CHB Resources

ETF Fund Guide
ETF Performance Guide
CHB

FUND SUMMARY

The Claymore Advantaged High Yield Bond ETF(the “Fund”) seeks to provide a return based on the price and performance, before fees and expenses, of the Barclays Capital U.S. High-Yield Very Liquid Index (“the Index”). The Fund obtains a tax-efficient exposure to the constituent securities of the index through entering into a forward agreement with a Canadian Chartered Bank.

The ETF provides suitable investors of different sizes with the opportunity to gain exposure to a well diversified U.S. high yield bond portfolio, on a Canadian dollar hedged basis.

Important Advantages Over Traditional Bond Investments:

The high-yield or "below investment-grade" segment of the bond market is comprised of all securities rated BB or lower by Standard & Poor’s® (S&P), and Ba or lower by Moody’s Investors Service® (Moody’s), and BB or lower by Fitch Ratings® (Fitch). High yield bonds typically offer higher interest rates than Treasuries or high-grade corporate bonds and have the potential for capital appreciation in the event of a rating upgrade, an economic recovery or improved performance at the issuing company.

Index Rules

  • Float – Minimum outstanding par value of at least US$600 million.
  • Quality – Each constituent must be rated high-yield (Ba1/BB+/BB+ or below) using the middle rating of Moody’s, S&P, and Fitch, respectively.
  • Maturity – The bonds included in the portfolio will have a maturity of at least one year.
  • Seniority of Debt – Senior and subordinated issued are included.
  • Coupon – Fixed-rate. Original issue zero coupon bonds, step-up coupons, and coupons that change according to a predetermined schedule are also included.
  • Market of Issue – Each constituent must be SEC-registered, fully taxable issue or SEC 144A securities (with and without Registration Rights).
  • Large Issue Constraint - Barclays Capital provides a rules-based methodology for issue inclusion where only the largest issue, based on amount outstanding, of each issuer will be included.
ELIGIBLE NON-ELIGIBLE
• Fixed-rate bullet, puttable and callable bonds • Non-corporate bonds
• SEC Rules 144A securities • Bonds with equity-type features (e.g. warrants, convertibility)
• Original issue zeros • Floating-rate issues

 

 • Eurobonds

 

 • Emerging market bonds

BENEFITS OF USING THE FORWARD STRUCTURE

The Fund utilizes a Forward Agreement structure with TD Global Finance, a member of TD Financial Group in order to provide exposure to the portfolio of the Barclays Capital U.S. High-Yield Very Liquid Index™ on a tax-efficient basis. Amounts equivalent to the income generated by the index (interest income) will paid to Unitholders of the ETF primarily as return of capital distributions and distributions of capital gains. The Forward Agreement structure also reduces the instances where capital gains may be realized as a result of any scheduled rebalancing of the Barclays Capital U.S. High-Yield Very Liquid IndexTM.

The above diagram is for illustrative purposes only. The forward agreement structure is used to achieve the exposure to the Barclays Capital U.S. High-Yield Very Liquid IndexTM portfolio.

THE CASE FOR HIGH YIELD BONDS

High Yield Bonds are an important global asset class to be considered in the construction of a well-balanced investment portfolio. The diversification benefits of High Yield Bonds is the main reason for their importance in global asset allocation decision making. High Yield Bonds have low correlation to other asset classes including investment grade bonds and equities which provides opportunity for enhanced returns of a well-balanced portfolio.

Barclays Capital U.S. High-Yield Very Liquid Index

The Claymore Advantaged High Yield Bond ETF has been designed to track the Barclays Capital U.S. High-Yield Very Liquid IndexTM.

The Index covers the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below. The index excludes Emerging Markets debt.

ASSET CLASS 5-Year 10-Year 15-Year Inception
 Canadian Bonds1 0.18 0.12 0.19 0.19
Canadian Equity2 0.68 0.60 0.57 0.57
US Equity3 0.44 0.41 0.41 0.41
International Equity4 0.58 0.49 0.44 0.44
Emerging Markets Equity5 0.64 0.59 0.53 0.52
Commodity6 0.16 0.04 0.05 0.05
Source: PC Bond & Bloomberg

1The DEX Universe Bond Index is a broad measure of the Canadian investment-grade fixed income market. 2The S&P/TSX Composite Index is a capitalization weighted index of the largest (by market capitalization) and most liquid stocks listed on the TSX. 3The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure the performance of the broad US economy. 4The MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the performance of developed markets, excluding US & Canada. 5The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. 6The S&P GSCI® is a composite index of commodity sector returns representing an unleveraged, long-only investment in commodity futures that is broadly diversified across the spectrum of commodities.

 

Fund Statistics

as of 9/2/10

  MARKET PRICE NAV
Close $19.95 $19.69
Change $0.06 $0.07
52-Week High $20.34 $20.14
52-Week Low $18.79 $18.69
Bid/Ask Midpoint $19.93
Bid/Ask Premium (Discount) 1.22 %
Volume 22,738
Shares Outstanding 4,050,000
Total Managed Assets $79,726,694
Total Managed Assets (Common and Advisor) $88,584,349
Price History

Index Characteristics

as of 9/01/10

Average Credit Quality B1/B2
Average Coupon 9.21%
Yield To Maturity 9.07%
Average Yield To Worst 8.86%
Average Maturity in Years 7.56
Modified Adjusted Duration in Years 4.82
Convexity 0.14%
Number of Holdings 144

Profile

Symbol (Click for Intraday Price) CHB
Exchange TSX
CUSIP 18382A107
Fund Inception Date 1/11/10
Income Distribution Return of Capital and Capital Gains
Distribution Schedule (if any) Monthly
Management Fees 0.50 %
Fiscal Year-End 12/31
Investment Adviser Claymore Investments, Inc.
Index Name Barclays Capital U.S. High-Yield Very Liquid Index
Index Provider Barclays Capital
RRSP, RRIF, RESP, DPSP, TFSA 100% Eligible
DRIP Yes
PACC Yes
SWP Yes

Top Fund Holdings

as of 9/2/2010

GOODYEAR TIRE 10.5% 15/MAY/2016 5.51 %
CIT GROUP INC 7.0% 1MAY17 4.22 %
UNITED AIRLINES INC 9.75% 15JAN17 4.08 %
CONSOL ENERGY 8% 01APR2017 3.64 %
FORD MOTOR CREDIT 7.5% 1AUG2012 2.9 %
WINDSTREAM CORP 7.875% 01NOV17 2.64 %
SPRINT NEXTEL 8 3/8% 15AUG2017 2.57 %
AMERICAN INTL GROUP 8.175% 15MAY58 2.57 %
AES CORP 8% SNR NT 15/10/2017 U 2.21 %
MGM RESORTS INT 11.125% 15NOV17 2.08 %
All Holdings

Initially, in order to obtain exposure to the performance of the Index, the Claymore Advantaged High Yield Bond ETF (the “ETF”) will invest the net proceeds of its continuous offerings in a portfolio of common shares of Canadian public companies listed on the TSX that qualify as “Canadian securities” for purpose of the Tax Act (the “Canadian Share Portfolio”). The ETF will enter into one or more forward purchase and sale agreements (collectively, the “Forward”) with a Canadian chartered bank or an affiliate thereof (the “Counterparty”) pursuant to which the ETF will agree to sell securities in the Canadian Share Portfolio to the Counterparty from time to time in exchange for a purchase price determined by reference to the Canadian dollar value (the “Forward Amount”) of the performance of Index. However, neither the ETF nor its Unitholders by virtue of their investment in Units will have any ownership interest in the Index or any other financial instrument, if any, the Counterparty chooses to hedge its exposure under the Forward.

DISTRIBUTION INFORMATION

Last Distribution per Share $0.125500
Indicated Distribution Yield* 7.650%
DRIP/PACC Price -
Date Paid 9/7/10
Distribution History
Next Targeted Distribution
Ex-Date 9/27/10
Record Date 9/29/10
Payable Date 10/6/10
(*) Approximate annualized distribution yield based on last distribution and most recent NAV. Information may change without notice.  Actual results may vary.

Distribution per unit is subject to change on the ex-distribution date. Distributions, if any, will be paid on a monthly basis.

RISKS AND OTHER CONSIDERATIONS

There is no assurance the Fund will achieve its investment objective. Past performance does not guarantee future results. Index returns do not represent Fund returns. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Exchange-Traded funds are not guaranteed. Their values change frequently and past performance may not be repeated. There are certain general risk factors inherent to an investment in the Fund, including but not limited to: (i) risk of error in replicating the applicable Index; (ii) high yield securities risk; (iii) call risk; (iv) index investment strategy risk; (v) tracking error; (vi) fluctuations in the NAV and NAV per Unit of the Fund; (vii) the possibility that the Fund will be unable to acquire or dispose of illiquid securities; (viii) risks associated with the use of derivative transactions; (ix) counterparty credit risk associated with forward purchase and sale agreements; (x) the lack of operating history of certain Claymore ETFs; ; (xi) concentration risk; (xii) exchange rate risk; and (xiii) interest rate risk. The information included herein is for informational purposes only and is not intended to constitute specific or personalized advice including, without limitation, investment, financial, legal or tax advice. Investors may be required to make certain elections for tax reporting purposes. Investors must seek their own advise prior to making an investment decision.

“Barclays Capital U.S. High-Yield Very Liquid Index™”® is a registered trademark of Barclays Capital, the investment banking division of Barclays Bank PLC (“Barclays Capital”) and has been licensed for use by Claymore Investments, Inc.; “S&P” is a registered trademark STANDARD & POOR’S is a registered trademark of The McGraw-Hill Companies ; “Moody’s” is a registered trademark of Moody’s Investors Service, Inc.; “Fitch Ratings” is a registered trademark of Fitch Group. The third party owners of the trademarks do not sponsor or endorse, sell or promote Claymore ETFs, are not affiliated with Claymore Investments, Inc., and make no representation, warranty or condition regarding the advisability of investing in the Fund.

TD Global Finance’s (the “Counterparty”) only contractual relationship to the Fund is that the Counterparty will act as the counterparty under the forward agreement. As such, the securities offered by the Fund (the “Units”) are not sponsored, endorsed or promoted by the Counterparty or any of its affiliates. Neither the Counterparty nor its affiliates makes any representation or warranty, express or implied, to purchasers of the Units or any member of the public regarding the advisability of investing in securities generally or in the Units particularly. The Counterparty has not provided advice to the Fund or any other party as to whether the forward agreement is appropriate or suitable for the transactions contemplated under this document. The Counterparty has not participated in and is not responsible for the issue, promotion or administration of the Units nor does the Counterparty exercise any control over or oversight of the Fund, the fund manager or the investment manager. The Counterparty does not guarantee the accuracy and/or the completeness of any information or representation set out in this document, assumes no obligations or duties, fiduciary or otherwise, to any person in connection with the Units and shall not be liable (whether in negligence or otherwise) to any person arising in respect of the content of this document including, without limitation, any error, omission, or misrepresentation contained in this document, or arising in respect of any purchase of Units.

Commissions, trailing commissions, management fees and expenses all may be associated with fund investments. Please read the prospectus before investing. The indicated rate of return is the historical annual compounded total return including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Funds are not guaranteed, their values change frequently and past performance may not be repeated.