MZF
MBIA Capital/Claymore
Managed Duration Investment Grade Municipal Fund
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COMMON SHARES
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DAILY DATA as of
3/12/10
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Closing Share Price
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$13.55
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Closing NAV
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$14.01
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Premium/(Discount)
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(3.28%)
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52-Week Average Premium/Discount
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(7.74%)
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Current Distribution Rate8
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7.31%
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Taxable Equivalent Distribution Rate1
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11.24%
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Daily Volume
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29,934
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Monthly Dividend Per Share2
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$0.08250
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Ex-Dividend Date
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3/11/10
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Payable Date
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3/31/10
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52 Week High/Low Share Price3
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$13.58/$9.68
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52 Week High/Low NAV3
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$14.38/$11.33
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Intraday Trading Information
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NYSE
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Data subject to change on a daily basis.
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WEEKLY DATA as of
3/12/10
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Closing Share Price
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$13.55
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Closing NAV
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$14.01
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Closing Volume
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29,934
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Premium/(Discount)
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(3.28%)
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Distribution Rate
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7.31%
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Total Managed Assets
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$180,627,630
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Common Shares Outstanding
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7,935,591
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Percent Leveraged From Preferred Shares
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38.45%
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Data subject to change on a daily basis.
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SEMI-ANNUAL DATA as of
7/31/09
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Fiscal Year-End
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07/31
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Expense Ratio (Common Shares)4
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1.54%
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Expense Ratio (Total Fund)4
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0.89%
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Portfolio Turnover Rate6
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21%
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Portfolio Manager
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Cutwater Asset Management Corp.
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Shareholder Servicing Agent
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Claymore Securities
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Data subject to change on a daily basis.
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INCEPTION INFORMATION
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Common Shares5
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Inception Date
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August 26, 2003
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NYSE Symbol
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MZF
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NAV Symbol
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XMZFX
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The Wall Street Journal Listing
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MBIA CapClymrFd
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CUSIP
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55266X100
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Inception Share Price
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$15.00
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Inception NAV
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$14.33
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Auction Market Preferred Shares
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Total Preferred Assets
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$69,450,000
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Share Price
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$25,000
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1940 Act Asset Coverage Ratio7
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260%
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Preferred Share Daily Rates and Risk Considerations
QUARTERLY TOTAL RETURNS
as of 12/31/09
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MARKET PRICE
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NAV
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2009 YTD
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66.45 %
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41.74 %
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1 Year
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66.45 %
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41.74 %
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3 Year
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6.93 %
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3.14 %
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5 Year
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6.16 %
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4.00 %
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Since Inception
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3.60 %
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4.44 %
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Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Since Inception returns assume a purchase of common shares at the initial offering price of $15.00 per share for market price returns or initial net asset value (NAV) of $14.33 per share for NAV returns. Returns for periods of less than one year are not annualized. All distributions are assumed to be reinvested either in accordance with the dividend reinvestment plan (DRIP) for market price returns or NAV for NAV returns. Until the DRIP price is available from the Plan Agent, the market price returns reflect the reinvestment at the closing market price on the last business day of the month. Once the DRIP is available around mid-month, the market price returns are updated to reflect reinvestment at the DRIP price.
1
The taxable equivalent distribution rate is calculated by taking the current distribution rate and dividing it by one minus the highest federal marginal tax bracket. Our example uses the federal marginal tax rate of 35%.
2
Dividend per share is subject to change on the ex-dividend date. The distribution amount may include net investment income, capital gains and/or return of capital. The distribution amount alone is not indicative of Fund performance.
3
Figures are based on market close.
4
Expense ratio is annualized; Common Share Expense Ratio includes fee waiver of 0.37%, Total Fund Expense Ratio includes fee waiver of 0.21%.
5
Based on the prospectus information.
6
Not annualized
7
The Fund is required to maintain, with respect to the AMPS, as of the last business day of each month in which any AMPS are outstanding, asset coverage of at least 200% with respect to senior securities which are beneficial interests in the Fund.
8
Latest declared monthly dividend per share annualized and divided by the current share price. To the extent any portion of the current distribution is estimated to be sourced from something other than income, such as return of capital, the source would be disclosed on a Section 19a-1 letter located under the “Fund News” section of the “News & Literature” section of the Fund’s website. The distribution rate may include net investment income, capital gains and/or return of capital. The distribution rate alone is not indicative of Fund performance.
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INVESTMENT OBJECTIVE
The Fund’s investment objective is to provide its common shares with high current income exempt from regular Federal income tax while seeking to protect the value of the Fund's assets during periods of interest-rate volatility. There can be no assurance that the Fund's investment objective will be realized.
Under normal market conditions, the Fund seeks to achieve its objective by investing at least 80% of its total assets in municipal bonds of investment grade quality [those rated Baa or higher by Moody's Investors Service, Inc. ("Moody's") or BBB or higher by either Standard & Poor's Ratings Group ("S&P"), or Fitch, Inc. ("Fitch"), or unrated municipal securities considered by the Fund's investment adviser to be of comparable quality] and will normally invest substantially all of its total assets in securities of investment grade quality.
For periodic shareholder reports and recent fund-specific filings, please visit the U.S. Securities and Exchange Commission (“SEC”) website via the following link, click here.
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FREQUENTLY ASKED QUESTIONS
Why is the Fund conducting a tender offer and what are the details of the Fund’s initial tender offer?
The Fund believes that conducting the tender offers at a price equal to at least 98% of NAV will accommodate the interests of shareholders who seek an opportunity to dispose of their shares as well as shareholders who desire to remain shareholders of the Fund.
The Fund will commence a tender offer for up to 15% of its outstanding common shares at a price equal to at least 98% of the Fund’s net asset value (“NAV”) per share on the date the tender offer expires. The Fund will commence the initial tender offer prior to March 1, 2010. Please see the Fund’s November 27th press release or its SEC filings for further information.
What are the details of the Fund’s three additional conditional tender offers?
In addition, upon the occurrence of certain events as set forth below and certain other terms and conditions, the Fund’s Board of Trustees has also agreed to conduct three additional tender offers as soon as reasonably practicable after June 1, 2010, September 1, 2010 and December 1, 2010 (the “Conditional Tender Offers”).
The Fund will commence a Conditional Tender Offer for up to 5% of the then outstanding common shares of MZF at a price equal to at least 98% of the NAV of MZF’s common shares as determined as of the close of regular trading session of the New York Stock Exchange on the date such Conditional Tender Offer expires, if during approximately three calendar months prior to such Conditional Tender Offer (each a “Conditional Tender Offer Test Period”), the common shares of MZF have traded on the New York Stock Exchange at an average daily discount from NAV of more than 5% during the applicable Conditional Tender Offer Test Period. If the average of MZF’s daily discount of market price to net asset value for each trading day in the applicable Conditional Tender Offer Test Period is less than 5% during such period, MZF will not conduct any subsequent Conditional Tender Offers. Please see the Fund’s November 27th press release or its SEC filings for further information.
What if more than 1,190,339 Common Shares are tendered?
The Fund is offering to repurchase up to 1,190,339 Common Shares. If shareholders tender (and do not timely withdraw) more than 1,190,339 Common Shares, the Fund will repurchase duly tendered Common
Shares from participating shareholders on a pro rata basis, disregarding fractions, based upon the number of Common Shares each shareholder tenders for repurchase and does not timely withdraw, provided that
the Fund will exclude from such pro rata reduction and accept all Common Shares duly tendered in accordance with the terms and conditions specified in the Offer by any shareholder who owns, beneficially or of record, an aggregate of not more than 99 Common Shares and who properly tenders all such Common Shares. The Fund does not intend to increase the number of Shares that it is offering to repurchase, even if shareholders tender more than 1,190,339 Shares.
How do I obtain more information regarding the Offer?
Questions, requests for assistance and requests for additional copies of the Offer to Repurchase, the Letter of Transmittal and all other Offer documents should be directed to the Information Agent toll free at (800) 777-3674. More information may also be obtained in the Fund’s February 11, 2010 press release regarding the Offer. The press release can be found in the “News + Literature” section of the Fund’s website.
What are municipal bonds?
Municipal bonds are debt instruments issued by state and local governments for the purpose of financing projects such as new schools, health care facilities and general infrastructure construction and improvement projects. In that municipal bonds are used to fund public purpose projects, they typically pay a lower yield than other debt instruments. In return for a lower yield, investors are generally allowed to exclude interest paid on a municipal bond from regular federal, and, if applicable, state and local income tax.
What is duration?
Duration is the dollar-value weighted-average timing of a bond’s cash flows and is a measure of the price sensitivity of a fixed income security relative to changes in interest rates.
Why is Cutwater Asset Management managing the duration of this Fund?
Cutwater Asset Management will manage each Fund’s duration to attempt to provide shareholders with the highest amount of risk-adjusted return while seeking to reduce the volatility of the Funds’ income and net asset value. The management of the Funds’ duration is designed to work in concert with the Funds’ hedging strategy. There can be no assurance that duration management will be successful in preserving the net asset value of any of the Funds
Does the protective hedge guarantee safety?
There are no guarantees in hedging. Initially, Cutwater Asset Management plans to apply a hedging strategy against a period of potentially rising interest rates and will adjust its strategy as it deems appropriate. It is important to note that during periods of rising interest rates, the value of the underlying municipal bonds held by each Fund would likely decline in value, which may negatively affect the Funds NAV and market price.
When does the protective hedge come into effect?
The protective hedge is generally created by purchasing out-of-the-money put options. As interest rates rise, the options increase in value, helping to offset any declines in the valuation of the municipal securities. However, if rates stay the same or decline the hedge may expire worthless.
What does the "Ex-Div" or the "Ex-Dividend" date refer to?
Every month the Fund pays dividends and those investors who purchase the Fund before the ex-dividend date will receive the next dividend distribution. Investors who purchase on or after the ex-dividend date will not receive the next dividend distribution. The value of the dividend is subtracted from the Fund's NAV on the ex-dividend date each month. So when the NAV is reported with an "ex-div" behind it, this means that the amount of the dividend has already been taken out of the NAV.
Describe the differences between closed-end and open-end funds?
An open-end fund may be purchased or sold at NAV. An open-end fund will issue new shares when an investor wants to purchases shares in the fund and will sell assets to redeem shares when an investor wants to sell shares. When selling an open-end fund the price the seller receives is established at the close of the market when the NAV is calculated. Unlike the open-end fund, a closed-end fund has a limited number of shares outstanding and trades on an exchange at the market price based on supply and demand. An investor may purchase or sell shares at market price while the exchange is open. The common shares may trade at a discount or premium to the NAV.
What is the DRIP and how does it work?
DRIP is the Dividend Reinvestment Plan. The number of shares of common stock distributed to participants in the Plan in lieu of a cash dividend is determined in the following manner. Whenever the market price per share of the Fund’s common stock is equal to or exceeds the net asset value per share on the valuation date, participants in the Plan will be issued new shares valued at the higher of net asset value or 95% of the then-current market value. Otherwise, the Administrator will buy shares of the common stock in the open market, on the NYSE or elsewhere.
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MZF FUND MANAGER
The Cutwater team of fixed-income professionals uses a combination of surveillance, risk management, fundamental, quantitative and technical analysis to continuously assess interest-rate, security and liquidity risks to their investment-grade bond holdings. Cutwater Asset Management Corp. intends to seek consistently attractive risk-adjusted returns in the Fund through careful selection of the bond portfolio, ongoing management of the duration and the employment of an actively-managed hedging strategy. The Fund is in no way insured or guaranteed by MBIA Inc. or any subsidiary thereof.
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INVESTMENT TEAM
Portfolio Management
Clifford D. Corso | Portfolio Manager
Clifford D. Corso is Chief Executive Officer and Chief Investment Officer of Cutwater Asset Management Corp (“Cutwater”), Chief Investment Officer of MBIA Insurance Corp. and Executive Vice President & Chief Investment Officer of MBIA Inc. His responsibilities include oversight and direction of the investments of MBIA Inc. and its subsidiaries. He manages Cutwater’s fixed income asset management platform, directs the investment of all fixed income assets under management, and oversees the portfolios of MBIA Insurance Corp. and its affiliates. In addition, Mr. Corso’s responsibilities include the direction of investments for outside clients such as pension funds, sovereign governments, state and local governments, and institutional investors. Mr. Corso is also an active member of the Board of Directors for the MBIA Foundation, Inc. Before joining MBIA in 1994, he was the co-head of fixed income at a subsidiary of Alliance Capital Management. Throughout his 25-year career, Mr. Corso has managed a wide array of fixed income products, including corporate, asset-backed, government, mortgage and derivative products. Mr. Corso has a bachelor’s degree from Yale University and a master’s degree from Columbia University. He holds Series 7, 24, and 63 licenses from the Financial Industry Regulatory Authority (FINRA).
E. Gerard Berrigan | Portfolio Manager
Mr. Berrigan, who joined the firm in 1994, is a Managing Director and
head of portfolio management Cutwater Asset Management Corp (“Cutwater”). A member
of the firm’s Investment Strategy Committee, he manages Cutwater’s asset/
liability management products and is responsible for structured investments
across all managed portfolios. He is also a member of Cutwater’s Investment
Review and Market Risk Committees. Mr. Berrigan has more than
15 years of experience in securities trading and portfolio management,
including positions at the Federal National Mortgage Association and
CS First Boston. He has a bachelor’s degree from Bucknell University
and a master’s degree from Columbia University.
He holds Series 7 and 63 registrations from FINRA.
Jeffrey S. MacDonald, CFA | Portfolio Manager
Mr. MacDonald, who joined MBIA in 2007, is a Director of Cutwater and has extensive experience in the fixed-income markets across a variety of sectors with particular emphasis on core and core plus strategies. He was previously a vice president and portfolio manager at Hartford Investment Management Company (HIMCO), where he managed core, core plus, intermediate core, and other broad-based fixed-income styles. He was also instrumental in designing some of HIMCO’s fixed-income-based products, including a number of “alternative” strategies. Prior to joining HIMCO, Mr. MacDonald was a fixed-income portfolio analyst specializing in taxable/insurance portfolios at Wellington Management Company. He began his career with Fidelity Investments as a fixed income trader and lead systems analyst. Mr. MacDonald earned his bachelor's degree from Trinity College in Connecticut and his master’s degree from Boston University. He holds the designation of Chartered Financial Analyst (CFA) through the CFA Institute and is a member of the Hartford Security Analysts Society.
MZF Investment Adviser
Cutwater Asset Management Corp.
113 King Street
Armonk NY, 10504
If you would like to view the Investment Manager's website, you may click on the link below.
It is important to note that by clicking on the link, you will be leaving this website
and any information viewed there is not the property of Claymore Securities, Inc.
www.cutwater.com
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RISKS AND OTHER CONSIDERATIONS
There can be no assurance that the Fund will achieve its investment objectives. The value of the Fund will fluctuate with the value of the underlying securities. Historically, closed-end funds often trade at a discount to their net asset value. Risk is inherent in all investing, including the loss of your entire principal. Therefore, before investing you should consider the following risks carefully.
Market Risk and Selection Risk. Market risk is the risk that the bond market will go down in value, including the possibility that the market will go down sharply and unpredictably. Selection risk is the risk that the securities that MBIA-CMC selects will underperform the bond market, the relevant market indices, or other funds with similar investment objectives and investment strategies.
Municipal Bond Market Risk. The amount of public information available about the Municipal Bonds in the Fund’s portfolio is generally less than that for corporate equities or bonds, and the investment performance of the Fund may therefore be more dependent on the analytical abilities of MBIA-CMC than that of an equity fund or taxable bond fund. The secondary market for Municipal Bonds also tends to be less well-developed, or liquid, than many other securities markets, which may adversely affect the Fund’s ability to sell its bonds at attractive prices or at prices approximating those at which the Fund currently values them. The ability of municipal issuers to make timely payments of interest and principal may be diminished during general economic downturns and as governmental cost burdens are reallocated among federal, state and local governments. In addition, laws enacted in the future by Congress or state legislatures or referenda could extend the time for payment of principal and/or interest, or impose other constraints on enforcement of such obligations, or on the ability of municipalities to levy taxes. In the event of bankruptcy of an issuer, the Fund could experience delays in collecting principal and interest and the Fund may not, in all circumstances, be able to collect all principal and interest to which it is entitled.
Interest Rate and Credit Risk. The Fund invests in Municipal Bonds which are subject to interest rate and credit risk. Interest rate risk is the risk that prices of Municipal Bonds generally increase when interest rates decline and decrease when interest rates increase. Prices of longer term securities generally change more in response to interest rate changes than prices of shorter term securities. The common share net asset value and market price per share of the bonds in which the Fund will invest will fluctuate more in response to changes in market interest rates than if the Fund invested primarily in shorter-term bonds. The Fund’s use of leverage by the issuance of preferred shares and its investment in inverse floating obligations, as discussed below, may increase interest rate risk. Market interest rates for investment grade Municipal Bonds in which the Fund will primarily invest have recently declined significantly below the historical average rates for such bonds and market interest rates are near historical lows. These levels increase the risk that these rates will rise in the future (which would cause the value of the Fund’s net assets to decline). Credit risk is the risk that the issuer will be unable to pay the interest or principal when due. The degree of credit risk depends on both the financial condition of the issuer and the terms of the obligation. The Fund intends to invest in Municipal Bonds that are rated investment grade by S&P, Moody’s or Fitch. It may also invest in unrated Municipal Bonds that MBIA-CMC believes are of comparable quality. Obligations rated in the lowest investment grade category may have certain speculative characteristics.
Call and Redemption Risk. A Municipal Bond’s issuer may call the bond for redemption before it matures. If this happens to a Municipal Bond held by the Fund, the Fund may lose income and may have to invest the proceeds in Municipal Bonds with lower yields.
Private Activity Bonds. The Fund may invest in certain tax exempt securities classified as ‘‘private activity bonds.’’ These bonds may subject certain investors in the Fund to the AMT. The Fund may invest up to 25% of its total assets in Municipal Bonds subject to the AMT. The Fund is not restricted with respect to investing in private activity bonds that are not subject to the AMT.
Risks of Tobacco-Related Municipal Bonds. The Fund may invest in Municipal Bonds that are collateralized by the proceeds from litigation against the tobacco industry. Payment by the tobacco industry participants of such proceeds is spread over a number of years and the collection and distribution of such proceeds to issuers of Municipal Bonds is dependent on the financial health of such tobacco industry participants, which cannot be assured. Additional litigation, government regulation or prohibition of the sale of tobacco products, or the seeking of protection under bankruptcy laws, could adversely affect the tobacco industry which, in turn, could have an adverse effect on tobacco-related Municipal Bonds.
Leverage. Leverage creates certain risks for common shareholders, including higher volatility of both the net asset value and the market value of the common shares, because common shareholders bear the effects of changes in the value of the Fund’s investments. Leverage also creates the risk that the investment return on the Fund’s common shares will be reduced to the extent the dividends paid on preferred shares and other expenses of the preferred shares exceed the income earned by the Fund on its investments. If the Fund is liquidated, preferred shareholders will be entitled to receive liquidating distributions before any distribution is made to common shareholders. When the Fund uses leverage, the fees paid to MBIA-CMC and the Servicing Agent will be higher than if leverage was not used.
Inflation Risk. Inflation risk is the risk that the value of assets or income from an investment will be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the common shares and distributions can decline. In addition, during periods of rising inflation, preferred share dividend rates would likely increase, which would tend to further reduce returns to common shareholders.
Portfolio Strategies. The Fund may engage in various portfolio strategies both to seek to hedge its portfolio against adverse effects from movements in interest rates and in the securities markets generally and to seek to increase the return of the Fund. These strategies include the use of derivatives such as exchange traded financial futures and option contracts, options on futures contracts, or over-the-counter dealer transactions in caps, swap agreements or swaptions, the risks of which are summarized below. Such strategies subject the Fund to the risk that, if MBIA-CMC incorrectly forecasts market values, interest rates or other applicable factors, the Fund’s performance could suffer. Certain of these strategies may provide investment leverage to the Fund’s portfolio and result in many of the same risks of leverage to the holders of the Fund’s common shares as discussed above under ‘‘—Leverage.’’ The Fund is not required to use derivatives or other portfolio strategies and may not do so. Distributions by the Fund of any income or gain realized on the Fund’s hedging transactions generally will not be exempt from regular Federal income tax. There can be no assurance that the Fund’s portfolio strategies will be effective.
Derivatives Risk. Derivatives are financial contracts whose value depends on, or is derived from, the value of an underlying asset, reference rate or index, or the relationship between two indices. The Fund may invest in a variety of derivative instruments for hedging purposes, such as exchange-traded financial futures and option contracts, options on futures contracts, or over-the-counter dealer transactions in caps, swap agreements or swaptions. The Fund may use derivatives as a substitute for taking a position in an underlying security or other asset and/or as part of a strategy designed to reduce exposure to other risks, such as interest rate risk. The Fund also may use derivatives to add leverage to the portfolio. The Fund’s use of derivative instruments involves risks different from, and possibly greater than, the risks associated with investing directly in securities and other traditional investments. Derivatives are subject to a number of risks described elsewhere in this Prospectus, such as liquidity risk, interest rate risk, credit risk, leveraging risk, the risk of ambiguous documentation and selection risk. They also involve the risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. Under the terms of certain derivative instruments, the Fund could lose more than the principal amount invested. The use of derivatives also may increase the amount of taxes payable by common shareholders. Also, suitable derivative transactions may not be available in all circumstances and there can be no assurance that the Fund will engage in these transactions to reduce exposure to other risks when that would be beneficial.
Affiliated Insurers. Provisions of the Investment Company Act of 1940, as amended, and the rules and regulations thereunder (the ‘‘1940 Act’’), may prohibit the Fund from purchasing Municipal Bonds for which MBIA Insurance Corporation and other affiliates of MBIA-CMC (collectively, ‘‘MBIA Insurers’’) provide financial insurance. The Fund intends to apply to the SEC for exemptive relief under the 1940 Act (the ‘‘Exemptive Relief’’) that would permit the Fund, subject to certain conditions and limitations, to purchase Municipal Bonds insured by MBIA Insurers in the secondary market. The application for the Exemptive Relief would also permit the Fund to accept certain payments that might arise from claims made upon MBIA Insurers under such insurance policies and, in connection with the Fund’s acceptance of any such payments, to assign to an MBIA Insurer the Fund’s rights of recovery therefor. The 1940 Act may also prohibit the Fund from purchasing Secondary Market Insurance or Portfolio Insurance (as defined below under ‘‘The Fund’s Investments—Insured Municipal Bonds’’) directly or indirectly from an MBIA Insurer. The application for the Exemptive Relief would not permit the Fund to engage in such purchases of Secondary Market Insurance or Portfolio Insurance, and in no event will the Fund purchase Secondary Market Insurance or Portfolio Insurance directly or indirectly from an MBIA Insurer. There can be no assurance that the SEC will grant the Exemptive Relief to the Fund, and until the Exemptive Relief is granted, the Fund will not purchase Municipal Bonds insured by MBIA Insurers. Because MBIA Insurers provide a substantial portion of all Original Issue, Secondary Market and Portfolio Insurance for Municipal Bonds, the Fund’s inability, absent the SEC’s granting of the Exemptive Relief, to purchase Municipal Bonds insured by MBIA Insurers may place it at a disadvantage relative to other similar funds that may purchase such Municipal Bonds. Any such disadvantage could increase in the event that one or more of the other providers of financial insurance for Municipal Bonds experiences problems meeting its insurance obligations. However, based upon current market conditions and on the anticipated size of the Fund’s offering of common shares and subsequent issuance of preferred shares, MBIA-CMC believes that such inability will not adversely affect the Fund’s ability to achieve its investment objective.
Anti-takeover Provisions. The Fund’s Amended and Restated Agreement and Declaration of Trust dated as of July 21, 2003 (the ‘‘Declaration’’) and By-laws include provisions that could limit the ability of other entities or persons to acquire control of the Fund or to change the composition of its Board of Trustees. Such provisions could limit the ability of common shareholders to sell their shares at a premium over prevailing market prices by discouraging a third party from seeking to obtain control of the Fund.
Market Disruption. The war with Iraq, its aftermath and the continuing occupation of Iraq are likely to have a substantial impact on the U.S. and world economies and securities markets. The nature, scope and duration of the war and occupation cannot be predicted with any certainty. Terrorist attacks on the World Trade Center and the Pentagon on September 11, 2001 closed some of the U.S. securities markets for a four-day period, and similar events cannot be ruled out. The war and occupation, terrorism and related geopolitical risks have led, and may in the future lead, to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets generally. Those events could also have an acute effect on individual issuers or related groups of issuers. These risks could also adversely affect individual issuers and securities markets, interest rates, auctions, secondary trading, ratings, credit risk, inflation and other factors relating to the common shares.
Risks of Investing in AMPS. There also risks associated with investing in Auction Market Preferred Shares or AMPS. The AMPS are redeemable, in whole or in part, at the option of the Fund on any dividend payment date for the AMPS, and will be subject to mandatory redemption in certain circumstances. The AMPS will not be listed on an exchange. You may only buy or sell AMPS through an order placed at an auction with or through a broker-dealer that has entered into an agreement with the auction agent and the Fund or in a secondary market maintained by certain broker-dealers. These broker-dealers are not required to maintain this market, and it may not provide you with liquidity. Visit Preferred Share Daily Rates more Fund information and additional risk on investing in AMPS.
The AMPS market continues to remain illiquid as auctions for nearly all AMPS continue to fail. A failed auction is not a default, nor does it require the redemption of a fund’s auction-rate preferred shares. Provisions in the Fund’s offering documents provide a mechanism to set a maximum rate in the event of a failed auction, and, thus, investors will continue to be entitled to receive payment for holding these AMPS.
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Investors should carefully consider the investment objectives and policies, risk considerations, charges and ongoing expenses of any investment
product before investing. For more information, please contact a securities representative or Claymore Securities, Inc., 2455 Corporate West Drive,
Lisle, Illinois 60532, 800-345-7999.
NOT FDIC-INSURED | NOT BANK-GUARANTEED | MAY LOSE VALUE
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