UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21652
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Fiduciary/Claymore MLP Opportunity Fund
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(Exact name of registrant as specified in charter)
2455 Corporate West Drive, Lisle, IL 60532
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(Address of principal executive offices) (Zip code)
J. Thomas Futrell
2455 Corporate West Drive, Lisle, IL 60532
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(Name and address of agent for service)
Registrant's telephone number, including area code: (630) 505-3700
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Date of fiscal year end: November 30
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Date of reporting period: May 31, 2008
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. Section 3507.
Item 1. Reports to Stockholders.
The registrant's semi-annual report transmitted to shareholders pursuant to Rule
30e-1 under the Investment Company Act of 1940, as amended, is as follows:
SEMIANNUAL
REPORT
May 31, 2008
(Unaudited)
Fiduciary/Claymore | FMO
MLP Opportunity Fund
Graphic:Pipelinr
Logo: FAMCO
Logo: Claymore(R)
www.fiduciaryclaymore.com
... your pipeline to the LATEST,
most up-to-date INFORMATION about the
Fiduciary/Claymore MLP Opportunity Fund
Graphic:Pipeline
The shareholder report you are reading right now is just the beginning of the
story. Online at WWW.FIDUCIARYCLAYMORE.COM, you will find:
o Daily, weekly and monthly data on share prices, distributions, dividends
and more
o Portfolio overviews and performance analyses
o Announcements, press releases and special notices
o Fund and adviser contact information
Fiduciary Asset Management and Claymore are constantly updating and expanding
shareholder information services on the Fund's website, in an ongoing effort to
provide you with the most current information about how your Fund's assets are
managed, and the results of our efforts. It is just one more small way we are
working to keep you better informed about your investment in the Fund.
2 | SemiAnnual Report | May 31, 2008
FMO | Fiduciary/Claymore MLP Opportunity Fund
Dear Shareholder|
Dear Shareholder:
We thank you for your investment in the Fiduciary/Claymore MLP Opportunity Fund
(the "Fund"). This report covers the Fund's performance for the semi-annual
period ended May 31, 2008.
The Fund's investment objective is to provide a high level of after-tax total
return with an emphasis on current distributions paid to shareholders. Fiduciary
Asset Management, LLC ("FAMCO"), the Fund's sub-adviser, seeks to achieve that
objective by investing at least 80% of the Fund's managed assets in master
limited partnership ("MLP") entities, which can provide shareholders with
attractive tax-deferred income.
FAMCO manages a wide range of institutional products and is one of the leading
managers of hedged equity investments. As of May 31, 2008, FAMCO managed or
supervised approximately $17.8 billion in assets.
All Fund returns cited - whether based on net asset value ("NAV") or market
price - assume the reinvestment of all distributions. For the six-month period
ending May 31, 2008, the Fund provided a total return based on market price of
3.53% and a return of -2.07% based on NAV. As of May 31, 2008, the Fund's last
closing market price of $22.70 represented a premium of 3.65% to the Fund's NAV
of $21.90. Past performance is not a guarantee of future results.
The market value of the Fund's shares fluctuates from time to time, and it may
be higher or lower than the Fund's NAV.
On January 2, 2008, the Board of Trustees of the Fund announced that it would
increase the quarterly dividend by 1.41% to $0.36 per share, effective with the
January 2008 distribution. The Board of Trustees subsequently authorized two
additional dividend increases during this fiscal period: a 1.39% increase to
$0.365 effective with the April 2008 distribution, and a 1.37% increase to $0.37
per share effective with the July 2008 distribution. This July-declared
quarterly dividend level of $0.37 represents an annualized distribution rate of
6.52%, based on the Fund's closing market price of $22.70 on May 31, 2008.
Under the Fund's Automatic Dividend Reinvestment Plan (the "Plan"), a
shareholder whose Common Shares are registered in his or her own name will have
all distributions reinvested automatically unless the shareholder elects to
receive cash. Distributions with respect to Common Shares registered in the name
of a broker-dealer or other nominee (that is, in "street name") will be
reinvested by the broker or nominee in additional Common Shares under the Plan,
unless the service is not provided by the broker or nominee or the shareholder
elects to receive distributions in cash. The Plan is described in detail on page
24 of the Fund's semi-annual report. When shares trade at a discount to NAV, the
Plan takes advantage
SemiAnnual Report | May 31, 2008 | 3
FMO | Fiduciary/Claymore MLP Opportunity Fund | Dear Shareholder continued
of the discount by reinvesting the quarterly dividend distribution in common
shares of the Fund purchased in the market at a price less than NAV. Conversely,
when the market price of the Fund's common shares is at a premium above NAV, the
Plan reinvests participants' dividends in newly-issued common shares at NAV,
subject to an IRS limitation that the purchase price cannot be more than 5%
below the market price per share. The Plan provides a cost-effective means to
accumulate additional shares and enjoy the benefits of compounding returns over
time.
To learn more about the Fund's performance and investment strategy, we encourage
you to read the Questions & Answers section of the report, which begins on page
5. You'll find information on FAMCO's investment philosophy, its views on the
economy and market environment, and detailed information about the factors that
impacted the Fund's performance.
We appreciate your investment and look forward to serving your investment needs
in the future. For the most up-to-date information on your investment, please
visit the Fund's website at www.fiduciaryclaymore.com.
Sincerely,
/s/ J. Thomas Futrell
J. Thomas Futrell
Fiduciary/Claymore MLP Opportunity Fund
4 | SemiAnnual Report | May 31, 2008
FMO | Fiduciary/Claymore MLP Opportunity Fund
QUESTIONS & ANSWERS|
The Fiduciary/Claymore MLP Opportunity Fund (the "Fund") is managed by Fiduciary
Asset Management, LLC. ("FAMCO"). In the following interview, Portfolio Manager
James J. Cunnane, Jr., CFA, discusses the Fund's performance for the semi-annual
period ended May 31, 2008.
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WILL YOU REMIND US OF THIS FUND'S OBJECTIVE AND INVESTMENT STRATEGY?
The Fund's investment objective is to provide a high level of after-tax total
return with an emphasis on current distributions paid to shareholders. The total
return sought by the Fund includes appreciation in the net asset value ("NAV")
of the Fund's common shares and all distributions made by the Fund to its common
shareholders, regardless of the tax characterization of such distributions. The
Fund has been structured to seek to provide an efficient vehicle through which
its shareholders may invest in a portfolio of publicly traded securities of
master limited partnerships ("MLPs") and related entities. MLPs combine the tax
benefits of limited partnerships with the liquidity of publicly traded
securities. The Fund believes that as a result of the tax characterization of
cash distributions made by MLPs to their investors, a significant portion of the
Fund's income will be tax-deferred, which may allow distributions by the Fund to
its shareholders to include high levels of tax-deferred income.
Under normal market conditions, we invest at least 80% of the Fund's managed
assets in MLP entities, and at least 65% of managed assets in equity securities
of MLP entities. MLP entities include affiliates of MLPs that own general
partner interests or, in some cases, subordinated units, registered or
unregistered common units, or other limited partner units in an MLP. The Fund
may also invest in common stocks of large capitalization companies, including
companies engaged in the energy, natural resources and real estate sectors. We
may employ an option strategy of writing (selling) covered call options on
common stocks held in the Fund's portfolio in order to generate current income
and gains. Up to 40% of the Fund's managed assets may be invested in
unregistered or otherwise restricted securities, which may consist of equity
securities of MLP entities and other securities of public and non-public
companies, but no more than 20% of its managed assets will be invested in
restricted securities issued by non-public companies.
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HOW WOULD YOU DESCRIBE THE MASTER LIMITED PARTNERSHIP MARKET OVER THE LAST SIX
MONTHS?
In recent months, MLPs have been in a generally sideways trading pattern but
with considerable volatility. This followed a rather dramatic sell-off in the
MLP market in the summer of 2007, when there was a significant change in the
financial landscape, with much wider credit spreads and a marked decline in
investors' risk tolerance.
A significant pull-back in late March 2008 was associated with the continued
de-levering of the market that included MLPs. After that disruption, MLPs moved
back into the same trading range we have seen over the last six to nine months.
Using the Alerian MLP Index (the "Index") as a benchmark for the industry, total
return for the six-month period ended May 31, 2008, was 1.25%.(1)
In the spring of 2008, our analysis indicated that the market for MLPs was as
cheap on a fundamental valuation basis as it had been at any time in the last
five years. Of necessity, that comparison of valuation over time included only
those MLPs that have operated for several years, excluding some of the newer
ones with less proven business plans. What we have seen in the last few months
is not a break-down in the fundamentals of MLPs, but rather broader market
issues impacting investors in MLPs. Throughout the capital markets, there has
been an aversion to risk in any form and a pronounced de-levering across asset
classes. Some of the larger investors in MLPs, faced with the need to raise
cash, sold their MLP investments. This over-supply of MLP equities created a
significant downward pressure on MLP pricing. Fundamentals of MLPs, however,
remain sound. Most of the seasoned, well managed MLPs have continued to increase
earnings, and distributions have been increasing at an annual rate of about 10%.
There were three major drivers of performance among specific MLPs over this
period. First, prices of most commodities, especially those that relate to
energy, have been rising steadily. So, almost any business with a direct
interest in commodities, including many MLPs, has performed well.
Second, the market's risk aversion has led to a significant flight to quality.
This means that those MLPs perceived as being of higher
---------------------
1 The Alerian MLP Index measures the composite performance of the 50 most
prominent energy MLPs, and is calculated by Standard & Poor's using a
float-adjusted, capitalization-weighted methodology. An Index is unmanaged
and it is not possible to invest directly in an index.
SemiAnnual Report | May 31, 2008 | 5
FMO | Fiduciary/Claymore MLP Opportunity Fund | QUESTIONS & ANSWERS continued
quality and lower risk performed better than others. In general, this means that
the largest MLPs performed best. As we analyze the MLP market, we divide the
Alerian MLP Index into quintiles on various measures including market
capitalization. Over the six months ended May 2008, the average market price of
the quintile with the largest market capitalization, $11 billion or more, was up
approximately 8.7%. None of the other quintiles produced positive returns on a
market price basis.
The third big driver of MLP market performance was a major imbalance between
supply and demand, as widening credit spreads and investors' decreased risk
tolerance created a liquidity crisis. Those MLPs that were in need of new
capital and those that had major investors who needed to raise cash by selling
assets generally performed poorly.
--------------------------------------------------------------------------------
HOW DID THE FUND PERFORM IN THIS MARKET ENVIRONMENT?
All Fund returns cited - whether based on NAV or market price - assume the
reinvestment of all distributions. For the six-month period ended May 31, 2008,
the Fund provided a total return based on market price of 3.53% and a return of
-2.07% based on NAV, trailing the Alerian MLP Index by a little over 300 basis
points. It should be noted that the broader MLP market return does not reflect
the impact of expenses or income taxes. Past performance is not a guarantee of
future results.
The market value of the shares of closed-end funds fluctuates from time to time,
and a fund's market value may be higher or lower than its net asset value. The
last closing price of the Fund's shares as of May 31, 2008, was $22.70,
representing a 3.65% premium to the NAV of $21.90. On November 30, 2007, the
Fund's market price closed at $22.66, which represented a discount of 1.95% to
the NAV of $23.11. At its inception in December 2004, the Fund's NAV was $19.10.
When comparing market value and NAV performance, it is important to consider the
special tax structure of the Fund. For every dollar earned by the Fund, the NAV
tends to rise by a smaller amount. That is because the Fund is a taxable entity,
meaning the Fund recognizes a deferred tax liability that accrues as the value
of its portfolio appreciates. This ensures the Fund's NAV reflects the after-tax
value of the unrealized gains in the Fund's portfolio. With that said, the Fund
retains those additional assets to manage until it sells the underlying
securities, subsequently realizes any gains and finally pays taxes on the sold
securities.
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PLEASE TELL US ABOUT THE FUND'S DISTRIBUTIONS.
On January 2, 2008, the Board of Trustees of the Fund announced that it would
increase the quarterly dividend by 1.41% to $0.36 per share, effective with the
January 2008 distribution. The Board of Trustees subsequently authorized two
additional dividend increases during this fiscal period: a 1.39% increase to
$0.365 effective with the April 2008 distribution, and a 1.37% increase to $0.37
per share effective with the July 2008 distribution.
These dividend increases were made possible by a modification to the Fund's
distribution policy announced in December 2006 that better allows the Fund to
pass through positive performance of the portfolio to Fund shareholders. We
believe the revised policy better aligns it with the Fund's investment
objective. The revised policy is consistent with our belief that distributions
from a taxable closed-end fund such as this one should reflect the expected
long-term after-tax total return potential of the portfolio. Some of the
investments under consideration have lower current yields than other possible
investments, but we believe they have better prospects for total long-term
return. The revised policy enables the Fund to generate distributions from both
net investment income and capital appreciation of portfolio securities. This
flexibility aligns well with our investment philosophy of managing the portfolio
with total return in mind. The new policy gives us the flexibility to purchase
for the Fund the securities we consider best overall, even if the net investment
income they generate does not fully fund a distribution in a given quarter.
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HOW IS THE FUND POSITIONED IN TERMS OF SECTORS?
Within the MLP category, the two largest sectors by far are midstream gas and
midstream oil, which together represent approximately 85% of the Index. As in
prior periods, we kept the Fund invested across the MLP market but maintained
most of its exposure in these two large sectors. As of May 31, 2008, midstream
gas represented 42.3% of long-term investments, and midstream oil represented
37.2%, so together these two large sectors represented 79.5% of long-term
investments, somewhat less than the Index.
6 | SemiAnnual Report | May 31, 2008
FMO | Fiduciary/Claymore MLP Opportunity Fund | QUESTIONS & ANSWERS continued
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WHAT WERE THE MOST SIGNIFICANT FACTORS AFFECTING THE FUND'S PERFORMANCE?
The Fund's performance benefited from a significant position in
commodity-focused MLPs, particularly coal. We have gradually begun to reduce
some of these positions, taking advantage of recent strong performance. The
Fund's coal MLPs that performed well include Alliance Holdings GP, L.P. (3.7% of
long-term investments) and Alliance Resource Partners, L.P. (0.7% of long-term
investments).
A significant detriment to performance was the Fund's positioning in terms of
market capitalization. We have positioned the Fund with slightly smaller market
capitalization than the Index and most competing funds. As mentioned above, the
largest MLPs performed best over this period, as they are perceived by investors
as being less risky.
Another detractor from performance was the Fund's emphasis on MLPs that are
oriented toward growth. If you examine distribution growth among the five
quintiles of the Index in terms of market capitalization, the smallest MLPs had
the greatest growth in distributions and the largest had the least. Similarly,
the MLPs with the lowest yields, which generally correlate to highest growth,
were the weakest within the Index. Despite strong fundamental performance, in
line with our expectations, the equity securities for these MLPs underperformed.
To summarize, over this period, the Fund's emphasis on smaller capitalization
and higher growth MLPs detracted from performance. We regard this as a temporary
situation that relates to the market's risk aversion, and we believe this
positioning will benefit the Fund's shareholders over the long term.
The largest MLPs in the portfolio in terms of total market capitalization,
Kinder Morgan Energy Partners, L.P. (4.3% of long-term investments) and Kinder
Morgan Management, LLC (4.1% of long-term investments), made significant
contributions to absolute performance; these two related MLPs are largely the
same entity but packaged somewhat differently. However, the Fund is underweight
in these large MLPs relative to the Index, and that detracted from relative
performance. These large MLP entities have tended to perform well when investors
become uncomfortable with risk and there is a flight to quality, as in this
six-month period.
A growth-oriented holding that performed quite well in terms of operations is
DCP Midstream Partners, LP (3.1% of long-term investments), a midstream gas
company. DCP is a good example of the kind of investment we are seeking for the
Fund: we believe it is a solid entity with a sound low-risk business model.
However, it performed poorly on a market price basis due to market conditions
unrelated to its business.
--------------------------------------------------------------------------------
HOW DID THE FUND'S LEVERAGE AFFECT PERFORMANCE DURING THIS PERIOD?
The purpose of leverage (borrowing) is to fund the purchase of additional
securities that provide increased income and potentially greater appreciation to
common shareholders than could be achieved from an unleveraged portfolio. Of
course, leverage results in greater NAV volatility and entails more downside
risk than an unleveraged portfolio.
During the six months ended May 31, 2008, the Fund's leverage represented
between 29.4% and 32.7% of managed assets, defined as net assets plus leverage.
At the end of the period, leverage was approximately 30% of managed assets.
Since leverage adds to performance only when the cost of leverage is less than
the return generated by investments, the use of leverage detracted from
performance during this period. However, a positive factor for performance
relative to competing funds was that the Fund's leverage as a percentage of
managed assets was somewhat lower than most of the funds that we consider to be
the Fund's peer group. Also, we were fortunate to have our leverage in the
commercial paper conduit market, rather than through the issuance of Auction
Market Preferred Shares ("AMPS"), a form of leverage used by many closed-end
funds. The broad auction-rate preferred securities market has experienced
considerable disruption in the past few months, including many failed auctions
and increased cost of leverage in some cases. Because of the nature of
instruments used for leverage, the Fund's cost of leverage was therefore
significantly less than many other funds. Furthermore, we were able to execute
swaps against approximately two-thirds of our leverage at very attractive
levels, locking in a low cost of leverage for several years. Over the long term,
we believe that leverage will contribute to the Fund's performance, as it has in
past periods.
SemiAnnual Report | May 31, 2008 | 7
FMO | Fiduciary/Claymore MLP Opportunity Fund | QUESTIONS & ANSWERS continued
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WHAT IS YOUR CURRENT OUTLOOK FOR THE MLP MARKET?
We believe that the recent weakness in market prices of MLPs has very little to
do with fundamentals. In fact, the MLP market looks robust now, with solid
infrastructure spending and sound fundamentals. At current prices, we believe
that many MLPs are priced well below their intrinsic value, and we are taking
advantage of opportunities to make some investments at attractive prices. As we
seek new investments, we remain focused on smaller, faster growing MLPs that
have healthy balance sheets, high-quality assets and strong management teams.
We believe that MLPs offer a combination of current yield and growth potential
that provides greater stability, higher income and better long-term potential
than other income-oriented investments such as bonds, utility stocks or real
estate investment trusts. MLPs also have a reasonable level of growth potential
and tax deferral features. We believe that the correlation to other asset
classes will remain low over the next few years as the credit markets settle
into more normalized patterns and the acquisition market re-accelerates.
8 | SemiAnnual Report | May 31, 2008
FMO | Fiduciary/Claymore MLP Opportunity Fund | QUESTIONS & ANSWERS continued
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RISKS AND OTHER CONSIDERATIONS
The views expressed in this report reflect those of the portfolio manager and
Claymore only through the report period as stated on the cover. These views are
subject to change at any time, based on market and other conditions and should
not be construed as a recommendation of any kind. The material may also include
forward looking statements that involve risk and uncertainty, and there is no
guarantee that any predictions will come to pass. There can be no assurance that
the Fund will achieve its investment objectives. The value of the Fund will
fluctuate with the value of the underlying securities. Historically, closed-end
funds often trade at a discount to their net asset value.
RISKS OF INVESTING IN MLP UNITS. An investment in MLP units involves risks that
differ from a similar investment in equity securities, such as common stock, of
a corporation. Holders of MLP units have the rights typically afforded to
limited partners in a limited partnership. As compared to common shareholders of
a corporation, holders of MLP units have more limited control and limited rights
to vote on matters affecting the partnership. There are certain tax risks
associated with an investment in MLP units. Additionally, conflicts of interest
may exist between common unit holders, subordinated unit holders and the general
partner of an MLP; for example a conflict may arise as a result of incentive
distribution payments.
TAX RISKS OF INVESTING IN EQUITY SECURITIES OF MLPS. There are certain tax risks
associated with an investment in MLP units. Much of the benefit the Fund derives
from its investment in equity securities of MLPs is a result of MLPs generally
being treated as partnerships for U.S. federal income tax purposes. A change in
current tax law, or a change in the business of a given MLP, could result in an
MLP being treated as a corporation for U.S. federal income tax purposes, which
would result in such MLP being required to pay U.S. federal income tax on its
taxable income. The classification of an MLP as a corporation for U.S. federal
income taxation purposes would have the effect of reducing the amount of cash
available for distribution by the MLP and causing any such distributions
received by the Fund to be taxed as dividend income. Thus, if any of the MLPs
owned by the Fund were treated as corporations for U.S. federal income tax
purposes, the after-tax return to the Fund with respect to its investment in
such MLPs would be materially reduced, which could cause a substantial decline
in the value of the common shares.
Because of the Fund's concentration in MLPs, the Fund is not eligible to be
treated as a "regulated investment company" under the Internal Revenue Code of
1986, as amended. Instead, the Fund will be treated as a regular corporation for
US federal income tax purposes and as a result, unlike most investment
companies, will be subject to corporate income tax to the extent the Fund
recognizes taxable income. The Fund believes that as a result of the tax
characterization of cash distributions made by MLPs, a significant portion of
the Fund's income will be tax-deferred, which will allow distributions by the
Fund to its shareholders to include high levels of tax-deferred income. However,
there can be no assurance in this regard. If this expectation is not realized,
the Fund will have a larger corporate income tax expense than expected, which
will result in less cash available to distribute to shareholders.
EQUITY SECURITIES RISK. Equity risk is the risk that MLP units or other equity
securities held by the Fund will fall due to general market or economic
conditions, perceptions regarding the industries in which the issuers of
securities held by the Fund participate, changes in interest rates, and the
particular circumstances and performance of particular companies whose
securities the Fund holds. In addition, MLP units or other equity securities
held by the Fund may decline in price if the issuer fails to make anticipated
distributions or dividend payments because, among other reasons, the issuer
experiences a decline in its financial condition.
CONCENTRATION RISK. Because the Fund will invest in MLP entities, a substantial
portion of which are expected to be engaged primarily in the energy, natural
resources and real estate sectors of the economy, such concentration may present
more risks than if the Fund were broadly diversified over numerous industries
and sectors of the economy
RISKS ASSOCIATED WITH OPTIONS ON SECURITIES. There are several risks associated
with transactions in options on securities. 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 writer of an option has
no control over the time when it may be required to fulfill its obligation as a
writer of the option.
CASH FLOW RISK. The Fund expects that a substantial portion of the cash flow it
receives will be derived from its investments in equity securities of MLP
entities. The amount and tax characterization of cash available for distribution
by an MLP entity depends upon the amount of cash generated by such entity's
operations. Cash available for distribution by MLP entities will vary widely
from quarter to quarter and is affected by various factors affecting the
entity's operations. In addition to the risks described herein, operating costs,
capital expenditures, acquisition costs, construction costs, exploration costs
and borrowing costs may reduce the amount of cash that an MLP entity has
available for distribution in a given period.
SMALL CAPITALIZATION RISK. The Fund may invest in securities of MLP entities and
other issuers that have comparatively smaller capitalizations relative to
issuers whose securities are included in major benchmark indices, which present
unique investment risks.
LOWER GRADE SECURITIES RISK. The Fund may invest in fixed-income securities
rated below investment grade, which are commonly referred to as "junk bonds."
Investment in securities of below-investment grade quality involves substantial
risk of loss.
FOREIGN SECURITIES. Investing in securities of foreign companies (or foreign
governments) may involve certain risks not typically associated with investing
in domestic companies. The prices of foreign securities may be affected by
factors not present with securities traded in the U.S. markets, including,
political and economic conditions, less stringent regulation and higher
volatility.
NON-DIVERSIFIED STATUS. The Fund may invest a greater portion of its assets in a
more limited number of issuers than a diversified fund.
In addition to the risks described above, the Fund is also subject to:
Affiliated Party Risk, Energy Sector Risks, Other Sector Risks, Restricted
Securities Risks, Cash Flow Risk, Liquidity Risk, Valuation Risk, Interest Rate
Risk, Portfolio Turnover Risk, Derivatives Risk, Market Discount Risk, Other
Investment Companies Risk, Royalty Trust Risk, Financial Leverage, Management
Risk, and Current Developments. Please see www.fiduciaryclaymore.com for a more
detailed discussion about Fund risks and considerations.
SemiAnnual Report | May 31, 2008 | 9
FMO | Fiduciary/Claymore MLP Opportunity Fund
Fund SUMMARY | As of May 31, 2008 (unaudited)
FUND STATISTICS
-------------------------------------------------------
Share Price $22.70
Common Share Net Asset Value $21.90
Premium/(Discount) to NAV 3.65%
Net Assets ($000) $398,228
-------------------------------------------------------
TOTAL RETURNS
-------------------------------------------------------
(INCEPTION 12/28/04) MARKET NAV
-------------------------------------------------------
Six Months 3.53% -2.07%
One Year -3.30% -11.39%
Three Year (annualized) 12.27% 9.82%
Since Inception (annualized) 10.04% 10.11%
-------------------------------------------------------
% OF LONG-TERM
SECTOR BREAKDOWN INVESTMENTS
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Midstream Gas Infrastructure 42.3%
Midstream Oil Infrastructure 37.2%
Oil and Gas Production 7.8%
Coal 7.3%
Propane 4.7%
Consumer Discretionary 0.5%
Marine Transportation 0.2%
-------------------------------------------------------
% OF LONG-TERM
TOP TEN ISSUERS INVESTMENTS
-------------------------------------------------------
Energy Transfer Partners 11.1%
Copano Energy 10.6%
Plains All American Pipeline 9.0%
Kinder Morgan 8.4%
Magellan Midstream Partners 7.9%
Enbridge Energy 5.4%
Crosstex Energy 4.9%
Inergy 4.7%
Alliance 4.4%
Holly Energy Partners 3.2%
-------------------------------------------------------
Past performance does not guarantee future results. All portfolio data is
subject to change daily. For more current information, please visit
www.fiduciaryclaymore.com. The above summaries are provided for informational
purposes only and should not be viewed as recommendations.
SHARE PRICE & NAV PERFORMANCE
12/30/04 20.06 19.07
20.01 19.07
20.18 19.07
20.24 19.27
20.5 19.42
19.92 19.6
19.97 19.75
19.99 19.86
20.16 19.72
20.19 19.84
19.97 19.81
19.91 19.9
19.97 20.02
19.96 19.85
20.07 19.88
19.7 19.43
19.8 19.61
20.15 19.64
19.45 19.08
19.55 19.6
19.9 19.52
19.93 19.63
19.86 19.62
19.84 19.53
19.02 19.59
19.28 19.7
19.3 19.74
19.75 19.97
19.77 20.05
19.85 20.3
19.92 20.28
19.77 20.38
19.92 20.68
19.91 20.56
19.96 20.79
20.51 21.15
20.52 21.25
21.27 21.64
20.92 21.09
20.1 20.46
20.1 20.92
20.71 21.01
20.77 21.14
20.56 21.13
20.41 21.05
20.14 20.98
20.23 21.3
20.45 21.31
20.15 20.72
19.3 19.78
18.35 20.03
18.62 20.2
19.03 20.55
19.6 20.48
18.98 20.15
18.8 19.93
18.35 19.91
17.99 19.78
17.81 19.76
17.79 19.89
17.75 19.9
17.65 19.58
17.25 19.55
17.29 19.63
18.72 20.01
18.65 19.81
18.69 20.09
18.59 20.15
19.09 20.33
19.18 20.29
18.75 20.06
19.15 20.13
19 20.23
18.8 20.15
18.77 20.16
18.58 19.99
18.88 20.39
18.6 20.31
18.41 20.42
18.6 20.46
18.94 20.36
18.49 19.91
18.39 20.16
18.33 20.39
18.38 20.41
18.44 20.71
18.53 20.72
18.21 20.31
18.15 20.13
18.31 20.66
18.5 20.71
18.31 20.46
18 20.22
18.25 20.34
18.22 20.42
18.17 20.48
18.48 20.53
18.24 20.16
18.3 20.28
18.53 20.52
18.9 20.69
19.3 21.02
19.02 20.87
19.28 20.94
19.51 21.08
19.41 21.19
19.27 20.95
19.48 20.86
19.25 20.72
19.05 20.91
19.4 20.96
19.47 20.98
19.33 20.78
19.53 21.3
19.75 21.6
19.81 21.66
20.02 21.64
20.31 22.04
20.08 22.21
22.09 22.39
21.87 22.49
22.91 22.63
22.76 22.73
22.12 22.52
22.79 22.7
22.7 22.65
22.41 22.5
21.95 22.15
21.97 22.37
21.69 22.84
23.05 23.31
23.45 23.39
22.58 23.67
23.3 23.7
23.81 23.87
23.46 23.89
23.3 24.04
23.4 24.05
23.62 24.38
24.53 24.81
23.9 24.98
24.33 24.95
24.91 25.31
24.5 25.08
24.83 25.5
24.79 26.16
24.92 26.07
25.31 25.96
25.4 26.53
24.75 26.18
24.19 25.74
25 26.27
24.5 25.91
24.75 25.99
24.86 26.29
24.73 26.32
24.36 26.48
24.9 26.77
25.41 26.77
24.78 26.95
23.48 26.2
23.46 25.9
22 24.87
22.41 23.83
20.35 23
22.43 24.13
22.4 23.87
23.06 24.03
23.5 24.14
22.51 23.51
22.64 23.93
22.7 23.08
22.86 23.12
22.1 22.84
23.25 23.56
22.8 23.6
22.43 23.6
23.84 24.04
23.74 23.95
23.6 23.3
22.9 22.92
20.85 22.43
22.68 22.75
22.66 23.11
22.44 22.58
21.3 22.44
20.59 22.14
20.18 23.17
20.88 23.11
22.37 23.17
22.42 22.86
22.11 21.99
20.26 21.6
21.99 22.1
21.59 22.03
21.17 21.97
21.36 21.77
22.19 22.19
22.09 21.99
21.8 21.57
20.73 20.8
20.6 19.83
20.9 20.54
20.96 20.57
22.04 21.04
21.89 21.13
22.2 21.33
21.23 21.18
21.34 21.36
21.57 21.6
22.1 21.54
22.21 21.96
22.42 21.9
22.27 21.88
22.52 21.73
5/30/08 22.7 21.9
Share Price NAV
DISTRIBUTIONS TO SHAREHOLDERS
Apr 05 0.3125
Jul 05 0.3125
Oct 05 0.3125
Jan 06 0.3125
Apr 06 0.3125
Jul 06 0.3125
Oct 06 0.3125
Jan 07 0.3275
Apr 07 0.3325
Jul 07 0.35
Oct 07 0.355
Jan 08 0.36
Apr 08 0.365
10 | SemiAnnual Report | May 31, 2008
FMO | Fiduciary/Claymore MLP Opportunity Fund
Portfolio of INVESTMENTS | MAY 31, 2008 (UNAUDITED)
NUMBER
OF SHARES VALUE
------------------------------------------------------------------
MASTER LIMITED PARTNERSHIPS AND MLP AFFILIATES - 160.4%
COAL - 11.7%
848,700 Alliance Holdings GP, L.P. $23,636,295
101,790 Alliance Resource Partners, L.P. 4,657,910
1,145,621 Clearwater Natural Resources, L.P.
(Acquired 08/01/05 and 10/02/06,
Cost $22,912,423) (a) (b) (c) 11,456,210
123 Clearwater GP Holding Co.
(Acquired 02/29/08, Cost $187,828)
(a) (b) (c) 154,000
170,600 Natural Resource Partners, L.P. 6,713,110
------------------------------------------------------------------
46,617,525
------------------------------------------------------------------
CONSUMER DISCRETIONARY - 0.8%
183,105 StoneMor Partners, L.P. 3,259,269
------------------------------------------------------------------
MARINE TRANSPORTATION - 0.4%
36,000 Teekay LNG Partners, L.P.
(Marshall Islands) 1,053,000
15,603 Teekay Offshore Partners, L.P.
(Marshall Islands) 358,869
------------------------------------------------------------------
1,411,869
------------------------------------------------------------------
MIDSTREAM GAS INFRASTRUCTURE - 67.8%
98,900 Atlas Pipeline Partners, L.P. 4,066,768
1,692,804 Copano Energy, L.L.C. 62,379,827
190,000 Copano Energy, L.L.C., Unregistered Series
D Units (Acquired 03/14/08, Cost
$4,987,500) (a) (b) (c) 5,669,794
656,637 Crosstex Energy, L.P. 20,152,190
387,534 Crosstex Energy, L.P., Senior Subordinated
Series D Units (Acquired 03/23/07,
Cost $10,050,005) (a) (b) (c) 10,877,746
635,480 DCP Midstream Partners, L.P. 19,750,718
515,300 El Paso Pipeline Partners L.P. 11,805,523
1,460,580 Energy Transfer Partners, L.P. 70,619,043
544,280 Enterprise Products Partners L.P. 16,475,356
255,700 Hiland Partners, L.P. 12,782,443
226,194 Markwest Energy Partners, L.P. 8,156,556
206,918 Targa Resources Partners L.P. 5,489,535
200,000 Western Gas Partners L.P. (c) 3,350,000
426,400 Williams Partners, L.P. 15,218,216
175,000 Williams Pipeline Partners, L.P. 3,220,000
------------------------------------------------------------------
270,013,715
------------------------------------------------------------------
NUMBER
OF SHARES VALUE
------------------------------------------------------------------
MIDSTREAM OIL INFRASTRUCTURE - 59.7%
683,245 Enbridge Energy Partners, L.P. $ 34,367,223
463,730 Genesis Energy, L.P. 9,780,066
250,000 Global Partners, L.P. 4,717,500
457,600 Holly Energy Partners, L.P. (d) 20,752,160
467,450 Kinder Morgan Energy Partners, L.P. 27,191,566
476,903 Kinder Morgan Management, L.L.C. (e) 26,301,200
1,306,086 Magellan Midstream Partners, L.P. 50,597,772
266,600 NuStar GP Holdings, L.L.C. 6,627,676
1,176,651 Plains All American Pipeline, L.P. 57,491,168
------------------------------------------------------------------
237,826,331
------------------------------------------------------------------
OIL AND GAS PRODUCTION - 12.4%
571,150 Abraxas Petroleum Corp. (c) 2,541,617
525,211 Abraxas Energy Partners, L.P. (Acquired
05/25/07, Cost $8,066,191) (a) (b) 8,750,015
778,888 BreitBurn Energy Partners L.P.
(Acquired 11/01/07, Cost $20,640,532)
(a) (b) 16,606,054
302,595 EV Energy Partner, L.P. 9,456,094
498,465 Linn Energy L.L.C. 11,300,202
30,000 Pioneer Southwest Energy Partners L.P. (c) 581,400
------------------------------------------------------------------
49,235,382
------------------------------------------------------------------
PROPANE - 7.6%
522,900 Inergy Holdings, L.P. 20,785,275
338,900 Inergy, L.P. 9,526,479
------------------------------------------------------------------
30,311,754
------------------------------------------------------------------
TOTAL MASTER LIMITED PARTNERSHIPS AND
MLP AFFILIATES (Cost $439,712,110) 638,675,845
------------------------------------------------------------------
INCENTIVE DISTRIBUTION RIGHTS - 0.0%
43 Clearwater Natural Resources, L.P.
(Acquired 08/01/05, Cost $0) (a) (b) (c) -
------------------------------------------------------------------
WARRANTS - 0.1%
114,230 Abraxas Petroleum Corp. (Acquired 5/25/07,
Cost $0) (a) (b) (c) 295,033
------------------------------------------------------------------
See notes to financial statements.
SemiAnnual Report | May 31, 2008 | 11
FMO | Fiduciary/Claymore MLP Opportunity Fund | PORTFOLIO OF INVESTMENTS
(unaudited) continued
NUMBER
OF SHARES VALUE
------------------------------------------------------------------
SHORT TERM INVESTMENTS - 4.3%
MONEY MARKET FUND - 4.3%
17,329,055 Dreyfus Treasury & Agency Cash Management
- Investor Shares (Cost $17,329,055) $17,329,055
------------------------------------------------------------------
TOTAL INVESTMENTS - 164.8%
(Cost $457,041,165) 656,299,933
Borrowings Outstanding - (43.9% of Net
Assets or 26.7% of Total Investments) (175,000,000)
Liabilities in Excess of Other Assets -
(20.9%) (83,071,976)
------------------------------------------------------------------
Net Assets - 100.0% $398,227,957
------------------------------------------------------------------
L.L.C. Limited Liability Company
L.P. Limited Partnership
MLP Master Limited Partnership
(a) Security is restricted and may be resold only in transactions exempt from
registration, normally to qualified institutional buyers. At May 31, 2008,
restricted securities aggregate market value amounted to $53,808,852 or
13.5% of net assets.
(b) Security is valued in accordance with Fair Valuation procedures established
in good faith by the Board of Trustees. The total market value of such
securities is $53,808,852 which represents 13.5% of net assets.
(c) Non-income producing security.
(d) Affiliated company. See Note 5 in the Notes to Financial Statements.
(e) While non-income producing, security makes regular in-kind distributions.
See notes to financial statements.
12 | SemiAnnual Report | May 31, 2008
FMO | Fiduciary/Claymore MLP Opportunity Fund
Statement of ASSETS AND LIABILITIES | MAY 31, 2008 (UNAUDITED)
ASSETS
Unaffiliated investments in securities, at value (cost $442,380,370) $635,547,773
Affiliated investments in securities, at value (cost $14,660,795) 20,752,160
--------------------------------------------------------------------------------------------------------------
Total investments in securities, at value (cost $457,041,165) 656,299,933
Cash 804,782
Receivable for investments sold 2,664,587
Net unrealized appreciation on interest rate swaps 2,078,516
Interest receivable 7,614
Other assets 284,699
--------------------------------------------------------------------------------------------------------------
Total assets 662,140,131
--------------------------------------------------------------------------------------------------------------
LIABILITIES
Borrowings 175,000,000
Net deferred tax liability 85,889,775
Current tax liability 781,236
Payable for investments purchased 855,938
Interest due on borrowings 640,162
Advisory fee payable 484,533
Administration fee payable 10,656
Accrued expenses and other liabilities 249,874
--------------------------------------------------------------------------------------------------------------
Total liabilities 263,912,174
--------------------------------------------------------------------------------------------------------------
NET ASSETS $398,227,957
==============================================================================================================
COMPOSITION OF NET ASSETS
Common stock, $.01 par value per share; unlimited number of shares authorized, 18,187,651
shares issued and outstanding $ 181,877
Additional paid-in capital 269,551,043
Net unrealized appreciation on investments and swaps, net of deferred tax 119,575,857
Accumulated net realized gain on investments, net of deferred tax 25,672,394
Accumulated net investment loss, net of deferred tax (16,753,214)
-------------------------------------------------------------------------------------------------------------
NET ASSETS $398,227,957
==============================================================================================================
NET ASSET VALUE
(based on 18,187,651 common shares outstanding) $ 21.90
==============================================================================================================
See notes to financial statements.
SemiAnnual Report | May 31, 2008 | l3
FMO | Fiduciary/Claymore MLP Opportunity Fund
Statement of OPERATIONS | FOR THE SIX MONTHS ENDED MAY 31, 2008 (UNAUDITED)
INVESTMENT INCOME
Distributions from unaffiliated master limited partnerships
(net of return of capital distributions received of $19,118,065) $ 1,785,939
Distributions from affiliated master limited partnerships
(net of return of capital distributions received of $752,818) -
Interest 59,002
--------------------------------------------------------------------------------------------------------------
Total income $ 1,844,941
--------------------------------------------------------------------------------------------------------------
EXPENSES
Advisory fee 2,853,410
Professional fees 107,922
Administration fee 62,801
Trustees' fees and expenses 61,263
Custodian fee 60,090
Commercial paper issuance costs 59,729
Fund accounting 59,364
Printing expense 52,144
Insurance 13,249
NYSE listing fee 10,626
Miscellaneous 10,192
Transfer agent fee 8,688
Interest expense on borrowings 3,635,881
--------------------------------------------------------------------------------------------------------------
Total expenses 6,995,359
--------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS BEFORE TAXES (5,150,418)
--------------------------------------------------------------------------------------------------------------
Deferred tax benefit 2,689,343
Current tax expense (721,336)
--------------------------------------------------------------------------------------------------------------
Net investment loss (3,182,411)
--------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized gain/(loss) on unaffiliated investments before taxes 10,935,376
Net realized gain/(loss) on affiliated investments before taxes 1,355,586
Net realized gain/(loss) on swaps 965,111
Deferred tax expense (5,065,229)
--------------------------------------------------------------------------------------------------------------
Net realized gain on investments 8,190,844
--------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation / (depreciation)
on investments before taxes (24,538,120)
Net change in unrealized appreciation / (depreciation) on swaps before taxes 2,078,516
Deferred tax benefit 8,581,956
--------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and swaps (13,877,648)
--------------------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments and swaps (5,686,804)
--------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(8,869,215)
--------------------------------------------------------------------------------------------------------------
See notes to financial statements.
14 | SemiAnnual Report | May 31, 2008
FMO | Fiduciary/Claymore MLP Opportunity Fund
Statements of CHANGES IN NET ASSETS |
FOR THE
SIX MONTHS ENDED FOR THE
MAY 31, 2008 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 2007
===============================================================================================================
INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (3,182,411) $(7,169,757)
Net realized gain on investments 8,190,844 9,089,770
Net change in unrealized appreciation / (depreciation) on investments (13,877,648) 34,030,992
---------------------------------------------------------------------------------------------------------------
Net increase / (decrease) in net assets resulting from operations (8,869,215) 35,951,005
---------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM
Return of capital (13,141,134) (24,701,113)
---------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Reinvestment of dividends 1,800,035 893,428
---------------------------------------------------------------------------------------------------------------
Net increase from capital share transactions 1,800,035 893,428
---------------------------------------------------------------------------------------------------------------
Total increase / (decrease) in net assets (20,210,314) 12,143,320
Net Assets
Beginning of period 418,438,271 406,294,951
---------------------------------------------------------------------------------------------------------------
End of period (including accumulated net investment losses of
$16,753,214 and $13,570,802, respectively, net of deferred tax) $398,227,957 $418,438,271
==============================================================================================================
See notes to financial statements.
SemiAnnual Report | May 31, 2008 | l5
FMO | Fiduciary/Claymore MLP Opportunity Fund
Statement of CASH FLOWS | FOR THE SIX MONTHS ENDED MAY 31, 2008 (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net decrease in net assets resulting from operations $ (8,869,215)
---------------------------------------------------------------------------------------------------------------
ADJUSTMENTS TO RECONCILE NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS TO
NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES:
Net change in unrealized appreciation on investments and swaps 22,459,604
Net accretion of bond discount and amortization of bond premium before taxes (40,546)
Net realized gain on investments before taxes (12,290,962)
Purchases of long-term investments (39,066,044)
Proceeds from sale of long-term investments 51,990,920
Net purchases of short-term investments (13,189,352)
Increase in receivable for investments sold (2,664,587)
Increase in interest receivable (7,614)
Decrease in other assets 40,396
Decrease in deferred tax liability (6,230,170)
Increase in current tax liability 255,436
Decrease in interest due on borrowings (319,501)
Decrease in advisory fee payable (2,934)
Increase in payable for investments purchased 855,938
Increase in administration fee payable 57
Increase in accrued expenses and other liabilities 42,781
Return of capital distributions received from investee companies 19,870,883
Adjustment to prior year estimated return of capital distributions received
from investee companies (1,073,426)
---------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities $ 11,761,664
---------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Return of capital distributions (11,341,099)
---------------------------------------------------------------------------------------------------------------
Net Cash Used by Financing Activities (11,341,099)
---------------------------------------------------------------------------------------------------------------
Net increase in cash 420,565
CASH AT BEGINNING OF PERIOD 384,217
---------------------------------------------------------------------------------------------------------------
CASH AT END OF PERIOD $ 804,782
===============================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: CASH PAID DURING THE PERIOD FOR INTEREST $ 3,955,382
===============================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: IN KIND STOCK DIVIDENDS RECEIVED DURING
THE PERIOD $ 870,011
===============================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: TAXES PAID DURING THE PERIOD $ 490,000
===============================================================================================================
See notes to financial statements.
16 | SemiAnnual Report | May 31, 2008
FMO | Fiduciary/Claymore MLP Opportunity Fund
Financial HIGHLIGHTS |
FOR THE FOR THE PERIOD
SIX MONTHS ENDED FOR THE FOR THE DECEMBER 28, 2004*
PER SHARE OPERATING PERFORMANCE MAY 31, 2008 YEAR ENDED YEAR ENDED THROUGH
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD (UNAUDITED) NOVEMBER 30, 2007 NOVEMBER 30, 2006 NOVEMBER 30, 2005
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 23.11 $ 22.49 $ 19.78 $ 19.10(b)
------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (0.28) (0.67) (0.33) (0.26)
Net realized and unrealized gain/loss on investments (0.21) 2.66 4.29 1.92
------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.49) 1.99 3.96 1.66
------------------------------------------------------------------------------------------------------------------------------------
COMMON SHARES' OFFERING EXPENSES CHARGED TO PAID-IN CAPITAL - - - (0.04)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
Return of capital (0.72) (1.37) (1.25) (0.94)
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 21.90 $ 23.11 $ 22.49 $ 19.78
------------------------------------------------------------------------------------------------------------------------------------
MARKET VALUE, END OF PERIOD $ 22.70 $ 22.66 $ 21.87 $ 17.99
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN (C)
Net asset value -2.07% 8.53% 20.70% 8.38%
Market value 3.53% 9.70% 29.68% -5.81%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $398,228 $ 418,438 $ 406,295 $ 357,441
Ratios to Average Net Assets applicable to Common Shares: (d)
Total expenses, excluding interest expense and deferred
tax expense/benefit 1.70% 1.62% 1.69% 1.48%
Total expenses, including interest expense and deferred
tax expense/benefit 0.77% 9.40% 16.89% 8.41%
Interest expense 1.84% 2.13% 2.17% 1.02%
Current and deferred tax expense/(benefit) (2.77)% 5.65% 13.03% 5.91%
Net investment income/(loss), including interest expense
and deferred tax expense/benefit 0.17% (8.40)% (14.66)% (7.30)%
Net investment income/(loss), excluding interest expense
and deferred tax expense/benefit (0.76)% (0.62)% 0.55% (0.37)%
Ratios to Average Managed Assets: (d)(e)
Total expenses, excluding interest expense and deferred
tax expense/benefit 1.18% 1.18% 1.20% 1.19%
Total expenses, including interest expense and deferred
tax expense/benefit 0.53% 6.86% 12.03% 6.77%
Interest expense 1.27% 1.56% 1.55% 0.82%
Current and deferred tax expense/(benefit) (1.92)% 4.12% 9.28% 4.76%
Net investment income/(loss), including interest expense
and deferred tax expense/benefit 0.12% (6.13)% (10.44)% (5.88)%
Net investment income/(loss), excluding interest expense
and deferred tax expense/benefit (0.53)% (0.45)% 0.39% (0.30)%
Portfolio Turnover Rate 6% 11% 21% 41%
Senior Indebtedness
Total borrowings outstanding (in thousands) $175,000 $ 175,000 $ 150,000 $ 150,000
Asset coverage per $1,000 of indebtedness(f) $ 3,276 $ 3,391 $ 3,709 $ 3,383
* Commencement of investment operations.
(a) Based on average shares outstanding during the period.
(b) Before deduction of offering expenses charged to capital.
(c) Total investment return is calculated assuming a purchase of a common share
at the beginning of the period and a sale on the last day of the period
reported either at net asset value ("NAV") or market price per share.
Dividends and distributions are assumed to be reinvested at NAV for NAV
returns or the prices obtained under the Fund's Dividend Reinvestment Plan
for market value returns. Total investment return does not reflect
brokerage commissions. A return calculated for a period of less than one
year is not annualized.
(d) Annualized.
(e) Managed assets are equal to net assets plus outstanding leverage.
(f) Calculated by subtracting the Fund's total liabilities (not including the
borrowings) from the Fund's total assets and dividing by the total
borrowings.
See notes to financial statements.
SemiAnnual Report | May 31, 2008 | l7
FMO | Fiduciary/Claymore MLP Opportunity Fund
Notes to FINANCIAL STATEMENTS | MAY 31, 2008 (UNAUDITED)
Note 1 - ORGANIZATION:
Fiduciary/Claymore MLP Opportunity Fund (the "Fund") was organized as a Delaware
statutory trust on October 4, 2004. The Fund is registered as a non-diversified,
closed-end management investment company under the Investment Company Act of
1940, as amended.
The Fund's investment objective is to provide a high level of after-tax total
return with an emphasis on current distributions paid to shareholders. The Fund
has been structured to seek to provide an efficient vehicle through which its
shareholders may invest in a portfolio of publicly traded securities of master
limited partnerships ("MLPs") and MLP affiliates. MLPs combine the tax benefits
of limited partnerships with the liquidity of publicly traded securities. The
Fund believes that as a result of the tax characterization of cash distributions
made by MLPs to their investors (such as the Fund) a significant portion of the
Fund's income will be tax-deferred returns of capital, which will allow
distributions by the Fund to its shareholders to include high levels of
tax-deferred income. There can be no assurance that the Fund will achieve its
investment objective.
Note 2 - ACCOUNTING POLICIES:
The preparation of the financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from these estimates.
The following is a summary of significant accounting policies followed by the
Fund.
(a) VALUATION OF INVESTMENTS
Readily marketable securities listed on an exchange are valued at the last
reported sale price on the primary exchange or in the principal over the counter
("OTC") market on which they are traded. Readily marketable securities traded on
an exchange or OTC for which there are no transactions on a given day are valued
at the mean of the closing bid and asked prices. Securities traded on NASDAQ are
valued at the NASDAQ Official Closing Price. Debt securities are valued by
independent pricing services or dealers using the last available bid price for
such securities or, if such prices are not available, at prices for securities
of comparable maturity, quality and type. For those securities where quotations
or prices are not available, including restricted securities, valuations are
determined in accordance with procedures established in good faith by the Board
of Trustees. These procedures consider factors such as discounts to publicly
traded securities and/or securities with similar yields, quality, type of issue
and duration. Interest rate swaps are valued at closing prices for such
contracts established by the dealer. Short-term securities having a remaining
maturity of sixty days or less are valued at amortized cost, which approximates
market value.
In September, 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 157, "Fair Valuation
Measurements" ("FAS 157"). This standard clarifies the definition of fair value
for financial reporting, establishes a framework for measuring fair value and
requires additional disclosures about the use of fair value measurements. FAS
157 establishes three different categories for valuations. Level 1 valuations
are those based upon quoted prices in active markets. Level 2 valuations are
those based upon quoted prices in inactive markets or based upon significant
observable inputs (i.e. yield curves; benchmark interest rates; indices). Level
3 valuations are those based upon unobservable inputs (i.e. discounted cash flow
analysis; non-market based methods used to determine fair valuation). Details of
the valuations as of May 31, 2008 were as follows:
DESCRIPTION SECURITIES DERIVATIVES TOTAL
----------------------------------------------------------------
(value in $000s)
Level 1 $ 602,491 $ - $ 602,491
Level 2 33,154 2,079 35,233
Level 3 20,655 - 20,655
----------------------------------------------------------------
Total $ 656,300 $ 2,079 $ 658,379
----------------------------------------------------------------
LEVEL 3 HOLDINGS SECURITIES DERIVATIVES TOTAL
--------------------------------------------------------------------------------------
(value in $000s)
Beginning Balance at 11/30/07 $ 20,418 $ - $ 20,418
Total Realized Gain/Loss - - -
Change in Unrealized Gain/Loss 83 - 83
Net Purchases and Sales 154 - 154
Net Transfers In/Out - - -
--------------------------------------------------------------------------------------
Ending Balance at 5/31/08 $ 20,655 $ - $ 20,655
======================================================================================
(b) INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Realized gains and
losses on investments are determined on the identified cost basis. Dividend
income is recorded on the ex-dividend date and interest income is recorded on an
accrual basis. Discounts or premiums on debt securities purchased are accreted
or amortized to interest income over the lives of the respective securities
using the effective interest method.
The Fund records the character of dividends received from MLPs based on
estimates made at the time such distributions are received. These estimates are
based upon a historical review of information available from each MLP and other
industry sources. The Fund's characterization of the estimates may subsequently
be revised based on information received from MLPs after their tax reporting
periods conclude.
For the six months ended May 31, 2008, the Fund estimated approximately 8% of
its distributions from MLPs as investment income and approximately 92% as return
of capital, which is reflected in the Statement of Operations.
Subsequent to November 30, 2007, the Fund reclassified the amount of investment
income and return of capital it recognized based on the 2007 tax reporting
information received from the individual MLPs. This reclassification amounted to
an increase in pre-tax net investment income of approximately $1.1 million ($0.6
million net of deferred tax benefit) and a corresponding decrease in unrealized
appreciation of investments of approximately $1.1 million ($0.6 million net of
deferred tax expense). The reclassification is reflected in the period ended May
31, 2008.
(c) SWAPS
A swap is an agreement to exchange the return generated by one instrument for
the return generated by another instrument. The Fund may enter into swap
agreements to manage its exposure to interest rates and/or credit risk or to
generate income. Interest rate swap agreements involve the exchange by the Fund
with another party of their respective commitments to pay or receive interest.
The swaps are valued daily at current market value and any unrealized gain or
loss is included in the Statement of Assets and Liabilities. Gain or loss is
realized on the
l8 | SemiAnnual Report | May 31, 2008
FMO | Fiduciary/Claymore MLP Opportunity Fund | NOTES TO FINANCIAL STATEMENTS
(unaudited) continued
termination date of the swap and is equal to the difference between the Fund's
basis in the swap and the proceeds of the closing transaction, including any
fees. During the period that the swap agreement is open, the Fund may be subject
to risk from the potential inability of the counterparty to meet the terms of
the agreement. The swaps involve elements of both market and credit risk in
excess of the amounts reflected on the Statement of Assets and Liabilities.
Realized gain (loss) upon termination of swap contracts is recorded on the
Statement of Operations. Fluctuations in the value of swap contracts are
recorded as a component of net change in unrealized appreciation (depreciation)
of swap contracts. Net periodic payments received by the Fund are included as
part of realized gains (losses) and, in the case of accruals for periodic
payments, are included as part of unrealized appreciation (depreciation) on the
Statement of Operations.
(d) DISTRIBUTIONS TO SHAREHOLDERS
The Fund intends to make quarterly distributions to shareholders. Distributions
to shareholders are recorded on the ex-dividend date. Distributions are
determined in accordance with U.S. generally accepted accounting principles
which may differ from their ultimate characterization for federal income tax
purposes. The Fund anticipates that a significant portion of its distributions
will be comprised of return of capital as a result of the tax character of cash
distributions made by MLPs. The Fund is unable to make final determinations as
to the tax character of the distributions to shareholders until after the end of
the calendar year.
Note 3 - INVESTMENT ADVISORY AGREEMENT, SUB-ADVISORY AGREEMENT
AND OTHER AGREEMENTS:
Pursuant to an Investment Advisory Agreement (the "Advisory Agreement") between
the Fund and Claymore Advisors, LLC (the "Adviser"), the Adviser will furnish
offices, necessary facilities and equipment, oversee the activities of Fiduciary
Asset Management, LLC (the "Sub-Adviser"), provide personnel including certain
officers required for its administrative management and pay the compensation of
all officers and Trustees of the Fund who are its affiliates. As compensation
for these services, the Fund will pay the Adviser an annual fee, payable
monthly, in an amount equal to 1.00% of the Fund's average daily Managed Assets
(net assets plus any assets attributable to financial leverage).
Pursuant to a Sub-Advisory Agreement (the "Sub-Advisory Agreement") between the
Fund, the Adviser and the Sub-Adviser, the Sub-Adviser under the supervision of
the Fund's Board of Trustees and the Adviser, provides a continuous investment
program for the Fund's portfolio; provides investment research and makes and
executes recommendations for the purchase and sale of securities; and provides
certain facilities and personnel, including certain officers required for its
administrative management and pays the compensation of all officers and Trustees
of the Fund who are its affiliates. As compensation for its services, the
Adviser pays the Sub-Adviser a fee, payable monthly, in an annual amount equal
to 0.50% of the Fund's average daily Managed Assets.
Under a separate Fund Administration agreement, the Adviser provides Fund
Administration services to the Fund. As compensation for services performed
under the Administration Agreement, the Adviser receives an administration fee
payable monthly at the annual rate set forth below as a percentage of the
average daily managed assets of the Fund:
MANAGED ASSETS RATE
================================================================
First $200,000,000 0.0275%
Next $300,000,000 0.0200%
Next $500,000,000 0.0150%
Over $1,000,000,000 0.0100%
----------------------------------------------------------------
The Bank of New York Mellon ("BNY") acts as the Fund's custodian, accounting
agent and transfer agent. As custodian, BNY is responsible for the custody of
the Fund's assets. As accounting agent, BNY is responsible for maintaining the
books and records of the Fund's securities and cash. As transfer agent, BNY is
responsible for performing transfer agency services for the Fund.
Note 4 - FEDERAL INCOME TAXES:
The Fund will be treated as a regular corporation, or "C" corporation, for U.S.
federal income tax purposes. Accordingly, the Fund generally will be subject to
U.S. federal income tax on its taxable income at the graduated rates applicable
to corporations (currently at a maximum rate of 35%). In addition, as a regular
corporation, the Fund will be subject to various state income taxes by reason of
its investments in MLPs. The Fund may be subject to a 20% alternative minimum
tax to the extent that it exceeds the Fund's regular income tax liability. The
amount to which the Fund is required to pay U.S. corporate income tax or
alternative minimum tax could materially reduce the Fund's cash available to
make distributions on Common Shares.
Information on the tax components of investments as of May 31, 2008 is as
follows:
COST OF NET TAX NET TAX
INVESTMENTS GROSS TAX GROSS TAX UNREALIZED UNREALIZED
FOR TAX UNREALIZED UNREALIZED APPRECIATION APPRECIATION
PURPOSES APPRECIATION DEPRECIATION ON INVESTMENTS ON DERIVATIVES
============================================================================
$413,830,954 $257,759,297 $(15,290,318) $242,468,979 $2,078,516
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for tax purposes. The Fund will accrue deferred
income taxes for its future tax liability associated with that portion of MLP
distributions considered to be a tax-deferred return of capital as well as
capital appreciation of its investments. For purposes of estimating deferred tax
liability for financial statement reporting and determining its net asset value,
the Fund will be required to rely, to some extent, on information provided by
MLPs in which it invests. Such information may not be received in a timely
manner. Accordingly, the Fund will, from time to time, modify its estimates or
assumptions regarding its deferred tax liability as new information becomes
available. Upon the sale of an equity security in an MLP, the Fund generally
will be liable for any previously deferred taxes. The Fund's income tax
provision consists of the following:
Current taxes $ 721,336
Deferred federal income taxes benefit (5,275,885)
Deferred state income taxes benefit (930,185)
--------------------------------------------------------------------------------
Total current and deferred tax expense (benefit) $(5,484,734)
--------------------------------------------------------------------------------
Total income tax expense differs from the amount computed by applying the
federal statutory income tax rate of 35% to net investment income and realized
and unrealized gains before taxes as follows:
RATE
================================================================================
Application of statutory income tax rate benefit $ 5,090,382 35.00%
State income tax benefit 830,052 5.71%
Foreign income tax expense (435,700) (3.00)%
--------------------------------------------------------------------------------
Total tax benefit $ 5,484,734 37.71%
--------------------------------------------------------------------------------
SemiAnnual Report | May 31, 2008 | l9
FMO | Fiduciary/Claymore MLP Opportunity Fund | NOTES TO FINANCIAL STATEMENTS
(unaudited) continued
Components of the Fund's deferred tax liability as of May 31, 2008 are as
follows:
DEFERRED TAX ASSETS:
Net operating loss carryforward $ 14,395,182
Valuation allowance (2,731,979)
------------------------------------------------------------------------------
Deferred tax asset 11,663,203
------------------------------------------------------------------------------
DEFERRED TAX LIABILITIES:
Unrealized gain on investments $ 97,552,978
------------------------------------------------------------------------------
Gross deferred tax liability 97,552,978
------------------------------------------------------------------------------
Net deferred tax liability $ 85,889,775
------------------------------------------------------------------------------
At May 31, 2008, November 30, 2007 and November 30, 2006, the Fund recorded a
valuation allowance against its deferred tax assets in the amount of $391,215,
$1,665,241 and $675,523, respectively. This allowance occurred because it is
unlikely that the Fund will be able to use net operating losses sourced to
states (other than Illinois) because it is not projected that the Fund will have
future taxable income sourced to these states.
At November 30, 2007 and 2006, the Fund had a net operating loss for federal
income tax purposes of $10,333,986 and $16,422,389, respectively. This net
operating loss may be carried forward for 20 years, and would expire November
30, 2027 and 2026, respectively.
On July 13, 2006, the FASB released FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how
uncertain tax positions should be recognized, measured, presented and disclosed
in the financial statements. FIN 48 requires the evaluation of tax positions
taken or expected to be taken in the course of preparing the Fund's tax returns
to determine whether the tax positions are "more-likely-than-not" of being
sustained by the applicable tax authority. Tax positions not deemed to meet the
more-likely-than-not threshold would be recorded as a tax benefit or expense in
the current year. Management has evaluated the implications of FIN 48 and has
determined it does not have any impact on the financial statements as of May 31,
2008.
Tax years for 2005, 2006 and 2007 are still subject to examination by major
jurisdictions.
Note 5 - AFFILIATED COMPANIES:
During the period, the Fund owned shares of the following affiliated companies.
Affiliated companies are defined by the 1940 Act, as amended, as those companies
in which a Fund holds 5% or more of the outstanding voting securities.
RETURN
OF CAPITAL MARKET
DIVIDEND DISTRIBUTIONS VALUE
NAME SHARES INCOME RECEIVED 5/31/08 COST
==============================================================================================
Holly Energy Partners, L.P. 457,600 - $752,818 $20,752,160 $14,660,795
Affiliate transactions during the six months ended May 31, 2008 were:
RETURN
REALIZED OF CAPITAL
SHARES GROSS GROSS SHARES GAIN/ DISTRIBUTIONS
NAME 11/30/07 ADDITIONS REDUCTIONS 5/31/08 (LOSS) RECEIVED
========================================================================================================
Holly Energy Partners L.P. 624,150 - (166,550) 457,600 $1,355,586 $84,722
Note 6 - INVESTMENTS IN SECURITIES:
For the six months ended May 31, 2008, purchases and sales of investments,
excluding short-term securities, were $39,066,044 and $51,990,920, respectively.
The Fund entered into interest rate swap agreements during the six months ended
May 31, 2008. As of May 31, 2008, the Fund had swaps with a total notional value
of $120,000,000 outstanding. Details of the swap agreements outstanding as of
May 31, 2008 were as follows:
NOTIONAL UNREALIZED
TERMINATION AMOUNT FIXED APPRECIATION/
COUNTERPARTY DATE (000) RATE FLOATING RATE (DEPRECIATION)
==============================================================================================
Merrill Lynch 01/30/2011 $30,000 3.05% 1-Month LIBOR $ 140,040
Merrill Lynch 01/30/2013 $30,000 3.49% 1-Month LIBOR 449,088
Morgan Stanley 02/07/2011 $30,000 2.92% 1-Month LIBOR 332,762
Morgan Stanley 03/19/2013 $30,000 3.13% 1-Month LIBOR 1,156,626
----------------------------------------------------------------------------------------------
$2,078,516
----------------------------------------------------------------------------------------------
For each swap noted, the Fund is obligated to pay the fixed rate and entitled to
receive the floating rate.
Note 7 - BORROWINGS:
On July 15, 2005, the Fund entered into a commercial paper conduit funding
agreement with a line of credit of $150,000,000. The Fund incurred an issuance
cost of $500,000 associated with the $150,000,000 commercial paper conduit. This
cost is being amortized to expense over a period of five years. A $25,000,000
addition to the line of credit was secured by the Fund and issued on May 24,
2007. Interest on the amount borrowed is based on the prevailing commercial
paper rate plus 0.35%. An unused commitment fee of 0.15% is charged on the
difference between the credit line of $175,000,000 and the amount borrowed. The
commercial paper rate is reset periodically. At May 31, 2008 there was
$175,000,000 outstanding in connection with the Fund's commercial paper conduit.
The average daily amount of borrowings during the six months ended May 31, 2008
was $175,000,000 with a related weighted average interest rate of 4.16%,
inclusive of the 0.35% program fee. The maximum amount outstanding during the
six months ended May 31, 2008, was $175,000,000.
Note 8 - CAPITAL:
COMMON SHARES
The Fund has an unlimited amount of common shares, $0.01 par value, authorized
and 18,187,651 issued and outstanding.
Transactions in common shares were as follows:
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2008 NOVEMBER 30, 2007
====================================================================================
Beginning shares 18,105,218 18,067,021
Shares issued through dividend reinvestment 82,433 38,197
------------------------------------------------------------------------------------
Ending shares 18,187,651 18,105,218
------------------------------------------------------------------------------------
Note 9 - CONCENTRATION OF RISK:
Because the Fund is focused in MLP entities in the energy, natural resources and
real estate sectors of the economy, such concentration may present more risks
than if the Fund were broadly diversified over numerous industries and sectors
of the economy. A downturn in the energy, natural resources or real estate
sectors of the economy could have a larger impact on the Fund than on an
investment company that does not concentrate in such sectors. At times, the
performance of securities of companies in the energy, natural resources and real
estate sectors of the economy may lag the performance of other sectors or the
broader market as a whole.
20 | SemiAnnual Report | May 31, 2008
FMO | Fiduciary/Claymore MLP Opportunity Fund | NOTES TO FINANCIAL STATEMENTS
(unaudited) continued
An investment in MLP units involves risks that differ from a similar investment
in equity securities, such as common stock, of a corporation. Holders of MLP
units have the rights typically afforded to limited partners in a limited
partnership. As compared to common shareholders of a corporation, holders of MLP
units have more limited control and limited rights to vote on matters affecting
the partnership. There are certain tax risks associated with an investment in
MLP units. Additionally, conflicts of interest may exist between common unit
holders, subordinated unit holders and the general partner of an MLP; for
example a conflict may arise as a result of incentive distribution payments.
Note 10 - RESTRICTED SECURITIES:
The Fund may invest up to 40% of its Managed Assets in unregistered or otherwise
restricted securities. Restricted securities are securities that are
unregistered, held by control persons of the issuer or are subject to
contractual restrictions on resale. The Fund will typically acquire restricted
securities in directly negotiated transactions. Restricted securities are fair
valued in accordance with procedures established by the Fund's Board of
Trustees. As of May 31, 2008, the Fund held the following restricted securities:
FAIR VALUE PER SHARE AT
DATE OF CURRENT MARKET ACQUISITION DATE 5/31/08
SECURITY ACQUISITION SHARES COST VALUE (UNRESTRICTED)*** PRICE
===============================================================================================================================
Abraxas Energy Partners, L.P. 5/25/07 525,211 $8,066,191 $ 8,750,015 $ 16.66 $ 16.66
Abraxas Petroleum Corp.* 5/25/07 114,230 - $ 295,033 - $ 2.58
BreitBurn Energy Partners L.P. 11/01/07 778,888 $20,640,532 $16,606,054 $ 27.00 $ 21.32
Clearwater GP Holding Co. 2/29/08 123 $ 187,828 $ 154,000 $ 1,252.03 $ 1,252.03
Clearwater Natural Resources L.P.** 8/01/05 43 - - - -
Clearwater Natural Resources L.P. 8/01/05 892,857 $17,857,143 $ 8,928,570 - $ 10.00
Clearwater Natural Resources L.P. 10/02/06 252,764 $ 5,055,280 $ 2,527,640 - $ 10.00
Copano Energy, L.L.C.,
Unregistered Series D Units 3/14/08 190,000 $ 4,987,500 $ 5,669,794 $ 34.05 $ 29.84
Crosstex Energy, L.P., Senior
Subordinated Series D Units 3/23/07 387,534 $10,050,005 $10,877,746 $ 34.65 $ 28.07
-------------------------
Total $66,844,479 $53,808,852
=========================
* Warrants.
** Incentive Distribution Rights.
*** Valuation of unrestricted common stock on the acquisition date of the
restricted securities.
Note 11 - ACCOUNTING PRONOUNCEMENTS:
In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities." This standard is intended to enhance
financial statement disclosures for derivative instruments and hedging
activities and enable investors to understand: a) how and why a fund uses
derivative instruments, b) how derivatives instruments and related hedge fund
items are accounted for, and c) how derivative instruments and related hedge
items affect a fund's financial position, results of operations and cash flows.
SFAS No. 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. As of May 31, 2008,
management does not believe the adoption of SFAS No. 161 will impact the
financial statement amounts; however, additional footnote disclosures may be
required about the use of derivative instruments and hedging items.
Note 12 - INDEMNIFICATIONS:
In the normal course of business, the Fund enters into contracts that contain a
variety of representations, which provide general indemnifications. The Fund's
maximum exposure under these arrangements is unknown, as this would involve
future claims that may be made against the Fund that have not yet occurred.
However, the Fund expects the risk of loss to be remote.
Note 13 - SUBSEQUENT EVENT:
Subsequent to May 31, 2008, the Fund declared a quarterly dividend of $0.37 per
share. This dividend is payable on July 31, 2008 to shareholders of record on
July 15, 2008.
Subsequent to May 31, 2008, management received notice from the Fund's line of
credit provider of their intent to not renew the Fund's line of credit.
Management is evaluating alternative sources of leverage to replace the existing
facility. It is anticipated, however, that the Fund's cost of leverage under any
new facility will increase.
SemiAnnual Report | May 31, 2008 | 2l
FMO | Fiduciary/Claymore MLP Opportunity Fund
Supplemental INFORMATION | (unaudited)
FEDERAL INCOME TAX INFORMATION
In January 2009, shareholders will be advised on IRS Form 1099 DIV or substitute
1099 DIV as to the federal tax status of the distributions received by you in
the calendar year 2008.
TRUSTEES
The Trustees of the Fiduciary/Claymore MLP Opportunity Fund and their principal
occupation during the past five years:
NAME, ADDRESS*, YEAR TERM OF OFFICE** PRINCIPAL OCCUPATIONS DURING NUMBER OF FUNDS IN
OF BIRTH AND POSITION(S) AND LENGTH OF THE PAST FIVE YEARS AND THE FUND COMPLEX*** OTHER DIRECTORSHIPS
HELD WITH REGISTRANT TIME SERVED OTHER AFFILIATIONS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
====================================================================================================================================
INDEPENDENT TRUSTEES:
====================================================================================================================================
Randall C. Barnes Since 2004 Investor (2001-present). 41 None.
Year of birth: 1951 Formerly, Senior Vice
Trustee 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).
------------------------------------------------------------------------------------------------------------------------------------
Howard H. Kaplan Since 2004 Partner of Stinson Morrison 2 None.
Year of birth: 1969 Hecker LLP, a law firm
Trustee providing legal advice in
business law and litigation.
------------------------------------------------------------------------------------------------------------------------------------
Robert B. Karn III Since 2004 Consultant (1998-present). 2 Director of Peabody
Year of birth: 1942 Previously, Managing Energy Company, GP,
Trustee Partner, Financial and Natural Resource
Economic Consulting, St. Partners LLC and
Louis Office of Arthur Kennedy Capital
Andersen, LLP. Management, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Ronald A. Nyberg Since 2004 Partner of Nyberg & 44 None.
Year of birth: 1953 Cassioppi, LLC, a law firm
Trustee 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).
------------------------------------------------------------------------------------------------------------------------------------
John M. Roeder Since 2005 Financial consultant 2 Director, LMI
Year of birth: 1943 (1999-present). Formerly, Aerospace.
Trustee Director in Residence at The
Institute for Excellence in
Corporate Governance of the
University of Texas at
Dallas School of Management.
Office Managing Partner,
Arthur Andersen, LLP.
------------------------------------------------------------------------------------------------------------------------------------
Ronald E. Toupin, Jr. Since 2004 Retired. 41 None.
Year of birth: 1958 Formerly, Vice President,
Trustee Manager and Portfolio
Manager of Nuveen Asset
Management (1998-1999), Vice
President of Nuveen
Investment Advisory Corp.
(1992-1999), 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 & Co., Inc.
(1982-1999).
INTERESTED TRUSTEES:
====================================================================================================================================
Nicholas Dalmaso+ Since 2004 Attorney. Formerly, Senior 44 None.
Year of birth: 1965 Managing Director and Chief
Trustee Administrative Officer
(2007-2008) and General
Counsel of Claymore Advisors,
LLC and Claymore
Securities, Inc. Formerly,
Assistant General
Counsel, John Nuveen and
Company Inc. (1999-2000).
Former Vice President and
Associate General Counsel of
Van Kampen Investments, Inc.
(1992-1999).
------------------------------------------------------------------------------------------------------------------------------------
Joseph E. Gallagher, Jr.++ Since 2004 Executive Managing Director 2 Member of the
8112 Maryland Avenue and Chief Operating Officer Board of Directors
Suite 400 of Fiduciary Asset for the Rossman
St. Louis, MO 63105 Management, LLC School
Year of Birth: 1956 (1994-present). Member of
Trustee the St. Louis Chapter of the
National Association for
Business Economics.
* Address for all Trustees unless otherwise noted: 2455 Corporate West Drive,
Lisle, IL 60532
** After a Trustee's initial term, each Trustee is expected to serve a
three-year term concurrent with the class of Trustees for which he serves:
-Messrs. Roeder, Toupin and Karn, as Class III trustees, are expected to
stand for re-election at the Fund's 2008 annual meeting of shareholders.
-Messrs. Barnes and Dalmaso, as Class I trustees, are expected to stand for
re-election at the Fund's 2009 annual meeting of shareholders.
-Messrs. Gallagher, Kaplan and Nyberg, as Class II trustees, are expected
to stand for re-election at the Fund's 2010 annual meeting of shareholders.
*** The Claymore Fund Complex consists of U.S. registered investment companies
advised or serviced by Claymore Advisors, LLC or Claymore Securities, Inc.
+ Mr. Dalmaso is an "interested person" (as defined in section 2(a)(19) of
the 1940 Act) of the Fund because of his former position as an officer of
and his equity ownership in Claymore Advisors, LLC, the Fund's Investment
Adviser, and certain of its affiliates.
++ Mr. Gallagher is an "interested person" (as defined in section 2(a)(19) of
the 1940 Act) of the Fund because of his position as an officer of
Fiduciary Asset Management, LLC, the Fund's Sub-Adviser.
22 | SemiAnnual Report | May 31, 2008
FMO | Fiduciary/Claymore MLP Opportunity Fund | SUPPLEMENTAL INFORMATION
(unaudited) continued
OFFICERS
The Officers of the Fiduciary/Claymore MLP Opportunity Fund and their principal
occupation during the past five years:
NAME, ADDRESS*, YEAR OF BIRTH AND TERM OF OFFICE** AND PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
POSITION(S) HELD WITH REGISTRANT LENGTH OF TIME SERVED AND OTHER AFFILIATIONS
====================================================================================================================================
OFFICERS:
====================================================================================================================================
J. Thomas Futrell Effective May 29, 2008 Senior Managing Director and Chief Investment
Year of birth: 1955 Officer of Claymore Advisors, LLC and Claymore
Chief Executive Officer Securities, Inc. (2008-present). Formerly,
Managing Director of Research, Nuveen Asset
Management (2000-2007).
------------------------------------------------------------------------------------------------------------------------------------
Kevin M. Robinson Effective May 29, 2008 Senior Managing Director and General Counsel of
Year of birth: 1959 Claymore Advisors, LLC, Claymore Securities,
Chief Legal Officer Inc. and Claymore Group, Inc. (2007-present).
Formerly, Associate General Counsel and
Assistant Corporate Secretary of NYSE Euronext,
Inc. (2000-2007).
------------------------------------------------------------------------------------------------------------------------------------
Steven M. Hill Since 2004 Senior Managing Director of Claymore Advisors,
Year of birth: 1964 LLC and Claymore Securities, Inc.
Chief Financial Officer, Chief (2005-present). Previously, Chief Financial
Accounting Officer and Treasurer Officer of Claymore Group Inc. (2005-2006).
Managing Director of Claymore Advisors, LLC and
Claymore Securities, Inc. (2003-2005).
Treasurer of Henderson Global Funds and
Operations Manager for Henderson Global
Investors (North America) 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 Since 2006 Vice President - Fund Compliance Officer of
Year of birth: 1957 Claymore Advisors, LLC (Feb. 2006-present).
Chief Compliance Officer Previously, Chief Compliance Officer/Assistant
Secretary of Harris Investment Management,
Inc. (2003-2006). Director-Compliance of
Harrisdirect LLC (1993-2003).
------------------------------------------------------------------------------------------------------------------------------------
Mark E. Mathiasen Since 2007 Assistant Vice President, Assistant General
Year of Birth: 1978 Counsel of Claymore Group, Inc. (2007 to
Secretary present). Secretary of certain funds in the
Fund Complex. Previously, Law Clerk for the
Idaho State Courts (2003-2007).
------------------------------------------------------------------------------------------------------------------------------------
James Cunnane, Jr. Since 2007 Managing Director, Senior Portfolio Manager
Year of Birth: 1970 (1996-present) of Fiduciary Asset Management,
Vice President LLC.
------------------------------------------------------------------------------------------------------------------------------------
Mohammed Riad Since 2007 Managing Director, Senior Portfolio Manager
Year of Birth: 1969 (1999-present) of Fiduciary Asset Management,
Vice President LLC.
------------------------------------------------------------------------------------------------------------------------------------
Matthew J. Patterson Since 2006 Vice President, Assistant General Counsel of
Year of birth: 1971 Claymore Group, Inc. (2006 to present).
Assistant Secretary Secretary of certain funds in the Fund Complex.
Previously, Chief Compliance Officer and Clerk,
The Preferred Group of Mutual Funds
(2005-2006). Chief Compliance Officer and
Secretary, Caterpillar Investment Management
Ltd. (2005-2006); Securities Counsel,
Caterpillar Inc. (2004-2006); Associate,
Skadden, Arps, Slate, Meagher & Flom LLP
(2002-2004).
------------------------------------------------------------------------------------------------------------------------------------
James Howley Since 2004 Vice President, Fund Administration of Claymore
Year of birth: 1972 Group, Inc. (2004-present). Previously,
Assistant Treasurer Manager, Mutual Fund Administration of Van
Kampen Investments.
------------------------------------------------------------------------------------------------------------------------------------
Melissa J. Nguyen Since 2006 Vice President, Assistant General Counsel of
Year of birth: 1978 Claymore Advisors, LLC. (2005 to present).
Assistant Secretary Secretary of certain funds in the Fund Complex.
Previously, Associate, Vedder, Price, Kaufman &
Kammholz, P.C. (2003-2005).
------------------------------------------------------------------------------------------------------------------------------------
* Address for all Officers: 2455 Corporate West Drive, Lisle, IL 60532
** Officers serve at the pleasure of the Board of Trustees and until his or
her successor is appointed and qualified or until his or her earlier
resignation or removal.
SemiAnnual Report | May 31, 2008 | 23
FMO | Fiduciary/Claymore MLP Opportunity Fund
Dividend Reinvestment PLAN | (unaudited)
Unless the registered owner of common shares elects to receive cash by
contacting the Plan Administrator, all dividends declared on common shares of
the Fund will be automatically reinvested by The Bank of New York Mellon (the
"Plan Administrator"), Administrator for shareholders in the Fund's Dividend
Reinvestment Plan (the "Plan"), in additional common shares of the Fund.
Participation in the Plan is completely voluntary and may be terminated or
resumed at any time without penalty by notice if received and processed by the
Plan Administrator prior to the dividend record date; otherwise such termination
or resumption will be effective with respect to any subsequently declared
dividend or other distribution. Some brokers may automatically elect to receive
cash on your behalf and may re-invest that cash in additional common shares of
the Fund for you. If you wish for all dividends declared on your common shares
of the Fund to be automatically reinvested pursuant to the Plan, please contact
your broker.
The Plan Administrator will open an account for each common shareholder under
the Plan in the same name in which such common shareholder's common shares are
registered. Whenever the Fund declares a dividend or other distribution
(together, a "Dividend") payable in cash, non-participants in the Plan will
receive cash and participants in the Plan will receive the equivalent in common
shares. The common shares will be acquired by the Plan Administrator for the
participants' accounts, depending upon the circumstances described below, either
(i) through receipt of additional unissued but authorized common shares from the
Fund ("Newly Issued Common Shares") or (ii) by purchase of outstanding common
shares on the open market ("Open-Market Purchases") on the New York Stock
Exchange or elsewhere. If, on the payment date for any Dividend, the closing
market price plus estimated brokerage commission per common share is equal to or
greater than the net asset value per common share, the Plan Administrator will
invest the Dividend amount in Newly Issued Common Shares on behalf of the
participants. The number of Newly Issued Common Shares to be credited to each
participant's account will be determined by dividing the dollar amount of the
Dividend by the net asset value per common share on the payment date; provided
that, if the net asset value is less than or equal to 95% of the closing market
value on the payment date, the dollar amount of the Dividend will be divided by
95% of the closing market price per common share on the payment date. If, on the
payment date for any Dividend, the net asset value per common share is greater
than the closing market value plus estimated brokerage commission, the Plan
Administrator will invest the Dividend amount in common shares acquired on
behalf of the participants in Open-Market Purchases.
If, before the Plan Administrator has completed its Open-Market Purchases, the
market price per common share exceeds the net asset value per common share, the
average per common share purchase price paid by the Plan Administrator may
exceed the net asset value of the common shares, resulting in the acquisition of
fewer common shares than if the Dividend had been paid in Newly Issued Common
Shares on the Dividend payment date. Because of the foregoing difficulty with
respect to Open-Market Purchases, the Plan provides that if the Plan
Administrator is unable to invest the full Dividend amount in Open-Market
Purchases during the purchase period or if the market discount shifts to a
market premium during the purchase period, the Plan Administrator may cease
making Open-Market Purchases and may invest the uninvested portion of the
Dividend amount in Newly Issued Common Shares at net asset value per common
share at the close of business on the Last Purchase Date provided that, if the
net asset value is less than or equal to 95% of the then current market price
per common share; the dollar amount of the Dividend will be divided by 95% of
the market price on the payment date.
The Plan Administrator maintains all shareholders' accounts in the Plan and
furnishes written confirmation of all transactions in the accounts, including
information needed by shareholders for tax records. Common shares in the account
of each Plan participant will be held by the Plan Administrator on behalf of the
Plan participant, and each shareholder proxy will include those shares purchased
or received pursuant to the Plan. The Plan Administrator will forward all proxy
solicitation materials to participants and vote proxies for shares held under
the Plan in accordance with the instruction of the participants. There will be
no brokerage charges with respect to common shares issued directly by the Fund.
However, each participant will pay a pro rata share of brokerage commission
incurred in connection with Open-Market Purchases. The automatic reinvestment of
Dividends will not relieve participants of any Federal, state or local income
tax that may be payable (or required to be withheld) on such Dividends.
The Fund reserves the right to amend or terminate the Plan. There is no direct
service charge to participants with regard to purchases in the Plan; however,
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants.
All correspondence or questions concerning the Plan should be directed to the
Plan Administrator, The Bank of New York Mellon, Attention: Stock Transfer
Department, 101 Barclay 11E, New York, NY 10286, Phone Number: (866) 488-3559.
24 | SemiAnnual Report | May 31, 2008
FMO | Fiduciary/Claymore MLP Opportunity Fund
Fund INFORMATION |
BOARD OF TRUSTEES
Randall C. Barnes
Nicholas Dalmaso*
Joseph E. Gallagher, Jr.**
Howard H. Kaplan
Robert B. Karn III
Ronald A. Nyberg
John M. Roeder
Ronald E. Toupin, Jr.
* Trustee is an "interested person" of the Fund as defined in the Investment
Company Act of 1940, as amended, as a result of his former position as an
officer of and his equity ownership in Claymore Advisors, LLC, the Fund's
Investment Adviser, and certain of its affiliates.
** Trustee is an "interested person" of the Fund as defined in the Investment
Company Act of 1940, as amended
OFFICERS
J. Thomas Futrell
Chief Executive Officer
Kevin M. Robinson
Chief Legal Officer
Steven M. Hill
Chief Accounting Officer,
Chief Financial Officer and Treasurer
Bruce Saxon
Chief Compliance Officer
Mark E. Mathiasen
Secretary
James Cunnane, Jr.
Vice President
Mohammed Riad
Vice President
James Howley
Assistant Treasurer
Matthew J. Patterson
Assistant Secretary
Melissa J. Nguyen
Assistant Secretary
INVESTMENT ADVISER
AND ADMINISTRATOR
Claymore Advisors, LLC
Lisle, Illinois
INVESTMENT SUB-ADVISER
Fiduciary Asset Management, LLC
St. Louis, Missouri
ACCOUNTING AGENT,
CUSTODIAN AND TRANSFER AGENT
The Bank of New York Mellon
New York, New York
LEGAL COUNSEL
Skadden, Arps, Slate,
Meagher & Flom LLP
Chicago, Illinois
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
Chicago, Illinois
PRIVACY PRINCIPLES OF FIDUCIARY/CLAYMORE MLP OPPORTUNITY FUND FOR SHAREHOLDERS
The Fund is committed to maintaining the privacy of its shareholders and to
safeguarding its non-public personal information. The following information is
provided to help you understand what personal information the Fund collects, how
we protect that information and why, in certain cases, we may share information
with select other parties.
Generally, the Fund does not receive any non-public personal information
relating to its shareholders, although certain non-public personal information
of its shareholders may become available to the Fund. The Fund does not disclose
any non-public personal information about its shareholders or former
shareholders to anyone, except as permitted by law or as is necessary in order
to service shareholder accounts (for example, to a transfer agent or third party
administrator).
The Fund restricts access to non-public personal information about the
shareholders to Claymore Advisors, LLC employees with a legitimate business need
for the information. The Fund maintains physical, electronic and procedural
safeguards designed to protect the non-public personal information of its
shareholders.
QUESTIONS CONCERNING YOUR SHARES OF FIDUCIARY/CLAYMORE MLP OPPORTUNITY FUND?
o If your shares are held in a Brokerage Account, contact your Broker.
o If you have physical possession of your shares in certificate form, contact
the Fund's Accounting Agent, Custodian and Transfer Agent: The Bank of New
York Mellon, 101 Barclay 11E New York, New York 10286; (866) 488-3559
This report is sent to shareholders of Fiduciary/Claymore MLP Opportunity Fund
for their information. It is not a Prospectus, circular or representation
intended for use in the purchase or sale of shares of the Fund or of any
securities mentioned in this report.
A description of the Fund's proxy voting policies and procedures related to
portfolio securities is available without charge, upon request, by calling the
Fund at (888) 991-0091.
Information regarding how the Fund voted proxies for portfolio securities, if
applicable, during the most recent 12-month period ended June 30, is also
available, without charge and upon request by calling (888) 991-0091 or by
accessing the Fund's Form N-PX on the SEC's website at www.sec.gov or
www.claymore.com.
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is
available on the SEC website at www.sec.gov or www.claymore.com. The Fund's Form
N-Q may also be viewed and copied at the SEC's Public Reference Room in
Washington, DC; information on the operation of the Public Reference Room may be
obtained by calling (800) SEC-0330 or at www.sec.gov.
In September 2007, the Fund submitted a CEO annual certification to the NYSE in
which the Fund's principal executive officer certified that he was not aware, as
of the date of the certification, of any violation by the Fund of the NYSE's
Corporate Governance listing standards. In addition, as required by Section 302
of the Sarbanes-Oxley Act of 2002 and related SEC rules, the Fund's principal
executive and principal financial officers have made quarterly certifications,
included in filings with the SEC on Forms N-CSR and N-Q, relating to, among
other things, the Fund's disclosure controls and procedures and internal control
over financial reporting.
SemiAnnual Report | May 31, 2008 | 25
FMO | Fiduciary/Claymore MLP Opportunity Fund
About the FUND MANAGER |
FIDUCIARY ASSET MANAGEMENT, LLC
Fiduciary is a registered investment adviser that manages a broad array of
equity and fixed-income portfolios primarily for institutional investors and is
based in St. Louis, Missouri. Fiduciary currently supervises and manages
approximately $17.8 billion in assets for endowments & foundations, public
pension plans, corporate trusts, union plans, Taft-Hartley plans, three
exchange-listed closed-end funds and five private investment funds.
INVESTMENT PHILOSOPHY
Fiduciary believes that investment decisions should always be guided
by a disciplined, risk-aware strategy that seeks to add value in all market
environments. Their unique investment philosophy is multifaceted, utilizing
macroeconomic analysis, disciplined security selection, cost-controlled trading
procedures, continuous risk analysis and an unwavering focus on achieving
shareholder objectives.
INVESTMENT PROCESS
The manager seeks to achieve the Fund's investment objective by investing
primarily in securities of MLP (Master Limited Partnership) entities that
Fiduciary believes offer attractive distribution rates and capital appreciation
potential. Energy and natural resources represent a substantial portion of the
MLP entities. In seeking investments, Fiduciary looks for MLPs that offer a
combination of quality, growth and yield; intended to produce superior total
returns over the long run. In selecting individual positions, the manager
employs Fiduciary's top-down process which considers a combination of
quantitative, qualitative and relative value factors. Fiduciary emphasizes
rigorous proprietary analysis and valuation models constructed and maintained by
its in-house investment analysts, while maintaining active dialogues with
research analysts covering the MLP entities and an ongoing relationship with
company management. In applying its selection criteria, the manager considers a
company's proven track record, business prospects, strong record of distribution
or dividend growth, ratios of debt to cash flow, coverage ratios with respect to
distributions to unit holders, distribution incentive structure and the
composition and goals of the company management team.
26 | SemiAnnual Report | May 31, 2008
(This page is intentionally left blank)
FIDUCIARY ASSET MANAGEMENT, LLC
8112 Maryland Ave.
Suite 400
St. Louis, MO 63105
CLAYMORE SECURITIES, INC.
2455 Corporate West Drive
Lisle, IL 60532
Member FINRA/SIPC (07/08)
FMO
LISTED
NYSE
FMO-SAR-0508
Item 2. Code of Ethics.
Not applicable for a semi-annual reporting period.
Item 3. Audit Committee Financial Expert.
Not applicable for a semi-annual reporting period.
Item 4. Principal Accountant Fees and Services.
Not applicable for a semi-annual reporting period.
Item 5. Audit Committee of Listed Registrants.
Not applicable for a semi-annual reporting period.
Item 6. Schedule of Investments.
The Schedule of Investments is included as part of Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable for a semi-annual reporting period.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
(a) Not applicable for a semi-annual reporting period.
(b) There has been no change, as of the date of this filing, in the
Portfolio Manager identified in response to paragraph (a)(1) of
this Item in the registrant's most recent annual report on Form
N-CSR.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
None.
Item 10. Submission of Matters to a Vote of Security Holders.
The registrant has not made any material changes to the procedures by which
shareholders may recommend nominees to the registrant's Board of Trustees.
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial officer
have evaluated the registrant's disclosure controls and procedures (as defined
in Rule 30a under the Investment Company Act of 1940) as of a date within 90
days of this filing and have concluded based on such
evaluation, as required by Rule 30a-3(b) under the Investment Company Act of
1940, that the registrant's disclosure controls and procedures were effective,
as of that date, in ensuring that information required to be disclosed by the
registrant in this Form N-CSR was recorded, processed, summarized, and reported
within the time periods specified in the Securities and Exchange Commission's
rules and forms.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940)
that occurred during the registrant's second fiscal quarter that have materially
affected, or are reasonably likely to materially affect, the registrant's
internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Not applicable.
(a)(2) Certifications of principal executive officer and principal financial
officer pursuant to Rule 30a-2(a) of the Investment Company Act of 1940.
(b) Certifications of principal executive officer and principal financial
officer pursuant to Rule 30a-2(b) of the Investment Company Act of 1940 and
Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Fiduciary/Claymore MLP Opportunity Fund
By: /s/ J. Thomas Futrell
------------------------------------------------
Name: J. Thomas Futrell
Title: Chief Executive Officer
Date: August 4, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ J. Thomas Futrell
------------------------------------------------
Name: J. Thomas Futrell
Title: Chief Executive Officer
Date: August 4, 2008
By: /s/ Steven M. Hill
------------------------------------------------
Name: Steven M. Hill
Title: Chief Financial Officer, Chief Accounting Officer and Treasurer
Date: August 4, 2008