UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
TS&W / CLAYMORE TAX-ADVANTAGED BALANCED FUND
(Names of Registrant as Specified in its Declaration of Trust)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
PRELIMINARY PROXY STATEMENT - SUBJECT TO COMPLETION
[CLAYMORE LOGO]
TS&W / CLAYMORE TAX-ADVANTAGED BALANCED FUND
2455 CORPORATE WEST DRIVE
LISLE, ILLINOIS 60532
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 19, 2010
Notice is hereby given to the holders of common shares of beneficial
interest, par value $0.01 per share ("Common Shares"), and the holders of
Auction Market Preferred Shares, par value $0.01 per share, liquidation
preference $25,000 per share ("Preferred Shares," and together with Common
Shares, "Shares"), of TS&W / Claymore Tax-Advantaged Balanced Fund (the "Fund"),
that the annual meeting of shareholders of the Fund (the "Annual Meeting") will
be held at the offices of the Fund, 2455 Corporate West Drive, Lisle, Illinois
60532, on Monday, July 19, 2010, at 12:00 p.m., Noon, Central time. The Annual
Meeting is being held for the following purposes:
1. To elect Trustees in the following manner:
(a) to elect one Trustee as a Class III Trustee by holders of Common Shares
and Preferred Shares voting together as a single class, to serve until
the Fund's 2013 annual meeting of shareholders or until a successor shall
have been elected and qualified;
(b) to elect one Trustee as a Class III Trustee by holders of Preferred
Shares voting as a separate class, to serve until the Fund's 2013 annual
meeting of shareholders or until a successor shall have been elected and
qualified.
2. To act on a shareholder proposal, if properly presented at the meeting.
3. To transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.
THIS IS A VERY IMPORTANT ANNUAL MEETING OF THE FUND. A SHAREHOLDER HAS
NOTIFIED THE FUND OF ITS INTENT TO NOMINATE CANDIDATES FOR ELECTION AS TRUSTEES
OF THE FUND. THE BOARD OF TRUSTEES (THE "BOARD") OF THE FUND, INCLUDING THE
INDEPENDENT TRUSTEES, UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF
EACH TRUSTEE NOMINEE NOMINATED BY THE BOARD AS SET FORTH IN THE ACCOMPANYING
PROXY STATEMENT. THE BOARD STRONGLY URGES YOU NOT TO VOTE FOR ANY TRUSTEE
NOMINEE PUT FORWARD BY A SHAREHOLDER. THE BOARD, INCLUDING THE INDEPENDENT
TRUSTEES, UNANIMOUSLY RECOMMENDS THAT YOU VOTE AGAINST A SHAREHOLDER PROPOSAL
REGARDING ANNUAL TERMS FOR DIRECTORS, IF THE PROPOSAL IS PROPERLY PRESENTED AT
THE MEETING.
The Board has fixed the close of business on March 23, 2010 as the
record date (the "Record Date") for the determination of shareholders entitled
to notice of, and to vote at, the Annual Meeting.
It is important that your Shares be represented at the Annual Meeting
in person or by proxy. Whether or not you plan to attend the Annual Meeting, we
urge you to complete, sign, date, and return the enclosed [White Proxy Card] in
the postage-paid envelope provided or vote your proxy via telephone or the
Internet pursuant to the instructions on the enclosed [White Proxy Card] so you
will be represented at the Annual Meeting. If you attend the Annual Meeting and
wish to vote in person, you will be able to do so and your vote at the Annual
Meeting will revoke any proxy you may have submitted. Merely attending the
Annual Meeting, however, will not revoke any previously submitted proxy.
THE BOARD STRONGLY URGES YOU NOT TO SIGN OR RETURN ANY PROXY CARD THAT
MAY BE SENT TO YOU BY A SHAREHOLDER. If you have previously returned a proxy
card sent to you by a shareholder, you may change your vote by completing,
signing, dating and returning the enclosed [White Proxy Card] in the
postage-paid envelope provided or by recording your voting instructions via
telephone or the Internet pursuant to the instructions on the enclosed [White
Proxy Card].
By order of the Board of Trustees,
/s/ J. Thomas Futrell
J. Thomas Futrell
Chief Executive Officer
Lisle, Illinois
June [o], 2010
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED [WHITE PROXY CARD]
IN THE POSTAGE-PAID ENVELOPE PROVIDED OR VOTE YOUR PROXY VIA TELEPHONE OR THE
INTERNET PURSUANT TO THE INSTRUCTIONS ON THE ENCLOSED [WHITE PROXY CARD]. IN
ORDER TO SAVE THE FUND ANY ADDITIONAL EXPENSE OF FURTHER SOLICITATION, PLEASE
MAIL YOUR [WHITE PROXY CARD] OR VOTE YOUR PROXY VIA TELEPHONE OR THE INTERNET
PURSUANT TO THE INSTRUCTIONS ON THE ENCLOSED [WHITE PROXY CARD] PROMPTLY.
(This page has been left blank intentionally)
PRELIMINARY PROXY STATEMENT - SUBJECT TO COMPLETION
TS&W / CLAYMORE TAX-ADVANTAGED BALANCED FUND
----------------------
PROXY STATEMENT
----------------------
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 19, 2010
This proxy statement ("Proxy Statement") is furnished to the holders of
common shares of beneficial interest, par value $0.01 per share ("Common
Shares"), and the holders of Auction Market Preferred Shares, par value $0.01
per share, liquidation preference $25,000 per share ("Preferred Shares," and
together with Common Shares, "Shares"), of TS&W / Claymore Tax-Advantaged
Balanced Fund (the "Fund") in connection with the solicitation by the Board of
Trustees of the Fund (the "Board") of proxies to be voted at the annual meeting
of shareholders of the Fund to be held on Monday, July 19, 2010, and any
adjournment or postponement thereof (the "Annual Meeting"). The Annual Meeting
will be held at the offices of the Fund, 2455 Corporate West Drive, Lisle,
Illinois 60532 on July 19, 2010, at 12:00 p.m., Noon, Central time.
This Proxy Statement gives you information you need to vote on the
matters listed on the accompanying Notice of Annual Meeting of Shareholders
("Notice of Annual Meeting"). Much of the information in this Proxy Statement is
required under rules of the Securities and Exchange Commission ("SEC"). If there
is anything you don't understand, please contact us at our toll-free number:
[(866) 882-0688].
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF THE FUND'S MOST RECENT
ANNUAL REPORT AND SEMI-ANNUAL REPORT TO SHAREHOLDERS TO ANY SHAREHOLDER UPON
REQUEST. REQUESTS SHOULD BE DIRECTED TO CLAYMORE SECURITIES, INC., 2455
CORPORATE WEST DRIVE, LISLE, ILLINOIS 60532, [(866) 882-0688].
The Notice of Annual Meeting, this Proxy Statement and the enclosed
[White Proxy Card] are first being sent to the Fund's shareholders on or about
June [o], 2010.
o WHY IS A SHAREHOLDER MEETING BEING HELD?
The Fund's Common Shares are listed on the New York Stock Exchange
(the "NYSE"), under the ticker symbol "TYW", which requires the
Fund to hold an annual meeting of shareholders to elect Trustees
each fiscal year.
o WHAT PROPOSALS WILL BE VOTED ON AT THE ANNUAL MEETING?
Shareholders of the Fund are being asked to vote on the following
proposals at the Annual Meeting:
1. To elect Trustees in the following manner:
(a) to elect one Trustee as a Class III Trustee (Mr. Steven D.
Cosler is the nominee) by holders of Common Shares and
Preferred Shares voting together as a single class, to
serve until the Fund's 2013 annual meeting of shareholders
or until a successor shall have been elected and
qualified;
(b) to elect one Trustee as a Class III Trustee (Mr. Ronald E.
Toupin, Jr. is the nominee) by holders of Preferred Shares
voting as a separate class, to serve until the Fund's 2013
annual meeting of shareholders or until a successor shall
have been elected and qualified.
2. To act on a shareholder proposal, if properly presented at the
Annual Meeting.
o WILL YOUR VOTE MAKE A DIFFERENCE?
YES! Your vote is important and could make a difference in the
governance of the Fund, no matter how many Shares you own.
This is a very important Annual Meeting of the Fund. A shareholder
has notified the Fund of its intent to nominate candidates for
election as Trustees of the Fund. The Board has nominated Mr.
Steven D. Cosler and Mr. Ronald E. Toupin, Jr. for re-election as
Class III Trustees. Mr. Cosler has served as a Trustee of the Fund
since 2005. Mr. Toupin has served as a Trustee of the Fund since
the commencement of the Fund's operations in 2004 and currently
serves as the chairperson of the Board of Trustees. The Board
strongly believes that Mr. Cosler and Mr. Toupin are better
qualified to serve as Trustees of the Fund than the shareholder's
proposed nominees and will better serve the interests of all
shareholders. The Board strongly urges you not to vote for any
trustee nominee put forward by a shareholder.
o WHO IS ASKING FOR YOUR VOTE?
The enclosed proxy is solicited by the Board for use at the Annual
Meeting to be held on Monday, July 19, 2010, and, if the Annual
Meeting is adjourned or postponed, at any later meetings, for the
purposes stated in the Notice of Annual Meeting.
o HOW DOES THE BOARD RECOMMEND THAT SHAREHOLDERS VOTE ON THE
PROPOSALS?
With respect to Proposal 1(a), the Board, including the
Independent Trustees, unanimously recommends that shareholders
vote "FOR" the nominee of the Board (Mr. Steven D. Cosler). With
respect to Proposal 1(b), the Board, including the Independent
Trustees, unanimously recommends that holders of Preferred Shares
vote "FOR" the nominee of the Board (Mr. Ronald E. Toupin, Jr.).
The Board strongly urges you not to vote for any trustee nominee
put forward by a shareholder.
With respect to Proposal 2, The Board, including the Independent
Trustees, unanimously recommends that you vote "AGAINST" the
shareholder proposal, if properly presented at the Annual Meeting.
o WHO IS ELIGIBLE TO VOTE?
Shareholders of record of the Fund at the close of business on
March 23, 2010 (the "Record Date") are entitled to be present and
to vote at the Annual Meeting or any adjournment or postponement
thereof. Shareholders will be entitled to one vote on each matter
to be voted for each Share of the Fund held and a fractional vote
with respect to fractional Shares, with no cumulative voting.
o HOW DO YOU VOTE YOUR SHARES?
Whether or not you plan to attend the Annual Meeting, we urge you
to complete, sign, date, and return the enclosed [White Proxy
Card] in the postage-paid envelope provided or vote your proxy via
telephone or the Internet pursuant to the instructions on the
enclosed [White Proxy Card] so your Shares will be represented at
the Annual Meeting. Information regarding how to vote your proxy
via telephone or the Internet is included on the enclosed [White
Proxy Card]. The required control number for Internet and
telephone voting is printed on the enclosed proxy [White Proxy
Card]. The control number is used to match proxy cards with
shareholders' respective accounts and to ensure that, if multiple
proxy cards are executed, Shares are voted in accordance with the
proxy card bearing the latest date. If you wish to attend the
Annual Meeting and vote in person, you will be able to do so. You
may contact the Fund's proxy information line at [o] to obtain
directions to the site of the Annual Meeting.
All Shares represented by properly executed proxies received prior
to the Annual Meeting will be voted at the Annual Meeting in
accordance with the instructions marked thereon or otherwise as
provided therein. IF YOU SIGN THE [WHITE PROXY CARD], BUT DON'T
FILL IN A VOTE, YOUR SHARES WILL BE VOTED IN ACCORDANCE WITH THE
BOARD'S RECOMMENDATION. If any other business is brought before
the Annual
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Meeting, your Shares will be voted at the proxies' discretion.
Shareholders who execute proxy cards or vote their proxies via
telephone or the Internet may revoke them at any time before they
are voted by filing with the Secretary of the Fund a written
notice of revocation, by delivering (including via telephone or
the Internet) a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person. Merely
attending the Annual Meeting, however, will not revoke any
previously submitted proxy.
Broker-dealer firms holding Shares in "street name" for the
benefit of their customers and clients will request the
instructions of such customers and clients on how to vote their
Shares on the Proposals. Under current interpretations of the New
York Stock Exchange (the "NYSE"), broker-dealers that are members
of the NYSE and that have not received instructions from a
customer may not vote such customer's Shares. Broker-dealers who
are not members of the NYSE may be subject to other rules, which
may or may not permit them to vote your shares without
instruction. Therefore, you are encouraged to contact your broker
and record your voting instructions.
Shareholders of the Fund as of the close of business on the Record
Date will be entitled to one vote on each matter to be voted for
each Share of the Fund held and a fractional vote with respect to
fractional Shares, with no cumulative voting.
THE BOARD STRONGLY URGES YOU NOT TO SIGN OR RETURN ANY PROXY CARD
THAT MAY BE SENT TO YOU BY A SHAREHOLDER. If you have previously
returned a proxy card sent to you by a shareholder, you may change
your vote by completing, signing, dating and returning the
enclosed [White Proxy Card] in the postage-paid envelope provided
or by voting your proxy via telephone or the Internet pursuant to
the instructions on the enclosed [White Proxy Card].
o WHAT VOTE IS REQUIRED TO APPROVE THE PROPOSALS?
With respect to Proposal 1(a), the affirmative vote of a majority
of the Shares present in person or represented by proxy and
entitled to vote on the matter at the Annual Meeting at which a
quorum is present is necessary to elect a Trustee nominee.
With respect to Proposal 1(b), the affirmative vote of a majority
of the Preferred Shares present in person or represented by proxy
at the Annual Meeting at which a quorum is present is necessary to
elect a Trustee nominee.
With respect to Proposal 2, if the shareholder proposal is
properly presented at the Annual Meeting, a majority of the Shares
present in person or represented by proxy and entitled to vote on
the matter at the Annual Meeting at which a quorum is present will
be necessary to approve the proposal.
o HOW MANY SHARES OF THE FUND WERE OUTSTANDING AS OF THE RECORD
DATE?
At the close of business on the Record Date, the Fund had [o]
Common Shares and [o] Preferred Shares outstanding.
3
PROPOSAL 1: ELECTION OF TRUSTEES
The Fund's Common Shares are listed on the NYSE, which requires the
Fund to hold an annual meeting of shareholders to elect Trustees each fiscal
year. Shareholders of the Fund are being asked to elect to Trustees in the
following manner:
1(a): To elect one Trustee as a Class III Trustee (Mr. Steven
D. Cosler is the nominee) by holders of Common Shares
and Preferred Shares voting together as a single class,
to serve until the Fund's 2013 annual meeting of
shareholders or until a successor shall have been
elected and qualified.
1(b): To elect one Trustee as a Class III Trustee (Mr. Ronald
E. Toupin, Jr. is the nominee) by holders of Preferred
Shares voting as a separate class, to serve until the
Fund's 2013 annual meeting of shareholders or until a
successor shall have been elected and qualified.
COMPOSITION OF THE BOARD OF TRUSTEES
The Trustees of the Fund are classified into three classes: Class I
Trustees, Class II Trustees and Class III Trustees.
CLASS I TRUSTEES
- Mr. Randall C. Barnes and Mr. Robert M. Hamje are the Class I
Trustees. The term of the Class I Trustees of the Fund will continue
until the Fund's 2011 annual meeting of shareholders or until
successors shall have been elected and qualified.
CLASS II TRUSTEES
- Mr. Matthew J. Appelstein, Mr. L. Kent Moore* and Mr. Ronald A.
Nyberg are the Class II Trustees. The term of the Class II Trustees of
the Fund will continue until the Fund's 2012 annual meeting of
shareholders or until successors shall have been elected and qualified.
CLASS III TRUSTEES
- Mr. Steven D. Cosler and Mr. Ronald E. Toupin, Jr.* are the Class III
Trustees. Messrs. Cosler and Toupin are standing for election at the
Annual Meeting. If elected, the term of the Class III Trustees will
continue until the Fund's 2013 annual meeting of shareholders or until
successors shall have been elected and qualified.
-----------------------
* Designated as Trustee representing holders of Preferred Shares.
Generally, the Trustees of only one class are elected at each annual
meeting of shareholders, so that the regular term of only one class of Trustees
will expire annually and any particular Trustee stands for election only once in
each three year period. Each trustee nominee elected at the annual meeting as a
Class III Trustee of the Fund will hold office until the Fund's 2013 annual
meeting of shareholders or until his successor shall have been elected and
qualified. The other Trustees of the Fund will continue to serve under their
current terms as described above. Unless authority is withheld, it is the
intention of the persons named in the proxy to vote the proxy "FOR" the election
of the trustee nominees named above pursuant to Proposal 1. Each trustee nominee
nominated by the Board has indicated that he has consented to serve as a Trustee
if elected at the Annual Meeting. If a designated trustee nominee declines or
otherwise becomes unavailable for election, however, the proxy confers
discretionary power on the persons named therein to vote in favor of a
substitute nominee or nominees.
TRUSTEES
Certain information concerning the Trustees and officers of the Fund is
set forth in the tables below. The "interested" Trustee (as defined in Section
2(a)(19) of the Investment Company Act of 1940, as amended (the "1940 Act")) is
indicated below. Independent Trustees are those who are not interested persons
of the Fund, the Fund's
4
investment adviser, Claymore Advisors, LLC ("Claymore" or the "Adviser"), or the
Fund's sub-advisers, SMC Fixed Income Management, LP ("SMC") and Thompson,
Siegel & Walmsley LLC ("TS&W" and together with SMC, the "Sub-Advisers") and
comply with the definition of "independent" (as defined in Rule 10A-3 under the
Securities Exchange Act of 1934, as amended) (the "Independent Trustees").
The Fund is part of a fund complex (referred to herein as the "Fund
Complex") that consists of U.S. registered investment companies advised or
serviced by the Adviser or its affiliates. As of the date of this Proxy
Statement, the Fund Complex is composed of [14] closed-end funds, including the
Fund, and [34] exchange-traded funds. The Fund Complex is overseen by multiple
boards of trustees.
NUMBER OF OTHER
TERM OF PORTFOLIOS IN DIRECTORSHIPS
POSITION(S) OFFICE(2) AND FUND COMPLEX HELD BY TRUSTEE
NAME, ADDRESS(1) HELD WITH LENGTH OF TIME PRINCIPAL OCCUPATION DURING THE OVERSEEN BY DURING THE PAST
AND AGE FUND SERVED PAST FIVE YEARS TRUSTEE FIVE YEARS
INDEPENDENT TRUSTEES:
Randall C. Barnes Trustee Trustee since Private Investor. Formerly, [44] None.
Year of birth: 1951 2005 Senior Vice President &
Treasurer (1993-1997),
President, Pizza Hut
International (1991-1993)
and Senior Vice President,
Strategic Planning and New
Business Development
(1987-1990) of PepsiCo,
Inc.
Steven D. Cosler(3) Trustee Trustee since Formerly, President (2001-2005), 2 Director, Cydex
Year of birth: 1955 2005 Chief Executive Officer and Pharmaceuticals,
Director (2002-2005), Chief Inc.
Operating Officer (2000-2002) (2005-present),
and Executive Vice President CCS Medical
(1997-2001) of Priority (2006-2010),
Healthcare Corporation. Access Mediquip
(2006-present),
SXC Health
Solutions
(2007-present),
CareCentrix
(2008-present),
Healthplan
Holdings
(2008-present)
Robert M. Hamje Trustee Trustee since Formerly, President and Chief 2 Trustee, funds
Year of birth: 1942 2004 Investment Officer of TRW in the Old
Investment Management Company Mutual Advisor
(1990-2003). fund complex
(2004 -
present).
L. Kent Moore Trustee Trustee since Owner, Eagle River Ventures, LLC 2 Trustee, funds
Year of birth: 1955 2004 (1999-present). Previously, in the Old
Partner at WillSource Enterprise Mutual Advisor
(2005-2006), Managing Director fund complex
High Sierra Energy L.P. (___-present),
(2004-2005), Portfolio Manager American
and Vice President of Janus Midstream
Capital Corp. (2000-2002) and Partners, LLC
Senior Analyst/Portfolio Manager (2009-present)
of Marsico Capital Management
(1997-1999).
Ronald A. Nyberg Trustee Trustee since Partner of Nyberg & Cassioppi, [46] None.
Year of birth: 1953 2004 LLC, a law firm specializing in
Corporate Law, Estate Planning
and Business Transactions
(2000-present). Formerly,
Executive Vice President,
General Counsel and Corporate
Secretary of Van Kampen
Investments (1982-1999).
5
NUMBER OF OTHER
TERM OF PORTFOLIOS IN DIRECTORSHIPS
POSITION(S) OFFICE(2) AND FUND COMPLEX HELD BY TRUSTEE
NAME, ADDRESS(1) HELD WITH LENGTH OF TIME PRINCIPAL OCCUPATION DURING THE OVERSEEN BY DURING THE PAST
AND AGE FUND SERVED PAST FIVE YEARS TRUSTEE FIVE YEARS
INDEPENDENT TRUSTEES:
Ronald E. Toupin, Trustee Trustee since Formerly, Vice President, [43] None.
Jr.(3) 2004 Manager and Portfolio Manager of
Year of birth: 1958 Nuveen Asset Management
(1998-1999), Vice
President of Nuveen
Investment Advisor
Corporation (1992-1999),
Vice President and Manager
of Nuveen Unit Investment
Trusts (1991-1999) and
Assistant Vice President
and Portfolio Manager of
Nuveen Unit Investment
Trusts (1988-1999), each
of John Nuveen & Company,
Inc. (1982-1999).
INTERESTED TRUSTEES:
Matthew J. Trustee Trustee since Executive Vice President, head 2 Trustee, funds
Appelstein+ 2005 of Sales and Marketing, Old in the Old
Year of birth: 1961 Mutual Asset Management Mutual Advisor
(2003-present). fund complex.
- ------------------------------
+ "Interested person" of the Fund as defined in the 1940 Act. Mr. Appelstein
is an interested person of the Fund because he is an officer of Old Mutual
Asset Management, the parent company of TS&W.
(1) The business address of each Trustee of the Fund is 2455 Corporate West
Drive, Lisle, Illinois 60532, unless otherwise noted.
(2) Each Trustee is generally expected to serve a three year term concurrent
with the class of Trustees for which he serves.
(3) Nominee for election as a Trustee at the Annual Meeting.
TRUSTEE QUALIFICATIONS
The Trustees were selected to serve and continue on the Board based
upon their skills, experience, judgment, analytical ability, diligence, ability
to work effectively with other Trustees, availability and commitment to attend
meetings and perform the responsibilities of a Trustee and, for each Independent
Trustee, a demonstrated willingness to take an independent and questioning view
of management.
The following is a summary of the experience, qualifications,
attributes and skills of each Trustee that support the conclusion, as of the
date of this proxy statement, that each Trustee should serve as a Trustee in
light of the Fund's business and structure. References to the qualifications,
attributes and skills of Trustees are pursuant to requirements of the SEC, do
not constitute holding out of the Board or any Trustee as having any special
expertise and shall not impose any greater responsibility or liability on any
such person or on the Board by reason thereof.
Matthew J. Appelstein. Mr. Appelstein has served as a Trustee of the
Fund and another fund in the Claymore Fund Complex since 2005. Through his
service as a Trustee of the Fund, his service on other public company boards,
including other investment company boards, his experience as Executive Vice
President of Old Mutual Asset Management, an investment services company, and
his prior experience, including Senior Vice President of Fidelity Management
Trust Company, also an investment services company, Mr. Appelstein is
experienced in financial, investment, technology and regulatory matters.
Randall C. Barnes. Mr. Barnes has served as a Trustee of the Fund and
other funds in the Claymore Fund Complex since 2003. Mr. Barnes also serves on
the board of certain Claymore sponsored Canadian funds. Through his service as a
Trustee of the Fund and as chairman of the Audit Committee, employment
experience as President of Pizza Hut International and as Treasurer of PepsiCo,
Inc., and his personal investment experience, Mr. Barnes is experienced in
financial, accounting, regulatory and investment matters.
6
Steven D. Cosler. Mr. Cosler has served as a Trustee of the Fund and
another fund in the Claymore Fund Complex since 2005. Through his service as a
Trustee of the Fund, his service on other public and private company boards, and
his prior experience, including President and Chief Executive Officer of
Priority Healthcare Corporation, Mr. Cosler is experienced in financial,
investment and regulatory matters.
Robert M. Hamje. Mr. Hamje has served as a Trustee of the Fund and
another fund in the Claymore Fund Complex since 2004. Through his service as a
Trustee of the Fund, his service on other public company boards, including funds
in another investment company complex, and his prior experience, including
President and Chief Investment Officer of TRW Investment Management Company, Mr.
Hamje is experienced in financial, investment and regulatory matters.
L. Kent Moore. Mr. Moore has served as a Trustee of the Fund and
another fund in the Claymore Fund Complex since 2004. Through his service as a
Trustee of the Fund and funds in another investment company complex and his
experience as an analyst, portfolio manager and principal at both Janus Capital
and Marsico Capital Management, Mr. Moore is experienced in financial,
investment and regulatory matters.
Ronald A. Nyberg. Mr. Nyberg has served as a Trustee of the Fund and
other funds in the Claymore Fund Complex since 2003. Through his service as a
Trustee of the Fund and as chairman of the Nominating & Governance Committee,
his professional training and experience as an attorney and partner of a law
firm, Nyberg & Cassioppi LLC, and his prior employment experience, including
Executive Vice President and General Counsel of Van Kampen Investments, an asset
management firm, Mr. Nyberg is experienced in financial, regulatory and
governance matters.
Ronald E. Toupin, Jr. Mr. Toupin has served as a Trustee of the Fund
and other funds in the Claymore Fund Complex since 2003. Through his service as
a Trustee of the Fund and as chairman of the Board, and his professional
training and employment experience, including Vice President and Portfolio
Manager for Nuveen Asset Management, an asset management firm, Mr. Toupin is
experienced in financial, regulatory and investment matters.
Each Trustee also now has considerable familiarity with the Fund, the
Adviser, the Sub-Advisers and other service providers, and their operations, as
well as the special regulatory requirements governing regulated investment
companies and the special responsibilities of investment company trustees as a
result of his substantial prior service as a Trustee of the Fund.
EXECUTIVE OFFICERS
The following information relates to the executive officers of the Fund
who are not Trustees. The Fund's officers receive no compensation from the Fund
but may also be officers or employees of the Adviser, the Sub-Advisers or
affiliates of the Adviser or the Sub-Advisers and may receive compensation in
such capacities.
TERM OF OFFICE(2)
NAME, ADDRESS(1) AND LENGTH OF TIME PRINCIPAL OCCUPATION DURING
AND AGE TITLE SERVED THE PAST FIVE YEARS
J. Thomas Futrell Chief Since 2008 Senior Managing Director, Chief Investment Officer
Year of birth: 1955 Executive (2008-present) of Claymore Advisors, LLC and Claymore
Officer Securities, Inc.; Chief Executive Officer of certain
funds in the Fund Complex. Formerly, Managing Director
in charge of Research (2000-2007) for Nuveen Asset
Management.
Kevin M. Robinson Chief Legal Since 2008 Senior Managing Director, General Counsel and Corporate
Year of birth: 1959 Officer Secretary (2007-present) of Claymore Advisors, LLC and
Claymore Securities, Inc.; Chief Legal Officer of
certain funds in the Fund Complex. Formerly, Associate
General Counsel (2000-2007) of NYSE Euronext, Inc.
Formerly, Archipelago Holdings, Inc. Senior Managing
Director and Associate General Counsel (1997-2000) of
ABN Amro Inc. Formerly, Senior Counsel in the
Enforcement Division (1989-1997) of the U.S. Securities
and Exchange Commission.
7
TERM OF OFFICE(2)
NAME, ADDRESS(1) AND LENGTH OF TIME PRINCIPAL OCCUPATION DURING
AND AGE TITLE SERVED THE PAST FIVE YEARS
Steven M. Hill Chief Since 2004 Senior Managing Director of Claymore Advisors, LLC and
Year of birth: 1964 Financial Claymore Securities, Inc. (2005- present). Formerly,
Officer, Chief Financial Officer (2005-2006) Claymore Group Inc.
Chief Managing Director of Claymore Advisors, LLC and Claymore
Accounting Securities, Inc. (2003-2005). Previously, Treasurer of
Officer and Henderson Global Funds and Operations Manager for
Treasurer Henderson Global Investors (NA) Inc., (2002-2003);
Managing Director, FrontPoint Partners LLC (2001- 2002);
Vice President, Nuveen Investments (1999-2001); Chief
Financial Officer, Skyline Asset Management LP, (1999);
Vice President, Van Kampen Investments and Assistant
Treasurer, Van Kampen mutual funds (1989-1999).
Bruce Saxon Chief Since 2006 Vice President - Fund Compliance Officer of Claymore
Year of birth: 1957 Compliance Securities, Inc. (2006-present). Chief Compliance
Officer Officer of certain funds in the Fund Complex. Chief
Compliance Officer/Assistant Secretary of Harris
Investment Management, Inc. (2003-2006).
Director-Compliance of Harrisdirect LLC (1999-2003).
Mark E. Mathiasen Secretary Since 2008 Vice President; Assistant General Counsel of Claymore
Year of birth: 1978 Group Inc. (2007-present). Secretary of certain funds in
the Fund Complex. Previously, Law Clerk, Idaho State
Courts (2003-2006).
Vincent R. Giordano Vice Since 2004 Senior Managing Director of SMC Fixed Income Management,
Year of Birth: 1948 President LP (2006-present). Formerly, Senior Managing Director of
Claymore Advisors, LLC (2004-2006); Senior Vice
President and Portfolio Manager of Merrill Lynch Asset
Management, Inc. (1985-2001).
George Gregorio Vice Since 2004 Managing Director of SMC Fixed Income Management, LP
Year of Birth: 1949 President (2006-present). Formerly, Managing Director of Claymore
Advisors, LLC (2004-2006); Sell Side Analyst for JB
Hanauer & Co.
Roberto W. Roffo Vice Since 2004 Managing Director of SMC Fixed Income Management, LP
Year of Birth: 1966 President (2006-present). Formerly, Managing Director of Claymore
Advisors, LLC (2004-2006); Director and Vice President
of Merrill Lynch Investment Managers.
Elizabeth H. Hudson Assistant Since 2009 Assistant General Counsel of Claymore Group Inc.
Year of birth: 1980 Secretary (2009-present). Assistant Secretary of certain funds in
the Fund Complex. Previously, associate at Bell, Boyd &
Lloyd LLP (nka K&L Gates LLP) (2007-2008). J.D., Northwestern
University (2004-2007).
Melissa J. Nguyen Assistant Since 2006 Vice President, Assistant General Counsel of Claymore
Year of birth: 1978 Secretary Group Inc. (2005-present). Secretary of certain funds
in the Fund Complex. Formerly, Associate, Vedder Price
P.C. (2003-2005).
James Howley Assistant Since 2007 Vice President, Fund Administration of Claymore
Year of birth: 1972 Treasurer Securities, Inc. (2004-present). Assistant Treasurer of
certain funds in the Fund Complex. Previously, Manager,
Mutual Fund Administration of Van Kampen Investments,
Inc.
Donald P. Swade Assistant Since 2008 Vice President, Fund Administration (2006-present) of
Year of birth: 1972 Treasurer Claymore Advisors, LLC and Claymore Securities, Inc.;
Assistant Treasurer of certain funds in the Fund Complex.
Formerly, Manager-Mutual Fund Financial Administration
(2003-2006) for Morgan Stanley/Van Kampen Investments.
Mark J. Furjanic Assistant Since 2008 Vice President, Fund Administration-Tax (2005-present)
Year of birth: 1959 Treasurer of Claymore Advisors, LLC and Claymore Securities, Inc.;
Assistant Treasurer of certain funds in the Fund
Complex.
TERM OF OFFICE(2)
NAME, ADDRESS(1) AND LENGTH OF TIME PRINCIPAL OCCUPATION DURING
AND AGE TITLE SERVED THE PAST FIVE YEARS
Formerly, Senior Manager (1999-2005) for Ernst
& Young LLP.
(1) The business address of each officer of the Fund is 2455 Corporate West
Drive, Lisle, Illinois 60532, unless otherwise noted.
(2) Officers serve at the pleasure of the Board and until his or her successor
is appointed and qualified or until his or her earlier resignation or
removal.
BOARD LEADERSHIP STRUCTURE
The primary responsibility of the Board is to represent the interests
of the Fund and to provide oversight of the management of the Fund. The Fund's
day-to-day operations are managed by the Adviser, the Sub-Advisers and other
service providers who have been approved by the Board. The Board is currently
comprised of seven Trustees, six of whom (including the chairperson) are
classified as Independent Trustees and one of whom is classified as an
interested person of the Fund ("Interested Trustee"). Generally, the Board acts
by majority vote of all the Trustees, including a majority vote of the
Independent Trustees if required by applicable law.
The Board has appointed an Independent Trustee as chairperson, who
presides at Board meetings and who is responsible for, among other things,
participating in the planning of Board meetings, setting the tone of Board
meetings and seeking to encourage open dialogue and independent inquiry among
the trustees and management. The Board has established two standing committees
(as described below) and has delegated certain responsibilities to those
committees, each of which is comprised solely of Independent Trustees. The Board
and its committees meet periodically throughout the year to oversee the Fund's
activities, review contractual arrangements with service providers, review the
Fund's financial statements, oversee compliance with regulatory requirements,
and review performance. The Independent Trustees are represented by independent
legal counsel at Board and committee meetings. The Board has determined that
this leadership structure, including an Independent Chairperson, a supermajority
of Independent Trustees and committee membership limited to Independent
Trustees, is appropriate in light of the characteristics and circumstances of
the Fund.
BOARD COMMITTEES
The Trustees have determined that the efficient conduct of the
Trustees' affairs makes it desirable to delegate responsibility for certain
specific matters to committees of the Board. The committees meet as often as
necessary, either in conjunction with regular meetings of the Board or
otherwise. The committees of the Board are the Audit Committee and the
Nominating and Governance Committee.
Audit Committee. The Board has an Audit Committee, which is composed of
Randall C. Barnes, Steven D. Cosler, Robert M. Hamje, L. Kent Moore, Ronald A.
Nyberg and Ronald E. Toupin, Jr., each of whom is an Independent Trustee as
defined above and is "independent" as defined by NYSE listing standards. Mr.
Barnes serves as chairperson of the Audit Committee.
The Audit Committee is charged with selecting an independent registered
public accounting firm for the Fund and reviewing accounting matters with the
Fund's independent registered public accounting firm. Each member of the Audit
Committee is an Independent Trustee as defined above and also meets the
additional independence requirements for audit committee members as defined by
NYSE listing standards.
The Audit Committee is governed by a written charter, the most recent
version of which was approved by the Board on April 20, 2010 (the "Audit
Committee Charter"). In accordance with proxy rules promulgated by the SEC, a
fund's audit committee charter is required to be filed at least once every three
years as an exhibit to a fund's proxy statement. The Fund's Audit Committee
Charter is attached as Appendix B hereto.
The Audit Committee presents the following report on behalf of the
Fund:
The Audit Committee has performed the following functions: (i) the
Audit Committee reviewed and discussed the audited financial statements
of the Fund with management of the Fund, (ii) the Audit
9
Committee discussed with the Fund's independent registered public
accounting firm the matters required to be discussed by the Statement
on Auditing Standards No. 61, (iii) the Audit Committee received the
written disclosures and the letter from the Fund's independent
registered public accounting firm required by Independence Standards
Board Standard No. 1 and has discussed with the Fund's independent
registered public accounting firm the independence of the Fund's
independent registered public accounting firm and (iv) the Audit
Committee recommended to the Board of Trustees of the Fund that the
financial statements be included in the Fund's Annual Report for the
past fiscal year.
Nominating and Governance Committee. The Board has a Nominating and
Governance Committee, which is composed of Randall C. Barnes, Steven D. Cosler,
Robert M. Hamje, L. Kent Moore, Ronald A. Nyberg and Ronald E. Toupin, Jr., each
of whom is an Independent Trustee as defined above and is "independent" as
defined by NYSE listing standards. Mr. Nyberg serves as chairperson of the
Nominating and Governance Committee.
The Nominating and Governance Committee is governed by a written
charter, the most recent version of which was approved by the Board on April 16,
2009 (the "Nominating and Governance Committee Charter"). In accordance with
proxy rules promulgated by the SEC, a fund's nominating committee charter is
required to be filed at least once every three years as an exhibit to a fund's
proxy statement. The Fund's Nominating and Governance Committee Charter was
attached as Appendix B to the Fund's 2009 proxy statement.
The Nominating and Governance Committee (i) evaluates and recommends
all candidates for election or appointment as members of the Board and
recommends the appointment of members and chairs of each committee of the Board,
(ii) reviews policy matters affecting the operation of the Board and committees
of the Board, (iii) periodically evaluates the effectiveness of the Board and
committees of the Board and (iv) oversees the contract review process, including
review of the Fund's advisory agreements and other contracts with affiliated
service providers. In considering Trustee nominee candidates, the Nominating and
Governance Committee requires that Trustee candidates have a college degree or
equivalent business experience and may take into account a wide variety of
factors in considering Trustee candidates, including (but not limited to)
availability and commitment of a candidate to attend meetings and perform the
responsibilities of a Trustee, relevant experience, educational background,
financial expertise, the candidate's ability, judgment and expertise and overall
diversity of the Board's composition. The Nominating and Governance Committee
may consider candidates recommended by various sources, including (but not
limited to) such Fund's Trustees, officers, investment advisers and
shareholders. The Nominating and Governance Committee will not nominate a person
for election to the Board as a Trustee after such person has reached the age of
seventy-two (72), unless such person is an "interested person" of such Fund as
defined in the 1940 Act. The Nominating and Governance Committee may, but is not
required to, retain a third party search firm to identify potential candidates.
A Trustee candidate must (i) be prepared to submit written answers to a
questionnaire seeking professional and personal information that will assist the
Nominating and Governance Committee to evaluate the candidate and to determine,
among other matters, whether the candidate would qualify as a Trustee who is not
an "interested person" of the Fund as such term is defined under the 1940 Act;
(ii) be prepared to submit character references and agree to appropriate
background checks; and (iii) be prepared to meet with one or more members of the
Nominating and Governance Committee at a time and location convenient to those
Nominating and Governance Committee members in order to discuss the nominee's
qualifications.
The Nominating and Governance Committee will consider Trustee
candidates recommended by the Fund's shareholders. The Nominating and Governance
Committee will consider and evaluate Trustee nominee candidates properly
submitted by shareholders on the same basis as it considers and evaluates
candidates recommended by other sources.
In considering Trustee nominee candidates, the Nominating and
Governance Committee takes into account a wide variety of factors, including the
overall diversity of the Board's composition. The Nominating and Governance
Committee believes the Board generally benefits from diversity of background,
experience and views among its
10
members, and considers this a factor in evaluating the composition of the Board,
but has not adopted any specific policy in this regard.
To have a candidate considered by the Nominating and Governance
Committee, a shareholder must submit the recommendation in writing and must
include the information required by the "Procedures for Shareholders to Submit
Nominee Candidates" that are set forth as Appendix B to the Nominating and
Governance Committee Charter, which was attached as Appendix B to the Fund's
2009 Proxy Statement. Shareholder recommendations must be sent to the Fund's
Secretary, c/o Claymore Advisors, LLC, 2455 Corporate West Drive, Lisle,
Illinois 60532.
The nominees for election at the Annual Meeting currently serve as
Trustees and were unanimously nominated by the Board of Trustees and the
Nominating and Governance Committee.
BOARD'S ROLE IN RISK OVERSIGHT
Consistent with its responsibility for oversight of the Fund, the
Board, among other things, oversees risk management of the Fund's investment
program and business affairs directly and through the committee structure it has
established. The Board has established the Audit Committee and the Nominating
and Governance Committee to assist in its oversight functions, including its
oversight of the risks the Fund faces. Each committee reports its activities to
the Board on a regular basis. Risks to the Fund include, among others,
investment risk, credit risk, liquidity risk, valuation risk and operational
risk, as well as the overall business risk relating to the Fund. The Board has
adopted, and periodically reviews, policies, procedures and controls designed to
address these different types of risks. Under the Board's supervision, the
officers of the Fund, the Adviser, the Sub-Adviser and other service providers
to the Fund also have implemented a variety of processes, procedures and
controls to address various risks. In addition, as part of the Board's periodic
review of the Fund's advisory, sub-advisory and other service provider
agreements, the Board may consider risk management aspects of the service
providers' operations and the functions for which they are responsible.
The Board requires officers of the Fund to report to the full Board on
a variety of matters at regular and special meetings of the Board and its
committees, as applicable, including matters relating to risk management. The
Audit Committee also receives reports from the Fund's independent registered
public accounting firm on internal control and financial reporting matters. On
at least a quarterly basis, the Board meets with the Fund's Chief Compliance
Officer, including separate meetings with the Independent Trustees in executive
session, to discuss compliance matters and, on at least an annual basis,
receives a report from the Chief Compliance Officer regarding the effectiveness
of the Fund's compliance program. The Board, with the assistance of Fund
management, reviews investment policies and risks in connection with its review
of the Fund's performance. In addition, the Board receives reports from the
Adviser and Sub-Adviser on the investments and securities trading of the Fund.
With respect to valuation, the Board oversees a pricing committee comprised of
Fund officers and Adviser personnel and has approved Fair Valuation procedures
applicable to valuing the Fund's securities, which the Board and the Audit
Committee periodically review. The Board also requires the Adviser to report to
the Board on other matters relating to risk management on a regular and
as-needed basis.
SHAREHOLDER COMMUNICATIONS
Shareholders and other interested parties may contact the Board or any
Trustee by mail. To communicate with the Board or any Trustee, correspondence
should be addressed to the Board of Trustees or the Trustee with whom you wish
to communicate by either name or title. All such correspondence should be sent
c/o the Fund's Secretary, c/o Claymore Advisors, LLC, 2455 Corporate West Drive,
Lisle, Illinois 60532.
11
TRUSTEE BENEFICIAL OWNERSHIP OF SECURITIES
As of March 23, 2010, each Trustee beneficially owned equity securities
of the Fund and other funds in the Fund Complex overseen by the Trustee in the
dollar range amounts as specified below:
AGGREGATE DOLLAR RANGE OF
DOLLAR RANGE OF EQUITY EQUITY SECURITIES OVERSEEN BY
NAME OF TRUSTEE SECURITIES IN THE FUND TRUSTEE IN THE FUND COMPLEX
--------------- ---------------------- ---------------------------
Independent Trustees:
Randall C. Barnes [$10,001-$50,000] [Over $100,000]
Steven D. Cosler [$10,001-$50,000] [$10,001-$50,000]
Robert M. Hamje [$10,001-$50,000] [$10,001-$50,000]
L. Kent Moore [Over $100,000] [Over $100,000]
Ronald A. Nyberg [$1-$10,000] [Over $100,000]
Ronald E. Toupin, Jr. [None] [None]
Interested Trustees:
Matthew Appelstein [None] [None]
As of March 23, 2010, each Trustee and the Trustees and officers of the
Fund as a group owned [less than 1%] of each class of outstanding Shares of the
Fund.
BOARD MEETINGS
During the Fund's fiscal year ended December 31, 2009, the Board held 7
meetings, the Audit Committee held 3 meetings and the Nominating and Governance
Committee held 5 meetings.
Each Trustee attended [at least 75%] of the meetings of the Board (and
any committee thereof on which he serves) held during the Fund's fiscal year
ended December 31, 2009. It is the Fund's policy to encourage Trustees to attend
annual meetings of shareholders.
TRUSTEE COMPENSATION
The Fund pays an annual retainer and fee per meeting attended to each
Trustee who is not affiliated with the Adviser, a Sub-Adviser or their
respective affiliates and pays an additional annual fee to the chairman of the
Board and the chairman of any committee of the Board. The following table
provides information regarding the compensation of the Fund's Trustees for the
Fund's fiscal year ended December 31, 2009. The Fund does not accrue or pay
retirement or pension benefits to Trustees as of the date of this proxy
statement.
COMPENSATION TOTAL COMPENSATION
NAME OF TRUSTEE(1) FROM THE FUND FROM THE FUND COMPLEX
------------------ --------------------
Randall C. Barnes $27,000 $251,750
Steven D. Cosler $24,000 $48,000
Robert M. Hamje $24,000 $47,000
L. Kent Moore $25,500 $50,000
Ronald A. Nyberg $27,000 $357,875
Ronald E. Toupin, Jr. $30,000 $301,375
---------------------
(1) Trustees not eligible for compensation are not included in the
above table.
ADDITIONAL INFORMATION ABOUT THE SOLICITATION
At the Annual Meeting, shareholders will elect one Trustee as a Class
III Trustee by holders of Preferred Shares voting as a separate class and one
Trustee as a Class III Trustee by holders of Common Shares and Preferred
12
Shares voting as a single class, each to serve until the Fund's 2013 annual
meeting of shareholders or until their respective successors shall have been
elected and qualified.
The Nominating and Governance Committee unanimously determined to
recommend the nomination of Mr. Steven D. Cosler, who has served as a Trustee of
the Fund since 2005, and Mr. Ronald E. Toupin, Jr., who has served as a Trustee
of the Fund since the commencement of the Fund's operations in 2004, for
re-election as Class III Trustees. The Board received and reviewed the
recommendation of the Nominating and Governance Committee and unanimously
determined to nominate Mr. Cosler and Mr. Toupin for re-election as Class III
Trustees.
On April 26, 2010, the Fund received a communication from Western
Investment LLC ("Western") notifying the Fund of its intent to nominate
candidates for election as Class III Trustees at the Annual Meeting. The Board
and the Nominating and Governance Committee reviewed the communication received
from Western, including information regarding the qualifications of the proposed
candidates. The Nominating and Governance Committee and the Board continue to
support the nomination of Mr. Cosler and Mr. Toupin and unanimously recommend
that all shareholders vote "FOR" the election of Mr. Cosler as a Class III
Trustee and that holders of Preferred Shares vote "FOR" the election of Mr.
Toupin as a Class III Trustee on the enclosed [White Proxy Card].
You may receive solicitation materials from Western seeking your proxy
to vote for its trustee nominees. THE BOARD STRONGLY URGES YOU NOT TO VOTE FOR
ANY TRUSTEE NOMINEE PUT FORWARD BY WESTERN OR ANY SHAREHOLDER AND NOT TO SIGN OR
RETURN ANY PROXY CARD THAT MAY BE SENT TO YOU BY WESTERN OR ANY SHAREHOLDER.
Appendix A to this Proxy Statement sets forth certain information
relating to the Fund's Trustees, executive officers and certain other persons
who may be deemed to be "participants" in the solicitation of proxies.
SHAREHOLDER APPROVAL
With respect to Proposal 1(a), the affirmative vote of a majority of
the Shares present in person or represented by proxy and entitled to vote on the
matter at the Annual Meeting at which a quorum is present is necessary to elect
a Trustee nominee. The holders of Common Shares and the holders of Preferred
Shares will have equal voting rights (i.e. one vote per Share) and will vote
together as a single class with respect to Proposal 1(a). Votes withheld will
have the same effect as votes against Proposal 1(a). Votes withheld will have
the same effect as votes against Proposal 1(a). "Broker non-votes" (i.e. Shares
held by brokers or nominees as to which (i) instructions have not been received
from the beneficial owner or the persons entitled to vote and (ii) the broker
does not have discretionary voting power on a particular matter) will have no
effect on the outcome of the vote on Proposal 1.
With respect to Proposal 1(b), the affirmative vote of a majority of
the Preferred Shares present in person or represented by proxy at the Annual
Meeting at which a quorum is present is necessary to approve the proposal. The
holders of Preferred Shares will have equal voting rights (i.e. one vote per
Share) and will vote as a separate class with respect to Proposal 1(b). Votes
withheld and broker non-votes will have the same effect as votes against
Proposal 1(b).
BOARD RECOMMENDATION
With respect to Proposal 1(a), the Board, including the Independent
Trustees, unanimously recommends that shareholders vote "FOR" the nominee of the
Board (Mr. Steven D. Cosler). With respect to Proposal 1(b), the Board,
including the Independent Trustees, unanimously recommends that holders of
Preferred Shares vote "FOR" the nominee of the Board (Mr. Ronald E. Toupin,
Jr.). The Board strongly urges you not to vote for any trustee nominee put
forward by a shareholder.
13
PROPOSAL 2: SHAREHOLDER PROPOSAL
A beneficial owner of Common Shares of the Fund (the "proponent") has
informed the Fund that it intends to present a proposal for action at the
Meeting. The proponent's name and address and the number of shares owned by the
proponent will be furnished by the Secretary of the Fund upon request. In
accordance with SEC regulations, the Fund is including the following shareholder
proposal plus any supporting statement exactly as submitted by the proponent.
PROPOSAL:
RESOLVED, that the shareholders of TS&W / Claymore
Tax-Advantaged Balanced Fund ("TYW") hereby request that the
Board of Trustees of TYW (the "Board") take the necessary
steps to declassify the Board so that all trustees are elected
on an annual basis. Such declassification shall be completed
in a manner that does not affect the unexpired terms of the
previously elected trustees.
SUPPORTING STATEMENT:
We believe the annual election of all trustees encourages
board accountability to its shareholder constituents. This view is
shared by many others, and we believe is generally held to be the
standard for corporate governance best practices. In fact, Glass, Lewis
& Co. and Risk Metrics Group, two of the leading proxy advisory firms,
and The Council of Institutional Investors, a nonprofit association of
public, union and corporate pension funds with combined assets that
exceed $3 trillion, all recommend that all members of the board be
elected annually.
Currently, the Board is divided into three classes serving
staggered three-year terms. It is our belief that the classification of
the Board is strong proof the Board is not acting in the best interests
of shareholders. A classified board protects the incumbents, which in
turn dilutes the voice of shareholders and limits board accountability
to shareholders.
IN THIS DIFFICULT MARKET AND ECONOMIC ENVIRONMENT,
ACCOUNTABILITY FOR PERFORMANCE MUST BE GIVEN TO THE SHAREHOLDERS WHOSE
CAPITAL HAS BEEN ENTRUSTED IN THE FORM OF SHARE INVESTMENTS IN TYW.
Under this Board, TYW has:
o TRADED AT AN EXCESSIVE DISCOUNT TO NET ASSET VALUE ("NAV").
TYW's shares have traded at a persistent and excessive
discount to its per share NAV, frequently over 12% during the
past two years, bottoming out at an incredible 31.8% discount
to NAV on October 10, 2008.
o MAINTAINED EXCESSIVE LEVERAGE. TYW has suffered large losses
due, in part, to high leverage. This decision to incur
leverage further hurt shareholders through increased
management fees.
o FAILED TO CONDUCT ACCRETIVE SHARE REPURCHASES. This Board has
failed to conduct repurchases of TYW's common stock, which
would have been accretive to NAV and earnings per share, to
address the double-digit discount to NAV at which TYW has
consistently traded.
WE BELIEVE THIS BOARD'S ACTIONS ARE CONSISTENT WITH MAXIMIZING
MANAGEMENT FEES RATHER THAN SHAREHOLDER VALUE. Enacting this proposal
would provide shareholders with the opportunity to annually evaluate
and weed out ineffective trustees, which would, we believe, keep the
Board focused on maximizing shareholder value, its true responsibility.
For a greater voice in the corporate governance of TYW and to
increase the accountability of the Board to shareholders, we urge you
to vote FOR this proposal to declassify the Board.
14
STATEMENT OF THE BOARD IN OPPOSITION TO THE SHAREHOLDER PROPOSAL (PROPOSAL 2)
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY RECOMMENDS THAT YOU
VOTE AGAINST PROPOSAL 2.
After careful consideration, the Board has determined that it is in the
best interests of the Fund and its shareholders to maintain a classified board.
The Board believes that adopting the proposal would not be in the best interests
of the Fund's shareholders.
As stated in the Fund's prospectus in its initial public offering,
common shares of the Fund are designed primarily for long-term investors seeking
to achieve the Fund's investment objectives, and the Fund should not be viewed
as a vehicle for trading purposes. Since the Fund's inception, the Board has
been cognizant of seeking to protect the long-term interests of all shareholders
of the Fund. The Board does not believe that a staggered board is in any way
indicative that the Board is not acting in the best interest of shareholders.
Six of the seven current trustees of the Fund are independent from Fund
management. The Board believes that the current trustees have deep governance
experience in the mutual fund industry, top-shelf business and investment
experience, commitment to acting in the best interests of shareholders, and a
track record of seeking to protect the long-term interests of all shareholders
of the Fund. The Board continues to evaluate various options to maximize
long-term value for all shareholders of the Fund, but does not believe that the
proposal would achieve this objective.
The Board believes that the following factors support the conclusion
that maintaining a classified board would be in the best interests of the Fund's
shareholders:
THE CURRENT METHOD OF ELECTING TRUSTEES FOR STAGGERED TERMS PROVIDES
CONTINUITY AND STABILITY IN THE SUPERVISION OF MANAGEMENT OF THE BUSINESS AND
AFFAIRS OF THE FUND. A classified board promotes continuity of experience and an
orderly succession of trustees, which in turn, increases the stability of the
Fund and encourages long-term perspective. It ensures that a majority of
trustees at any given time will have prior experience with and in-depth
knowledge of the Fund, its service providers and its objectives, policies and
strategies, and will be positioned to make decisions that are best for the Fund
and its shareholders. Specifically, the Board believes that a classified board:
o creates a more experienced Board that is better able to
identify and accomplish long-term goals in supervising
management of the Fund;
o enhances the independence of Independent Trustees by providing
them with an assured three year term of office rather than
just a one year term;
o strengthens the Fund's ability to attract and retain highly
qualified trustees who are willing to make a multi-year
commitment to the Fund and its shareholders and to develop a
deep understanding of the Fund;
o allows new trustees an opportunity to gain knowledge about the
Fund from continuing trustees; and
o helps to prevent abrupt changes in the Fund based on
short-term objectives and the special interests of a select
group of shareholders who might seek to implement an agenda
contrary to the long-term interests of all shareholders.
A critical component of a closed-end fund board's oversight
responsibility is to protect the Fund's shareholders against potential conflicts
of interest between the Fund and its service providers, which the Fund relies
upon to carry out the Fund's day-to-day operations. The continuity provided by a
classified board helps to ensure that the Board has the necessary knowledge and
familiarity of the Fund's relationship with its service providers to ensure that
the Board can properly focus on the performance of these entities under their
respective contracts and monitor potential conflicts of interest that can arise
between the Fund and its service providers.
THE BENEFITS OF A CLASSIFIED BOARD STRUCTURE DO NOT COME AT THE COST OF
TRUSTEES' ACCOUNTABILITY TO SHAREHOLDERS. The Fund's trustees' interests are
specifically aligned with shareholders' interests through the fiduciary duty
owed by board members to act in shareholders' best interests. All trustees are
required by law to uphold their fiduciary duties to the Fund and its
shareholders, regardless of the length of their term of office. The Board
believes that a classified board in no way diminishes trustees' responsibilities
and accountability to shareholders. Further, the Board believes that a
classified board is not inconsistent with good corporate governance. Instead,
the
15
Board believes that good corporate governance depends primarily upon active and
independent trustees who are experts in their fields, knowledgeable about
critical aspects of the Fund's operations and skillful in serving as competent,
alert overseers of Fund management.
IMPLEMENTATION OF THE PROPOSAL WILL REQUIRE FURTHER ACTION BY THE BOARD
AND SHAREHOLDERS. This shareholder proposal has been cast as a recommendation.
The classified board structure is set forth in the Fund's Declaration of Trust,
and declassification could only occur through an amendment to the Declaration of
Trust. In order to declassify the Fund's Board, an amendment to the applicable
provisions of the Declaration of Trust would need to be approved first by a
majority of the trustees and then by the affirmative vote of the holders of not
less than seventy-five percent (75%) of the Shares outstanding, voting as
separate classes or series, or if such amendment has been approved by 80% of the
Trustees, by the lesser of the vote of (i) 67% or more of the outstanding voting
securities of the Fund entitled to vote thereon present at the Annual Meeting or
represented by proxy if holders of more than 50% of the Fund's outstanding
voting securities are present or represented by proxy; or (ii) more than 50% of
the outstanding voting securities of the Fund entitled to vote thereon. Seeking
and obtaining approval by the shareholders, if not at an annual meeting, would
be expensive and would result in some delay in effecting the amendment. The
costs of obtaining such approval of shareholders would be an expense of the Fund
which would be borne by all shareholders.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY RECOMMENDS
THAT YOU VOTE AGAINST PROPOSAL 2.
16
ADDITIONAL INFORMATION
FURTHER INFORMATION ABOUT VOTING AND THE ANNUAL MEETING
The holders of a majority of the Shares entitled to vote on any matter
at a meeting present in person or by proxy shall constitute a quorum at such
meeting of the shareholders for purposes of conducting business on such matter.
Votes withheld and broker non-votes will be counted as Shares present at the
Annual Meeting for quorum purposes.
The Board has fixed the close of business on March 23, 2010 as the
Record Date for the determination of shareholders of the Fund entitled to notice
of, and to vote at, the Annual Meeting. Shareholders of the Fund as of the close
of business on the Record Date will be entitled to one vote on each matter to be
voted on by the Fund for each Share held and a fractional vote with respect to
fractional Shares with no cumulative voting rights.
Whether or not you plan to attend the Annual Meeting, we urge you to
complete, sign, date, and return the enclosed [White Proxy Card] in the
postage-paid envelope provided or vote your proxy via telephone or the Internet
pursuant to the instructions on the enclosed [White Proxy Card] so your Shares
will be represented at the Annual Meeting. Information regarding how to vote via
telephone or the Internet is included on the enclosed [White Proxy Card]. The
required control number for Internet and telephone voting is printed on the
enclosed [White Proxy Card]. The control number is used to match proxy cards
with shareholders' respective accounts and to ensure that, if multiple proxy
cards are executed, Shares are voted in accordance with the proxy card bearing
the latest date. If you wish to attend the Annual Meeting and vote in person,
you will be able to do so. You may contact the Fund's proxy information line at
[o] to obtain directions to the site of the Annual Meeting.
All properly executed proxies received prior to the Annual Meeting will
be voted at the Annual Meeting in accordance with the instructions marked
thereon or otherwise as provided therein. IF NO SPECIFICATION IS MADE ON A PROXY
CARD, IT WILL BE VOTED IN ACCORDANCE WITH THE BOARD'S RECOMMENDATIONS.
Shareholders who execute proxies may revoke them at any time before
they are voted by filing with the Secretary of the Fund a written notice of
revocation, by delivering a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person. Merely attending the Annual
Meeting, however, will not revoke any previously submitted proxy.
Broker-dealer firms holding Shares in "street name" for the benefit of
their customers and clients will request the instructions of such customers and
clients on how to vote their Shares on the Proposals. Under current
interpretations of the New York Stock Exchange (the "NYSE"), broker-dealers that
are members of the NYSE and that have not received instructions from a customer
may not vote such customer's Shares on Proposal 1. Broker-dealers who are not
members of the NYSE may be subject to other rules, which may or may not permit
them to vote your shares without instruction. Therefore, you are encouraged to
contact your broker and record your voting instructions.
THE BOARD STRONGLY URGES YOU NOT TO SIGN OR RETURN ANY PROXY CARD THAT
MAY BE SENT TO YOU BY WESTERN OR ANY SHAREHOLDER. If you have previously
returned a proxy card sent to you by Western or any shareholder, you may change
your vote by completing, signing, dating and returning the enclosed [White Proxy
Card] in the postage-paid envelope provided or by recording your voting
instructions via telephone or the Internet pursuant to the instructions on the
enclosed [White Proxy Card].
If you hold Shares in more than one account, you will receive a [White
Proxy Card] for each account. To ensure that all of your Shares are voted,
please sign, date and return the [White Proxy Card] for each account. To ensure
shareholders have the Fund's latest proxy information and material to vote, the
Board may conduct additional mailings prior to the date of the Annual Meeting,
each of which will include a [White Proxy Card] regardless of whether you have
previously voted. Only your latest dated proxy card will be counted.
17
ADVISER AND SUB-ADVISERS
Claymore Advisors, LLC, located at 2455 Corporate West Drive, Lisle,
Illinois 60532, acts as the Fund's investment adviser. As of March 31, 2010,
Claymore entities have provided supervision, management and/or servicing on
approximately $15.9 billion in assets through closed-end funds, unit investment
trusts and exchange-traded funds. Claymore Advisors, LLC is a wholly-owned
subsidiary of Guggenheim Partners, LLC, a global, diversified financial services
firm with more than $100 billion in assets under supervision. Guggenheim,
through its affiliates, provides investment management, investment advisory,
insurance, investment banking, and capital markets services. The firm is
headquartered in Chicago and New York with a global network of offices
throughout the United States, Europe, and Asia.
SMC Fixed Income Management, LP acts as the Fund's investment
sub-adviser and is responsible for the day-to-day management of the Fund's
portfolio of municipal securities. SMC is an affiliate of Spring Mountain
Capital, LP, with its principal offices at 3 Independence Way, Suite 205,
Princeton, New Jersey 08540. Spring Mountain is an investment management firm
founded in July 2001 specializing in alternative investments and advisory
services for both broad asset allocation and/or focused portfolios. As of [o],
2010, Spring Mountain managed approximately $[o] billion in total assets.
Thompson, Siegel & Walmsley LLC acts as the Fund's investment
sub-adviser and is responsible for the day-to-day management of the Fund's
portfolio of equity and income securities. As of December 31, 2009, TS&W managed
approximately $7.4 billion in total assets. TS&W is located at 6806 Paragon
Place, Suite 300, Richmond, Virginia 23230. TS&W is a subsidiary of Old Mutual
(US) Holdings Inc., a wholly-owned subsidiary of Old Mutual plc, a London-based,
multi-national financial services firm. As of December 31, 2009, Old Mutual plc
and its affiliates had approximately (pound)285 billion of assets under
management. Old Mutual plc is a FTSE 100 listed company operating in 34
countries.
ADMINISTRATOR
Claymore Advisors, LLC, located at 2455 Corporate West Drive, Lisle,
Illinois 60532, serves as the Fund's administrator.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP ("E&Y") has been selected as the independent
registered public accounting firm for the Fund by the Audit Committee of the
Fund and approved by a majority of the Fund's Board, including a majority of the
Independent Trustees, to audit the accounts of the Fund for and during the
Fund's current fiscal year. The Fund does not know of any direct or indirect
financial interest of E&Y in the Fund.
Representatives of E&Y will be available to attend the Annual Meeting,
will have the opportunity to make a statement if they desire to do so and will
be available to answer questions if necessary.
AUDIT FEES
The aggregate fees billed to the Fund by E&Y for professional services
rendered for the audit of the Fund's annual financial statements for the Fund's
fiscal year ended December 31, 2009 were approximately $40,500 and for the
Fund's fiscal year ended December 31, 2008 were approximately $40,500.
AUDIT-RELATED FEES
The aggregate fees billed by E&Y and approved by the Audit Committee of
the Fund for assurance and related services reasonably related to the
performance of the audit of the Fund's annual financial statements (such fees
relate to services rendered, and out of pocket expenses incurred, in connection
with the Fund's registration statements, comfort letters and consents) for the
Fund's fiscal year ended December 31, 2009 were approximately $6,300 and for the
Fund's fiscal year ended December 31, 2008 were approximately $6,300. E&Y did
not perform any other
18
assurance and related services that were required to be approved by the Fund's
Audit Committee for such periods.
TAX FEES
The aggregate fees billed by E&Y and approved by the Audit Committee of
the Fund for professional services rendered for tax compliance, tax advice, and
tax planning (such fees relate to tax services provided by E&Y in connection
with the Fund's excise tax calculations and review of the Fund's tax returns)
for the Fund's fiscal year ended December 31, 2009 were approximately $6,000 and
for the Fund's fiscal year ended December 31, 2008 were approximately $6,000.
E&Y did not perform any other tax compliance or tax planning services or render
any tax advice that were required to be approved by the Fund's Audit Committee
for such periods.
ALL OTHER FEES
Other than those services described above, E&Y did not perform any
other services on behalf of the Fund for the Fund's fiscal year ended December
31, 2008 and for the Fund's fiscal year ended December 31, 2007.
AGGREGATE NON-AUDIT FEES
The aggregate non-audit fees billed by E&Y for services rendered to the
Fund, the Adviser and any entity controlling, controlled by or under common
control with the Adviser that provides ongoing services to the Fund (not
including a sub-adviser whose primary role is portfolio management and is
sub-contracted with or overseen by another investment adviser) that directly
related to the operations and financial reporting of the Fund for the Fund's
fiscal year ended December 31, 2009 were approximately $12,300 and for the
Fund's fiscal year ended December 31, 2008 were approximately $12,300.
AUDIT COMMITTEE'S PRE-APPROVAL POLICIES AND PROCEDURES
As noted above, the Audit Committee is governed by the Audit Committee
Charter, which is attached as Appendix B hereto, which includes Pre-Approval
Policies and Procedures in Section IV of such Charter. Specifically, sections
IV.C.2 and IV.C.3 of the Audit Committee Charter contain the Pre-Approval
Policies and Procedures and such sections are included below.
IV.C.2. Pre-approve any engagement of the independent auditors to
provide any non-prohibited services to the Trust, including
the fees and other compensation to be paid to the independent
auditors (unless an exception is available under Rule 2-01 of
Regulation S-X).
(a) The Chairman or any member of the Audit Committee may
grant the pre-approval of services to the Fund for
non-prohibited services up to $10,000. All such
delegated pre-approvals shall be presented to the
Audit Committee no later than the next Audit
Committee meeting.
IV.C.3. Pre-approve any engagement of the independent auditors,
including the fees and other compensation to be paid to the
independent auditors, to provide any nonaudit services to the
Adviser (or any "control affiliate" of the Adviser providing
ongoing services to the Trust), if the engagement relates
directly to the operations and financial reporting of the
Trust (unless an exception is available under Rule 2-01 of
Regulation S-X).
(a) The Chairman or any member of the Audit Committee may
grant the pre-approval for non-audit services to the
Adviser up to $10,000. All such delegated
pre-approvals shall be presented to the Audit
Committee no later than the next Audit Committee
meeting.
The Audit Committee has pre-approved all audit and non-audit services
provided by E&Y to the Fund, and all non-audit services provided by E&Y to the
Adviser, or any entity controlling, controlled by, or under common control with
the Adviser that provides ongoing services to the Fund that are related to the
operations of the Fund for
19
the fiscal years ended December 31, 2009 and December 31, 2008.
None of the services described above for the Fund's fiscal years ended
December 31, 2009 and December 31, 2008 were approved by the Audit Committee
pursuant to the pre-approval exception under Rule 2-01(c)(7)(i)(C) of Regulation
S-X promulgated by the SEC.
PRINCIPAL SHAREHOLDERS
As of the Record Date, to the knowledge of the Fund, no person
beneficially owned more than 5% of the voting securities of any class of
securities of the Fund, except as listed below:
SHAREHOLDER NAME AND ADDRESS CLASS OF SHARES SHARE HOLDINGS PERCENTAGE OWNED
Western/Benchmark Group(1) Common 903,612 5.8%
Western Investments, LLC
7050 S. Union Park Center, Suite 590
Midvale, Utah 84047
Benchmark Plus Management, L.L.C.
820 A Street, Suite 700
Tacoma, Washington 98402
Merrill Lynch & Co., Inc.(2) Preferred 1,382 [o]%
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center
New York, New York 10080
(1) Based on information obtained from a Schedule 13D filed with the
SEC on February 18, 2010.
(2) Based on information obtained from a Form 3 filed with the SEC on
January 12, 2009.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Section 30(h) of the 1940 Act require the Fund's officers
and Trustees, certain officers of the Fund's investment adviser, affiliated
persons of the Fund's investment adviser, and persons who beneficially own more
than ten percent of the Fund's Shares to file certain reports of ownership
("Section 16 filings") with the SEC and the New York Stock Exchange. Based upon
the Fund's review of the copies of such forms effecting the Section 16 filings
received by it, the Fund believes that for the Fund's fiscal year ended December
31, 2009, all filings applicable to such persons were completed and filed in a
timely manner, except as follows: [insert, if any].
PRIVACY PRINCIPLES OF THE FUND
The Fund is committed to maintaining the privacy of 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).
20
The Fund restricts access to non-public personal information about its
shareholders to employees of the Adviser 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.
DEADLINE FOR SHAREHOLDER PROPOSALS
The Fund's Amended and Restated By-Laws (the "By-Laws") require
compliance with certain procedures for a shareholder to properly make a
nomination for election as a Trustee or to propose other business for the Fund.
If a shareholder who is entitled to do so under the Fund's By-Laws wishes to
nominate a person or persons for election as a Trustee or propose other business
for the Fund, that shareholder must provide a written notice to the Secretary of
the Fund at the Fund's principal executive offices.
The notice must set forth: (a) as to each person whom the shareholder
proposes to nominate for election as a Trustee (i) all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of Trustees in an election contest, or is otherwise required, in each
case pursuant to and in accordance with Regulation 14A under the Exchange Act
and (ii) such person's written consent to being named as a nominee and to
serving as a Trustee if elected; (b) as to any other business that the
shareholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the text of the proposal or
business (including the text of any resolutions proposed for consideration), the
reasons for conducting such business at the meeting and any material interest in
such business of such shareholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the shareholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is made
(i) the name and address of such shareholder, as they appear on the Fund's
books, and of such beneficial owner, (ii) the class or series and number of
Shares which are owned beneficially and of record by such shareholder and such
beneficial owner, (iii) a description of any agreement, arrangement or
understanding with respect to the nomination or proposal between or among such
shareholder and such beneficial owner, any of their respective affiliates or
associates, and any others acting in concert with any of the foregoing, (iv) a
description of any agreement, arrangement or understanding (including any
derivative or short positions, profit interests, options, warrants, stock
appreciation or similar rights, hedging transactions, and borrowed or loaned
Shares) that has been entered into as of the date of the shareholder's notice
by, or on behalf of, such shareholder and such beneficial owners, the effect or
intent of which is to mitigate loss to, manage risk or benefit of share price
changes for, or increase or decrease the voting power of, such shareholder or
such beneficial owner, with respect to Shares of the Fund, (v) a representation
that the shareholder is a holder of record of Shares of the Fund entitled to
vote at such meeting and intends to appear in person or by proxy at the meeting
to propose such business or nomination, and (vi) a representation whether the
shareholder or the beneficial owner, if any, intends or is part of a group which
intends (a) to deliver a proxy statement and/or form of proxy to holders of at
least the percentage of the Fund's outstanding Shares required to approve or
adopt the proposal or elect the nominee and/or (b) otherwise to solicit proxies
from shareholders in support of such proposal or nomination. The Fund may
require any proposed nominee to furnish such other information as it may
reasonably require to determine the eligibility of such proposed nominee to
serve as a Trustee of the Fund.
To be timely, the notice must be delivered to the Secretary of the Fund
at the Fund's principal executive offices not later than the close of business
on the ninetieth (90th) day, nor earlier than the close of business on the one
hundred twentieth (120th) day, prior to the first anniversary of the preceding
year's annual meeting (provided, however, that in the event that the date of the
annual meeting is more than thirty (30) days before or more than seventy (70)
days after such anniversary date, notice by the shareholder must be so delivered
not earlier than the close of business on the one hundred twentieth (120th) day
prior to such annual meeting and not later than the close of business on the
later of the ninetieth (90th) day prior to such annual meeting or the tenth
(10th) day following the day on which public announcement of the date of such
meeting is first made by the Fund).
The foregoing description of the procedures for a shareholder properly
to make a nomination for election as a Trustee or to propose other business for
the Fund is only a summary and is not complete. A copy of the Fund's By-Laws,
which includes the provisions regarding the requirements for shareholder
nominations and proposals, may be obtained by writing to the Secretary of the
Fund at 2455 Corporate West Drive, Lisle, Illinois 60532. Any shareholder
considering making a nomination or other proposal should carefully review and
comply with those provisions of the Fund's By-Laws.
21
Shareholder proposals intended for inclusion in the Fund's proxy
statement in connection with such annual meeting of shareholders pursuant to
Rule 14a-8 under the Exchange Act must be received by the Fund at the Fund's
principal executive offices by [o], 2011. Proposals made outside of Rule 14a-8
under the Exchange Act must be submitted, in accordance with the notice
requirements of the Fund's By-Laws, not earlier than the close of business on
[o], 2011 nor later than the close of business on [o], 2011 (which is also the
date after which shareholder nominations and proposals made outside of Rule
14a-8 under the Exchange Act would not be considered "timely" within the meaning
of Rule 14a-4(c) under the Exchange Act).
EXPENSES OF PROXY SOLICITATION
As a result of the potential proxy solicitation by Western, the Fund
may incur additional costs in connection with its solicitation of proxies. The
cost of soliciting proxies will be borne by the Fund. The Fund estimates that
the total expenditures relating to the Fund's proxy solicitation (other than
salaries and wages of officers and employees of the Fund) will be approximately
$[o], of which approximately $[o] has been incurred as of the date hereof.
Certain officers of the Fund and certain officers and employees of Claymore or
its affiliates (none of whom will receive additional compensation therefore),
may solicit proxies by telephone, mail, e-mail and personal interviews.
Brokerage houses, banks and other fiduciaries may be requested to forward proxy
solicitation material to their principals to obtain authorization for the
execution of proxies, and will be reimbursed by the Fund for such out-of-pocket
expenses. The Fund has retained [o] as its proxy solicitor and will pay a
project management fee as well as fees charged on a per call basis and certain
other expenses. [Disclose any indemnification of proxy solicitor] [o] has
advised the Fund that approximately [o] of its employees will be involved in the
solicitation of proxies by [o] on behalf of the Fund. Management of the Fund
estimates that the fees payable to [o] by the Fund will be approximately $[o].
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL
MEETING TO BE HELD ON JULY 19, 2010
This Proxy Statement is available on the Internet at [o ].
OTHER MATTERS
The management of the Fund knows of no other matters which are to be
brought before the Annual Meeting. However, if any other matters not now known
properly come before the Annual Meeting, it is the intention of the persons
named in the enclosed form of proxy to vote such proxy in accordance with their
judgment on such matters.
In the event a quorum is present at the Annual Meeting but sufficient
votes to approve any of the Proposals are not received, proxies (including
broker non-votes) would vote in favor of one or more adjournments of the Annual
Meeting with respect to such Proposal(s) to permit further solicitation of
proxies, provided they determine that such an adjournment and additional
solicitation is reasonable and in the interest of shareholders based on a
consideration of all relevant factors, including the nature of the relevant
proposal, the percentage of votes then cast, the percentage of negative votes
then cast, the nature of the proposed solicitation activities and the nature of
the reasons for such further solicitation.
Very truly yours,
/s/ J. Thomas Futrell
J. THOMAS FUTRELL
CHIEF EXECUTIVE OFFICER
June [o], 2010
22
APPENDIX A
INFORMATION CONCERNING PARTICIPANTS IN THE SOLICITATION
Under applicable SEC rules and regulations, members of the Board, the
Board's nominees, and certain executive officers of the Fund may be deemed to be
"participants" with respect to the Fund's solicitation of proxies in connection
with the Annual Meeting. The following sets forth certain information about the
persons who may be deemed to be "participants."
TRUSTEES AND NOMINEES
The following sets forth the names of the Fund's Trustees and nominees
who may be deemed to be "participants." The principal occupations or employment
of the Fund's Trustees and nominees are set forth under "The Proposals: Election
of Trustees -- Trustees" in this Proxy Statement. The principal business address
with respect to each Trustee's principal occupation or employment is set forth
below.
Matthew K. Appelstein 200 Clarendon Street, 53rd floor, Boston, Massachusetts 02116
Randall C. Barnes 2455 Corporate West Drive, Lisle, Illinois 60532
Steven D. Cosler 2455 Corporate West Drive, Lisle, Illinois 60532
Robert M. Hamje 2455 Corporate West Drive, Lisle, Illinois 60532
L. Kent Moore 5460 South Quebec Street, #230, Greenwood Village, Colorado 80111
Ronald A. Nyberg 1111 South Washington Street, Suite 100, Naperville, Illinois 60540
Ronald E. Toupin , Jr. 2455 Corporate West Drive, Lisle, Illinois 60532
EXECUTIVE OFFICERS
The following sets forth the names of the Fund's executive officers who
may be deemed "participants." The principal occupation of the named executive
officers are set forth under "The Proposals: Election of Trustees - Officers" in
this Proxy Statement. The principal business address with respect to each
executive officer's principal occupation or employment is set forth below.
J. Thomas Futrell 2455 Corporate West Drive, Lisle, Illinois 60532
Kevin M. Robinson 2455 Corporate West Drive, Lisle, Illinois 60532
Steven M. Hill 2455 Corporate West Drive, Lisle, Illinois 60532
Bruce Saxon 2455 Corporate West Drive, Lisle, Illinois 60532
Vincent R. Giordano 3 Independence Way, Suite 205, Princeton, New Jersey 08540
George Gregorio 3 Independence Way, Suite 205, Princeton, New Jersey 08540
Robert W. Roffo 3 Independence Way, Suite 205, Princeton, New Jersey 08540
James Howley 2455 Corporate West Drive, Lisle, Illinois 60532
Donald P. Swade 2455 Corporate West Drive, Lisle, Illinois 60532
Mark J. Furjanic 2455 Corporate West Drive, Lisle, Illinois 60532
Mark E. Mathiasen 2455 Corporate West Drive, Lisle, Illinois 60532
Melissa Nguyen 2455 Corporate West Drive, Lisle, Illinois 60532
Elizabeth H. Hudson 2455 Corporate West Drive, Lisle, Illinois 60532
A-1
INFORMATION REGARDING OWNERSHIP OF THE FUND'S SECURITIES BY PARTICIPANTS
Except as described in this Appendix A or this Proxy Statement, none of
the persons listed above under "Directors and Nominees" or "Executive Officers"
owns any securities of the Fund of record which such person not own
beneficially. The number of Shares beneficially owned by Trustees, trustee
nominees and the named officers as of March 23, 2010, is set forth below.
NAME SHARES OWNED
---- ------------
Randall C. Barnes [o]
Steven D. Cosler [o]
George Gregorio [o]
Vincent R. Giordano [o]
Robert M. Hamje [o]
L. Kent Moore [o]
Ronald A. Nyberg [o]
Robert W. Roffo [o]
INFORMATION REGARDING TRANSACTIONS IN THE FUND'S SECURITIES BY PARTICIPANTS
The following table sets forth purchases and sales during the past two
years of the Fund's securities by the persons listed above under "Trustees and
Nominees" and "Executive Officers," except for Common Shares acquired pursuant
to the Fund's dividend reinvestment plan. None of the purchase price or market
value of the securities listed below is represented by funds borrowed or
otherwise obtained for the purpose of acquiring or holding such securities.
SHARES OF PURCHASED OR SOLD (MARCH 23, 2008 THROUGH MARCH 23, 2010)
----------------------------------- ---------------------- ------------------ ------------------------------
NAME DATE # OF SHARES TRANSACTION DESCRIPTION
----------------------------------- ---------------------- ------------------ ------------------------------
Vincent R. Giordano............. October 7, 2008 6,500 Common Shares purchased
L. Kent Moore .................. September 12, 2008 6,000 Common Shares sold
September 26, 2008 5,000 Common Shares sold
December 3, 2008 4,000 Common Shares sold
Ronald A. Nyberg ............... May 1, 2008 650 Common Shares purchased
June 4, 2008 627 Common Shares sold
Roberto W. Roffo ............... October 24, 2008 447 Common Shares sold
MISCELLANEOUS INFORMATION CONCERNING PARTICIPANTS
Except as described in this Appendix A or this Proxy Statement, neither
any participant nor any of their respective associates or affiliates (together,
the "Participant Affiliates") is either a party to any transaction or series of
transactions since January 1, 2009, or has knowledge of any current proposed
transaction or series of proposed transactions, (i) to which the Fund or any of
its subsidiaries was or is to be a participant, (ii) in which the amount
involved exceeds $120,000, and (iii) in which any participant or Participant
Affiliate had, or will have, a direct or indirect material interest.
Furthermore, except as described in this Appendix A or this Proxy Statement, (a)
no participant or Participant Affiliate, directly or indirectly, beneficially
owns any securities of the Fund or any securities of any parent or subsidiary of
the Fund, and (b) no participant owns any securities of the Fund of record but
not beneficially.
Except as described in this Appendix A or this Proxy Statement, no
participant or Participant Affiliate has
A-2
entered into any agreement or understanding with any person with respect to any
future employment by the Fund or any of its affiliates or any future
transactions to which the Fund or any of its affiliates will or may be a party.
Except as described in this Annex A or this Proxy Statement, there are
no contracts, arrangements or understandings by any participant or Participant
Affiliate since January 1, 2009 with any person with respect to any securities
of the Fund, including, but not limited to, joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
division of losses or profits, or the giving or withholding of proxies. Except
as described in this Appendix A or this Proxy Statement, and excluding any
trustee or executive officer of the Fund acting solely in that capacity, no
person who is a party to an arrangement or understanding pursuant to which a
nominee for election as a Trustee is proposed to be elected has any substantial
interest, direct or indirect, by security holdings or otherwise, in any matter
to be acted upon at the Annual Meeting.
A-3
APPENDIX B
CLAYMORE FUNDS
AUDIT COMMITTEE CHARTER
I. PURPOSE
The Audit Committee is a committee of the Board of the Trust (see
Appendix A for a list of funds that have approved this Audit Committee Charter).
Its primary function is to assist the Board in fulfilling certain of its
responsibilities. This Charter sets forth the duties and responsibilities of the
Audit Committee.
The Audit Committee serves as an independent and objective party to
monitor the Trust's accounting policies, financial reporting and internal
control system, as well as the work of the independent auditors. The Audit
Committee assists Board oversight of (1) the integrity of the Trust's financial
statements; (2) the Trust's compliance with legal and regulatory requirements;
(3) the independent auditors' qualifications and independence; and (4) the
performance of the Trust's independent auditors. The Audit Committee also serves
to provide an open avenue of communication among the independent auditors, Trust
management, the personnel responsible for internal audit functions (if any) and
the Board.
o Trust management has the primary responsibility to
establish and maintain systems for accounting, reporting and
internal control.
o The independent auditors have the primary responsibility
to plan and implement a proper audit, including consideration of
the Trust's accounting, reporting and internal control practices.
The Audit Committee may have additional functions and responsibilities
as deemed appropriate by the Board and the Audit Committee.
Although the Audit Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Audit Committee to plan or
conduct audits or to determine that the Trust's financial statements are
complete and accurate and have been prepared in accordance with generally
accepted accounting principles.
II. COMPOSITION
The Audit Committee shall be comprised of three or more board members
as determined by the Board, each of whom shall be an independent board member,
and free from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment as a member of
the Audit Committee. For purposes of the Audit Committee, a board member is
independent if:
o he or she is not an "interested person" of the Trust as
that term is defined in the Investment Company Act of 1940; and
o he or she does not accept, directly or indirectly, any
consulting, advisory, or other compensatory fee from the Trust
(except in the capacity as a Board or committee member).
Each member of the Audit Committee shall be financially literate, as
such qualification is interpreted by the Board in its business judgment (or must
become financially literate within a reasonable time after his or her
appointment to the Audit Committee). The Audit Committee will review the
qualifications of its members and determine whether any of its members qualify
as an "audit committee financial expert" as defined in Form N-CSR. The Audit
Committee will submit such determination to the Board for its final
determination.
B-1
The members and Chairman of the Audit Committee shall be elected by the
Board annually and serve until their successors shall be duly elected and
qualified.
No member of the Audit Committee shall serve on the audit committee of
more than three public companies with shares registered under the Securities
Exchange Act of 1934, as amended, unless the Board determines that such
simultaneous service would not impair the ability of the Audit Committee member
to serve effectively on the Audit Committee. For purposes of counting an Audit
Committee member's audit committee service, service on the Trust's Audit
Committee, together with other audit committees within the Claymore fund
complex, shall count as one public company.
III. MEETINGS
The Audit Committee shall meet two times annually, or more frequently
as circumstances dictate. Special meetings (including telephone meetings) may be
called by the Chairman or a majority of the members of the Audit Committee upon
reasonable notice to the other members of the Audit Committee.
As part of its job to foster open communication, the Audit Committee
shall meet annually with senior Trust management responsible for accounting and
financial reporting and the independent auditors in separate executive sessions
to discuss any matters that the Audit Committee, or any of such other persons,
believes should be discussed privately.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
A. Charter
Review this Charter, annually, and recommend changes, if any, to
the Board.
B. Internal Controls
1. Review, annually, with Trust management and the independent
auditors:
(a) the organizational structure, reporting relationship,
adequacy of resources and qualifications of the senior Trust
management personnel responsible for accounting and financial
reporting; and
(b) their separate evaluation of the adequacy and effectiveness
of the Trust's system of internal controls, including those of the
Trust's service providers.
2. Review, with Trust management and the independent auditors:
(a) the Trust's plan related to the Trust's systems for
accounting, reporting and internal controls;
(b) the responsibilities, resources and staffing with respect
to the activities in IV.B.2.(a) above; and
(c) any significant audit findings or recommendations related
to the Trust's systems for accounting, reporting and internal
controls and Trust management's response.
3. Monitor procedures for the receipt, retention and treatment of
complaints received by the Trust and/or the Audit Committee regarding
accounting, internal accounting controls or auditing matters and the
confidential, anonymous submission by officers and trustees of the
Trust or employees of the Adviser,
B-2
underwriter and any provider of accounting-related services to the
Trust of concerns regarding questionable accounting or auditing
matters.
4. Review, annually, with Trust management and the independent
auditors, policies for valuation of Trust portfolio securities, and the
frequency and magnitude of pricing errors.
C. Independent Auditors
1. Approve, and recommend to the Board, the appointment, retention
or termination of the independent auditors, and approve the fees and
other compensation to be paid to the independent auditors. Such
selection shall be pursuant to a written engagement letter approved by
the Audit Committee.
2. Pre-approve any engagement of the independent auditors to
provide any non-prohibited services to the Trust, including the fees
and other compensation to be paid to the independent auditors (unless
an exception is available under Rule 2-01 of Regulation S-X).
(a) The Chairman or any member of the Audit Committee may grant
the pre-approval of services to the Fund for non-prohibited
services up to $10,000. All such delegated pre-approvals shall be
presented to the Audit Committee no later than the next Audit
Committee meeting.
3. Pre-approve any engagement of the independent auditors,
including the fees and other compensation to be paid to the independent
auditors, to provide any non-audit services to the Adviser (or any
"control affiliate" of the Adviser providing ongoing services to the
Trust), if the engagement relates directly to the operations and
financial reporting of the Trust (unless an exception is available
under Rule 2-01 of Regulation S-X).
(a) The Chairman or any member of the Audit Committee may grant
the pre-approval for non-audit services to the Adviser up to
$10,000. All such delegated pre-approvals shall be presented to
the Audit Committee no later than the next Audit Committee
meeting.
4. On an annual basis, request, receive in writing and review a
report by the independent auditors describing:
(a) the independent auditors' internal quality-control
procedures;
(b) any material issues raised by the most recent internal
quality-control review, or peer review, of the independent
auditors, or by any inquiry or investigations by governmental or
professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the
independent auditors, and any steps taken to deal with any such
issues; and
(c) all relationships between the independent auditors and the
Trust, so as to assess the auditors' independence, including
identification of all relationships the independent auditors have
with the Trust and all significant relationships the independent
auditors have with the Adviser (and any "control affiliate" of the
Adviser) and any material service provider to the Trust
(including, but not limited to, disclosures regarding the
independent auditors' independence required by Public Company
Accounting Oversight Board Rule 3526 and compliance with the
applicable independence provisions of Rule 2-01 of Regulation
S-X).
In assessing the auditors' independence, the Audit Committee
shall take into account the opinions of Trust management. The
Committee will present its conclusions with respect to the
independent auditors to the Board, and recommend that the Board
take appropriate action, if any, in response to the independent
auditors' report to satisfy itself of the independent auditors'
independence.
B-3
5. On an annual basis, review and evaluate the lead audit partner
(such review to include consideration of whether, in addition to the
regular rotation of the lead audit partner as required by law, in order
to assure continuing auditor independence, there should be regular
consideration of rotation of the firm serving as independent auditors).
6. On an annual basis, meet with the independent auditors and
Trust management to review the arrangements for and scope of the
proposed audit for the current year and the audit procedures to be
utilized.
7. Review the management letter prepared by the independent
auditors and Trust management's response.
D. Financial Reporting Processes
1. If the Trust is a listed closed-end investment company,
(a) Review with Trust management and the independent auditors,
(i) the Trust's audited financial statements and recommend to the
Board, if appropriate, that the audited financial statements be
included in the Trust's annual report to shareholders required by
Section 30(e) of the Investment Company Act of 1940 and Rule 30d-1
thereunder and (ii) narrative disclosure analogous to the
"Management's Discussion of Fund Performance," if any is included
in such annual report to shareholders.
(b) Review with Trust management and the independent auditors
the Trust's semi-annual financial statements and narrative
disclosure analogous to the "Management's Discussion of Fund
Performance," if any is included in such semi-annual report to
shareholders.
(c) Review the Trust's policy and procedures with respect to
declaring dividends and issuing dividend announcements and related
press releases, as well as financial information and dividend
guidance provided to analysts and rating agencies.
2. Review with Trust management and the independent auditors the
matters that auditing professional standards require to be communicated
to the Audit Committee, including, but not limited to, the matters
required to be discussed by Statement on Auditing Standards No. 114,
including:
o the independent auditors' judgments about the quality, and
not just the acceptability, of the Trust's accounting
principles as applied in its financial reporting;
o the process used by Trust management in formulating
estimates and the independent auditors' conclusions regarding
the reasonableness of those estimates;
o all significant adjustments arising from the audit,
whether or not recorded by the Trust;
o when the independent auditors are aware that Trust
management has consulted with other accountants about
significant accounting and auditing matters, the independent
auditors' views about the subject of the consultation;
o any disagreements with Trust management regarding
accounting or reporting matters;
o any difficulties encountered in the course of the audit,
including any restrictions on the scope of the independent
auditors' activities or on access to requested information; and
B-4
o significant deficiencies in the design or operation of
internal controls.
3. The independent auditors shall report, within 90 days prior to
the filing of the Trust's annual financial statements with the SEC, to
the Audit Committee:
(a) all critical accounting policies and practices to be used;
(b) all alternative treatments of financial information within
GAAP for policies and practices related to material items
that have been discussed with Trust management, the
ramifications of the use of such alternative disclosures
and treatments, and the treatment preferred by the
independent auditor;
(c) other material written communications between the
independent auditors and Trust management including, but
not limited to, any management letter or schedule of
unadjusted differences; and
(d) all non-audit services provided to an entity in the
"investment company complex" as defined in paragraph
(f)(14) of Rule 2-01 of Regulation S-X that were not
pre-approved by the Audit Committee.
4. Review, annually, with Trust management and the independent
auditors, the Trust's "disclosure controls and procedures" and the
Trust's "internal control over financial reporting" as defined in Rule
30a-3(c) and (d) under the Investment Company Act of 1940.
5. Review with Trust management and the independent auditors a
report by Trust management covering any Form N-CSR and Form N-Q filed,
and any required certification of such filing, along with the results
of Trust management's most recent evaluation of the Trust's "disclosure
controls and procedures" and "internal control over financial
reporting."
E. Process Improvements
Review with the independent auditors and Trust management
significant changes or improvements in accounting and auditing
processes that have been implemented.
F. Legal and Compliance
1. Review any legal or regulatory matters that arise that could
have a material impact on the Trust's financial statements.
2. Review policies and procedures with respect to financial
statement risk assessment and risk management, including the steps
Trust management has taken to monitor and control such risk exposures.
3. Establish clear hiring policies for the Trust with respect to
employees or former employees of the independent auditors.
G. Other Responsibilities
1. Review, annually, the performance of the Audit Committee.
2. If the Trust is a closed-end investment company, prepare the
report required by Item 407(d)(3)(i) of Regulation S-K for inclusion in
the Trust's proxy statement if the proxy statement relates to the
election of Board members of the Trust.
B-5
3. Investigate any other matter brought to its attention within
the scope of its duties, and have the authority in its discretion to
retain legal, accounting or other experts or consultants to advise the
Audit Committee, at the expense of the Trust, if, in the Committee's
judgment, that is appropriate.
4. Perform any other activities consistent with this Charter, the
Trust's Charter, By-Laws and governing law, as the Audit Committee or
the Board deems necessary or appropriate.
5. Maintain minutes of Committee meetings; report its significant
activities to the Board; and make such recommendations to the Board as
the Audit Committee may deem necessary or appropriate.
V. FUNDING
The Audit Committee shall receive appropriate funding, as determined by
the Audit Committee, for payment of (i) compensation to the independent auditors
for approved audit or non-audit services for the Trust; (ii) compensation to any
legal, accounting or other experts or consultants retained by the Audit
Committee pursuant to Section IV.G.3 above and (iii) ordinary administrative
expenses of the Audit Committee that are necessary or appropriate in carrying
out its duties.
B-6
BACKGROUND AND DEFINITIONS
FOR
AUDIT COMMITTEE CHARTER
The following is supplemental information regarding the Audit Committee
Charter designed to provide the Audit Committee background information and
definitions to assist the Committee in fulfilling its responsibilities under the
Charter.
I. COMPOSITION
An "audit committee financial expert" of a company is defined as a
person who has all of the following attributes: (1) an understanding of
generally accepted accounting principles ("GAAP") and financial statements; (2)
the ability to assess the general application of GAAP in connection with the
accounting for estimates, accruals and reserves; (3) experience preparing,
auditing, analyzing or evaluating financial statements that present a breadth
and level of complexity of accounting issues that are generally comparable to
the breadth and complexity of issues that can reasonably be expected to be
raised by the company's financial statements, or experience actively supervising
one or more persons engaged in such activities; (4) an understanding of internal
controls and procedures for financial reporting; and (5) an understanding of
audit committee functions. An audit committee financial expert must have
acquired such attributes through any one or more of the following: (1) education
and experience as a principal financial officer, principal accounting officer,
controller, public accountant or auditor or experience in one or more positions
that involve the performance of similar functions (or active supervision of such
persons); or (2) experience overseeing or assessing the performance of companies
or public accountants with respect to the preparation, auditing or evaluation of
financial statements; or (3) other relevant experience.
If the Trust is listed on the New York Stock Exchange, at least one
member of the Audit Committee must have accounting or related financial
management expertise, as the Board interprets such qualification in its business
judgment.
II. RESPONSIBILITIES AND DUTIES
A. Pre-Approval Not Required
Under Section 10A(h)(i)(1)(B) of the Securities Exchange Act of 1934
and Rule 2-01 under Regulation S-X (Section (c)(7)), pre-approval of non-audit
services for the Trust pursuant to Section IV.C. 2 is not required, if:
1. the aggregate amount of all non-audit services provided to the
Trust is no more than 5% of the total fees paid by the Trust to the
independent auditors during the fiscal year in which the non-audit
services are provided;
2. the services were not recognized by Trust management at the
time of the engagement as non-audit services; and
3. such services are promptly brought to the attention of the
Audit Committee by Trust management and the Audit Committee approves
them (which may be by delegation) prior to the completion of the audit.
Under Section 10A(h)(i)(1)(B) of the Securities Exchange Act of 1934
and Rule 2-01 under Regulation S-X (Section (c)(7)), pre-approval of non-audit
services for the Adviser (or any affiliate of the Adviser providing ongoing
services to the Trust) pursuant to Section IV.C.3 is not required, if:
1. the aggregate amount of all non-audit services provided is no
more than 5% of the total fees paid to the Trust's independent auditors
by the Trust, the Adviser and any "control affiliate" of the Adviser
providing ongoing services to the Trust during the fiscal year in which
the non-audit services are provided;
B-7
2. the services were not recognized by Trust management at the
time of the engagement as non-audit services; and
3. such services are promptly brought to the attention of the
Audit Committee by Trust management and the Audit Committee approves
them (which may be by delegation) prior to the completion of the audit.
B. Control Affiliate
As used in Section IV.C.3, "control affiliate" means any entity
controlling, controlled by, or under common control with the Adviser.
C. Prohibited Non-Audit Services
Under Section 10A(g) of the Securities Exchange Act of 1934 and Rule
2-01 under Regulation S-X (Section (c)(4)), an auditor is not independent if, at
any point during the audit and professional engagement period, the auditor
provides certain non-audit services to an audit client. As referred to in
Section IV.C.2, these prohibited non-audit services would include:
1. bookkeeping or other services related to the accounting records
or financial statements of the Trust;
2. financial information systems design and implementation;
3. appraisal or valuation services, fairness opinions, or
contribution-in-kind reports;
4. actuarial services;
5. internal audit outsourcing services;
6. management functions or human resources;
7. broker or dealer, investment adviser, or investment banking
services;
8. legal services and expert services unrelated to the audit; and
9. any other services that the Public Company Accounting Oversight
Board determines are impermissible.
D. Other Definitions
"Investment company complex" includes: (1) an investment company and
its investment adviser or sponsor; (2) any entity controlled by or controlling
an investment adviser or sponsor in (1) above, or any entity under common
control with any investment adviser or sponsor in (1) above if the entity: (A)
is an investment adviser or sponsor or (B) is engaged in the business of
providing administrative, custodian, underwriter, or transfer agent services to
any investment company, investment adviser, or sponsor; and (3) an investment
company or entity that would be an investment company but for the exclusions
provided by Section 3(c) of the 1940 Act that has an investment adviser or
sponsor included in (1) and (2) above. Investment adviser does not include a
subadviser whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser. Sponsor is an entity that
establishes a unit investment trust.
"Disclosure controls and procedures" means controls and other
procedures of a registered management investment company that are designed to
ensure that information required to be disclosed by the investment company
B-8
on Form N-CSR and Form N-Q is recorded, processed, summarized and reported,
within the time periods specified in the SEC's rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by an investment
company in the reports that it files or submits on Form N-CSR and Form N-Q is
accumulated and communicated to the investment company's management, including
its principal executive officer or officers and principal financial officer or
officers, or person performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
"Internal control over financial reporting" is a process designed by,
or under the supervision of, the Trust's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
Trust's Board, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP and includes
those policies and procedures that:
1. Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the
assets of the Trust;
2. Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with GAAP, and that receipts and expenditures of the Trust are being
made only in accordance with authorization of management and directors
of the Trust; and
3. Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the
Trust's assets that could have a material effect on the financial
statements.
The report to be prepared by the Audit committee to be included in the
annual proxy statement is governed by Item 407(d)(3)(i) of Regulation S-K, which
requires each proxy statement relating to a shareholder meeting at which
directors are to be elected to include a report, followed by the name of each
Audit Committee member, stating whether: (1) the Committee has reviewed and
discussed the audited financial statements with management, (2) the Committee
has discussed with the independent auditors the matters required to be discussed
by SAS 114, (3) the Committee has received the written disclosures and the
letter from the independent auditors required by Public Company Accounting
Oversight Board Rule 3526, and has discussed with the independent auditors their
independence, and (4) based on the review and discussions referred to in
paragraphs (1) through (3), the Audit Committee recommended to the Board that
the audited financial statements be included in the Trust's annual report to
shareholders required by Section 30(e) of the Investment Company Act of 1940 and
Rule 30d-1 thereunder.
B-9
FORM OF PROXY CARD
PROXY TABULATOR
[ADDRESS]
TO VOTE BY INTERNET
1) Read the Proxy Statement and have the proxy card below at hand.
2) Got to the website [ ]
3) Follow the instructions provided on the website.
TO VOTE BY TELEPHONE
1) Read the Proxy Statement and have the proxy card below at hand.
2) Call [ ]
3) Follow the instructions.
TO VOTE BY MAIL
1) Read the Proxy Statement
2) Check the appropriate boxes on the proxy card below.
3) Sign and date the proxy card.
4) Return the proxy card in the envelope provided.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
CLAYM1
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
TS&W / CLAYMORE TAX-ADVANTAGED BALANCED FUND - COMMON
FOR WITHHOLD AUTHORITY
1(a) To elect one Trustee as a Class III Trustee by holders of Common Shares
and Preferred Shares voting together as a single class, to serve until the
Fund's 2013 annual meeting of shareholders or until a successor shall have
been elected and qualified.
(01) Steven D. Cosler [ ] [ ]
FOR AGAINST
2 To act on a shareholder proposal regarding annual terms for directors, if properly
presented at the meeting. [ ] [ ]
3. To transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Please sign here exactly as your name appears in the records of the Fund and
date. If the shares are held jointly, each holder should sign. When signing as
an attorney, executor, administrator, trustee, guardian, officer of a
corporation or other entity or in any other representative capacity, please give
the full title under signature(s).
Signature [PLEASE SIGN WITHIN BOX] Signature (Joint Owners)
Date Date
B-10
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SPECIAL MEETING:
The Proxy Statement is available at [ ].
- --------------------------------------------------------------------------------
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
TS&W / CLAYMORE TAX-ADVANTAGED BALANCED FUND
ANNUAL MEETING OF SHAREHOLDERS
JULY 19, 2010
COMMON
The annual meeting of shareholders of TS&W / Claymore Tax-Advantaged Balanced
Fund (the "Fund") will be held at the offices of the Fund, 2455 Corporate West
Drive, Lisle, Illinois, 60532, on Monday, July 19, 2009 at 12:00 P.M., noon,
Central Time (the "Annual Meeting"). The undersigned hereby appoints each of
Mark E. Mathiasen and Kevin M. Robinson, or their respective designees, with
full power of substitution and revocation, as proxies to represent and to vote
all shares of the undersigned at the Annual Meeting and all adjournments
thereof, with all powers the undersigned would possess if personally present,
upon the matters specified on the reverse side.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
INDICATED AS TO THE PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH PROPOSAL. THE
PROXIES MAY VOTE AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE ANNUAL MEETING.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
FORM OF PROXY CARD
PROXY TABULATOR
[ADDRESS]
TO VOTE BY INTERNET
1) Read the Proxy Statement and have the proxy card below at hand.
2) Got to the website [ ]
3) Follow the instructions provided on the website.
TO VOTE BY TELEPHONE
1) Read the Proxy Statement and have the proxy card below at hand.
2) Call [ ]
3) Follow the instructions.
TO VOTE BY MAIL
1) Read the Proxy Statement
2) Check the appropriate boxes on the proxy card below.
3) Sign and date the proxy card.
4) Return the proxy card in the envelope provided.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
CLAYM1
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
TS&W / CLAYMORE TAX-ADVANTAGED BALANCED FUND - PREFERRED
FOR WITHHOLD AUTHORITY
1(a) To elect one Trustee as a Class III Trustee by holders of Common Shares
and Preferred Shares voting together as a single class, to serve until the
Fund's 2013 annual meeting of shareholders or until a successor shall have
been elected and qualified.
(01) Steven D. Cosler [ ] [ ]
1(b) To elect one Trustee as a Class III Trustee by holders of Preferred Shares
voting as a separate class, to serve until the Fund's 2013 annual meeting
of shareholders or until a successor shall have been elected and qualified.
(02) Ronald E. Toupin, Jr. [ ] [ ]
FOR AGAINST
2 To act on a shareholder proposal regarding annual terms for directors, if properly
presented at the meeting. [ ] [ ]
3. To transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign here exactly as your name appears in the records of the Fund and
date. If the shares are held jointly, each holder should sign. When signing as
an attorney, executor, administrator, trustee, guardian, officer of a
corporation or other entity or in any other representative capacity, please give
the full title under signature(s).
Signature [PLEASE SIGN WITHIN BOX] Signature (Joint Owners)
Date Date
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SPECIAL MEETING:
The Proxy Statement is available at [ ].
- --------------------------------------------------------------------------------
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
TS&W / CLAYMORE TAX-ADVANTAGED BALANCED FUND
ANNUAL MEETING OF SHAREHOLDERS
JULY 19, 2010
PREFERRED
The annual meeting of shareholders of TS&W / Claymore Tax-Advantaged Balanced
Fund (the "Fund") will be held at the offices of the Fund, 2455 Corporate West
Drive, Lisle, Illinois, 60532, on Monday, July 19, 2009 at 12:00 P.M., noon,
Central Time (the "Annual Meeting"). The undersigned hereby appoints each of
Mark E. Mathiasen and Kevin M. Robinson, or their respective designees, with
full power of substitution and revocation, as proxies to represent and to vote
all shares of the undersigned at the Annual Meeting and all adjournments
thereof, with all powers the undersigned would possess if personally present,
upon the matters specified on the reverse side.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
INDICATED AS TO THE PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH PROPOSAL. THE
PROXIES MAY VOTE AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE ANNUAL MEETING.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.