1 The "Inception Bid Price" represents the net asset value of one unit of a trust excluding any deferred sales charge, if applicable.
2 The "Maturity Price" represents the proceeds per unit received by unitholders upon termination of the trust.
3 The Historical Annual Dividend Distribution is as of the date of deposit and subject to change. The amount of distributions paid by the Trust’s securities may be lower or greater than the above-stated amount 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. 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.
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.
The Trust’s portfolio is constructed and the securities are selected approximately six business days prior to the initial date of deposit (the “Inception Date”) using the methodology described below.
In constructing the Trust portfolio, 50 securities will be selected based on the following fundamentally-based quantitative criteria:
- Begin with all companies listed in the Dow Jones U.S. Top-Cap Value Total Stock Index, which is a combination of the Dow Jones U.S. Large-Cap Value Total Stock Index and the Dow Jones U.S. Mid-Cap Value Total Stock Market Index.
- Exclude companies with a price per share of less than $5 and more than $500.
- Exclude companies with a 30-day average daily traded value of less than $1 million.
- Exclude companies with an indicated dividend yield of 0. Indicated dividend yield is a company’s most recently announced dividend, annualized based on dividend frequency and divided by market price (abnormal or special dividends are not included).
- Exclude 20% of the companies with the lowest indicated dividend yield.
- Select the 100 companies according to the Required Business Performance® (“RBP®”) methodology described below that have the highest probability percentage.
- Select the top 50 companies by indicated dividend yield and weight the portfolio by indicated dividend yield, subject to a 5% cap for each individual security on the day the strategy generates the final portfolio. (A company’s weight in the portfolio is derived by dividing the indicated dividend yield of each company by the sum of all indicated dividend yields for the 50 selected companies). Please note that due to the fluctuating nature of security prices, the weighting of an individual security in the Trust may be greater than 5% of the portfolio after the portfolio selection date.
Required Business Performance®
RBP® seeks to measure the performance that is implied in the price of a company’s stock. To determine the RBP® probability for a given company, the company’s required revenue (revenue that the company is required to generate over the next twelve months) is calculated through a ten-year forward discounted free cash flow (“FCF”) model. The ten-year forward FCF model includes the perpetuity growth rate, capital expenditures, operating margins and potentially scaling forward growth rates. With this required forward FCF and historical company performance from the past twelve quarters, a distribution curve is fit to the data and derives an RBP® probability (expressed as a percentage from 0 to 100%).
Transparent Value, LLC
Transparent Value was established in 2003 with a dedicated vision: the pursuit of delivering sustainable investment returns across global equity markets by introducing a new way to measure the equity value of publicly traded companies.
Transparent Value calculates the Required Business Performance® probabilities used in the Dow Jones RBP Indexes? and licenses the RBP® probabilities exclusively to Dow Jones Indexes? for the construction of domestic and global indexes.
Since 2003, Transparent Value has grown into a financial services firm with subsidiaries, including Transparent Value Advisors LLC, a U.S. registered adviser and Transparent Value Pvt., Ltd., its Indian knowledge center. Guggenheim Funds will pay Transparent Value a fee for its assistance in the selection of the Trust portfolio. Transparent Value is an affiliate of the Sponsor.
The Dow Jones U.S. Total Stock Market Index is an all-inclusive measure composed of all U.S. equity securities with readily available prices. This broad index is sliced according to stock-size segment, style and sector to create distinct sub-indexes that track every major segment of the market. Size-segments are defined based on full market capitalization rankings within the Dow Jones U.S. Total Stock Market Index as follows: Dow Jones U.S. Large-Cap Total Stock Market Index: Stocks ranked 1-750, Dow Jones U.S. Mid-Cap Total Stock Market Index: Stocks ranked 501-1000. The indexes are unmanaged and it is not possible to invest directly in the indexes.
The Dow Jones U.S. Top-Cap Value Total Stock Index, Dow Jones U.S. Large-Cap Value Total Stock Index, Dow Jones U.S. Mid- Cap Value Total Stock Market Index, Dow Jones U.S. Top-Cap Growth Total Stock Index, Dow Jones U.S. Large-Cap Growth Total Stock Index, Dow Jones U.S. Mid-Cap Growth Total Stock Market Index, Dow Jones U.S. Top-Cap Total Stock Index, Dow Jones U.S. Large-Cap Total Stock Index, and Dow Jones U.S. Mid-Cap Total Stock Market Index are products of Dow Jones Indexes, a licensed trademark of CME Group Index Services LLC (“CME”), and have been licensed for use. “Dow Jones U.S. Top-Cap Value Total Stock Index, Dow Jones U.S. Large-Cap Value Total Stock Index, Dow Jones U.S. Mid-Cap Value Total Stock Market Index, Dow Jones U.S. Top-Cap Growth Total Stock Index, Dow Jones U.S. Large-Cap Growth Total Stock Index, Dow Jones U.S. Mid- Cap Growth Total Stock Market Index, Dow Jones U.S. Top-Cap Total Stock Index, Dow Jones U.S. Large-Cap Total Stock Index, and Dow Jones U.S. Mid-Cap Total Stock Market Index, and “Dow Jones Indexes” are service marks of Dow Jones Trademark Holdings, LLC (“Dow Jones”), and have been licensed for use for certain purposes by Guggenheim Funds Distributors, Inc. (“Guggenheim Funds”) and Guggenheim Funds’ Dow Jones Value RBP Dividend Focus Portfolio, Series 4 is not sponsored, endorsed, sold or promoted by Dow Jones, CME or their respective affiliates. Dow Jones, CME and respective affiliates make no representation or warranty, express or implied, to the owners of the Trusts or any member of the public regarding the advisability of trading in the Trusts.
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:
- 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. 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.
- Share prices or dividend rates on the securities in the Trust may decline during the life of the Trust. There is no guarantee that the issuers of the securities will declare dividends in the future and, if declared, whether they will remain at current levels or increase over time.
- The Trust includes securities issued by companies in the financial sector. Companies in the financial sector include banks, insurance companies and investment firms. The profitability of companies in the financial sector is largely dependent upon the availability and cost of capital which may fluctuate significantly in response to changes in interest rates and general economic developments. Financial sector companies are especially subject to the adverse effects of economic recession, decreases in the availability of capital, volatile interest rates, portfolio concentrations in geographic markets and in commercial and residential real estate loans, and competition from new entrants in their fields of business. Negative developments initially relating to the subprime mortgage market and subsequently spreading to other parts of the economy, have adversely affected credit and capital markets worldwide and significantly impacted financial sector companies.
- The Trust includes real estate investment trusts (“REITs”). REITs may concentrate their investments in specific geographic areas or in specific property types, such as, hotels, shopping malls, residential complexes and office buildings. The value of the REITs and other real estate securities and the ability of such securities to distribute income may be adversely affected by several factors, including: rising interest rates; changes in the global and local economic climate and real estate conditions; perceptions of prospective tenants of the safety, convenience and attractiveness of the properties; the ability of the owner to provide adequate management, maintenance and insurance; increased competition from new properties; the impact of present or future environmental legislation and compliance with environmental laws; changes in real estate taxes and other operating expenses; adverse changes in governmental rules and fiscal policies; adverse changes in zoning laws; declines in the value of real estate; the downturn in the subprime mortgage lending market and the real estate market in the United States; and other factors beyond the control of the issuer of the security.
- The Trust invests in U.S.-listed foreign securities. The Trust’s investment in U.S.-listed foreign securities presents additional risk. Securities of foreign issuers present risks beyond those of domestic securities. More specifically, 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.
- The Trust invests in securities issued by small-capitalization and mid-capitalization companies. These securities customarily involve more investment risk than securities of larger capitalization companies. Small-capitalization and mid-capitalization companies may have limited product lines, markets or financial resources and may be more vulnerable to adverse general market or economic developments.
- 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.
Please see the Trust prospectus for more complete risk information.
Unit Investment Trusts ("UITs") are fixed and not actively managed. An investment in this fixed portfolio should be made with an understanding of the risks involved with owning various types of investments. Industry predictions may not materialize and securities selected for the Trust may not participate in overall industry growth, if any. UITs are subject to annual
fund operating expenses in addition to the sales charges. Units, when redeemed, may be worth more or less than their original price.
This UIT is part of a long-term strategy, and investors should consider their ability to invest in successive portfolios, if available, at the applicable 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.