anthonydavidow guggenheim 0216...particular cap-weighted strategy. the smaller companies may help an...

S&P Webinar

Anthony B. Davidow, CIMA®

Managing Director – Portfolio Strategist

FOR FINANCIAL PROFESSIONAL USE ONLY. NOT TO BE SHOWN OR DISTRIBUTED TO THE PUBLIC.

The Case For Equal Weight ETFs

2FOR FINANCIAL PROFESSIONAL USE ONLY. NOT TO BE SHOWN OR DISTRIBUTED TO THE PUBLIC.

Performance PotentialAn equal weight approach reduces the bias towards thelargest companies within a particular cap-weighted strategy. The smaller companies may help an equal weight strategy outperform when large caps are not in favor—though when large stocks are in favor, equal weighted strategies may underperform. .

Disciplined RebalanceSystematic reallocation from outperforming to under performing stocks and market segments may provide enhanced risk control and the opportunity to capture long-term equity market performance.

Diversification1

Broad diversification across market segments may help reduce concentration risk and result in more balanced exposure across market capitalization, sectors, and other broad risk factors

1 Diversification neither assures a profit nor eliminates the risk of experiencing investment losses.

Equal Weight versus Cap Weight


Source: Factset

Performance displayed represents past performance, which is no guarantee of future results. Index performance is not meant to represent performance of any fund. The referenced indices are unmanaged and not available for direct investment. Index returns do not reflect any management fees, transaction costs or expenses.

S&P 500 3 Year Average Top 10 Holdings (as of 12-31-2011)

% of index portfolio S&P 500 Cap-Weight

S&P 500EW Weight

Exxon Mobil Corp. 3.6 0.2Apple Inc. 2.2 0.2Microsoft Corp. 1.9 0.2Procter & Gamble Co. 1.7 0.2General Electric Co. 1.7 0.2Johnson & Johnson 1.7 0.2International Business Machines Corp. 1.7 0.2Chevron Corp. 1.7 0.2AT&T Inc. 1.6 0.2JPMorgan Chase & Co. 1.5 0.2Top 10 Names 19.4 2.0

Next 40 Names 30.8 8.6Top 50 Names 50.1 10.6

The S&P 500 Cap Weight Index is a concentrated bet on Mega-Cap Stocks

S&P 500 EW Diversification


Source: FactSet

This page compares the capitalization ranges of the securities within S&P 500 Index against S&P 500 EWI. Decile 1 includes the top ten % largest securities and Decile 10 includes the bottom 10% smallest securities, based on the S&P 500 Index weightings. Each Decile % has been rounded to the nearest whole percent. S&P 500 EWI rebalances on a quarterly basis to equal weight each constituent. Weightings are subject to change.

As of 12.31.2011% of index of portfolio

Larget Decile Smallest Decile

Market Cap Decile Analysis

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MC Decile 1 MC Decile 2 MC Decile 3 MC Decile 4 MC Decile 5 MC Decile 6 MC Decile 7 MC Decile 8 MC Decile 9 MC Decile 10

S&P 500 EW TR S&P 500 TR

SP 500 Top 50 Names are > 50% of the Index; the remaining 450 names are < 50%

EW strategies receive a larger contribution of return from smaller constituents in the

portfolio

S&P 500 EWI vs. S&P 500 and Large-Cap Universe


Source: Factset; Lipper data. * Inception of S&P 500 EWI

Performance displayed is past performance, which is no guarantee of future results. Index performance is not meant to represent performance of any fund. The referenced indices are unmanaged and not available for direct investment. Index returns do not reflect any management fees, transaction costs or expenses.

Upside DownsideAnlzd Return Anlzd StdDev Capture % Capture % Anlzd Alpha Sharpe Ratio Info Ratio Sortino Ratio

Statistic Statistic Statistic Statistic Statistic Statistic Statistic Statistic

Upside DownsideAs of 12.31.11 Anlzd Return Anlzd StdDev Capture % Capture % Anlzd Alpha Sharpe Ratio Info Ratio Sortino Ratio

Statistic Statistic Statistic Statistic Statistic Statistic Statistic StatisticS&P 500 Equal Weight Index 9.43 18.52 173.43 105.58 2.27 0.41 0.64 0.61S&P 500 Index 6.16 15.12 100.00 100.00 0.00 0.28 0.40

Peer Group 5th Percentile Return 7.89 18.46 132.21 106.73 1.80 0.38 0.42 0.56Peer Group 25th Percentile Return 6.31 16.20 107.33 102.78 0.43 0.30 0.04 0.43Peer Group Median Return 5.52 15.38 96.51 100.61 -0.46 0.24 -0.18 0.34Peer Group 75th Percentile Return 4.71 14.65 83.82 97.75 -1.26 0.18 -0.45 0.26Peer Group 95th Percentile Return 3.29 12.97 67.26 90.18 -2.61 0.10 -0.97 0.13

Peer Group = Lipper Large Cap Core Funds: 584 funds in the Universe

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10S&P 500 Equal WeightIndex

S&P 500 Index

Peer Group 5th PercentileReturn

Peer Group Median Return

Peer Group 95th PercentileReturn

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140

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(January 8, 2003* – December 31, 2011)

Pure Style


Rydex S&P Pure Style exchange traded funds (ETFs) are benchmarked to the S&P Pure Style indices. Unlike traditional style indices, these pure style indices seek to remove overlap between growth and value. Each index is weighted by style scores, as opposed to market cap. Only pure growth and pure value stocks are included and the stocks with similar growth and value characteristics are eliminated. Therefore, these products deliver pure style based only on stocks with the strongest style attributes.

SIX PURE STYLE ETFS:

• Rydex S&P 500 Pure Growth ETF RPG

• Rydex S&P 500 Pure Value ETF RPV

• Rydex S&P MidCap 400 Pure Growth ETF RFG

• Rydex S&P MidCap 400 Pure Value ETF RFV

• Rydex S&P SmallCap 600 Pure Growth ETF RZG

• Rydex S&P SmallCap 600 Pure Value ETF RZV

FUND HIGHLIGHTS & APPLICATIONS:• Provides pure exposure to growth or value stocks within the S&P

500, S&P MidCap 400 and S&P SmallCap 600 indices

• Pure Style benchmarks, as a result of a tighter focus, will realize a larger spread in performance versus traditional style benchmarks

• Pure Style benchmarks have lower correlations to “core” benchmarks (large, mid & small), than traditional style benchmarks where significant exposure to constituents with both growth and value attributes exist

INVESTMENT STRATEGY:• Seeks to replicate as closely as possible, before expenses, the

performance of the corresponding S&P Pure Style Indices.

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 moreor less than original cost. Most investors will also incur customary brokerage commissions when buying or selling shares of an ETF. • Investments in securitiesand 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 tradingmarket for shares will develop or be maintained.

Index Construction for the S&P Pure Style Indices


SOURCE: Standard & Poor’s

Pure Style indices are based on identifying approximately a third (1/3) of the market capitalization of the index as pure growth, and a third (1/3) as pure value. There are no overlapping stocks and stocks are weighted by their style attractiveness.

Growth FactorsThree‐year change in Earnings per

Share over Price per Share

Three‐year Sales per Share Growth Rate

Momentum (12‐Month % Price Change

Value FactorsBook Value to Price Ratio

Earnings to Price Ratio

Sales to Price Ratio

Index ConstructionEach factor is equally weighted

A Growth & Value score is computed for each company via the average of the three factors

Higher Growth Rank = Pure Growth Index vs.Higher Value Rank = Pure Value Index

No stock can represent greater than a 2%Weighting after applying style scores

Pure Style Methodology


Parent Index

S&P 500®

S&P MidCap 400 TM

S&P SmallCap 600 TM

Pure Style Indices

Pure Growth

Non-PureStocks Removed

PureValue

PureGrowthStocks

SimilarGrowth and Value

Stocks

PureValueStocks

Growth(2/3 of parent index)Traditional

Style Indices Value(2/3 of parent index)

Comparative Performance


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45.00

10.00 20.00 30.00 40.00

S&P 500 Equal Weighted TR USD

S&P 500 TR

S&P 500 Pure Growth TR

S&P 500 Pure Value TR

Source: Morningstar

Performance displayed represents past performance, which is no guarantee of future results. Index performance is not meant to represent performance of any fund. The referenced indices are unmanaged and not available for direct investment. Index returns do not reflect any management fees, transaction costs or expenses.

Standard Deviation

Tota

l Ret

urn

%

S&P 500 Indices 3-Year Average Performance(From January 31, 2010 through January 31, 2012)

The referenced ETFs are subject to risks and may not be suitable for all investors.

Each Fund is subject to the risk that unanticipated early closings of securities exchanges and other financial markets may result in the Fund's inability to buy or sell securities or other financial instruments on that day.

In certain circumstances, it may be difficult for the Funds to purchase and sell particular investments within a reasonable time at a fair price.

Investments in securities, in general, are subject to market risks that may cause their prices to fluctuate over time. An investment in the Funds may lose money. Most investors will also incur customary brokerage commissions when buying or selling shares of an ETF.

Unlike many investment companies, the Fund are not actively "managed." This means that, based on market and economic conditions, the Funds’ performance could be lower than other types of mutual funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.

Tracking error risk refers to the risk that the Advisor may not be able to cause the Funds’ performance to match or correlate to that of the Funds’ Underlying Index, either on a daily or aggregate basis. Tracking error risk may cause the Funds’ performance to be less than you expect.

Shares may trade below their net asset value ("NAV"). The NAV of shares will fluctuate with changes in the market value of the Funds’ holdings. In addition, although the Funds’ shares are currently listed on NYSE Arca, Inc. (the "Exchange"), there can be no assurance that an active trading market for shares will develop or be maintained.

Investing in sector funds is more volatile than investing in broadly diversified funds, as there is a greater risk due to the concentration of the fund's holdings in issuers of the same or similar offerings.

The Rydex MSCI ETFs' investments in foreign instruments may be volatile due to the impact of diplomatic, political or economic developments on the country in question. Additionally, the Funds’ exposure to foreign currencies subjects the fund to the risk that those currencies will decline in value relative to the U.S. dollar.

The Rydex MSCI ACWI Equal Weight ETF invests to a significant extent in other investment companies and therefore will be exposed to all of the risks of the underlying funds and will bear a proportionate share of each underlying Fund’s operating expenses. See the Prospectus for more details.

Risks


The information provided herein is intended to be general in nature and should not be construed as a recommendation of any specific security or strategy. Data is subject to change at any time, based on market and other conditions. The referenced indices are unmanaged and not available for direct investment. Index returns do not reflect any management fees, transaction costs or expenses. The information provided within this presentation has been provided for illustrative purposes only and is not indicative of any investment. No assumptions should be made that similar asset allocations will be profitable, suitable, or perform as indicated. Allocations and their percentages should change based on an individual investor’s needs.

ETFs are subject to third party transaction fees/commissions. Net asset value (NAV) is calculated by subtracting total liabilities from total assets, then dividing by the number of shares outstanding. Market close is the last price at which shares are traded.Fund shares may trade at, above or below NAV.

Read a fund’s prospectus and summary prospectus (if available) carefully before investing. It contains the fund’s investment objectives, risks, charges, expenses and other information, which should be considered carefully before investing. Obtain a prospectus and summary prospectus (if available) at rydex-sgi.com or call 800.820.0888

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

Important Disclosure


"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," "500," "S&P MidCap 400," and "S&P SmallCap 600" are trademarks of The Standard & Poor's, LLC and have been licensed for use by Rydex|SGI and its affiliates. The Products are not sponsored, endorsed, sold or promoted by Standard and Poor's and Standard & Poor's makes no representation regarding the advisability of investing in the Products.

The Russell Midcap® Equal Weight Index, Russell 1000® Equal Weight Index and the Russell 2000® Equal Weight Index are trademarks of Russell Investment Group and have been licensed for use by Rydex|SGI and its affiliates. Neither Russell’s publication of the Russell indices nor its licensing of its trademarks for use in connection with financial products derived from a Russell index in any way suggest or imply a representation or opinion by Russell as to the attractiveness of investment in any securities or other financial products based upon or derived from any Russell index. Russell is not the issuer of any such securities or other financial products and makes no expressed or implied warranties of merchantability or fitness for any particular purpose with respect to any Russell index or any data included or reflected therein, nor as to results to be obtained by any person or any entity from the use of the Russell index or any data included or reflected therein.

The MSCI EAFE, MSCI ACWI and the MSCI Emerging Markets Equal Weighted Indexes are trademarks of MSCI and have been licensed for use by Rydex|SGI and its affiliates. None of the Information constitutes an offer to sell (or a solicitation of an offer to buy), or a promotion or recommendation of, any security, financial product or other investment vehicle or any trading strategy, and none of the MSCI Parties endorses, approves or otherwise expresses any opinion regarding any issuer, securities, financial products or instruments or trading strategies. None of the Information, MSCI indices, models or other products or services is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. The Funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such Funds or securities or any index on which such Funds or securities are based. The Prospectus contains a more detailed description of the limited relationship MSCI has with Rydex|SGI and any related funds.

Important Disclosure


1211 x0312 #4170

anthonydavidow guggenheim 0216...particular cap-weighted strategy. the smaller companies may help an...

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