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Monday, June 25, 2007

Claymore Starts "Sudan-Free" ETF

News summary by MFWire's editors

Instead of divesting from Sudan, Claymore has set a "Sudan-free" fund. Today the fund shop launched the Claymore/KLD Sudan Free Large-Cap Core ETF on the American Stock Exchange. The new fund has a list of disqualifiers for companies it considers invest in, including; owning or controlling property or assets in Sudan, having employees or facilities in Sudan, or providing goods or services to companies domiciled in Sudan.

Claymore Securities today launched the Claymore/KLD Sudan Free Large-Cap Core ETF (AMEX: KSF) on the American Stock Exchange. The Claymore/KLD Sudan Free Large-Cap Core ETF tracks the KLD Large Cap Sudan Free SocialSM Index, which is the first socially responsible index tied to the issue of Sudan divestment.

“Claymore Securities is dedicated to providing financial advisors and their clients with the investment choices they want,” said Christian Magoon, Senior Managing Director, Claymore Securities. “By partnering with KLD, the recognized index provider for socially responsible investing, Claymore is offering investors the first ETF based on an index with a Sudan-free mandate in the index methodology.”

“The new KLD Sudan Free Large Cap Social Index is the result of institutional and retail investors’ desire for Sudan-free investment products,” said Thomas Kuh, Managing Director of KLD Research & Analytics, Inc. “The grassroots efforts of citizens who care deeply about the crisis in Darfur have helped bring about new legislative mandates and socially responsible investing strategies to eliminate corporate support of Sudan’s current regime.”

Claymore/KLD Sudan Free Large-Cap Core ETF (AMEX: KSF) seeks investment results that correspond generally to the performance, before the Fund’s fees and expenses, of the KLD Large Cap Sudan Free Social Index. The index is comprised of a subset of stocks in the Russell 1000® Index with market capitalizations generally greater than $1 billion and that meet KLD Research & Analytics’ screens for environmental, social, and governance factors and involvement in Sudan.

Business involvement in Sudan for which the KLD Large Cap Sudan Free Social Index screens includes:

* Owns or controls property or assets in Sudan
* Has employees or facilities in Sudan
* Provides goods or services to companies domiciled in Sudan
* Obtains goods or services from Sudan
* Has distribution agreements with companies domiciled in Sudan
* Issues credits or loans to companies domiciled in Sudan
* Purchases goods or commercial paper issued by the Government of Sudan

The Claymore/KLD Sudan Free Large-Cap Core ETF will normally invest at least 90% of its total assets in common stock and ADRs that comprise the index. The index is rebalanced annually in June in conjunction with the reconstitution schedule of the Russell 1000® Index.

About Claymore Securities

Claymore Securities, Inc. is a privately-held financial services company offering unique investment solutions for financial advisors and their valued clients. As of May 31, 2007, Claymore entities have provided supervision, management, servicing or distribution on approximately $17 billion in assets through closed-end funds, unit investment trusts, mutual funds, separately managed accounts and exchanged-traded funds.

About KLD

KLD Research and Analytics, Inc. is the leading authority on social research and indexes for institutional investors. Founded in 1988, today, 33 of the top 50 institutional money managers worldwide use KLD’s research to integrate environmental, social and governance factors into their investment decisions. Over $10 billion is invested in funds based on KLD indexes.

The KLD Large Cap Sudan Free Social Index is the second product from KLD that addresses the Sudan Divestment issue.

Important Risks and Other Considerations

This information does not represent an offer to sell securities of funds and it is not soliciting an offer to buy securities of the fund. There can be no assurance that the fund will achieve its’ investment objectives. An investment in Claymore’s ETF is subject to certain risks and other considerations. Such risks and considerations include, but are not limited to:

Investment Risk: An investment in the Fund is subject to investment risk, including the possible loss of the entire principal amount that you invest.

Equity Risk: A principal risk of investing in the Fund is equity risk, which means that the value of the securities held by the Fund will fall due to general market and economic conditions, perceptions regarding the industries in which the issuers of securities held by the Fund participate, or factors relating to specific companies in which the Fund invests.

Social Investment Risk: The KLD Index’s social policy could cause the Fund to underperform similar funds that do not have a social policy. Among the reasons for this: undervalued stocks that do not meet the KLD Index’s social criteria could outperform those that do; economic or political changes could make certain companies less attractive for investment; the KLD Index’s social policy could cause the Fund to sell or avoid stocks that subsequently perform well.

Foreign Investment Risk: The Fund’s investments in non-U.S. issuers, although limited to ADRs, may involve unique risks compared to investing in securities of U.S. issuers, including, among others, greater market volatility than U.S. securities, currency risk and less complete financial information than for U.S. issuers among other risks.

Non-Correlation Risk: The Fund’s return may not match the return of the Index for a number of reasons including, but not limited to, operating expenses not applicable to the Index and costs in buying and selling securities to reflect changes in the composition of the Index. Additionally, the Fund may not be fully invested at times, either as a result of cash flows into the Fund or reserves of cash held by the Fund to meet redemptions and expenses.

Replication Management Index: Unlike many investment companies, the Fund is not “actively” managed. Therefore, it would not necessarily sell a stock because the stock’s issuer was in financial trouble unless that stock is removed from the Index.

Issuer-Specific Changes: the value of an individual security or particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. Non-Diversified Fund Risk: the Fund is considered non-diversified and can invest a greater portion of assets in securities of individual issuers than a diversified fund, which may result in greater fluctuations in share price.

Claymore ETFs are listed on the AMEX the same way as shares of a publicly-traded company. Claymore ETFs can be purchased through most brokerage accounts. They can be bought and sold throughout the day on the AMEX during normal trading hours.

The Fund issues and redeems shares at NAV only in large blocks of 150,000 shares (each block of 150,000 shares is called a “Creation Unit”) or multiples thereof. Only broker-dealers or large institutional investors with creation and redemption agreements, called Authorized Participants (“APs”), can purchase or redeem these Creation Units.

Investors buying or selling ETF shares on the secondary market may incur brokerage costs and other transactional fees. Shares of ETFs may fluctuate in price due to daily changes in trading volume. At times, shares may not have a high volume of trading. Except when aggregated in Creation Units, Shares are not redeemable securities of the Fund. 

Edited by: Erin Kello

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