The Flaherty & Crumrine Preferred Portfolio, Series 56 ("Trust") primarily seeks to provide current income with a secondary objective of capital appreciation.
|Wrap Fee Price||$9.1627|
|Remaining Deferred Sales Charge||$0.2250|
|Mandatory Maturity Date||8/12/2024|
|Inception Unit Price||$10.0000|
|Inception Liquidation Price||$9.7750|
|Deferred Sales Charge Dates||
|Number of Holdings||98|
|Rate Fee Based||5.67%|
* The Historical Annual Dividend Distribution (HADD) per unit is as of the day prior to trust deposit and subject to change. The HADD per unit is the weighted average of the trailing twelve-month distributions paid by the securities included in the portfolio. The HADD rate is based on the HADD divided by the current offer price and recalculated daily. Both the HADD per unit and the rate shown are reduced to account for the effects of fees and expenses, which will be incurred when investing in the Trust. The HADD per unit and rate will vary due to certain factors that may include, but are not limited to, a change in the dividends paid by issuers, a change in Trust expenses or the sale or maturity of securities in the portfolio. There is no guarantee the issuers of the securities included in the Trust will declare dividends or distributions in the future. The HADD of the securities included in the Trust is for illustrative purposes only and is not indicative of the Trust’s distribution. Due to the negative economic impact across many industries caused by the recent COVID-19 outbreak, certain issuers of the securities included in the trust may elect to reduce the amount of, or cancel entirely, dividends and/or distributions paid in the future. As a result, the HADD figure will likely be higher, and in some cases significantly higher, than the actual distribution rate achieved by the trust.
All data is subject to change daily. Data may differ from the prospectus due to different data sources or market changes. Please refer to prospectus for additional information about the trust including the portfolio section criteria. Source: FactSet Research Systems Inc. unless otherwise noted. The total percentages may not be equal to 100% due to rounding. N/A indicates that certain securities have not been identified and/or classified by the data provider. A unit is a combination of securities or types of securities traded together.
|Weighted Average Price/Earnings (P/E) Ratio||5.50|
|Weighted Average Price/Book (P/B) Ratio||0.58|
|Weighted Average Market Cap (MM)||$471.28|
|Diversified Financial Services||1.50%|
|Mortgage Real Estate Investment Trusts (REITs)||1.93%|
|Thrifts & Mortgage Finance||2.72%|
|Equity Real Estate Investment Trusts (REITs)||2.22%|
|Diversified Telecommunication Services||0.52%|
|Wireless Telecommunication Services||0.42%|
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
Under normal circumstances, the Trust will invest at least 80% of the value of its assets in preferred securities. The Sponsor has selected Flaherty & Crumrine Incorporated (“Flaherty”) to serve as the Trust’s portfolio consultant. The portfolio consultant is responsible for assisting the Sponsor with the selection of the Trust’s portfolio.
The Trust may consist of a portfolio of exchange-listed preferred securities, which include traditional and hybrid preferred securities, and/or baby bonds selected from Flaherty’s proprietary preferred securities database and its internally generated credit research. The U.S.-listed common stocks held by the Trust may include the common stocks of U.S. and non-U.S. companies. The Trust may also invest in real estate investment Trusts and master limited partnerships.
In choosing the securities the primary factors include, but are not limited to, credit quality of the issuer and the liquidity and yield of the security as of the Trust’s initial date of deposit. Certain of the securities are rated below investment-grade and are considered to be high-yield or “junk” securities. As a result of this strategy, the Trust is concentrated in the financial sector.
With assistance from Flaherty, the Sponsor has selected preferred securities and/or baby bonds believed to have the best potential for current income with the potential for capital appreciation. The Sponsor believes that an investment in a portfolio of preferred securities and/or baby bonds offers investors an opportunity to receive many of the income flow advantages of bonds. The Trust is diversified across the listed preferred and/or baby bonds market, with attention paid to the credit quality of the issuer and the liquidity and yield of the security. As of the Trust’s initial date of deposit (the “Inception Date”), at least 50% of the securities included in the Trust are rated investment-grade quality by at least one nationally recognized statistical rating organization.
See “Description of Ratings” in Part B of the prospectus for additional information regarding the ratings criteria.
Preferred Stock. As of the Inception Date, 86.49% of the Trust consists of preferred stocks, including the preferred stocks of real estate investment Trusts. Similar to bonds, preferred stocks offer a stated rate of return, paid in the form of a dividend, and are traded on the basis of their credit risk and yield. Dividend distributions of preferred stocks may be eligible for the dividends-received deduction for corporations and typically count as qualified dividend income for individual investors.
Like common stock, preferred stocks usually are perpetual equity securities representing ownership in a company. Preferred stock ranks senior to common stock and preferred stockholders enjoy preference over common stockholders with regard to liquidations. Preferred stockholders may also forfeit or at least be limited in their voting rights. The preferred stocks included in the Trust, if applicable, are traded on the national stock exchanges.
Hybrid Preferred Securities. As of the Inception Date, 12.50% of the Trust consists of hybrid preferred securities, including the preferred securities of master limited partnerships. Hybrid preferred securities possess varying combinations of features of both debt and traditional preferred securities. As such, they may constitute subordinated debt or preferred shares in an issuer’s capital structure. Certain hybrid preferred securities are typically issued by corporations, generally in the form of interest-bearing notes or preferred securities, or by an affiliated business Trust of a corporation, generally in the form of beneficial interests in subordinated debentures issued by the corporation. Unlike preferred stocks, distributions for hybrid preferred securities are generally treated as interest rather than dividends for federal income tax purposes and therefore are not eligible for the dividends-received deduction for corporations and typically do not count as qualified dividend income for individual investors.
Baby Bonds. As of the Inception Date, 1.01% of the Trust consists of baby bonds. Baby bonds are generally long-term, fixed-income senior debt securities that are issued in small denominations. As with other types of bonds, baby bonds usually have a stated maturity that is at least 10 years after they are issued, and some are issued for as long as 50 years. When a baby bond reaches maturity, the issuing organization is required to repay the principal to the bondholder. The distributions from baby bonds are generally treated as interest for federal income tax purposes and therefore, are not eligible for the dividends-received deduction for corporations and do not count as qualified dividend income for individual investors.
Flaherty & Crumrine Incorporated
Flaherty & Crumrine Incorporated was formed in 1983 with the express intention of managing portfolios of preferred and debt securities for institutional investors. The firm has experience dating back to 1991 in managing preferred securities funds. Through its experience in the preferred and debt securities markets, Flaherty has developed the expertise necessary to implement the portfolio and interest rate management strategies necessary in seeking to obtain the highest sustainable income. In addition to receiving a portfolio consulting fee, the Trust pays Flaherty a licensing fee for the use of its intellectual property.
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:
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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