The Core Four 60/40 Retirement Portfolio, Series 1 ("Trust") seeks current income as the primary objective, with the potential for capital appreciation as a secondary objective.
|Wrap Fee Price||N/A|
|Remaining Deferred Sales Charge||$0.0000|
|Mandatory Maturity Date||2/19/2019|
|NASDAQ Ticker Symbol||CCFOAX|
|Inception Unit Price||$10.0000|
|Inception Liquidation Price||$9.8650|
|Deferred Sales Charge Dates||
|Number of Holdings||85|
|Historical Annual Dividend Distribution||$0.2535|
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.
|Exchange Traded Fund||39.30%|
|Weighted Average Price/Earnings (P/E) Ratio||32.31|
|Weighted Average Price/Book (P/B) Ratio||14.16|
|Weighted Average Market Cap (MM)||$103,853.20|
|US Common Stock||54.38%|
|Internet Software & Services||1.92%|
|Semiconductors & Semiconductor Equipment||1.88%|
|Technology Hardware Storage & Peripherals||0.80%|
|Hotels Restaurants & Leisure||2.72%|
|Internet & Direct Marketing Retail||0.74%|
|Mortgage Real Estate Investment Trusts (REITs)||3.90%|
|Aerospace & Defense||2.95%|
|Commercial Services & Supplies||0.86%|
|Health Care Equipment & Supplies||0.79%|
|Health Care Providers & Services||1.49%|
|Equity Real Estate Investment Trusts (REITs)||2.41%|
|Diversified Telecommunication Services||2.24%|
|Containers & Packaging||0.62%|
|Oil Gas & Consumable Fuels||1.76%|
|High Yield Muni||4.05%|
|High Yield Bond||1.97%|
|Emerging-Markets Local-Currency Bond||1.80%|
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 exchange traded funds in the UIT. The total percentages may not be equal to 100% due to rounding.
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
The Trust seeks to provide current income with the potential for capital appreciation by investing in dividend-paying stocks of U.S.-listed companies along with shares of exchange-traded funds (“ETFs”) that invest substantially all of their assets in fixed-income securities.
The Trust is comprised of four sleeves, each with a unique strategy to address the needs or concerns of individuals near or in retirement: i) income, ii) growth of income, iii) stability of principal, and iv) capital appreciation. As of the security selection date, the Trust portfolio is constructed with an asset allocation of 60% equity securities and 40% ETFs substantially invested in fixed income securities.
The Sponsor has selected the securities to be included in the Trust’s portfolio. The U.S.-listed common stocks held by the Trust may include the common stocks of U.S. and non-U.S. companies of small-, mid- or large-capitalizations. Such securities may be issued by companies located in emerging markets. Certain of the common stocks included in the Trust portfolio are issued by real estate investment Trusts (“REITs”).
The fixed-income ETFs included in the portfolio invest in a wide range of debt securities rated investment-grade through below 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. The fixed-income ETFs included in the portfolio may also invest in debt securities issued by foreign companies, including companies located in emerging markets.
Higher-Yielding Income Sleeve
Approximately 30% of the Trust portfolio will constitute securities that seek to deliver an above average income stream. The Sponsor will select higher dividend-yielding, U.S.-listed equity securities (approximately 20% of the Trust portfolio) and higher yielding fixed income asset classes accessed through ETFs (approximately 10% of the Trust portfolio).
Equity Income Security Selection:
1. Initial Universe: Start with all companies listed in the Dow Jones Top Cap Value Index, which is a combination of the Dow Jones U.S. Large-Cap Value Total Stock Market Index and the Dow Jones U.S. Mid- Cap Value Total Stock Market Index.
2. Defined Sub-Universe: Reduce the initial universe of securities to a sub-universe that meets the following requirements:
• Exclude companies with an indicated dividend-yield of zero.
• Exclude 20% of the remaining companies with the lowest indicated dividend-yield.
• Using the entire initial universe, exclude the 20% of companies with the highest standard deviation of daily returns for the trailing year, as provided by FactSet Research Systems Inc.
3. Selection: From the sub-universe, apply the following factors:
• Select the 100 companies with the highest Santa Monica Quantitative (SMQ) Alpha Score, which is a proprietary value score that incorporates elements of forward looking growth and profitability to estimate future cash flows and value them relative to current market prices.
• Then, select the top 50 companies by indicated dividend-yield.
4. Rank: Rank the remaining 50 securities by combined scores of highest gross dividend-yield and lowest one-year volatility (the annualized standard deviation for the 360 most recent trading days returns). Select the 15 stocks with the highest combined score and equally weight them. Fixed Income ETF Security Selection:
The Sponsor focuses on macro and sector views when selecting ETFs that it believes hold higher yielding fixed income asset classes (i.e., high yield corporate bonds, floating rate bonds, emerging market debt, convertible securities, preferred securities, etc.). The Sponsor selects ETFs based upon criteria including, but not limited to:
• ETFs with assets above $50 million.
• Trading liquidity above $0.5 million median value for last 90 trading days.
• Security price above $5 per share.
Initial individual ETF weightings will range between approximately 2% and 5% of the Trust portfolio.
Dividend Growth Sleeve
Approximately 20% of the Trust portfolio will hold U.S.-listed equity companies that have shown the historical ability and willingness to increase their dividend distributions annually for a minimum number of years, described below.
1. Initial Universe: Start with all dividend paying U.S.-listed issuers.
2. Define Sub-Universe: Reduce the initial universe of securities to a sub-universe that meets the following requirements:
• Dividend growth: For the securities of large-capitalization companies, exclude companies that do not have a minimum ten-year history of dividend growth. For the securities of small- and mid-capitalization companies, exclude companies that do not have a minimum five-year history of dividend growth. The capitalizations of companies are determined by referencing the Russell 3000® Index. As of the most recent reconstitution on May 12, 2017, small-capitalization companies have $4.366 million or less in assets, mid-capitalization companies have between $4.366 million to $29.389 million in assets, and large-capitalization companies have $29.389 million or more in assets.
• Above-average dividend-yield: Exclude securities that do not have a dividend-yield of greater than 1.5%.
• Cash dividend coverage: Exclude companies without a history of increasing dividend coverage ratios.
• Growth: Exclude companies without a history of and prospects for above average growth of dividends, sales and earnings.
• Profitability: Exclude companies without a history of consistent and high profitability as measured by return-on-assets, return-on equity, gross margin and net margin.
3. Selection: From the sub-universe, identify companies for inclusion in the portfolio through a qualitative analysis based on the following factors:
• Cash-flow adequacy: Companies with earnings and operating cashflow significantly higher than the dividends paid as of the company’s most recent financial reporting period.
• Balance sheet: Companies that possess overall financial strength and exhibit balance sheet improvements relative to their peers and the marketplace. Financial strength is a qualitative determination based on a review of a company’s balance sheet. Balance sheet improvement is a determination of whether the factors that are considered for financial strength have improved over the last three years.
• Valuation: Companies whose valuations appear to be attractive based on measures such as price-to-earnings, price-to-book and price-to-cash flow.
• Industry leadership: Companies that possess a strong competitive position among their domestic and global peers (e.g., companies with less threat from new entrants or substitutes, companies with more bargaining power compared to customers or suppliers).
• Growth: Companies with a history of (and prospects for) above average growth of dividends, sales and earnings.
4. Rank: Rank the remaining securities by combined scores of highest gross dividend-yield and three-year average growth rates. Select the 30 stocks with the highest combined score. The selected stocks will be subject to the following constraints:
• Sector weighting at 25%.
• No sector will deviate from its initial universe weighting by more than 5%.
If the selected stocks violate the sector constraints, the lowest scoring security will be removed and replaced by the next security with the highest combined score. This substitution process will be repeated, if necessary, until the constraints are met.
Principal Stability Sleeve
Approximately 30% of the Trust portfolio seeks to reduce potential volatility of the overall portfolio by investing in ETFs that hold at least 80% of their portfolios in investment grade securities. The Sponsor focuses on macro and sector views when selecting these ETFs. The Sponsor selects ETFs based upon criteria including, but not limited to:
• ETFs with assets above $50 million.
• Trading liquidity above $0.5 million median value for last 90 trading days.
• Security price above $5 per share.
Initial individual ETF weightings will range between 2% and 10% of the Trust portfolio.
Capital Appreciation Sleeve
Approximately 20% of the Trust portfolio seeks to provide growth of principal by investing in large-cap, U.S.-listed growth companies.
1. Initial Universe: Start with all U.S.- listed growth securities. Remove securities that are classified as small-capitalization or mid-capitalization in the Russell 3000® Index. Remove securities whose growth score is below average, as defined by Russell.
2. Define Sub-Universe: From the initial universe, identify companies for inclusion by focusing on factors including, but not limited to:
• Valuation. Companies whose valuations appear to be attractive based on measures such as price-to-earnings, price-to-book and price-to-cash flow.
• Growth. Companies with a history of (and prospects for) above average growth of dividends, sales and earnings.
• Profitability. Companies with a history of consistent and high profitability as measured by return-on-assets, return-on equity, gross margin and net margin.
• Industry leadership. Companies that possess a strong competitive position among their domestic and global peers (e.g., companies with less threat from new entrants or substitutes, companies with more bargaining power compared to customers or suppliers).
• Balance sheet. Companies that possess overall financial strength and exhibit balance sheet improvements relative to their peers and the marketplace. Financial strength is a qualitative determination based on a review of a company’s balance sheet. Balance sheet improvement is a determination of whether the factors that are considered for financial strength have improved over the last three years.
• Cash-flow adequacy. Companies with earnings and operating cashflow significantly higher than the dividends paid as of the company’s most recent financial reporting period.
3. Selection: Select the most attractive candidates from each sector for expected performance and risk. The securities will be selected and weighted so that the sector weightings of this sleeve be substantially similar to the sector weightings of the initial universe.
Securities in the final portfolio will be cross-referenced against other sleeves to ensure no security overlap.
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:
• Certain ETFs 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.
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.
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