Convertible & Income Portfolio of Funds Series 18

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.
• 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.
• 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.
• Duration. The Sponsor considers the duration of the funds relative to their peers as well as the overall portfolio.

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.

Exchange Traded-Funds

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.

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.
• 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. In addition, Standard & Poor’s Rating Services lowered its long-term sovereign credit rating on the United States to “AA+” from “AAA.” Effects of the economic crisis can still be felt in many countries around the world and may have an impact on the securities held by the Trust.
• 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. 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 underlying ETF has management and operating expenses. You will bear not only your share of the Trust’s expenses, but also the expenses of the underlying ETF. By investing in an ETF, the Trust incurs greater expenses than you would incur if you invested directly in the ETF.
• 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 common shares 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. Instability in the auction rate preferred shares market may affect the volatility of Closed-End Funds that use such instruments to provide leverage. 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 and Closed-End Funds are subject to annual fees and expenses, including a management fee. Unitholders of the Trust will bear these fees in addition to the fees and expenses of the Trust. See “Fees and Expenses” for additional information.
• The ETF and certain Closed-End Funds held by the Trust invest in convertible securities. Convertible securities generally offer lower interest or dividend yields than nonconvertible 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.
• 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 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, ETF or an issuer of securities held by a Closed-End Fund or ETF may worsen, 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 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 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 subject to a greater risk of default than securities rated as investment-grade by more than one rating agency.
• 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 companies headquartered or incorporated in countries considered to be emerging markets. Emerging markets are generally defined as countries with low per capita income in the initial stages of their industrialization cycles. Risks of investing in developing or emerging countries include the possibility of investment and trading limitations, liquidity concerns, delays and disruptions in settlement transactions, political uncertainties and dependence on international trade and development assistance. Companies headquartered in emerging market countries may be exposed to greater volatility and market risk.
• Economic conditions may lead to limited liquidity and greater volatility. The markets for fixed- income securities, such as those held by certain Closed-End Funds and the ETF, may experience periods of illiquidity and volatility. 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 a 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, when creating additional units, continue to buy, the same securities even though a security’s outlook, market value or yield may have changed.

See “Investment Risks” in Part A of the prospectus and “Risk Factors” in Part B of the prospectus for additional information.