Guggenheim 40/40/20 Asset Allocation Portfolio of ETFs Series 1 - Overview (2024)

Under normal circ*mstances, the Trust will invest at least 80% of the value of its assets in shares of ETFs. The Trust is comprised of ETFs and ETNs across three different asset classes:

• Common stock funds;
• Commodity notes; and
• Fixed-income funds.

The Trust has been designed to provide investors with broad diversification by investing in three different, low correlated asset classes to potentially reduce volatility in a rising inflationary environment. The portfolio is constructed to provide investors with broad diversification by investing in ETFs that invest in common stocks of various market capitalizations, growth and value styles, sectors and countries as well as taxable and government bonds. The Trust’s investments in ETNs is diversified across various types of commodity-linked notes.

The Sponsor, with the assistance of Guggenheim Partners Investment Management Inc. ("GPIM") has selected a portfolio of ETFs and ETNs believed to have the best potential for capital appreciation and the potential for current income. As of the Trust’s initial date of deposit (the “Inception Date”), the asset classes represented in the portfolio will be approximately weighted as follows: common stock funds, 40%; commodities notes, 20%; and fixed-income funds, 40%.

When selecting the ETFs for the Trust, the Sponsor considers a number of factors including, but not limited to, the size, liquidity and daily trading volume, the current dividend yield, the strategy and investment objective, the securities held by the ETF, the expense ratio and limitations on the overlap of the underlying securities held by the ETFs. When selecting the ETNs for the Trust, the Sponsor considers a number of factors including, but not limited to, the credit quality of the issuer, the size, liquidity and daily trading volume and the type of commodity exposure the ETN intends to provide.

Guggenheim Partners Investment Management, LLC

Guggenheim Partners Investment Management, LLC, is a wholly-owned subsidiary of Guggenheim Partners, LLC, which offers financial services expertise within its asset management, investment advisory, capital markets, institutional finance and merchant banking business lines. Clients consist of an elite mix of individuals, family offices, endowments, foundations, insurance companies, pension plans and other institutions that together have entrusted the firm with supervision of more than $100 billion in assets. A global diversified financial services firm, Guggenheim Partners, LLC office locations include New York, Chicago, Los Angeles, Miami, Boston, Philadelphia, St. Louis, Houston, London, Dublin, Geneva, Hong Kong, Singapore, Mumbai and Dubai.

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. In the last year, economic activity has declined across all sectors of the economy, and the United States is experiencing increased unemployment. The current economic crisis has affected the global economy with European and Asian markets also suffering historic losses. Extraordinary steps have been taken by the governments of several leading economic countries to combat the economic crisis; however, the impact of these measures is not yet 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 invests in shares of ETFs. ETFs are investment pools that hold other securities. The ETFs in the Trust are usually 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, and to manage the fund’s portfolio when the underlying securities are redeemed or sold, during periods of market turmoil and as investors’ perceptions regarding ETFs or their underlying investments change. You will bear not only your share of your trust’s expenses, but also the expenses of the underlying funds. 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 index correlation risk. 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 transaction costs, market impact, corporate actions (such as mergers and spin-offs) and timing variances.
• The value of the fixed-income securities 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.
• An ETF or an issuer of securities held by an ETF may be unwilling or unable to make principal payments and/or to declare dividends in the future, may call a security before its stated maturity, or may reduce the level of dividends declared. This may result in a reduction in the value of your units.
• The financial condition of an ETF or an issuer of securities held by an ETF may worsen or its credit ratings may drop, resulting in a reduction in the value of your units. This may occur at any point in time, including during the primary offering period.
• The financial condition of an issuer of ETNs may worsen or its credit ratings may drop, resulting in a reduction in the value of your units. This may occur at any point in time, including during the initial offering period.
• Certain of the securities in the Trust’s portfolio are ETNs. In particular, an investment in these notes is subject to risks related to factors such as the note issuer’s credit, price volatility, limited portfolio diversification, limited liquidity, issuer default and uncertain principal repayment. The ETNs charge an annual investor fee. You will bear not only your share of the Trust’s expenses, but also the fees of the underlying ETNs. By investing in other notes, the Trust incurs greater expenses than you would incur if you invested directly in the ETNs.
• The Trust is exposed to commodities through its investment in the underlying ETNs. Commodities prices are highly volatile and are affected by numerous factors in addition to economic activity. These include political events, weather, labor activity, direct government intervention, such as embargos, and supply disruptions in major producing or consuming regions. Those events tend to affect prices worldwide, regardless of the location of the event.
• The Trust invests in ETFs that hold 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.
• The Sponsor does not actively manage the portfolio. The Trust will generally hold, and may continue to buy, the same securities even though a security’s outlook, market value or yield may have changed.
• Inflation may lead to a decrease in the value of assets or income from investments.