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 811-21504
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Advent/Claymore Enhanced Growth & Income Fund
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(Exact name of registrant as specified in charter)
1065 Avenue of the Americas, New York, NY 10018
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(Address of principal executive offices) (Zip code)
Robert White, Treasurer
1065 Avenue of the Americas, New York, NY 10018
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(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 479-0675
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Date of fiscal year end: October 31
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Date of reporting period: April 30, 2008
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The registrant's semi-annual report transmitted to shareholders pursuant to Rule
30e-1 under the Investment Company Act of 1940 is as follows:
SHAREHOLDER
LETTER
April 30, 2008
Advent/Claymore Enhanced | LCM
Growth & Income Fund
Logo: ADVENT CAPITAL MANAGEMENT
Logo: Claymore (R)
www.adventclaymore.com
... YOUR BRIDGE TO THE LATEST,
MOST UP-TO-DATE INFORMATION ABOUT THE
ADVENT/CLAYMORE ENHANCED GROWTH & INCOME FUND
The shareholder report you are reading right now is just the beginning of the
story. Online at WWW.ADVENTCLAYMORE.COM, you will find:
o Daily, weekly and monthly data on share prices, net asset values,
distributions, and more
o Portfolio overviews and performance analyses
o Announcements, press releases and special notices
o Fund and adviser contact information
Advent Capital Management and Claymore are continually 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 | Letter to Shareholders | April 30, 2008 | www.adventclaymore.com
LCM | Advent/Claymore Enhanced Growth & Income Fund
Photo of: Tracy V. Maitland
Tracy V. Maitland
President and Chief Executive Officer
Dear SHAREHOLDER |
We thank you for your investment in the Advent/Claymore Enhanced Growth & Income
Fund (the "Fund"). This report covers the Fund's performance for the semi-annual
period ended April 30, 2008.
As you may know, the Fund's primary investment objective is to seek current
income and current gains trading in securities, with a secondary objective of
long term capital appreciation. Under normal market conditions, the Fund invests
at least 70% of its managed assets in a diversified portfolio of equity
securities and convertible securities of U.S. and non-U.S. issuers and up to 30%
of assets in non-convertible high yield securities. Additionally, the Fund
intends to engage in an option strategy of writing (selling) covered call
options on at least 50% of the securities held in the portfolio of the Fund,
thus generating option writing premiums. We seek international investment
opportunities in each asset class, with an emphasis on large multinational
companies. Appreciation potential is provided by investments in convertibles and
common stock, while the allocation to high-yield securities is primarily a
source of income. The balance between convertible securities, equities and
high-yield securities and the degree to which the Fund engages in a covered call
strategy will vary from time to time based on security valuations, interest
rates, equity market volatility and other economic and market factors. We
believe this flexibility to move among the three asset classes is quite
beneficial to the Fund's ability to balance return and risk.
All Fund returns cited--whether based on net asset value ("NAV") or market
price--assume the reinvestment of all distributions. For the six-month period
ending April 30, 2008, the Fund provided a total return based on market price of
- -8.91% and a return of -11.78% based on NAV. As of April 30, 2008, the Fund's
market price of $15.12 represented a discount of 10.80% to the Fund's NAV of
$16.95.
The Fund has paid quarterly dividends of $0.40 per share since its initial
dividend in May 2005. This quarterly distribution represents an annualized
distribution rate of 10.58%, based on the Fund's closing market price of $15.12
on April 30, 2008. Since the Fund's inception on January 31, 2005, through April
30, 2008, the Fund generated an average annual total return of 4.19% based on
NAV and -0.33% based on market price. There is no guarantee of any future
distributions or that the current returns and distribution rate will be
maintained.
We encourage shareholders to consider the opportunity to reinvest their
distributions from the Fund through the Dividend Reinvestment Plan ("DRIP"),
which is described in detail on page 17 of the Fund's semi-annual report. When
shares trade at a discount to NAV, the DRIP takes
Letter to Shareholders | April 30, 2008 | www.adventclaymore.com | 3
LCM | Advent/Claymore Enhanced Growth & Income Fund | DEAR SHAREHOLDER continued
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 DRIP 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 DRIP provides a
cost-effective means to accumulate additional shares and enjoy the benefits of
compounding returns over time. Since the Fund endeavors to maintain a steady
quarterly distribution, the DRIP plan effectively provides an income averaging
technique, which causes shareholders to accumulate a larger number of Fund
shares when the market price is depressed than when the price is higher.
The Fund is managed by a team of experienced and seasoned professionals led by
myself in my capacity as Chief Investment Officer (as well as President and
Founder) of Advent Capital Management, LLC. We encourage you to read the
following Questions & Answers section, which provides more information about the
factors that impacted the Fund's performance.
We thank you for your investment in the Fund and we are honored that you have
chosen the Advent/Claymore Enhanced Growth & Income Fund as part of your
investment portfolio. For the most up-to-date information on your investment,
please visit the Fund's website at www.adventclaymore.com.
Sincerely,
/s/ Tracy V. Maitland
Tracy V. Maitland
President and Chief Executive Officer of the Advent/Claymore Enhanced Growth &
Income Fund
April 25, 2008
4 | Letter to Shareholders | April 30, 2008 | www.adventclaymore.com
LCM | Advent/Claymore Enhanced Growth & Income Fund
QUESTIONS & ANSWERS |
Advent/Claymore Enhanced Growth & Income Fund (the "Fund") is managed by a team
of seasoned professionals at Advent Capital Management, LLC ("Advent"), led by
Tracy V. Maitland, Advent's President and Chief Investment Officer. In the
following interview, the management team discusses the equity, convertible
securities and high-yield markets and the performance of the Fund during the
six-month period ended April 30, 2008.
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WILL YOU REMIND US OF THIS FUND'S OBJECTIVES AND HOW YOU SEEK TO ACHIEVE THEM?
The Fund's primary investment objective is to provide current income and current
gains from trading in securities, with a secondary objective of long-term
capital appreciation. Under normal market conditions, the Fund invests at least
70% of assets in a diversified portfolio of equity securities and convertible
securities of U.S. and non-U.S. issuers and up to 30% of its managed assets in
non-convertible high yield securities. Additionally, the Fund intends to engage
in an option strategy of writing (selling) covered call options on at least 50%
of the securities held in the portfolio of the Fund, thus generating option
writing premiums. We seek international investment opportunities in each asset
class, with an emphasis on large multinational companies. Appreciation potential
is provided by investments in convertibles and common stock, while the
allocation to high-yield securities is primarily a source of income.
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PLEASE TELL US ABOUT THE ECONOMIC AND MARKET ENVIRONMENT OVER THE LAST SIX
MONTHS.
The six-month period from October 31, 2007, through April 30, 2008, was a period
of considerable economic uncertainty and significant turmoil throughout capital
markets. In the final few months of 2007, what began as a correction in the U.S.
housing market accelerated into a crisis in the subprime mortgage market with
profound implications for the entire economy. By early 2008, there had been
pronounced changes in attitudes toward risk in financial markets, as
demonstrated by wider credit spreads, severe dislocation in short-term credit
markets, overall tightening of financial conditions and an increasingly volatile
equity market. The Federal Reserve Board reduced interest rates seven times
between September 2007 and April 2008, striving to strike a balance between
providing liquidity to financial markets and keeping inflation at a moderate
level. Even with this stimulus, recent trends in employment and consumer
spending, accompanied by a spike in energy prices, have led many economists to
forecast that the U.S. will experience a recession during 2008.
In this challenging economic environment, most U.S. equity indices posted
negative returns. In the U.S., treasury securities provided higher returns than
other asset classes, as investors became increasingly uncomfortable with risk.
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HOW DID THE FUND PERFORM IN THIS ENVIRONMENT?
All Fund returns cited--whether based on net asset value ("NAV") or market
price--assume the reinvestment of all distributions. For the six-month period
ending April 30, 2008, the Fund provided a total return based on market price of
- -8.91% and a return of -11.78% based on NAV. As of April 30, 2008, the Fund's
market price of $15.12 represented a discount of 10.80% to the Fund's NAV of
$16.95.
For NAV performance comparison purposes, the Standard & Poor's 500 Index ("S&P
500"), which is considered a common indicator of broad U.S. stock market
performance, returned -9.64% for the six-month period. The MSCI World Index,
which tracks performance of equity markets throughout the world, posted a return
of -9.06%. The Merrill Lynch All Convertibles Index, which tracks performance of
the U.S. market for convertible securities, returned -5.26%. The Merrill Lynch
High Yield Master II Index, which is a measure of the broad high yield market,
returned -0.77%.
As most investors may know, 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. The
current discount to NAV may provide an opportunity for suitable investors to
purchase shares of the Fund below the market value of the securities in the
underlying portfolio. We believe that, over the long term, the progress of the
NAV will be reflected in the market price return to shareholders.
Letter to Shareholders | April 30, 2008 | www.adventclaymore.com | 5
LCM | Advent/Claymore Enhanced Growth & Income Fund |
QUESTIONS & ANSWERS continued
QUESTIONS & ANSWERS |
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HOW DID YOU ALLOCATE THE FUND AMONG ASSET CLASSES OVER THE LAST SIX MONTHS?
The Fund was designed to be diversified among asset classes but to also have the
flexibility to reallocate assets as necessary. Investments are allocated
globally among stocks, convertible securities and high-yield bonds. At the
beginning of the six-month period, the Fund's equity exposure represented
approximately 62.7% of total investments; convertible securities represented
20.4%; non-convertible corporate high-yield bonds represented 13.5%; and other
assets represented 3.4% of total investments.
Over this period we reduced the exposure to equities, which stood at 51.9% at
April 30, 2008. Approximately 36.8% of the portfolio is in securities of
companies headquartered outside the U.S. Our emphasis is on markets in
well-developed economies, mainly in Europe and Asia, not emerging markets.
However, we gain some participation in rapidly growing emerging markets, while
maintaining risk at an acceptable level, by investing in companies in well
established markets, such as Japan and Hong Kong, that do business in rapidly
growing economies in countries such as China and India.
Balancing the reduction in the equity position, we added to the portfolio's
exposure to convertible securities, which represented 31.6% of the portfolio as
of April 30, 2008, compared with 20.4% as of October 31, 2007. Convertibles
offer the opportunity to receive attractive yields and also participate in any
of the upside potential of the underlying equities.
We have also opportunistically increased the allocation to high yield securities
somewhat, taking advantage of dislocations in the credit markets. As of April
30, 2008, high yield bonds represented 15.4% of the portfolio. We believe that
many of the high yield bonds purchased have the potential for significant
capital appreciation as well as offering attractive current yields. Rigorous
credit research is an important element of security selection for this Fund, and
Advent's proprietary credit research emphasizes cash flow and balance sheets. We
focus on the higher-quality segment of the high yield bond market, avoiding
those bonds that are more likely to default. With the addition of these
securities, the portfolio's current yield is significantly higher than it has
been historically.
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WHICH SECURITIES MOST HELPED THE FUND'S PERFORMANCE?
Two areas that performed quite well were energy and agriculture. One of the best
performing positions was Chaoda Modern Agriculture Ltd. (0.8% of long-term
investments). Chaoda is a rapidly expanding company that grows vegetables and
other agricultural products throughout China, taking advantage of the Chinese
government's support for encouraging greater production. Chaoda expects to
double the amount of land under management over the next two years, and margins,
already very attractive, are expected to expand as it increases production
volume.
Another strong performer was Pride International, Inc., an offshore drilling
contractor (0.6% of long-term investments). This stock has traditionally traded
at a lower multiple than other drillers because it has operated mostly small
jackup rigs, rather than the more sophisticated deep water rigs. Over the last
few months the company has been selling some of its jackup rigs and buying deep
water submersible rigs to be delivered over the next few years. Pride has a
backlog of business that may essentially ensure significant growth over the next
few years, and we believe there is a good chance of multiple expansion as the
business evolves.
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WHICH HOLDINGS HURT PERFORMANCE?
A significant negative was drug producer Schering-Plough Corp. (0.2% of
long-term investments); we feel we own a good quality convertible with an
attractive yield. This stock dropped on publicity surrounding Vytorin, a
cholesterol-lowering drug. A recent panel indicated that Vytorin may not have
the previously presumed advantages over a combination of generic drugs. As a
result, it now appears that Vytorin may not be the growth engine it was
previously hoped to be. We continue to hold Schering-Plough, as we believe
trends are not as negative as the current market price suggest; we believe that
the company has other sources of growth, including the recent acquisition of
Organon International.
6 | Letter to Shareholders | April 30, 2008 | www.adventclaymore.com
LCM | Advent/Claymore Enhanced Growth & Income Fund |
QUESTIONS & ANSWERS continued
Another underperforming holding is RF Micro Devices, Inc. (0.8% of long-term
investments), which manufacturers components for hand sets. Demand for the
company's products has dropped dramatically in recent months, as major handset
producers faced a combination of weak demand and changing technology. RF Micro
Devices, Inc. has begun a restructuring program, reducing expenses and
eliminating low margin products, and we believe the stock has good potential for
recovery.
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HOW DID THE FUND'S COVERED CALL PROGRAM AFFECT PERFORMANCE?
We manage our covered call overlay primarily to help us meet distribution goals
and, to a lesser extent, to help maintain the Fund's NAV. Option premiums,
dividends, interest and capital appreciation are all part of the total return.
The U.S. has a broad and deep options market, while many international companies
that we find attractive do not have options. We may write options on any
position where options are available and make investment sense. The majority of
options are written on the equities and convertible securities in the Fund,
because they have more volatility than high-yield securities, and, therefore, a
greater potential for income generation. We write options on high-yield
positions opportunistically.
Although we have the ability to write calls on the entire portfolio, covered
calls are generally written on no more than 60-65% of the total portfolio. We
usually write calls on just a portion of a position so that if the price of the
security rises substantially and the call is exercised, we still maintain a
portion of the position. Also, we tier the calls with varying maturities and
strike prices so that not all expire at the same time or are exercised at the
same price.
During the month of April, we wrote covered call options against a significant
proportion of our equity holdings, and these options helped contribute to income
and overall return. Covered call options provide the opportunity to add income
while taking advantage of high market volatility. In writing options, we take
great care to make sure not only that the income received is adequate but also
that we do not give up too much upside market potential. As of April 30, 2008,
options were written against 52% of the securities in the portfolio.
- --------------------------------------------------------------------------------
What is a covered call?
A call is an option (or contract) that gives its holder the right, but not the
obligation, to buy shares of the underlying security at a specified price on or
before a pre-determined expiration date. After this predetermined date, the
option and its corresponding rights expire. A covered call is when the seller of
the call option also owns the security on which the call is written. Covered
call strategies are generally used as a hedge--to limit losses by obtaining
premium income from the sale of calls, while still maintaining upside potential.
- --------------------------------------------------------------------------------
Letter to Shareholders | April 30, 2008 | www.adventclaymore.com | 7
LCM | Advent/Claymore Enhanced Growth & Income Fund |
QUESTIONS & ANSWERS continued
- --------------------------------------------------------------------------------
WHAT IS YOUR CURRENT OUTLOOK FOR THE MARKETS AND THE FUND?
A major advantage of this Fund is its ability to invest in multiple asset
classes, taking advantage of different opportunities and anomalies in various
markets around the world. As mentioned above, we were able to take advantage of
dislocations in U.S. credit markets over the last few months, buying quality
debt securities at very attractive prices.
At present, as financial markets continue to experience turmoil, we see many
opportunities in the convertible market. Very high quality financial
institutions are issuing high coupon bonds and preferreds as they seek to
rebuild their balance sheets or make acquisitions, and we have taken advantage
of the opportunity to invest in some of these securities. They may not recover
quickly, but we have the ability to hold them for several years, collecting
attractive yields in the meantime.
We believe that, over the long term, our careful security selection and asset
allocation will help the Fund's performance by providing favorable returns in
rising markets and a level of income that can provide some protection for
overall return against down markets.
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LCM ADDITIONAL RISKS AND DISCLOSURE
The views expressed in this report reflect those of the Portfolio Managers 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 contain
forward-looking statements that involve risk and uncertainty, and there is no
guarantee they 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. The Fund is subject to investment risk,
including the possible loss of the entire amount that you invest. Past
performance does not guarantee future results.
CONVERTIBLE SECURITIES. The Fund is not limited in the percentage of its assets
that may be invested in convertible securities. Convertible securities generally
offer lower interest or dividend yields than non-convertible securities of
similar quality. The market values of convertible securities tend to decline as
interest rates increase and, conversely, to increase as interest rates decline.
However, the convertible security's market value tends to reflect the market
price of the common stock of the issuing company when that stock price is
greater than the convertible's "conversion price," which is the predetermined
price at which the convertible security could be exchanged for the associated
stock.
SYNTHETIC CONVERTIBLE SECURITIES. The value of a synthetic convertible security
will respond differently to market fluctuations than a convertible security
because a synthetic convertible security is composed of two or more separate
securities, each with its own market value. In addition, if the value of the
underlying common stock or the level of the index involved in the convertible
component falls below the exercise price of the warrant or option, the warrant
or option may lose all value.
8 | Letter to Shareholders | April 30, 2008 | www.adventclaymore.com
LCM | Advent/Claymore Enhanced Growth & Income Fund |
QUESTIONS & ANSWERS continued
EQUITY SECURITIES RISK. Equity risk is the risk that 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,
and the particular circumstances and performance of particular companies whose
securities the Fund holds.
RISKS ASSOCIATED WITH OPTIONS ON SECURITIES. There are significant differences
between the securities and options markets that could result in an imperfect
correlation between these markets, causing a given transaction not to achieve
its objectives. 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. Once an
option writer has received an exercise notice, it cannot effect a closing
purchase transaction in order to terminate its obligation under the option and
must deliver the underlying security at the exercise price.
LOWER GRADE SECURITIES. The Fund may invest an unlimited amount in lower grade
securities. Investing in lower grade securities (commonly known as "junk bonds")
involves additional risks, including credit risk. Credit risk is the risk that
one or more securities in the Fund's portfolio will decline in price, or fail to
pay interest or principal when due, because the issuer of the security
experiences a decline in its financial status.
FOREIGN SECURITIES AND EMERGING MARKETS RISK. Investing in non-U.S. issuers may
involve unique risks, such as currency, political, economic and market risk. In
addition, investing in emerging markets entails additional risk including, but
not limited to (1) news and events unique to a country or region (2) smaller
market size, resulting in lack of liquidity and price volatility (3) certain
national policies which may restrict the Fund's investment opportunities.
ILLIQUID INVESTMENTS. The Fund may invest without limit in illiquid securities.
The Fund may also invest without limit in Rule 144A Securities. Although many of
the Rule 144A Securities in which the Fund invests may be, in the view of the
Investment Manager, liquid, if qualified institutional buyers are unwilling to
purchase these Rule 144A Securities, they may become illiquid. Illiquid
securities may be difficult to dispose of at a fair price at the times when the
Fund believes it is desirable to do so. The market price of illiquid securities
generally is more volatile than that of more liquid securities, which may
adversely affect the price that the Fund pays for or recovers upon the sale of
illiquid securities.
In addition to the risks described above, the Fund is also subject to: Interest
Rate Risk, Credit Risk, Call Risk, Currency Risks, Management Risk, Strategic
Transactions, Anti-Takeover Provisions, and Market Disruption Risk. Please see
www.adventclaymore.com for a more detailed discussion about Fund risks and
considerations.
Letter to Shareholders | April 30, 2008 | www.adventclaymore.com | 9
LCM | Advent/Claymore Enhanced Growth & Income Fund
Fund SUMMARY | AS OF APRIL 30, 2008 (unaudited)
FUND STATISTICS
- -------------------------------------------------------
Share Price $15.12
Common Share Net Asset Value $16.95
Premium/Discount to NAV -10.80%
Net Assets ($000) $230,605
- -------------------------------------------------------
TOTAL RETURNS
- -------------------------------------------------------
(Inception 1/31/05) Market NAV
- -------------------------------------------------------
Six-Month-non-annualized -8.91% -11.78%
One Year -16.74% -9.36%
Three Year - average annual 3.98% 6.71%
Since Inception - average annual -0.33% 4.19%
- -------------------------------------------------------
% of Long-Term
TOP TEN INDUSTRIES Investments
- -------------------------------------------------------
Pharmaceuticals 9.3%
Chemicals 6.6%
Oil and Gas 6.5%
Special Purpose Entity 5.7%
Automotive 5.3%
Telecommunications 5.2%
Financial Services 3.9%
Utilities - Gas and Electric 3.9%
Diversified Metals and Mining 3.9%
Computers - Software and Peripherals 3.5%
- -------------------------------------------------------
% of Long-Term
TOP TEN ISSUERS Investments
- -------------------------------------------------------
Dow Jones CDX North America High Yield 5.7%
Mylan, Inc. 2.3%
Intel Corp. 2.3%
Xstrata PLC 2.1%
Bayer Capital Corp. BV 2.1%
Suzuki Motor Corp. 2.0%
Continental AG 1.9%
Vallourec SA 1.9%
Schering-Plough Corp. 1.8%
Roche Holding AG 1.8%
- -------------------------------------------------------
Past performance does not guarantee future results. All portfolio data is
subject to change daily.
For more current information, please visit www.adventclaymore.com. The above
summaries are provided for informational purposes only and should not be viewed
as recommendations.
Line Chart:
SHARE PRICE & NAV PERFORMANCE
SHARE RICE NAV
17.46 20.09
17.31 19.8
17.39 19.79
17.32 19.63
17.29 19.74
16.95 19.53
16.6 19.39
16.5 19.22
16.29 18.94
16.05 18.69
15.89 18.79
15.75 18.62
15.8 18.53
15.55 18.17
15.4 18.18
15.25 17.92
15.49 18.15
15.1 18.07
15.16 18.13
15.58 18.45
15.67 18.56
15.75 18.73
15.85 18.61
15.95 18.46
16.1 18.56
16.3 18.71
16.32 18.78
16.4 18.81
16.01 18.61
16.03 18.64
16 18.46
15.8 18.31
15.54 18.03
15.57 18.01
15.55 18
15.33 18.06
15.57 18.28
15.94 18.37
15.86 18.47
15.81 18.38
15.85 18.43
15.98 18.41
15.98 18.39
16.17 18.3
15.92 17.96
15.86 17.84
15.67 17.75
15.89 17.74
15.98 17.77
15.84 17.67
16.01 17.79
15.66 17.47
15.52 17.11
15.2 16.82
14.76 16.72
14.49 16.33
14.67 16.42
14.83 16.74
14.87 16.87
15.32 16.92
15.52 17.08
15.9 17.04
16.01 17.23
16.17 17.5
16.14 17.51
16.02 17.12
15.95 16.94
15.96 16.87
15.84 16.8
15.83 16.88
15.89 17
15.47 16.79
14.74 16.79
14.83 16.81
15.01 16.9
15.12 16.84
15.27 16.87
15.15 16.88
15.31 17.08
15.48 17.2
15.53 17.22
15.59 17.07
15.2 16.81
15.21 16.67
15.11 16.54
15.17 16.58
14.9 16.39
14.6 16.21
14.2 15.93
14.52 16.17
14.36 16.17
14.25 16.17
13.92 15.98
13.55 15.51
13.8 15.82
13.47 15.64
13.84 15.67
14.01 15.89
13.98 16.08
14.02 16.03
14.04 16.02
13.99 15.98
14.06 15.95
14.39 16.16
14.24 16.24
14.31 16.34
14.44 16.43
14.52 16.56
14.48 16.49
14.42 16.37
14.48 16.42
14.2 16.35
14.25 16.29
14.27 16.32
14.42 16.56
14.48 16.56
14.69 16.7
14.69 16.75
14.55 16.62
14.61 16.69
14.74 16.82
14.9 16.88
15.01 16.96
15.06 16.92
15.12 16.95
Pie Chart:
PORTFOLIO COMPOSITION (% of Total Investments)
Asset Class
- -----------
Common Stocks 51.9%
Convertible Bonds 16.4%
Corporate Bonds 15.4%
Convertible Preferred Stocks 15.2%
Exchange-Traded Funds 1.0%
CallOptions Purchased 0.1%
% of Long-Term
COUNTRY BREAKDOWN Investments
- -------------------------------------------------------
United States 63.2%
Japan 8.1%
United Kingdom 5.4%
Canada 5.1%
Germany 3.2%
Switzerland 2.3%
Netherlands 2.1%
Cayman Islands 2.0%
France 1.8%
Czech Republic 1.7%
Bermuda 1.6%
Guernsey 1.4%
China 1.2%
Brazil 0.9%
- -------------------------------------------------------
10 | Letter to Shareholders | April 30, 2008 | www.adventclaymore.com
LCM | Advent/Claymore Enhanced Growth & Income Fund
About the INVESTMENT MANAGER |
ADVENT CAPITAL MANAGEMENT, LLC
Advent Capital Management, LLC ("Advent") is a registered investment advisor,
based in New York, which specializes in convertible, equity and high-yield
securities for institutional and individual investors. The firm was established
by Tracy V. Maitland, a former Director in the Convertible Securities sales and
trading division of Merrill Lynch. Advent's investment discipline emphasizes
capital structure research, encompassing equity fundamentals as well as credit
research, with a focus on cash flow and asset values while seeking to maximize
total return.
INVESTMENT PHILOSOPHY
Advent believes that superior returns can be achieved while reducing risk by
investing in a diversified portfolio of global equity, convertible and
high-yield securities. The Fund Manager seeks securities with attractive
risk/reward characteristics. A strategy of writing (selling) covered call
options on at least 50% of the securities held in the portfolio is also employed
primarily to generate premium income and secondarily to help reduce downside
portfolio risk. Advent employs a bottom-up security selection process across all
of the strategies it manages. Securities are chosen from those that the Fund
Manager believes have stable-to-improving fundamentals and attractive
valuations.
INVESTMENT PROCESS
Advent manages securities by using a strict four-step process:
1 Screen the equity, convertible and high-yield markets for securities with
attractive risk/reward characteristics and favorable cash flows;
2 Analyze the quality of issues to help manage downside risk;
3 Analyze fundamentals to identify catalysts for favorable performance; and
4 Continually monitor the portfolio for improving or deteriorating trends in
the financials of each investment.
Letter to Shareholders | April 30, 2008 | www.adventclaymore.com | 11
ADVENT CAPITAL MANAGEMENT, LLC
1065 Avenue of the Americas
New York, New York 10018
THIS REPORT IS SENT TO SHAREHOLDERS OF ADVENT/CLAYMORE ENHANCED GROWTH & INCOME
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.
LCM
LISTED
NYSE(R)
LCM-SL-0408
SEMI-ANNUAL
REPORT
April 30, 2008
(Unaudited)
Advent/Claymore Enhanced | LCM
Growth & Income Fund
Logo: ADVENT CAPITAL MANAGEMENT
Logo: CLAYMORE (R)
LCM | Advent/Claymore Enhanced Growth & Income Fund
Fund SUMMARY | AS OF APRIL 30, 2008 (unaudited)
FUND STATISTICS
- -------------------------------------------------------
Share Price $15.12
Common Share Net Asset Value $16.95
Premium/Discount to NAV -10.80%
Net Assets ($000) $230,605
- -------------------------------------------------------
TOTAL RETURNS
- -------------------------------------------------------
(INCEPTION 1/31/05) MARKET NAV
- -------------------------------------------------------
Six-Month-non-annualized -8.91% -11.78%
One Year -16.74% -9.36%
Three Year - average annual 3.98% 6.71%
Since Inception - average annual -0.33% 4.19%
- -------------------------------------------------------
% OF LONG-TERM
TOP TEN INDUSTRIES INVESTMENTS
- -------------------------------------------------------
Pharmaceuticals 9.3%
Chemicals 6.6%
Oil and Gas 6.5%
Special Purpose Entity 5.7%
Automotive 5.3%
Telecommunications 5.2%
Financial Services 3.9%
Utilities - Gas and Electric 3.9%
Diversified Metals and Mining 3.9%
Computers - Software and Peripherals 3.5%
- -------------------------------------------------------
% OF LONG-TERM
TOP TEN ISSUERS INVESTMENTS
- -------------------------------------------------------
Dow Jones CDX North America High Yield 5.7%
Mylan, Inc. 2.3%
Intel Corp. 2.3%
Xstrata PLC 2.1%
Bayer Capital Corp. BV 2.1%
Suzuki Motor Corp. 2.0%
Continental AG 1.9%
Vallourec SA 1.9%
Schering-Plough Corp. 1.8%
Roche Holding AG 1.8%
- -------------------------------------------------------
Past performance does not guarantee future results. All portfolio data is
subject to change daily. For more current information, please visit
www.adventclaymore.com. The above summaries are provided for informational
purposes only and should not be viewed as recommendations.
Line Chart:
SHARE PRICE & NAV PERFORMANCE
SHARE PRICE NAV
17.46 20.09
17.31 19.8
17.39 19.79
17.32 19.63
17.29 19.74
16.95 19.53
16.6 19.39
16.5 19.22
16.29 18.94
16.05 18.69
15.89 18.79
15.75 18.62
15.8 18.53
15.55 18.17
15.4 18.18
15.25 17.92
15.49 18.15
15.1 18.07
15.16 18.13
15.58 18.45
15.67 18.56
15.75 18.73
15.85 18.61
15.95 18.46
16.1 18.56
16.3 18.71
16.32 18.78
16.4 18.81
16.01 18.61
16.03 18.64
16 18.46
15.8 18.31
15.54 18.03
15.57 18.01
15.55 18
15.33 18.06
15.57 18.28
15.94 18.37
15.86 18.47
15.81 18.38
15.85 18.43
15.98 18.41
15.98 18.39
16.17 18.3
15.92 17.96
15.86 17.84
15.67 17.75
15.89 17.74
15.98 17.77
15.84 17.67
16.01 17.79
15.66 17.47
15.52 17.11
15.2 16.82
14.76 16.72
14.49 16.33
14.67 16.42
14.83 16.74
14.87 16.87
15.32 16.92
15.52 17.08
15.9 17.04
16.01 17.23
16.17 17.5
16.14 17.51
16.02 17.12
15.95 16.94
15.96 16.87
15.84 16.8
15.83 16.88
15.89 17
15.47 16.79
14.74 16.79
14.83 16.81
15.01 16.9
15.12 16.84
15.27 16.87
15.15 16.88
15.31 17.08
15.48 17.2
15.53 17.22
15.59 17.07
15.2 16.81
15.21 16.67
15.11 16.54
15.17 16.58
14.9 16.39
14.6 16.21
14.2 15.93
14.52 16.17
14.36 16.17
14.25 16.17
13.92 15.98
13.55 15.51
13.8 15.82
13.47 15.64
13.84 15.67
14.01 15.89
13.98 16.08
14.02 16.03
14.04 16.02
13.99 15.98
14.06 15.95
14.39 16.16
14.24 16.24
14.31 16.34
14.44 16.43
14.52 16.56
14.48 16.49
14.42 16.37
14.48 16.42
14.2 16.35
14.25 16.29
14.27 16.32
14.42 16.56
14.48 16.56
14.69 16.7
14.69 16.75
14.55 16.62
14.61 16.69
14.74 16.82
14.9 16.88
15.01 16.96
15.06 16.92
15.12 16.95
Pie Chart:
PORTFOLIO COMPOSITION (% of Total Investments)
Asset Class
- -----------
Common Stocks 51.9%
Convertible Bonds 16.4%
Corporate Bonds 15.4%
Convertible Preferred Stocks 15.2%
Exchange-Traded Funds 1.0%
Call Options Purchased 0.1%
% OF LONG-TERM
COUNTRY BREAKDOWN INVESTMENTS
- -------------------------------------------------------
United States 63.2%
Japan 8.1%
United Kingdom 5.4%
Canada 5.1%
Germany 3.2%
Switzerland 2.3%
Netherlands 2.1%
Cayman Islands 2.0%
France 1.8%
Czech Republic 1.7%
Bermuda 1.6%
Guernsey 1.4%
China 1.2%
Brazil 0.9%
- -------------------------------------------------------
2 | SemiAnnual Report | April 30, 2008
LCM | Advent/Claymore Enhanced Growth & Income Fund
Portfolio of INVESTMENTS | APRIL 30, 2008 (unaudited)
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
LONG-TERM INVESTMENTS - 95.9%
COMMON STOCKS - 49.8%
AEROSPACE AND DEFENSE - 0.8%
80,000 AAR Corp. (a) (b) $ 1,872,000
- --------------------------------------------------------------------------------
AGRICULTURE - 0.7%
1,164,000 Chaoda Modern Agriculture Ltd. (Cayman Islands) 1,672,543
- --------------------------------------------------------------------------------
AIRLINES - 0.8%
50,000 Continental Airlines, Inc., Class B (a)(b) 899,000
100,000 Northwest Airlines Corp. (a)(b) 966,000
- --------------------------------------------------------------------------------
1,865,000
- --------------------------------------------------------------------------------
ALUMINUM, STEEL AND OTHER METALS - 2.7%
18,500 Freeport-McMoran Copper & Gold, Inc. (a) 2,104,375
15,000 Vallourec SA (France) (a) 4,092,701
- --------------------------------------------------------------------------------
6,197,076
- --------------------------------------------------------------------------------
AUTO PARTS & EQUIPMENT - 0.0%
100 Continental AG (Germany) (a) 11,759
- --------------------------------------------------------------------------------
AUTOMOTIVE - 1.9%
171,500 Suzuki Motor Corp. (Japan) 4,315,807
- --------------------------------------------------------------------------------
BEVERAGES - 1.0%
92,000 SABMiller PLC (United Kingdom) (a) 2,128,221
- --------------------------------------------------------------------------------
BIOTECHNOLOGY - 2.6%
60,000 Amgen, Inc. (a)(b) 2,512,200
50,000 Genzyme Corp. (a)(b)(c) 3,517,500
- --------------------------------------------------------------------------------
6,029,700
- --------------------------------------------------------------------------------
CHEMICALS - 4.3%
60,300 Nitto Denko Corp. (Japan) 2,486,776
2,895,000 Sinofert Holdings, Ltd. (Bermuda) 2,209,895
45,000 Terra Industries, Inc. (a) 1,703,700
338,000 Tokai Carbon Co., Ltd. (Japan) 3,509,042
- --------------------------------------------------------------------------------
9,909,413
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES - 0.5%
15,000 Visa, Inc., Class A (a)(b) 1,251,750
- --------------------------------------------------------------------------------
COMMUNICATIONS, MEDIA AND ENTERTAINMENT - 1.6%
50,000 DISH Network Corp., Class A (a)(b) 1,492,000
250,000 Interpublic Group of Cos., Inc. (a)(b) 2,262,500
- --------------------------------------------------------------------------------
3,754,500
- --------------------------------------------------------------------------------
COMPUTERS - SOFTWARE AND PERIPHERALS - 1.1%
325,000 Compuware Corp. (a)(b) 2,450,500
- --------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS - 1.1%
629,000 Shanghai Industrial Holdings Ltd. (China) 2,606,510
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT AND COMPONENTS - 1.6%
25,000 General Cable Corp. (a)(b) 1,675,000
550,000 RF Micro Devices, Inc. (a)(b)(c) 1,853,500
- --------------------------------------------------------------------------------
3,528,500
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
ENGINEERING - 0.5%
37,400 ABB Ltd. (Switzerland) $ 1,143,311
- --------------------------------------------------------------------------------
FINANCIAL SERVICES - 1.3%
250,000 Man Group PLC (United Kingdom) (a) 2,879,226
- --------------------------------------------------------------------------------
FOREST PRODUCTS - 0.6%
125,000 Temple-Inland, Inc. (a) 1,458,750
- --------------------------------------------------------------------------------
HEALTH CARE PRODUCTS AND SERVICES - 2.1%
774,000 Hengan International Group Co., Ltd. (Cayman Islands) 2,765,491
70,000 Hologic, Inc. (a)(b) 2,043,300
- --------------------------------------------------------------------------------
4,808,791
- --------------------------------------------------------------------------------
INSURANCE - 0.5%
50,000 Assured Guaranty, Ltd. (Bermuda) (a) 1,264,500
- --------------------------------------------------------------------------------
INTERNET - 0.8%
21,200 Equinix, Inc. (a)(b) 1,916,904
- --------------------------------------------------------------------------------
INVESTMENT BANKING & BROKERAGE - 1.1%
50,000 Merrill Lynch & Co., Inc. (a) 2,491,500
- --------------------------------------------------------------------------------
LEISURE AND ENTERTAINMENT - 1.9%
110,000 International Game Technology (a) 3,821,400
100,000 Shuffle Master, Inc. (a)(b)(c) 491,000
- --------------------------------------------------------------------------------
4,312,400
- --------------------------------------------------------------------------------
MACHINERY AND EQUIPMENT - 1.9%
140,000 Nabtesco Corp. (Japan) 2,056,263
19,400 SMC Corp. (Japan) 2,242,388
- --------------------------------------------------------------------------------
4,298,651
- --------------------------------------------------------------------------------
MANUFACTURING - 0.7%
50,000 General Electric Co. (a) 1,635,000
- --------------------------------------------------------------------------------
OIL AND GAS - 5.1%
25,000 Baytex Energy Trust (Income Trust) (Canada) 626,303
102,000 Bonavista Energy Trust (Income Trust) (Canada) 3,131,606
40,000 Cameron International Corp. (a)(b) 1,969,200
80,000 Enerplus Resources Fund (Income Trust) (Canada) 3,584,947
30,000 Pride International, Inc. (a)(b) 1,273,500
28,700 Vermilion Energy Trust (Income Trust) (Canada) 1,130,502
- --------------------------------------------------------------------------------
11,716,058
- --------------------------------------------------------------------------------
PHARMACEUTICALS - 4.5%
100,000 Bristol-Myers Squibb Co. (a) 2,197,000
90,000 Isis Pharmaceuticals, Inc. (a)(b) 1,060,200
75,000 Merck & Co., Inc. (a) 2,853,000
24,000 Roche Holding AG (Switzerland) 3,981,758
25,000 Schering-Plough Corp. (a)(c) 460,250
- --------------------------------------------------------------------------------
10,552,208
- --------------------------------------------------------------------------------
REAL ESTATE AND DEVELOPMENT - 1.4%
219,000 Shoei Co., Ltd. (Japan) 3,218,678
- --------------------------------------------------------------------------------
See notes to financial statements.
SemiAnnual Report | April 30, 2008 | 3
LCM | Advent/Claymore Enhanced Growth & Income Fund |
PORTFOLIO OF INVESTMENTS (unaudited) continued
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
RETAIL - SPECIALTY STORES - 1.7%
30,000 GameStop Corp., Class A (a)(b) $ 1,651,200
95,510 Whitbread PLC (United Kingdom) (a) 2,298,323
- --------------------------------------------------------------------------------
3,949,523
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS - 5.0%
102,500 Amdocs, Ltd. (Guernsey) (a)(b) 3,216,450
200,000 Comverse Technology, Inc. (b) 3,490,000
70,000 NII Holdings, Inc. (a)(b) 3,201,800
600,000 Powerwave Technologies, Inc. (a)(b) 1,638,000
- --------------------------------------------------------------------------------
11,546,250
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS - 49.8%
(Cost $130,127,910) 114,785,029
- --------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS - 14.6%
AUTOMOTIVE - 0.5%
34,300 Ford Motor Co., Capital Trust II, 6.50%, 2032 1,263,955
- --------------------------------------------------------------------------------
BANKING AND FINANCE - 2.0%
2,000 Bank of America Corp., Ser. L, 7.25%, 2049 (a) (g) 2,196,000
2,000 Wachovia Corp., Ser. L, 7.50%, 2049 (g) 2,338,100
- --------------------------------------------------------------------------------
4,534,100
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 2.3%
5,000 Lucent Technologies Capital Trust I, 7.75%, 2017 3,800,000
131,400 Merrill Lynch & Co., Inc., Ser. Motorola, Inc.,
18.70%, 2008 (d)(e) 1,442,772
- --------------------------------------------------------------------------------
5,242,772
- --------------------------------------------------------------------------------
COMPUTERS - SOFTWARE AND PERIPHERALS - 0.6%
78,003 Merrill Lynch & Co., Inc., Ser. Dell, Inc., 14.85%,
2008 (a)(d)(e) 1,502,338
- --------------------------------------------------------------------------------
DIVERSIFIED METALS AND MINING - 0.9%
27,500 Vale Capital Ltd., Ser. RIO, 5.50%, 2010
(Brazil) (a)(d) 2,014,375
- --------------------------------------------------------------------------------
FINANCIAL SERVICES - 0.5%
1,250 SLM Corp., Ser. C, 7.25%, 2010 (a) 1,199,062
- --------------------------------------------------------------------------------
MISCELLANEOUS CONSUMER DISCRETIONARY - 0.8%
40,000 Avery Dennison Corp., 7.875%, 2010 (a) 1,910,800
- --------------------------------------------------------------------------------
PHARMACEUTICALS - 3.8%
5,500 Mylan, Inc., 6.50%, 2010 (a)(c) 5,126,770
20,000 Schering-Plough Corp., 6.00%, 2010 3,610,600
- --------------------------------------------------------------------------------
8,737,370
- --------------------------------------------------------------------------------
SEMICONDUCTORS - 2.2%
222,860 Wachovia Bank NA, Ser. Intel Corp., 8.00%,
2008 (a)(d)(e) 5,077,375
- --------------------------------------------------------------------------------
UTILITIES - GAS AND ELECTRIC - 1.0%
6,000 NRG Energy, Inc. 5.75%, 2009 (a) 2,259,375
- --------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS - 14.6%
(Cost $37,935,982) 33,741,522
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
CONVERTIBLE BONDS - 15.7%
AIRLINES - 1.0%
$ 1,000,000 AMR Corp., B-, 4.50%, 2/15/24 $ 933,750
$ 1,895,000 JetBlue Airways Corp., CCC, 3.75%, 3/15/35 1,388,088
- --------------------------------------------------------------------------------
2,321,838
- --------------------------------------------------------------------------------
AUTO PARTS AND EQUIPMENT - 1.8%
(euro)
1,700,000 Conti-Gummi Finance BV, Ser. Continental AG, BBB
1.625%, 5/19/11 (Germany) (d) 4,154,043
- --------------------------------------------------------------------------------
AUTOMOTIVE - 2.6%
(euro)
2,500,000 Deutsche Bank AG, Ser. Daimler AG, NR
8.00%, 6/20/08 (Germany) (d) (e) 2,856,912
$ 1,375,000 General Motors Corp., Ser. C, 6.25%, 2033 (a) 1,022,450
$ 3,125,000 General Motors Corp., Ser. B, 5.25%, 2032 (a) 2,203,750
- --------------------------------------------------------------------------------
6,083,112
- --------------------------------------------------------------------------------
BANKING AND FINANCE - 1.0%
$ 1,000,000 Boston Private Financial Holdings, Inc., NR
3.00%, 7/15/27 (a) 891,250
$ 1,750,000 National City Corp., A
4.00%, 2/1/11 1,476,562
- --------------------------------------------------------------------------------
2,367,812
- --------------------------------------------------------------------------------
CHEMICALS - 2.0%
(euro)
2,000,000 Bayer Capital Corp. BV, BBB
6.625%, 6/01/09 (Netherlands) 4,641,119
- --------------------------------------------------------------------------------
DIVERSIFIED METALS AND MINING - 2.8%
(pound)
2,000,000 Calyon Financial Products Ltd., Ser. Xstrata PLC, NR
8.00%, 6/12/08 (United Kingdom) (d) 4,655,483
$ 1,500,000 Peabody Energy Corp., B
4.75%, 12/15/41 (a) 1,852,500
- --------------------------------------------------------------------------------
6,507,983
- --------------------------------------------------------------------------------
FINANCIAL SERVICES - 1.7%
$ 1,636,000 CompuCredit Corp., NR
5.875%, 11/30/35 (a) 582,825
$ 750,000 Countrywide Financial Corp., BB+
0.00% 4/15/37 (f) 693,750
$ 2,750,000 Nasdaq OMX Group (The), BB+
2.50%, 8/15/13 (e) 2,729,375
- --------------------------------------------------------------------------------
4,005,950
- --------------------------------------------------------------------------------
PHARMACEUTICALS - 0.7%
$ 2,000,000 Omnicare, Inc., B+
3.25%, 12/15/35 (a) 1,382,500
- --------------------------------------------------------------------------------
TRANSPORTATION - 0.5%
$ 1,264,000 YRC Worldwide, Inc., B+
5.00%, 8/08/23 1,110,740
- --------------------------------------------------------------------------------
UTILITIES - GAS AND ELECTRIC - 1.6%
(euro)
2,200,000 Deutsche Bank AG, Ser. CEZ AS, NR
8.00%, 6/20/08 (Czech Republic) (d) 3,665,628
- --------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS - 15.7%
(Cost $32,245,576) 36,240,725
- --------------------------------------------------------------------------------
See notes to financial statements.
4 | SemiAnnual Report | April 30, 2008
LCM | Advent/Claymore Enhanced Growth & Income Fund |
PORTFOLIO OF INVESTMENTS (unaudited) continued
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
CORPORATE BONDS - 14.8%
ADVERTISING - 0.2%
$ 500,000 Interpublic Group of Cos., Inc., B+
7.25%, 8/15/11 (a) $ 490,000
- --------------------------------------------------------------------------------
COMPUTERS - SOFTWARE AND PERIPHERALS - 1.6%
3,500,000 SunGard Data Systems, Inc., B-
10.25%, 8/15/15 3,718,750
- --------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS - 0.4%
1,000,000 Leucadia National Corp., BB+
8.125%, 9/15/15 1,020,000
- --------------------------------------------------------------------------------
ELECTRONICS EQUIPMENT AND COMPONENTS - 1.5%
4,000,000 Freescale Semiconductor, Inc., B-
8.875%, 12/15/14 3,520,000
- --------------------------------------------------------------------------------
FINANCIAL SERVICES - 0.3%
600,000 JP Morgan Chase & Co., A
7.90%, 4/29/49 (f) 611,220
- --------------------------------------------------------------------------------
HEALTH CARE PRODUCTS AND SERVICES - 0.3%
750,000 Axcan Intermediate Holdings, Inc., B-
12.75%, 3/1/16 (e) 737,550
- --------------------------------------------------------------------------------
OIL AND GAS - 1.2%
3,000,000 CCS, Inc., B-
11.00%, 11/15/15 (Canada) (e) 2,696,400
- --------------------------------------------------------------------------------
PACKAGING & CONTAINERS - 0.8%
1,500,000 Jefferson Smurfit Corp., B-
8.25%, 10/1/12 1,365,000
500,000 Smurfit-Stone Container Enterprises, Inc., B-
8.375%, 7/1/12 457,500
- --------------------------------------------------------------------------------
1,822,500
- --------------------------------------------------------------------------------
SPECIAL PURPOSE ENTITY - 5.5%
12,150,000 Dow Jones CDX North America High Yield, Ser. 3-4, NR
10.50%, 12/29/09 (e) 12,673,969
- --------------------------------------------------------------------------------
TRANSPORTATION - 0.4%
1,000,000 USF Corp., B+
8.50%, 4/15/10 920,000
- --------------------------------------------------------------------------------
TRAVEL SERVICES - 1.5%
3,500,000 Travelport LLC, B
9.875%, 9/01/14 3,381,875
- --------------------------------------------------------------------------------
UTILITIES- GAS AND ELECTRIC - 1.1%
2,500,000 Texas Competitive Electric Holdings Co., LLC, CCC
10.25%, 11/01/15 (e) 2,606,250
- --------------------------------------------------------------------------------
TOTAL CORPORATE BONDS - 14.8%
(Cost $33,963,692) 34,198,514
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
EXCHANGE-TRADED FUNDS - 1.0%
35,000 UltraShort QQQ ProShares (a) $ 1,479,100
12,500 UltraShort S&P500 ProShares (a) 725,500
- --------------------------------------------------------------------------------
(Cost $2,321,539) 2,204,600
- --------------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS - 95.9% 221,170,390
================================================================================
CONTRACTS
(100 SHARES EXPIRATION EXERCISE
PER CONTRACT) OPTIONS PURCHASED(B) DATE PRICE VALUE
- ---------------------------------------------------------------------------------------------
CALL OPTIONS PURCHASED - 0.0%
300 Flextronics International, Ltd. May 2008 $ 10.00 $ 16,500
- ----------------------------------------------------------------------------------------------
PUT OPTIONS PURCHASED - 0.1%
230 FEI, Co. June 2008 25.00 79,350
250 UltraShort QQQ ProShares May 2008 41.00 23,750
100 UltraShort S&P500 ProShares May 2008 55.00 4,750
- ----------------------------------------------------------------------------------------------
107,850
- ----------------------------------------------------------------------------------------------
TOTAL OPTIONS PURCHASED
(Cost $107,996) 124,350
- ----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 96.0%
(Cost $236,702,695) 221,294,740
Other assets in excess of liabilities - 4.2% 9,850,347
Total Options Written (Premiums received $742,646) - (0.2%) (539,915)
- ----------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $230,605,172
==============================================================================================
LLC - Limited Liability Corp.
PLC - Public Limited Company.
(a) All or a portion of this security position represents cover (directly or
through conversion rights) for outstanding options written.
(b) Non-income producing security.
(c) All or a portion of these securities with an aggregate market value of
$11,449,020 have been physically segregated to collateralize written call
options.
(d) Synthetic convertible - A synthetic convertible security is either a bond
or preferred security structured by an investment bank that provides
exposure to a specific company's common stock.
(e) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30,
2008, these securities amounted to 14.0% of net assets.
(f) Variable rate or floating rate security. The rate shown is as of April 30,
2008.
(g) Security is convertible until December 31, 2049.
Ratings shown are per Standard & Poor's and are unaudited. Securities classified
as NR are not rated by Standard & Poors.
See notes to financial statements.
SemiAnnual Report | April 30, 2008 | 5
LCM | Advent/Claymore Enhanced Growth & Income Fund |
PORTFOLIO OF INVESTMENTS (unaudited) continued
CONTRACTS
(100 SHARES EXPIRATION EXERCISE MARKET
PER CONTRACT) CALL OPTIONS WRITTEN (a) DATE PRICE VALUE
- ---------------------------------------------------------------------------------------------------
50 AAR Corp. June 2008 $ 25.00 $ 4,125
125 Amdocs, Ltd. May 2008 30.00 22,500
100 Amgen, Inc. June 2008 45.00 7,000
100 Assured Guaranty, Ltd. May 2008 25.00 14,000
50 Avery Dennison Corp. May 2008 50.00 3,000
50 Bank of America Corp. May 2008 42.50 250
50 Boston Private Financial Holdings, Inc. May 2008 12.50 1,250
50 Bristol-Myers Squibb Co. May 2008 22.50 1,600
50 Cameron International Corp. May 2008 52.50 4,650
100 Cameron International Corp. June 2008 55.00 10,800
50 Cameron International Corp. May 2008 45.00 3,250
50 CompuCredit Corp. May 2008 12.50 500
50 Compuware Corp. May 2008 10.00 500
1 Continental AG May 2008 70.00 954
100 Continental Airlines, Inc., Class B June 2008 20.00 14,500
50 DISH Network Corp., Class A May 2008 32.50 1,650
100 DISH Network Corp., Class A June 2008 32.50 8,500
12 Equinix, Inc. May 2008 80.00 13,320
50 Equinix, Inc. June 2008 100.00 10,750
25 Freeport-McMoRan Copper & Gold, Inc. May 2008 135.00 650
50 Freeport-McMoRan Copper & Gold, Inc. June 2008 140.00 7,000
100 GameStop Corp., Class A May 2008 55.00 20,000
100 GameStop Corp., Class A May 2008 60.00 3,500
100 GameStop Corp., Class A June 2008 65.00 8,000
50 General Cable Corp. May 2008 70.00 6,500
50 General Cable Corp. May 2008 65.00 8,350
25 General Electric Co. May 2008 35.00 825
50 General Motors Corp. June 2008 25.00 5,500
100 Genzyme Corp. June 2008 75.00 13,750
50 Hologic, Inc. May 2008 30.00 5,500
20 International Game Technology June 2008 40.00 700
50 Interpublic Group of Cos., Inc. July 2008 10.00 1,000
25 Isis Pharmaceuticals, Inc. June 2008 12.50 2,000
100 Man Group PLC June 2008 595.00 58,894
CONTRACTS
(100 SHARES EXPIRATION EXERCISE MARKET
PER CONTRACT) CALL OPTIONS WRITTEN (a) DATE PRICE VALUE
- ---------------------------------------------------------------------------------------------------
50 Man Group PLC June 2008 $ 635.00 $ 14,854
50 Merck & Co., Inc. June 2008 45.00 750
50 Merrill Lynch & Co., Inc. June 2008 55.00 4,500
50 Merrill Lynch & Co., Inc. June 2008 52.50 9,700
50 Merrill Lynch & Co., Inc., Ser. Dell, Inc. May 2008 21.00 175
50 Mylan, Inc. May 2008 12.50 5,000
25 NII Holdings, Inc. May 2008 40.00 15,000
100 Northwest Airlines Corp. June 2008 15.00 1,500
50 NRG Energy, Inc. May 2008 42.50 11,125
50 Omnicare, Inc. June 2008 22.50 4,000
50 Peabody Energy Corp. May 2008 70.00 1,000
50 Powerwave Technologies, Inc. August 2008 2.50 2,250
300 Pride International, Inc. May 2008 40.00 75,000
100 RF Micro Devices, Inc. May 2008 7.50 500
10 SABMiller PLC June 2008 1,300.00 2,278
50 Schering-Plough Corp. June 2008 20.00 2,000
100 Shuffle Master, Inc. August 2008 7.50 1,000
50 SLM Corp. May 2008 20.00 2,750
100 Temple-Inland, Inc. June 2008 12.50 7,500
50 Terra Industries, Inc. May 2008 40.00 6,250
250 Terra Industries, Inc. May 2008 45.00 8,750
150 Terra Industries, Inc. May 2008 50.00 1,500
150 UltraShort QQQ ProShares June 2008 49.00 16,875
100 UltraShort S&P500 ProShares June 2008 66.00 10,000
50 Vale Capital Ltd., Ser. RIO May 2008 37.50 12,500
50 Vallourec SA June 2008 190.00 31,449
50 Visa, Inc., Class A June 2008 85.00 22,500
50 Wachovia Bank NA, Ser. Intel Corp. May 2008 22.00 3,000
5 Whitbread PLC June 2008 1,400.00 941
- ---------------------------------------------------------------------------------------------------
TOTAL VALUE OF CALL OPTIONS WRITTEN
(Premiums received $742,646) $ 539,915
===================================================================================================
(a) Non-income producing security.
See notes to financial statements.
6 | SemiAnnual Report | April 30, 2008
LCM | Advent/Claymore Enhanced Growth & Income Fund
Statement of ASSETS AND LIABILITIES | APRIL 30, 2008 (unaudited)
ASSETS
Investments, at value (cost $236,702,695) $221,294,740
Foreign currency, at value (cost $462,804) 466,640
Cash 8,363,537
Receivable for securities sold 5,475,010
Dividends and interest receivable 1,674,744
Net unrealized appreciation on forward foreign currency contracts 300,579
Reclaims receivable 102,738
Other assets 72,154
- --------------------------------------------------------------------------------------------------------------
Total assets 237,750,142
- --------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for securities purchased 6,100,656
Options written, at value (premiums received of $742,646) 539,915
Net unrealized depreciation on forward foreign currency contracts 158,622
Investment Management fee payable 93,950
Investment Advisory fee payable 90,266
Accrued expenses and other liabilities 161,561
- --------------------------------------------------------------------------------------------------------------
Total liabilities 7,144,970
- --------------------------------------------------------------------------------------------------------------
NET ASSETS $230,605,172
==============================================================================================================
COMPOSITION OF NET ASSETS
Common stock, $0.001 par value per share; unlimited number of shares authorized,
13,603,025 shares issued and outstanding $ 13,603
Additional paid-in capital 259,265,272
Accumulated net realized loss on investments, options and foreign currency transactions (6,314,921)
Accumulated net unrealized depreciation on investments, options and foreign currency translation (15,037,418)
Distributions in excess of net investment income (7,321,364)
- --------------------------------------------------------------------------------------------------------------
NET ASSETS $230,605,172
==============================================================================================================
NET ASSET VALUE
(based on 13,603,025 common shares outstanding) $ 16.95
==============================================================================================================
See notes to financial statements.
SemiAnnual Report | April 30, 2008 | 7
LCM | Advent/Claymore Enhanced Growth & Income Fund
Statement of OPERATIONS | FOR THE SIX MONTHS ENDED APRIL 30, 2008 (unaudited)
INVESTMENT INCOME
Interest (net of foreign withholding taxes of $463) $ 2,470,875
Dividends (net of foreign withholding taxes of $65,045) 1,851,980
- ---------------------------------------------------------------------------------------------------------------
Total income $ 4,322,855
- ---------------------------------------------------------------------------------------------------------------
EXPENSES
Investment Management fee 600,060
Investment Advisory fee 576,528
Professional fees 88,192
Trustees' fees and expenses 73,500
Printing expense 45,598
Fund accounting 38,939
Administration fee 38,450
Custodian fee 28,876
Insurance 11,775
Transfer agent fee 10,686
NYSE listing fee 10,538
Miscellaneous 6,462
- ---------------------------------------------------------------------------------------------------------------
Total expenses 1,529,604
- ---------------------------------------------------------------------------------------------------------------
Net investment income 2,793,251
- ---------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) on:
Investments (11,722,228)
Options 1,744,968
Foreign currency transactions (1,112,168)
Net change in unrealized appreciation (depreciation) on:
Investments (24,073,818)
Options 418,420
Foreign currency translation 150,989
- ---------------------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments, options and foreign currency transactions (34,593,837)
- ---------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(31,800,586)
===============================================================================================================
See notes to financial statements.
8 | SemiAnnual Report | April 30, 2008
LCM | Advent/Claymore Enhanced Growth & Income Fund
Statement of CHANGES IN NET ASSETS |
FOR THE SIX
MONTHS ENDED FOR THE
APRIL 30, 2008 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2007
- ----------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 2,793,251 $ 5,934,940
Net realized gain (loss) on investments, options and foreign
currency transactions (11,089,428) 20,909,185
Net change in unrealized appreciation (depreciation) on investments,
options and foreign currency translation (23,504,409) 4,103,545
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (31,800,586) 30,947,670
- ----------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM
Net investment income (10,882,420) (21,746,612)
- ----------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Reinvestment of dividends -- 439,291
- ----------------------------------------------------------------------------------------------------------------
Net increase from capital share transactions -- 439,291
- ----------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (42,683,006) 9,640,349
NET ASSETS
Beginning of year 273,288,178 263,647,829
- ----------------------------------------------------------------------------------------------------------------
End of year (including distributions in excess of net investment
income and undistributed net investment income of ($7,321,364)
and $767,805, respectively) $230,605,172 $273,288,178
===============================================================================================================
See notes to financial statements.
SemiAnnual Report | April 30, 2008 | 9
LCM | Advent/Claymore Enhanced Growth & Income Fund
Financial HIGHLIGHTS |
FOR THE FOR THE PERIOD
SIX MONTHS ENDED FOR THE FOR THE JANUARY 31, 2005*
PER SHARE OPERATING PERFORMANCE APRIL 30, 2008 YEAR ENDED YEAR ENDED THROUGH
FOR A COMMON SHARE OUTSTANDING THROUGHOUT THE PERIOD (UNAUDITED) OCTOBER 31, 2007 OCTOBER 31, 2006 OCTOBER 31, 2005
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 20.09 $ 19.41 $ 18.51 $ 19.10(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income (b) 0.21 0.44 0.58 0.47
Net realized and unrealized gain (loss)
on investments, options and foreign
currency transactions (2.55) 1.84 1.92 (0.22)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (2.34) 2.28 2.50 0.25
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON SHARES' OFFERING EXPENSES CHARGED TO
PAID-IN CAPITAL -- -- -- (0.04)
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
Net investment income (0.80) (1.60) (1.60) (0.80)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 16.95 $ 20.09 $ 19.41 $ 18.51
- ------------------------------------------------------------------------------------------------------------------------------------
MARKET VALUE, END OF PERIOD $ 15.12 $ 17.46 $ 18.78 $ 16.83
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN (C)
Net asset value -11.78% 12.24% 14.11% 1.12%
Market value -8.91% 1.08% 22.20% -12.08%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $230,605 $273,288 $263,648 $251,349
Ratio of net expenses to average net assets 1.30%(d) 1.26% 1.29% 1.38%(d)
Ratio of net investment income to average net assets 2.37%(d) 2.21% 3.09% 3.37%(d)
Portfolio turnover rate 71% 181% 415% 246%
* Commencement of investment operations.
(a) Before deduction of offering expenses charged to capital.
(b) Based on average shares outstanding during the period.
(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.
See notes to financial statements.
10 | SemiAnnual Report | April 30, 2008
LCM | Advent/Claymore Enhanced Growth & Income Fund
Notes to FINANCIAL STATEMENTS | APRIL 30, 2008 (unaudited)
Note 1 - ORGANIZATION:
Advent/Claymore Enhanced Growth & Income Fund (the "Fund") was organized as a
Delaware statutory trust on January 30, 2004. The Fund is registered as a
diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended.
The Fund's primary investment objective is to provide current income and current
gains from trading in securities, with a secondary objective of long-term
capital appreciation. The Fund will pursue its investment objectives by
investing its assets in dividend and interest paying equity securities,
convertible securities and non-convertible high-yield securities. Also, in
pursuit of the Fund's primary investment objective, the Fund intends to engage
in an option strategy of writing (selling) covered call options on at least 50%
of the securities held in the portfolio. There can be no assurance the Fund will
achieve its investment objectives.
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
Equity securities listed on an exchange are valued at the last reported sale
price on the primary exchange on which they are traded. Equity securities traded
on an exchange 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. Equity securities not listed on a
securities exchange or NASDAQ are valued at the mean of the closing bid and
asked prices. Debt securities are valued by independent pricing services or
dealers using the closing bid prices for such securities or, if such prices are
not available, at prices for securities of comparable maturity, quality and
type. Futures contracts are valued using the settlement price established each
day on the exchange on which they are traded. Exchange-traded options are valued
at the closing price, if traded that day. If not traded, they are valued at the
mean of the bid and asked prices on the primary exchange on which they are
traded. For those securities where quotations or prices are not available,
valuations are determined in accordance with procedures established in good
faith by the Board of Trustees. Short-term securities with remaining maturities
of 60 days or less are valued at amortized cost, which approximates market
value.
(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 corporate debt securities purchased are
accreted or amortized to interest income over the lives of the respective
securities using the effective interest method.
(C) CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies are translated into
U.S. dollars at the mean of the bid and asked price of respective exchange rates
on the last day of the period. Purchases and sales of investments denominated in
foreign currencies are translated at the exchange rate on the date of the
transaction.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Foreign exchange realized gain or loss resulting from holding of a foreign
currency, expiration of a currency exchange contract, difference in exchange
rates between the trade date and settlement date of an investment purchased or
sold, and the difference between dividends actually received compared to the
amount shown in the Fund's accounting records on the date of receipt is shown as
net realized gains or losses on foreign currency transactions in the Fund's
Statement of Operations.
Foreign exchange unrealized gain or loss on assets and liabilities, other than
investments, is shown as unrealized appreciation (depreciation) on foreign
currency translation in the Fund's Statement of Operations.
(D) COVERED CALL OPTIONS
The Fund will pursue its primary objective by employing an option strategy of
writing (selling) covered call options on at least 50% of the securities held in
the portfolio of the Fund. The Fund seeks to produce a high level of current
income and gains generated from option writing premiums and, to a lesser extent,
from dividends.
An option on a security is a contract that gives the holder of the option, in
return for a premium, the right to buy from (in the case of a call) or sell to
(in the case of a put) the writer of the option the security underlying the
option at a specified exercise or "strike" price. The writer of an option on a
security has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price (in the case of a call)
or to pay the exercise price upon delivery of the underlying security (in the
case of a put).
There are several risks associated with transactions in options on securities.
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
SemiAnnual Report | April 30, 2008 | 11
LCM | Advent/Claymore Enhanced Growth & Income Fund |
NOTES TO FINANCIAL STATEMENTS (unaudited) continued
its obligation as writer of the option. Once an option writer has received an
exercise notice, it cannot effect a closing purchase transaction in order to
terminate its obligation under the option and must deliver the underlying
security at the exercise price.
When an option is written, the premium received is recorded as an asset with an
equal liability and is subsequently marked to market to reflect the current
market value of the option written. These liabilities are reflected as options
written in the Statement of Assets and Liabilities. Premiums received from
writing options which expire unexercised are recorded on the expiration date as
a realized gain. The difference between the premium received and the amount paid
on effecting a closing purchase transaction, including brokerage commissions, is
also treated as a realized gain, or if the premium is less than the amount paid
for the closing purchase transactions, as a realized loss. If a call option is
exercised, the premium is added to the proceeds from the sale of the underlying
security in determining whether there has been a realized gain or loss.
(E) FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund may enter into forward exchange currency contracts in order to hedge
its exposure to change in foreign currency exchange rates on its foreign
portfolio holdings, to hedge certain firm purchases and sales commitments
denominated in foreign currencies and for investment purposes. A forward
exchange currency contract is a commitment to purchase or sell a foreign
currency on a future date at a negotiated forward rate. The gain or loss arising
from the difference between the original contracts and the closing of such
contracts would be included in net realized gain or loss on foreign currency
transactions.
Fluctuations in the value of open forward exchange currency contracts are
recorded for financial reporting purposes as unrealized appreciation and
depreciation by the Fund.
Risk may arise from the potential inability of a counterparty to meet the terms
of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount, in U.S.
dollars, reflects the total exposure the Fund has in that particular currency
contract. Forward exchange currency contracts involve elements of both market
and credit risk in excess of the amounts reflected on the Statement of Assets
and Liabilities.
(F) DISTRIBUTIONS TO SHAREHOLDERS
The Fund declares and pays quarterly dividends to common shareholders. These
dividends consist of investment company taxable income, which generally includes
qualified dividend income, ordinary income and short-term capital gains. Any net
realized long-term gains are distributed annually to common shareholders.
Distributions to shareholders are recorded on the ex-dividend date. The amount
and timing of distributions are determined in accordance with federal income tax
regulations, which may differ from U.S. generally accepted accounting
principles.
Note 3 - INVESTMENT ADVISORY AGREEMENT, INVESTMENT MANAGEMENT AGREEMENT AND
OTHER AGREEMENTS:
Pursuant to an Investment Advisory Agreement (the "Agreement") between Claymore
Advisors, LLC (the "Adviser") and the Fund, the Adviser furnishes offices,
necessary facilities and equipment, provides administrative services to the
Fund, oversees the activities of Advent Capital Management, LLC (the "Investment
Manager"), provides personnel and pays the compensation of all Trustees and
Officers of the Fund who are its affiliates. As compensation for these services,
the Fund pays the Adviser an annual fee, payable monthly in arrears, at an
annual rate equal to 0.49% of the average Managed Assets during such month.
Managed Assets means the total of assets of the Fund (including any assets
attributable to any preferred shares or otherwise attributable to the use of
financial leverage, if any) less the sum of accrued liabilities.
Pursuant to an Investment Management Agreement between the Investment Manager
and the Fund, the Fund has agreed to pay the Investment Manager an annual fee,
payable monthly in arrears, at an annual rate equal to 0.51% of the average
Managed Assets during such month for the services and facilities provided by the
Investment Manager to the Fund. These services include the day-to-day management
of the Fund's portfolio of securities, which includes buying and selling
securities for the Fund and investment research. The Investment Manager also
provides personnel to the Fund and pays the compensation of all Trustees and
Officers of the Fund who are its affiliates.
The Bank of New York Mellon ("BNY") acts as the Fund's custodian, administrator
and transfer agent. As custodian, BNY is responsible for the custody of the
Fund's assets. As administrator, 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.
Certain Officers and Trustees of the Fund are also Officers and Directors of the
Adviser or Investment Manager. The Fund does not compensate its Officers or
Trustees who are Officers of the aforementioned firms.
Note 4 - FEDERAL INCOME TAXES:
The Fund intends to continue to comply with the requirements of Subchapter M of
the Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies. Accordingly, no provision for U.S. federal income taxes is
required. In addition, by distributing substantially all of its ordinary income
and long-term capital gains, if any, during each calendar year, the Fund intends
not to be subject to U.S. federal excise tax.
12 | SemiAnnual Report | April 30, 2008
LCM | Advent/Claymore Enhanced Growth & Income Fund |
NOTES TO FINANCIAL STATEMENTS (unaudited) continued
At April 30, 2008, the cost and related gross unrealized appreciation and
depreciation on investments for tax purposes, excluding written options and
foreign currency translations are as follows:
COST OF NET TAX NET TAX UNREALIZED
INVESTMENTS GROSS TAX GROSS TAX UNREALIZED APPRECIATION
FOR TAX UNREALIZED UNREALIZED DEPRECIATION ON DERIVATIVES AND
PURPOSES APPRECIATION DEPRECIATION ON INVESTMENTS FOREIGN CURRENCY
- -------------------------------------------------------------------------------------
$236,925,255 $9,442,742 $(25,073,257) $(15,630,515) $370,328
- -------------------------------------------------------------------------------------
The differences between book basis and tax basis unrealized
appreciation/(depreciation) is attributable to the tax deferral of losses on
wash sales and additional income accrued for tax purposes on certain convertible
securities.
For the year ended October 31, 2007, the tax character of distributions paid, as
reflected in the Statement of Changes in Net Assets of $21,746,612, was ordinary
income.
On July 13, 2006, the Financial Accounting Standards Board ("FASB") released
FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in the
course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
would be recorded as a tax benefit or expense in the current year. Management
has evaluated the implications of FIN 48 and has determined it does not have any
impact on the financial statements as of April 30, 2008.
Tax years for 2005, 2006 and 2007 are still subject to examination by major
jurisdictions.
Note 5 - INVESTMENTS IN SECURITIES:
For the six months ended April 30, 2008, purchases and sales of investments,
excluding options and short-term securities, were $177,000,429 and $189,004,820,
respectively.
The Fund entered into written option contracts for the six months ended April
30, 2008.
Details of the transactions were as follows:
NUMBER OF CONTRACTS PREMIUMS RECEIVED
- --------------------------------------------------------------------------------
Options outstanding, beginning of year 10,435 $ 1,530,278
Options written during the year 41,479 5,574,533
Options expired during the year (19,432) (2,312,887)
Options closed during the year (17,830) (2,243,751)
Options assigned during the year (10,329) (1,805,527)
- --------------------------------------------------------------------------------
Options outstanding, end of period 4,323 $ 742,646
- --------------------------------------------------------------------------------
Note 6 - DERIVATIVES:
At April 30, 2008, the following forward exchange currency contracts were
outstanding:
UNREALIZED
CURRENT APPRECIATION/
SHORT CONTRACTS VALUE DEPRECIATION
- --------------------------------------------------------------------------------
Canadian Dollar, 5,000,000 expiring 6/18/08 $ 4,962,590 $ (18,948)
EURO, 7,500,000, expiring 6/18/08 11,651,167 (131,796)
Japanese Yen, 926,300,000 expiring 6/18/08 8,890,475 164,280
Pound Sterling, 4,450,000 expiring 6/18/08 8,783,352 92,638
Swiss Franc, 3,200,000 expiring 6/18/08 3,074,217 35,783
- --------------------------------------------------------------------------------
$ 141,957
- --------------------------------------------------------------------------------
Note 7 - CAPITAL:
COMMON SHARES
The Fund has an unlimited amount of common shares, $0.001 par value, authorized
and 13,603,025 issued and outstanding. In connection with the Fund's dividend
reinvestment plan, the Fund issued 0 shares during the six months ended April
30, 2008 and 22,785 shares during the year ended October 31, 2007.
SemiAnnual Report | April 30, 2008 | 13
LCM | Advent/Claymore Enhanced Growth & Income Fund |
NOTES TO FINANCIAL STATEMENTS (unaudited) continued
Note 8 - 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 9 - SUBSEQUENT EVENT:
On May 1, 2008, the Board of Trustees declared a quarterly dividend of $0.40 per
common share. This dividend was payable on May 30, 2008 to shareholders of
record on May 15, 2008.
On March 11, 2008, the Board of Trustees approved Claymore Advisors, LLC to
replace BNY as the Fund Administration Agent effective May 1, 2008.
Note 10 - NEW ACCOUNTING PRONOUNCEMENTS:
In September 2006, the FASB released Statement of Financial Accounting Standards
No. 157, "Fair Value Measurements" ("FAS 157"). This standard clarifies the
definition of fair value for financial reporting, establishes a framework for
measuring fair value and requires additional disclosures about the use of fair
value measurements. FAS 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and interim periods within those
fiscal years. As of April 30, 2008, the Fund does not believe the adoption of
FAS 157 will impact the amounts reported in the financial statements, however,
additional disclosure will be required about the inputs used to develop
measurements of fair value and the effect of certain of the measurements
reported in the statement of operations for a fiscal period.
In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities." This standard is intended to enhance
financial statement disclosures for derivative instruments and hedging
activities and enable investors to understand: a) how and why a fund uses
derivative instruments, b) how derivatives instruments and related hedge fund
items are accounted for, and c) how derivative instruments and related hedge
items affect a fund's financial position, results of operations and cash flows.
SFAS No. 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. As of April 30, 2008,
management does not believe the adoption of SFAS No. 161 will impact the
financial statement amounts; however, additional footnote disclosures may be
required about the use of derivative instruments and hedging items.
14 | SemiAnnual Report | April 30, 2008
LCM | Advent/Claymore Enhanced Growth & Income Fund
Supplemental INFORMATION | (unaudited)
TRUSTEES
The Trustees of the Advent/Claymore Enhanced Growth & Income Fund and their
principal occupations during the past five years:
NUMBER OF
FUNDS IN
THE FUND OTHER
NAME, ADDRESS, YEAR TERM OF OFFICE* PRINCIPAL OCCUPATIONS DURING COMPLEX** DIRECTORSHIPS
OF BIRTH AND POSITION(S) AND LENGTH OF THE PAST FIVE YEARS AND OVERSEEN HELD BY
HELD WITH REGISTRANT TIME SERVED OTHER AFFILIATIONS BY TRUSTEE TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES:
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel Black+ Since 2005 Partner, the Wicks Group of Cos., LLC 3 Director of Penn Foster
Year of birth: 1960 (2003-present). Formerly, Managing Director Education Group, Inc.
Trustee and Co-head of the Merchant Banking Group at
BNY Capital Markets, a division of The Bank
of New York Co., Inc. (1998-2003).
- ------------------------------------------------------------------------------------------------------------------------------------
Randall C. Barnes++ Since 2005 Formerly, Senior Vice President, Treasurer 41 None.
Year of birth: 1951 (1993-1997), President, Pizza Hut
Trustee International (1991-1993) and Senior Vice
President, Strategic Planning and New
Business Development (1987-1990) of PepsiCo,
Inc. (1987-1997).
- ------------------------------------------------------------------------------------------------------------------------------------
Derek Medina+ Since 2004 Senior Vice President, Business Affairs at 3 Director of Young
Year of birth: 1966 ABC News (2008-present). Vice President, Scholar's Institute.
Trustee Business Affairs and News Planning at ABC
News (2003-2008). Formerly, Executive
Director, Office of the President at ABC
News (2000-2003). Former Associate at Cleary
Gottlieb Steen & Hamilton (law firm)
(1995-1998). Former associate in Corporate
Finance at J.P. Morgan/Morgan Guaranty
(1988-1990).
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald A. Nyberg++ Since 2004 Principal of Nyberg & Cassioppi, LLC, a law 44 None.
Year of birth: 1953 firm specializing in corporate law, estate
Trustee planning and business transactions
(2000-present). Formerly, Executive Vice
President, General Counsel and Corporate
Secretary of Van Kampen Investments
(1982-1999).
- ------------------------------------------------------------------------------------------------------------------------------------
Gerald L. Seizert, CFP+ Since 2004 Chief Executive Officer of Seizert Capital 3 Former Director of Loomis,
Year of birth: 1952 Partners, LLC, where he directs the equity Sayles and Co., L.P.
Trustee disciplines of the firm and serves as a
co-manager of the firmhedge fund, Proper
Associates, LLC (2000-present). Formerly,
Co-Chief Executive (1998-1999) and a
Managing Partner and Chief Investment
Officer-Equities of Munder Capital
Management, LLC (1995-1999). Former Vice
President and Portfolio Manager of Loomis,
Sayles & Co., L.P. (asset manager)
(1984-1995). Former Vice President and
Portfolio Manager at First of America Bank
(1978-1984).
- ------------------------------------------------------------------------------------------------------------------------------------
Michael A. Smart+ Since 2004 Managing Partner, Cordova, Smart & Williams 3 Director, Country Pure
Year of birth: 1960 LLC, Advisor to First Atlantic Capital Ltd., Foods. Chairman, Board
Trustee (2001-present). Formerly, a Managing of Directors, Berkshire
Director in Investment Banking-The Private Blanket, Inc., President
Equity Group (1995-2001) and a Vice and Chairman, Board of
President in Investment Banking-Corporate Directors, Sqwincher
Finance (1992-1995) at Merrill Lynch & Co. Holdings. Board of
Founding Partner of The Carpediem Group, a Directors, Sprint
private placement firm (1991-1992). Former Industrial Holdings.
Associate at Dillon, Read and Co. Co-chair of the Board of
(investment bank) (1988-1990). H2O plus.
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES:
- ------------------------------------------------------------------------------------------------------------------------------------
Tracy V. Maitland+0 Since 2004 President of Advent Capital Management, LLC, 3 None.
Year of birth: 1960 which he founded in 1995. Prior to June
Trustee, President and 2001, President of Advent Capital
Chief Executive Officer Management, a division of Utendahl Capital.
- ------------------------------------------------------------------------------------------------------------------------------------
Nicholas Dalmaso++00 Since 2004 Formerly, Senior Managing Director and Chief 44 None.
Year of Birth: 1965 Administrative Officer (2007-2008) and
Trustee 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).
- ------------------------------------------------------------------------------------------------------------------------------------
+ Address for all Trustees noted: 1065 Avenue of the Americas, 31st Floor,
New York, NY 10018
++ Address for all Trustees 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. Smart, Nyberg and Black, as Class I Trustees, are expected to
stand for re-election at the Fund's 2008 annual meeting of
shareholders.
- Messrs. Maitland and Dalmaso, as Class II Trustees, are expected to
stand for re-election at the Fund's 2009 annual meeting of
shareholders.
- Messrs. Seizert, Medina and Barnes, as Class III Trustees, are
expected to stand for re-election at the Fund's 2010 annual meeting of
shareholders.
** The Claymore Fund Complex consists of U.S. registered investment companies
advised or serviced by Claymore Advisors, LLC or Claymore Securities, Inc.
The Claymore Fund Complex is overseen by multiple Boards of Trustees.
0 Mr. Maitland 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 Advent
Capital Management, LLC, the Fund's Investment Manager.
00 Mr. Dalmaso is an "interested person" (as defined in section 2(a)(19) of
the 1940 Act) of the Fund as a result of his position as an officer
(through May 13, 2008) of and his equity ownership in the Adviser and
certain of its affiliates.
SemiAnnual Report | April 30, 2008 | l5
LCM | Advent/Claymore Enhanced Growth & Income Fund |
SUPPLEMENTAL INFORMATION (unaudited) continued
OFFICERS
The Officers of the Advent/Claymore Enhanced Growth & Income Fund and their
principal occupations during the past five years:
OFFICERS:
NAME, ADDRESS*, YEAR OF BIRTH AND TERM OF OFFICE** AND PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
POSITION(S) HELD WITH REGISTRANT LENGTH OF TIME SERVED AND OTHER AFFILIATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS:
- ------------------------------------------------------------------------------------------------------------------------------------
F. Barry Nelson Since 2005 Co-Portfolio Manager at Advent Capital Management, LLC
Year of birth: 1943 (2001-present). Prior to 2001, Mr. Nelson held the same position
Vice President at Advent Capital Management, a division of Utendahl Capital.
- ------------------------------------------------------------------------------------------------------------------------------------
Robert White Since 2005 Chief Financial Officer, Advent Capital Management, LLC
Year of birth: 1965 (2005-present). Previously, Vice President, Client Service
Treasurer and Manager, Goldman Sachs Prime Brokerage (1997-2005).
Chief Financial Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Rodd Baxter Since 2005 General Counsel, Advent Capital Management, LLC (2002-present);
Year of birth: 1950 Formerly, Director and Senior Counsel, SG Cowen Securities Corp.
Secretary and (1998-2002).
Chief Compliance Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Steven M. Hill Since 2005 Senior Managing Director and Chief Financial Officer of Claymore
2455 Corporate West Drive Advisors, LLC and Claymore Securities, Inc. (2005-present).
Lisle, IL 60532 Formerly, Chief Financial Officer (2005-2006) of Claymore Group,
Year of birth: 1964 Inc., Managing Director of Claymore Advisors, LLC and Claymore
Assistant Treasurer Securities, Inc. (2003-2005). Previously, Treasurer of Henderson
Global Funds and Operations Manager for Henderson Global Investors
(North America) Inc., (2002-2003); Managing Director, FrontPoint
Partners LLC (2001-2002); Vice President, Nuveen Investments
(1999-2001); Chief Financial Officer, Skyline Asset Management LP
(1999); Vice President, Van Kampen Investments and Assistant
Treasurer, Van Kampen mutual funds (1989-1999).
- ------------------------------------------------------------------------------------------------------------------------------------
* Address for all Officers unless otherwise noted: 1065 Avenue of the
Americas, 31st Floor, New York, NY 10018
** 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.
16 | SemiAnnual Report | April 30, 2008
LCM | Advent/Claymore Enhanced Growth & Income Fund
Dividend Reinvestment PLAN | (unaudited)
Unless the registered owner of common shares elects to receive cash by
contacting The Bank of New York Mellon (the "Plan Administrator"), all dividends
declared on common shares of the Fund will be automatically reinvested by the
Plan Administrator for shareholders in the Fund's Dividend Reinvestment Plan
(the "Plan"), in additional common shares of the Fund. Participation in the Plan
is completely voluntary and may be terminated or resumed at any time without
penalty by notice if received and processed by the Plan Administrator prior to
the dividend record date; otherwise such termination or resumption will be
effective with respect to any subsequently declared dividend or other
distribution. Some brokers may automatically elect to receive cash on your
behalf and may re-invest that cash in additional common shares of the Fund for
you. If you wish for all dividends declared on your common shares of the Fund to
be automatically reinvested pursuant to the Plan, please contact your broker.
The Plan Administrator will open an account for each common shareholder under
the Plan in the same name in which such common shareholder's common shares are
registered. Whenever the Fund declares a dividend or other distribution
(together, a "Dividend") payable in cash, non-participants in the Plan will
receive cash and participants in the Plan will receive the equivalent in common
shares. The common shares will be acquired by the Plan Administrator for the
participants' accounts, depending upon the circumstances described below, either
(i) through receipt of additional unissued but authorized common shares from the
Fund ("Newly Issued Common Shares") or (ii) by purchase of outstanding common
shares on the open market ("Open-Market Purchases") on the New York Stock
Exchange or elsewhere. If, on the payment date for any Dividend, the closing
market price plus estimated brokerage commission per common share is equal to or
greater than the net asset value per common share, the Plan Administrator will
invest the Dividend amount in Newly Issued Common Shares on behalf of the
participants. The number of Newly Issued Common Shares to be credited to each
participant's account will be determined by dividing the dollar amount of the
Dividend by the net asset value per common share on the payment date; provided
that, if the net asset value is less than or equal to 95% of the closing market
value on the payment date, the dollar amount of the Dividend will be divided by
95% of the closing market price per common share on the payment date. If, on the
payment date for any Dividend, the net asset value per common share is greater
than the closing market value plus estimated brokerage commission, the Plan
Administrator will invest the Dividend amount in common shares acquired on
behalf of the participants in Open-Market Purchases.
If, before the Plan Administrator has completed its Open-Market Purchases, the
market price per common share exceeds the net asset value per common share, the
average per common share purchase price paid by the Plan Administrator may
exceed the net asset value of the common shares, resulting in the acquisition of
fewer common shares than if the Dividend had been paid in Newly Issued Common
Shares on the Dividend payment date. Because of the foregoing difficulty with
respect to Open-Market Purchases, the Plan provides that if the Plan
Administrator is unable to invest the full Dividend amount in Open-Market
Purchases during the purchase period or if the market discount shifts to a
market premium during the purchase period, the Plan Administrator may cease
making Open-Market Purchases and may invest the uninvested portion of the
Dividend amount in Newly Issued Common Shares at net asset value per common
share at the close of business on the Last Purchase Date provided that, if the
net asset value is less than or equal to 95% of the then current market price
per common share; the dollar amount of the Dividend will be divided by 95% of
the market price on the payment date.
The Plan Administrator maintains all shareholders' accounts in the Plan and
furnishes written confirmation of all transactions in the accounts, including
information needed by shareholders for tax records. Common shares in the account
of each Plan participant will be held by the Plan Administrator on behalf of the
Plan participant, and each shareholder proxy will include those shares purchased
or received pursuant to the Plan. The Plan Administrator will forward all proxy
solicitation materials to participants and vote proxies for shares held under
the Plan in accordance with the instruction of the participants.
There will be no brokerage charges with respect to common shares issued directly
by the Fund. However, each participant will pay a pro rata share of brokerage
commission incurred in connection with Open-Market Purchases. The automatic
reinvestment of Dividends will not relieve participants of any Federal, state or
local income tax that may be payable (or required to be withheld) on such
Dividends.
The Fund reserves the right to amend or terminate the Plan. There is no direct
service charge to participants with regard to purchases in the Plan; however,
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants.
All correspondence or questions concerning the Plan should be directed to the
Plan Administrator, The Bank of New York Mellon, Attention: Stock Transfer
Department, 101 Barclay 11E, New York, NY 10286; Phone Number: (866) 488-3559.
SemiAnnual Report | April 30, 2008 | 17
LCM | Advent/Claymore Enhanced Growth & Income Fund
Investment Management
AGREEMENT AND INVESTMENT ADVISORY AGREEMENT RE-APPROVAL | (unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the "1940 Act")
contemplates that the Board of Trustees (the "Board") of Advent/Claymore
Enhanced Growth & Income Fund (the "Fund"), including a majority of the Trustees
who have no direct or indirect interest in the investment management agreement
and the investment advisory agreement and are not "interested persons" of the
Fund, as defined in the 1940 Act (the "Independent Trustees"), is required to
annually review and re-approve the terms of the Fund's existing investment
management agreement and investment advisory agreement and approve any newly
proposed terms therein. In this regard, the Board reviewed and re-approved,
during the most recent six month period covered by this report, the investment
management agreement (the "Management Agreement") with Advent Capital
Management, LLC ("Advent") and the investment advisory agreement (the "Advisory
Agreement") with Claymore Advisors, LLC ("Claymore"), for the Fund.
More specifically, at a meeting held on March 11, 2008, the Board, including the
Independent Trustees advised by their independent legal counsel, considered the
factors and reached the conclusions described below relating to the selection of
Advent and Claymore and the re-approval of the Management Agreement and the
Advisory Agreement, respectively.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board received and considered various data and information regarding the
nature, extent and quality of services provided to the Fund by Advent and
Claymore under the Management Agreement and Advisory Agreement. The Board
reviewed and analyzed the responses of Advent and Claymore to a detailed series
of requests submitted by the Independent Trustees' independent legal counsel on
behalf of such Trustees which included, among other things, information about
the background and experience of the senior management and the expertise of, and
amount of attention devoted to the Fund by, personnel of Advent and Claymore. In
this regard, the Board specifically reviewed the qualifications, background and
responsibilities of the officers primarily responsible for day-to-day portfolio
management services for the Fund.
The Board evaluated the ability of Advent and Claymore, including their
resources, reputation and other attributes, to attract and retain highly
qualified investment professionals, including research, advisory and supervisory
personnel. In this connection, the Board considered information regarding the
compensation structures for the personnel of Advent and Claymore involved in the
management of the Fund.
Based on the above factors, together with those referenced below, the Board
concluded that it was satisfied with the nature, extent and quality of the
investment management and advisory services provided to the Fund by Advent and
Claymore.
FUND PERFORMANCE AND EXPENSES
The Board considered the most recent one year, three-month and year-to-date
performance results for the Fund. It also considered these results in comparison
to the performance results of a group of other closed-end funds that were
determined to be the most similar to the Fund ("Peer Group").
The Board received and considered statistical information regarding the Fund's
total expense ratio (based on net assets applicable to common shares) and its
various components. The Board also considered comparisons of these expenses to
the expense information for the Fund's Peer Group.
Based on the above-referenced considerations and other factors, the Board
concluded that the overall performance and expense results supported the
re-approval of the Management Agreement and Advisory Agreement of the Fund.
INVESTMENT MANAGEMENT FEE RATES
The Board reviewed and considered the contractual investment management fee and
the investment advisory fee rates for the Fund (collectively, the "Management
Agreement Rates") payable by the Fund to Advent and Claymore for investment
management and advisory services. In addition, the Board reviewed and considered
all fee waiver arrangements applicable to the Management Agreement Rates and
considered the Management Agreement Rates after taking all applicable waivers
into account (the "Net Management Rates").
Additionally, the Board received and considered information comparing the
Management Agreement Rates (on a stand-alone basis exclusive of service
fee/administrative fee rates) with those of the other funds in the Peer Group.
The Board concluded that the fees were fair and equitable based on relevant
factors, including the Fund's performance results and total expenses ranking
relative to its Peer Group.
PROFITABILITY
The Board received and considered an estimated profitability analysis of Advent
and Claymore based on the Net Management Rates. The Board concluded that, in
light of the costs of providing investment management and advisory services to
the Fund, the profits and other ancillary benefits that Advent and Claymore
received with regard to providing these services to the Fund were not
unreasonable.
ECONOMIES OF SCALE
The Board received and considered information regarding whether there have been
economies of scale with respect to the management of the Fund, whether the Fund
has appropriately benefited from any economies of scale, and whether there is
potential for realization of any further economies of scale. The Board concluded
that the opportunity to benefit from economies of scale was diminished in the
context of closed-end funds.
INFORMATION ABOUT SERVICES TO OTHER CLIENTS
The Board also received and considered information about the nature, extent and
quality of services and fee rates offered by Advent and Claymore to their other
clients.
After considering the above-described factors and based on the deliberations and
its evaluation of the information provided to it, the Board concluded that
re-approval of the Management Agreement and the Advisory Agreement was in the
best interest of the Fund and its shareholders. Accordingly, the Board
unanimously re-approved the Management Agreement and Advisory Agreement.
18 | SemiAnnual Report | April 30, 2008
LCM | Advent/Claymore Enhanced Growth & Income Fund
Fund INFORMATION |
BOARD OF TRUSTEES
Randall C. Barnes
Daniel Black
Nicholas Dalmaso*
Tracy V. Maitland**
Chairman
Derek Medina
Ronald A. Nyberg
Gerald L. Seizert
Michael A. Smart
* 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
(through May 13, 2008) of and his equity ownership in the Adviser and
certain of its affiliates.
** Trustee is an "interested person" of the Fund as defined in the Investment
Company Act of 1940, as amended.
OFFICERS
Tracy V. Maitland
President and Chief Executive Officer
F. Barry Nelson
Vice President
Robert White
Treasurer and Chief Financial Officer
Rodd Baxter
Secretary and Chief Compliance Officer
INVESTMENT MANAGER
Advent Capital Management, LLC
New York, New York
INVESTMENT ADVISER AND ADMINISTRATOR (EFFECTIVE MAY 1, 2008)
Claymore Advisors, LLC
Lisle, Illinois
ADMINISTRATOR (THROUGH APRIL 30, 2008), CUSTODIAN AND TRANSFER AGENT
The Bank of New York Mellon
New York, New York
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher &
Flom LLP
New York, New York
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
New York, New York
PRIVACY PRINCIPLES OF THE FUND
The Fund is committed to maintaining the privacy of its shareholders and to
safeguarding their non-public personal information. The following information is
provided to help you understand what personal information the Fund collects, how
the Fund protects that information and why, in certain cases, the Fund 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 its
shareholders to employees of the Fund's investment adviser and its affiliates
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 ADVENT/CLAYMORE ENHANCED GROWTH & INCOME
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 Custodian and Transfer Agent: The Bank of New York
Mellon, 101 Barclay 11E, New York, NY 10286; (866) 488-3559.
This report is sent to shareholders of Advent/Claymore Enhanced Growth & Income
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 (866) 274-2227 or on the Securities & Exchange Commission's ("SEC's")
website at http://www.sec.gov.
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 the Fund at (866) 274-2227
or by accessing the Fund's Form N-PX on the SEC's website at http://www.sec.gov.
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 http://www.sec.gov. 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 http://www.sec.gov.
In October 2007, the Fund submitted a CEO annual certification to the New York
Stock Exchange ("NYSE") in which the Fund's principal executive officer
certified that he was not aware, as of the date of the certification, of any
violation by the Fund of the NYSE's Corporate Governance listing standards. In
addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and
related SEC rules, the Fund's principal executive and principal financial
officers have made quarterly certifications, included in filings with the SEC on
Forms N-CSR and N-Q, relating to, among other things, the Fund's disclosure
controls and procedures and internal control over financial reporting.
SemiAnnual Report | April 30, 2008 | 19
ADVENT CAPITAL MANAGEMENT, LLC
1065 Avenue of the Americas
New York, New York 10018
LCM
LISTED
NYSE(R)
LCM-SAR-0408
ITEM 2. CODE OF ETHICS.
Not applicable for a semi-annual reporting period.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for a semi-annual reporting period.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for a semi-annual reporting period.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable for a semi-annual reporting period.
ITEM 6. SCHEDULE OF INVESTMENTS.
The Schedule of Investments is included as part of Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable for a semi-annual reporting period.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a) Not applicable for a semi-annual reporting period.
(b) There has been no change, as of the date of this filing, in the Portfolio
Manager identified in response to paragraph (a)(1) of this Item in the
registrant's most recent annual report on Form N-CSR.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
None.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant has not made any material changes to the procedures by which
shareholders may recommend nominees to the registrant's Board of Trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have evaluated the registrant's disclosure controls and procedures
(as defined in Rule 30a-3(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 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) Certification of principal executive officer and principal financial
officer pursuant to Rule 30a-2(a) of the Investment Company Act of 1940.
(a)(3) Not Applicable.
(b) Certification of principal executive officer and principal financial
officer pursuant to Rule 30a-2(b) of the Investment Company Act of 1940.
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) Advent/Claymore Enhanced Growth & Income Fund
By: /s/ Tracy V. Maitland
-----------------------------------------------------------------------
Name: Tracy V. Maitland
Title: President and Chief Executive Officer
Date: August 6, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Tracy V. Maitland
-----------------------------------------------------------------------
Name: Tracy V. Maitland
Title: President and Chief Executive Officer
Date: August 6, 2008
By: /s/ Rober White
-----------------------------------------------------------------------
Name: Robert White
Title: Treasurer and Chief Financial Officer
Date: August 6, 2008