Closed-End Covered Call and Income Portfolio Series 5

Under normal circumstances, the Trust will invest at least 80% of the value of its assets in common stocks of closed-end investment companies (“Closed-End Funds”) that are considered to be covered call funds and/or income funds. The Closed-End Funds may contain portfolios that are concentrated in high-yield bonds. Claymore, through proprietary research, will strive to select Closed-End Funds featuring the potential for current income, diversification and overall liquidity.

The Sponsor has selected for the portfolio common stocks of closed-end funds believed to have the best potential to achieve the Trust’s investment objective. The closed-end funds’ portfolios consist primarily of covered call securities and/or income producing securities, including high-yield bonds and preferred securities.

As of the Trust’s initial date of deposit (the “Inception Date”), 100% of the Trust’s portfolio is invested in securities of closed-end funds with portfolios that consist primarily of covered call securities and/or income producing securities including high yield bonds and preferred 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.
• 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.
• 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 benchmark.

Some of the securities held by the closed-end funds may be income producing securities including corporate bonds, preferred securities and high-yield bonds. High-yield or “junk” bonds, the generic names for bonds rated below the category of “BBB” by Standard & Poor’s or the category of “Baa” by Moody’s, are frequently issued by corporations in the growth stage of their development or by established companies who are highly leveraged or whose operations or industries are depressed. Obligations rated below investment-grade should be considered speculative as these ratings indicate a quality of less than investment-grade. Because high-yield bonds are generally subordinated obligations and are perceived by investors to be riskier than higher rated securities, their prices tend to fluctuate more than higher rated securities and are affected by short-term credit developments to a greater degree.

See “Description of Ratings” in Part B of the prospectus for additional information regarding the ratings criteria.

You can lose money by investing in the Trust. The Trust also might not perform as well as you expect. This can happen for reasons such as these:

• Share 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.
• The sponsor does not actively manage the portfolio. The trust will generally hold, and may continue to buy, the same securities even though the security’s outlook, market value or yield may have changed.
• The trust includes securities of 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 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. 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.
• The value of the securities in the Closed-End Funds that include fixed-income securities 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.
• Certain Closed-End Funds held by the trust may 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 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 may 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 more subject to a greater risk of default than securities rated as investment grade by both Moody’s and Standard & Poor’s.
• The value of a call option may be adversely affected if the market for the option becomes less liquid or smaller. The value of an option will be affected by changes in the value and dividend rates of the stock subject to the option, an increase in interest rates, a change in the actual and perceived volatility of the stock market and the common stock, and the remaining time to expiration.
• The call writing portion of the investment strategy of the Closed-End Fund may not be successful in that the Closed-End Funds may not realize the full appreciation of stocks on which the Closed-End Funds have written call options. The ability to successfully implement the Closed-End Fund’s investment strategy depends on the Closed-End Fund’s adviser’s ability to predict pertinent market movements, which cannot be assured.
• 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, includin government seizure of assets, excessive taxation, limitations on the use or transfer of assets, the lack of liquidity or regulatory controls or differing legal and/or accounting standards. A Closed-End Fund may invest in companies located in countries with emerging markets. These markets are generally more volatile than countries with more mature economies.
• Certain Closed-End Funds held by the trust may 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 then those debt instruments. See “Investment Risks” for additional information.
• A Closed-End Fund or issuers of securities held by a Closed-End Fund may be unwilling or unable to make principal payments and/or to declare distributions in the future, may call a security before its stated maturity, or may reduce the level of distributions declared. This may result in a reduction in the value of your units.
• The financial condition of a Closed-End Fund or issuers of securities held by a Closed-End Fund may worsen or their 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.
• Inflation may decrease the value of money. Inflation may lead to a decrease in the value of assets or income from investments.