the portfolio were rated investment-grade quality by at least one nationally recognized statistical rating organization. Such ratings relate to the underlying bonds and not the units of the Trust. After the Inception Date, a bond’s rating may be lowered. See “Description of Bond Ratings” in the prospectus for additional information.

Certain bonds in the Trust may be covered by insurance policies obtained from municipal bond insurers identified in “Trust Portfolio,” which guarantee payment of principal and interest on the bonds when due. As a result of such insurance, the insured bonds have received ratings that may reflect the creditworthiness of the bond issuer. Please note that the insurance relates only to the insured bonds in the Trust and not to the units or the market value of the bonds or of the units.

The Trust intends to pay interest distributions each month and expects to prorate the interest distributed on an annual basis; see “Distributions” in the prospectus. The record dates and distribution dates for principal and interest distribution dates are the 15th and 25th of each month, respectively. Furthermore, investors may receive principal distributions from bonds being called or sold prior to their maturity or as bonds mature.

The Sponsor has selected Guggenheim Partners Investment Management, LLC ("GPIM"), a wholly-owned subsidiary of Guggenheim Partners, LLC, to assist the Sponsor with the selection of the Trust’s portfolio.

Selection Criteria

The Sponsor considered the following factors, among others, in selecting the bonds:

  • The bonds must be rated as investment-grade or above by at least one nationally recognized statistical rating organization;
  • The price of the bonds relative to other bonds with comparable characteristics;
  • The diversification of bonds with respect to the issuer with no one issuer comprising more than 20% of the final portfolio;
  • Attractiveness of the interest payments relative to bonds with similar characteristics; and
  • The potential for early return of principal or any event risk which could have a negative impact on the price of the bonds.

Guggenheim Partners Investment Management, LLC (GPIM)

Guggenheim Partners Investment Management, LLC, is a subsidiary of Guggenheim Partners, LLC and an affiliate of the Sponsor which offers financial services expertise within its asset management, investment advisory, capital markets, institutional finance and merchant banking business lines. Clients consist of an elite 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” in the prospectus for additional information.

Risks and Other Considerations

As with all investments, you may lose some or all of your investment in the Trust. The value of the units and the bonds held in the portfolio can each decline in value. 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. The Trust also might not perform as well as you expect. This can happen for reasons such as these:

  • The Sponsor does not actively manage the portfolio. Because the portfolio is fixed and not managed, in general, the Sponsor only sells bonds at the Trust’s termination or in order to meet redemptions, for tax purposes or to pay sales charges and expenses. As a result, the price at which a bond is sold may not be the highest price the Trust could have received during the life of the Trust.
  • No assurance can be given that the Trust’s investment objective will be achieved. This objective is subject to the continuing ability of the respective issuers of the bonds to meet their obligations.
  • Due to the current state of the economy, the value of the securities held by the Trust may be subject to steep declines or increased volatility due to changes in performance or perception of the issuers. Starting in December 2007, economic activity declined across all sectors of the economy, and the United States experienced increased unemployment. The economic crisis affected the global economy with European and Asian markets also suffering historic losses. Extraordinary steps have been taken by the governments of several leading countries to combat the economic crisis; however, the impact of these measures is not yet fully known and cannot be predicted.
  • An issuer or an insurer of the bonds may be unwilling or unable to make principal payments and/or interest payments in the future, may call a security before its stated maturity or may reduce the level of payments made. This may result in a reduction in the value of your units.
  • The financial condition of an issuer or an insurer of the bonds may worsen or its credit ratings may drop, resulting in a reduction in the value of your units. This may occur at any point in time, including during the primary offering period.
  • Municipal bonds are fixed-rate debt obligations that generally decline in value with increases in interest rates, an issuer’s or an insurer’s worsening financial condition or a drop in bond ratings. Typically, bonds with longer periods before maturity are more sensitive to interest rate changes.
  • Certain municipal bonds may be rated as investment-grade by only one rating agency. As a result, such split-rated securities may have more speculative characteristics and are subject to a greater risk of default than securities rated as investment-grade by more than one rating agency.
  • Any issuer of a Build America Bond in the Trust portfolio that fails to continue to meet the requirements imposed by the Recovery Act may not receive federal cash subsidy payments, which could impair the issuer’s ability to make scheduled interest payments.
  • Changes in the tax treatment of bonds either due to future legislation or due to the failure of a public issuer of a bond (or private guarantor) to meet certain conditions imposed by various tax laws may have an adverse impact on the value of the units and the bonds held in the Trust.
  • The income generated by the Trust may be reduced over time in response to bond sales, changes in distributions paid by issuers, unit redemptions and expenses.
  • The Trust may sell bonds to meet redemptions, to pay deferred sales fees and expenses, for credit issues and in other circumstances. Accordingly, the size, diversity, composition, returns and income generated by the Trust may be adversely affected. In addition, such sales of bonds may be at a loss. If such sales are substantial enough, provisions of the Trust’s indenture could cause a complete and unexpected liquidation of the Trust before its scheduled maturity, resulting in unanticipated losses for investors.
  • Certain of the bonds included in the Trust may be original issue discount bonds, as noted in “Trust Portfolio.” These bonds may be subject to greater price fluctuations with changing interest rates and contain additional risks.
  • Inflation may lead to a decrease in the value of assets or income from investments.

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 Corporate Funding, LLC, Guggenheim Partners Europe Limited, GS GAMMA Advisors, LLC, and Guggenheim Partners India Management. Securities offered through Guggenheim Funds Distributors, LLC.

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