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, 2009
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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 annual report transmitted to shareholders pursuant to Rule
30e-1 under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), is as follows:
SEMIANNUAL
REPORT FIDUCIARY/CLAYMORE |
May 31, 2009 MLP OPPORTUNITY FUND | FMO
(Unaudited)
[PHOTO OF PIPE LINE]
[LOGO OF FAMCO] [LOGO OF CLAYMORE]
FIDUCIARY ASSET MANAGEMENT CLAYMORE(SM)
WWW.CLAYMORE.COM/FMO
...YOUR PIPELINE TO THE LATEST,
MOST UP-TO-DATE INFORMATION ABOUT THE
FIDUCIARY/CLAYMORE MLP OPPORTUNITY FUND
FMO | Fiduciary
LISTED | Claymore
NYSE | MLP Opportunity
Fund
[LOGO OF FAMCO] [LOGO OF CLAYMORE]
FIDUCIARY ASSET MANAGEMENT CLAYMORE(SM)
There can be no assurance the fund will achive its investment objective. The
value of the fund will fluctuate with the value of the underlying securities.
Historically, closed-end funds often trade at a dicount to their net asset
value.
NOT FDIC-INSURED | NOT BANK-GUARANTEED | MAY LOSE VALUE
The shareholder report you are reading right now is just the beginning of the
story. Online at WWW.CLAYMORE.COM/FMO, 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, 2009
FMO | Fiduciary/Claymore MLP Opportunity Fund
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 semiannual
period ended May 31, 2009.
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 with managed or supervised
assets of approximately $12.4 billion as of May 31, 2009.
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
ended May 31, 2009, the Fund provided a total return based on market price of
37.29% and a return of 15.38% based on NAV. As of May 31, 2009, the Fund's
closing market price of $14.81 represented a premium of 12.71% to the Fund's NAV
of $13.14.As of November 28, 2008, the Fund's closing market price of $11.42
represented a discount of 5.54% to the Fund's NAV of $12.09. 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.
During the six-month period ended May 31, 2009, the Fund paid quarterly
distributions of $0.37185 per share on January 30, 2009 and April 30, 2009.
Beginning with the July 2009 distribution, the quarterly distribution has been
reduced by $0.03685 to $0.335.This reduced quarterly distribution level
represents an annualized distribution rate of 9.05%, based on the Fund's last
closing market price of $14.81 as of May 31, 2009.
Under the Fund's 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 25 of the
Fund's semian-
Semiannual Report | May 31, 2009 | 3
FMO | Fiduciary/Claymore MLP Opportunity Fund | DEAR SHAREHOLDER continued
nual report. When shares trade at a discount to NAV, the Plan takes advantage 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 web site at www.claymore.com/fmo.
Sincerely,
/S/ J.Thomas Futrell
J.Thomas Futrell
Chief Executive Officer
Fiduciary/Claymore MLP Opportunity Fund
4 | Semiannual Report | May 31, 2009
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 Managers
James J. Cunnane, Jr., CFA, and Quinn T. Kiley discuss the Fund's performance
for the semiannual period ended May 31, 2009.
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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, in a typical year 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, at least 80% of the Fund's managed assets are
invested in MLP entities, and at least 65% of managed assets in equity
securities of MLP entities. It is anticipated that a substantial portion of the
MLP entities in which the Fund invests will be engaged primarily in the energy,
natural resources and real estate sectors of the economy. 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 stock of large
capitalization companies, including companies engaged primarily in the
aforementioned sectors. FAMCO may employ an option strategy of writing (selling)
covered call options on securities, which may include MLPs 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. The Fund may invest a total of up to 25% of its managed assets in
debt securities of MLP entities and non-MLP entity issuers, including securities
rated below investment grade.
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HOW WOULD YOU DESCRIBE THE MASTER LIMITED PARTNERSHIP MARKET OVER THE LAST SIX
MONTHS?
At the time of the Fund's last annual report, dated November 30, 2008,
conditions in the MLP market were extremely challenging. Capital markets were
essentially frozen, and that made it extremely difficult for MLPs to obtain new
capital. Because MLPs pay out most of their cash each year as distributions to
shareholders, they need to be able to tap the capital markets on a continuing
basis to finance growth. With the ability to issue new equity or obtain new debt
almost non-existent, balance sheets of many MLP entities deteriorated and
prospects for near-term growth in earnings and distributions were dim.
Like other equity securities, equity securities of MLPs had dropped sharply
because of a combination of risk aversion and an expected impairment of earnings
streams and cash flows caused by current economic conditions. Forced selling by
institutional investors in need of reducing leverage or by investors who wanted
to take advantage of tax losses put further pressure on prices of MLPs.
Fortunately, conditions in the MLP market have improved substantially over the
last six months, as forced selling abated and capital markets in general
improved. FAMCO stated in the Fund's last annual report that they were
optimistic about the prospects for improvement in the market for MLPs. In fact,
the recovery in the MLP market has been more rapid and stronger than they had
expected. Using the Alerian MLP Index1 (the "Index") as a benchmark for the
industry, the total return for the six-month period ended May 31, 2009, was
29.96%.This unusually high return made MLPs one of the best performing asset
classes over the six-month period.
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(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, 2009 | 5
FMO | Fiduciary/Claymore MLP Opportunity Fund | QUESTIONS & ANSWERS continued
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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, 2009,
the Fund provided a total return based on market price of 37.29% and a return of
15.38% based on NAV. 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
closing price of the Fund's shares as of May 31, 2009, was $14.81, representing
a 12.71% premium to the NAV of $13.14. On November 30, 2008, the Fund's market
price closed at $11.42, which represented a discount of 5.54% to the NAV of
$12.09.At its inception in December 2004, the Fund's NAV was $19.10.
Please keep in mind that the Fund is a taxable entity--meaning it recognizes
either a deferred tax liability on realized and unrealized portfolio gains or a
deferred tax benefit on realized and unrealized portfolio losses. The intent of
this process is to ensure the Fund's NAV reflects the net after-tax value of the
Fund's portfolio. As of May 31, 2009, the Fund's NAV included a net deferred tax
liability of $0.4 million, or $0.02 per share.
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PLEASE EXPLAIN THE MAJOR FACTORS THAT AFFECTED THE FUND'S PERFORMANCE.
FAMCO is pleased that the Fund had strongly positive returns for the six months
ended May 31, 2009, a period for which MLPs were among the few asset classes
with positive returns. The publicly traded portion of the portfolio, on an
unlevered basis, had a return of approximately 34% for the six months ended May
31, 2009, actually exceeding return of the Index. However, the Fund's NAV return
for the period trailed the Index for two main reasons.
The major reason for the Fund's underperformance relative to the Index was a
change in the Fund's leverage facility effective September 2008. The new
facility is a prime brokerage account renewable on a daily basis with a 180-day
cancellation period. Declines in market values of some of the Fund's holdings,
along with regulatory requirements and restrictions of the new leverage
facility, made it necessary to reduce leverage. The reduction in leverage at a
time when markets were highly illiquid meant that it was necessary to sell some
securities, particularly some of the less liquid mid-size MLPs in the portfolio,
at prices below what FAMCO considered to be their intrinsic value. Selling
securities to reduce leverage also meant that the Fund carried a higher than
usual cash balance over the last six months. As the MLP market improved
dramatically in the first few months of 2009, the Fund's reduced leverage and
increased cash balance penalized performance relative to the Index and to other
similar funds.
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. As of May 31, 2009, the Fund's leverage was
27.8% of managed assets. The Fund also held excess cash that is available to pay
down debt, should FAMCO decide to do so.
The second factor affecting the Fund's performance was the negative performance
of two private MLPs, Clearwater Natural Resources, L.P. (0.1% of the Fund's
long-term investments as of May 31, 2009) and Abraxas Energy Partners, L.P.
(1.2% of the Fund's long-term investments as of May 31, 2009). Clearwater filed
for bankruptcy protection near the end of 2008.Although the company has some
valuable assets, it now seems unlikely that equity holders will realize any
value, as the assets may be sold to pay off the company's debt. Abraxas is a
coal company that we believe has considerable value, but its recent results have
suffered from declining coal prices. We are currently carrying this asset on the
Fund's books at a value that we believe fully reflects the present difficult
market conditions.
FAMCO generally allocated approximately 10% of the Fund's portfolio to the
private market, and these investments have proven to be very disappointing.
Private assets in general have performed very poorly over the past few months
because there is essentially no IPO (initial public offering) market; this means
that the opportunity to realize value by selling shares publicly is almost
nonexistent. There have been no buyers for private assets except at very
distressed prices. In addition, in a very tight credit market, small private
companies don't have access to the outside capital they need to generate growth
and fund ongoing operations.
6 | Semiannual Report | May 31, 2009
FMO | Fiduciary/Claymore MLP Opportunity Fund | QUESTIONS & ANSWERS continued
Lenders are protecting their collateral by forcing management to take actions
that may not be in the best long-term interest of the business. So private
entities, particularly those in the coal and energy production area such as the
ones owned by the Fund, have performed very poorly.
A further cause of the underperformance relative to the Index was its status as
a taxable entity, which means that the Fund's NAV reflects the after-tax value
of the portfolio as of May 31, 2009. Since the Index does not incorporate any
tax considerations, the taxation at the Fund level also detracted from the
Fund's performance relative to the Index during the six months ended May 31,
2009.
--------------------------------------------------------------------------------
PLEASE TELL US ABOUT THE FUND'S DISTRIBUTIONS.
The Fund paid quarterly distributions of $0.37185 per share on January 30, 2009
and April 30, 2009, maintaining the rate established with the October 2008
distribution. Beginning with the July 2009 distribution, the quarterly
distribution rate has been reduced by $0.03685 to $0.335.
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HOW IS THE FUND POSITIONED IN TERMS OF MARKET CAPITALIZATION AND INDUSTRY
SECTORS?
This Fund's portfolio has generally had a slightly smaller capitalization than
the Index or most competing funds. The Fund is therefore not as concentrated in
middle market names as in the past, and this change detracted from performance
over the last six months, as middle market MLPs have performed quite well.
Within the middle market category, FAMCO's focus is on companies with a history
of stable cash flows; these holdings provide a good offset to some of the other
smaller capitalization companies in the portfolio that have more sensitivity to
commodity prices. Positions that contributed to the Fund's return over the last
six months include Inergy Holdings L.P. (8.2% of the Fund's long-term
investments as of May 31, 2009), DCP Midstream Partners, L.P. (3.4% of the
Fund's long-term investments as of May 31, 2009), Energy Transfer Equity, L.P.
(8.3% of the Fund's long-term investments as of May 31, 2009) and Magellan
Midstream Holdings, L.P. (5.8% of the Fund's long-term investments as of May 31,
2009).
The Fund continues to be concentrated in the two largest sectors of the MLP
market, which are midstream gas and midstream oil; these two sectors together
represent approximately 85% of the Index. As of May 31, 2009, midstream oil
represented 40.0% of the Fund's portfolio and midstream gas represented
42.6%.Within the midstream oil & gas sector, the Fund is focused on federally
regulated long haul pipelines. This is a business with stable cash flow and a
low-risk business model; they believe there is great long-term value in many of
these companies.
At the same time, FAMCO maintained exposure to upstream names, such as those
that are at the wellhead gathering natural gas; an example would be DCP
Midstream Partners. These companies, which are subject to more commodity price
exposure and more volatile cash flows, were generally very weak in 2008, but
recovered strongly in the last few months.
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WHAT IS YOUR CURRENT OUTLOOK FOR THE MLP MARKET?
FAMCO was pleased with the rapidity and extent of the recovery in the MLP
market, and they continue to find many reasons to be optimistic. Conditions have
improved throughout the capital markets, supporting balance sheets and healing
some of the wounds from last year. FAMCO believes that the long-term outlook for
MLPs is positive, as they believe that an improving economy will stimulate
energy demand, resulting in improving cash flow and earnings for energy-related
MLPs. Near-term, FAMCO remains somewhat cautious, as they look for further
improvement in capital markets as a whole, more certainty in credit markets, and
the resumption of a more normal level of economic activity.
Over the long term, FAMCO believes 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.
Semiannual Report | May 31, 2009 | 7
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 uncer-tainty, 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 oper-ations. 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.
RESTRICTED SECURITIES RISKS. The Fund may invest in unregistered or otherwise
restricted securities. The term "restricted securities"refers to securities that
are unregistered, held by control persons of the issuer or are subject to
contractual restrictions on their resale.Restricted securities are often
purchased at a discount from the market price of unrestricted securities of the
same issuer reflecting the fact that such securities may not be readily
marketable without some time delay. Such securities are often more difficult to
value and the sale of such securities often requires more time and results in
higher brokerage charges or dealer discounts and other selling expenses than
does the sale of liquid securities trading on national securities exchanges or
in the over-the-counter markets. Contractual restrictions on the resale of
securities result from negotiations between the issuer and purchaser of such
securities and therefore vary substantially in length and scope. To dispose of a
restricted security that the Fund has a contractual right to sell, the Fund may
first be required to cause the security to be registered. A considerable period
may elapse between a decision to sell the securities and the time when the Fund
would be permitted to sell, during which time the Fund would bear market 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 RISK. 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.
8 | Semiannual Report | May 31, 2009
FMO | Fiduciary/Claymore MLP Opportunity Fund | QUESTIONS & ANSWERS continued
RISKS OF LEVERAGE. The Fund's use of leverage creates special risks that may
adversely affect the return for the holders of common shares, including:greater
volatility of the net asset value and market price of the Fund's common shares;
fluctuations in the interest rates on forms of leverage; and the possibility
that the increased costs associated with leverage, which would be borne entirely
by holders of the Fund's common shares, may reduce the Fund's total return.
Leverage is a speculative investment technique, and there can be no assurance
that the Fund's potential leverage strategy will be successful. Because the fees
received by Claymore Advisors, LLC and Fiduciary Asset Management, LLC are based
on the managed assets of the Fund (including the proceeds of any leverage), the
aforementioned firms have a financial incentive for the Fund to utilize
leverage, which may create a conflict of interest between them and the common
shareholders.
NON-DIVERSIFIED STATUS RISK. 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, Liquidity Risk, Valuation
Risk, Interest Rate Risk, Portfolio Turnover Risk, Derivatives Risk, Market
Discount Risk, Other Investment Companies Risk, Royalty Trust Risk, Management
Risk, and Current Developments Risk. Please see www.claymore.com/fmo for a more
detailed discussion about Fund risks and considerations.
Semiannual Report | May 31, 2009 | 9
FMO | Fiduciary/Claymore MLP Opportunity Fund
Fund SUMMARY | AS OF MAY 31, 2009 (unaudited)
FUND STATISTICS
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Share Price $ 14.81
Common Share Net Asset Value $ 13.14
Premium/(Discount) to NAV 12.71%
Net Assets ($000) $ 242,156
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TOTAL RETURNS
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(INCEPTION 12/28/04) MARKET NAV
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Six Months 37.29% 15.38%
One Year -27.96% -33.49%
Three Year (annualized) 0.29% -7.46%
Since Inception (annualized) -0.01% -1.75%
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% OF LONG-TERM
TOP SECTORS INVESTMENTS
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Midstream Gas Infrastructure 42.6%
Midstream Oil Infrastructure 40.0%
Propane 8.8%
Oil and Gas Production 4.4%
Coal 3.4%
Consumer Discretionary 0.8%
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% OF LONG-TERM
TOP TEN ISSUERS INVESTMENTS
--------------------------------------------------------------------------------
Enterprise Products Partners, L.P. 8.5%
Energy Transfer Equity L.P. 8.3%
Inergy Holdings, L.P. 8.2%
Kinder Morgan Management, L.L.C. 7.8%
Plains All American Pipeline, L.P. 7.5%
Enbridge Energy Partners, L.P. 6.1%
Magellan Midstream Holdings L.P. 5.8%
ONEOK Partners L.P. 5.1%
Copano Energy, L.L.C. 4.4%
TEPPCO Partners, L.P. 4.2%
--------------------------------------------------------------------------------
Past performance does not guarantee future results. All portfolio data is
subject to change daily. For more current information, please visit
www.claymore.com/fmo. The above summaries are provided for informational
purposes only and should not be viewed as recommendations.
SHARE PRICE & NAV PERFORMANCE
[LINE CHART]
Share price NAV
--------------------------------------------------------------------------------
5/31/06 $ 18.31 $ 20.66
18.5 20.71
18.73 20.71
18.71 20.71
18.59 20.71
18.54 20.71
18.31 20.46
18.3 20.46
18.19 20.46
17.86 20.46
17.9 20.46
18 20.22
18.43 20.22
18.26 20.22
18.21 20.22
18.28 20.22
18.25 20.34
18.1 20.34
18.16 20.34
18.28 20.34
18.35 20.34
18.22 20.42
18.17 20.48
18.28 20.48
18.34 20.48
18.48 20.53
18.53 20.53
18.51 20.53
18.59 20.53
18.29 20.53
18.24 20.16
18.31 20.16
18.26 20.16
18.35 20.16
18.29 20.16
18.3 20.28
18.2 20.28
18.25 20.28
18.39 20.28
18.55 20.28
18.53 20.52
18.72 20.52
18.9 20.69
19.06 20.69
19.19 20.69
19.3 21.02
19.39 21.02
19.3 21.02
19.01 21.02
18.97 21.02
19.02 20.87
19.15 20.87
19.3 20.87
19.4 20.87
19.2 20.87
19.28 20.94
19.44 20.94
19.48 20.94
19.44 20.94
19.38 20.94
19.51 21.08
19.45 21.08
19.35 21.08
19.38 21.08
19.45 21.08
19.41 21.19
19.6 21.19
19.31 21.19
19.23 21.19
19.27 20.95
19.18 20.95
19.36 20.95
19.22 20.95
19.51 20.95
19.48 20.86
19.38 20.86
19.44 20.86
19.3 20.86
19.23 20.86
19.25 20.72
19.4 20.72
19.08 20.72
19.22 20.72
19.23 20.72
19.05 20.91
19.4 20.96
19.48 20.96
19.27 20.96
19.11 20.96
19.47 20.98
19.48 20.98
19.52 20.98
19.59 20.98
19.25 20.98
19.33 20.78
19.04 20.78
19.08 20.78
19.14 20.78
19.32 20.78
19.53 21.3
19.63 21.3
19.55 21.3
19.5 21.3
19.49 21.3
19.75 21.6
19.93 21.6
19.67 21.6
19.81 21.66
20.01 21.66
20.02 21.64
20.09 21.64
20.15 21.64
19.94 21.64
20.11 21.64
20.31 22.04
20.35 22.04
20.43 22.04
20.52 22.04
20.48 22.04
20.08 22.21
21.25 22.21
22.16 22.21
21.9 22.21
22.09 22.39
22.02 22.39
21.58 22.39
21.41 22.39
21.86 22.39
21.87 22.49
22.3 22.49
22.42 22.49
22.36 22.49
23.35 22.49
22.91 22.63
23.05 22.63
23.29 22.63
23.2 22.63
22.9 22.63
22.76 22.73
22.76 22.73
22 22.73
21.9 22.73
22.22 22.73
22.12 22.52
22.03 22.52
22.12 22.52
22.38 22.52
22.79 22.7
22.7 22.65
22.2 22.65
22.41 22.5
22.31 22.5
22.61 22.5
22.79 22.5
21.91 22.5
21.95 22.15
21.67 22.15
21.28 22.15
21.81 22.15
21.97 22.37
22 22.37
21.79 22.37
21.6 22.37
22.14 22.37
21.69 22.84
21.93 22.84
22.06 22.84
22.78 22.84
23.05 23.31
23.45 23.39
23.45 23.39
23.21 23.39
23 23.39
22.43 23.39
22.58 23.67
22.74 23.67
22.75 23.67
22.69 23.67
22.82 23.67
23.3 23.7
23.02 23.7
22.89 23.7
23.35 23.7
23.81 23.87
23.35 23.87
23.34 23.87
23.3 23.87
23.46 23.89
23.3 24.04
23.42 24.04
23.52 24.04
23.57 24.04
23.23 24.04
23.4 24.05
23.47 24.05
23.44 24.05
23.5 24.05
23.45 24.05
23.62 24.38
23.65 24.38
23.72 24.38
24.12 24.38
24.24 24.38
24.53 24.81
24.86 24.81
24.75 24.81
24.32 24.81
24.11 24.81
23.9 24.98
24.33 24.95
24.55 24.95
24.69 24.95
24.5 24.95
24.91 25.31
25.01 25.31
25.1 25.31
24.7 25.31
24.5 25.08
24.69 25.08
24.52 25.08
24.65 25.08
24.96 25.08
24.83 25.5
24.68 25.5
24.95 25.5
24.8 25.5
24.74 25.5
24.79 26.16
24.88 26.16
24.92 26.07
24.97 26.07
25.14 26.07
25.31 25.96
25.4 25.96
25.24 25.96
25.35 25.96
25.59 25.96
25.4 26.53
25.82 26.53
25.79 26.53
25.71 26.53
25.1 26.53
24.75 26.18
24.73 26.18
24.83 26.18
25.29 26.18
25.31 26.18
24.19 25.74
23.89 25.74
24.39 25.74
24.6 25.74
25 26.27
25.15 26.27
25.54 26.27
25.55 26.27
25.12 26.27
24.5 25.91
24.42 25.91
24.45 25.91
24.01 25.91
24.18 25.91
24.75 25.99
25.44 25.99
25.15 25.99
24.98 25.99
24.79 25.99
24.86 26.29
24.91 26.29
24.83 26.29
24.81 26.29
24.56 26.29
24.73 26.32
24.36 26.48
24.6 26.48
24.67 26.48
24.9 26.77
24.95 26.77
25.32 26.77
25.21 26.77
25.09 26.77
25.41 26.77
25 26.77
24.84 26.77
24.7 26.77
24.59 26.77
24.78 26.95
24.51 26.95
24.78 26.95
24.35 26.95
24.33 26.95
23.48 26.2
23.28 26.2
23.18 26.2
23.46 25.9
23.02 25.9
22 24.87
21.96 24.87
21.1 24.87
22.45 24.87
23 24.87
22.41 23.83
21.93 23.83
22.26 23.83
21.83 23.83
21.37 23.83
20.35 23
21.25 23
21.5 23
21.75 23
22.15 23
22.43 24.13
22.99 24.13
22.78 24.13
22.3 24.13
22.53 24.13
22.4 23.87
23.06 24.03
23.21 24.03
23.5 24.03
23.5 24.14
22.98 24.14
22.5 24.14
22.46 24.14
22.28 24.14
22.51 23.51
22.74 23.51
22.57 23.51
23.04 23.51
23.19 23.51
22.64 23.93
22.68 23.93
23.06 23.93
23.15 23.93
22.95 23.93
22.7 23.08
22.86 23.12
22.6 23.12
22.45 23.12
21.9 23.12
22.1 22.84
22.5 22.84
22.77 22.84
23.23 22.84
23.6 22.84
23.25 23.56
23.16 23.56
23.2 23.56
23.06 23.56
22.94 23.56
22.8 23.6
22.35 23.6
22.3 23.6
22.45 23.6
22.3 23.6
22.43 23.6
22.88 23.6
23.65 23.6
23.74 23.6
23.84 24.04
23.74 23.95
23.68 23.95
23.84 23.95
23.76 23.95
23.79 23.95
23.6 23.3
23.58 23.3
22.75 23.3
22.88 23.3
23 23.3
22.9 22.92
22.5 22.92
21.7 22.92
21.31 22.92
20.85 22.43
20.91 22.43
21.05 22.43
20.95 22.43
22.72 22.43
22.68 22.75
22.66 23.11
22.6 23.11
22.35 23.11
22 23.11
22.44 22.58
22.16 22.58
21.99 22.58
21.79 22.58
21.58 22.58
21.3 22.44
21.58 22.44
21.19 22.44
21.08 22.44
20.89 22.44
20.59 22.14
20.79 22.14
20.33 22.14
20.2 22.14
20.18 23.17
20.8 23.17
20.88 23.11
21.46 23.11
22.37 23.17
22.35 23.17
22.17 23.17
21.8 23.17
22.25 23.17
22.42 22.86
22.18 22.86
21.75 22.86
21.92 22.86
22.11 22.86
22.11 21.99
21.25 21.99
19.75 21.99
19.6 21.99
20.26 21.6
21.03 21.6
21.45 21.6
21.31 21.6
22 21.6
21.99 22.1
22.5 22.1
22.65 22.1
22.23 22.1
21.91 22.1
21.59 22.03
21.71 22.03
21.84 22.03
21.69 22.03
21.94 22.03
21.17 21.97
20.79 21.97
21.01 21.97
21.22 21.97
21.36 21.77
21.48 21.77
21.44 21.77
21.71 21.77
22.25 21.77
22.19 22.19
22.09 21.99
22.06 21.99
22.13 21.99
22.09 21.99
21.8 21.57
21.35 21.57
20.7 21.57
20.82 21.57
20.93 21.57
20.73 20.8
20.34 20.8
19.8 20.8
20.54 20.8
20.5 20.8
20.6 19.83
20.89 19.83
20.92 19.83
21.02 19.83
20.9 20.54
20.91 20.54
20.96 20.57
21.24 20.57
22.04 21.04
21.89 21.13
22.16 21.13
22.33 21.13
22.24 21.13
21.9 21.13
22.2 21.33
21.75 21.33
21.15 21.33
21.43 21.33
21.47 21.33
21.23 21.18
21.2 21.18
21.25 21.18
21.19 21.18
21.24 21.18
21.34 21.36
21.74 21.36
21.65 21.36
21.26 21.36
21.57 21.6
22.1 21.54
22.9 21.54
22.2 21.54
21.91 21.54
22.17 21.54
22.21 21.96
22.18 21.96
22.64 21.96
22.32 21.96
22.54 21.96
22.42 21.9
22.26 21.9
22.6 21.9
22.64 21.9
22.38 21.9
22.27 21.88
22.4 21.88
22.47 21.88
22.59 21.88
22.52 21.73
22.7 21.9
22.84 21.9
22.65 21.9
22.68 21.9
23.2 21.99
23.26 21.99
22.89 21.99
22.68 21.99
22.72 21.99
22.95 21.61
23 21.61
22.61 21.61
22.26 21.61
22.15 21.61
22.5 21.41
22.35 21.41
22.02 21.41
21.5 21.41
21.42 21.41
20.93 21.03
20.64 21.03
20.67 20.71
20.26 20.71
20.6 20.71
20.6 20.32
21.1 20.32
20.32 20.32
20.51 20.32
20.73 20.22
20.07 20.22
19.71 20.22
19.14 20.22
18.88 20.22
19.25 18.88
19.58 18.88
19.95 18.88
20.43 18.88
20.32 18.88
20.3 18.99
19.85 18.99
20.42 18.99
20.15 18.99
20.79 18.99
21 19.79
21.26 19.79
21 19.79
20.54 19.79
20.04 19.79
20.33 19.14
20.68 19.14
20.51 19.14
20.02 19.14
19.94 19.14
19.88 19.44
19.63 19.44
20 19.44
20.96 19.44
21.35 19.44
20.81 19.57
20.62 19.57
20.7 19.57
20.71 19.57
21.35 19.57
21.41 19.87
21.14 19.83
20.89 19.83
20.83 19.83
20.52 19.28
20.24 19.28
20.01 19.28
19.76 19.28
19.8 19.28
19.65 17.75
19.6 17.75
18.67 17.75
17.54 17.75
15.9 17.75
16.07 15.99
18.12 15.99
18.03 15.99
18.01 15.99
17.86 15.99
18.25 17.4
18.05 17.4
17.28 17.4
18.53 16.35
18.5 16.35
17.5 15.81
17.85 15.81
15.2 15.81
15.11 15.81
14.89 15.81
13.27 10.5
10.83 10.5
14.45 10.5
14 10.5
12.62 10.5
12.09 12.66
13.16 12.66
14.98 12.66
15.83 12.66
15 12.66
15.2 14.33
16.9 14.33
15.85 14.33
16.72 14.33
16.74 14.33
16.25 14.84
16.24 14.9
15.55 14.9
15.15 14.9
14.54 14.9
14.9 13.82
14.65 13.82
14.16 13.82
14.21 13.82
12.63 13.82
13.12 12.61
12.5 12.61
12.56 12.61
12 12.61
10.95 12.61
10.15 10.77
9.5 10.77
11 10.77
11.65 10.77
11.6 11.81
11.42 12.1
11.3 12.1
10.85 12.1
11.29 12.1
10.69 11.37
11.64 11.37
11.78 11.37
12 11.37
12.5 11.37
12.05 11.84
11.88 11.84
13.22 11.84
13.12 11.84
12.89 11.84
12.52 11.4
13 11.4
12.6 11.4
11 11.4
11.15 10.92
11.9 10.92
11.59 10.92
12.58 10.92
12.42 11.47
13.4 11.47
14.3 11.47
14.5 11.47
13.41 11.47
13.67 13.56
14.74 13.56
14.65 13.56
13.9 13.56
13.22 13.56
13.27 11.6
13.9 11.6
13.15 11.6
12.96 11.6
12.07 11.67
12.06 11.67
12.78 11.67
13.59 11.67
14.5 11.67
14.13 12.31
14.14 12.22
12.89 12.22
12.49 12.22
12.44 12.22
12.84 12.31
14.12 12.31
14.59 12.31
13.9 12.31
13.92 12.31
14.28 12.45
14.47 12.45
13.8 12.45
13.61 12.45
12.6 11.89
12.08 11.89
12.29 11.89
12.87 11.89
12.73 11.89
12.61 11.6
12.46 11.69
10.74 11.69
11.07 11.69
12.39 11.69
11.05 10.79
11.1 10.79
11.51 10.79
12.19 10.79
12.74 10.79
12.51 11.44
12.49 11.44
12.99 11.44
13.35 11.44
13.12 11.44
13.5 11.78
13.28 11.78
13.49 11.78
13.4 11.78
14.38 11.78
14.74 11.9
14.04 11.9
13.13 11.9
13.41 11.64
13.62 11.64
13.4 11.89
14.05 11.89
13.71 11.89
13.91 11.89
14.24 11.89
14.55 12.06
13.75 12.06
14.05 12.06
14.45 12.06
14.12 11.87
14 11.87
13.76 11.87
13.31 11.87
13.35 11.87
13.22 11.94
13.24 11.94
13.87 11.94
13.63 11.94
13.27 11.94
12.95 12.3
13.52 12.3
13.09 12.3
13.41 12.3
13.77 12.3
13.84 12.51
13.97 12.51
13.85 12.51
14.06 12.51
13.11 12.51
13.45 12.4
13.63 12.4
13.85 12.4
13.71 12.4
13.36 12.4
13.4 12.68
14.03 12.68
14.12 12.68
14.02 12.68
14.56 12.93
5/31/09 14.81 13.14
DISTRIBUTIONS TO SHAREHOLDERS
--------------------------------------------------------------------------------
[BAR CHART]
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
Jul 08 0.37
Oct 08 0.3719
Jan 09 0.3719
Apr 09 0.3719
Jul 09 0.335
10 | Semiannual Report | May 31, 2009
FMO | Fiduciary/Claymore MLP Opportunity Fund
Portfolio of INVESTMENTS | MAY 31, 2009 (unaudited)
NUMBER
OF SHARES VALUE
-------------------------------------------------------------------------------
MASTER LIMITED PARTNERSHIPS AND MLP
AFFILIATES - 137.8%
COAL - 4.4%
156,800 Alliance Resource Partners L.P. $ 5,967,808
1,145,621 Clearwater Natural Resources, L.P.
(Acquired 08/01/05 and 10/02/06, Cost
$22,912,423) (a) (b) (c) (d) -
123 Clearwater GP Holding Co.
(Acquired 02/29/08, Cost $192,961) (a) (b) (c) (d) -
203,350 Natural Resource Partners, L.P. 4,811,261
-------------------------------------------------------------------------------
10,779,069
-------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 1.1%
162,680 StoneMor Partners, L.P. 2,661,445
-------------------------------------------------------------------------------
MIDSTREAM GAS INFRASTRUCTURE - 58.8%
629,957 Boardwalk Pipeline Partners L.P. 13,002,312
750,317 Copano Energy, L.L.C.(e) 11,862,512
190,000 Copano Energy, L.L.C., Unregistered Series D Units
(Acquired 03/14/08, Cost $4,987,500) (a) (b) (c) 2,764,772
586,915 DCP Midstream Partners, L.P. 11,292,245
545,054 El Paso Pipeline Partners, L.P. 10,465,037
522,295 Energy Transfer Equity L.P. 13,725,913
329,237 Energy Transfer Partners, L.P.(e) 13,930,017
1,087,177 Enterprise Products Partners, L.P. 28,266,602
110,050 Exterran Partners L.P. 1,491,178
248,301 Hiland Partners, L.P. 1,325,927
352,880 ONEOK Partners L.P. 17,075,863
136,960 Spectra Energy Partners, L.P. 2,904,922
285,550 TC Pipelines L.P. 9,905,730
293,745 Western Gas Partners, L.P. 4,453,174
-------------------------------------------------------------------------------
142,466,204
-------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
-------------------------------------------------------------------------------
MIDSTREAM OIL INFRASTRUCTURE - 55.3%
509,052 Enbridge Energy Partners, L.P.(e) $ 20,540,248
260,830 Genesis Energy, L.P. 3,393,398
220,715 Holly Energy Partners, L.P. 6,643,522
578,062 Kinder Morgan Management, L.L.C.(c) (f) 25,949,203
720,380 Magellan Midstream Holdings L.P. 15,149,591
117,794 Magellan Midstream Partners, L.P.(e) 4,116,900
232,210 NuStar Energy L.P. 12,546,306
568,906 Plains All American Pipeline, L.P.(e) 25,191,158
122,030 Sunoco Logistics Partners L.P. 6,396,813
465,645 TEPPCO Partners, L.P.(e) 13,890,190
-------------------------------------------------------------------------------
133,817,329
-------------------------------------------------------------------------------
OIL AND GAS PRODUCTION - 6.1%
363,512 Abraxas Petroleum Corp.(c) (e) 428,944
534,299 Abraxas Energy Partners, L.P.(Acquired 05/25/07,
02/20/09 and
05/28/09, Cost $7,406,661) (a) (b) (c) (f) 3,633,233
389,212 EV Energy Partner, L.P. 8,262,971
133,346 Pioneer Southwest Energy Partners, L.P. 2,445,566
-------------------------------------------------------------------------------
14,770,714
-------------------------------------------------------------------------------
PROPANE - 12.1%
118,915 Global Partners, L.P. 1,962,098
517,600 Inergy Holdings, L.P. 19,927,600
288,931 Inergy, L.P. 7,338,847
-------------------------------------------------------------------------------
29,228,545
-------------------------------------------------------------------------------
TOTAL MASTER LIMITED PARTNERSHIPS AND MLP AFFILIATES
(Cost $298,790,035) 333,723,306
-------------------------------------------------------------------------------
INCENTIVE DISTRIBUTION RIGHTS - 0.0%
43 Clearwater Natural Resources, L.P.(Acquired
08/01/05, Cost $0) (a) (b) (c) (d) -
-------------------------------------------------------------------------------
WARRANTS - 0.0%
114,230 Abraxas Petroleum Corp.(Acquired 05/25/07, Cost
$0) (a) (b) (c) 20,712
9,499 Clearwater Natural Resouces, L.P.(Acquired
01/13/09, Cost $0) (a) (b) (c) (d) -
-------------------------------------------------------------------------------
20,712
-------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
-------------------------------------------------------------------------------
TERM LOANS - 0.2%
$ 1,237,397 Clearwater Subordinate Note 13.75%, 12/03/09, NR
(Acquired 07/08/08, 08/06/08, 09/29/08 and
01/09/09,
Cost $1,237,397) (a) (b) (c) (d) (f) (g) 433,089
--------------------------------------------------------------------------------
See notes to financial statements.
Semiannual Report | May 31, 2009 | 11
FMO | Fiduciary/Claymore MLP Opportunity Fund | PORTFOLIO OF INVESTMENTS
(unaudited) continued
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
SHORT TERM INVESTMENTS - 3.1%
MONEY MARKET FUND - 3.1%
7,520,663 Dreyfus Treasury & Agency Cash Management -
Investor Shares
(Cost $7,520,663) $ 7,520,663
--------------------------------------------------------------------------------
TOTAL INVESTMENTS - 141.1%
(Cost $307,548,095) 341,697,770
Borrowings Outstanding - (38.5% of Net Assets or
27.3% of
Total Investments) (93,262,708)
Liabilities in excess of Other Assets - (2.6%) (6,278,934)
--------------------------------------------------------------------------------
NET ASSETS - 100.0% $242,156,128
================================================================================
L.L.C. Limited Liability Company
L.P. Limited Partnership
MLP Master Limited Partnership
NR Ratings shown are per Standard & Poor's. Securities classified as NR are
not rated by Standard & Poor's.
(a) Security is restricted and may be resold only in transactions exempt from
registration, normally to qualified institutional buyers. At May
31,2009,restricted securities aggregate market value amounted to
$6,851,806 or 2.8% 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 $6,851,806 which represents 2.8% of net assets.
(c) Non-income producing security.
(d) Company has filed for protection in federal bankruptcy court.
(e) All or a portion of these securities have been physically segregated in
connection with swap agreements.
(f) While non-income producing, security makes regular in-kind distributions.
(g) Floating rate security. The rate shown is as of May 31, 2009.
See notes to financial statements.
12 | Semiannual Report | May 31, 2009
FMO | Fiduciary/Claymore MLP Opportunity Fund
Statement of ASSETS AND LIABILITIES | MAY 31, 2009(unaudited)
ASSETS
Total investments (cost $307,548,095) $341,697,770
Current tax receivable 769,591
Interest receivable 35
Other assets 38,109
--------------------------------------------------------------------------------
Total assets 342,505,505
--------------------------------------------------------------------------------
LIABILITIES
Borrowings 93,262,708
Net unrealized depreciation on interest rate swaps 5,580,108
Net deferred tax liability 912,205
Advisory fee payable 276,605
Current tax liability 255,100
Interest due on borrowings 29,271
Custodian bank 8,942
Administration fee payable 6,805
Accrued expenses and other liabilities 17,633
--------------------------------------------------------------------------------
Total liabilities 100,349,377
--------------------------------------------------------------------------------
NET ASSETS $242,156,128
================================================================================
COMPOSITION OF NET ASSETS
Common stock, $.01 par value per share; unlimited number of
shares authorized, 18,425,753 shares issued and outstanding $ 184,258
Additional paid-in capital 247,405,018
Net unrealized appreciation on investments and swaps, net of tax 13,192,116
Accumulated net realized gain on investments and swaps, net of tax 6,595,854
Accumulated net investment loss, net of tax (25,221,118)
--------------------------------------------------------------------------------
NET ASSETS $242,156,128
================================================================================
NET ASSET VALUE
(based on 18,425,753 common shares outstanding) $ 13.14
================================================================================
See notes to financial statements.
Semiannual Report | May 31, 2009 | 13
FMO | Fiduciary/Claymore MLP Opportunity Fund
Statement of OPERATIONS | FOR THE SIX MONTHS ENDED MAY 31, 2009(unaudited)
INVESTMENT INCOME
Distributions from master limited partnerships
(net of return of capital distributions
received of $14,261,306 and reclassification
of prior year income of $899,131) $ (899,131)
--------------------------------------------------------------------------------
Total income $ (899,131)
--------------------------------------------------------------------------------
EXPENSES
Advisory fee 1,473,885
Professional fees 157,163
Printing expense 86,453
Trustees'fees and expenses 79,475
Fund accounting 43,595
Administration fee 36,957
Custodian fee 29,406
Insurance 12,902
NYSE listing fee 10,730
Transfer agent fee 9,501
Miscellaneous 14,917
Interest expense and fees on borrowings 1,515,433
--------------------------------------------------------------------------------
Total expenses 3,470,417
--------------------------------------------------------------------------------
NET INVESTMENT LOSS BEFORE TAXES (4,369,548)
--------------------------------------------------------------------------------
Deferred tax benefit 1,847,996
--------------------------------------------------------------------------------
Net investment loss (2,521,552)
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS
Net realized gain/(loss) on investments
before taxes (22,955,743)
Net realized gain/(loss) on swaps (1,458,985)
Deferred tax benefit 10,325,626
--------------------------------------------------------------------------------
Net realized gain/(loss) on investments (14,089,102)
--------------------------------------------------------------------------------
Net change in unrealized appreciation on
investments before taxes 87,089,680
Net change in unrealized depreciation on
swaps before taxes (1,430,373)
Deferred tax expense (36,227,557)
--------------------------------------------------------------------------------
Net unrealized appreciation on
investments and swaps 49,431,750
--------------------------------------------------------------------------------
Net realized and unrealized gain/(loss) on
investments and swaps 35,342,648
--------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 32,821,096
================================================================================
See notes to financial statements.
14 | Semiannual Report | May 31, 2009
FMO | Fiduciary/Claymore MLP Opportunity Fund
Statements of CHANGES IN NET ASSETS |
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
MAY 31, 2009 NOVEMBER
(UNAUDITED) 30, 2008
--------------------------------------------------------------------------------
INCREASE/(DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment loss $ (2,521,552) $ (7,642,053)
Net realized gain/(loss) (14,089,102) 3,203,406
Net change in unrealized
appreciation/(depreciation) 49,431,750 (169,693,139)
--------------------------------------------------------------------------------
Net increase/(decrease) in net assets
resulting from operations 32,821,096 (174,131,786)
--------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From and in excess of net investment income - (1,486,710)
Return of capital (13,625,527) (25,162,072)
--------------------------------------------------------------------------------
(13,625,527) (26,648,782)
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Reinvestment of dividends 1,805,822 3,497,034
--------------------------------------------------------------------------------
Net increase from capital share transactions 1,805,822 3,497,034
--------------------------------------------------------------------------------
Total increase/(decrease) in net assets 21,001,391 (197,283,534)
NET ASSETS
Beginning of period 221,154,737 418,438,271
--------------------------------------------------------------------------------
End of period (including accumulated net
investment losses of $25,221,118 and
$22,699,566, respectively, net of
deferred tax) $ 242,156,128 $ 221,154,737
================================================================================
See notes to financial statements.
Semiannual Report | May 31, 2009 | 15
FMO | Fiduciary/Claymore MLP Opportunity Fund
Statement of CASH FLOWS | FOR THE SIX MONTHS ENDED MAY 31,2009(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations $ 32,821,096
--------------------------------------------------------------------------------
ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
TO NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES:
Net change in unrealized appreciation on
investments and swaps (85,659,307)
Net realized loss on investments before taxes 22,955,743
Purchases of long-term investments (122,648,496)
Proceeds from sale of long-term investments 93,521,928
Net proceeds of short-term investments 18,402,249
Decrease in receivable for investments sold 84,090
Decrease in interest receivable 60,859
Increase in other assets (29,454)
Increase in net deferred tax liability 24,508,535
Decrease in current tax receivable/liability net (1,974,600)
Decrease in payable for investments purchased (6,261,950)
Decrease in interest due on borrowings (398,491)
Increase in advisory fee payable 11,092
Increase in administration fee payable 266
Increase in custodian bank 8,942
Decrease in accrued expenses and other liabilities (226,163)
Return of capital distributions received
from investee companies 14,261,306
Adjustment to prior year estimated return of capital
distributions received from investee companies 899,131
--------------------------------------------------------------------------------
Net Cash Used by Operating Activities $ (9,663,224)
--------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 21,000,000
Distributions to Common Shareholders (11,819,705)
--------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 9,180,295
--------------------------------------------------------------------------------
Net change in cash (482,929)
CASH AT BEGINNING OF PERIOD 482,929
--------------------------------------------------------------------------------
CASH AT END OF PERIOD $ -
================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: CASH PAID
DURING THE PERIOD FOR INTEREST $ 1,913,924
================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: IN KIND
STOCK DIVIDENDS RECEIVED DURING THE PERIOD $ 1,144,876
================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: TAXES
PAID DURING THE PERIOD $ 1,520,000
================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: DIVIDEND
REINVESTMENT $ 1,805,822
================================================================================
See notes to financial statements.
16 | Semiannual Report | May 31, 2009
FMO | Fiduciary/Claymore MLP Opportunity Fund
Financial HIGHLIGHTS |
FOR THE FOR THE PERIOD
SIX FOR THE FOR THE FOR THE DECEMBER 28,
PER SHARE OPERATING PERFORMANCE MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED 2004* THROUGH
FOR A SHARE OUTSTANDING THROUGHOUT THE MAY 31, 2009 NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
PERIOD (UNAUDITED) 2008 2007 2006 2005
---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.09 $ 23.11 $ 22.49 $ 19.78 $ 19.10(b)
---------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (g) (0.24) (0.70) (0.67) (0.33) (0.26)
Net realized and unrealized gain/loss (g) 2.03 (8.85) 2.66 4.29 1.92
---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.79 (9.55) 1.99 3.96 1.66
---------------------------------------------------------------------------------------------------------------------------
COMMON SHARES' OFFERING EXPENSES CHARGED
TO PAID-IN CAPITAL - - - - (0.04)
---------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From and in excess of net investment - (0.08) - - -
income
Return of capital (0.74) (1.39) (1.37) (1.25) (0.94)
---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 13.14 $ 12.09 $ 23.11 $ 22.49 $ 19.78
===========================================================================================================================
MARKET VALUE, END OF PERIOD $ 14.81 $ 11.42 $ 22.66 $ 21.87 $ 17.99
===========================================================================================================================
TOTAL INVESTMENT RETURN (C)
Net asset value 15.38% -43.55% 8.53% 20.70% 8.38%
Market value 37.29% -45.67% 9.70% 29.68% -5.81%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 242,156 $ 221,155 $ 418,438 $ 406,295 $ 357,441
Ratios to Average Net Assets applicable
to Common Shares:(d)
Total expenses, excluding interest 1.80% 1.79% 1.62% 1.69% 1.48%
expense and tax expense/benefit
Total expenses, including interest 25.28% (28.34)% 9.40% 16.89% 8.41%
expense and tax expense/benefit
Interest expense 1.39% 1.83% 2.13% 2.17% 1.02%
Current and deferred tax
expense/(benefit) 22.09% (31.96)% 5.65% 13.03% 5.91%
Net investment income/(loss), including
interest expense and tax (26.11)% 28.42% (8.40)% (14.66)% (7.30)%
expense/benefit
Net investment income/(loss), excluding
interest expense and tax (2.63)% (1.71)% (0.62)% 0.55% (0.37)%
expense/benefit
Ratios to Average Managed Assets:(d)(e)
Total expenses,excluding interest
expense and tax expense/benefit 1.33% 1.23% 1.18% 1.20% 1.19%
Total expenses,including interest
expense and tax expense/benefit 18.68% (19.54)% 6.86% 12.03% 6.77%
Interest expense 1.03% 1.26% 1.56% 1.55% 0.82%
Current and deferred tax
expense/(benefit) 16.32% (22.03)% 4.12% 9.28% 4.76%
Net investment income/(loss),including
interest expense and tax
expense/benefit (19.29)% 19.59% (6.13)% (10.44)% (5.88)%
Net investment income/(loss),excluding
interest expense and tax (1.94)% (1.18)% (0.45)% 0.39% (0.30)%
expense/benefit
Portfolio Turnover Rate 33% 22% 11% 21% 41%
Senior Indebtedness
Total borrowings outstanding
(in thousands) $ 93,263 $ 72,263 $ 175,000 $ 150,000 $ 150,000
Asset coverage per $1,000 of
indebtedness(f) $ 3,596 $ 4,060 $ 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.
(g) The character of dividends received for each period are based upon
estimates made at the time the distribution was received. Any necessary
adjustments are reflected in the following fiscal year when the actual
character is known. See Note 2(b) of the Notes to Financial Statements for
additional information.
See notes to financial statements.
Semiannual Report | May 31, 2009 | 17
FMO | Fiduciary/Claymore MLP Opportunity Fund
Notes to FINANCIAL STATEMENTS | MAY 31,2009 (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 securi-ties. 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. Short-term securities having a
remaining maturity of sixty days or less are valued at amortized cost, which
approximates market value.
For those securities whose quotations or prices are not available, the
valuations are determined in accordance with procedures established in good
faith by the Board of Trustees. Valuations in accordance with these procedures
are intended to reflect each security's (or asset's) "fair value". Such "fair
value"is the amount that the Fund might reasonably expect to receive for the
security (or asset) upon its current sale. Each such determination should be
based on a consideration of all relevant factors, which are likely to vary from
one pricing context to another. Examples of such factors may include, but are
not limited to:(i) the type of security,(ii) the initial cost of the
security,(iii) the existence of any contractual restrictions on the security's
disposition,(iv) the price and extent of public trading in similar securities of
the issuer or of comparable companies,(v) quotations or evaluated prices from
broker-dealers and/or pricing services,(vi) information obtained from the
issuer, analysts, and/or the appropriate stock exchange (for exchange traded
securities),(vii) an analysis of the company's financial statements, and (viii)
an evaluation of the forces that influence the issuer and the market(s) in which
the security is purchased and sold (e.g. the existence of pending merger
activity, public offerings or tender offers that might affect the value of the
security).
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 measure-ments. 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 (e.g. yield curves; benchmark interest rates; indices). Level
3 valuations are those based upon unobservable inputs (e.g. discounted cash flow
analysis; non-market based methods used to determine fair valuation). Details of
the valuations as of May 31, 2009 were as follows:
DESCRIPTION SECURITIES DERIVATIVES TOTAL
--------------------------------------------------------------------------------
(value in $000s)
ASSETS
Level 1 $ 334,846 $ - $ 334,846
Level 2 2,765 - 2,765
Level 3 4,087 - 4,087
--------------------------------------------------------------------------------
Total $ 341,698 $ - $ 341,698
================================================================================
LIABILITIES
Level 1 $ - $ - $ -
Level 2 - 5,580 5,580
Level 3 - - -
--------------------------------------------------------------------------------
Total $ - $ 5,580 $ 5,580
================================================================================
LEVEL 3 HOLDINGS SECURITIES DERIVATIVES TOTAL
================================================================================
Beginning Balance at 11/30/08 $ 21,577 $ - $ 21,577
Total Realized Gain/Loss - - -
Change in Unrealized Gain/Loss (17,605) - (17,605)
Net Purchases and Sales 115 - 115
Net Transfers In/Out - - -
--------------------------------------------------------------------------------
Ending Balance at 5/31/09 $ 4,087 $ - $ 4,087
================================================================================
All net realized and unrealized gains/losses in the above table are reflected in
the Statement of Operations. Net unrealized gains/losses relate to those
investments held by the Fund at May 31, 2009.
(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, 2009, the Fund estimated 100% of its
distributions from MLPs as return of capital, which is reflected in the
Statement of Operations.
Subsequent to November 30, 2008, the Fund reclassified the amount of investment
income and return of capital it recognized based on the 2008 tax reporting
information received from the individual MLPs. This reclassification amounted to
a decrease in pre-tax net investment
18 | Semiannual Report | May 31, 2009
FMO | Fiduciary/Claymore MLP Opportunity Fund | NOTES TO FINANCIAL STATEMENTS
(unaudited) continued
income of $899,131 ($541,771 net of deferred tax benefit), an increase in
realized gain on investments of $932,799 ($562,058 net of deferred tax benefit)
and a decrease in unrealized appreciation on investments of $33,668 ($20,287 net
of deferred tax benefit). The reclassification is reflected in the period ended
May 31, 2009.
(C) 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. The Fund will inform shareholders of the final tax character
of the distributions on IRS Form 1099 DIV in January 2010.
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 is treated as a regular corporation, or "C"corporation, for U.S.
federal income tax purposes. Accordingly, the Fund generally is 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 is subject to various state and Canadian income taxes by
reason of its investments in MLPs. As a limited partner in the MLPs, the Fund
includes its allocable share of the MLP's taxable income in computing its own
taxable income. Deferred income taxes reflect (i) taxes on unrealized
gains/(losses), which are attributable to the temporary difference between fair
market value and tax basis, (ii) the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes and (iii) the net tax
benefit of accumulated net operating losses. 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, 2009 is as
follows:
COST OF NET TAX NET TAX
INVESTMENTS GROSS TAX GROSS TAX UNREALIZED UNREALIZED
FOR TAX UNREALIZED UNREALIZED APPRECIATION DEPRECIATION
PURPOSES APPRECIATION DEPRECIATION ON INVESTMENTS ON DERIVATIVES
---------------------------------------------------------------------------
$ 285,214,185 $ 86,130,600 $ (29,647,015) $ 56,483,585 $ (5,580,108)
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 accrues deferred income
taxes for its future tax liability or benefit associated with that portion of
MLP distributions considered to be a tax-deferred return of capital as well as
capital appreciation or depreciation of its investments. To the extent the Fund
has a deferred tax asset, consideration is given as to whether or not a
valuation allowance is required. The need to establish a valuation allowance for
deferred tax assets is assessed periodically by the Fund based on the criterion
established by the Statement of Financial Standards, Accounting for Income Taxes
("SFAS"No.109) that it is more likely than not that some portion or all of the
deferred tax asset will not be realized. In the assessment for a valuation
allowance, consideration is given to all positive and negative evidence related
to the realization of the deferred tax asset. This assessment considers, among
other matters, the nature, frequency and severity of current and cumulative
losses, forecasts of future profitability (which are highly dependent on future
MLP cash distributions), the duration of statutory carryforward periods and the
associated risk that operating loss carryforwards may expire unused.
The Fund may rely to some extent on information provided by the MLPs, which may
not necessarily be timely, to estimate taxable income allocable to the MLP units
held in the portfolio and to estimate the associated deferred tax liability.
Such estimates are made in good faith. From time to time, as new information
becomes available, the Fund modifies its estimates or assumptions regarding the
deferred tax liability.
The Fund's income tax provision consists of the following:
Deferred federal income taxes expense 19,385,814
Deferred state income taxes expense 4,668,121
--------------------------------------------------------------------------------
Total deferred tax expense $ 24,053,935
--------------------------------------------------------------------------------
Semiannual Report | May 31, 2009 | 19
FMO | Fiduciary/Claymore MLP Opportunity Fund | NOTES TO FINANCIAL STATEMENTS
(unaudited) continued
Total income tax benefit 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 $ 19,906,262 35.00%
State income taxes 4,147,673 7.29%
--------------------------------------------------------------------------------
Total $ 24,053,935 42.29%
--------------------------------------------------------------------------------
Components of the Fund's net deferred tax liability as of May 31, 2009 are as
follows:
DEFERRED TAX ASSETS:
Net operating loss carryforward $ 23,146,020
Valuation allowance (3,408,882)
--------------------------------------------------------------------------------
Deferred tax asset $ 19,737,138
--------------------------------------------------------------------------------
DEFERRED TAX LIABILITIES:
Unrealized gain on investments and swaps $ (20,649,343)
--------------------------------------------------------------------------------
Net deferred tax liability $ (912,205)
--------------------------------------------------------------------------------
At November 30, 2008, the Fund had a remaining net operating loss carryforward
of $25,269,665.The net operating loss carryforward is set to expire as
follows:$14,935,679 in 2026 and $10,333,986 in 2027.
The Fund periodically reviews the recoverability of any deferred tax asset based
on the weight of available evidence. The Fund's analysis of the need for a
valuation allowance considered that it had incurred a cumulative loss over the
three tax-year period ended November 30,2008. Substantially all of the Fund's
net pre-tax losses related to unrealized depreciation of investments occurred
during the fiscal fourth quarter of 2008 as a result of the unprecedented
decline in the overall financial,commodity and MLP markets. The Fund recognized
significant appreciation of investments during the six month period ended May
31,2009.
When assessing the recoverability of any deferred tax asset, significant weight
was given to the Fund's forecast of future taxable income, which is based
principally on the expected continuation of MLP cash distributions at or near
current levels. Consideration was also given to the effects of potential of
additional future realized and unrealized losses on investments and the period
over which these deferred tax assets can be realized, as the expiration dates
for the federal tax loss carryforwards range from eighteen to nineteen years.
Recovery of the deferred tax asset is dependent on continued payment of the MLP
cash distributions at or near current levels in the future and the resultant
generation of taxable income. Based on the Fund's assessment, it has determined
that it is more likely than not that any deferred tax asset will be realized
through future taxable income of the appropriate character. Accordingly, no
valuation allowance has been established for any deferred tax asset from a
federal income tax perspective. As of May 31, 2009, November 30, 2008 and
November 30, 2007, a valuation allowance for state income tax purposes of
$415,930, $652,188 and $1,665,241, respectively, was recorded as it is unlikely
that the Fund will be able to utilize the net operating losses sourced to states
(other than Illinois). The Fund will continue to assess the need for a valuation
allowance in the future. The Fund will review its financial forecasts in
relation to actual results and expected trends on an ongoing basis. Unexpected
significant decreases in MLP cash distributions or significant further declines
in the fair value of its portfolio of investments may change the Fund's
assessment regarding the recoverability of its deferred tax asset and would
likely result in a valuation allowance. If a valuation allowance is required to
reduce the deferred tax asset in the future, it could have a material impact on
the Fund's net asset value and results of operations in the period it is
recorded.
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. The implementation of FIN 48 did not result in any
unrecognized tax benefits in the accompanying financial statements.
Tax years for 2005,2006,2007 and 2008 are still subject to examination by major
jurisdictions.
Note 5 - INVESTMENTS IN SECURITIES:
For the six months ended May 31, 2009, purchases and sales of investments,
excluding short-term securities, were $122,648,496 and $93,521,928,
respectively.
Note 6 - DERIVATIVES:
In March 2008, the FASB issued SFAS No.161,"Disclosures about Derivative
Instruments and Hedging Activities. "This standard amends and expands the
disclosure requirements of SFAS No.133,"Accounting for Derivative Instruments
and Hedging Activities" and 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.
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 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
20 | Semiannual Report | May 31, 2009
FMO | Fiduciary/Claymore MLP Opportunity Fund | NOTES TO FINANCIAL STATEMENTS
(unaudited) continued
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.
The Fund had interest rate swap agreements outstanding during the six months
ended May 31, 2009 in order to hedge its exposure to short-term rates paid on
its credit facility. As of May 31, 2009, the Fund had swaps with a total
notional value of $120,000,000 outstand-ing. Details of the swap agreements
outstanding as of May 31, 2009 were as follows:
NOTIONAL UNREALIZED
TERMINATION AMOUNT FIXED APPRECIATION/
COUNTERPARTY DATE ($000S) RATE FLOATING RATE (DEPRECIATION)
--------------------------------------------------------------------------------
Merrill Lynch 01/30/2011 $ 30,000 3.05% 1-Month LIBOR $ (1,333,195)
Merrill Lynch 01/30/2013 $ 30,000 3.49% 1-Month LIBOR (1,803,980)
Morgan Stanley 02/07/2011 $ 30,000 2.92% 1-Month LIBOR (1,232,661)
Morgan Stanley 03/19/2013 $ 30,000 3.13% 1-Month LIBOR (1,210,272)
--------------------------------------------------------------------------------
$ (5,580,108)
--------------------------------------------------------------------------------
For each swap noted, the Fund is obligated to pay the fixed rate and entitled to
receive the floating rate.
STATEMENT OF ASSET & LIABILITY PRESENTATION OF FAIR VALUES OF DERIVATIVE
INSTRUMENTS:
================================================================================
(amount in thousands)
ASSET LIABILITY
AS OF MAY 31, 2009 DERIVATIVES DERIVATIVES
------------------- ---------------------- ---------------------------------
Derivatives not
accounted for as Balance Balance
hedging instruments Sheet Fair Sheet Fair
under Statement 133 Location Value Location Value
--------------------------------------------------------------------------------
Interest Rate Swaps N/A $ - Net unrealized
depreciation on
interest rate swaps $ 5,580
================================================================================
EFFECT OF DERIVATIVE INSTRUMENTS BEFORE TAXES ON THE STATEMENT OF OPERATIONS FOR
THE PERIOD ENDED MAY 31, 2009:
--------------------------------------------------------------------------------
(amount in thousands)
AMOUNT OF REALIZED GAIN/(LOSS) ON DERIVATIVES BEFORE TAXES
================================================================================
Derivatives not accounted for as hedging
instruments under Statement 133 Swaps
Interest Rate Swaps $ (1,459)
================================================================================
CHANGE IN UNREALIZED DEPRECIATION ON DERIVATIVES BEFORE TAXES
================================================================================
Derivatives not accounted for as hedging
instruments under Statement 133 Swaps
Interest Rate Swaps $ (1,430)
================================================================================
Note 7 - BORROWINGS:
On September 30, 2008, the Fund entered into a $155,000,000 credit facility
agreement. The Fund incurred an issuance cost of 0.25% on the credit
facility. Interest on the amount borrowed is based on the 3-month LIBOR plus
1.50%.An unused fee of 1.15% is charged on the difference between the
$155,000,000 credit facility and the amount borrowed. At May 31, 2009 there was
$93,262,708 outstanding in connection with the Fund's credit facility. The
average daily amount of borrowings on the credit facility during the six months
ended May 31, 2009 was $77,257,213 with a related weighted average interest rate
of 3.93%, inclusive of the program fees. The maximum amount outstanding during
the six months ended May 31, 2009, was $93,262,708.
Note 8 - CAPITAL:
COMMON SHARES
The Fund has an unlimited amount of common shares, $0.01 par value, authorized
and 18,425,753 issued and outstanding.
Transactions in common shares were as follows:
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2009 NOVEMBER 30, 2008
--------------------------------------------------------------------------------
Beginning shares 18,285,742 18,105,218
Shares issued through dividend
reinvestment 140,011 180,524
--------------------------------------------------------------------------------
Ending shares 18,425,753 18,285,742
--------------------------------------------------------------------------------
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.
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.
Semiannual Report | May 31, 2009 | 21
FMO | Fiduciary/Claymore MLP Opportunity Fund | NOTES TO FINANCIAL STATEMENTS
(unaudited) continued
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, 2009, the Fund held the following restricted securities:
PRICE AT
FAIR ACQUISITION
DATE OF SHARES/ CURRENT MARKET DATE 05/31/2009
SECURITY ACQUISITION PAR COST VALUE (UNRESTRICTED)*** PRICE
----------------------------------------------------------------------------------------------------------------
Abraxas Energy Partners,L.P. 05/25/2007 525,211 $ 7,406,661 $ 3,571,435 $ 16.66 $ 6.80
Abraxas Energy Partners,L.P. 02/20/2009 4,540 $ - $ 30,872 $ 9.50 $ 6.80
Abraxas Energy Partners,L.P. 05/28/2009 4,548 $ - $ 30,926 $ 6.80 $ 6.80
Abraxas Petroleum Corp.* 05/25/2007 114,230 $ - $ 20,712 $ - $ 0.1813
Clearwater GP Holding Co. 02/29/2008 123 $ 192,961 $ - $ 1,252.03 $ -
Clearwater Natural 01/13/2009 9,499 $ - $ - $ - $ -
Resources,L.P.*
Clearwater Natural 08/01/2005 43 $ - $ - $ - $ -
Resources,L.P.**
Clearwater Natural 08/01/2005 892,857 $ 17,857,143 $ - $ - $ -
Resources,L.P.
Clearwater Natural 10/02/2006 $ 252,764 $ 5,055,280 $ - $ - $ -
Resources,L.P.
Clearwater Subordinate Note 07/08/2008 $ 212,000 $ 212,000 $ 74,200 $ 100.00 $ 35.00
Clearwater Subordinate Note 08/06/2008 $ 212,000 $ 212,000 $ 74,200 $ 100.00 $ 35.00
Clearwater Subordinate Note 09/29/2008 $ 759,880 $ 759,880 $ 265,958 $ 100.00 $ 35.00
Clearwater Subordinate Note 01/09/2009 $ 53,517 $ 53,517 $ 18,731 $ 35.00 $ 35.00
Copano Energy,L.L.C.,
Unregistered Series D Units 03/14/2008 190,000 $ 4,987,500 $ 2,764,772 $ 34.05 $ 14.55
-------------------------
Total $ 36,736,942 $ 6,851,806
-------------------------
*Warrants
**Incentive Distribution Rights
***Valuation of unrestricted common stock on the acquisition date of the
restricted shares
Note 11 - ACCOUNTING PRONOUNCEMENTS:
In April 2009, the FASB issued FSP FAS 157-4,"Determining Fair Value When Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly"(FSP 157-4).FSP 157-4 provides
guidance on how to determine the fair value of assets and liabilities when the
volume and level of activity for the asset/liability has significantly
decreased. FSP 157-4 also provides guidance on identifying circumstances that
indicate a transaction is not orderly. In addition, FSP 157-4 requires
disclosure in interim and annual periods of the inputs and valuation techniques
used to measure fair value and a discussion of changes in valuation
techniques. FSP 157-4 is effective for interim and annual reporting periods
ending after June 15, 2009.The adoption of FSP 157-4 is not expected to have a
significant impact on these financial statements.
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, 2009, the Fund declared a quarterly dividend of $0.335 per
share. This dividend is payable on July 31, 2009 to shareholders of record on
July 15, 2009.
On July 17, 2009, Claymore Group Inc., the parent of the adviser, entered into
an Agreement and Plan of Merger between and among Claymore Group Inc., Claymore
Holdings, LLC and GuggClay Acquisition, Inc., (the latter two entities are
wholly-owned, indirect subsidiaries of Guggenheim Partners, LLC) whereby
GuggClay Acquisition, Inc., will merge into Claymore Group, Inc., which will be
the surviving entity. The parties intend that the completed merger will result
in a change - of - control whereby Claymore Group Inc. and its subsidiaries will
become indirect, wholly-owned subsidiaries of Guggenheim.
22 | Semiannual Report | May 31, 2009
FMO | Fiduciary/Claymore MLP Opportunity Fund
Supplemental INFORMATION | (unaudited)
FEDERAL INCOME TAX INFORMATION
In January 2010, 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 2009.
TRUSTEES
The Trustees of the Fiduciary/Claymore MLP Opportunity Fund and their principal
occupation during the past five years:
NUMBER OF
PORTFOLIOS IN
NAME, ADDRESS*, YEAR OF TERM OF OFFICE** PRINCIPAL OCCUPATIONS DURING FUND COMPLEX***
BIRTH AND POSITION(S) AND LENGTH OF THE PAST FIVE YEARS AND OVERSEEN BY OTHER DIRECTORSHIPS
HELD WITH REGISTRANT TIME SERVED OTHER AFFILIATIONS TRUSTEE HELD BY TRUSTEE
-----------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES:
-----------------------------------------------------------------------------------------------------------------------------------
Randall C.Barnes Since 2004 Private Investor 43 None
Year of birth:1951 (2001-present). Formerly, Senior
Trustee Vice President & Treasurer
PepsiCo, Inc.(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 Hecker 1 None
Year of birth:1969 LLP, a law firm providing legal
Trustee advice in business law and
litigation matters
(2007-present).Formerly, principal
of Blumenfeld, Kaplan & Sandweiss
P.C., a law firm providing legal
advice in business law and
litigation (1994-2007).
-----------------------------------------------------------------------------------------------------------------------------------
Robert B.Karn III Since 2004 Consultant 1 Director of Peabody Energy
Year of birth:1942 (1998-present).Previously, Company, GP Natural Resource
Trustee Managing Partner, Financial and Partners LLC and Kennedy
Economic Consulting, St.Louis Capital Management, Inc.
office of Arthur Andersen, LLP.
-----------------------------------------------------------------------------------------------------------------------------------
Ronald A.Nyberg Since 2004 Partner of Nyberg & Cassioppi, 46 None
Year of birth:1953 LLC, a law firm specializing in
Trustee 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 1 Director, LMI Aerospace.
Year of birth:1943 (1999-present). Formerly, Director
Trustee in Residence at The Institute for
Excellence in Corporate Governance of the
University of Texas at Dallas School of
Management (2005-2007). Office Managing
Partner, Arthur Andersen, LLP (1966-1999).
-----------------------------------------------------------------------------------------------------------------------------------
Ronald E.Toupin, Jr. 2004-2009 Retired. Formerly,Vice President, 43 None
Year of Birth:1958 Manager and Portfolio Manager of
Trustee 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+ 2004-2009 Attorney. Formerly, Senior Managing 45 None
Year of birth:1965 Director and Chief Administrative
Officer (2007-2008) and General Counsel
(2001-2007) 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, Since 2004 Executive Managing Director and 1 Member of the Board of
Jr.++ Chief Operating Officer of Directors
8235 Forsyth Boulevard Fiduciary Asset Management, LLC for the Rossman School.
Suite 700 (1994-present). Member of the
St.Louis, MO 63105 St.Louis Chapter of the National
Year of birth:1956 Association for Business Economics.
Trustee
------------------------------------------------------------------------------------------------------------------------------------
* 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. Barnes and Gallagher, as Class I trustees, are expected to stand
for re-election at the Fund's 2009 annual meeting of shareholders.
-Messrs. Kaplan and Nyberg, as Class II trustees, are expected to stand
for re-election at the Fund's 2010 annual meeting of shareholders.
-Messrs. Roeder, Toupin and Karn, as Class III trustees, are expected to
stand for re-election at the Fund's 2011 annual meeting of shareholders.
Mr. Dalmaso served as a Class I Trustee of the Fund. Mr. Dalmaso did not
stand for re-election at the Fund's annual meeting of shareholders on July
21, 2009 (the "Annual Meeting"). Based on a recommendation from the
Nominating and Governance Committee of the Board and pursuant to authority
granted to it under the Fund's Agreement and Declaration of Trust, the
Board decided to reduce its size from eight to seven Trustees upon the
expiration of the current term of Mr. Dalmaso at the Annual Meeting. In
connection with the reduction in the size of the Board, Mr. Gallagher was
reclassified by the Board as a Class I Trustee of the Fund. The
reclassification of Mr. Gallagher as a Class I Trustee ensures that each
class of Trustees includes at least two Trustees and the classification of
the Board complies with applicable NYSE requirements.
*** 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, 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.
Semiannual Report | May 31, 2009 | 23
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 POSITION(S) TERM OF OFFICE** AND PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
HELD WITH REGISTRANT LENGTH OF TIME SERVED AND OTHER AFFILIATIONS
-------------------------------------------------------------------------------------------------------------------------
OFFICERS:
-------------------------------------------------------------------------------------------------------------------------
J. Thomas Futrell Since 2008 Senior Managing Director and Chief Investment Officer of Claymore
Year of birth:1955 Advisors, LLC and Claymore Securities, Inc.(2008-present). Formerly,
Chief Executive Officer Managing Director of Research, Nuveen Asset Management (2000-2007).
-------------------------------------------------------------------------------------------------------------------------
Kevin M. Robinson Since 2008 Senior Managing Director and General Counsel of Claymore Advisors,
Year of birth:1959 LLC, Claymore Securities, Inc. and Claymore Group,
Chief Legal Officer 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, LLC and Claymore
Year of birth:1964 Securities, Inc.(2005-present). Previously,Chief Financial Officer of
Chief Financial Officer, Claymore Group Inc.(2005-2006). Managing Director of Claymore
Chief Accounting Officer Advisors, LLC and Claymore Securities, Inc.(2003-2005). Treasurer of
and Treasurer 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 Claymore Advisors, LLC
Year of birth:1957 (2006-present). Previously, Chief Compliance Officer/Assistant
Chief Compliance Officer Secretary of Harris Investment Management,
Inc.(2003-2006). Director-Compliance of Harrisdirect LLC (1993-2003).
-------------------------------------------------------------------------------------------------------------------------
Mark E. Mathiasen Since 2007 Vice President, Assistant General Counsel of Claymore Group Inc.(2007
Year of Birth:1978 to present). Secretary of certain funds in the Fund
Secretary Complex. Previously, Law Clerk for the Idaho State Courts (2003-2007).
-------------------------------------------------------------------------------------------------------------------------
Charles D. Walbrandt Since 2008 Founding Principal, Chief Executive Officer & Chief Investment
Year of birth:1938 Officer of Fiduciary Asset Management, LLC (1994-present).
Vice President
-------------------------------------------------------------------------------------------------------------------------
James Cunnane, Jr. Since 2007 Managing Director, Senior Portfolio Manager of Fiduciary Asset
Year of birth:1970 Management, LLC (1996-present).
Vice President
-------------------------------------------------------------------------------------------------------------------------
* 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.
24 | Semiannual Report | May 31, 2009
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, BNY Mellon Shareowner Services, PO Box 358015, Pittsburgh,
PA 15252-8015, Phone Number:(866) 488-3559.
Semiannual Report | May 31, 2009 | 25
FMO | Fiduciary/Claymore MLP Opportunity Fund
Fund INFORMATION |
BOARD OF TRUSTEES
Randall C. Barnes
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 position as an officer
of Fiduciary Asset Management, LLC, the Fund's Investment Sub-Adviser
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
Charles D.Walbrandt
Vice President
James Cunnane, Jr.
Vice President
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 August 2008, 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.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may from time to time purchase
its shares of common stock in the open market.
26 | Semiannual Report | May 31, 2009
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 $12.4 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.
Semiannual Report | May 31, 2009 | 27
FIDUCIARY ASSET MANAGEMENT, LLC CLAYMORE SECURITIES, INC. FMO
8235 Forsyth Boulevard 2455 Corporate West Drive LISTED
Suite 700 Lisle, IL 60532 NYSE
St. Louis, MO 63105 Member FINRA/SIPC (07/09) FMO-SAR-0509
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 30a3(c) 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 of the period
covered by this report 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 of the Investment Company Act of 1940.
(a)(3) Not applicable.
(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 5, 2009
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
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Name: J. Thomas Futrell
Title: Chief Executive Officer
Date: August 5, 2009
By: /s/ Steven M. Hill
-----------------------------------------------------------------------
Name: Steven M. Hill
Title: Chief Financial Officer, Chief Accounting Officer and Treasurer
Date: August 5, 2009