About Guggenheim Investments - Security Benefit Agent

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Guggenheim Investments Key Areas of Fixed Income Expertise Core and Core Plus Fixed Income - Innovative approach focused on clients’ investment objectives rather than the weights of a generic benchmark – Manage $75+ billion in Core/Core Plus fixed income mandates – Composite returns ranked in the top 5% or better of competitor universe for the past 1-, 3-, 5-, 7- and 10-year periods 1 – Winner of 2011 Industry Innovation Award in the US Fixed Income category by aiCIO magazine 2 11% 9% 7% 5% 3% 1% -1% -3% Returns for Period ended Dec. 31, 2013 9.60% 7.55% 7.09% 6.71% 4.44% 4.91% 4.55% 3.26% 0.97% -2.02% 1 YR 3 YRS 5 YRS 7 YRS 10 YRS Guggenheim Core Fixed Income Composite (Gross) Barclays U.S. Aggregate Index Source: Guggenheim Partners Investment Management, LLC. (GPIM), Barclays Returns are presented gross of advisory fees. Core Fixed Income performance is based on the Fixed Income composite returns. Returns for periods longer than one year are annualized. The Fixed Income Composite consists of intermediate fixed income accounts that are managed on a total rate of return basis. The strategy seeks to achieve its investment objective by investing in a broadly diversified portfolio of fixed income instruments. The strategy normally maintains an average duration that is within +/ 1.0 year of the duration of a given portfolio’s respective benchmark. The Barclays U.S. Aggregate Index represents securities that are SEC registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis. Past performance is not indicative of future results. 2 aiCIO: The aiCIO Industry Innovation Awards are awarded annually to industry participants that are deemed by the aiCIO editorial team, in conjunction with an Advisory Board comprised of former chief investment officers and pension officials, to be an industry innovator in one of five distinct categories (Core Investment, Alternative Investment, Strategy & Tactics, Servicing, and Holistic), each of which has multiple sub-categories. Asset International (AI) covers 5,000 pools of capital. The Core Investment category consists of five sub-categories – Fixed-Income (US), Fixed-Income (Non-US), Equities (US), Equities (Non-US), and Emerging Markets. The 2011 Fixed-Income (US) sub-category consisted of all managers in this space. Winners are nominated internally by aiCIO. A proprietary panel of judges makes recommendations to the aiCIO editorial team; subsequently the winners are announced. Corporate Credit – Fully integrated $55+ billion corporate credit platform delivers top-performing bank loans and high yield strategies – Guggenheim’s 90+ member Corporate Credit investment team is one of largest in the industry – US Bank Loans and High Yield composite returns ranked in top-quartile of competitor universe for the past 1-, 3-, 7- and 10-year periods 1 – 2013 Creditflux Awards: “Best U.S. CLO 2.0” 5180 CLO 3 Source: Guggenheim Partners Investment Management, LLC. (GPIM), BAML, Credit Suisse Returns are shown gross of advisory fees. Returns for periods longer than one year are annualized. The BofA Merrill Lynch U.S. High Yield Master II Constrained Index is a broad-based Index consisting of all U.S. dollar-denominated high-yield bonds with a minimum outstanding amount of $100 million and maturing over one year. The Credit Suisse Leveraged Loan Index is designed to mirror the investable universe of the USD denominated leveraged loan market. Returns do not reflect performance that would have necessarily been achieved by a portfolio limited to those assets. Past performance is not indicative of future results. 3 Creditflux: The Creditflux “CLO” awards are performance-based awards presented to a CLO selected from the CLO universe, which includes US and European CLOs, and where possible differentiates between vintages. In 2013, 394 U.S. and 193 European arbitrage CLO transactions were reviewed in the study. Performance is evaluated across the lifetime of a deal up to the end of the year preceding the award year. Through the use of its proprietary ParPlus formula in 2011 and its liquidation IRR in 2012, Creditflux judges the best performing deals to be those that have safeguarded debt investors’ principal and interest, while generating excellent returns for equity investors. The awards are calculated using data supplied directly by managers, but all finalists are checked against the performance data in CLO Master. For validation purposes, only CLOs in CLO Master will be eligible for an award. The “Best U.S. CLO 2.0” is a category that measures the best CLO with a closing date between 2009 and 2011, based on liquidation IRR. Liquidation IRR is the internal rate of return equity investors would receive if a CLO had been liquidated on 31 December 2012, all its assets sold at market value and all proceeds and remaining cash distributed to investors in accordance with the cash flow waterfall. To achieve a positive liquidation IRR, CLOs must be able to repay all debt liabilities. Market values are based on an average of all managers’ marks for that asset. Creditflux applies a haircut for assets that are held by only one manager. 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% U.S. Bank Loans Returns for Period ended Dec. 31, 2013 High Yield 7.30% 7.41% 7.54% 7.33% 6.15% 5.76% 5.05% 4.58% 1 YR 3 YRS 5 YRS 10 YRS 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 10.23% 10.47% 10.31% 9.17% 9.01% 8.63% 8.46% 7.41% 1 YR 3 YRS 5 YRS 10 YRS Guggenheim: U.S. Bank Loans Composite (Gross) Credit Suisse Leveraged Loan Index Guggenheim: High Yield bonds Sector (Gross) BofA Merrill Lynch High Yield Master II Constrained Index 1 The rankings are based on data self-reported by managers to eVestment Alliance (“EA”); EA does not verify this data. As of 12.31.2013, the number of observations since inception for each universe is as follows: Core Fixed Income - 157, U.S. Bank Loans - 16 and High Yield - 165. The strategies included herein are not representative of all strategies included in the EA database. The rankings may not be representative of any one client’s experience because the ranking reflects an average of all, or a sample of all, of the experiences of the adviser’s clients. Past performance does not guarantee future returns. Additional information regarding EA rankings for year to date and since inception performance of each composite is available on EA’s website.
Core Fixed Income Composite Schedule of Investment Performance for the Period 01.01.2003 - 12.31.2012 Period Composite Gross of Fees Rates of Return (%) 3-Year Standard Deviation (%) Composite Net of Fees Barclays U.S. Agg Composite Barclays U.S. Agg No. of Accounts Dispersion (%) Composite Assets ($m) Firm Assets ($m) 2012 10.65 10.10 4.21 3.21 2.42 21 1.05 73,745 113,588 2011 11.38 10.83 7.84 4.80 2.82 14 1.50 52,942 75,740 2010 13.47 12.91 6.54 6.68 4.23 12 1.13 43,774 55,911 2009 12.02 11.47 5.93 6.39 4.17 9 1.59 32,728 45,263 2008 -3.47 -3.95 5.24 5.56 4.03 7 1.22 26,332 32,988 2007 5.80 5.27 6.97 4.22 2.80 7 N/A 25,881 30,957 2006 5.52 5.00 4.33 5.19 3.26 ≤5 N/A 22,270 27,121 2005 4.45 3.93 2.43 6.67 4.12 ≤5 N/A 20,323 24,301 2004 7.50 6.96 4.34 6.44 4.34 ≤5 N/A 18,244 21,390 2003 7.10 6.57 4.10 5.71 4.26 ≤5 N/A 15,293 18,088 Guggenheim Investments Asset Management (GIAM) is a global investment management firm providing fixed income, equity and alternative investment services primarily to institutional investors and is comprised of the following affiliated entities of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC (GPIM), Guggenheim Partners Europe Limited (GPE), Transparent Value Advisors, LLC (TVA), and, as of February 2012, Security Investors, LLC (SI). GPIM was formed in June 2012 as the result of the merger of Guggenheim Partners Asset Management, Inc. (GPAM) and Guggenheim Investment Management, LLC (GIM). Also, in June 2012, GIAM broadened the definition of the GIPS firm to include GIAM’s historically affiliated advisors GPAM, GIM, GPE and TVA since each entity’s inception. GIAM claims compliance with the Global Investment Performance Standards (GIPS ® ) and has prepared and presented this report in compliance with the GIPS standards. GIAM has been independently verified for the periods January 1, 1999 through December 31, 2011. The verification reports are available upon request. Verification assesses whether (1) the firm has complied with all the Composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation. The Core Fixed Income Composite (the “Composite”) is comprised of accounts with a total return objective and invest in broadly diversified portfolios of primarily investment grade fixed income instruments, rotating opportunistically among sectors where perceived relative value exists. Derivatives may be used to hedge interest rate and credit risks. Leverage may be employed when appropriate market conditions exist. The creation date for this composite is September 1, 2010. Derivatives are used to hedge various risk components of the Composite and may make up a material part of the composite strategy. Interest rate derivatives are used to hedge interest rate risk and credit default derivatives are used to hedge underlying credit risk. The use of leverage may be employed when appropriate market conditions exits, generally in the form of reverse repurchase agreements and securities lending. For comparison purposes the Composite is measured against the Barclays U.S. Aggregate Index. The Barclays U.S. Aggregate Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. All performance is expressed in U.S. dollars. Gross returns are presented net of non-reclaimable foreign withholding taxes applicable to the U.S. investors and include the reinvestment of income. Net returns are calculated by reducing gross returns by the greater of 1) the highest management fee charged to an account in the composite or 2) the highest tier of the current management fee schedule. The representative, standard fee schedule for this composite is: First $100M: 0.33% Next $200M: 0.27% Above $300M: 0.20% The composite dispersion is calculated using the asset-weighted standard deviation of all accounts within the Composite. Dispersion will be calculated only if the number of accounts in the Composite is greater than five and will only include accounts that have been in the Composite for the entire year. The firm’s list of composite descriptions, as well as information regarding the firm’s policies for valuing investments, calculating performance, and preparing compliant presentations, is available upon request. Past performance may not be indicative of future returns. The value of any investment may rise or fall over time. Principal is not guaranteed, and investors may receive less than the full amount of principal invested at the time of redemption if asset values have declined. Individual account performance may be greater than or less than the performance presented for this composite.
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