LISLE, Ill.--(BUSINESS WIRE)--(NYSE: DCS) Claymore Dividend & Income Fund (the “Fund”) announces that the Fund’s Board of Trustees has approved the appointment of a new investment sub-adviser to the Fund: Guggenheim Partners Asset Management, LLC (“GPAM”), an affiliate of Guggenheim Funds Investment Advisors, LLC (“GFIA”), the Fund’s investment adviser. GPAM will begin serving as investment sub-adviser as of May 16, 2011. The Fund will continue to seek its primary investment objective of seeking a high level of current income with a secondary objective of capital appreciation, but will seek to achieve such investment objective by utilizing an enhanced equity option strategy developed by GPAM. The Fund anticipates that this investment strategy may increase the income and gains earned by the Fund, which may result in an increase in the amount of quarterly distributions payable by the Fund beginning in August 2011 to an annualized range of 7% to 8%, based on current market conditions. No assurance can be given that such a distribution rate will be achieved and the Fund’s actual distribution rate may be above or below the range stated herein. In connection with the appointment of GPAM, GFIA has agreed to extend the waiver of a portion of the advisory fees payable by the Fund.
Change in Investment Sub-Adviser
The Fund’s Board of Trustees has approved the appointment of GPAM as the Fund’s investment sub-adviser, effective as of May 16, 2011. At such time, Manning & Napier Advisors, Inc. (“M&N”) will cease to serve as investment sub-adviser to the Fund and GPAM will enter into an interim investment sub-advisory agreement (the “Interim Sub-Advisory Agreement”) with GFIA and the Fund, which will be in effect for an interim period of up to 150 days. The Board of Trustees also approved a new sub-advisory agreement among the Fund, GFIA and GPAM (the “New Sub-Advisory Agreement”), to be effective upon approval by shareholders, and intends to submit the New Sub-Advisory Agreement to shareholders for approval at the 2011 annual meeting of shareholders of the Fund. Proxy materials for the annual meeting will contain information regarding the New Sub-Advisory Agreement and GPAM. Each of GFIA and GPAM is an indirect subsidiary of Guggenheim Partners, LLC (“Guggenheim”), a diversified financial services firm.
Name and Ticker Change
In connection with the appointment of GPAM as investment sub-adviser, the name of the Fund will change to Guggenheim Enhanced Equity Strategy Fund. The name change will be effective on or about May 16, 2011. At such time, the Fund anticipates that the Fund’s NYSE ticker symbol will change to “GGE” and the Fund’s CUSIP will also change.
Under the investment advisory agreement between the Fund and GFIA, GFIA is entitled to receive an investment advisory fee at an annual rate equal to 0.85% of the average daily value of the Fund’s total managed assets. GFIA previously agreed to a 0.08% fee waiver due to expire on June 17, 2011. Beginning upon the expiration of the current fee waiver and for so long as the investment sub-adviser of the Fund is an affiliate of GFIA, GFIA has agreed to waive 0.05% of its advisory fee, such that the Fund will pay to GFIA an investment advisory fee at an annual rate equal to 0.80% of the average daily value of the Fund’s total managed assets. GFIA will pay a portion of the advisory fee to GPAM as investment sub-adviser. GFIA has agreed to reimburse certain fees and expenses of the Fund associated with the appointment of GPAM.
The Fund will continue to seek its primary investment objective of seeking a high level of current income with a secondary objective of capital appreciation. The Fund currently seeks to achieve its investment objective by investing primarily in a portfolio of equity securities selected by M&N. After GPAM becomes the investment sub-adviser, GPAM will manage the Fund utilizing an enhanced equity option strategy developed by GPAM.
GPAM will seek to achieve the Fund's investment objective by obtaining broadly diversified exposure to the equity markets and utilizing a covered call strategy which follows GPAM's proprietary dynamic rules-based methodology to seek to utilize efficiencies from the tax characteristics of the Fund's portfolio. The Fund may seek to obtain exposure to equity markets through investments in exchange-traded funds or other investment funds that track equity market indices, through investments in individual equity securities and/or through derivative instruments that replicate the economic characteristics of exposure to equity securities or markets. In current market conditions, GPAM initially expects to seek to obtain exposure to equity markets by investing primarily in exchange-traded funds. The Fund will have the ability to write call options on indices and/or securities which will typically be at- or out-of-the money. GPAM's strategy typically targets one-month options, although options of any strike price or maturity may be utilized. The Fund will seek to earn income and gains both from dividends paid on securities owned by the Fund and cash premiums received from selling options. Although the Fund will receive premiums from the options written, by writing a covered call option, the Fund forgoes any potential increase in value of the underlying securities above the strike price specified in an option contract through the expiration date of the option. To the extent GPAM's strategy seeks to achieve broad equity exposure through a portfolio of common stocks, the Fund would hold a diversified portfolio of stocks. To the extent GPAM's equity exposure strategy is implemented through investment in broad-based equity exchange-traded funds or other investment funds or derivative instruments that replicate the economic characteristics of exposure to equity securities markets, the Fund's portfolio is expected to comprise fewer holdings. The Fund will ordinarily focus its investments in securities of U.S. issuers but may invest up to 15% of its total assets in U.S. dollar-denominated securities of foreign issuers. The Fund may invest in or seek exposure to equity securities of issuers of any market capitalization.
Changes to Non-Fundamental Investment Policies
In connection with the appointment of GPAM the Board of Trustees has approved changes to certain non-fundamental investment policies of the Fund. Such changes will become effective as of May 16, 2011.
It will no longer be an investment policy of the Fund, under normal market conditions, to invest at least 80% of its total assets in dividend-paying or other income-producing securities. Nor will it be an investment policy of the Fund, under normal market conditions, to invest at least 65% of the Fund's total assets in dividend-paying common and preferred stocks.
Instead, the Fund has adopted a non-fundamental investment policy of, under normal market conditions, investing at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities. Once this policy becomes effective, it may be changed by the Board, but no change is anticipated. If such policy changes, the Fund will provide shareholders at least 60 days' written notice before implementation of the change.
In addition, it will no longer be an investment policy of the Fund to invest up to 10% of the Fund's total assets in securities of other open- or closed-end investment companies that invest primarily in securities of the types in which the Fund may invest directly. Instead, the Fund will be able to invest without limitation in securities of other open- or closed-end investment companies, including exchange-traded funds. In current market conditions, GPAM initially expects to seek to obtain exposure to equity markets by investing primarily in exchange-traded funds. Investments in exchange-traded funds and other investment funds which invest at least 80% of their assets in equity securities or have investment objectives or strategies of tracking equity market indices will be included as investments in equity securities for the purpose of the Fund’s investment policy of investing at least 80% of its assets in equity securities.
The Fund is required to provide shareholders 60 days’ written notice of a change to its current non-fundamental policy with respect to investing in dividend-paying or other income-producing securities. Accordingly, a notice describing the changes discussed above will be mailed to shareholders of record as of March 8, 2011. No action is required by shareholders of the Fund in connection with this change.
Summary of Certain Additional Risk Factors
As a result of the changes in the Fund’s investment strategy described above, the Fund will be subject to certain additional risk factors.
There are several risks associated with transactions in options used in connection with the Fund’s option strategy. A decision as to whether, when and how to use options involves the exercise of skill and judgment, and even a well conceived transaction may be unsuccessful to some degree because of market behavior or unexpected events. As the writer of a covered call option, the Fund forgoes, during the option’s life, the opportunity to profit from increases in the market value of the security covering the call option above the sum of the premium and the strike price of the call, but has retained the risk of loss should the price of the underlying security decline. The Fund’s successful use of options on indices depends upon its ability to predict the direction of the market and is subject to various additional risks. There can be no assurance that a liquid market will exist when the Fund seeks to close out an option position on an options exchange. If the Fund were unable to close out a covered call option that it had written on a security, it would not be able to sell the underlying security unless the option expired without exercise.
As a stockholder in an investment company, the Fund will bear its ratable share of that investment company's expenses, and would remain subject to payment of the Fund's investment management fees with respect to the assets so invested. Shareholders would therefore be subject to duplicative expenses to the extent the Fund invests in other investment companies. To the extent the Fund invests in exchange-traded funds or other investment companies that seek to track a specified index, such investments will be subject to tracking error risk.
GPAM is an investment manager specializing in innovative investment strategies that aim to add incremental returns relative to benchmarks in both up and down markets. GPAM's investment philosophy is predicated upon the belief that thorough research and independent thought are rewarded with performance that has the potential to outperform benchmark indices with both lower volatility and lower correlation of returns over time as compared to such benchmark indices.
GFIA and its affiliates (“Guggenheim Funds”) offer strategic investment solutions for financial advisors and their valued clients. As an innovator in exchange-traded funds (ETFs), unit investment trusts (UITs) and closed-end funds (CEFs), Guggenheim Funds often leads its peers with creative investment strategy solutions. Guggenheim Funds provides supervision, management or servicing of assets with a commitment to consistently delivering exceptional service.
Guggenheim Funds and GPAM are indirect subsidiaries of Guggenheim Partners, LLC, a global, diversified financial services firm with more than $100 billion in assets under management and supervision. Guggenheim, through its affiliates, provides investment management, investment advisory, insurance, investment banking, and capital markets services. The firm is headquartered in Chicago and New York with a global network of offices throughout the United States, Europe, and Asia.
This information does not represent an offer to sell securities of the Fund and it is not soliciting an offer to buy securities of the Fund. There can be no assurance that the Fund will achieve its investment objective. The net asset value of the Fund will fluctuate with the value of the underlying securities. It is important to note that closed-end funds trade on their market value, not net asset value, and closed-end funds often trade at a discount to their net asset value. Past performance is not indicative of future performance.
Forward Looking Statements
This press release may contain forward-looking statements, within the meaning of the federal securities laws. These statements describe the Fund’s plans, strategies, and goals and the Fund’s beliefs and assumptions concerning future economic and other conditions and the outlook for the Fund. Words such as “anticipates,” “believes,” “expects,” “objectives,” “goals,” “future,” “intends,” “seeks,” “will,” “may,” “could,” “should,” and similar expressions are used to identify forward-looking statements, although some forward-looking statements may be expressed differently.
The Fund cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, based on currently available information, and the Fund assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
Investors should consider the investment objectives and policies, risk considerations, charges and expenses of any investment before they invest. For this and more information, please contact a securities representative or Guggenheim Funds Distributors, Inc., 2455 Corporate West Drive, Lisle, Illinois 60532, 800-345-7999.
Member FINRA/SIPC (3/11)
NOT FDIC-INSURED | NOT BANK-GUARANTEED | MAY LOSE VALUE