The Alternative Income Portfolio, Series 11 ("Trust") seeks to provide current income and, as a secondary objective, the potential for capital appreciation.
|Wrap Fee Price||$9.8162|
|Remaining Deferred Sales Charge||$0.2250|
|Mandatory Maturity Date||4/13/2020|
|NASDAQ Ticker Symbol||CAIPKX|
|Inception Unit Price||$10.0000|
|Inception Liquidation Price||$9.7750|
|Deferred Sales Charge Dates||
|Number of Holdings||45|
|Historical Annual Dividend Distribution||$0.8357|
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 Leverage Ratio**||4.59%|
** The Total value of the fund’s outstanding leverage presented as a percentage of total assets.
Example: Percentage of Total Assets represented by leverage.(e.g., Total Assets = $200M; Net Assets = $160M; Leverage = $40M. Leverage = 20%, calculated by dividing $40M by $200M.)
|Weighted Average Price/Earnings (P/E) Ratio||25.14|
|Weighted Average Price/Book (P/B) Ratio||1.41|
|Weighted Average Market Cap (MM)||$7,046.22|
|Equity Real Estate Investment Trusts (REITs)||32.91%|
|Oil Gas & Consumable Fuels||20.35%|
|Trust Weighted Average||0.49%|
|Closed-End Fund ("CEF") Universe Average||-6.46%|
* Closed-end funds may trade at a premium or discount to their net asset value (“NAV”). The Premium/Discount shown is for the underlying securities held by the closed-end funds in the UIT. This is the weighted average of all the CEFs in portfolio.
Premium/Discount and Holdings Analysis data is provided by Morningstar Traded Fund Center. Data is subject to change on a nightly basis. The data is for the underlying securities held by the closed-end funds in the UIT. 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.
The Closed-End Fund (“CEF”) Universe is comprised of all CEFs currently listed on U.S. exchanges.
© 2018 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
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 alternative asset classes consisting of real estate investment Trusts (“REITs”), shares of closed-end funds that have elected to be treated as business development companies under the Investment Company Act of 1940, as amended (“BDCs”), master limited partnerships (“MLPs”) and shares of closed-end investment companies (“Closed-End Funds”) that invest substantially all of their assets in MLPs. The Sponsor has decided to combine these asset classes to create a Trust that has the potential to benefit from the performance of each asset class as well as the reduced volatility that can result from an increase in diversification. As a result of this strategy, the Trust is concentrated in the energy sector, financial sector and real estate sector. The Sponsor, with the assistance of Guggenheim Partners Investment Management, LLC (“GPIM”), an affiliate of Guggenheim Partners, LLC, has selected the securities to be included in the Trust’s portfolio.
The Trust invests in a portfolio of MLP, REIT and BDC segments.
Master Limited Partnerships Segment
The Sponsor includes individual MLPs as well as common shares of Closed-End Funds that invest in MLPs. The individual MLPs are selected based on, but not limited to, the following considerations:
1. Liquidity: The Sponsor seeks to avoid MLPs that are less liquid compared to their peers.
2. Yield: The Sponsor prefers MLPs that offer higher yields through dividends provided the dividends are supported by operational cash flows.
3. Distribution Growth: The Sponsor prefers MLPs that have customarily achieved increasing rates of dividend growth.
4. Valuations: The Sponsor prefers MLPs with greater potential for increased valuation.
5. Debt Levels: The Sponsor prefers MLPs with low or manageable levels of leverage.
The Sponsor includes shares of Closed-End Funds that invest in MLPs. The Closed-End Funds are selected based on, but not limited to, the following considerations:
1. Investment Objective: The Sponsor includes Closed-End Funds that contain a MLP focus in their investment strategy.
2. Premium/Discount: The Sponsor prioritizes Net Asset Value (“NAV”) discounts over peer and historic discounts when selecting Closed-End Funds.
3. Dividend: The Sponsor prefers Closed- End Funds that offer higher yields through dividends provided the dividends are supported by underlying income.
4. Performance: The Sponsor prefers Closed-End Funds with managers that have historically outperformed their peers.
5. Liquidity: The Sponsor seeks to avoid Closed-End Funds that are less liquid compared to their peers.
Real Estate Investment Trusts Segment
The REITs are selected by the Sponsor based on, but not limited to, the following considerations:
1. Liquidity: The Sponsor seeks to avoid REITs that are less liquid compared to their peers.
2. Volatility: The Sponsor seeks to avoid REITs that have been more volatile compared to their peers within the prior year.
3. Yield: The Sponsor prefers REITs with higher yields.
Business Development Companies Segment
The BDCs are selected by the Sponsor based on, but not limited to, the following considerations:
1. Liquidity: The Sponsor seeks to avoid BDCs that are less liquid compared to their peers.
2. Yield: The Sponsor prefers BDCs with higher yields.
The BDCs held by the Trust may hold equity or fixed-income securities issued by domestic or foreign companies. These securities may include the securities of small-, mid- or large capitalization companies. In addition, the securities held by the BDCs included in the Trust may be rated investment-grade or noninvestment- grade. High-yield or “junk” bonds, the generic names for bonds rated below investment-grade, are frequently issued by corporations in the growth stage of their development or by established companies that are highly leveraged or whose operations or industries are depressed. Obligations rated below investment-grade should be considered speculative. Please see “Principal Risks” and “Investment Risks” for additional information about the risks of investing in high-yield or “junk” securities.
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.
• The Trust is concentrated in the financial sector. As a result, the factors that impact the financial sector will likely have a greater effect on this Trust than on a more broadly diversified Trust. 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.
• The Trust and the Closed-End Funds in which it invests are concentrated in the energy sector. As a result, the factors that impact the energy sector will have a greater effect on this Trust than on a more broadly diversified Trust. Companies in the energy sector are subject to volatile fluctuations in price and supply of energy fuels, and can be impacted by international politics and conflicts, including the unrest and hostilities in the Middle East, terrorist attacks, the success of exploration projects, reduced demand as a result of increases in energy efficiency and energy conservation, natural disasters, clean-up and litigation costs associated with environmental damage and extensive regulation.
• The Trust invests in REITs and is concentrated in the real estate sector. As a result, the factors that impact the real estate sector will likely have a greater impact on this Trust than on a more broadly diversified Trust. 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; the cost of complying with the Americans with Disabilities Act; 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 markets in the United States; and other factors beyond the control of the issuer of the security.
• 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.
• The Trust invests in shares of BDCs. BDCs’ ability to grow and their overall financial condition is impacted significantly by their ability to raise capital. In addition to raising capital through the issuance of common stock, BDCs may engage in borrowing. A BDC’s credit rating may change over time which could adversely affect their ability to obtain additional credit and/or increase the cost of such borrowing. BDCs are generally leveraged, which may magnify the potential for gains and losses on amounts invested and, accordingly, may increase the risks associated with those securities.
BDC investments are frequently not publicly traded and, as a result, there is uncertainty as to the value and liquidity of those investments. Due to the relative illiquidity of certain BDC investments, if a BDC is required to liquidate all or a portion of its portfolio quickly, it may realize significantly less than the value at which such investments are recorded.
BDCs frequently have high expenses which may include, but are not limited to, the payment of management fees, administration expenses, taxes, interest payable on debt, governmental charges, independent director fees and expenses, valuation expenses, and fees payable to third parties relating to or associated with making investments. In addition, a BDC may pay an incentive fee to its investment adviser. The potential for the investment adviser to earn incentive fees may create an incentive for the investment adviser to make investments that are riskier or more speculative than would otherwise be in the best interests of the BDC. Additionally, if the base management fee is based on gross assets, the investment adviser may have an incentive to increase portfolio leverage in order to earn higher base management fees. These incentives may raise the expenses paid by a BDC. The Trust will indirectly bear these expenses and estimated BDC expenses are shown in the Trust’s annual operating expenses under “Fees and Expenses” to illustrate their impact. These expenses may fluctuate significantly over time.
• The Closed-End Funds and BDCs 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 value of the fixed-income securities in the Closed-End Funds and BDCs 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. The Trust may be subject to greater risk of rising interest rates than would normally be the case due to the current period of historically low interest rates.
• A BDC, Closed-End Fund or an issuer of securities held by a BDC or 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. Issuers may suspend dividends during the life of the Trust. This may result in a reduction in the value of your units.
• The financial condition of a BDC, Closed-End Fund or an issuer of securities held by a BDC or Closed- End Fund 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.
• 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 BDCs, 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 or BDC uncertain and/or result in sudden and significant valuation increases or declines in its holdings.
• Certain Closed-End Funds and BDCs held by the Trust invest in securities 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 in a falling rate environment.
• Certain Closed-End Funds and BDCs held by the Trust may invest in securities 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 BDCs held by the Trust invest in senior loans. Borrowers under senior loans may default on their obligations to pay principal or interest when due. This non-payment would result in a reduction of income to the applicable BDCs, a reduction in the value of the senior loan experiencing non-payment and a decrease in the net asset value of the BDCs. Although senior loans in which the BDCs invest may be secured by specific collateral, there can be no assurance that liquidation of collateral would satisfy the borrower’s obligation in the event of non-payment of scheduled principal or interest or that such collateral could be readily liquidated.
Senior loans in which the BDCs invest:
— generally are of below investment-grade credit or “junk” quality;
— may be unrated at the time of investment;
— may be floating-rate instruments in which the interest rate payable on the obligations fluctuates on a periodic basis based upon changes in the base lending rate;
— generally are not registered with the Securities and Exchange Commission (“SEC”) or any state securities commission; and
— generally are not listed on any securities exchange.
In addition, the amount of public information available on senior loans generally is less extensive than that available for other types of assets.
• Certain BDCs held by the Trust may invest in securities that are structured as floating-rate instruments. The yield on these securities will generally decline in a falling interest rate environment, causing the BDCs to experience a reduction in the income they receive from these securities. A sudden and significant increase in market interest rates may increase the risk of payment defaults and cause a decline in the value of these investments and the value of the BDCs held by the Trust.
• The Trust and certain BDCs and Closed-End Funds held by the Trust invest in securities issued by small-capitalization and mid-capitalization companies. These securities customarily involve more investment risk than securities of large-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.
• The Trust and the Closed-End Funds held by the Trust invest in MLPs. MLPs are limited partnerships or limited liability companies that are taxed as partnerships and whose interests (limited partnership units or limited liability company units) are traded on securities exchanges like shares of common stock. Currently, most MLPs operate in the energy, natural resources or real estate sectors. Investments in MLP interests are subject to the risks generally applicable to companies in the energy and natural resources sectors, including commodity pricing risk, supply and demand risk, depletion risk and exploration risk.
The benefit the Trust derives from its investment in MLPs is largely dependent on their being treated as partnerships for federal income tax purposes. As a partnership, an MLP has no income tax liability at the entity level. If, as a result of a change in an MLP’s business, an MLP were treated as a corporation for federal income tax purposes, such MLP would be obligated to pay federal income tax on its income at the applicable corporate tax rate. If an MLP was classified as a corporation for federal income tax purposes, the amount of cash available for distribution with respect to its units would be reduced and any such distributions received by the Trust would be taxed entirely as dividend income if paid out of the earnings of the MLP. Therefore, treatment of an MLP as a corporation for federal income tax purposes would result in a material reduction in the after-tax return to the Trust, likely causing a substantial reduction in the value of the units of the Trust.
• Share prices, distributions 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 distributions or dividends in the future and, if declared, whether they will remain at current levels or increase over time.
• 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.
Investing involves risk, including the possible loss of principal.
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.
© 2018 Guggenheim Investments. All Rights Reserved.
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