The Floating Rate & Dividend Growth Portfolio, Series 23 ("Trust") seeks to provide current income and, as a secondary objective, the potential for capital appreciation.
|Wrap Fee Price||$10.1753|
|Remaining Deferred Sales Charge||$0.2250|
|Mandatory Maturity Date||5/1/2023|
|Inception Unit Price||$10.0000|
|Inception Liquidation Price||$9.7750|
|Deferred Sales Charge Dates||
|Number of Holdings||45|
|Rate Fee Based||3.38%|
* The Historical Annual Dividend Distribution (HADD) per unit is as of the day prior to trust deposit and subject to change. The HADD per unit is the weighted average of the trailing twelve-month distributions paid by the securities included in the portfolio. The HADD rate is based on the HADD divided by the current offer price and recalculated daily. Both the HADD per unit and the rate shown are reduced to account for the effects of fees and expenses, which will be incurred when investing in the Trust. The HADD per unit and rate will vary 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. There is no guarantee the issuers of the securities included in the Trust will declare dividends or distributions in the future. The HADD of the securities included in the Trust is for illustrative purposes only and is not indicative of the Trust’s distribution. Due to the negative economic impact across many industries caused by the recent COVID-19 outbreak, certain issuers of the securities included in the trust may elect to reduce the amount of, or cancel entirely, dividends and/or distributions paid in the future. As a result, the HADD figure will likely be higher, and in some cases significantly higher, than the actual distribution rate achieved by the trust.
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||23.96%|
|Weighted Average Leverage Ratio**||8.56%|
** 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||26.16|
|Weighted Average Price/Book (P/B) Ratio||11.36|
|Weighted Average Market Cap (MM)||$137,514.20|
|US Common Stock||46.92%|
|Aerospace & Defense||1.85%|
|Semiconductors & Semiconductor Equipment||1.80%|
|Equity Real Estate Investment Trusts (REITs)||3.72%|
|Hotels Restaurants & Leisure||1.69%|
|Containers & Packaging||1.66%|
|Oil Gas & Consumable Fuels||1.72%|
|Trust Weighted Average||-0.88%|
|Closed-End Fund ("CEF") Universe Average||-2.13%|
* 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.
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.
The Closed-End Fund (“CEF”) Universe is comprised of all CEFs currently listed on U.S. exchanges.
© 2021 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 a combination of dividend-paying equity securities, common shares of closed-end investment companies (“Closed-End Funds”) that invest substantially all of their assets in floating rate securities and shares of exchange-traded funds (“ETFs”) that invest substantially all of their assets in floating rate securities. The Trust seeks to provide current income with the potential for capital appreciation by investing approximately 50% of the portfolio in dividend-paying equity securities that have historically increased their dividends and at least approximately 30% of the portfolio in ETFs and Closed-End Funds that invest substantially all of their assets in floating rate securities, which will include floating rate loans. The Trust may also invest up to 20% of the portfolio in Closed-End Funds or ETFs that invest principally in various debt securities. The securities held by the Closed-End Funds or ETFs in the Trust will include high-yield or “junk” securities. The Sponsor will consider Closed-End Funds and ETFs investing in securities of all durations. The Trust may invest in stocks of companies with all market capitalizations that trade on an U.S. securities exchange, including U.S.-listed foreign companies. The U.S.-listed foreign companies may include companies located in emerging markets. The Sponsor believes that dividends are often a good indicator of a corporation’s current financial condition and, furthermore, may signal management’s belief in a profitable future for the corporation. Additionally, the Sponsor will strive to select ETFs and Closed-End Funds featuring the potential for current income, diversification and overall liquidity.
Equity Securities Selection
Approximately 50% of the Trust portfolio will constitute dividend-paying stocks of U.S.- traded companies. To select the stocks the Sponsor follows a disciplined process that includes both quantitative screening and qualitative analysis.
The Sponsor begins with a universe of all dividend-paying companies traded in the United States as of the date of the security selection. The Sponsor then reduces the universe to approximately 100 companies by performing quantitative screening, which may be primarily based on, but not limited to, the following factors:
• Dividend Growth. The Sponsor favors companies with a history of dividend growth.
• Cash Dividend Coverage. The Sponsor favors companies with a recent history of increasing dividend coverage ratios (defined as funds from operations relative to cash dividends to common shareholders).
• Growth. The Sponsor may screen for companies with a history of (and prospects for) above average growth of dividends, sales and earnings.
• Profitability. The Sponsor may screen for companies with a history of consistent and high profitability as measured by return-on-assets, return-on-equity, gross margin and net margin.
From this universe of approximately 100 companies, the Sponsor identifies companies for inclusion in the portfolio through a qualitative analysis based on factors such as, but not limited to:
• Cash-flow Adequacy. The Sponsor favors companies with recent earnings and operating cash-flow significantly higher than the dividends paid as of the company’s most recent financial reporting period.
• Balance Sheet. The Sponsor favors companies that possess overall financial strength and exhibit balance sheet improvements relative to their peers and the marketplace.
• Valuation. The Sponsor favors 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. The Sponsor favors companies that possess a strong competitive position among their domestic and global peers.
• Growth. The Sponsor favors companies with a history of (and prospects for) above average growth of dividends, sales and earnings.
Closed-End Fund Selection
The Sponsor has selected for the portfolio Closed-End Funds believed to have the best potential to achieve the Trust’s investment objective. The majority of Closed-End Funds selected have portfolios that invest substantially all of their assets in floating rate securities. The Sponsor will consider Closed-End Funds investing in securities of all durations.
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 benchmark.
Exchange-Traded Fund Selection
The Sponsor will generally seek to select ETFs for inclusion in the Trust portfolio that invest substantially all of their assets in floating rate securities. When selecting ETFs the Sponsor looks at numerous factors. These factors include, but are not limited to, duration, maturity and liquidity. The Sponsor will consider ETFs investing in securities of all durations. The duration of a security 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.
Investing in Floating Rate Securities
The Trust will invest at least approximately 30% of the portfolio in Closed-End Funds and ETFs that invest substantially all of their assets in floating rate securities, which include loans. The Closed-End Funds or ETFs selected for the Trust may also include various bonds and other income-producing securities, including high-yield securities.
Floating rate securities have variable or floating-rates of interest and, under certain limited circumstances, may have varying principal amounts. Unlike a fixed interest rate, a floating interest rate is one that rises and falls based on the movement of an underlying index of interest rates. Floating rate instruments pay interest at rates that are adjusted periodically according to a specified formula. The floating rate tends to decrease the security’s price sensitivity to changes in interest rates.
Loans are made by banks, other financial institutions, and other investors (“Lenders”), to corporations, partnerships, limited liability companies and other entities (“Borrowers”) to finance leveraged buyouts, recapitalizations, mergers, acquisitions, stock repurchases, debt refinancings and, to a lesser extent, for general operating and other purposes. Loans are generally negotiated between a Borrower and the Lenders represented by one or more Lenders acting as agent (“Agent”) of all the Lenders. The Agent is responsible for negotiating the loan agreement (“Loan Agreement”) that establishes the terms and conditions of the senior loan and the rights of the Borrower and the Lenders. The Agent is paid a fee by the Borrower for its services.
Senior loans generally are not subordinate to other significant claims on a Borrower’s assets. While senior loans can provide investors with high current income potential, the majority of senior loans are considered below investment-grade, and therefore retain a higher credit risk relative to lower yielding, investment-grade securities. The senior loan market is still considered relatively illiquid.
For floating-rate senior loans, the interest rates are generally adjusted based on a base rate plus a premium or spread over the base rate. Interest rates on senior loans may adjust daily, monthly, quarterly, semi-annually or annually. The base rate is usually:
• the London Inter-Bank Offered Rate (“LIBOR”);
• the prime rate offered by one or more major U.S. banks (the “Prime Rate”); or
• the certificate of deposit (“CD”) rate or other base lending rates used by commercial lenders.
LIBOR, as provided for in Loan Agreements, is usually an average of the interest rates quoted by several designated banks as the rates at which they pay interest to major depositors in the London interbank market on U.S. dollar-denominated deposits. The prime rate quoted by a major U.S. bank is generally the interest rate at which that bank is willing to lend U.S. dollars to its most creditworthy borrowers, although it may not be the bank’s lowest available rate. The CD rate, as provided for in loan agreements, usually is the average rate paid on large certificates of deposit traded in the secondary market.
High-yield securities are securities rated below investment-grade by a nationally recognized statistical rating organization. High-yield or “junk” securities are frequently issued by corporations in the growth stage of their development or by established companies who are highly leveraged or whose operations or industries are depressed. Securities that are rated below investment-grade by one national rating agency will be deemed to be below investment-grade for purposes of the Trust even if the security has received an investment-grade rating by a different national rating agency. Obligations rated below investment-grade should be considered speculative as these ratings indicate a quality of less than investment-grade. Because high-yield securities are generally perceived by investors to be riskier than higher rated securities, their prices tend to fluctuate more than higher rated securities and are affected by short-term credit developments to a greater degree.
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. Changes in legal, political, regulatory, tax and economic conditions may cause fluctuations in markets and securities prices, which could negatively impact the value of Trust. Additionally, event such war, terrorism, natural and environmental disasters and the spread of infectious illnesses or other public health emergencies may adversely affect the economy, various markets and issuers. Recently, the outbreak of a novel and highly contagious form of coronavirus (“COVID-19”) has adversely impacted global commercial activity and contributed to significant volatility in certain markets. Many governments and businesses have instituted quarantines and closures, which has resulted in significant disruption in manufacturing, supply chains, consumer demand and economic activity. The potential impacts are increasingly uncertain, difficult to assess and impossible to predict, and may result in significant losses. Any adverse event could materially and negatively impact the value and performance of Trust and the Trust’s ability to achieve its investment objectives. 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, dividend rates or distributions 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 or distributions in the future and, if declared, whether they will remain at current levels or increase over time.
• The Trust invests in 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 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 Trust invests in shares of ETFs. ETFs are investment pools that hold other securities. The ETFs are often passively-managed index funds that seek to replicate the performance or composition of a recognized securities index. 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. Consequently, you will bear not only your share of your Trust’s expenses, but also the expenses of the underlying ETFs. By investing in ETFs, the Trust incurs greater expenses than you would incur if you invested directly in the ETFs.
• The Trust is subject to an ETF’s index correlation risk. To the extent that an underlying ETF is an index tracking ETF, index correlation risk is the risk that the performance of an ETF will vary from the actual performance of the fund’s target index, known as “tracking error.” This can happen due to fund expenses, transaction costs, market impact, corporate actions (such as mergers and spin-offs) and timing variances.
• The ETFs 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 value of the fixed-income securities in the Closed-End Funds and ETFs 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. In addition, the duration of a bond will also affect its price sensitivity to interest rate changes. For example, if a security has a duration of 3 years and interest rates go up by 1%, it can be expected that the security price will move down by 3%. 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 rates.
• 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. Issuers may suspend distributions during the life of the Trust. 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 and ETFs held by the Trust 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 Closed-End Funds and ETFs 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 Closed-End Funds and ETFs held by the Trust.
Many floating-rate securities use LIBOR as their reference rate. LIBOR will be phased out by the end of 2021. An underlying fund’s investments in instruments that pay a floating interest rate based on LIBOR, including any instrument that does not include a provision specifying the replacement reference rate if LIBOR is no longer available (a “fallback provision”), may be adversely affected during the transition away from LIBOR by, among other things, increased volatility or illiquidity. There remains uncertainty regarding the future use of LIBOR and the nature of any replacement reference rate and, accordingly, it is difficult to predict the full impact of the transition away from LIBOR.
• Certain Closed-End Funds and ETFs 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 Closed-End Fund or ETF, a reduction in the value of the senior loan experiencing non-payment and a decrease in the net asset value of the Closed-End Fund or ETF. Although senior loans in which the Closed-End Funds and ETFs 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 Closed- End Funds and ETFs invest:
— generally are of below investment-grade or “junk” credit 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 Closed-End Funds and ETFs 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 falling rate environments.
• Certain Closed-End Funds and 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.
• The Trust invests in securities issued by mid-capitalization companies and certain Closed-End Funds or ETFs held by the Trust may invest in securities issued by small-capitalization and/or 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.
• 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 ETFs, 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 ETF uncertain and/or result in sudden and significant valuation increases or declines in its holdings.
• The Trust may be susceptible to potential risks through breaches in cybersecurity. A breach in cybersecurity refers to both intentional and unintentional events that may cause the Trust to lose proprietary information, suffer data corruption or lose operational capacity. Such events could cause the Sponsor of the Trust to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. In addition, cybersecurity breaches of the Trust’s third-party service providers, or issuers in which the Trust invests, can also subject the Trust to many of the same risks associated with direct cybersecurity breaches.
• The Trust is subject to risks arising from various operational factors and their service providers. Operational factors include, but not limited to, human error, processing and communication errors, errors of the Trust’s service providers, counterparties or other third-parties, failed or inadequate processes and technology or systems failures. Additionally, the Trust may be subject to the risk that a service provider may not be willing or able to perform their duties as required or contemplated by their agreements with the Trust. Although the Trust seeks to reduce these operational risks through controls and procedures, there is no way to completely protect against such risks.
• 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 following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Corporate Funding, LLC, Guggenheim Partners Europe Limited, GS GAMMA Advisors, LLC, and Guggenheim Partners India Management. Securities offered through Guggenheim Funds Distributors, LLC.
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