As filed with the Securities and Exchange Commission on July 3, 2008
SECURITIES ACT FILE NO. 333-135105
INVESTMENT COMPANY ACT FILE NO. 811-21910
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. | |
Post Effective Amendment No. 31 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 33 |X|
(Check appropriate box or boxes)
|
CLAYMORE EXCHANGE-TRADED FUND TRUST 2
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
2455 CORPORATE WEST DRIVE
LISLE, ILLINOIS 60532
(Address of Principal Executive
Offices)
(630) 505-3700
Registrant's Telephone Number
KEVIN M. ROBINSON, ESQ.
CLAYMORE ADVISORS, LLC
2455 CORPORATE WEST DRIVE
LISLE, ILLINOIS 60532
(Name and Address of Agent for Service)
Copy to:
STUART M. STRAUSS, ESQ.
CLIFFORD CHANCE US LLP
31 WEST 52ND STREET
NEW YORK, NEW YORK 10019
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
_________ IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B) OF RULE 485.
_________ ON [DATE] PURSUANT TO PARAGRAPH (B) OF RULE 485.
_________ 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1) OF RULE 485.
_________ ON [DATE] PURSUANT TO PARAGRAPH (A) OF RULE 485.
____X____ 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2) OF RULE 485.
_________ ON [DATE] PURSUANT TO PARAGRAPH (A) OF RULE 485.
[CLAYMORE(R) LOGO]
SUBJECT TO COMPLETION DATED [ ], 2008
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE TRUST
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
CLAYMORE EXCHANGE-TRADED FUND TRUST 2
CLAYMORE/DELTA GLOBAL SHIPPING ETF
PROSPECTUS
[ ], 2008
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
Page
INTRODUCTION--CLAYMORE EXCHANGE--TRADED FUND TRUST 2..........................1
WHO SHOULD INVEST.............................................................1
TAX-ADVANTAGED PRODUCT STRUCTURE..............................................1
CLAYMORE/DELTA GLOBAL SHIPPING ETF............................................2
SECONDARY INVESTMENT STRATEGIES...............................................8
ADDITIONAL RISK CONSIDERATIONS................................................8
INVESTMENT ADVISORY SERVICES..................................................9
PURCHASE AND REDEMPTION OF SHARES............................................10
HOW TO BUY AND SELL SHARES...................................................11
FREQUENT PURCHASES AND REDEMPTIONS...........................................14
FUND SERVICE PROVIDERS.......................................................15
INDEX PROVIDER...............................................................15
DISCLAIMERS..................................................................15
FEDERAL INCOME TAXATION......................................................16
OTHER INFORMATION............................................................18
FINANCIAL HIGHLIGHTS.........................................................18
FOR MORE INFORMATION.........................................................18
|
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus, in connection with the offer contained in this Prospectus and, if
given or made, such other information or representations must not be relied upon
as having been authorized by the Fund, Claymore Advisors, LLC, the Fund's
investment adviser (the "Investment Adviser"), or the Fund's distributor,
Claymore Securities, Inc. This Prospectus does not constitute an offer by the
Fund or by the Fund's distributor to sell or a solicitation of an offer to buy
any of the securities offered hereby in any jurisdiction to any person to whom
it is unlawful for the Fund to make such an offer in such jurisdiction.
i
INTRODUCTION--CLAYMORE EXCHANGE--TRADED FUND TRUST 2
The Claymore Exchange-Traded Fund Trust 2 (the "Trust") is an
investment company consisting of 13 separate exchange-traded "index funds." The
investment objective of each of the funds is to replicate as closely as
possible, before fees and expenses, the performance of a specified market index.
Claymore Advisors, LLC is the investment adviser for the funds (the "Investment
Adviser").
This prospectus relates to one fund of the Trust, Claymore/Delta Global
Shipping ETF (the "Fund").
The Fund has applied to list its shares (the "Shares"), subject to
notice of issuance, on the New York Stock Exchange Arca, Inc. (the "Arca"). The
Fund's Shares will trade at market prices that may differ to some degree from
the net asset value ("NAV") of the Shares. Unlike conventional mutual funds, the
Fund issues and redeems Shares on a continuous basis, at NAV, only in large
specified blocks of [ ] Shares, each of which is called a "Creation Unit."
Creation Units are issued and redeemed principally in-kind for securities
included in a specified index. EXCEPT WHEN AGGREGATED IN CREATION UNITS, SHARES
ARE NOT REDEEMABLE SECURITIES OF THE FUND.
WHO SHOULD INVEST
The Fund is designed for investors who seek a relatively low-cost
"passive" approach for investing in a portfolio of equity securities of
companies in a specified index. The Fund may be suitable for long-term
investment in the market represented by a specified index and may also be used
as an asset allocation tool or as a speculative trading instrument.
TAX-ADVANTAGED PRODUCT STRUCTURE
Unlike interests in many conventional mutual funds, the Shares are
traded throughout the day on a national securities exchange, whereas mutual fund
interests are typically only bought and sold at closing net asset values. The
Shares have been designed to be tradable in the secondary market on a national
securities exchange on an intra-day basis, and to be created and redeemed
principally in-kind in Creation Units at each day's next calculated NAV. These
arrangements are designed to protect ongoing shareholders from adverse effects
on the Fund's portfolios that could arise from frequent cash creation and
redemption transactions. In a conventional mutual fund, redemptions can have an
adverse tax impact on taxable shareholders because of the mutual fund's need to
sell portfolio securities to obtain cash to meet fund redemptions. These sales
may generate taxable gains for the shareholders of the mutual fund, whereas the
Shares' in-kind redemption mechanism generally will not lead to a tax event for
the Fund or their ongoing shareholders.
1
CLAYMORE/DELTA GLOBAL SHIPPING ETF
INVESTMENT OBJECTIVE
The Fund seeks investment results that correspond generally to the
performance, before the Fund's fees and expenses, of an equity index called the
DGI Global Shipping Index (the "Shipping Index" or the "Index"). The Fund's
investment objective is not fundamental and may be changed by the Board of
Trustees without shareholder approval.
PRIMARY INVESTMENT STRATEGIES
The Fund, using a low cost "passive" or "indexing" investment approach, will
seek to replicate, before the Fund's fees and expenses, the performance of the
Shipping Index. The Index is designed to measure the performance of companies
listed on global developed market exchanges within the maritime shipping
industry (as defined below). Delta Global Indices, LLC ("Delta Global" or the
"Index Provider") defines developed markets as countries with western-style
legal systems, transparent financial rules for financial reporting and
sophisticated, liquid and accessible stock exchanges with readily-exchangeable
currencies. This category currently consists of the major stock exchanges in
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong
Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal,
Singapore, Spain, Sweden, Switzerland, the United States or the United Kingdom.
The market capitalizations of stocks included in the Index currently range from
$324 million to $26.9 billion, which includes small-, mid- and
large-capitalization stocks as defined by the Index Provider. The Fund will
normally invest at least 80% of its total assets in common stock, American
depositary receipts ("ADRs") and global depositary receipts ("GDRs") that
comprise the Index. The Fund has adopted a policy that requires the Fund to
provide shareholders with at least 60 days notice prior to any material change
in this policy or the Index. The Board of Trustees of the Trust may change the
Fund's investment strategy and other policies without shareholder approval,
except as otherwise indicated.
The Investment Adviser seeks a correlation over time of 0.95 or better
between the Fund's performance and the performance of the Index. A figure of
1.00 would represent perfect correlation.
The Fund generally will invest in all of the stocks comprising the
Index in proportion to their weightings in the Index. However, under various
circumstances, it may not be possible or practicable to purchase all of the
stocks in the Index in those weightings. In those circumstances, the Fund may
purchase a sample of the stocks in the Index in proportions expected by the
Investment Adviser to replicate generally the performance of the Index as a
whole. There may also be instances in which the Investment Adviser may choose to
overweight another stock in the Index, purchase (or sell) securities not in the
Index which the Investment Adviser believes are appropriate to substitute for
one or more Index components, or utilize various combinations of other available
investment techniques, in seeking to accurately track the Index. In addition,
from time to time stocks are added to or removed from the Index. The Fund may
sell stocks that are represented in the Index or purchase stocks that are not
yet represented in the Index in anticipation of their removal from or addition
to the Index.
INDEX METHODOLOGY
The Index currently consists of 30 companies within the maritime
shipping industry. The Index Provider defines the shipping industry to include
companies within the following business segments of the maritime shipping
industry: companies deriving a significant portion (in excess of 80%) of their
revenues (as determined in the manner set forth below) from the seaborne
transport of dry bulk goods and
2
the leasing and/or operating of tanker ships, container ships, specialty
chemical ships and ships that transport liquid natural gas ("LNG") or dry bulk
goods.
INDEX CONSTRUCTION
Delta Global verifies that each company included in the universe of
potential Index constituents meets the following criteria:
1. All global publicly-traded companies with any connection to the
maritime shipping industry are identified by company description database
searches and bottom-up industry research of publicly available information and
databases.
2. Companies that are identified through the initial search are put
into two groups based on a review of the company's public filings and company
description information:
o "Qualifying" Group: companies that generate in excess of 80% of
their revenues from operating or leasing seaborne ships or the
transport of dry bulk, tanker, container, specialty chemical or
LNG goods via seaborne ships.
o "Excluded" Group: companies that are either not involved in
seaborne shipping of the goods described above or, if they are,
receive less than 80% of their overall revenues from such
operations.
3. From the securities in the Qualifying Group, securities eligible for
inclusion in the Index must be listed on a developed market exchange, have a
minimum market capitalization greater than or equal to $250 million at the
reference date preceding each reconstitution and have a minimum 30-day average
daily trading volume of $2 million (measured in U.S. dollars) at the reference
date preceding each reconstitution. Securities in the Qualifying Group which do
not meet these liquidity and market cap criteria are excluded from consideration
as an Index constituent.
4. From the remaining securities in the Qualifying Group, all
securities listed on a major U.S. stock exchange shall be included. Should the
remaining universe include more than 30 U.S.-listed securities, the 30 most
liquid of these equities will be included. Should the remaining universe include
fewer than 30 U.S. listed securities, securities listed on global developed
market exchanges will be included, in order of their average daily volumes
measured in U.S. dollars. Companies eligible for inclusion in the Index must
have their shares listed on a major stock exchange in a country that meets the
Index Provider's criteria for "developed markets," which currently consists of
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong
Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal,
Singapore, Spain, Sweden, Switzerland, the United States or the United Kingdom.
5. A modified dividend weighting mechanism is applied to constitute the
final Index, with higher-yielding securities based on their indicated dividend
yield being more highly weighted according to a proprietary methodology created
by the Index Provider. No single security weight will exceed 4% of the Index at
the time of each rebalance.
6. The Index will be reconstituted annually, with rebalancing occurring
quarterly. Should a company in the Index cease to be traded due to a merger,
bankruptcy or other event, that constituent will be replaced immediately by the
next qualifying security not currently included in the Index at the same weight
as the removed constituent.
3
PRIMARY INVESTMENT RISKS
Investors should consider the following risk factors and special
considerations associated with investing in the Fund, which may cause you to
lose money.
Investment Risk. An investment in the Fund is subject to investment
risk, including the possible loss of the entire principal amount that you
invest.
Equity Risk. A principal risk of investing in the Fund is equity risk,
which is the risk that the value of the securities held by the Fund will fall
due to general market and economic conditions, perceptions regarding the
industries in which the issuers of securities held by the Fund participate, or
factors relating to specific companies in which the Fund invests. For example,
an adverse event, such as an unfavorable earnings report, may depress the value
of equity securities of an issuer held by the Fund; the price of common stock of
an issuer may be particularly sensitive to general movements in the stock
market; or a drop in the stock market may depress the price of most or all of
the common stocks and other equity securities held by the Fund. In addition,
common stock of an issuer in the Fund's portfolio may decline in price if the
issuer fails to make anticipated dividend payments because, among other reasons,
the issuer of the security experiences a decline in its financial condition.
Common stock is subordinated to preferred stocks, bonds and other debt
instruments in a company's capital structure, in terms of priority to corporate
income, and therefore will be subject to greater dividend risk than preferred
stocks or debt instruments of such issuers. In addition, while broad market
measures of common stocks have historically generated higher average returns
than fixed income securities, common stocks have also experienced significantly
more volatility in those returns.
Shipping Industry Risk. A significant percentage of the Index may be
comprised of issuers in a single industry or sector of the economy. If the Fund
is focused in an industry or sector, it may present more risks than if it were
broadly diversified over numerous industries and sectors of the economy. The
Fund includes securities issued by companies in the shipping industry. Companies
in the marine sub-industry are subject to volatile fluctuations in the price and
supply of energy fuels, steel, raw materials and other products transported by
containerships. In addition, changes in seaborne transportation patterns,
weather patterns and events including hurricane activity, commodities prices,
international politics and conflicts, port congestion, canal closures, embargoes
and labor strikes can significantly affect companies involved in the maritime
shipping of crude oil, dry bulk and container cargo.
Foreign Investment Risk. The Fund's investments in non-U.S. issuers may
involve unique risks compared to investing in securities of U.S. issuers,
including, among others, greater market volatility than U.S. securities and less
complete financial information than for U.S. issuers. In addition, adverse
political, economic or social developments could undermine the value of the
Fund's investments or prevent the Fund from realizing the full value of its
investments. Financial reporting standards for companies based in foreign
markets differ from those in the United States. Finally, the value of the
currency of the country in which the Fund has invested could decline relative to
the value of the U.S. dollar, which may affect the value of the investment to
U.S. investors. In addition, the underlying issuers of certain depositary
receipts, particularly unsponsored or unregistered depositary receipts, are
under no obligation to distribute shareholder communications to the holders of
such receipts, or to pass through to them any voting rights with respect to the
deposited securities.
Small and Medium-Sized Company Risk. Investing in securities of small
and medium-sized companies involves greater risk than is customarily associated
with investing in more established companies. These companies' stocks may be
more volatile and less liquid than those of more established companies. These
stocks may have returns that vary, sometimes significantly, from the overall
stock market.
4
Non-Correlation Risk. The Fund's return may not match the return of the
Index for a number of reasons. For example, the Fund incurs a number of
operating expenses not applicable to the Index, and incurs costs in buying and
selling securities, especially when rebalancing the Fund's securities holdings
to reflect changes in the composition of the Index.
The Fund may not be fully invested at times, either as a result of cash
flows into the Fund or reserves of cash held by the Fund to meet redemptions and
expenses. If the Fund utilizes a sampling approach or futures or other
derivative positions, its return may not correlate as well with the return on
the Index, as would be the case if it purchased all of the stocks in the Index
with the same weightings as the Index.
Replication Management Risk. Unlike many investment companies, the Fund
is not "actively" managed. Therefore, it would not necessarily sell a stock
because the stock's issuer was in financial trouble unless that stock is removed
from the Index.
Issuer-Specific Changes. The value of an individual security or
particular type of security can be more volatile than the market as a whole and
can perform differently from the value of the market as a whole. The value of
securities of smaller issuers can be more volatile than that of larger issuers.
Non-Diversified Fund Risk. The Fund is considered non-diversified and
can invest a greater portion of assets in securities of individual issuers than
a diversified fund. As a result, changes in the market value of a single
investment could cause greater fluctuations in share price than would occur in a
diversified fund.
FUND PERFORMANCE
As of the date of this Prospectus, the Fund has not yet completed a
full calendar year of investment operations. When the Fund has completed a full
calendar year of investment operations, this section will include charts that
show annual total returns, highest and lowest quarterly returns and average
annual total returns (before and after taxes) compared to a benchmark index
selected for the Fund.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy
and hold shares of the Fund. Investors purchasing Shares in the secondary market
will not pay the shareholder fees shown below, but may be subject to costs
(including customary brokerage commissions) charged by their broker.
SHAREHOLDER FEES (paid directly by Authorized Participants)
Sales charges (loads)..................................................... None
Standard creation/redemption transaction fee per order(1)................. $
Maximum additional creation/redemption transaction fee per order(1)....... $
ANNUAL FUND OPERATING EXPENSES(2)(3) (expenses that are deducted from Fund
assets)
Management Fees...........................................................
Distribution and/or service (12b-1) fees(4).............................. - %
Other expenses(5).........................................................[ ]%
Total annual Fund operating expenses......................................[ ]%
Expense Waiver and Reimbursements(6)......................................[ ]%
Net Operating Expenses....................................................[ ]%
|
5
1. Purchasers of Creation Units and parties redeeming Creation Units must pay
a standard creation or redemption transaction fee of $[ ]. If a Creation
Unit is purchased or redeemed for cash, a variable fee of up to four times
the standard creation or redemption transaction fee may be charged. See the
following discussion of "Creation Transaction Fees and Redemption
Transaction Fees."
2. The Fund had not commenced operations as of the date of this Prospectus.
The expenses listed in the table are estimates based on the expenses the
Fund expects to incur for the fiscal year ending August 31, 2008.
3. Expressed as a percentage of average net assets.
4. The Fund has adopted a Distribution and Service (12b-1) Plan pursuant to
which the Fund may bear a 12b-1 fee not to exceed 0.25% per annum of the
Fund's average daily net assets. However, no such fee is currently paid by
the Fund.
5. Other expenses have been estimated for the Fund's initial fiscal year
assuming net assets of $100 million. Such expenses may be higher if the
Fund's net assets total less than $100 million at the end of its initial
fiscal year, or lower if the Fund's net assets exceed $100 million at the
end of its initial fiscal year.
6. The Fund's Investment Adviser has contractually agreed to waive fees and/or
pay Fund expenses to the extent necessary to prevent the operating expenses
of the Fund (excluding interest expenses, a portion of the Fund's licensing
fees, offering costs up to 0.25% of the Fund's average net assets,
brokerage commissions and other trading expenses, taxes and extraordinary
expenses such as litigation and other expenses not incurred in the ordinary
course of the Fund's business) from exceeding 0.[ ]% of average net assets
per year, at least until December 31, 2010. The offering costs excluded
from the 0. [ ]% expense cap are: (a) legal fees pertaining to the Fund's
Shares offered for sale; (b) SEC and state registration fees; and (c)
initial fees paid to be listed on an exchange. The Trust and the Investment
Adviser have entered into an Expense Reimbursement Agreement (the "Expense
Agreement") in which the Investment Adviser has agreed to waive its
management fees and/or pay certain operating expenses of the Fund in order
to maintain the expense ratio of the Fund at or below 0. [ ]% (excluding
the expenses set forth above) (the "Expense Cap"). For a period of five
years subsequent to the Fund's commencement of operations, the Investment
Adviser may recover from the Fund fees and expenses waived or reimbursed
during the prior three years if the Fund's expense ratio, including the
recovered expenses, falls below the Expense Cap.
EXAMPLE
The following example is intended to help you compare the cost of
investing in the Fund with the costs of investing in other funds. This example
does not take into account transaction fees on purchases and redemptions of
Creation Units of the Fund or customary brokerage commissions that you may pay
when purchasing or selling Shares of the Fund.
The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same each year. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
6
ONE YEAR THREE YEARS
-------- -----------
$[ ] $[ ]
|
CREATION TRANSACTION FEES AND REDEMPTION TRANSACTION FEES
The Fund issues and redeems Shares at NAV only in large blocks of [ ]
Shares (each block of [ ] Shares called a "Creation Unit") or multiples thereof.
As a practical matter, only broker-dealers or large institutional investors with
creation and redemption agreements and called Authorized Participants ("APs")
can purchase or redeem these Creation Units. Purchasers of Creation Units at NAV
must pay a standard Creation Transaction Fee of $[ ] per transaction. The value
of a Creation Unit as of first creation was approximately $[ ]. An AP who holds
Creation Units and wishes to redeem at NAV would also pay a standard Redemption
Fee of $[ ] per transaction (see "How to Buy and Sell Shares" later in this
Prospectus). APs who hold Creation Units in inventory will also pay the Annual
Fund Operating Expenses described in the table above. Assuming an investment in
a Creation Unit of $[ ] and a 5% return each year, and assuming that the Fund's
gross operating expenses remain the same, the total costs would be $[ ] if the
Creation Unit is redeemed after one year, and $[ ] if the Creation Unit is
redeemed after three years.
If a Creation Unit is purchased or redeemed outside the usual process
through the National Securities Clearing Corporation or for cash, a variable fee
of up to four times the standard Creation or Redemption Transaction Fee may be
charged to the AP making the transaction.
The creation fee, redemption fee and variable fee are not expenses of
the Fund and do not impact the Fund's expense ratio.
7
SECONDARY INVESTMENT STRATEGIES
The Fund will at all times invest at least 80% of its total assets in
component securities that comprise the Index and investments that have economic
characteristics that are substantially identical to the economic characteristics
of the component securities that comprise the Index. The Fund may invest its
remaining assets in money market instruments, including repurchase agreements or
other funds which invest exclusively in money market instruments, convertible
securities, structured notes (notes on which the amount of principal repayment
and interest payments are based on the movement of one or more specified
factors, such as the movement of a particular stock or stock index), forward
foreign currency exchange contracts and in swaps, options and futures contracts.
Swaps, options and futures contracts (and convertible securities and structured
notes) may be used by the Fund in seeking performance that corresponds to its
Index, and in managing cash flows. The Fund will not invest in money market
instruments as part of a temporary defensive strategy to protect against
potential stock market declines. The Investment Adviser anticipates that it may
take approximately three business days (i.e., each day the NYSE Arca is open)
for additions and deletions to the Fund's Index to be reflected in the portfolio
composition of the Fund.
The Fund may borrow money from a bank up to a limit of 10% of the value
of its assets, but only for temporary or emergency purposes.
The Fund may lend its portfolio securities to brokers, dealers and
other financial institutions desiring to borrow securities to complete
transactions and for other purposes. In connection with such loans, the Fund
receives liquid collateral equal to at least 102% of the value of the portfolio
securities being lent. This collateral is marked to market on a daily basis.
The policies described herein constitute non-fundamental policies that
may be changed by the Board of Trustees of the Trust without shareholder
approval. Certain other fundamental policies of the Fund are set forth in the
Statement of Additional Information under "Investment Restrictions."
ADDITIONAL RISK CONSIDERATIONS
In addition to the risks described previously, there are certain other
risks related to investing in the Fund.
Trading Issues. Trading in Shares on the NYSE Arca may be halted due to
market conditions or for reasons that, in the view of the NYSE Arca, make
trading in Shares inadvisable. In addition, trading in Shares on the NYSE Arca
is subject to trading halts caused by extraordinary market volatility pursuant
to the NYSE Arca "circuit breaker" rules. There can be no assurance that the
requirements of the NYSE Arca necessary to maintain the listing of the Fund will
continue to be met or will remain unchanged.
Fluctuation of Net Asset Value. The NAV of the Fund's Shares will
generally fluctuate with changes in the market value of the Fund's holdings. The
market prices of the Shares will generally fluctuate in accordance with changes
in NAV as well as the relative supply of and demand for the Shares on the NYSE
Arca. The Investment Adviser cannot predict whether the Shares will trade below,
at or above their NAV. Price differences may be due, in large part, to the fact
that supply and demand forces at work in the secondary trading market for the
Shares will be closely related to, but not identical to, the same forces
influencing the prices of the stocks of the Index trading individually or in the
aggregate at any point in time.
8
However, given that the Shares can be purchased and redeemed in
Creation Units (unlike shares of many closed-end funds, which frequently trade
at appreciable discounts from, and sometimes premiums to, their NAV), the
Investment Adviser believes that large discounts or premiums to the NAV of the
Shares should not be sustained.
Securities Lending. Although the Fund will receive collateral in
connection with all loans of its securities holdings, the Fund would be exposed
to a risk of loss should a borrower default on its obligation to return the
borrowed securities (e.g., the loaned securities may have appreciated beyond the
value of the collateral held by the Fund). In addition, the Fund will bear the
risk of loss of any cash collateral that it invests.
Leverage. To the extent that the Fund borrows money, it may be
leveraged. Leveraging generally exaggerates the effect on NAV of any increase or
decrease in the market value of the Fund's portfolio securities.
These risks are described further in the Statement of Additional
Information.
INVESTMENT ADVISORY SERVICES
INVESTMENT ADVISER
Claymore Advisors, LLC, a wholly-owned subsidiary of Claymore Group
Inc., acts as the Fund's investment adviser pursuant to an advisory agreement
with the Trust (the "Advisory Agreement"). The Investment Adviser is a Delaware
limited liability company with its principal offices located at 2455 Corporate
West Drive, Lisle, Illinois 60532. As of April 30, 2008, Claymore entities have
provided supervisory, management, servicing or distribution services on
approximately $18.2 billion in assets. Claymore currently offers closed-end
funds, unit investment trusts and exchange-traded funds. Pursuant to the
Advisory Agreement, the Investment Adviser manages the investment and
reinvestment of the Fund's assets and administers the affairs of the Fund to the
extent requested by the Board of Trustees. The Investment Adviser also acts as
investment adviser to closed-end and open-end management investment companies.
Pursuant to the Advisory Agreement, the Fund pays the Investment
Adviser an advisory fee for the services and facilities it provides payable on a
monthly basis at the annual rate of 0. [ ]% of the Fund's average daily net
assets.
The Fund's Investment Adviser has contractually agreed to waive fees
and/or pay Fund expenses to the extent necessary to prevent the operating
expenses of the Fund (excluding interest expenses, a portion of the Fund's
licensing fees, offering costs up to 0.25% of the Fund's average net assets,
brokerage commissions and other trading expenses, taxes and extraordinary
expenses such as litigation and other expenses not incurred in the ordinary
course of the Fund's business) from exceeding 0.[ ]% of average net assets per
year, at least until December 31, 2010. The offering costs excluded from the 0.
[ ]% expense cap are: (a) legal fees pertaining to the Fund's Shares offered for
sale; (b) SEC and state registration fees; and (c) initial fees paid to be
listed on an exchange. The Trust and the Investment Adviser have entered into an
Expense Reimbursement Agreement (the "Expense Agreement") in which the
Investment Adviser has agreed to waive its management fees and/or pay certain
operating expenses of the Fund in order to maintain the expense ratio of the
Fund at or below 0. [ ]% (excluding the expenses set forth above) (the "Expense
Cap"). For a period of five years subsequent to the Fund's commencement of
operations, the Investment Adviser may recover from the Fund fees and expenses
waived or reimbursed during the prior three years if the Fund's expense ratio,
including the recovered expenses, falls below the Expense Cap.
9
In addition to advisory fees, the Fund pays all other costs and
expenses of its operations, including service fees, distribution fees, custodian
fees, legal and independent registered public accounting firm fees, the costs of
reports and proxies to shareholders, compensation of Trustees (other than those
who are affiliated persons of the Investment Adviser) and all other ordinary
business expenses not specifically assumed by the Investment Adviser.
APPROVAL OF ADVISORY AGREEMENT
A discussion regarding the basis for the Board of Trustees' approval of
the Advisory Agreement will be available in the Fund's semi-annual report to
shareholders for the period ended February 28, 2009.
PORTFOLIO MANAGEMENT
The portfolio manager who is currently responsible for the
day-to-day management of the Fund's portfolio is Chuck Craig, CFA. Mr. Craig has
managed the Fund's portfolio since its inception. Mr. Craig is a Managing
Director, Research and Development, of the Investment Adviser and Claymore
Securities, Inc. and joined Claymore Securities, Inc. in May of 2003. Mr. Craig
received a M.S. in Financial Markets from the Center for Law and Financial
Markets at the Illinois Institute of Technology. He also earned a B.S. in
Finance from Northern Illinois University.
The Statement of Additional Information provides additional information
about the portfolio manager's compensation structure, other accounts managed by
the portfolio manager and the portfolio manager's ownership of securities of the
Fund.
PURCHASE AND REDEMPTION OF SHARES
GENERAL
The Shares will be issued or redeemed by the Fund at net asset value
per Share only in Creation Unit size. See "Creations, Redemptions and
Transaction Fees."
Most investors will buy and sell Shares of the Fund in secondary market
transactions through brokers. Shares of the Fund will be listed for trading on
the secondary market on the NYSE Arca. Shares can be bought and sold throughout
the trading day like other publicly traded shares. There is no minimum
investment. Although Shares are generally purchased and sold in "round lots" of
100 Shares, brokerage firms typically permit investors to purchase or sell
Shares in smaller "oddlots," at no per-share price differential. When buying or
selling Shares through a broker, you will incur customary brokerage commissions
and charges, and you may pay some or all of the spread between the bid and the
offered price in the secondary market on each leg of a round trip (purchase and
sale) transaction. The Fund will trade on the NYSE Arca at prices that may
differ to varying degrees from the daily NAV of the Shares. Given that the
Fund's Shares can be issued and redeemed in Creation Units, the Investment
Adviser believes that large discounts and premiums to NAV should not be
sustained for long. The Fund will trade under the NYSE Arca symbol SEA, subject
to notice of issuance.
Share prices are reported in dollars and cents per Share.
Investors may acquire Shares directly from the Fund, and shareholders
may tender their Shares for redemption directly to the Fund, only in Creation
Units of [ ] Shares, as discussed in the "Creations, Redemptions and Transaction
Fees" section below.
10
BOOK ENTRY
Shares are held in book-entry form, which means that no stock
certificates are issued. The Depository Trust Company ("DTC") or its nominee is
the record owner of all outstanding Shares of the Fund and is recognized as the
owner of all Shares for all purposes.
Investors owning Shares are beneficial owners as shown on the records
of DTC or its participants. DTC serves as the securities depository for all
Shares. Participants in DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and other institutions that directly or
indirectly maintain a custodial relationship with DTC. As a beneficial owner of
Shares, you are not entitled to receive physical delivery of stock certificates
or to have Shares registered in your name, and you are not considered a
registered owner of Shares. Therefore, to exercise any right as an owner of
Shares, you must rely upon the procedures of DTC and its participants. These
procedures are the same as those that apply to any other stocks that you hold in
book entry or "street name" form.
HOW TO BUY AND SELL SHARES
PRICING FUND SHARES
The trading price of the Fund's shares on the NYSE Arca may differ from
the Fund's daily net asset value and can be affected by market forces of supply
and demand, economic conditions and other factors.
The NYSE Arca intends to disseminate the approximate value of Shares of
the Fund every fifteen seconds. The approximate value calculations are based on
local closing prices and may not reflect events that occur subsequent to the
local market's close. As a result, premiums and discounts between the
approximate value and the market price could be affected. This approximate value
should not be viewed as a "real-time" update of the NAV per Share of the Fund
because the approximate value may not be calculated in the same manner as the
NAV, which is computed once a day, generally at the end of the business day. The
Fund is not involved in, or responsible for, the calculation or dissemination of
the approximate value and the Fund does not make any warranty as to its
accuracy.
The net asset value per Share for the Fund is determined once daily as
of the close of the NYSE, usually 4:00 p.m. Eastern time, each day the NYSE is
open for trading. NAV per Share is determined by dividing the value of the
Fund's portfolio securities, cash and other assets (including accrued interest),
less all liabilities (including accrued expenses), by the total number of shares
outstanding.
Equity securities are valued at the last reported sale price on the
principal exchange on which such securities are traded, as of the close of
regular trading on the NYSE on the day the securities are being valued or, if
there are no sales, at the mean of the most recent bid and asked prices. Equity
securities that are traded in OTC markets are valued at the NASDAQ Official
Closing Price as of the close of regular trading on the NYSE on the day the
securities are valued or, if there are no sales, at the mean of the most recent
bid and asked prices. Debt securities are valued at the bid price for such
securities or, if such prices are not available, at prices for securities of
comparable maturity, quality, and type. Securities for which market quotations
are not readily available, including restricted securities, are valued by a
method that the Trustees believe accurately reflects fair value. Securities will
be valued at fair value when market quotations are not readily available or are
deemed unreliable, such as when a security's value or meaningful portion of the
Fund's portfolio is believed to have been materially affected by a significant
event. Such events may include a natural disaster, an economic event like a
bankruptcy filing, a trading halt in a security, an unscheduled early market
close or a substantial fluctuation in domestic and foreign markets that has
occurred between the close of the principal exchange and the
11
NYSE. In such a case, the value for a security is likely to be different from
the last quoted market price. In addition, due to the subjective and variable
nature of fair market value pricing, it is possible that the value determined
for a particular asset may be materially different from the value realized upon
such asset's sale.
Securities trading in a particular country or countries may not take
place on all U.S. business days or may take place on days that are not U.S.
business days. Changes in valuations on certain securities may occur at times or
on days on which the Fund's net asset value is not calculated and on which the
Fund does not effect sales, redemptions and exchanges of its Shares.
CREATION UNITS
Investors such as market makers, large investors and institutions who
wish to deal in Creation Units directly with the Fund must have entered into an
authorized participant agreement with the distributor and the transfer agent, or
purchase through a dealer that has entered into such an agreement. Set forth
below is a brief description of the procedures applicable to purchase and
redemption of Creation Units. For more detailed information, see "Creation and
Redemption of Creation Unit Aggregations" in the Statement of Additional
Information.
HOW TO BUY SHARES
In order to purchase Creation Units of the Fund, an investor must
generally deposit a designated portfolio of equity securities constituting a
substantial replication, or a representation, of the stocks included in the
Index (the "Deposit Securities") and generally make a small cash payment
referred to as the "Cash Component." For those Authorized Participants that are
not eligible for trading a Deposit Security, custom orders are available. The
list of the names and the numbers of shares of the Deposit Securities is made
available by the Fund's custodian through the facilities of the National
Securities Clearing Corporation, commonly referred to as NSCC, immediately prior
to the opening of business each day of the NYSE Arca. The Cash Component
represents the difference between the net asset value of a Creation Unit and the
market value of the Deposit Securities. In the case of custom orders,
cash-in-lieu may be added to the Cash Component to replace any Deposit
Securities that the Authorized Participant may not be eligible to trade.
Orders must be placed in proper form by or through a participant of The
Depository Trust Company ("DTC Participant") that has entered into an agreement
with the Trust, the distributor and the transfer agent, with respect to
purchases and redemptions of Creation Units (collectively, "Authorized
Participant" or "AP"). All standard orders must be placed for one or more whole
Creation Units of Shares of the Fund and must be received by the distributor in
proper form no later than the close of regular trading on the NYSE Arca
(ordinarily 4:00 p.m. Eastern time) ("Closing Time") in order to receive that
day's closing NAV per Share. In the case of custom orders, as further described
in the Statement of Additional Information, the order must be received by the
distributor no later than one hour prior to Closing Time in order to receive
that day's closing NAV per Share. A custom order may be placed by an Authorized
Participant in the event that the Trust permits or requires the substitution of
an amount of cash to be added to the Cash Component to replace any Deposit
Security which may not be available in sufficient quantity for delivery or which
may not be eligible for trading by such Authorized Participant or the investor
for which it is acting or any other relevant reason. See "Creation and
Redemption of Creation Unit Aggregations" in the Statement of Additional
Information.
A fixed creation transaction fee of $[ ] per transaction (the "Creation
Transaction Fee") is applicable to each transaction regardless of the number of
Creation Units purchased in the transaction. An additional charge of up to four
times the Creation Transaction Fee may be imposed to the extent that
12
cash is used in lieu of securities to purchase Creation Units. See "Creation and
Redemption of Creation Unit Aggregations" in the Statement of Additional
Information. The price for each Creation Unit will equal the daily NAV per Share
times the number of Shares in a Creation Unit plus the fees described above and,
if applicable, any transfer taxes.
Shares of the Fund may be issued in advance of receipt of all Deposit
Securities subject to various conditions, including a requirement to maintain on
deposit with the Trust cash at least equal to 115% of the market value of the
missing Deposit Securities. See "Creation and Redemption of Creation Unit
Aggregations" in the Statement of Additional Information.
LEGAL RESTRICTIONS ON TRANSACTIONS IN CERTAIN STOCKS
An investor subject to a legal restriction with respect to a particular
stock required to be deposited in connection with the purchase of a Creation
Unit may, at the Fund's discretion, be permitted to deposit an equivalent amount
of cash in substitution for any stock which would otherwise be included in the
Deposit Securities applicable to the purchase of a Creation Unit. For more
details, see "Creation and Redemption of Creation Unit Aggregations" in the
Statement of Additional Information.
REDEMPTION OF SHARES
Shares may be redeemed only in Creation Units at their NAV and only on
a day the NYSE Arca is open for business. The Fund's custodian makes available
immediately prior to the opening of business each day of the NYSE Arca, through
the facilities of the NSCC, the list of the names and the numbers of shares of
the Fund's portfolio securities that will be applicable that day to redemption
requests in proper form ("Fund Securities"). Fund Securities received on
redemption may not be identical to Deposit Securities, which are applicable to
purchases of Creation Units. Unless cash redemptions are available or specified
for the Fund, the redemption proceeds consist of the Fund Securities, plus cash
in an amount equal to the difference between the NAV of Shares being redeemed as
next determined after receipt by the transfer agent of a redemption request in
proper form, and the value of the Fund Securities (the "Cash Redemption
Amount"), less the applicable redemption fee and, if applicable, any transfer
taxes. Should the Fund Securities have a value greater than the NAV of Shares
being redeemed, a compensating cash payment to the Trust equal to the
differential, plus the applicable redemption fee and, if applicable, any
transfer taxes will be required to be arranged for, by or on behalf of the
redeeming shareholder. For more details, see "Creation and Redemption of
Creation Unit Aggregations" in the Statement of Additional Information.
An order to redeem Creation Units of the Fund may only be effected by
or through an Authorized Participant. An order to redeem must be placed for one
or more whole Creation Units and must be received by the transfer agent in
proper form no later than the close of regular trading on the NYSE Arca
(normally 4:00 p.m. Eastern time) in order to receive that day's closing NAV per
Share. In the case of custom orders, as further described in the Statement of
Additional Information, the order must be received by the transfer agent no
later than 3:00 p.m. Eastern time.
A fixed redemption transaction fee of $[ ] per transaction (the
"Redemption Transaction Fee") is applicable to each redemption transaction
regardless of the number of Creation Units redeemed in the transaction. An
additional charge of up to four times the Redemption Transaction Fee may be
charged to approximate additional expenses incurred by the Trust to the extent
that redemptions are for cash. The Fund reserves the right to effect redemptions
in cash. A shareholder may request a cash redemption in lieu of securities,
however, the Fund may, in its discretion, reject any such request. See "Creation
and Redemption of Creation Unit Aggregations" in the Statement of Additional
Information.
13
DISTRIBUTIONS
Dividends and Capital Gains. Fund shareholders are entitled to their
share of the Fund's income and net realized gains on its investments. The Fund
pays out substantially all of its net earnings to its shareholders as
"distributions."
The Fund typically earns income dividends from stocks and interest from
debt securities. These amounts, net of expenses, are passed along to Fund
shareholders as "income dividend distributions." The Fund realizes capital gains
or losses whenever it sells securities. Net long-term capital gains are
distributed to shareholders as "capital gain distributions."
Income dividends, if any, are distributed to shareholders quarterly.
Net capital gains are distributed at least annually. Dividends may be declared
and paid more frequently to improve Index tracking or to comply with the
distribution requirements of the Internal Revenue Code. Some portion of each
distribution may result in a return of capital. Fund shareholders will be
notified regarding the portion of the distribution that represents a return of
capital.
Distributions in cash may be reinvested automatically in additional
whole Shares only if the broker through which the Shares were purchased makes
such option available.
DISTRIBUTION PLAN AND SERVICE PLAN
The Board of Trustees of the Trust has adopted a distribution and
services plan (the "Plan") pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended (the "1940 Act"). Under the Plan, the Fund is authorized
to pay distribution fees in connection with the sale and distribution of its
shares and pay service fees in connection with the provision of ongoing services
to shareholders of each class and the maintenance of shareholder accounts in an
amount up to 0.25% of its average daily net assets each year.
No 12b-1 fees are currently paid by the Fund, and there are no current
plans to impose these fees. However, in the event 12b-1 fees are charged in the
future, because these fees are paid out of the Fund's assets on an ongoing
basis, these fees will increase the cost of your investment in the Fund. By
purchasing shares subject to distribution fees and service fees, you may pay
more over time than you would by purchasing shares with other types of sales
charge arrangements. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charge permitted by the rules of the
FINRA. The net income attributable to the Shares will be reduced by the amount
of distribution fees and service fees and other expenses of the Fund.
FREQUENT PURCHASES AND REDEMPTIONS
The Fund imposes no restrictions on the frequency of purchases and
redemptions. The Board of Trustees evaluated the risks of market timing
activities by the Fund's shareholders when they considered that no restriction
or policy was necessary. The Board considered that, unlike traditional mutual
funds, the Fund issues and redeems its shares at NAV for a basket of securities
intended to mirror the Fund's portfolio, plus a small amount of cash, and the
Fund's Shares may be purchased and sold on the exchange at prevailing market
prices. Given this structure, the Board determined that it is unlikely that (a)
market timing would be attempted by the Fund's shareholders or (b) any attempts
to market time the Fund by its shareholders would result in negative impact to
the Fund or its shareholders.
14
FUND SERVICE PROVIDERS
Claymore Advisors, LLC is the administrator of the Fund.
The Bank of New York Mellon is the custodian and fund accounting and
transfer agent for the Fund.
Clifford Chance US LLP serves as counsel to the Fund.
[ ] serves as the Fund's independent registered public accounting firm.
The independent registered public accounting firm is responsible for auditing
the annual financial statements of the Fund.
INDEX PROVIDER
Delta Global is the Index Provider for the Claymore/Delta Global
Shipping ETF. Delta Global is not affiliated with the Trust, the Investment
Adviser or the distributor. The Investment Adviser has entered into a license
agreement with Delta Global to use the Index. The Fund is entitled to use the
Index pursuant to a sub-licensing arrangement with the Investment Adviser.
DISCLAIMERS
The "DGI Global Shipping Index" is a registered trademark of Delta
Global and has been licensed for use by the Investment Adviser. The Fund is not
sponsored, endorsed, sold or promoted by Delta Global and Delta Global makes no
representation regarding the advisability of investing in Shares of the Fund.
The Claymore/Delta Global Shipping ETF and its Shares are not
sponsored, endorsed, sold or promoted by Delta Global. Delta Global makes no
representation, condition or warranty, express or implied, to the shareholders
of the Fund or any member of the public regarding the advisability of investing
in securities generally or in the Fund particularly or the ability of the Index
to track general stock market performance. Delta Global's only relationship to
the Investment Adviser is the licensing of certain trademarks and trade names of
Delta Global and of the Index, which is determined, composed and calculated by
Delta Global without regard to the Investment Adviser or the Fund. Delta Global
has no obligation to take the needs of the Investment Adviser or the
shareholders of the Fund into consideration in determining, composing or
calculating the Index. Delta Global is not responsible for and has not
participated in the determination of the prices of the Shares of the Fund or the
timing of the issuance or sale of such Shares or in the determination or
calculation of the equation by which the Shares are to be converted into cash.
Delta Global has no obligation or liability in connection with the
administration, marketing, or trading of the Fund or its Shares.
Delta Global and the Investment Adviser do not guarantee the accuracy
and/or the completeness of the Index or any data included therein, and Delta
Global and the Investment Adviser shall have no liability for any errors,
omissions or interruptions therein. Delta Global and the Investment Adviser make
no warranty, condition or representation express or implied, as to results to be
obtained by the Fund, owners of the Shares of the Fund or any other person or
entity from the use of the Index or any data included therein. Delta Global and
the Investment Adviser make no express or implied warranties, representations or
conditions, and expressly disclaim all warranties or conditions of
merchantability or fitness for a particular purpose or use and any other express
or implied warranty or condition with respect to the Index or any data included
therein. Without limiting any of the foregoing, in no event shall Delta Global
or the Investment Adviser have any liability for any special, punitive, direct,
indirect or
15
consequential damages (including lost profits) arising out of matters relating
to the use of the Index or any data included therein even if notified of the
possibility of such damages.
FEDERAL INCOME TAXATION
As with any investment, you should consider how your investment in
Shares will be taxed. The tax information in this Prospectus is provided as
general information. You should consult your own tax professional about the tax
consequences of an investment in Shares.
Unless your investment in Shares is made through a tax-exempt entity or
tax-deferred retirement account, such as an IRA plan, you need to be aware of
the possible tax consequences when:
o The Fund makes distributions,
o You sell your Shares listed on the NYSE Arca, and
o You purchase or redeem Creation Units.
TAXES ON DISTRIBUTIONS
Dividends from net investment income, if any, are declared and paid
quarterly. The Fund may also pay a special distribution at the end of the
calendar year to comply with federal tax requirements. In general, your
distributions are subject to federal income tax when they are paid, whether you
take them in cash or reinvest them in the Fund. Dividends paid out of the Fund's
income and net short-term gains, if any, are taxable as ordinary income.
Distributions of net long-term capital gains, if any, in excess of net
short-term capital losses are taxable as long-term capital gains, regardless of
how long you have held the Shares.
Long-term capital gains of non-corporate taxpayers are generally taxed
at a maximum rate of 15% for taxable years beginning before January 1, 2011. In
addition, for these taxable years some ordinary dividends declared and paid by
the Fund to non-corporate shareholders may qualify for taxation at the lower
reduced tax rates applicable to long-term capital gains, provided that holding
period and other requirements are met by the Fund and the shareholder.
Distributions in excess of the Fund's current and accumulated earnings
and profits are treated as a tax-free return of capital to the extent of your
basis in the Shares, and as capital gain thereafter. A distribution will reduce
the Fund's net asset value per Share and may be taxable to you as ordinary
income or capital gain even though, from an investment standpoint, the
distribution may constitute a return of capital.
Since more than 50% of the Fund's total assets at the end of its
taxable year will consist of foreign stock or securities, the Fund intends to
elect to "pass through" to its investors certain foreign income taxes paid by
the Fund, with the result that each investor will (i) include in gross income,
as an additional dividend, even though not actually received, the investor's pro
rata share of the Fund's foreign income taxes, and (ii) either deduct (in
calculating U.S. taxable income) or credit (in calculating U.S. federal income),
subject to certain limitations, the investor's pro rate share of the Fund's
foreign income taxes.
If you are not a citizen or permanent resident of the United States,
the Fund's ordinary income dividends (which include distributions of net
short-term capital gains) will generally be subject to a 30% U.S. withholding
tax, unless a lower treaty rate applies or unless such income is effectively
connected with a U.S. trade or business carried on through a permanent
establishment in the United States. The Fund may,
16
under certain circumstances, designate all or a portion of a dividend as an
"interest-related dividend" that is received by a nonresident alien or foreign
entity generally would be exempt from the 30% U.S. withholding tax, provided
that certain other requirements are met. The Fund may also, under certain
circumstances, designate all or a portion of a dividend as a "short-term capital
gain dividend" which if received by a nonresident alien or foreign entity
generally would be exempt from the 30% U.S. withholding tax, unless the foreign
person is a nonresident alien individual present in the United States for a
period or periods aggregating 183 days or more during the taxable year. The
provisions contained in the legislation relating to dividends to foreign persons
would apply to dividends with respect to taxable years of the Fund beginning
after December 31, 2004 and before January 1, 2008. Prospective investors are
urged to consult their tax advisors regarding the specific tax consequences
relating to the proposed legislation.
Dividends and interest received by the Fund may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may reduce or eliminate such
taxes.
By law, the Fund must withhold a percentage of your distributions and
proceeds if you have not provided a taxpayer identification number or social
security number. The backup withholding rate for individual is currently 28%.
TAXES ON EXCHANGE-LISTED SHARES SALES
Currently, any capital gain or loss realized upon a sale of Shares is
generally treated as long-term capital gain or loss if the Shares have been held
for more than one year and as short-term capital gain or loss if the Shares have
been held for one year or less. The ability to deduct capital losses may be
limited.
TAXES ON PURCHASE AND REDEMPTION OF CREATION UNITS
An authorized purchaser who exchanges equity securities for Creation
Units generally will recognize a gain or a loss. The gain or loss will be equal
to the difference between the market value of the Creation Units at the time and
the exchanger's aggregate basis in the securities surrendered and the Cash
Component paid. A person who exchanges Creation Units for equity securities will
generally recognize a gain or loss equal to the difference between the
exchanger's basis in the Creation Units and the aggregate market value of the
securities received and the Cash Redemption Amount. The Internal Revenue
Service, however, may assert that a loss realized upon an exchange of securities
for Creation Units cannot be deducted currently under the rules governing "wash
sales," or on the basis that there has been no significant change in economic
position. Persons exchanging securities should consult their own tax advisor
with respect to whether the wash sale rules apply and when a loss might be
deductible.
Under current federal tax laws, any capital gain or loss realized upon
redemption of Creation Units is generally treated as long-term capital gain or
loss if the Shares have been held for more than one year and as a short-term
capital gain or loss if the Shares have been held for one year or less.
If you purchase or redeem Creation Units, you will be sent a
confirmation statement showing how many Shares you purchased or sold and at what
price.
The foregoing discussion summarizes some of the possible consequences
under current federal tax law of an investment in the Fund. It is not a
substitute for personal tax advice. You may also be subject to state and local
taxation on Fund distributions, and sales of Fund Shares. Consult your personal
tax advisor about the potential tax consequences of an investment in Fund Shares
under all applicable tax laws.
17
OTHER INFORMATION
For purposes of the 1940 Act, the Fund is treated as a registered
investment company. Section 12(d)(1) of the 1940 Act restricts investments by
investment companies in the securities of other investment companies, including
shares of the Fund. Registered investment companies are permitted to invest in
the Fund beyond the limits set forth in Section 12(d)(1) subject to certain
terms and conditions set forth in an SEC exemptive order issued to the Trust,
including that such investment companies enter into an agreement with the Fund.
DISCLOSURE OF PORTFOLIO HOLDINGS
A description of the Trust's policies and procedures with respect to
the disclosure of the Fund's portfolio securities is available in the Fund's
Statement of Additional Information.
FINANCIAL HIGHLIGHTS
Because the Shares of the Fund are newly offered, there is no financial
information available for the Shares as of the date of this prospectus.
FOR MORE INFORMATION
EXISTING SHAREHOLDERS OR PROSPECTIVE INVESTORS
o Call your broker
o www.claymore.com
DEALERS
o www.claymore.com
o Distributor Telephone: (888) 949-3837
Investment Adviser
Claymore Advisors, LLC
2455 Corporate West Drive
Lisle, Illinois 60532
Distributor
Claymore Securities, Inc.
2455 Corporate West Drive
Lisle, Illinois 60532
Custodian Transfer Agent
The Bank of New York Mellon The Bank of New York Mellon
101 Barclay Street 101 Barclay Street
New York, New York 10286 New York, New York 10286
|
18
Legal Counsel Independent Registered Public
Accounting Firm
Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019
|
19
[CLAYMORE(R) LOGO]
A Statement of Additional Information dated [________], which contains
more details about the Fund, is incorporated by reference in its entirety into
this Prospectus, which means that it is legally part of this Prospectus.
You will find additional information about the Fund in its annual and
semi-annual reports to shareholders, when available. The annual report will
explain the market conditions and investment strategies affecting the Fund's
performance during its last fiscal year.
You can ask questions or obtain a free copy of the Fund's shareholder
reports or the Statement of Additional Information by calling 1-888-949-3837.
Free copies of the Fund's shareholder reports and the Statement of Additional
Information are available from our website at www.claymore.com.
Information about the Fund, including its reports and the Statement of
Additional Information, has been filed with the SEC. It can be reviewed and
copied at the SEC's Public Reference Room in Washington, DC or on the EDGAR
database on the SEC's internet site (http://www.sec.gov). Information on the
operation of the SEC's Public Reference Room may be obtained by calling the SEC
at (202) 551-5850. You can also request copies of these materials, upon payment
of a duplicating fee, by electronic request at the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference section of the SEC, 100
F Street NE, Room 1580, Washington, DC 20549.
PROSPECTUS
Distributor
Claymore Securities, Inc.
2455 Corporate West Drive
Lisle, Illinois 60532
[ ], 2008
Investment Company Act File No. 811-21910.
20
SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION DATED [ ], 2008
THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND
MAY BE CHANGED. THE TRUST MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND
IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE
OFFER OR SALE IS NOT PERMITTED.
INVESTMENT COMPANY ACT FILE NO. 811-21910
CLAYMORE EXCHANGE-TRADED FUND TRUST 2
STATEMENT OF ADDITIONAL INFORMATION
DATED , 2008
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Prospectus dated , 2008 for the Claymore/Delta Global
Shipping ETF, a series of the Claymore Exchange-Traded Fund Trust 2 (the
"Trust"), as it may be revised from time to time. Capitalized terms used herein
that are not defined have the same meaning as in the Prospectus, unless
otherwise noted. A copy of the Prospectus may be obtained without charge by
writing to the Trust's Distributor, Claymore Securities, Inc., or by calling
toll free 1-888-949-3837.
Table of Contents
Page
GENERAL DESCRIPTION OF THE TRUST AND THE FUND.................................3
EXCHANGE LISTING AND TRADING..................................................3
INVESTMENT RESTRICTIONS AND POLICIES..........................................4
INVESTMENT POLICIES AND RISKS.................................................5
GENERAL CONSIDERATIONS AND RISKS..............................................9
MANAGEMENT...................................................................12
BROKERAGE TRANSACTIONS.......................................................20
ADDITIONAL INFORMATION CONCERNING THE TRUST..................................21
CREATION AND REDEMPTION OF CREATION UNIT AGGREGATIONS........................24
TAXES........................................................................31
FEDERAL TAX TREATMENT OF FUTURES AND OPTIONS CONTRACTS.......................36
DETERMINATION OF NAV.........................................................38
DIVIDENDS AND DISTRIBUTIONS..................................................38
MISCELLANEOUS INFORMATION....................................................39
|
FINANCIAL STATEMENTS.........................................................39
|
GENERAL DESCRIPTION OF THE TRUST AND THE FUND
The Trust was organized as a Delaware statutory trust on June 8, 2006
and is authorized to have multiple series or portfolios. The Trust is an
open-end management investment company, registered under the Investment Company
Act of 1940, as amended (the "1940 Act"). The Trust currently consists of 13
investment portfolios. This Statement of Additional Information relates to the
following investment portfolio: the Claymore/Delta Global Shipping ETF (the
"Fund"). The Claymore/Delta Global Shipping ETF is based on an underlying index
(the "Underlying Index") of U.S. and non-U.S. securities. The Fund is
"non-diversified" and, as such, the Fund's investments are not required to meet
certain diversification requirements under the 1940 Act. The shares of the Fund
are referred to herein as "Shares" or "Fund Shares."
The Fund is managed by Claymore Advisors, LLC ("Claymore Advisors" or
the "Investment Adviser").
The Fund offers and issues Shares at net asset value ("NAV") only in
aggregations of a specified number of Shares (each a "Creation Unit" or a
"Creation Unit Aggregation"), generally in exchange for a basket of equity
securities included in the relevant Underlying Indices (the "Deposit
Securities"), together with the deposit of a specified cash payment (the "Cash
Component"). The Fund anticipates that its Shares will be listed on the NYSE
Arca, Inc. (the "NYSE Arca"). Fund Shares will trade on the NYSE Arca at market
prices that may be below, at or above NAV. Shares are redeemable only in
Creation Unit Aggregations and, generally, in exchange for portfolio securities
and a specified cash payment. Creation Units are aggregations of [ ] Shares. In
the event of the liquidation of the Fund, the Trust may lower the number of
Shares in a Creation Unit.
The Trust reserves the right to offer a "cash" option for creations and
redemptions of Fund Shares. Fund Shares may be issued in advance of receipt of
Deposit Securities subject to various conditions including a requirement to
maintain on deposit with the Trust cash at least equal to 115% of the market
value of the missing Deposit Securities. See the "Creation and Redemption of
Creation Unit Aggregations" section. In each instance of such cash creations or
redemptions, transaction fees may be imposed that will be higher than the
transaction fees associated with in-kind creations or redemptions. In all cases,
such fees will be limited in accordance with the requirements of the Securities
and Exchange Commission (the "SEC") applicable to management investment
companies offering redeemable securities.
EXCHANGE LISTING AND TRADING
There can be no assurance that the requirements of the NYSE Arca
necessary to maintain the listing of Shares of the Fund will continue to be met.
The NYSE Arca may, but is not required to, remove the Shares of the Fund from
listing if (i) following the initial 12-month period beginning at the
commencement of trading of the Fund, there are fewer than 50 beneficial owners
of the Shares of the Fund for 30 or more consecutive trading days; (ii) the
value of the Underlying Indices is no longer calculated or available; or (iii)
such other event shall occur or condition exist that, in the opinion of the NYSE
Arca, makes further dealings on the NYSE Arca inadvisable. The NYSE Arca will
remove the Shares of the Fund from listing and trading upon termination of such
Fund.
As in the case of other stocks traded on the NYSE Arca, broker's
commissions on transactions will be based on negotiated commission rates at
customary levels.
3
The Trust reserves the right to adjust the price levels of the Shares
in the future to help maintain convenient trading ranges for investors. Any
adjustments would be accomplished through stock splits or reverse stock splits,
which would have no effect on the net assets of the Fund.
INVESTMENT RESTRICTIONS AND POLICIES
INVESTMENT OBJECTIVES
The investment objective of the Claymore/Delta Global Shipping ETF is
to provide investment results that correspond generally to the performance
(before the Fund's fees and expenses) of an equity index called the "DGI Global
Shipping Index."
INVESTMENT RESTRICTIONS
The Board of Trustees of the Trust (the "Board" or the "Trustees") has
adopted as fundamental policies the Fund's respective investment restrictions,
numbered (1) through (7) below. The Fund, as a fundamental policy, may not:
(1) Invest 25% or more of the value of its total assets in securities
of issuers in any one industry or group of industries, except to the extent that
the Underlying Index that the Fund replicates, concentrates in an industry or
group of industries. This restriction does not apply to obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.
(2) Borrow money, except that the Fund may (i) borrow money from banks
for temporary or emergency purposes (but not for leverage or the purchase of
investments) up to 10% of its total assets and (ii) make other investments or
engage in other transactions permissible under the 1940 Act that may involve a
borrowing, provided that the combination of (i) and (ii) shall not exceed 33
1/3% of the value of the Fund's total assets (including the amount borrowed),
less the Fund's liabilities (other than borrowings).
(3) Act as an underwriter of another issuer's securities, except to the
extent that the Fund may be deemed to be an underwriter within the meaning of
the Securities Act of 1933 in connection with the purchase and sale of portfolio
securities.
(4) Make loans to other persons, except through (i) the purchase of
debt securities permissible under the Fund's investment policies, (ii)
repurchase agreements or (iii) the lending of portfolio securities, provided
that no such loan of portfolio securities may be made by the Fund if, as a
result, the aggregate of such loans would exceed 33 1/3% of the value of the
Fund's total assets.
(5) Purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not prevent the
Fund (i) from purchasing or selling options, futures contracts or other
derivative instruments, or (ii) from investing in securities or other
instruments backed by physical commodities).
(6) Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prohibit the
Fund from purchasing or selling securities or other instruments backed by real
estate or of issuers engaged in real estate activities).
(7) Issue senior securities, except as permitted under the 1940 Act.
Except for restriction (2), if a percentage restriction is adhered to
at the time of investment, a later increase in percentage resulting from a
change in market value of the investment or the total assets, or the sale of a
security out of the portfolio, will not constitute a violation of that
restriction.
The foregoing fundamental investment policies cannot be changed as to
the Fund without approval by holders of a "majority of the Fund's outstanding
voting shares." As defined in the 1940 Act, this means the vote of (i) 67% or
more of the Fund's shares present at a meeting, if the holders of more than 50%
of the Fund's shares are present or represented by proxy, or (ii) more than 50%
of the Fund's shares, whichever is less.
In addition to the foregoing fundamental investment policies, the Fund
is also subject to the following non-fundamental restrictions and policies,
which may be changed at any time by the Board of Trustees without shareholder
approval. The Fund may not:
(1) Sell securities short, unless the Fund owns or has the right to
obtain securities equivalent in kind and amount to the securities sold short at
no added cost, and provided that transactions in options, futures contracts,
options on futures contracts or other derivative instruments are not deemed to
constitute selling securities short.
(2) Purchase securities on margin, except that the Fund may obtain such
short-term credits as are necessary for the clearance of transactions; and
provided that margin deposits in connection with futures contracts, options on
futures contracts or other derivative instruments shall not constitute
purchasing securities on margin.
(3) Purchase securities of open-end or closed-end investment companies
except in compliance with the 1940 Act.
(4) Invest in direct interests in oil, gas or other mineral exploration
programs or leases; however, the Fund may invest in the securities of issuers
that engage in these activities.
(5) Invest in illiquid securities if, as a result of such investment,
more than 15% of the Fund's net assets would be invested in illiquid securities.
The investment objective of the Fund is a non-fundamental policy that
can be changed by the Board of Trustees without approval by shareholders.
INVESTMENT POLICIES AND RISKS
Loans of Portfolio Securities. The Fund may lend its investment
securities to approved borrowers. Any gain or loss on the market price of the
securities loaned that might occur during the term of the loan would be for the
account of the Fund. These loans cannot exceed 33 1/3% of the Fund's total
assets.
Approved borrowers are brokers, dealers, domestic and foreign banks, or
other financial institutions that meet credit or other requirements as
established by, and subject to the review of, the Trust's Board, so long as the
terms, the structure and the aggregate amount of such loans are not inconsistent
with the 1940 Act and the rules and regulations thereunder or interpretations of
the SEC, which require that (a) the borrowers pledge and maintain with the Fund
collateral consisting of cash, an irrevocable letter of credit issued by a bank,
or securities issued or guaranteed by the U.S. Government having a value at all
times of not less than 102% of the value of the securities loaned (on a
"mark-to-market" basis); (b) the loan be made subject to termination by the Fund
at any time; and (c) the
Fund receives reasonable interest on the loan. From time to time, the Fund may
return a part of the interest earned from the investment of collateral received
from securities loaned to the borrower and/or a third party that is unaffiliated
with the Fund and that is acting as a finder.
Repurchase Agreements. The Fund may enter into repurchase agreements,
which are agreements pursuant to which securities are acquired by the Fund from
a third party with the understanding that they will be repurchased by the seller
at a fixed price on an agreed date. These agreements may be made with respect to
any of the portfolio securities in which the Fund is authorized to invest.
Repurchase agreements may be characterized as loans secured by the underlying
securities. The Fund may enter into repurchase agreements with (i) member banks
of the Federal Reserve System having total assets in excess of $500 million and
(ii) securities dealers ("Qualified Institutions"). The Investment Adviser will
monitor the continued creditworthiness of Qualified Institutions.
The use of repurchase agreements involves certain risks. For example,
if the seller of securities under a repurchase agreement defaults on its
obligation to repurchase the underlying securities, as a result of its
bankruptcy or otherwise, the Fund will seek to dispose of such securities, which
action could involve costs or delays. If the seller becomes insolvent and
subject to liquidation or reorganization under applicable bankruptcy or other
laws, the Fund's ability to dispose of the underlying securities may be
restricted. Finally, it is possible that the Fund may not be able to
substantiate its interest in the underlying securities. To minimize this risk,
the securities underlying the repurchase agreement will be held by the custodian
at all times in an amount at least equal to the repurchase price, including
accrued interest. If the seller fails to repurchase the securities, the Fund may
suffer a loss to the extent proceeds from the sale of the underlying securities
are less than the repurchase price.
The resale price reflects the purchase price plus an agreed upon market
rate of interest. The collateral is marked to market daily.
Reverse Repurchase Agreements. The Fund may enter into reverse
repurchase agreements, which involve the sale of securities with an agreement to
repurchase the securities at an agreed-upon price, date and interest payment and
have the characteristics of borrowing. The securities purchased with the funds
obtained from the agreement and securities collateralizing the agreement will
have maturity dates no later than the repayment date. Generally the effect of
such transactions is that the Fund can recover all or most of the cash invested
in the portfolio securities involved during the term of the reverse repurchase
agreement, while in many cases the Fund is able to keep some of the interest
income associated with those securities. Such transactions are only advantageous
if the Fund has an opportunity to earn a greater rate of return on the cash
derived from these transactions than the interest cost of obtaining the same
amount of cash. Opportunities to realize earnings from the use of the proceeds
equal to or greater than the interest required to be paid may not always be
available and the Fund intends to use the reverse repurchase technique only when
the Investment Adviser believes it will be advantageous to the Fund. The use of
reverse repurchase agreements may exaggerate any interim increase or decrease in
the value of the Fund's assets. The custodian bank will maintain a separate
account for the Fund with securities having a value equal to or greater than
such commitments. Under the 1940 Act, reverse repurchase agreements are
considered loans.
Money Market Instruments. The Fund may invest a portion of its assets
in high-quality money market instruments on an ongoing basis to provide
liquidity. The instruments in which the Fund may invest include: (i) short-term
obligations issued by the U.S. Government; (ii) negotiable certificates of
deposit ("CDs"), fixed time deposits and bankers' acceptances of U.S. and
foreign banks and similar institutions; (iii) commercial paper rated at the date
of purchase "Prime-1" by Moody's Investors Service, Inc. or "A-1+" or "A-1" by
Standard & Poor's or, if unrated, of comparable quality as determined by the
Investment Adviser; (iv) repurchase agreements; and (v) money market mutual
funds. CDs are short-term negotiable obligations of commercial banks. Time
deposits are non-negotiable deposits maintained in
banking institutions for specified periods of time at stated interest rates.
Banker's acceptances are time drafts drawn on commercial banks by borrowers,
usually in connection with international transactions.
Investment Companies. The Fund may invest in the securities of other
investment companies (including money market funds). Under the 1940 Act, the
Fund's investment in investment companies is limited to, subject to certain
exceptions, (i) 3% of the total outstanding voting stock of any one investment
company, (ii) 5% of the Fund's total assets with respect to any one investment
company and (iii) 10% of the Fund's total assets of investment companies in the
aggregate.
Real Estate Investment Trusts ("REITs"). The Fund may invest in the
securities of real estate investment trusts to the extent allowed by law, which
pool investors' funds for investments primarily in commercial real estate
properties. Investment in REITs may be the most practical available means for
the Fund to invest in the real estate industry. As a shareholder in a REIT, the
Fund would bear its ratable share of the REIT's expenses, including its advisory
and administration fees. At the same time, the Fund would continue to pay its
own investment advisory fees and other expenses, as a result of which the Fund
and its shareholders in effect will be absorbing duplicate levels of fees with
respect to investments in REITs.
Illiquid Securities. The Fund may invest up to an aggregate amount of
15% of its net assets in illiquid securities. Illiquid securities include
securities subject to contractual or other restrictions on resale and other
instruments that lack readily available markets.
Currency Transactions. The Fund does not expect to engage in currency
transactions for the purpose of hedging against declines in the value of the
Fund's assets that are denominated in a foreign currency. A Fund may enter into
foreign currency forward and foreign currency futures contracts to facilitate
local securities settlements or to protect against currency exposure in
connection with its distributions to shareholders, but may not enter into such
contracts for speculative purposes.
A forward currency contract is an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of the contract. A currency futures contract is a contract involving an
obligation to deliver or acquire the specified amount of a specific currency, at
a specified price and at a specified future time. Futures contracts may be
settled on a net cash payment basis rather than by the sale and delivery of the
underlying currency.
Futures and Options. The Fund may utilize exchange-traded futures and
options contracts and swap agreements.
Futures contracts generally provide for the future sale by one party
and purchase by another party of a specified commodity at a specified future
time and at a specified price. Stock index futures contracts are settled daily
with a payment by one party to the other of a cash amount based on the
difference between the level of the stock index specified in the contract from
one day to the next. Futures contracts are standardized as to maturity date and
underlying instrument and are traded on futures exchanges.
Futures traders are required to make a good faith margin deposit in
cash or U.S. government securities with a broker or custodian to initiate and
maintain open positions in futures contracts. A margin deposit is intended to
assure completion of the contract (delivery or acceptance of the underlying
commodity or payment of the cash settlement amount) if it is not terminated
prior to the specified delivery date. Brokers may establish deposit requirements
which are higher than the exchange minimums. Futures contracts are customarily
purchased and sold on margin deposits which may range upward from less than 5%
of the value of the contract being traded.
After a futures contract position is opened, the value of the contract
is marked to market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. In such case,
the Fund would expect to earn interest income on its margin deposits. Closing
out an open futures position is done by taking an opposite position ("buying" a
contract which has previously been "sold," or "selling" a contract previously
"purchased") in an identical contract to terminate the position. Brokerage
commissions are incurred when a futures contract position is opened or closed.
The Fund may use exchange-traded futures and options, together with
positions in cash and money market instruments, to simulate full investment in
its Underlying Index. Under such circumstances, the Investment Adviser may seek
to utilize other instruments that it believes to be correlated to the underlying
index components or a subset of the components.
An option on a futures contract, as contrasted with the direct
investment in such a contract, gives the purchaser the right, in return for the
premium paid, to assume a position in the underlying futures contract at a
specified exercise price at any time prior to the expiration date of the option.
Upon exercise of an option, the delivery of the futures position by the writer
of the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account that represents the
amount by which the market price of the futures contract exceeds (in the case of
a call) or is less than (in the case of a put) the exercise price of the option
on the futures contract. The potential for loss related to the purchase of an
option on a futures contract is limited to the premium paid for the option plus
transaction costs. Because the value of the option is fixed at the point of
purchase, there are no daily cash payments by the purchaser to reflect changes
in the value of the underlying contract; however, the value of the option
changes daily and that change would be reflected in the NAV of the Fund. The
potential for loss related to writing call options on equity securities or
indices is unlimited. The potential for loss related to writing put options is
limited only by the aggregate strike price of the put option less the premium
received.
The Fund may purchase and write put and call options on futures
contracts that are traded on a U.S. exchange as a hedge against changes in value
of its portfolio securities, or in anticipation of the purchase of securities,
and may enter into closing transactions with respect to such options to
terminate existing positions. There is no guarantee that such closing
transactions can be effected.
Restrictions on the Use of Futures Contracts and Options on Futures
Contracts. The Commodity Futures Trading Commission has eliminated limitations
on futures trading by certain regulated entities, including registered
investment companies, and consequently registered investment companies may
engage in unlimited futures transactions and options thereon provided that the
investment adviser to the company claims an exclusion from regulation as a
commodity pool operator. In connection with its management of the Trust, the
Investment Adviser has claimed such an exclusion from registration as a
commodity pool operator under the Commodity Exchange Act (the "CEA"). Therefore,
it is not subject to the registration and regulatory requirements of the CEA.
Therefore, there are no limitations on the extent to which the Fund may engage
in non-hedging transactions involving futures and options thereon, except as set
forth in the Fund's Prospectus and this Statement of Additional Information.
Swap Agreements. Swap agreements are contracts between parties in which
one party agrees to make periodic payments to the other party (the
"Counterparty") based on the change in market value or level of a specified
rate, index or asset. In return, the Counterparty agrees to make periodic
payments to the first party based on the return of a different specified rate,
index or asset. Swap agreements will usually be done on a net basis, the Fund
receiving or paying only the net amount of the two payments.
The net amount of the excess, if any, of the Fund's obligations over its
entitlements with respect to each swap is accrued on a daily basis and an amount
of cash or highly liquid securities having an aggregate value at least equal to
the accrued excess is maintained in an account at the Trust's custodian bank.
The use of interest-rate and index swaps is a highly specialized
activity that involves investment techniques and risks different from those
associated with ordinary portfolio security transactions. These transactions
generally do not involve the delivery of securities or other underlying assets
or principal.
The use of swap agreements involves certain risks. For example, if the
Counterparty under a swap agreement defaults on its obligation to make payments
due from it, as a result of its bankruptcy or otherwise, the Fund may lose such
payments altogether, or collect only a portion thereof, which collection could
involve costs or delays.
GENERAL CONSIDERATIONS AND RISKS
A discussion of the risks associated with an investment in the Fund is
contained in the Prospectus in the "Principal Risks of Investing in the Fund"
and "Additional Risks" sections. The discussion below supplements, and should be
read in conjunction with, these sections of the Prospectus.
An investment in the Fund should be made with an understanding that the
value of the Fund's portfolio securities may fluctuate in accordance with
changes in the financial condition of the issuers of the portfolio securities,
the value of common stocks in general and other factors that affect the market.
An investment in the Fund should also be made with an understanding of
the risks inherent in an investment in equity securities, including the risk
that the financial condition of issuers may become impaired or that the general
condition of the stock market may deteriorate (either of which may cause a
decrease in the value of the portfolio securities and thus in the value of Fund
Shares). Common stocks are susceptible to general stock market fluctuations and
to volatile increases and decreases in value as market confidence and
perceptions of their issuers change. These investor perceptions are based on
various and unpredictable factors, including expectations regarding government,
economic, monetary and fiscal policies, inflation and interest rates, economic
expansion or contraction, and global or regional political, economic or banking
crises.
Holders of common stocks incur more risk than holders of preferred
stocks and debt obligations because common stockholders, as owners of the
issuer, have generally inferior rights to receive payments from the issuer in
comparison with the rights of creditors, or holders of debt obligations or
preferred stocks. Further, unlike debt securities which typically have a stated
principal amount payable at maturity (whose value, however, is subject to market
fluctuations prior thereto), or preferred stocks, which typically have a
liquidation preference and which may have stated optional or mandatory
redemption provisions, common stocks have neither a fixed principal amount nor a
maturity.
The existence of a liquid trading market for certain securities may
depend on whether dealers will make a market in such securities. There can be no
assurance that a market will be made or maintained or that any such market will
be or remain liquid. The price at which securities may be sold and the value of
the Fund's Shares will be adversely affected if trading markets for the Fund's
portfolio securities are limited or absent, or if bid/ask spreads are wide.
Risks of Currency Transactions. Foreign exchange transactions involve a
significant degree of risk and the markets in which foreign exchange
transactions are effected are highly volatile, highly specialized and highly
technical. Significant changes, including changes in liquidity prices, can occur
in such markets within very short periods of time, often within minutes. Foreign
exchange trading risks
include, but are not limited to, exchange rate risk, maturity gap, interest rate
risk, and potential interference by foreign governments through regulation of
local exchange markets, foreign investment or particular transactions in foreign
currency. If the Fund utilizes foreign exchange transactions at an inappropriate
time or judges market conditions, trends or correlations incorrectly, foreign
exchange transactions may not serve their intended purpose of improving the
correlation of the Fund's return with the performance of its Underlying Index
and may lower the Fund's return. The Fund could experience losses if the value
of its currency forwards, options and futures positions were poorly correlated
with its other investments or if it could not close out its positions because of
an illiquid market. In addition, the Fund could incur transaction costs,
including trading commissions, in connection with certain foreign currency
transactions.
Risks of Futures and Options Transactions. There are several risks
accompanying the utilization of futures contracts and options on futures
contracts. First, while the Fund plans to utilize futures contracts only if an
active market exists for such contracts, there is no guarantee that a liquid
market will exist for the contract at a specified time.
Furthermore, because, by definition, futures contracts project price
levels in the future and not current levels of valuation, market circumstances
may result in a discrepancy between the price of the stock index future and the
movement in the Underlying Index. In the event of adverse price movements, the
Fund would continue to be required to make daily cash payments to maintain its
required margin. In such situations, if the Fund has insufficient cash, it may
have to sell portfolio securities to meet daily margin requirements at a time
when it may be disadvantageous to do so. In addition, the Fund may be required
to deliver the instruments underlying futures contracts it has sold.
The risk of loss in trading futures contracts or uncovered call options
in some strategies (e.g., selling uncovered stock index futures contracts) is
potentially unlimited. The Fund does not plan to use futures and options
contracts in this way. The risk of a futures position may still be large as
traditionally measured due to the low margin deposits required. In many cases, a
relatively small price movement in a futures contract may result in immediate
and substantial loss or gain to the investor relative to the size of a required
margin deposit. The Fund, however, intends to utilize futures and options
contracts in a manner designed to limit their risk exposure to levels comparable
to direct investment in stocks.
Utilization of futures and options on futures by the Fund involves the
risk of imperfect or even negative correlation to the Underlying Index if the
index underlying the futures contract differs from the Underlying Index. There
is also the risk of loss by the Fund of margin deposits in the event of
bankruptcy of a broker with whom the Fund has an open position in the futures
contract or option; however, this risk is substantially minimized because (a) of
the regulatory requirement that the broker has to "segregate" customer funds
from its corporate funds, and (b) in the case of regulated exchanges in the
United States, the clearing corporation stands behind the broker to make good
losses in such a situation. The purchase of put or call options could be based
upon predictions by the Investment Adviser as to anticipated trends, which
predictions could prove to be incorrect and a part or all of the premium paid
therefore could be lost.
Because the futures market imposes less burdensome margin requirements
than the securities market, an increased amount of participation by speculators
in the futures market could result in price fluctuations. Certain financial
futures exchanges limit the amount of fluctuation permitted in futures contract
prices during a single trading day. The daily limit establishes the maximum
amount by which the price of a futures contract may vary either up or down from
the previous day's settlement price at the end of a trading session. Once the
daily limit has been reached in a particular type of contract, no trades may be
made on that day at a price beyond that limit. It is possible that futures
contract prices could move to the daily limit for several consecutive trading
days with little or no trading, thereby preventing prompt liquidation of futures
positions and subjecting the Fund to substantial losses. In the event of adverse
price movements, the Fund would be required to make daily cash payments of
variation margin.
Although the Fund intends to enter into futures contracts only if there
is an active market for such contracts, there is no assurance that an active
market will exist for the contracts at any particular time.
Risks of Swap Agreements. The risk of loss with respect to swaps
generally is limited to the net amount of payments that the Fund is
contractually obligated to make. Swap agreements are also subject to the risk
that the swap counterparty will default on its obligations. If such a default
were to occur, the Fund will have contractual remedies pursuant to the
agreements related to the transaction. However, such remedies may be subject to
bankruptcy and insolvency laws which could affect the Fund's rights as a
creditor -- (e.g., the Fund may not receive the net amount of payments that it
contractually is entitled to receive). The Fund, however, intends to utilize
swaps in a manner designed to limit its risk exposure to levels comparable to
direct investments in stocks.
MANAGEMENT
Trustees and Officers
The general supervision of the duties performed by the Investment
Adviser for the Fund under the Investment Advisory Agreement is the
responsibility of the Board of Trustees. The Trust currently has four Trustees.
Three Trustees have no affiliation or business connection with the Investment
Adviser or any of its affiliated persons and do not own any stock or other
securities issued by the Investment Adviser. These are the "non-interested" or
"independent" Trustees ("Independent Trustees"). The other Trustee (the
"Management Trustee") is affiliated with the Investment Adviser.
The Independent Trustees of the Trust, their term of office and length
of time served, their principal business occupations during the past five years,
the number of portfolios in the Fund Complex (defined below) overseen by each
Independent Trustee, and other directorships, if any, held by the Trustee are
shown below. The Fund Complex includes all open- and closed-end funds (including
all of their portfolios) advised by the Investment Adviser and any funds that
have an investment adviser that is an affiliated person of the Investment
Adviser. As of the date of this SAI, the Fund Complex consists of the Trust's 13
portfolios, 29 domestic ETFs and 16 closed-end management investment companies.
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX OTHER
NAME, ADDRESS AND AGE OF HELD WITH TIME DURING OVERSEEN BY DIRECTORSHIPS HELD
INDEPENDENT TRUSTEES* TRUST SERVED** PAST 5 YEARS TRUSTEES BY TRUSTEES
--------------------------------------------------------------------------------------------------------------------------
Randall C. Barnes Trustee Since 2006 Private Investor. 43 None.
Year of Birth: 1951 Formerly, Senior Vice
President, Treasurer
(1993-1997),
President, Pizza Hut
International
(1991-1993) and Senior
Vice President,
Strategic Planning and
New Business
Development
(1987-1990) of
PepsiCo, Inc.
(1987-1997).
Ronald E. Toupin, Jr. Trustee Since 2006 Retired. Formerly 43 None.
Year of Birth: 1958 Vice President,
Manager and
Portfolio Manager
of Nuveen Asset
Management
(1998-1999), Vice
President of Nuveen
Investment Advisory
Corporation
(1993-1999), Vice
President and
Manager of Nuveen
Unit Investment
Trusts (1991-1999),
and Assistant Vice
President and
Portfolio Manager
of Nuveen Unit
Investment Trusts
(1988-1999), each
of John Nuveen &
Company, Inc.
(1982-1999).
Ronald A. Nyberg Trustee Since 2006 Partner of Nyberg & 46 None.
Year of Birth: 1953 Cassioppi, LLC, a law
firm specializing in
Corporate Law, Estate
Planning and Business
Transactions
(2000-present).
Formerly, Executive
Vice President,
General Counsel, and
Corporate Secretary of
Van Kampen Investments
(1982-1999).
|
*The business address of each Trustee is c/o Claymore Advisors, LLC,
2455 Corporate West Drive, Lisle, Illinois 60532.
**This is the period for which the Trustee began serving the Trust.
Each Trustee serves an indefinite term, until his successor is elected.
The Trustee who is affiliated with the Investment Adviser or affiliates
of the Investment Adviser and executive officers of the Trust, his term of
office and length of time served, his principal business
occupations during the past five years, the number of portfolios in the Fund
Complex overseen by the Management Trustee and the other directorships, if any,
held by the Trustee, are shown below.
NUMBER OF
TERM OF PORTFOLIOS
OFFICE AND IN FUND
POSITION(S) LENGTH PRINCIPAL COMPLEX
NAME, ADDRESS AND AGE OF HELD WITH OF TIME OCCUPATION(S) DURING OVERSEEN OTHER DIRECTORSHIPS
MANAGEMENT TRUSTEES* TRUST SERVED** PAST 5 YEARS BY TRUSTEES HELD BY TRUSTEES
-----------------------------------------------------------------------------------------------------------------
Nicholas Dalmaso*** Trustee; and Trustee Attorney. Formerly, 46 None
Year of birth: 1965 Chief Legal since 2006 Senior Managing
and Executive Director and Chief
Officer Administrative Officer
(2007-2008) and General
Counsel (2001-2007) of
Claymore Advisors, LLC
and Claymore Securities,
Inc., President and
Secretary of Claymore
Investments, Inc.
(2004-2008). Formerly,
Assistant General
Counsel, John Nuveen and
Company (1999-2001).
Formerly Vice President
and Associate General
Counsel of Van Kampen
Investments (1992-1999).
|
* The business address of each Trustee is c/o Claymore Advisors, LLC, 2455
Corporate West Drive, Lisle, Illinois 60532.
** This is the period for which the Trustee began serving the Trust. Each
Trustee serves an indefinite term, until his successor is elected.
*** Mr. Dalmaso is an interested person of the Trust because of his former
position as an officer of the Investment Adviser and certain of its
affiliates and his equity ownership of the Adviser and certain of its
affiliates.
NAME, ADDRESS AND AGE OF POSITION(S) HELD LENGTH OF TIME
EXECUTIVE OFFICER WITH TRUST SERVED* PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
-----------------------------------------------------------------------------------------------------------------
J. Thomas Futrell Chief Executive Since 2008
Year of birth: 1955 Officer Senior Managing Director, Chief Investment
Officer (2008-present) of Claymore
Advisors, LLC and Claymore Securities,
Inc.; Chief Executive Officer of certain
funds in the Fund Complex. Formerly,
Managing Director in charge of Research
(2000-2007) for Nuveen Asset Management.
|
Kevin M. Robinson Chief Legal Since 2008
Year of birth: 1959 Officer Senior Managing Director, General Counsel
and Corporate Secretary (2007-present) of
Claymore Advisors, LLC and Claymore
Securities, Inc.; Chief Legal Officer of
certain funds in the Fund Complex.
Formerly, Associate General Counsel (2000-
2007) of NYSE Euronext, Inc. Formerly,
Archipelago Holdings, Inc. Senior Managing
Director and Associate General Counsel
(1997-2000) of ABN Amro Inc. Formerly,
Senior Counsel in the Enforcement Division
(1989-1997) of the U.S. Securities and
Exchange Commission.
Steven M. Hill Chief Financial Since 2006 Senior Managing Director (2005-present) and
Year of birth: 1964 Officer, Chief Chief Financial Officer (2005-2006),
Accounting Managing Director (2003-2005) of Claymore
Officer and Advisors, LLC and Claymore Securities,
Treasurer Inc.; Chief Financial Officer, Chief
Accounting Officer and Treasurer of certain
funds in the Fund Complex. Formerly, Treasurer
of Henderson Global Funds and Operations
Manager for Henderson Global Investors
(NA) Inc. (2002-2003); Managing Director,
FrontPoint Partners LLC (2001-2002);
Vice President, Nuveen Investments
(1999-2001); Chief Financial Officer,
Skyline Asset Management LP, (1999);
Vice President, Van Kampen Investments
and Assistant Treasurer, Van Kampen
mutual funds (1989-1999).
Bruce Saxon Chief Since 2006 Vice President - Fund Compliance Officer of
Year of birth: 1957 Compliance Claymore Securities, Inc.(2006-present).
Officer Chief Compliance Officer of certain funds
in the Fund Complex. Formerly, Chief
Compliance Officer/Assistant Secretary of
Harris Investment Management, Inc.
(2003-2006). Director-Compliance of
Harrisdirect LLC (1999-2003).
Melissa J. Nguyen Secretary Since 2006 Vice President and Assistant General
Year of birth: 1978 Counsel of Claymore Securities, Inc.
(2005-present). Secretary of certain
funds in the Fund Complex. Formerly,
Associate, Vedder, Price, Kaufman &
Kammholz, P.C. (2003-2005).
William H. Belden III Vice President Since 2006 Managing Director of Claymore Securities,
Year of birth: 1965 Inc. (2005-present). Formerly, Vice
President of Product Management at Northern
Trust Global Investments (1999-2005); Vice
President of Stein Roe & Farnham
(1995-1999).
Chuck Craig Vice President Since 2006 Managing Director (2006-present), Vice
Year of birth: 1967 President (2003-2006) of Claymore
Securities, Inc. Formerly, Assistant Vice
President, First Trust Portfolios, L.P.
(1999-2003); Analyst, PMA Securities, Inc.
(1996-1999).
James Howley Assistant Since 2006 Vice President, Fund Administration of
Year of birth: 1972 Treasurer Claymore Securities, Inc. (2004-present).
Formerly, Manager, Mutual Fund
Administration of Van Kampen Investments,
Inc.
Mark J. Furjanic Assistant Since 2008
Year of birth: 1959 Treasurer Vice President, Fund Administration-Tax
(2005-present) of Claymore Advisors, LLC
and Claymore Securities, Inc.; Assistant
Treasurer of certain funds in the Fund
Complex. Formerly, Senior Manager
(1999-2005) for Ernst & Young LLP.
|
Donald P. Swade Assistant Since 2008
Year of birth: 1972 Treasurer Vice President, Fund Administration
(2006-present) of Claymore Advisors, LLC
and Claymore Securities, Inc.; Assistant
Treasurer of certain funds in the Fund
Complex. Formerly, Manager-Mutual Fund
Financial Administration (2003-2006) for
Morgan Stanley/Van Kampen Investments.
Mark E. Mathiasen Assistant Since 2008 Assistant Vice President; Assistant General
Year of birth: 1978 Secretary Counsel of Claymore Securities, Inc. (Jan.
2007-present). Secretary of certain funds in the
Fund Complex. Previously, Law Clerk, Idaho State
Courts (2003-2006).
Matt Patterson Assistant Since 2006 Vice President and Assistant General
Year of birth: 1971 Secretary Counsel of Claymore Securities, Inc.
(2006-present). Secretary of certain
funds in the Fund Complex. Previously,
Securities Counsel, Caterpillar Inc.
(2004-2006); Associate, Skadden, Arps,
Slate, Meagher & Flom LLP (2002-2004).
|
* The business address of each Officer is c/o Claymore Advisors, LLC, 2455
Corporate West Drive, Lisle, Illinois 60532.
** This is the period for which the Officer began serving the Trust. Each
Officer serves an indefinite term, until his successor is elected.
For each Trustee, the dollar range of equity securities beneficially
owned by the Trustee in the Trust and in all registered investment companies
overseen by the Trustee is shown below.
AGGREGATE DOLLAR RANGE OF
EQUITY SECURITIES IN ALL
DOLLAR RANGE OF EQUITY REGISTERED INVESTMENT
SECURITIES IN THE COMPANIES OVERSEEN BY
CLAYMORE/DELTA GLOBAL TRUSTEE IN FAMILY OF
SHIPPING ETF INVESTMENT COMPANIES
NAME OF TRUSTEE (AS OF DECEMBER 31, 2007) (AS OF DECEMBER 31, 2007)
-------------------- ------------------------- -------------------------
INDEPENDENT TRUSTEES
Randall C. Barnes None Over $100,000
Ronald A. Nyberg None Over $100,000
Ronald E. Toupin None None
INTERESTED TRUSTEE
Nicholas Dalmaso None None
|
As to each Independent Trustee and his immediate family members, no
person owned beneficially or of record securities in an investment adviser or
principal underwriter of the Fund, or a person (other than a registered
investment company) directly or indirectly controlling, controlled by or under
common control with an investment adviser or principal underwriter of the Fund.
Messrs. Barnes, Nyberg and Toupin, who are not "interested persons" of
the Trust, as defined in the 1940 Act, serve on the Trust's Nominating and
Governance Committee. The Nominating and Governance Committee is responsible for
recommending qualified candidates to the Board in the event that a position is
vacated or created. The Nominating and Governance Committee would consider
recommendations by shareholders if a vacancy were to exist. Such recommendations
should be forwarded to the Secretary of the Trust. The Trust does not have a
standing compensation committee.
Messrs. Barnes, Nyberg and Toupin, who are not "interested persons" of
the Trust, as defined in the 1940 Act, serve on the Trust's Audit Committee. The
Audit Committee is generally responsible for
reviewing and evaluating issues related to the accounting and financial
reporting policies and internal controls of the Trust and, as appropriate, the
internal controls of certain service providers, overseeing the quality and
objectivity of the Trust's financial statements and the audit thereof and acting
as a liaison between the Board of Trustees and the Trust's independent
registered public accounting firm.
Remuneration of Trustees and Officers
The Trust, together with Claymore Exchange-Traded Fund Trust, pays each
Independent Trustee a fee of $25,000 per year plus $1,000 per Board or committee
meeting participated in, together with each Trustee's actual out-of-pocket
expenses relating to attendance at such meetings.
Officers who are employed by the Investment Adviser receive no
compensation or expense reimbursements from the Trust.
The table below shows the estimated compensation that is contemplated
to be paid to Trustees for the Fund's fiscal year ended August 31, 2008,
assuming a full fiscal year of operations for the fiscal year ended August 31,
2008:
PENSION OR RETIREMENT
AGGREGATE COMPENSATION BENEFITS ACCRUED AS PART OF TOTAL COMPENSATION PAID
NAME OF TRUSTEE FROM TRUST FUND EXPENSES FROM FUND COMPLEX
INDEPENDENT TRUSTEES
Randall C. Barnes $ N/A $
Ronald A. Nyberg $ N/A $
Ronald E. Toupin, Jr. $ N/A $
INTERESTED TRUSTEE
Nicholas Dalmaso N/A N/A N/A
|
The officers and Trustees of the Trust, in the aggregate, own less than
1% of the shares of the Fund.
As of the date hereof, no person owned 5% or more of the outstanding
shares of the Fund.
Investment Adviser. The Investment Adviser manages the investment and
reinvestment of the Fund's assets and administers the affairs of the Fund to the
extent requested by the Board of Trustees.
Portfolio Manager. Chuck Craig, Managing Director, Research and
Development, of Claymore, serves as portfolio manager for the Fund and is
responsible for the day-to-day management of the Fund's portfolio.
Other Accounts Managed by the Portfolio Manager.
As of November 30, 2007, Mr. Craig managed three registered investment
companies (two such registered investment companies consisting of a total of 29
separate series) with a total of $1.85 billion in assets; no pooled investment
vehicles other than registered investment companies; and no other accounts.
Although the Funds in the Trust that are managed by Mr. Craig may have
different investment strategies, each has a portfolio objective of replicating
its underlying index. The Investment Adviser does not believe that management of
the different Funds of the Trust presents a material conflict of interest for
the portfolio manager or the Investment Adviser.
Portfolio Manager Compensation. The portfolio manager's compensation
consists of the following elements:
Base salary: The portfolio manager is paid a fixed base salary by the
Investment Adviser which is set at a level determined to be appropriate based
upon the individual's experience and responsibilities.
Annual bonus: The portfolio manager is eligible for a discretionary
annual bonus. There is no policy regarding, or agreement with, the portfolio
manager to receive bonuses or any other compensation in connection with the
performance of any of the accounts managed by the portfolio manager. The
portfolio manager also participates in benefit plans and programs generally
available to all employees of the Investment Adviser.
Securities Ownership of the Portfolio Managers. Because the Fund is
newly organized, the portfolio manager does not own shares of the Fund.
Investment Advisory Agreement. Pursuant to an Investment Advisory
Agreement between the Investment Adviser and the Trust, the Fund has agreed to
pay an annual management fee equal to a percentage of its average daily net
assets set forth in the chart below.
-------------------------------------------------------------------------- -------------------------------------------
FUND FEE
-------------------------------------------------------------------------- -------------------------------------------
Claymore/Delta Global Shipping ETF [ ]% of average daily net assets
-------------------------------------------------------------------------- -------------------------------------------
|
The Fund is responsible for all its expenses, including the investment
advisory fees, costs of transfer agency, custody, fund administration, legal,
audit and other services, interest, taxes, brokerage commissions and other
expenses connected with executions of portfolio transactions, any distribution
fees or expenses and extraordinary expenses. The Fund's Investment Adviser has
agreed to waive fees and/or pay Fund expenses to the extent necessary to prevent
the operating expenses of the Fund (excluding interest expenses, all or a
portion of the Fund's licensing fees, offering costs up to 0.25% of average net
assets, brokerage commissions, taxes and extraordinary expenses such as
litigation and other expenses not incurred in the ordinary course of the Fund's
business) from exceeding the percentage of its average net assets set forth in
the chart below. The offering costs excluded from the 0.[ ]% expense cap are:
(a) legal fees pertaining to the Fund's Shares offered for sale; (b) SEC and
state registration fees; and (c) initial fees paid to be listed on an exchange.
The Trust and the Investment Adviser have entered into the Expense Reimbursement
Agreement in which the Investment Adviser has agreed to waive its management
fees and/or pay certain other operating expenses of the Fund in order to
maintain the expense ratio of the Fund at or below the expense cap listed below
(the "Expense Cap"). For a period of five (5) years subsequent to the Fund's
commencement of operations, the Investment Adviser may recover from the Fund
fees and expenses waived or reimbursed during the prior three years if the
Fund's expense ratio, including the recovered expenses, falls below the Expense
Cap.
-------------------------------------------------------------------------- -------------------------------------------
FUND EXPENSE CAP
-------------------------------------------------------------------------- -------------------------------------------
Claymore/Delta Global Shipping ETF 0.[ ]% of average daily net assets
-------------------------------------------------------------------------- -------------------------------------------
|
Under the Investment Advisory Agreement, the Investment Adviser will
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the performance of the Investment
Advisory Agreement, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Investment Adviser in the performance of
its duties or from reckless disregard of its duties and obligations thereunder.
The Investment Advisory Agreement continues until _______, 2010, and thereafter
only if approved annually by the Board, including a majority of the Independent
Trustees. The Agreement terminates automatically upon assignment and is
terminable at any time without penalty as to the Fund by the Board, including a
majority of the
Independent Trustees, or by vote of the holders of a majority of that Fund's
outstanding voting securities on 60 days written notice to the Investment
Adviser, or by the Investment Adviser on 60 days written notice to the Fund.
Claymore Advisors is located at 2455 Corporate West Drive, Lisle,
Illinois 60532.
Administrator. Claymore Advisors, LLC also serves as the Trust's
administrator. Pursuant to an administration agreement, Claymore Advisors
provides certain administrative, bookkeeping and accounting services to the
Trust. For the services, the Trust pays Claymore Advisors a fee, accrued daily
and paid monthly, at the annualized rate of the Trust's average daily net assets
as follows:
First $200,000,000 0.0275%
Next $300,000,000 0.0200%
Next $500,000,000 0.0150%
Over $1 billion 0.0100%
|
Custodian and Transfer Agent . The Bank of New York Mellon ("BNY"),
located at 101 Barclay Street, New York, New York 10286, also serves as
custodian for the Fund pursuant to a Custodian Agreement. As custodian, BNY
holds the Fund's assets, calculates the net asset value of Shares and calculates
net income and realized capital gains or losses. BNY also serves as transfer
agent of the Fund pursuant to a Transfer Agency Agreement. BNY may be reimbursed
by the Fund for its out-of-pocket expenses.
Pursuant to the Custodian Agreement and the Transfer Agency Agreement,
each between BNY and the Trust, the Trust has agreed to pay an annual fee for
custodial and transfer agency services at the annualized rate of the Trust's
average daily net assets as follows:
First $2 billion 0.0375%
Over $2 billion 0.0275%
Distributor. Claymore Securities, Inc. ("Claymore") is the Distributor
of the Fund's Shares. Its principal address is 2455 Corporate West Drive, Lisle,
Illinois 60532. The Distributor has entered into a Distribution Agreement with
the Trust pursuant to which it distributes Fund Shares. Shares are continuously
offered for sale by the Fund through the Distributor only in Creation Unit
Aggregations, as described in the Prospectus and below under the heading
"Creation and Redemption of Creation Units."
12b-1 Plan. The Trust has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the 1940 Act (the "Plan") pursuant to which the
Fund may reimburse the Distributor up to a maximum annual rate of the percentage
of its average daily net assets as set forth in the chart below.
-------------------------------------------------------------------------- -------------------------------------------
FUND FEE
-------------------------------------------------------------------------- -------------------------------------------
Claymore/Delta Global Shipping ETF 0.25% of average daily net assets
-------------------------------------------------------------------------- -------------------------------------------
|
Under the Plan and as required by Rule 12b-1, the Trustees will receive
and review after the end of each calendar quarter a written report provided by
the Distributor of the amounts expended under the Plan and the purpose for which
such expenditures were made.
The Plan was adopted in order to permit the implementation of the
Fund's method of distribution. However, no such fee is currently charged to the
Fund, and there are no plans in place to impose such a fee.
Aggregations. Fund Shares in less than Creation Unit Aggregations are
not distributed by the Distributor. The Distributor will deliver the Prospectus
and, upon request, this SAI to persons purchasing Creation Unit Aggregations and
will maintain records of both orders placed with it and confirmations of
acceptance furnished by it. The Distributor is a broker-dealer registered under
the Securities Exchange Act of 1934 (the "Exchange Act") and a member of the
Financial Industry Regulatory Authority ("FINRA").
The Distribution Agreement for the Fund provides that it may be
terminated as to the Fund at any time, without the payment of any penalty, on at
least 60 days written notice by the Trust to the Distributor (i) by vote of a
majority of the Independent Trustees or (ii) by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Fund. The
Distribution Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
The Distributor may also enter into agreements with securities dealers
("Soliciting Dealers") who will solicit purchases of Creation Unit Aggregations
of Fund Shares. Such Soliciting Dealers may also be Participating Parties (as
defined in "Procedures for Creation of Creation Unit Aggregations" below) and
DTC Participants (as defined in "DTC Acts as Securities Depository" below).
Index Providers. Set forth below is a list of the Fund and the
Underlying Index upon which it is based.
------------------------------------------------------------ ---------------------------------------------------------
FUND UNDERLYING INDEX
------------------------------------------------------------ ---------------------------------------------------------
Claymore/Delta Global Shipping ETF DGI Global Shipping Index
------------------------------------------------------------ ---------------------------------------------------------
|
Delta Global Indices, LLC, the Fund's index provider ("Delta Global")is
not affiliated with the Claymore/Delta Global Shipping ETF or with the
Investment Adviser. The Fund is entitled to use its respective Underlying Index
pursuant to a sub-licensing arrangement with the Investment Adviser, which in
turn has a licensing agreement with Delta Global. The Fund reimburses the
Investment Adviser for the licensing fee payable to Delta Global.
The only relationship that Delta Global has with the Investment Adviser
or Distributor of the Fund in connection with the Fund is that each has licensed
certain of its intellectual property, including the determination of the
component stocks of the Underlying Index and the name of the Underlying Index.
The Underlying Index is selected and calculated without regard to the Investment
Adviser, Distributor or owners of the Fund. Delta Global has no obligation to
take the specific needs of the Investment Adviser, Distributor or owners of the
Fund into consideration in the determination and calculation of the Underlying
Index. Delta Global is not responsible for and has not participated in the
determination of pricing or the timing of the issuance or sale of the Shares of
the Fund or in the determination or calculation of the net asset value of the
Fund. Delta Global has no obligation or liability in connection with the
administration, marketing or trading of the Fund.
DELTA GLOBAL SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR
INTERRUPTIONS RELATED TO THE FUND OR UNDERLYING INDEX. DELTA GLOBAL MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE INVESTMENT
ADVISER, DISTRIBUTOR OR OWNERS OF THE FUND, OR ANY OTHER PERSON OR ENTITY, FROM
THE USE OF THE UNDERLYING INDEX OR ANY DATA INCLUDED THEREIN. DELTA GLOBAL MAKES
NO WARRANTY, EXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, WITH RESPECT TO THE
FUND OR TO UNDERLYING INDEX OR TO ANY DATA INCLUDED THEREIN. WITHOUT LIMITING
ANY OF THE
FOREGOING, IN NO EVENT SHALL DELTA GLOBAL HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) IN
CONNECTION WITH THE FUND OR THE UNDERLYING INDEX, EVEN IF DELTA GLOBAL IS
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
BROKERAGE TRANSACTIONS
The policy of the Trust regarding purchases and sales of securities is
that primary consideration will be given to obtaining the most favorable prices
and efficient executions of transactions. Consistent with this policy, when
securities transactions are effected on a stock exchange, the Trust's policy is
to pay commissions that are considered fair and reasonable without necessarily
determining that the lowest possible commissions are paid in all circumstances.
In seeking to determine the reasonableness of brokerage commissions paid in any
transaction, the Investment Adviser relies upon its experience and knowledge
regarding commissions generally charged by various brokers. The sale of Fund
Shares by a broker-dealer is not a factor in the selection of broker-dealers.
In seeking to implement the Trust's policies, the Investment Adviser
effects transactions with those brokers and dealers that the Investment Adviser
believes provide the most favorable prices and are capable of providing
efficient executions. The Investment Adviser and its affiliates do not currently
participate in soft dollar transactions.
The Investment Adviser assumes general supervision over placing orders
on behalf of the Fund for the purchase or sale of portfolio securities. If
purchases or sales of portfolio securities by the Fund and one or more other
investment companies or clients supervised by the Investment Adviser are
considered at or about the same time, transactions in such securities may be
allocated among the Fund, the several investment companies and clients in a
manner deemed equitable to all by the Investment Adviser. In some cases, this
procedure could have a detrimental effect on the price or volume of the security
as far as the Fund is concerned. However, in other cases, it is possible that
the ability to participate in volume transactions and to negotiate lower
brokerage commissions will be beneficial to the Fund. The primary consideration
is prompt execution of orders at the most favorable net price.
ADDITIONAL INFORMATION CONCERNING THE TRUST
The Trust is an open-end management investment company registered under
the 1940 Act. The Trust was organized as a Delaware statutory trust on June 8,
2006.
The Trust is authorized to issue an unlimited number of shares in one
or more series or "funds." The Trust currently is comprised of 13 funds. The
Board of Trustees of the Trust has the right to establish additional series in
the future, to determine the preferences, voting powers, rights and privileges
thereof and to modify such preferences, voting powers, rights and privileges
without shareholder approval.
Each Share issued by the Fund has a pro rata interest in the assets of
the Fund. Fund Shares have no preemptive, exchange, subscription or conversion
rights and are freely transferable. Each Share is entitled to participate
equally in dividends and distributions declared by the Board with respect to the
Fund, and in the net distributable assets of the Fund on liquidation.
Each Share has one vote with respect to matters upon which a
shareholder vote is required consistent with the requirements of the 1940 Act
and the rules promulgated thereunder. Shares of all funds, including the Fund,
of the Trust vote together as a single class except as otherwise required by the
1940 Act, or if the matter being voted on affects only a particular fund, and,
if a matter affects a particular fund differently from other funds, the shares
of that fund will vote separately on such matter.
The Declaration of Trust may, except in limited circumstances, be
amended or supplemented by the Trustees without shareholder vote. The holders of
Fund shares are required to disclose information on direct or indirect ownership
of Fund shares as may be required to comply with various laws applicable to the
Fund, and ownership of Fund shares may be disclosed by the Fund if so required
by law or regulation.
The Trust is not required and does not intend to hold annual meetings
of shareholders. Shareholders owning more than 51% of the outstanding shares of
the Trust have the right to call a special meeting to remove one or more
Trustees or for any other purpose.
The Trust does not have information concerning the beneficial ownership
of Shares held by DTC Participants (as defined below).
Shareholders may make inquiries by writing to the Trust, c/o the
Distributor, 2455 Corporate West Drive, Lisle, Illinois 60532.
Control Persons. No single person beneficially owns 25% or more of the
Fund's voting securities.
Book Entry Only System. The following information supplements and
should be read in conjunction with the section in the Prospectus entitled "Book
Entry."
DTC Acts as Securities Depository for Fund Shares. Shares of the Fund
are represented by securities registered in the name of DTC or its nominee and
deposited with, or on behalf of, DTC.
DTC, a limited-purpose trust company, was created to hold securities of
its participants (the "DTC Participants") and to facilitate the clearance and
settlement of securities transactions among the DTC Participants in such
securities through electronic book-entry changes in accounts of the DTC
Participants, thereby eliminating the need for physical movement of securities
certificates. DTC Participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations, some of
whom (and/or their representatives) own DTC. More specifically, DTC is owned by
a number of its DTC Participants and by the New York Stock Exchange ("NYSE"),
the NYSE Arca and FINRA. Access to the DTC system is also available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a DTC Participant, either directly or
indirectly (the "Indirect Participants").
Beneficial ownership of Shares is limited to DTC Participants, Indirect
Participants and persons holding interests through DTC Participants and Indirect
Participants. Ownership of beneficial interests in Shares (owners of such
beneficial interests are referred to herein as "Beneficial Owners") is shown on,
and the transfer of ownership is effected only through, records maintained by
DTC (with respect to DTC Participants) and on the records of DTC Participants
(with respect to Indirect Participants and Beneficial Owners that are not DTC
Participants). Beneficial Owners will receive from or through the DTC
Participant a written confirmation relating to their purchase and sale of
Shares.
Conveyance of all notices, statements and other communications to
Beneficial Owners is effected as follows. Pursuant to the Depositary Agreement
between the Trust and DTC, DTC is required to make available to the Trust upon
request and for a fee to be charged to the Trust a listing of the Shares of the
Fund held by each DTC Participant. The Trust shall inquire of each such DTC
Participant as to the number of Beneficial Owners holding Shares, directly or
indirectly, through such DTC Participant. The Trust shall provide each such DTC
Participant with copies of such notice, statement or other
communication, in such form, number and at such place as such DTC Participant
may reasonably request, in order that such notice, statement or communication
may be transmitted by such DTC Participant, directly or indirectly, to such
Beneficial Owners. In addition, the Trust shall pay to each such DTC Participant
a fair and reasonable amount as reimbursement for the expenses attendant to such
transmittal, all subject to applicable statutory and regulatory requirements.
Fund distributions shall be made to DTC or its nominee, Cede & Co., as
the registered holder of all Fund Shares. DTC or its nominee, upon receipt of
any such distributions, shall immediately credit DTC Participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
Shares of the Fund as shown on the records of DTC or its nominee. Payments by
DTC Participants to Indirect Participants and Beneficial Owners of Shares held
through such DTC Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in a "street name," and will be the
responsibility of such DTC Participants.
The Trust has no responsibility or liability for any aspect of the
records relating to or notices to Beneficial Owners, or payments made on account
of beneficial ownership interests in such Shares, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests, or for any other aspect of the relationship between DTC and the DTC
Participants or the relationship between such DTC Participants and the Indirect
Participants and Beneficial Owners owning through such DTC Participants.
DTC may decide to discontinue providing its service with respect to
Shares at any time by giving reasonable notice to the Trust and discharging its
responsibilities with respect thereto under applicable law. Under such
circumstances, the Trust shall take action to find a replacement for DTC to
perform its functions at a comparable cost.
Proxy Voting. The Board of Trustees of the Trust has delegated
responsibility for decisions regarding proxy voting for securities held by the
Fund to the Investment Adviser. The Investment Adviser engages a third-party
proxy service, such as Institutional Shareholder Services or a similar service,
to vote all proxies on behalf of the Fund. The Investment Adviser periodically
reviews the proxy voting results to ensure that proxies are voted in accordance
with the service's guidelines and that proxies are voted in a timely fashion. To
avoid any conflicts of interest, the Investment Adviser does not have authority
to override the recommendations of the third party service provider, except upon
the written authorization of the client directing the Investment Adviser to vote
in a specific manner. All overrides shall be approved by the Chief Compliance
Officer.
To the extent that the third party service provider seeks the
Investment Adviser's direction on how to vote on any particular matter, the
Chief Compliance Officer and Chief Financial Officer shall determine whether any
potential conflict of interest is present. If a potential conflict of interest
is present, the Investment Adviser shall seek instructions from clients on how
to vote that particular item.
The Trust is required to disclose annually the Fund's complete proxy
voting record on Form N-PX covering the period July 1 through June 30 and file
it with the SEC no later than August 31. Form N-PX for the Fund also will be
available at no charge upon request by calling 1-888-949-3837 or by writing to
Claymore Exchange-Traded Fund Trust 2 at 2455 Corporate West Drive, Lisle, IL
60532. The Fund's Form N-PX will also be available on the SEC's website at
www.sec.gov.
Quarterly Portfolio Schedule. The Trust is required to disclose, after
its first and third fiscal quarters, the complete schedule of the Fund's
portfolio holdings with the SEC on Form N-Q. The Trust will also disclose a
complete schedule of the Fund's portfolio holdings with the SEC on Form N-CSR
after its second and fourth quarters. Form N-Q and Form N-CSR for the Fund will
be available on the
SEC's website at http://www.sec.gov. The Fund's Form N-Q and Form N-CSR may also
be reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
and information on the operation of the Public Reference Room may be obtained by
calling 1-202-551-5850. The Fund's Form N-Q and Form N-CSR will be available
without charge, upon request, by calling 1-888-949-3837 or by writing to
Claymore Exchange-Traded Fund Trust 2 at 2455 Corporate West Drive, Lisle, IL
60532.
Portfolio Holdings Policy. The Trust has adopted a policy regarding the
disclosure of information about the Trust's portfolio holdings. The Fund and
their service providers may not receive compensation or any other consideration
(which includes any agreement to maintain assets in the Fund or in other
investment companies or accounts managed by the Investment Adviser or any
affiliated person of the Investment Adviser) in connection with the disclosure
of portfolio holdings information of the Fund. The Trust's policy is implemented
and overseen by the Chief Compliance Officer of the Fund, subject to the
oversight of the Board of Trustees. Periodic reports regarding these procedures
will be provided to the Board of Trustees of the Trust. The Board of Trustees of
the Trust must approve all material amendments to this policy. The Fund's
complete portfolio holdings are publicly disseminated each day the Fund is open
for business through financial reporting and news services, including publicly
accessible Internet web sites. In addition, a basket composition file, which
includes the security names and share quantities to deliver in exchange for Fund
shares, together with estimates and actual cash components, is publicly
disseminated daily prior to the opening of the NYSE Arca via the National
Securities Clearing Corporation (NSCC). The basket represents one Creation Unit
of the Fund. The Trust, the Investment Adviser and Claymore will not disseminate
non-public information concerning the Trust.
Codes of Ethics. Pursuant to Rule 17j-1 under the 1940 Act, the Board
of Trustees has adopted a Code of Ethics for the Trust and approved Codes of
Ethics adopted by the Investment Adviser and the Distributor (collectively the
"Codes"). The Codes are intended to ensure that the interests of shareholders
and other clients are placed ahead of any personal interest, that no undue
personal benefit is obtained from the person's employment activities and that
actual and potential conflicts of interest are avoided.
The Codes apply to the personal investing activities of Trustees and
officers of the Trust, the Investment Adviser and the Distributor ("Access
Persons"). Rule 17j-1 and the Codes are designed to prevent unlawful practices
in connection with the purchase or sale of securities by Access Persons. Under
the Codes, Access Persons are permitted to engage in personal securities
transactions, but are required to report their personal securities transactions
for monitoring purposes. The Codes permit personnel subject to the Codes to
invest in securities subject to certain limitations, including securities that
may be purchased or held by the Fund. In addition, certain Access Persons are
required to obtain approval before investing in initial public offerings or
private placements. The Codes are on file with the SEC, and are available to the
public.
CREATION AND REDEMPTION OF CREATION UNIT AGGREGATIONS
Creation. The Trust issues and sells Shares of the Fund only in
Creation Unit Aggregations on a continuous basis through the Distributor,
without a sales load, at their NAVs next determined after receipt, on any
Business Day (as defined below), of an order in proper form.
A "Business Day" is any day on which the NYSE is open for business. As
of the date of this SAI, the NYSE observes the following holidays: New Year's
Day, Martin Luther King, Jr. Day, Washington's Birthday, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Deposit of Securities and Deposit or Delivery of Cash. The
consideration for purchase of Creation Unit Aggregations of the Fund generally
consists of the in-kind deposit of a designated portfolio
of equity securities -- the "Deposit Securities" -- per each Creation Unit
Aggregation constituting a substantial replication of the stocks included in the
Underlying Index ("Fund Securities") and an amount of cash -- the "Cash
Component" -- computed as described below. Together, the Deposit Securities and
the Cash Component constitute the "Fund Deposit," which represents the minimum
initial and subsequent investment amount for a Creation Unit Aggregation of the
Fund.
The Cash Component is sometimes also referred to as the Balancing
Amount. The Cash Component serves the function of compensating for any
differences between the NAV per Creation Unit Aggregation and the Deposit Amount
(as defined below). The Cash Component is an amount equal to the difference
between the NAV of the Fund Shares (per Creation Unit Aggregation) and the
"Deposit Amount" -- an amount equal to the market value of the Deposit
Securities. If the Cash Component is a positive number (i.e., the NAV per
Creation Unit Aggregation exceeds the Deposit Amount), the creator will deliver
the Cash Component. If the Cash Component is a negative number (i.e., the NAV
per Creation Unit Aggregation is less than the Deposit Amount), the creator will
receive the Cash Component.
The Custodian, through the National Securities Clearing Corporation
("NSCC") (discussed below), makes available on each Business Day, prior to the
opening of business on the NYSE Arca (currently 9:30 a.m., Eastern time), the
list of the names and the required number of shares of each Deposit Security to
be included in the current Fund Deposit (based on information at the end of the
previous Business Day) for the Fund.
Such Fund Deposit is applicable, subject to any adjustments as
described below, in order to effect creations of Creation Unit Aggregations of
the Fund until such time as the next-announced composition of the Deposit
Securities is made available.
The identity and number of shares of the Deposit Securities required
for a Fund Deposit for the Fund changes as rebalancing adjustments and corporate
action events are reflected within the Fund from time to time by the Investment
Adviser with a view to the investment objective of the Fund. The composition of
the Deposit Securities may also change in response to adjustments to the
weighting or composition of the Component Stocks of the Underlying Index. In
addition, the Trust reserves the right to permit or require the substitution of
an amount of cash -- i.e., a "cash in lieu" amount -- to be added to the Cash
Component to replace any Deposit Security that may not be available in
sufficient quantity for delivery or that may not be eligible for transfer
through the systems of DTC, or which might not be eligible for trading by an
Authorized Participant (as defined below) or the investor for which it is acting
or other relevant reason. Brokerage commissions incurred in connection with the
acquisition of Deposit Securities not eligible for transfer through the systems
of DTC will be at the expense of the Fund and will affect the value of all
Shares; but the Investment Adviser, subject to the approval of the Board of
Trustees, may adjust the transaction fee within the parameters described above
to protect ongoing shareholders. The adjustments described above will reflect
changes known to the Investment Adviser on the date of announcement to be in
effect by the time of delivery of the Fund Deposit, in the composition of the
Underlying Index or resulting from certain corporate actions.
In addition to the list of names and numbers of securities constituting
the current Deposit Securities of a Fund Deposit, the Custodian, through the
NSCC, also makes available on each Business Day, the estimated Cash Component,
effective through and including the previous Business Day, per outstanding
Creation Unit Aggregation of the Fund.
Procedures for Creation of Creation Unit Aggregations. To be eligible
to place orders with the Distributor and to create a Creation Unit Aggregation
of the Fund, an entity must be a DTC Participant (see the Book Entry Only System
section), and, in each case, must have executed an agreement with the
Distributor, with respect to creations and redemptions of Creation Unit
Aggregations ("Participant
Agreement") (discussed below). A DTC Participant is also referred to as an
"Authorized Participant." Investors should contact the Distributor for the names
of Authorized Participants that have signed a Participant Agreement. All Fund
Shares, however created, will be entered on the records of DTC in the name of
Cede & Co. for the account of a DTC Participant.
All orders to create Creation Unit Aggregations, (through an Authorized
Participant), must be received by the Distributor no later than the closing time
of the regular trading session on the NYSE Arca ("Closing Time") (ordinarily
4:00 p.m., Eastern time) in each case on the date such order is placed in order
for creation of Creation Unit Aggregations to be effected based on the NAV of
Shares of the Fund as next determined on such date after receipt of the order in
proper form. In the case of custom orders, the order must be received by the
Distributor no later than 3:00 p.m. Eastern time on the trade date. A custom
order may be placed by an Authorized Participant in the event that the Trust
permits or requires the substitution of an amount of cash to be added to the
Cash Component to replace any Deposit Security which may not be available in
sufficient quantity for delivery or which may not be eligible for trading by
such Authorized Participant or the investor for which it is acting or other
relevant reason. The date on which an order to create Creation Unit Aggregations
(or an order to redeem Creation Unit Aggregations, as discussed below) is placed
is referred to as the "Transmittal Date." Orders must be transmitted by an
Authorized Participant by telephone or other transmission method acceptable to
the Distributor pursuant to procedures set forth in the Participant Agreement,
as described below (see the "Placement of Creation Orders" section). Severe
economic or market disruptions or changes, or telephone or other communication
failure may impede the ability to reach the Distributor or an Authorized
Participant.
All orders from investors who are not Authorized Participants to create
Creation Unit Aggregations shall be placed with an Authorized Participant, as
applicable, in the form required by such Authorized Participant. In addition,
the Authorized Participant may request the investor to make certain
representations or enter into agreements with respect to the order, e.g., to
provide for payments of cash, when required. Investors should be aware that
their particular broker may not have executed a Participant Agreement and that,
therefore, orders to create Creation Unit Aggregations of the Fund have to be
placed by the investor's broker through an Authorized Participant that has
executed a Participant Agreement. In such cases there may be additional charges
to such investor. At any given time, there may be only a limited number of
broker-dealers that have executed a Participant Agreement. Those placing orders
for Creation Unit Aggregations should afford sufficient time to permit proper
submission of the order to the Distributor prior to the Closing Time on the
Transmittal Date.
Orders for Creation Unit Aggregations . Those placing orders should
ascertain the deadlines applicable to DTC and the Federal Reserve Bank wire
system by contacting the operations department of the broker or depository
institution effectuating such transfer of Deposit Securities and Cash Component.
Placement of Creation Orders . For the Fund, the Custodian shall cause
the sub-custodian of the Fund to maintain an account into which the Authorized
Participant shall deliver, on behalf of itself or the party on whose behalf it
is acting, the securities included in the designated Fund Deposit (or the cash
value of all or part of such of such securities, in the case of a permitted or
required cash purchase or "cash in lieu" amount), with any appropriate
adjustments as advised by the Trust. Deposit Securities must be delivered to an
account maintained at the applicable local sub-custodian(s). Orders to purchase
Creation Unit Aggregations must be received by the Distributor from an
Authorized Participant on its own or another investor's behalf by the closing
time of the regular trading session on the NYSE Arca on the relevant Business
Day. However, when a relevant local market is closed due to local market
holidays, the local market settlement process will not commence until the end of
the local holiday period. Settlement must occur by 2:00 p.m., Eastern time, on
the contractual settlement date.
The Authorized Participant must also make available no later than 2:00
p.m., Eastern time, on the contractual settlement date, by means satisfactory to
the Trust, immediately-available or same-day funds
estimated by the Trust to be sufficient to pay the Cash Component next
determined after acceptance of the purchase order, together with the applicable
purchase transaction fee. Any excess funds will be returned following settlement
of the issue of the Creation Unit Aggregation.
To the extent contemplated by the applicable Participant Agreement,
Creation Unit Aggregations of the Fund will be issued to such Authorized
Participant notwithstanding the fact that the corresponding Fund Deposits have
not been received in part or in whole, in reliance on the undertaking of the
Authorized Participant to deliver the missing Deposit Securities as soon as
possible, which undertaking shall be secured by such Authorized Participant's
delivery and maintenance of collateral consisting of cash in the form of U.S.
dollars in immediately available funds having a value (marked to market daily)
at least equal to 115%, which the Investment Adviser may change from time to
time of the value of the missing Deposit Securities. Such cash collateral must
be delivered no later than 2:00 p.m., Eastern time, on the contractual
settlement date. The Participant Agreement will permit the Fund to buy the
missing Deposit Securities at any time and will subject the Authorized
Participant to liability for any shortfall between the cost to the Trust of
purchasing such securities and the value of the collateral.
Creation Unit Aggregations may be created in advance of receipt by the
Trust of all or a portion of the applicable Deposit Securities as described
below. In these circumstances, the initial deposit will have a value greater
than the NAV of the Fund Shares on the date the order is placed in proper form
since, in addition to available Deposit Securities, cash must be deposited in an
amount equal to the sum of (i) the Cash Component, plus (ii) 115% of the market
value of the undelivered Deposit Securities (the "Additional Cash Deposit"). The
order shall be deemed to be received on the Business Day on which the order is
placed provided that the order is placed in proper form prior to 4:00 p.m.,
Eastern time, on such date, and federal funds in the appropriate amount are
deposited with the Custodian by 11:00 a.m., Eastern time, the following Business
Day. If the order is not placed in proper form by 4:00 p.m. or federal funds in
the appropriate amount are not received by 11:00 a.m. the next Business Day,
then the order may be deemed to be canceled and the Authorized Participant shall
be liable to the Fund for losses, if any, resulting therefrom. An additional
amount of cash shall be required to be deposited with the Trust, pending
delivery of the missing Deposit Securities to the extent necessary to maintain
the Additional Cash Deposit with the Trust in an amount at least equal to 115%
of the daily marked to market value of the missing Deposit Securities. To the
extent that missing Deposit Securities are not received by 1:00 p.m., Eastern
time, on the third Business Day following the day on which the purchase order is
deemed received by the Distributor or in the event a marked-to-market payment is
not made within one Business Day following notification by the Distributor that
such a payment is required, the Trust may use the cash on deposit to purchase
the missing Deposit Securities. Authorized Participants will be liable to the
Trust and the Fund for the costs incurred by the Trust in connection with any
such purchases. These costs will be deemed to include the amount by which the
actual purchase price of the Deposit Securities exceeds the market value of such
Deposit Securities on the day the purchase order was deemed received by the
Distributor plus the brokerage and related transaction costs associated with
such purchases. The Trust will return any unused portion of the Additional Cash
Deposit once all of the missing Deposit Securities have been properly received
by the Custodian or purchased by the Trust and deposited into the Trust. In
addition, a transaction fee, as listed below, will be charged in all cases. The
delivery of Creation Unit Aggregations so created will occur no later than the
third Business Day following the day on which the purchase order is deemed
received by the Distributor.
Acceptance of Orders for Creation Unit Aggregations. The Trust reserves
the absolute right to reject a creation order transmitted to it by the
Distributor in respect of the Fund if: (i) the order is not in proper form; (ii)
the investor(s), upon obtaining the Fund Shares ordered, would own 80% or more
of the currently outstanding shares of any Fund; (iii) the Deposit Securities
delivered are not as disseminated for that date by the Custodian, as described
above; (iv) acceptance of the Deposit Securities would have certain adverse tax
consequences to the Fund; (v) acceptance of the Fund Deposit would, in the
opinion of
counsel, be unlawful; (vi) acceptance of the Fund Deposit would otherwise, in
the discretion of the Trust or the Investment Adviser, have an adverse effect on
the Trust or the rights of beneficial owners; or (vii) in the event that
circumstances outside the control of the Trust, the Custodian, the Distributor
and the Investment Adviser make it for all practical purposes impossible to
process creation orders. Examples of such circumstances include acts of God;
public service or utility problems such as fires, floods, extreme weather
conditions and power outages resulting in telephone, telecopy and computer
failures; market conditions or activities causing trading halts; systems
failures involving computer or other information systems affecting the Trust,
the Investment Adviser, the Distributor, the Custodian or sub-custodian or any
other participant in the creation process, and similar extraordinary events. The
Distributor shall notify a prospective creator of a Creation Unit and/or the
Authorized Participant acting on behalf of such prospective creator of its
rejection of the order of such person. The Trust, the Custodian, any
sub-custodian and the Distributor are under no duty, however, to give
notification of any defects or irregularities in the delivery of Fund Deposits
nor shall any of them incur any liability for the failure to give any such
notification.
All questions as to the number of shares of each security in the
Deposit Securities and the validity, form, eligibility, and acceptance for
deposit of any securities to be delivered shall be determined by the Trust, and
the Trust's determination shall be final and binding.
Creation Transaction Fee. Investors will be required to pay a fixed
creation transaction fee, described below, payable to Claymore regardless of the
number of creations made each day. An additional charge of up to four times the
fixed transaction fee (expressed as a percentage of the value of the Deposit
Securities) may be imposed for cash creations (to offset the Trust's brokerage
and other transaction costs associated with using cash to purchase the requisite
Deposit Securities). Investors are responsible for the costs of transferring the
securities constituting the Deposit Securities to the account of the Trust.
The Standard Creation/Redemption Transaction Fee for the Fund will be
$[____]. The Maximum Creation/Redemption Transaction Fee for the Fund will be
$[_____].
Redemption of Fund Shares in Creation Units Aggregations. Fund Shares
may be redeemed only in Creation Unit Aggregations at their NAV next determined
after receipt of a redemption request in proper form by the Fund through the
Transfer Agent and only on a Business Day. A Fund will not redeem Shares in
amounts less than Creation Unit Aggregations. Beneficial owners must accumulate
enough Shares in the secondary market to constitute a Creation Unit Aggregation
in order to have such Shares redeemed by the Trust. There can be no assurance,
however, that there will be sufficient liquidity in the public trading market at
any time to permit assembly of a Creation Unit Aggregation. Investors should
expect to incur brokerage and other costs in connection with assembling a
sufficient number of Fund Shares to constitute a redeemable Creation Unit
Aggregation.
With respect to the Fund, the Custodian, through the NSCC, makes
available prior to the opening of business on the [ ] (currently 9:30 a.m.,
Eastern time) on each Business Day, the identity of the Fund Securities that
will be applicable (subject to possible amendment or correction) to redemption
requests received in proper form (as described below) on that day. Fund
Securities received on redemption may not be identical to Deposit Securities
that are applicable to creations of Creation Unit Aggregations.
Unless cash redemptions are available or specified for the Fund, the
redemption proceeds for a Creation Unit Aggregation generally consist of Fund
Securities -- as announced on the Business Day of the request for redemption
received in proper form -- plus or minus cash in an amount equal to the
difference between the NAV of the Fund Shares being redeemed, as next determined
after a receipt of a request in proper form, and the value of the Fund
Securities (the "Cash Redemption Amount"), less a
redemption transaction fee as listed below. In the event that the Fund
Securities have a value greater than the NAV of the Fund Shares, a compensating
cash payment equal to the difference is required to be made by or through an
Authorized Participant by the redeeming shareholder.
The right of redemption may be suspended or the date of payment
postponed (i) for any period during which the NYSE is closed (other than
customary weekend and holiday closings); (ii) for any period during which
trading on the NYSE is suspended or restricted; (iii) for any period during
which an emergency exists as a result of which disposal of the Shares of the
Fund or determination of the Fund's NAV is not reasonably practicable; or (iv)
in such other circumstances as is permitted by the SEC.
Redemption Transaction Fee. A redemption transaction fee is imposed to
offset transfer and other transaction costs that may be incurred by the Fund. An
additional variable charge for cash redemptions (when cash redemptions are
available or specified) for the Fund may be imposed. Investors will also bear
the costs of transferring the Fund Securities from the Trust to their account or
on their order. Investors who use the services of a broker or other such
intermediary in addition to an Authorized Participant to effect a redemption of
a Creation Unit Aggregation may be charged an additional fee of up to four times
the fixed transaction fee for such services. The redemption transaction fees for
the Fund are the same as the creation fees set forth above.
Placement of Redemption Orders. Orders to redeem Creation Unit
Aggregations must be delivered through an Authorized Participant that has
executed a Participant Agreement. Investors other than Authorized Participants
are responsible for making arrangements for a redemption request to be made
through an Authorized Participant. An order to redeem Creation Unit Aggregations
is deemed received by the Trust on the Transmittal Date if: (i) such order is
received by the Custodian not later than the Closing Time on the Transmittal
Date; (ii) such order is accompanied or followed by the requisite number of
shares of the Fund specified in such order, which delivery must be made through
DTC to the Custodian no later than 10:00 a.m., Eastern time, on the next
Business Day following the Transmittal Date; and (iii) all other procedures set
forth in the Participant Agreement are properly followed. Deliveries of Fund
Securities to redeeming investors generally will be made within three Business
Days. Due to the schedule of holidays in certain countries, however, the
delivery of in-kind redemption proceeds may take longer than three Business days
after the day on which the redemption request is received in proper form. In
such cases, the local market settlement procedures will not commence until the
end of the local holiday periods. See below for a list of the local holidays in
the foreign countries relevant to the Fund.
In connection with taking delivery of shares of Fund Securities upon
redemption of shares of the Fund, a redeeming Beneficial Owner, or Authorized
Participant action on behalf of such Beneficial Owner must maintain appropriate
security arrangements with a qualified broker-dealer, bank or other custody
provider in each jurisdiction in which any of the Fund Securities are
customarily traded, to which account such Fund Securities will be delivered.
To the extent contemplated by an Authorized Participant's agreement, in
the event the Authorized Participant has submitted a redemption request in
proper form but is unable to transfer all or part of the Creation Unit
Aggregation to be redeemed to the Fund's Transfer Agent, the Distributor will
nonetheless accept the redemption request in reliance on the undertaking by the
Authorized Participant to deliver the missing shares as soon as possible. Such
undertaking shall be secured by the Authorized Participant to deliver the
missing shares as soon as possible. Such understanding shall be secured by the
Authorized Participant's delivery and maintenance of collateral consisting of
cash having a value (marked to market daily) at least equal to 115%, which the
Investment Adviser may change from time to time, of the value of the missing
shares.
The current procedures for collateralization of missing shares require,
among other things, that any cash collateral shall be in the form of U.S.
dollars in immediately-available funds and shall be held by Investors Bank and
marked to market daily, and that the fees of the Custodian and any
sub-custodians in respect of the delivery, maintenance and redelivery of the
cash collateral shall be payable by the Authorized Participant. The Authorized
Participant's agreement will permit the Trust, on behalf of the affected Fund,
to purchase the missing shares or acquire the Deposit Securities and the Cash
Component underlying such shares at any time and will subject the Authorized
Participant to liability for any shortfall between the cost to the Trust of
purchasing such shares, Deposit Securities or Cash Component and the value of
the collateral.
The calculation of the value of the Fund Securities and the Cash
Redemption Amount to be delivered upon redemption will be made by the Custodian
according to the procedures set forth under Determination of NAV computed on the
Business Day on which a redemption order is deemed received by the Trust.
Therefore, if a redemption order in proper form is submitted to the Custodian by
a DTC Participant not later than Closing Time on the Transmittal Date, and the
requisite number of shares of the relevant Fund are delivered to the Custodian
prior to the DTC Cut-Off-Time, then the value of the Fund Securities and the
Cash Redemption Amount to be delivered will be determined by the Custodian on
such Transmittal Date. If, however, a redemption order is submitted to the
Custodian by a DTC Participant not later than the Closing Time on the
Transmittal Date but either (i) the requisite number of shares of the relevant
Fund are not delivered by the DTC Cut-Off-Time, as described above, on such
Transmittal Date, or (ii) the redemption order is not submitted in proper form,
then the redemption order will not be deemed received as of the Transmittal
Date. In such case, the value of the Fund Securities and the Cash Redemption
Amount to be delivered will be computed on the Business Day that such order is
deemed received by the Trust, i.e., the Business Day on which the shares of the
relevant Fund are delivered through DTC to the Custodian by the DTC Cut-Off-Time
on such Business Day pursuant to a properly submitted redemption order.
If it is not possible to effect deliveries of the Fund Securities, the
Trust may in its discretion exercise its option to redeem such shares in cash,
and the redeeming Beneficial Owner will be required to receive its redemption
proceeds in cash. In addition, an investor may request a redemption in cash that
the Fund may, in its sole discretion, permit. In either case, the investor will
receive a cash payment equal to the NAV of its shares based on the NAV of shares
of the relevant Fund next determined after the redemption request is received in
proper form (minus a redemption transaction fee and additional charge for
requested cash redemptions specified above, to offset the Trust's brokerage and
other transaction costs associated with the disposition of Fund Securities). A
Fund may also, in its sole discretion, upon request of a shareholder, provide
such redeemer a portfolio of securities that differs from the exact composition
of the Fund Securities but does not differ in NAV.
Redemptions of shares for Fund Securities will be subject to compliance
with applicable federal and state securities laws and the Fund (whether or not
it otherwise permits cash redemptions) reserves the right to redeem Creation
Unit Aggregations for cash to the extent that the Trust could not lawfully
deliver specific Fund Securities upon redemptions or could not do so without
first registering the Fund Securities under such laws. An Authorized Participant
or an investor for which it is acting subject to a legal restriction with
respect to a particular stock included in the Fund Securities applicable to the
redemption of a Creation Unit Aggregation may be paid an equivalent amount of
cash. The Authorized Participant may request the redeeming Beneficial Owner of
the shares to complete an order form or to enter into agreements with respect to
such matters as compensating cash payment.
Because the Portfolio Securities of the Fund may trade on the relevant
exchange(s) on days that the NYSE Arca is closed or are otherwise not Business
Days for the Fund, shareholders may not be able to redeem their shares of the
Fund, or to purchase and sell shares of the Fund on the NYSE Arca, on days when
the NAV of the Fund could be significantly affected by events in the relevant
foreign markets.
Regular Holidays. The Fund generally intends to effect deliveries of
Creation Units and Portfolio Securities on a basis of "T" plus three Business
Days (i.e., days on which the national securities exchange is open). The Fund
may effect deliveries of Creation Units and Portfolio Securities on a basis
other than T plus three or T plus two in order to accommodate local holiday
schedules, to account for different treatment among foreign and U.S. markets of
dividend record dates and ex-dividend dates, or under certain other
circumstances. The ability of the Trust to effect in-kind creations and
redemptions within three Business Days of receipt of an order in good form is
subject, among other things, to the condition that, within the time period from
the date of the order to the date of delivery of the securities, there are no
days that are holidays in the applicable foreign market. For every occurrence of
one or more intervening holidays in the applicable foreign market that are not
holidays observed in the U.S. equity market, the redemption settlement cycle
will be extended by the number of such intervening holidays. In addition to
holidays, other unforeseeable closings in a foreign market due to emergencies
may also prevent the Trust from delivering securities within normal settlement
period.
The securities delivery cycles currently practicable for transferring
Portfolio Securities to redeeming investors, coupled with foreign market holiday
schedules, will require a delivery process longer than seven calendar days for
some Fund, in certain circumstances. The holidays applicable to the Fund during
such periods are listed below, as are instances where more than seven days will
be needed to deliver redemption proceeds. Although certain holidays may occur on
different dates in subsequent years, the number of days required to deliver
redemption proceeds in any given year is not expected to exceed the maximum
number of days listed below for the Fund. The proclamation of new holidays, the
treatment by market participants of certain days as "informal holidays" (e.g.,
days on which no or limited securities transactions occur, as a result of
substantially shortened trading hours), the elimination of existing holidays, or
changes in local securities delivery practices, could affect the information set
forth herein at some time in the future.
The dates in calendar year 2008 in which the regular holidays affecting
the relevant securities markets of the below listed countries are as follows:
ARGENTINA BRAZIL
Jan 1 May 1 Nov 6
Mar 20 Jun 6 Dec 24 Jan 1 Mar 21 Jul 9 Dec 31
Mar 21 Jul 9 Dec 25 Jan 25 Apr 21 Nov 20
Mar 31 Aug 18 Dec 31 Feb 4 May 1 Dec 24
Feb 5 May 22 Dec 25
AUSTRALIA CANADA
Jan 1 Mar 21 May 19 Aug 13
Jan 28 Mar 24 Jun 2 Oct 6 Jan 1 May 21 Sep 3 Dec 26
Mar 3 Apr 25 Jun 9 Nov 4 Jan 2 Jun 25 Oct 8
Mar 10 May 5 Aug 4 Dec 25 Feb 19 Jul 2 Nov 12
Dec 26 Apr 6 Aug 6 Dec 25
AUSTRIA CHILE
Jan 1 May 12 Dec 24 Jan 1 Aug 15 Dec 25
Mar 21 May 22 Dec 25 Mar 21 Sep 18 Dec 31
Mar 24 Aug 15 Dec 26 May 1 Sep 19
May 1 Dec 8 Dec 31 May 21 Dec 8
BELGIUM CHINA
Jan 1 May 2 Nov 11 Jan 1 Feb 11 May 7 Oct 6
Mar 21 May 17 Dec 25 Jan 21 Feb 12 May 26 Oct 7
Mar 24 Jul 21 Dec 26 Feb 4 Feb 13 Jul 4 Oct 13
May 1 Aug 15 Feb 5 May 1 Sep 1 Nov 11
Feb 6 May 2 Oct 1 Nov 27
Feb 7 May 5 Oct 2 Dec 25
Feb 8 May 6 Oct 3
|
DENMARK JAPAN
Jan 1 Apr 18 Dec 24
Mar 20 May 1 Dec 25 Jan 1 Feb 11 Jul 21 Nov 3
Mar 21 May 12 Dec 26 Jan 2 Mar 20 Sep 15 Nov 24
Mar 24 Jun 5 Dec 31 Jan 3 Apr 29 Sep 23 Dec 23
Jan 14 May 5 Oct 13 Dec 31
FINLAND
Jan 1 Jun 20 Dec 31 MALAYSIA
Mar 21 Dec 24
Mar 24 Dec 25 Jan 1 Mar 20 Sep 1 Dec 8
May 1 Dec 26 Jan 10 May 1 Oct 1 Dec 25
Feb 1 May 19 Oct 2 Dec 29
FRANCE Feb 6 May 20 Oct 3
Jan 1 May 8 Dec 25 Feb 7 May 30 Oct 27
Mar 21 Jun 14 Dec 26 Feb 8 Jun 7 Oct 28
Mar 24 Aug 15
May 1 Nov 11 MEXICO
Jan 1 Mar 21 Nov 20
GERMANY Feb 4 May 1 Dec 12
Mar 17 Sep 16 Dec 25
Jan 1 May 1 Oct 3 Dec 31 Mar 20 Nov 17
Feb 4 May 12 Dec 24
Mar 21 May 22 Dec 25 NETHERLANDS
Mar 24 Aug 15 Dec 26 Jan 1 May 1
Mar 21 May 12
GREECE Mar 24 Dec 25
Apr 30 Dec 26
Jan 1 Mar 25 Jun 16 Dec 26
Mar 10 Apr 25 Aug 15 NEW ZEALAND
Mar 21 Apr 28 Oct 28 Jan 1 Feb 6 Jun 2
Mar 24 May 1 Dec 25 Jan 2 Mar 21 Oct 27
Jan 21 Mar 24 Dec 25
HONG KONG Jan 28 Apr 25 Dec 26
Jan 1 Mar 24 Jul 1 Dec 25 NORWAY
Feb 6 Apr 4 Sep 15 Dec 26 Jan 1 May 1 Dec 26
Feb 7 May 1 Oct 1 Dec 31 Mar 20 May 12 Dec 31
Feb 8 May 12 Oct 7 Mar 21 Dec 24
Mar 21 Jun 9 Dec 24 Mar 24 Dec 25
INDONESIA PHILIPPINES
Jan 1 Jun 12 Dec 25
Jan 1 Apr 7 Sep 29 Dec 25 Feb 25 Aug 21 Dec 30
Jan 10 May 1 Oct 1 Dec 26 Mar 20 Oct 1 Dec 31
Jan 11 May 20 Oct 2 Dec 29 Mar 21 Dec 24
Feb 7 Jul 28 Oct 3 Dec 31
Mar 20 Jul 30 Dec 8 PORTUGAL
Mar 21 Aug 18 Dec 24
Jan 1 Apr 25 Jun 13 Dec 25
IRELAND Feb 5 May 1 Dec 1 Dec 26
Mar 21 May 22 Dec 8
Jan 1 May 1 Oct 27 Dec 29 Mar 24 Jun 10 Dec 24
Mar 17 May 5 Dec 24
Mar 21 Jun 2 Dec 25 SINGAPORE
Mar 24 Aug 4 Dec 26
Jan 1 May 1 Oct 1 Dec 17
ITALY Feb 7 May 19 Oct 27 Dec 25
Jan 1 Jun 2 Dec 25 Feb 8 May 20 Oct 28
Mar 21 Aug 15 Dec 26 Mar 21 Aug 9 Dec 8
Apr 25 Dec 8 Dec 31
May 1 Dec 24 SOUTH AFRICA
Jan 1 May 1 Dec 25
Mar 21 Jun 16 Dec 26
Mar 24 Sep 24
Apr 28 Dec 16
|
SOUTH KOREA
Jan 30 Jun 1 Oct 3
Mar 1 Jun 6 Oct 5
May 1 Jul 17 Dec 25
May 5 Aug 15
SPAIN
Jan 1 Mar 24 Jul 25 Dec 26
Jan 7 May 1 Aug 15
Mar 20 May 2 Dec 8
Mar 21 May 15 Dec 25
SWEDEN
Jan 1 Jun 6 Dec 26
Mar 21 Jun 20 Dec 31
Mar 24 Dec 24
May 1 Dec 25
SWITZERLAND
Jan 1 May 1 Sep 11 Dec 31
Jan 2 May 12 Dec 8
Mar 19 May 22 Dec 24
Mar 21 Aug 1 Dec 25
Mar 24 Aug 15 Dec 26
TAIWAN
Jan 1 Feb 7 Apr 4
Feb 4 Feb 8 May 1
Feb 5 Feb 11 Jun 9
Feb 6 Feb 28 Oct 10
THAILAND
Jan 1 Apr 15 Jul 1 Dec 5
Feb 20 May 1 Jul 18 Dec 10
Apr 7 May 5 Aug 12
Apr 14 May 20 Oct 23
UNITED KINGDOM
Jan 1 May 26
Mar 21 Aug 25
Mar 24 Dec 25
May 5 Dec 26
UNITED STATES
Jan 1 May 26 Nov 11
Jan 21 Jul 4 Nov 27
Feb 18 Sep 1 Dec 25
Mar 21 Oct 13
VENEZUELA
Jan 1 May 1 Aug 18
Feb 4 May 5 Dec 8
Feb 5 May 26 Dec 25
Mar 19 Jun 24
Mar 20 Jul 24
|
SETTLEMENT PERIODS GREATER THAN SEVEN DAYS FOR YEAR 2008
Argentina.................................................... 03/17/08 03/25/08 8
03/18/08 03/26/08 8
03/19/08 03/27/08 8
China........................................................ 02/04/08 02/14/08 10
02/05/08 02/15/08 10
02/06/08 02/18/08 12
04/28/08 05/08/08 10
04/29/08 05/09/08 10
04/30/08 05/12/08 12
09/26/08 10/08/08 12
09/29/08 10/09/08 10
09/30/08 10/10/08 10
Croatia...................................................... 12/19/08 12/29/08 10
12/22/08 12/30/08 8
12/23/08 01/02/09 10
Czech Republic............................................... 12/19/08 12/29/08 10
12/22/08 12/30/08 8
12/23/08 12/31/08 8
Denmark...................................................... 03/17/08 03/25/08 8
03/18/08 03/26/08 8
03/19/08 03/27/08 8
Finland...................................................... 03/17/08 03/25/08 8
03/18/08 03/26/08 8
03/19/08 03/27/08 8
Indonesia.................................................... 09/26/08 10/06/08 10
09/29/08 10/07/08 8
09/30/08 10/08/08 8
Japan........................................................ 12/26/08 01/05/09 10
12/29/08 01/06/09 8
12/30/08 01/07/09 8
Mexico....................................................... 03/14/08 03/24/08 10
Norway....................................................... 03/17/08 03/25/08 8
03/18/08 03/26/08 8
03/19/08 03/27/08 8
Philippines.................................................. 12/24/08 01/02/09 9
34
|
Russia....................................................... 12/26/07 01/08/08 13
12/27/07 01/09/08 13
12/28/07 01/10/08 13
Sweden....................................................... 03/17/08 03/25/08 8
03/18/08 03/26/08 8
03/19/08 03/27/08 8
Turkey....................................................... 12/04/08 12/12/08 8
12/05/08 12/15/08 10
Venezuela.................................................... 03/14/08 03/24/08 10
03/17/08 03/25/08 8
03/18/08 03/26/08 8
|
35
TAXES
The Fund intends to qualify for and to elect to be treated as a
separate regulated investment company (a "RIC") under Subchapter M of the
Internal Revenue Code (the "Code"). To qualify for treatment as a RIC, a company
must annually distribute at least 90% of its net investment company taxable
income (which includes dividends, interest and net capital gains) and meet
several other requirements relating to the nature of its income and the
diversification of its assets.
The Fund is treated as a separate corporation for federal income tax
purposes. The Fund therefore is considered to be a separate entity in
determining its treatment under the rules for RICs described herein and in the
Prospectus. Losses in one Fund do not offset gains in another Fund and the
requirements (other than certain organizational requirements) for qualifying RIC
status are determined at the Fund level rather than at the Trust level.
The Fund will be subject to a 4% excise tax on certain undistributed
income if it does not distribute to its shareholders in each calendar year at
least 98% of its ordinary income for the calendar year plus 98% of its net
capital gains for twelve months ended October 31 of such year. The Fund intends
to declare and distribute dividends and distributions in the amounts and at the
times necessary to avoid the application of this 4% excise tax.
As a result of tax requirements, the Trust on behalf of the Fund has
the right to reject an order to purchase Shares if the purchaser (or group of
purchasers) would, upon obtaining the Shares so ordered, own 80% or more of the
outstanding Shares of the Fund and if, pursuant to section 351 of the Code, the
Fund would have a basis in the Deposit Securities different from the market
value of such securities on the date of deposit. The Trust also has the right to
require information necessary to determine beneficial Share ownership for
purposes of the 80% determination.
Long-term capital gains tax of non-corporate taxpayers are generally
taxed at a maximum rate of 15% for taxable years beginning before January 1,
2011. Thereafter, without further Congressional action, that rate will return to
20%. In addition, some ordinary dividends declared and paid by the Fund to
non-corporate shareholders may qualify for taxation at the lower reduced tax
rates applicable to long-term capital gains, provided that holding period and
other requirements are met by the Fund and the shareholder. The Fund will report
to shareholders annually the amounts of dividends received from ordinary income,
the amount of distributions received from capital gains and the portion of
dividends which may qualify for the dividends received deduction. In addition,
the Fund will report the amount of dividends to individual shareholders eligible
for taxation at the lower reduced tax rates applicable to long-term capital
gains.
The sale, exchange or redemption of Shares may give rise to a gain or
loss. In general, any gain or loss realized upon a taxable disposition of Shares
will be treated as long-term capital gain or loss if the Shares have been held
for more than one year. Otherwise, the gain or loss on the taxable disposition
of Shares will be treated as short-term capital gain or loss. A loss realized on
a sale or exchange of Shares of the Fund may be disallowed if other
substantially identical Shares are acquired (whether through the automatic
reinvestment of dividends or otherwise) within a sixty-one (61) day period
beginning thirty (30) days before and ending thirty (30) days after the date on
which the Shares are disposed. In such a case, the basis of the Shares acquired
must be adjusted to reflect the disallowed loss. Any loss upon the sale or
exchange of Shares held for six (6) months or less is treated as long-term
capital loss to the extent of any capital gain dividends received by the
shareholders (including undistributed capital gain included in income).
Distribution of ordinary income and capital gains may also be subject to state
and local taxes.
36
Distributions reinvested in additional Shares of the Fund through the
means of the dividend reinvestment service (see below) will nevertheless be
taxable dividends to shareholders acquiring such additional Shares to the same
extent as if such dividends had been received in cash.
Distributions of ordinary income paid to shareholders who are
nonresident aliens or foreign entities that are not effectively connected to the
conduct of a trade or business within the U.S. will generally be subject to a
30% U.S. withholding tax unless a reduced rate of withholding or a withholding
exemption is provided under applicable treaty law. However, shareholders who are
nonresident aliens or foreign entities will generally not be subject to U.S.
withholding or income tax on gains realized on the sale of Shares or on
dividends from capital gains unless (i) such gain or capital gain dividend is
effectively connected with the conduct of a trade or business within the U.S. or
(ii) in the case of an individual shareholder, the shareholder is present in the
U.S. for a period or periods aggregating 183 days or more during the year of the
sale or capital gain dividend and certain other conditions are met. Gains on the
sale of Shares and dividends that are effectively connected with the conduct of
a trade or business within the U.S. will generally be subject to U.S. federal
net income taxation at regular income tax rates. Dividends paid by the Fund to
shareholders who are nonresident aliens or foreign entities that are derived
from short-term capital gains and qualifying net interest income (including
income from original issue discount and market discount), and that are properly
designated by the Fund as "interest-related dividends" or "short-term capital
gain dividends," will generally not be subject to U.S. withholding tax, provided
that the income would not be subject to federal income tax if earned directly by
the foreign shareholder. The provisions discussed above relating to
distributions to shareholders who are nonresident aliens or foreign entities
generally would apply to distributions with respect to taxable years of the Fund
beginning before January 1, 2008. In addition, capital gains distributions
attributable to gains from U.S. real property interests (including certain U.S.
real property holding corporations and which may include certain REITs and
capital gains distributions from REITs) will generally be subject to U.S.
withholding tax and will give rise to an obligation on the part of the foreign
shareholder to file a U.S. federal income tax return. Nonresident shareholders
are urged to consult their own tax advisors concerning the applicability of the
U.S. withholding tax.
Some shareholders may be subject to a withholding tax on distributions
of ordinary income, capital gains and any cash received on redemption of
Creation Units ("backup withholding"). Generally, shareholders subject to backup
withholding will be those for whom no certified taxpayer identification number
is on file with the Fund or who, to the Fund's knowledge, have furnished an
incorrect number. When establishing an account, an investor must certify under
penalty of perjury that such number is correct and that such investor is not
otherwise subject to backup withholding.
Dividends and interest received by the Fund may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may reduce or eliminate such
taxes.
The foregoing discussion is a summary only and is not intended as a
substitute for careful tax planning. Purchasers of Shares should consult their
own tax advisors as to the tax consequences of investing in such Shares,
including under federal, state, local and other tax laws. Finally, the foregoing
discussion is based on applicable provisions of the Code, regulations, judicial
authority and administrative interpretations in effect on the date hereof.
Changes in applicable authority could materially affect the conclusions
discussed above, and such changes often occur.
37
FEDERAL TAX TREATMENT OF FUTURES AND OPTIONS CONTRACTS
The Fund is required for federal income tax purposes to mark to market
and recognize as income for each taxable year its net unrealized gains and
losses on certain futures contracts as of the end of the year as well as those
actually realized during the year. Gain or loss from futures and options
contracts on broad-based indexes required to be marked to market will be 60%
long-term and 40% short-term capital gain or loss. Application of this rule may
alter the timing and character of distributions to shareholders. The Fund may be
required to defer the recognition of losses on futures contracts, options
contracts and swaps to the extent of any unrecognized gains on offsetting
positions held by the Fund.
In order for the Fund to continue to qualify for federal income tax
treatment as a RIC, at least 90% of its gross income for a taxable year must be
derived from qualifying income, i.e., dividends, interest, income derived from
loans or securities, gains from the sale of securities or of foreign currencies
or other income derived with respect to the Fund's business of investing in
securities (including net income derived from an interest in certain "qualified
publicly traded partnerships"). It is anticipated that any net gain realized
from the closing out of futures or options contracts will be considered gain
from the sale of securities or derived with respect to the Fund's business of
investing in securities and therefore will be qualifying income for purposes of
the 90% gross income requirement.
The Fund distributes to shareholders at least annually any net capital
gains which have been recognized for federal income tax purposes, including
unrealized gains at the end of the Fund's fiscal year on futures or options
transactions. Such distributions are combined with distributions of capital
gains realized on the Fund's other investments and shareholders are advised on
the nature of the distributions.
DETERMINATION OF NAV
The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "Net Asset Value."
The NAV per Share of the Fund is computed by dividing the value of the
net assets of the Fund (i.e., the value of its total assets less total
liabilities) by the total number of Shares of the Fund outstanding, rounded to
the nearest cent. Expenses and fees, including without limitation, the
management and administration fees, are accrued daily and taken into account for
purposes of determining NAV. The NAV per Share is calculated by the Custodian
and determined as of the close of the regular trading session on the NYSE
(ordinarily 4:00 p.m., Eastern time) on each day that such exchange is open.
In computing the Fund's NAV, the Fund's securities holdings traded on a
national securities exchange are valued based on their last sale price. Price
information on listed securities is taken from the exchange where the security
is primarily traded. Securities regularly traded in an over-the-counter market
are valued at the latest quoted sale price in such market or in the case of the
NASDAQ, at the NASDAQ official closing price. Other portfolio securities and
assets for which market quotations are not readily available are valued based on
fair value as determined in good faith in accordance with procedures adopted by
the Board.
DIVIDENDS AND DISTRIBUTIONS
The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "Dividends, Distributions and
Taxes."
38
General Policies. Dividends from net investment income, if any, are
declared and paid annually. Distributions of net realized securities gains, if
any, generally are declared and paid once a year, but the Trust may make
distributions on a more frequent basis. The Trust reserves the right to declare
special distributions if, in its reasonable discretion, such action is necessary
or advisable to preserve the status of the Fund as a RIC or to avoid imposition
of income or excise taxes on undistributed income.
Dividends and other distributions on Fund Shares are distributed, as
described below, on a pro rata basis to Beneficial Owners of such Shares.
Dividend payments are made through DTC Participants and Indirect Participants to
Beneficial Owners then of record with proceeds received from the Fund.
Dividend Reinvestment Service. No reinvestment service is provided by
the Trust. Broker-dealers may make available the DTC book-entry Dividend
Reinvestment Service for use by Beneficial Owners of the Fund for reinvestment
of their dividend distributions. Beneficial Owners should contact their broker
to determine the availability and costs of the service and the details of
participation therein. Brokers may require Beneficial Owners to adhere to
specific procedures and timetables.
MISCELLANEOUS INFORMATION
Counsel. Clifford Chance US LLP, 31 West 52nd Street, New York, NY
10019, is counsel to the Trust.
Independent Registered Public Accounting Firm. [_______________],
serves as the Fund's independent registered public accounting firm. They audit
the Fund's financial statements and perform other related audit services.
FINANCIAL STATEMENTS
[TO COME]
Semi-annual statements are furnished to shareholders and annually
such statements are audited by the Fund's independent registered public
accounting firm.
39
PART C: OTHER INFORMATION
ITEM 23. EXHIBITS:
(a)(1) Certificate of Trust.*
(a)(2) Amended and Restated Agreement and Declaration of Trust.**
(b) Bylaws of the Trust.**
(c) Not applicable.
(d)(1) Investment Advisory Agreement between the Trust and Claymore Advisors,
LLC.**
(d)(2) Expense Reimbursement Agreement between the Trust and Claymore Advisors,
LLC.****
(e)(1) Distribution Agreement between the Trust and Claymore Securities, Inc.**
(e)(2) Form of Participant Agreement.***
(f) Not applicable.
(g) Form of Custody Agreement between the Trust and The Bank of New York.***
(h)(1) Administration Agreement between the Trust and Claymore Advisors, LLC.**
(h)(2) Form of Transfer Agency Services Agreement between the Trust and The Bank
of New York.***
(h)(3) Form of Fund Accounting Agreement between the Trust and The Bank of New
York.***
(h)(4) Form of Sub-License Agreement between the Trust and Claymore Advisors,
LLC.***
(i) Opinion and consent of Clifford Chance US LLP.***
(j) Consent of ___________, independent registered public accounting
firm.*****
(k) Not applicable.
(l) Not applicable.
(m) Distribution and Service Plan.******
(n) Not applicable.
(o) Not applicable
(p) Code of Ethics of the Trust and the Adviser.*******
(q) Powers of attorney.********
* Previously filed as an exhibit to the Trust's Registration Statement on
Form N-1A (File Nos. 333-135105; 811-21910), filed with the Securities
and Exchange Commission on June 16, 2006.
** Previously filed as an exhibit to Pre-Effective Amendment No. 1 to the
Trust's Registration Statement on Form N-1A (File Nos. 333-135105;
811-21910), filed with the Securities and Exchange Commission on
October 27, 2006.
*** Previously filed as an exhibit to Pre-Effective Amendment No. 2 to the
Trust's Registration Statement on Form N-1A (File Nos. 333-135105;
811-21910), filed with the Securities and Exchange Commission on
February 5, 2007.
**** Previously filed as an exhibit to Post-Effective Amendment No. 24 to
the Trust's Registration Statement on Form N-1A (File Nos. 333-134551;
811-219061), filed with the Securities and Exchange Commission on
December 13, 2007.
***** To be filed by amendment.
****** Previously filed as an exhibit to Post-Effective Amendment No. 25 to
the Trust's Registration Statement on Form N-1A (File Nos. 333-134551;
811-219061), filed with the Securities and Exchange Commission on
December 31, 2007.
******* Previously filed as an exhibit to Post-Effective Amendment No. 28 to
the Trust's Registration Statement on Form N-1A (File Nos. 333-134551;
811-219061), filed with the Securities and Exchange Commission on
February 14, 2008.
******** Previously filed as an exhibit to Post-Effective Amendment No. 31 to
the Trust's Registration Statement on Form N-1A (File Nos. 333-135105;
811-21910), filed with the Securities and Exchange Commission on
June 5, 2008.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Immediately prior to the contemplated public offering of each Fund's
Shares, the following persons may be deemed individually to control a Fund or
the Trust:
Claymore Securities, Inc. will be the only shareholder immediately
prior to the contemplated public offering of each Fund.
ITEM 25. INDEMNIFICATION
Pursuant to Article VI of the Registrant's Agreement and Declaration of
Trust, the Trust has agreed to indemnify each person who at any time serves as a
Trustee or officer of the Trust (each such person being an "indemnitee") against
any liabilities and expenses, including amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and reasonable counsel fees
reasonably incurred by such indemnitee in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or investigative body in which he may be or
may have been involved as a party or otherwise or with which he may be or may
have been threatened, while acting in any capacity set forth therein by reason
of his having acted in any such capacity, except with respect to any matter as
to which he shall not have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust or, in the case of any criminal
proceeding, as to which he shall have had reasonable cause to believe that the
conduct was unlawful, provided, however, that no indemnitee shall be indemnified
hereunder against any liability to any person or any expense of such indemnitee
arising by reason of (i) willful misfeasance, (ii) bad faith, (iii) gross
negligence, or (iv) reckless disregard of the duties involved in the conduct of
his position (the conduct referred to in such clauses (i) through (iv) being
sometimes referred to herein as "disabling conduct"). Notwithstanding the
foregoing, with respect to any action, suit or other proceeding voluntarily
prosecuted by any indemnitee as plaintiff, indemnification shall be mandatory
only if the prosecution of such action, suit or other proceeding by such
indemnitee (1) was authorized by a majority of the Trustees or (2) was
instituted by the indemnitee to enforce his or her rights to indemnification
hereunder in a case in which the indemnitee is found to be entitled to such
indemnification. The rights to indemnification set forth in the Declaration of
Trust shall continue as to a person who has ceased to be a Trustee or officer of
the Trust and shall inure to the benefit of his or her heirs, executors and
personal and legal representatives. No amendment or restatement of the
Declaration of Trust or repeal of any of its provisions shall limit or eliminate
any of the benefits provided to any person who at any time is or was a Trustee
or officer of the Trust or otherwise entitled to indemnification hereunder in
respect of any act or omission that occurred prior to such amendment,
restatement or repeal.
Notwithstanding the foregoing, no indemnification shall be made
hereunder unless there has been a determination (i) by a final decision on the
merits by a court or other body of competent jurisdiction before whom the issue
of entitlement to indemnification hereunder was brought that such indemnitee is
entitled to indemnification hereunder or, (ii) in the absence of such a
decision, by (1) a majority vote of a quorum of those Trustees who are neither
"interested persons" of the Trust (as defined in Section 2(a)(19) of the 1940
Act) nor parties to the proceeding ("Disinterested Non-Party Trustees"), that
the indemnitee is entitled to indemnification hereunder, or (2) if such quorum
is not obtainable or even if obtainable, if such majority so directs,
independent legal counsel in a written opinion concludes that the indemnitee
should be entitled to indemnification hereunder.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT MANAGER
See "Management" in the Statement of Additional Information.
Information as to the directors and officers of the Adviser is included in its
Form ADV filed with the SEC and is incorporated herein by reference thereto.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Claymore Securities, Inc, is the Trust's principal
underwriter.
(b) The following is a list of the executive officers, directors
and partners of Claymore Securities, Inc.:
NAME AND PRINCIPAL
BUSINESS ADDRESS(1) POSITIONS AND OFFICES WITH UNDERWRITER
David C. Hooten Chief Executive Officer
Kevin M. Robinson Senior Managing Director, General Counsel and
Corporate Secretary
Michael J. Rigert Vice Chairman
Anthony J. DiLeonardi Vice Chairman
Bruce Albelda Senior Managing Director, Chief Financial
Officer
Anne S. Kochevar Senior Managing Director, Chief Compliance
Officer
Steven M. Hill Senior Managing Director
_____________________
|
(1) The principal business address for all listed persons is 2455 Corporate
West Drive, Lisle, Illinois 60532.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents of the Registrant required to
be maintained by Section 31(a) of the Investment Company Act of 1940, as
amended, and the rules promulgated thereunder, are maintained in part at the
office of Claymore Advisors, LLC at 2455 Corporate West Drive, Lisle, Illinois
60532, and in part at the offices of the Transfer Agent at 101 Barclay Street,
New York, New York 10286.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lisle and State of Illinois on the 3rd day of July,
2008.
CLAYMORE EXCHANGE-TRADED FUND TRUST 2
By: /s/ J. Thomas Futrell
--------------------------------
J. Thomas Futrell
Chief Executive Officer
|
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
SIGNATURES TITLE DATE
* Trustee July 3, 2008
----------------------------
Randall C. Barnes
* Trustee July 3, 2008
----------------------------
Ronald A. Nyberg
* Trustee July 3, 2008
----------------------------
Ronald E. Toupin, Jr.
* Trustee July 3, 2008
----------------------------
Nicholas Dalmaso
Treasurer, Chief Financial July 3, 2008
/s/ Steven M. Hill Officer and Chief
---------------------------- Accounting Officer
Steven M. Hill
*/s/ Kevin M. Robinson July 3, 2008
----------------------------
Kevin M. Robinson
|
Attorney-In-Fact, pursuant to power of attorney
Invesco S&P Global Water... (AMEX:CGW)
過去 株価チャート
から 11 2024 まで 12 2024
Invesco S&P Global Water... (AMEX:CGW)
過去 株価チャート
から 12 2023 まで 12 2024
