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Income Closed-End & Treasury Allocation Portfolio Series 3

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Investment Objective

The Income Closed-End & Treasury Allocation Portfolio ("Trust") seeks to provide high current income and the potential for capital appreciation.

Principal Investment Strategy

Selection Criteria

Risks and Other Considerations

Portfolio Information

Deposit Information

Inception Date 1/14/2009
Non-Reoffered Date 5/6/2009
Mandatory Maturity Date 12/8/2010
NASDAQ Ticker Symbol CICECX
Trust Structure GRANTOR
Inception Unit Price $10.0000
Maturity Price (as of 12/8/10) $13.5134

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 either shares of an exchange-traded fund (“ETF”) which tracks a U.S. Treasury bond index, or common stocks of closed-end investment companies (“closed-end funds”) that invest in various income-oriented securities of different asset classes. These asset classes may include, but are not limited to:

  • Government Bonds
  • Mortgage-Backed Bonds
  • Convertible Bonds
  • Preferred Securities
  • Corporate Bonds
  • Senior Loans
  • High Yield Bonds
  • International Bonds

Claymore, through proprietary research and strategic alliances, will strive to select closed-end funds featuring the potential for current income, diversification and overall liquidity.

See “Investment Policies” in Part B of the prospectus for additional information.

Selection Criteria

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 either shares of an ETF which tracks a U.S. Treasury bond index, or closed-end funds that invest in various income-oriented securities of different asset classes.

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.

Premium/Discount. The Sponsor favors funds that are trading at a discount relative to their peers and relative to their long-term average.

Consistent Dividend. The Sponsor favors funds that have a history of paying a consistent and competitive dividend which, in the opinion of the Sponsor, can be maintained. average.

Performance. The Sponsor favors funds that have a history of strong relative performance (based on market price and net asset value) when compared to their peers and an applicable index.

The Sponsor will seek to select an ETF for inclusion in the Trust portfolio which tracks a low duration U.S. Treasury bond index in an effort to dampen the Trust’s duration sensitivity and lower the Trust’s overall volatility. When selecting the ETF the Sponsor looks at numerous factors. These factors include, but are not limited to: duration, maturity and coupon rate. Due to the current economic environment, U.S. Treasury bonds and ETFs that invest in U.S. Treasury bonds are generating yields that are at historic lows. While U.S. Treasury bonds are considered to be some of the most risk adverse securities available, if U.S. Treasury bond yields remain at its current levels, the ETF included in the Trust’s portfolio may not contribute to or may lower the Trust’s performance. As of the Inception Date, the ETF comprised approximately 20% of the Trust’s portfolio.

Risks and Other Considerations

As with all investments, you may lose some or all of your investment in the Trust. 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.
  • The Trust includes an ETF. ETFs are investment pools that hold other securities. ETFs are subject to various risks, including management’s ability to meet the fund’s investment objective, and to manage the fund’s portfolio when the underlying securities are redeemed or sold, during periods of market turmoil and as investors’ perceptions regarding ETFs or their underlying investments change. 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. The Trust and the underlying funds have management and operating expenses. You will bear not only your share of the Trust’s expenses, but also the expenses of the underlying funds. By investing in other funds, the Trust incurs greater expenses than you would incur if you invested directly in the funds.
  • The ETF held by the Trust invests in U.S. Treasury obligations. U.S. Treasury obligations are direct obligations of the United States which are backed by the full faith and credit of the United States. U.S. Treasury obligations are generally not affected by credit risk, but are subject to changes in market value resulting from changes in interest rates. The value of U.S. Treasury obligations will be adversely affected by decreases in bond prices and increases in interest rates.
  • The Trust includes closed-end funds. Closed-end funds are actively managed investment companies that 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’s portfolio during periods of market turmoil and as investors’ perceptions regarding closed-end funds or their underlying investments change. Closed-end funds are not redeemable at the option of the shareholder and they may trade in the market at a discount to their net asset value. Closed-end funds may also employ the use of leverage which increases risk and volatility. Recent instability in the auction rate preferred shares market may affect the volatility of certain closed-end funds, especially those that use leverage or plan to use leverage.
  • The value of the fixed-income securities in the closed-end funds and ETF will generally fall if interest rates, in general, rise. Typically, fixed-income securities with longer periods before maturity are more sensitive to interest rate changes.
  • A closed-end fund, ETF or an issuer of securities held by a closed-end fund or ETF may be unwilling or unable to make principal payments and/or to declare dividends in the future, may call a security before its stated maturity, or may reduce the level of dividends declared. This may result in a reduction in the value of your units.
  • The financial condition of a closed-end fund, ETF or an issuer of securities held by a closed-end fund or ETF 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.
  • Certain closed-end funds held by the Trust invest in preferred securities. Preferred securities are typically subordinated to bonds and other debt instruments in a company’s capital structure in terms of priority to corporate income and therefore will be subject to greater credit risk than those debt instruments.
  • Certain closed-end funds held by the Trust invest in bonds that are rated below investment-grade and are considered to be “junk” securities. Below investment-grade obligations are considered to be speculative and are subject to greater market and credit risks, and accordingly, the risk of non-payment or default is higher than with investment-grade securities. In addition, such securities may be more sensitive to interest rate changes and more likely to receive early returns of principal.
  • Certain closed-end funds held by the Trust invest in bonds that are 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 both Moody’s and Standard & Poor’s.
  • Certain closed-end funds held by the Trust 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 that stock price is greater than the convertible security’s “conversion price.” 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.
  • Certain closed-end funds held by the Trust invest in foreign securities. Investment in foreign securities presents additional risk. 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.
  • Certain closed-end funds held by the Trust invest in securities issued by entities located in emerging markets. Emerging markets are generally defined as countries with low per capita income in the initial stages of their industrialization cycles. The markets of emerging markets countries are generally more volatile than the markets of developed countries with more mature economies.
  • Current economic conditions may lead to limited liquidity and greater volatility. The markets for fixed-income securities, such as those held by the closed-end funds and the ETF, have experienced periods of illiquidity and volatility since the latter half of 2007. General market uncertainty and consequent repricing risk have led to market imbalances of sellers and buyers, which in turn have resulted in significant valuation uncertainties in a variety of fixed-income securities. These conditions resulted, and in many cases continue to result in, greater volatility, less liquidity, widening credit spreads and a lack of price transparency, with many debt securities remaining illiquid and of uncertain value. These market conditions may make valuation of some of the securities held by the closed-end fund and the ETF uncertain and/or result in sudden and significant valuation increases or declines in its holdings.
  • Inflation may lead to a decrease in the value of assets or income from investments.
  • The Sponsor does not actively manage the portfolio. The Trust will generally hold, and may continue to buy, the same securities even though a security’s outlook, rating, market value or yield may have changed.

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 investment management business of Guggenheim Partners, LLC ("Guggenheim"), which includes Security Investors, LLC ("SI"), Guggenheim Funds Investments Advisors, LLC ("GFIA") and Guggenheim Partners Investment Management ("GPIM") the investment advisors to the referenced funds.

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