ETFessentials - Structural Characteristics - ETF Holdings and Transparency

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STRUCTURAL CHARACTERISTICS
ETF Holdings and Transparency

Overview

Underlying
ETF Holdings

"Replication" or
"Representation"?

Changes to
ETF Holdings

ETF Transparency

Overview

Since their birth in 1993, exchange traded funds (ETFs) have come a long way with a large variety of ETFs available for investment today. Most ETFs define themselves by the asset class they invest in, by their underlying securities or by their investment style.

On the surface, ETFs that seem to invest in similar areas or sectors of the market may appear almost identical, but they can actually be very different due to alternative weighting strategies and even in the ways they gain exposure to the market areas they seek to access.

Since most ETFs track to an underlying index—either a proprietary one or a third-party veteran or custom index—it may seem as if ETFs’ investment objectives are self-explanatory. But it’s also important to pop open the hood on an ETF, take a good hard look inside and really understand precisely what an ETF is investing in.

ETFs may not be suitable for all investors. •Investment returns and principal value will fluctuate so that when shares are redeemed, they may be worth more or less than original cost. Most investors will also incur customary brokerage commissions when buying or selling shares of an ETF. •Investments in securities and derivatives, in general, are subject to market risks that may cause their prices to fluctuate over time. •ETF Shares may trade below their net asset value (“NAV”). The NAV of shares will fluctuate with changes in the market value of an ETF’s holdings. In addition, there can be no assurance that an active trading market for shares will develop or be maintained.

This information is subject to change at any time and should not be construed as a recommendation of any specific security or strategy.

This information does not constitute tax advice. Please consult your tax advisor and/or state and local tax offices for more complete information.

Securities are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.

RydexShares™ are distributed by Rydex Distributors, LLC (RDL), an affiliate of Rydex SGI.

Not FDIC Insured No Bank Guarantee May Lose Value

For more complete information regarding the funds, call 800.820.0888 or click here for a prospectus and a summary prospectus (if available). Investors should carefully consider the investment objectives, risks, charges and expenses of a fund before investing. A fund's prospectus and its summary prospectus (if available) contains this and other information about the fund. Please read the prospectus and summary prospectus (if available) carefully before you invest or send money.

The funds are distributed by Rydex Distributors, LLC (RDL). Guggenheim Investments represents the investment management businesses of Guggenheim Partners, LLC (GP), which includes Guggenheim Partners Asset Management, LLC (GPAM) and Security Investors, LLC (SI), the investment advisors to the referenced funds. Rydex Distributors, LLC, is affiliated with GP, GPAM and SI.