The Enhanced Quality 16 Strategy Portfolio, Series 5 ("Trust") seeks attractive total return through capital appreciation and dividend income.
|Wrap Fee Price||$9.525700|
|Remaining Deferred Sales Charge||$0.145000|
|Mandatory Maturity Date||1/8/2018|
|NASDAQ Ticker Symbol||CEQSEX|
|Inception Unit Price||$10.000000|
|Inception Bid Price||$9.900000|
|Inception Liquidation Price||$9.755000|
|Deferred Sales Charge Dates||
|Number of Holdings||16|
|Historical Annual Dividend Distribution||$0.144700|
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||19.48|
|Weighted Average Price/Book (P/B) Ratio||3.50|
|Weighted Average Market Cap (MM)||$19,309.15|
|US Common Stock||93.54%|
|Hotels Restaurants & Leisure||6.49%|
|Textiles Apparel & Luxury Goods||6.21%|
|Aerospace & Defense||6.35%|
|Containers & Packaging||6.29%|
|Equity Real Estate Investment Trusts (REITs)||6.46%|
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 invests at least 80% of the value of its assets in common stocks of enhanced quality companies, which are companies that exhibit an attractive blend of quality, valuation and price appreciation characteristics. When assessing quality, the Trust evaluates companies by looking for positive and improving profitability, earnings that are cash generative, declining leverage and improving liquidity. Utilizing a unique rule based strategy, the Trust invests in 16 top ranked securities in the Russell 1000 Index selected by the Sponsor, with the assistance of Guggenheim Partners Investment Management, LLC (“GPIM”), an affiliate of Guggenheim Partners, LLC. The Trust may invest in U.S.-listed companies, which include U.S.-listed foreign securities, and may invest in mid- and large-capitalization companies.
As a result of this strategy, the Trust is concentrated in the consumer products and industrials sectors.
The Trust’s portfolio was constructed and the securities were selected seven business days prior to the initial date of deposit (the “Security Selection Date”) using the following security selection rules:
1. Starting Universe: Start with the Russell 1000 Index as of the Security Selection Date.
2. Define Sub-Universe: Reduce the initial universe of securities to a sub-universe by applying the following screens as of the Security Selection Date:
• Exclude the 25% of securities with the lowest Book to Market Ratio.
• Exclude the 25% of securities with the lowest Free Cash Flow Yield.
• Exclude the 25% of securities with the lowest total return during the 11 month period ending 1 month prior to the Security Selection Date.
• Exclude the securities with a Piotroski F-Score of less than 8.
• Using Bloomberg data, exclude securities that have a pending merger or acquisition, which will lead to delisting the security.
3. Selection: Rank securities in the sub-universe by highest Free Cash Flow Yield within securities with a Piotroski F-Score of 8 or 9. Select the 16 top ranked securities while maintaining a maximum 40% weight in any GICS sector as provided by S&P Compustat and equally weight these securities.
• If 16 securities are not available, then include securities with the next highest Piotroski F-Score until 16 securities are available. Rank the securities in a subsequent Piotroski F-Score against each other by highest Free Cash Flow Yield until 16 top ranked securities are selected.
• Once a GICS sector investment limitation has been reached, additional securities of that type will not be included in the Trust and the next highest ranked security will be used. Due to the fluctuating nature of security prices, the weighting of an individual security or sector in the Trust portfolio may change after the Security Selection Date.
Russell 1000 Index: This index measures the performance of the 1,000 largest capitalization companies in the Russell 3000 Index. The index includes large- and mid-capitalization companies and as of its reconstitution on June 24, 2016, included securities with market capitalization ranges from approximately $2.4 billion to $750.5 billion. The index consists of companies with an United States home country designation by the Russell Global Index Methodology, which includes U.S.-listed foreign securities.
Book to Market Ratio: A measure of valuation calculated as latest quarter end book value of a firm divided by its market value as of the Security Selection Date, as provided by S&P Compustat.
Free Cash Flow Yield: A measure of financial performance calculated as latest four quarters of cash flow from operations minus capital expenditures as provided by S&P Compustat, divided by market value as of the Security Selection Date.
Total Return: The actual rate of return of a security, including share price appreciation and dividends paid, over a given period of time as provided by S&P Compustat.
Piotroski F-Score: A measure of quality calculated by assigning 1 point for each of 9 accounting based criteria met and 0 points when not met, and by utilizing data from S&P Compustat. Criteria include:
1. Positive Return on Assets calculated as latest four quarters of net income before extraordinary items, divided by beginning period total assets.
2. Increased Return on Assets, as calculated by latest four quarters of net income before extraordinary items, divided by beginning period total assets, versus the same metric in the prior four quarter period.
3. Positive Cash from Operations on Assets calculated as Net Cash from Operations of latest four quarters divided by beginning period total assets.
4. Net Cash from Operations of latest four quarters is greater than latest four quarters of net income before extraordinary items.
5. Decreased Leverage as of latest quarter end versus year ago calculated as total long term debt divided by total assets.
6. Increased Current Ratio as of latest quarter end versus year ago calculated as current assets divided by current liabilities.
7. No additional equity issued in the last twelve months.
8. Increased Gross Income Margin calculated as last four quarters of net sales minus the sum of cost of goods sold and depreciation & amortization expense, divided by net sales versus prior four quarter period.
9. Increased Asset Turnover calculated as the sum of the latest four quarters of sales divided by beginning period total assets versus prior four quarter period.
The Piotroski F-Score of a company is equal to the number of above criteria met as of the Security Selection Date.
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.
• Share prices or dividend rates on the securities in the Trust may decline during the life of the Trust. There is no guarantee that share prices of the securities in the Trust will not decline and 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.
• Securities selected according to this strategy may not perform as intended. The Trust is exposed to additional risk due to its policy of investing in accordance with an investment strategy. Although the Trust’s investment strategy is designed to achieve the Trust’s investment objective, the strategy may not prove to be successful. The investment decisions may not produce the intended results and there is no guarantee that the investment objective will be achieved.
• The Trust is concentrated in the consumer products sector. As a result, the factors that impact the consumer products sector will likely have a greater effect on this Trust than on a more broadly diversified Trust. General risks of companies in the consumer products sector include cyclicality of revenues and earnings, economic recession, currency fluctuations, changing consumer tastes, extensive competition, product liability litigation and increased government regulation. A weak economy and its effect on consumer spending would adversely affect companies in the consumer products sector.
• The Trust is concentrated in the industrials sector. As a result, the factors that impact the industrials sector will likely have a greater effect on this Trust than on a more broadly diversified Trust. Adverse developments in this sector may significantly affect the value of your units. Companies involved in the industrials sector must contend with the state of the economy, intense competitors, domestic and international politics, excess capacity and spending trends.
• The Trust invests in securities issued by mid-capitalization companies. These securities customarily involve more investment risk than securities of large-capitalization companies. 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.
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.
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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