UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-21359
Name of Registrant: MBIA Capital/Claymore Managed Duration Investment Grade
Municipal Fund
Address of Registrant: 113 King Street, Armonk, NY 10504
Name and address of agent for service: Clifford D. Corso,
113 King Street, Armonk, NY 10504
Copies to: John McDonnell,
2701 Renaissance Blvd., 4th Fl.,
King of Prussia, PA 19482
Registrant's telephone number, including area code: (914) 273-4545
Date of fiscal year end: July 31
Date of reporting period: August 27, 2003 - January 31, 2004
ITEM 1: Reports to Shareholders
Semi-Annual Report
January 31, 2004
MBIA Capital/Claymore Managed
Duration Investment Grade MZF
Municipal Fund
[MBIA LOGO OMITTED] [CLAYMORE LOGO OMITTED]
NOT INSURED o NOT GUARANTEED o MAY LOSE VALUE
Table of Contents
Shareholder Letter ............................ 1
Fund Summary .................................. 2
Portfolio of Investments ...................... 3
Statement of Assets and Liabilities ........... 10
Statement of Operations ....................... 11
Statement of Changes in Net Assets
Applicable to Common Shareholders .......... 12
Financial Highlights .......................... 13
Notes to Financial Statements ................. 14
Additional Information Regarding the
Fund's Trustees ............................ 19
Dividend Reinvestment Plan .................... 21
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Dear Shareholder:
I am pleased to provide you with the Semi-Annual Report to Shareholders of MBIA
Capital/Claymore Managed Duration Investment Grade Municipal Fund (the "Fund")
for the period ending January 31, 2004. The Fund's common shares began trading
on the New York Stock Exchange on August 27, 2003 under the ticker symbol MZF.
The Fund issued approximately $70 million of preferred shares on October 28,
2003, and declared its first monthly dividend of $.07 per common share on
October 15, 2003.
While interest rates remain at or near historical lows, they have not been
immune from volatility. Between the Fund's initial trading date and January 31,
2004, the 10-Year U.S. Treasury Bond has yielded as high as 4.601% and as low as
3.934%. Needless to say, this type of environment presents numerous challenges
to any fixed-income portfolio. Because of the Fund's focus on investment grade
municipal bonds, its emphasis on long-term value within the municipal sector,
its intermediate duration, and its hedging strategies, the Fund's Net Asset
Value ("NAV") has remained relatively stable in this turbulent environment.
Since commencement of investment operations, the Fund's common shares have
consistently traded at a premium to NAV.
Recent pronouncements -- or, more properly, the lack of such pronouncements --
by the Federal Reserve seem to indicate that interest rates may begin to rise
over the long-term. We believe that if rates rise, investment grade municipal
bonds will represent a prudent place to be in the fixed-income universe. As the
charts on the following page show, the Fund's bond assets are all investment
grade and are diversified both geographically and across sectors.
Our investment strategy, emphasizing both bottom-up and top-down fundamental and
technical analysis, has and will continue to drive our actions. The Fund will
continue to strive for good relative value in the investment grade municipal
sector, seeking out those securities which we believe will outperform in the
long-term.
Sincerely,
/S/CLIFFORD D. CORSO
Clifford D. Corso
President, Chief Executive Officer
February 13, 2004
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. There is no guarantee that
the Fund's or any other investment techniques will be effective under all market
conditions.
1
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Fund Summary (Unaudited) JANUARY 31, 2004
- --------------------------------------------------------------------------------
WEEKLY SHARE PRICE PERFORMANCE
- --------------------------------------------------------------------------------
[LINE CHART OMITTED, PLOT POINTS FOLLOWS]
DATE SHARE PRICE NAV OFFERING PRICE
1/30/2004 15.22 14.67 15
1/23/2004 15.95 14.75 15
1/16/2004 15.55 14.75 15
1/9/2004 15.4 14.72 15
1/2/2004 15.35 14.57 15
12/26/2003 15.2 14.59 15
12/19/2003 15.08 14.58 15
12/12/2003 15.3 14.48 15
12/5/2003 15.2 14.45 15
11/28/2003 15.15 14.53 15
11/14/2003 15.15 14.43 15
11/7/2003 15.1 14.3 15
10/31/2003 15.15 14.4 15
10/24/2003 15.06 14.54 15
10/17/2003 15.15 14.47 15
10/10/2003 14.92 14.49 15
10/3/2003 14.95 14.48 15
9/26/2003 15.06 14.49 15
9/19/2003 15.01 14.46 15
9/12/2003 15.05 14.42 15
9/5/2003 15.03 14.36 15
8/29/2003 15 14.3 15
8/27/2003 15 14.29 15
MONTHLY DIVIDENDS PER SHARE
- --------------------------------------------------------------------------------
[BAR CHART OMITTED, PLOT POINTS FOLLOWS]
NOV. '03 $0.07
DEC. '03 $0.07
JAN. '04 $0.07
SECTOR CONCENTRATION (AS OF 01/31/04)(1)
- --------------------------------------------------------------------------------
[PIE CHART OMITTED, PLOT POINTS FOLLOWS]
INSURED (25.30%)
HOSPITAL (19.60%)
ELECTRIC POWER (11.60%)
EDUCATION (9.70%)
TRANSPORTATION (7.10%)
GENERAL OBLIGATION - STATE (6.50%)
OTHER (6.20%)
REVENUE (4.70%)
INSURED AIR (3.30%)
LEASE (3.10%)
HOUSING (2.90%)
CREDIT QUALITY (AS OF 01/31/04)(1)
- --------------------------------------------------------------------------------
[PIE CHART OMITTED, PLOT POINTS FOLLOWS]
AAA (35.76%)
AA (21.33%)
A (30.25%)
BBB (12.66%)
TOP STATE ALLOCATIONS (AS OF 01/31/04)(1)
- -----------------------------------------
California 18.21%
- -----------------------------------------
New York 16.50%
- -----------------------------------------
Ohio 10.81%
- -----------------------------------------
Puerto Rico 9.89%
- -----------------------------------------
Florida 7.17%
- -----------------------------------------
Texas 4.61%
- -----------------------------------------
Massachusetts 4.59%
- -----------------------------------------
Colorado 4.09%
- -----------------------------------------
District of Columbia 3.30%
- -----------------------------------------
West Virginia 2.88%
- -----------------------------------------
TOP 10 ISSUERS (AS OF 01/31/04)(1)
- -------------------------------------------------
Colorado Health Facilities Auth. 4.09%
- -------------------------------------------------
Cuyahoga County, OH 3.70%
- -------------------------------------------------
California State 3.38%
- -------------------------------------------------
Metropolitan D.C. Airport Auth. 3.30%
- -------------------------------------------------
Highlands County, FL Health Fac. Auth. 3.20%
- -------------------------------------------------
Puerto Rico Commonwealth 3.10%
- -------------------------------------------------
East Side Union High School District, CA 3.09%
- -------------------------------------------------
Ohio State University 2.97%
- -------------------------------------------------
Port Auth. of NY and NJ 2.94%
- -------------------------------------------------
Puerto Rico Electric Power Authority 2.91%
- -------------------------------------------------
(1) PERCENTAGES CALCULATED BASED ON TOTAL MUNICIPAL BONDS AND NOTES.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
2
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Portfolio of Investments (Unaudited) JANUARY 31, 2004
- ------------------------------------------------------------------------------------------------------
RATING PRINCIPAL OPTIONAL CALL VALUE
STATE (S&P)* AMOUNT (000) DESCRIPTION PROVISIONS** (NOTE 1)
- ------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES -- 153.21%
- ------------------------------------------------------------------------------------------------------
ALABAMA -- 0.77%
BBB $845 Courtland AL Ind. Dev. Brd.
Environ. Imp. Rev.,
Ser. B, 6.25%, 08/01/25 08/01/13 @ 100 $ 888,619
-----------
- ------------------------------------------------------------------------------------------------------
CALIFORNIA -- 27.90%
AAA 3,810 Anaheim, CA Pub. Fin. Auth.
Lease Rev., Zero Coupon,
09/01/19 (FSA) No Call Provision 1,800,758
AAA 4,000 CA Infra. & Econ. Dev. Rev.,
Bay Area Toll Brdgs., 5.00%,
07/01/26 (FGIC) 07/01/13 @ 100 4,146,880
BBB+ 4,000 CA Dept. of Water Res.
Power Supply Rev., Ser. A,
5.125%, 05/01/19 05/01/13 @ 101 4,151,360
BBB 6,000 CA State Var. Purpose, 5.125%,
11/01/24 11/01/13 @ 100 6,012,540
AAA 5,310 East Side Union High School,
Ser. B, 5.00%, 08/01/27
(FGIC) 08/01/11 @ 102 5,502,435
BBB- 4,000 Golden State Tobbaco
Settlement Rev., Ser. B,
5.375%, 06/01/28 06/01/10 @ 100 3,986,600
AAA 4,000 Port of Oakland, CA Rev.,
Ser. L, 5.00%, 11/01/22
(FGIC) 11/01/12 @ 100 4,126,280
AAA 2,500 San Diego, CA Unified
School Dist., Ser. D, 5.25%,
07/01/25 (FGIC) 07/01/12 @ 101 2,654,850
----------
32,381,703
----------
- ------------------------------------------------------------------------------------------------------
COLORADO -- 6.27%
AA 7,000 CO Health Facs. Auth. Rev.,
5.25%, 09/01/21 09/01/11 @ 100 7,279,580
----------
- ------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA -- 5.05%
AAA 5,700 Metropolitan D.C. Airport
Auth. Sys. Ref., Ser. A,
5.125%, 10/01/29 (FGIC) 10/01/13 @ 100 5,865,471
----------
See notes to financial statements
3 www.mbiaclaymore.com
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Portfolio of Investments (Unaudited)-- (continued) JANUARY 31, 2004
- ------------------------------------------------------------------------------------------------------
RATING PRINCIPAL OPTIONAL CALL VALUE
STATE (S&P)* AMOUNT (000) DESCRIPTION PROVISIONS** (NOTE 1)
- ------------------------------------------------------------------------------------------------------
FLORIDA -- 10.99%
A $ 2,500 Highlands Co.,
FL Health Facs. Auth. Rev.,
Ser. B, 5.25%, 11/15/23 11/15/12 @ 100 $ 2,528,650
A 3,000 Highlands Co.,
FL Health Facs. Auth. Rev.,
5.875%, 11/15/29 11/15/13 @ 100 3,157,710
AA 4,000 Orlando, FL Utilities Comm.
Water & Elec. Rev. Ref.,
Ser. B, 5.00%, 10/01/22 04/01/13 @ 100 4,186,360
A+ 2,750 South Broward Co., FL Hosp.
Dist. Rev., 5.60%, 05/01/27 05/01/12 @ 101 2,878,343
-----------
12,751,063
-----------
- ------------------------------------------------------------------------------------------------------
ILLINOIS -- 2.64%
A 3,000 IL Dev. Fin. Auth. Hosp.
Rev., 5.65%, 11/15/24 11/15/09 @ 101 3,058,470
-----------
- ------------------------------------------------------------------------------------------------------
LOUISIANA -- 4.07%
BBB 1,000 Desoto Parish,
LA Environ. Imp. Rev., Ser. A,
5.85%, 11/01/27 11/01/13 @ 100 1,017,480
AAA 3,255 New Orleans, LA Gen.
Oblig. Ref., 5.50%,
12/01/21 (FGIC) 12/01/19 @ 100 3,701,879
-----------
4,719,359
-----------
- ------------------------------------------------------------------------------------------------------
MASSACHUSETTS -- 7.03%
AAA 3,000 MA Dev. Fin. Agy. Rev., Ser. A,
5.00%, 10/01/28 04/01/13 @ 100 3,087,180
AAA 5,000 MA Port Auth. Special Facs.
Rev., Ser. A, 5.00%,
01/01/21 (AMBAC) 01/01/11 @ 101 5,068,550
-----------
8,155,730
-----------
- ------------------------------------------------------------------------------------------------------
MICHIGAN -- 4.38%
AAA 2,000 Detroit, MI Sewer Ref.,
Ser. A, 5.00%, 07/01/28 07/01/13 @ 100 2,067,220
A 2,500 MI State Hosp. Fin. Auth.
Rev., 5.50%, 11/01/18 11/01/13 @ 100 2,628,450
See notes to financial statements
4
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Portfolio of Investments (Unaudited)-- (continued) JANUARY 31, 2004
- ------------------------------------------------------------------------------------------------------
RATING PRINCIPAL OPTIONAL CALL VALUE
STATE (S&P)* AMOUNT (000) DESCRIPTION PROVISIONS** (NOTE 1)
- ------------------------------------------------------------------------------------------------------
MICHIGAN (CONTINUED)
AA $ 390 University of Michigan
Ref. Hosp., Ser. A2, VRDN,
1.05%, 12/01/24 -- $ 390,000
----------
5,085,670
----------
- ------------------------------------------------------------------------------------------------------
MISSOURI -- 2.67%
AA 3,000 Curators University of Missouri
Sys. Facs. Rev., Ser. A,
5.00%, 11/01/27 11/01/13 @ 100 3,101,340
----------
- ------------------------------------------------------------------------------------------------------
NEW JERSEY -- 3.72%
AA- 4,000 NJ Trans. Trust Fund Auth.
Rev., Ser. C, 5.50%, 06/15/24 06/15/13 @ 100 4,313,560
----------
- ------------------------------------------------------------------------------------------------------
NEW YORK -- 25.27%
AA- 4,000 Metropolitan Trans. Auth.,
Ser. A, 5.125%, 01/01/24 07/01/12 @ 100 4,142,720
A 4,300 New York, NY Gen. Oblig.,
Ser. H, 5.25%, 03/15/16 03/15/11 @ 101 4,559,634
A 1,500 NY State Dorm. Auth.
Lease Rev. Court Facs.,
Ser. A, 5.375%, 05/15/22 05/15/13 @ 100 1,587,345
A 2,500 NY State Dorm. Auth.
Lease Rev. Court Facs.,
Ser. A, 5.375%, 05/15/23 05/15/13 @ 100 2,635,900
A3 1,500 NY State Dorm. Auth.
Rev. North Shore
L I Jewish Group,
5.375%, 05/01/23 05/01/13 @ 100 1,554,225
AA- 4,000 NY Tobacco Settlement
Funding Corp., Ser. A1,
5.50%, 06/01/19 06/01/13 @ 100 4,334,680
AA+ 250 New York, NY Trans.
Fin. Auth., VRDN,
1.12%, 05/01/28 -- 250,000
AAA 5,000 Port Auth. NY and
NJ - Cons. 127th Rev.,
5.20%, 12/15/26 (AMBAC) 06/15/12 @ 101 5,226,900
See notes to financial statements
5 www.mbiaclaymore.com
<page>
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Portfolio of Investments (Unaudited)-- (continued) JANUARY 31, 2004
- ------------------------------------------------------------------------------------------------------
RATING PRINCIPAL OPTIONAL CALL VALUE
STATE (S&P)* AMOUNT (000) DESCRIPTION PROVISIONS** (NOTE 1)
- ------------------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
A $ 5,000 Suffolk Co., NY Ind.
Dev. Agy. Rev.,
5.25%, 06/01/27 06/01/13 @ 100 $ 5,038,550
-----------
29,329,954
-----------
- ------------------------------------------------------------------------------------------------------
NORTH CAROLINA -- 3.60%
BBB 1,000 NC Eastern Muni. Power
Agy. Sys. Rev. Ref., Ser. D,
5.125%, 01/01/23 01/01/13 @ 100 999,060
BBB 1,000 NC Eastern Muni. Power
Agy. Sys. Rev. Ref., Ser. D,
5.125%, 01/01/26 01/01/13 @ 100 985,100
AAA 2,135 NC Housing Fin. Agy. Rev.,
Ser. 14A, 5.35%, 01/01/22
(AMBAC) 07/01/11 @ 100 2,196,659
-----------
4,180,819
-----------
- ------------------------------------------------------------------------------------------------------
OHIO -- 16.57%
A 3,000 Cuyahoga Co., OH Rev. Ref.,
Ser. A, 6.00%, 01/01/20 07/01/13 @ 100 3,290,940
A 3,000 Cuyahoga Co., OH Rev. Ref.,
Ser. A, 6.00%, 01/01/21 07/01/13 @ 100 3,281,370
AA- 5,000 Lorain Co., OH Hosp.
Rev. Ref., Ser. A,
5.25%, 10/01/33 10/01/11 @ 101 5,032,400
AA 5,100 Ohio State Univ.
Gen. Receipts.,
Ser. B, 5.00%, 06/01/28 06/01/13 @ 100 5,273,961
Aaa 2,250 Toledo, OH City
Sch. Dist. Facs. Impr.
Gen. Oblig., 5.00%,
12/01/25 (FSA) 12/01/13 @ 100 2,344,680
-----------
19,223,351
-----------
- ------------------------------------------------------------------------------------------------------
PENNSYLVANIA -- 2.04%
BBB 2,340 PA State Higher Educ.
Facs. Auth. Rev.,
5.25%, 05/01/2023 05/01/2013 @ 100 2,369,390
-----------
See notes to financial statements
6
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Portfolio of Investments (Unaudited)-- (continued) JANUARY 31, 2004
- ------------------------------------------------------------------------------------------------------
RATING PRINCIPAL OPTIONAL CALL VALUE
STATE (S&P)* AMOUNT (000) DESCRIPTION PROVISIONS** (NOTE 1)
- ------------------------------------------------------------------------------------------------------
PUERTO RICO -- 15.15%
A- $ 4,035 PR Comnwlth. Hwy. &
Trans. Auth. Sub. Rev.,
5.00%, 07/01/28 07/01/13 @ 100 $ 4,114,812
A- 5,400 PR Comnwlth. Pub.
Impr., Ser. A,
5.00%, 07/01/27 07/01/13 @ 100 5,510,916
A- 2,735 PR Pub. Bldgs. Auth.
Rev. Gtd. Govt. Facs., Ser. G,
5.00%, 07/01/26 07/01/12 @ 100 2,787,922
A- 5,000 PR Elec. Power Auth. Rev.,
Ser. NN, 5.125%, 07/01/24 07/01/13 @ 100 5,172,850
-------------
17,586,500
-------------
- ------------------------------------------------------------------------------------------------------
TEXAS -- 7.07%
AAA 4,000 Eagle Mtn. & Saginaw,
TX Indep. Sch. Dist.,
Ser. A, 5.25%, 08/15/23
(PSF-GTD) 08/15/13 @ 100 4,247,680
AAA 4,200 Houston, TX Water &
Sewer Sys. Rev., Ser. A,
Zero Coupon,
12/01/20 (FSA) No Call Provision 1,857,828
BBB 2,000 Sabine River, TX Auth.
Poll. Cntl. Rev. Ref.,
Ser. B, 6.15%, 08/01/22 08/01/13 @ 101 2,097,580
-------------
8,203,088
-------------
- ------------------------------------------------------------------------------------------------------
WASHINGTON -- 3.61%
AAA 4,000 Seattle, WA Muni. Light &
Power Rev. Imp. & Ref.,
5.125%, 03/01/21 (FSA) 03/01/11 @ 100 4,186,880
-------------
- ------------------------------------------------------------------------------------------------------
WEST VIRGINIA -- 4.41%
AAA 5,000 WV State Housing Dev.
Fund Rev., Ser. D,
5.20%, 11/01/21 05/01/11 @ 100 5,111,550
-------------
TOTAL MUNICIPAL BONDS & NOTES
(COST $172,100,632)-- 153.21% 177,792,097
-------------
See notes to financial statements
7 www.mbiaclaymore.com
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Portfolio of Investments (Unaudited)-- (continued) JANUARY 31, 2004
- --------------------------------------------------------------------------------
NOTIONAL EXPIRATION VALUE
COUNTERPARTY AMOUNT (000) DESCRIPTION DATE (NOTE 1)
- -------------------------------------------------------------------------------------------------
SWAPTIONS -- 4.85%(1)
AIG $20,000 Option on a pay fixed/receive
floating rate interest rate swap
terminating on 09/03/28 (pay
fixed rate of 5.85% and receive
three-month LIBOR rate with
a quarterly reset) 03/03/04 $ 11,582
AIG 3,000 Option on a pay fixed/receive
floating rate interest rate swap
terminating on 09/03/24 (pay
fixed rate of 5.97% and receive
three-month LIBOR rate with a
quarterly reset) 09/03/04 57,173
AIG 16,000 Option on a pay fixed/receive
floating rate interest rate swap
terminating on 03/03/24 (pay
fixed rate of 5.44% and receive
three-month LIBOR rate with
a quarterly reset) 03/03/04 122,815
AIG 6,700 Option on a pay fixed/receive
floating rate interest rate swap
terminating on 03/03/25 (pay
fixed rate of 5.83% and receive
three-month LIBOR rate with
a quarterly reset) 03/03/05 290,395
Goldman Sachs 10,000 Option on a pay fixed/receive
floating rate interest rate swap
terminating on 09/03/25 (pay
fixed rate of 6.30% and receive
three-month LIBOR rate with a
quarterly reset) 09/03/05 346,000
Goldman Sachs 7,000 Option on a pay fixed/receive
floating rate interest rate swap
terminating on 09/03/28 (pay fixed
rate of 6.50% and receive
three-month LIBOR rate with a
quarterly reset) 09/03/08 409,000
See notes to financial statements
8
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Portfolio of Investments (Unaudited)-- (continued) JANUARY 31, 2004
- --------------------------------------------------------------------------------
NOTIONAL EXPIRATION VALUE
COUNTERPARTY AMOUNT (000) DESCRIPTION DATE (NOTE 1)
- -------------------------------------------------------------------------------------------------
SWAPTIONS (CONTINUED)
Goldman Sachs $85,000 Option on a pay fixed/receive
floating rate interest rate swap
terminating on 09/03/28 (pay
fixed rate of 5.20% and receive
BMA rate with a weekly reset) 09/03/08 $ 4,395,000
-----------
Total Swaptions (Cost $8,175,700)-- 4.85% 5,631,965
-----------
TOTAL INVESTMENTS (Cost $180,276,332)-- 158.06% 183,424,062
Other Assets Less Liabilities-- 1.79% 2,076,598
Preferred Shares, at Redemption Value-- (59.85)%(2) (69,450,000)
-----------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS -- 100.00%(3) $116,050,660
============
* FOR SECURITIES NOT RATED BY STANDARD &POOR'S RATINGS GROUP, THE RATING BY
MOODY'S INVESTORS SERVICES, INC. IS PROVIDED.
** DATE AND PRICE OF THE EARLIEST OPTIONAL CALL OR REDEMPTION. THERE MAY BE
OTHER CALL PROVISIONS AT VARYING PRICES AT LATER DATES.
(1) NON-INCOME PRODUCING SECURITIES.
(2) PREFERRED SHARES AS A PERCENTAGE OF MANAGED ASSETS IS 37.4%.
(3) PORTFOLIO PERCENTAGES ARE CALCULATED BASED ON NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS.
GLOSSARY:
AMBAC -- INSURED BY AMBAC ASSURANCE CORPORATION.
BMA -- BOND MARKET ASSOCIATION
FGIC -- INSURED BY FINANCIAL GUARANTY INSURANCE CO.
FSA -- INSURED BY FINANCIAL SECURITY ASSURANCE, INC.
LIBOR -- LONDON INTER-BANK OFFERING RATE
PSF-GTD -- GUARANTEED BY PUBLIC SCHOOL FUND
VRDN -- VARIABLE RATE DEMAND NOTES ARE INSTRUMENTS WHOSE INTEREST RATES CHANGE
ON A SPECIFIED DATE (SUCH AS A COUPON DATE OR INTEREST PAYMENT DATE) AND/OR
WHOSE INTEREST RATES VARY WITH CHANGES IN A DESIGNATED BASE RATE (SUCH AS THE
PRIME INTEREST RATE). INTEREST RATE SHOWN REFLECTS RATE AT BALANCE SHEET DATE.
See notes to financial statements
9 www.mbiaclaymore.com
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Statement of Assets and Liabilities
JANUARY 31, 2004 (UNAUDITED)
ASSETS:
Investment in securities, at value
(amortized cost $180,276,332) .............................. $183,424,062
Cash .......................................................... 93,627
Interest receivable ........................................... 2,215,953
Other assets .................................................. 17,046
------------
Total Assets ................................................ 185,750,688
------------
LIABILITIES:
Dividends payable to preferred shareholders ................... 34,437
Preferred shares offering costs payable ....................... 49,038
Due to affiliates ............................................. 94,274
Accrued expenses payable ...................................... 72,279
------------
Total Liabilities ........................................... 250,028
------------
PREFERRED SHARES:
($25,000 net asset and liquidation value
per share applicable to 2,778 shares authorized,
issued and outstanding) ..................................... 69,450,000
------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS:
(equivalent to $14.67 per share based on
7,910,993 common shares issued and
outstanding; unlimited number of common
shares authorized) .......................................... $116,050,660
============
NET ASSETS APPLICABLE TO COMMON
SHAREHOLDERS CONSISTED OF:
Common shares of beneficial interest,
par value $0.001 per share .................................. $ 7,911
Paid-in capital in excess of par .............................. 112,104,952
Undistributed net investment income ........................... 703,034
Accumulated net realized gain
on investments .............................................. 87,033
Net unrealized appreciation
on investments .............................................. 3,147,730
------------
NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS ........................................... $116,050,660
============
See notes to financial statements
10
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Statement of Operations
FOR THE PERIOD AUGUST 27, 2003* THROUGH JANUARY 31, 2004 (UNAUDITED)
INVESTMENT INCOME:
Interest ............................................ $3,127,767
----------
EXPENSES:
Investment advisory fees ......................... $261,062
Servicing agent fees ............................. 174,041
Administration and accounting fees ............... 66,939
Auction agent fees and commissions ............... 28,380
Transfer agent fees .............................. 14,067
NYSE fee ......................................... 10,417
Trustees' fees ................................... 16,729
Audit fees ....................................... 25,809
Legal fees and expenses .......................... 24,747
Reports to shareholders .......................... 11,618
Custodian fees ................................... 9,147
Miscellaneous .................................... 34,774
--------
Total expenses (before waivers) .................. 677,730
Less investment advisory fees waived .......... (60,245)
Less servicing agent fees waived .............. (40,163)
--------
Net expenses (after waivers) .................. 577,322
--------
Net Investment Income ............................... 2,550,445
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from
security transactions ......................... 87,033
Net change in unrealized appreciation
of investments ................................ 3,147,730
----------
Net realized and unrealized gain
on investments ................................ 3,234,763
----------
DIVIDENDS ON PREFERRED SHARES FROM
NET INVESTMENT INCOME ............................ (189,977)
-----------
NET INCREASE IN NET ASSETS APPLICABLE
TO COMMON SHAREHOLDERS RESULTING
FROM INVESTMENT OPERATIONS ....................... $5,595,231
==========
* COMMENCEMENT OF INVESTMENT OPERATIONS.
See notes to financial statements
11 www.mbiaclaymore.com
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Statement of Changes in Net Assets Applicable to Common Shareholders
FOR THE PERIOD AUGUST 27, 2003* THROUGH DECEMBER 31, 2003 (UNAUDITED)
INVESTMENT OPERATIONS:
Net investment income ........................................ $ 2,550,445
Net realized gain from security transactions ................. 87,033
Net change in unrealized appreciation
of investments ............................................ 3,147,730
------------
Net increase in net assets resulting from
investment operations .................................. 5,785,208
------------
DIVIDENDS ON PREFERRED SHARES FROM
NET INVESTMENT INCOME ........................................ (189,977)
------------
Net Increase in Net Assets Applicable to
Common Shareholders Resulting
from Investment Operations ................................... 5,595,231
------------
DIVIDENDS TO COMMON SHAREHOLDERS FROM
NET INVESTMENT INCOME ........................................ (1,657,434)
------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of common shares ...................... 112,809,375
Preferred shares underwriting discount charged
to paid-in capital in excess of par ....................... (694,500)
Common shares and preferred shares
offering costs charged to paid-in capital
in excess of par .......................................... (526,459)
Reinvestment of dividends .................................... 424,444
------------
Net increase in net assets applicable to
common shares from capital
share transactions .................................. 112,012,860
------------
Net increase in net assets applicable
to common shares .......................................... 115,950,657
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS:
Beginning of period .......................................... 100,003
------------
End of period (including undistributed
net investment income of $703,034) ........................ $116,050,660
============
* COMMENCEMENT OF INVESTMENT OPERATIONS.
See notes to financial statements
12
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Financial Highlights
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR A COMMON SHARE OUTSTANDING
THROUGHOUT THE PERIOD PRESENTED.
FOR THE PERIOD
AUGUST 27, 2003* THROUGH
JANUARY 31, 2004
(UNAUDITED)
------------------------
PER COMMON SHARE OPERATING PERFORMANCE
Net asset value, beginning of period** ......................... $ 14.33
--------
INVESTMENT OPERATIONS:
Net investment income .......................................... 0.32
Net realized and unrealized gain on investments ................ 0.41
--------
Total from investment operations ............................ 0.73
--------
DIVIDENDS ON PREFERRED SHARES FROM
NET INVESTMENT INCOME ....................................... (0.03)
--------
Net increase in net assets applicable to common
shares resulting from investment operations ................. 0.70
--------
DIVIDENDS TO COMMON SHAREHOLDERS FROM
NET INVESTMENT INCOME ....................................... (0.21)
--------
CAPITAL SHARE TRANSACTIONS:
Common share offering costs charged to paid-in
capital in excess of par .................................... (0.03)
Preferred shares offering costs/underwriting discount
charged to paid-in capital in excess of par ................. (0.12)
--------
Total capital share transactions ............................ (0.15)
--------
Net asset value, end of period ................................. $ 14.67
========
Per share market value, end of period .......................... $ 15.22
========
TOTAL INVESTMENT RETURN (1) .................................... 2.93%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets: (2) (3)
Expenses (net of fee waivers) ............................... 1.18%
Expenses (excluding fee waivers) ............................ 1.39%
Net investment income ....................................... 5.23%
Portfolio turnover rate ........................................ 74%
Net assets, end of period (in 000's) ........................... $116,051
Preferred shares asset coverage per share ...................... 66,775
* COMMENCEMENT OF INVESTMENT OPERATIONS.
** INITIAL PUBLIC OFFERING PRICE OF $15.00 PER SHARE LESS UNDERWRITING DISCOUNT
OF $0.675 PER SHARE.
(1) TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A PURCHASE OF COMMON SHARES
AT THE OFFERING PRICE OF $15.00 ON AUGUST 27, 2003, AND A SALE AT THE MARKET
PRICE ON THE LAST DAY OF THE PERIOD REPORTED. DIVIDENDS AND DISTRIBUTIONS,
IF ANY, ARE ASSUMED FOR PURPOSES OF THIS CALCULATION TO BE REINVESTED AT
PRICES OBTAINED UNDER THE FUND'S DIVIDEND REINVESTMENT PLAN. TOTAL
INVESTMENT RETURN DOES NOT REFLECT BROKERAGE COMMISSIONS. THE TOTAL
INVESTMENT RETURN, WHICH IS FOR LESS THAN A FULL YEAR, IS NOT ANNUALIZED.
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS.
(2) ANNUALIZED
(3) CALCULATED ON THE BASIS OF INCOME AND EXPENSES APPLICABLE TO BOTH COMMON AND
PREFERRED SHARES RELATIVE TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS.
See notes to financial statements
13 www.mbiaclaymore.com
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Notes to Financial Statements
JANUARY 31, 2004 (UNAUDITED)
NOTE 1 -- ORGANIZATION & ACCOUNTING POLICIES:
- --------------------------------------------------------------------------------
The MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund (the
"Fund") was organized as a Delaware statutory trust on May 20, 2003. The Fund is
registered as a diversified, closed-end management investment company under the
Investment Company Act of 1940, as amended. The Fund's investment objective is
to provide its common shareholders with high current income exempt from regular
Federal income tax while seeking to protect the value of the Fund's assets
during periods of interest rate volatility.
Prior to commencing operations on August 27, 2003, the Fund had no operations
other than matters relating to its organization and registration and the sale
and issuance of 6,981 common shares of beneficial interest to MBIA Capital
Management Corp.
The following is a summary of significant accounting policies followed by the
Fund.
SECURITIES VALUATION: The municipal bonds in which the Fund invests are traded
primarily in the over-the-counter markets. In determining net asset value, the
Fund uses the valuations of portfolio securities furnished by a pricing
service approved by the Board of Trustees. The pricing service typically
values portfolio securities at the bid price or the yield equivalent when
quotations are readily available. Municipal bonds for which quotations are not
readily available are valued at fair market value on a consistent basis as
determined by the pricing service using a matrix system to determine
valuations. The procedures of the pricing service and its valuations are
reviewed by the officers of the Fund under the general supervision of the
Board of Trustees. Positions in futures contracts, interest rate swaps and
options on interest rate swaps ("swaptions") are valued at closing prices for
such contracts established by the exchange or dealer market on which they are
traded, or if market quotations are not readily available, are valued at fair
value on a consistent basis using methods approved in good faith by the Board
of Trustees.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
accounted for on the trade date. Realized gains and losses on investments are
determined on the identified cost basis. Interest income and expenses are
accrued daily. All discounts/premiums are accreted/amortized for financial
reporting purposes as required.
SWAPTIONS: The Fund may engage in options transactions on interest rate swap
agreements, commonly referred to as swaptions. A swaption is an agreement
between two parties where one party purchases the right from the other party
14
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Notes to Financial Statements
JANUARY 31, 2004 (UNAUDITED) -- CONTINUED
to enter into an interest rate swap at a specified date and for a specified
"fixed rate" yield (or "exercise" yield). In a pay-fixed swaption, the holder
of the swaption has the right to enter into an interest rate swap as a payer
of fixed rate interest and receiver of variable rate interest, while the
writer of the swaption has the obligation to enter into the other side of the
interest rate swap. In a receive-fixed swaption, the holder of the swaption
has the right to enter into an interest rate swap as a receiver of fixed rate
interest and a payer of variable rate interest, while the writer has the
obligation to enter into the opposite side of the interest rate swap. The Fund
will enter into such transactions to attempt to hedge some or all of its
interest rate exposure in its holdings of municipal bonds. During the period
ended January 31, 2004, the Fund purchased pay-fixed swaptions. Upon the
purchase of these pay-fixed swaptions by the Fund, the total purchase price
paid was recorded as an investment. The market valuation is determined as set
forth in the preceding securities valuation paragraph. When the pay-fixed
swaptions are exercised, the Fund has the right to enter into an interest rate
swap as a payer of fixed rate interest and receiver of variable rate interest.
When the pay-fixed swaptions reach their scheduled expiration dates, the Fund
will record a gain or loss depending on the difference between the purchase
price and the value of the swaptions on their exercise date.
FEDERAL INCOME TAXES: It is the Fund's intention to elect to be treated as a
regulated investment company under the Internal Revenue Code of 1986, as
amended, and to distribute sufficient net income to shareholders to qualify as
such. For this reason and because substantially all of the Fund's gross income
consists of tax-exempt interest, no Federal income tax provision is required.
DIVIDENDS AND DISTRIBUTIONS: The Fund intends to declare and pay dividends
from net investment income monthly to common shareholders. Distributions of
net realized capital gains, if any, will be paid at least annually. Dividends
and distributions to shareholders will be recorded on the ex-dividend date.
Dividends and distributions to preferred shareholders are accrued and
determined as described in Note 4.
USE OF ESTIMATES: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
15 www.mbiaclaymore.com
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Notes to Financial Statements
JANUARY 31, 2004 (UNAUDITED) -- CONTINUED
NOTE 2 -- AGREEMENTS:
- --------------------------------------------------------------------------------
Pursuant to an Investment Advisory Agreement (the "Advisory Agreement") between
MBIA Capital Management Corp. (the "Adviser") and the Fund, the Adviser is
responsible for the daily management of the Fund's Portfolio, which includes
buying and selling securities for the Fund, as well as investment research,
subject to the directions of the Fund's Board of Trustees. The Adviser is a
subsidiary of MBIA Asset Management LLC which, in turn, is a wholly-owned
subsidiary of MBIA Inc. The Advisory Agreement provides that the Fund shall pay
to the Adviser a monthly fee for its services at the annual rate of 0.39% of the
sum of the Fund's average daily net assets (including assets acquired from the
sale of any preferred shares), plus the proceeds of any outstanding borrowings
used for financial leverage (in total, the "Managed Assets"). The Adviser has
contractually agreed to waive a portion of the management fees it is entitled to
receive from the Fund at the annual rate of 0.09% of the Fund's average daily
Managed Assets from the commencement of the Fund's operations through September
1, 2008, and at the rate of 0.042% thereafter through September 1, 2009.
Pursuant to a Servicing Agreement, Claymore Securities, Inc. (the "Servicing
Agent") acts as servicing agent to the Fund. The Servicing Agent receives an
annual fee from the Fund, payable monthly in arrears, in an amount equal to
0.26% of the average daily value of the Fund's Managed Assets. The Servicing
Agent has contractually agreed to waive a portion of the servicing fee it is
entitled to receive from the Fund at the annual rate of 0.06% of the average
daily value of the Fund's Managed Assets from the commencement of the Fund's
operations through September 1, 2008, and at a rate of 0.028% thereafter through
September 1, 2009.
MBIA Municipal Investors Service Corporation ("MBIA-MISC"), a subsidiary of MBIA
Asset Management LLC, serves as Accounting Agent and Administrator to the Fund
pursuant to an Accounting Services and Administration Agreement with the Fund.
As Accounting Agent and Administrator, MBIA-MISC is responsible for services
such as financial reporting, compliance monitoring and corporate management.
MBIA-MISC is also responsible for maintaining the books and records of the
Fund's securities and cash. For these services, the Fund pays MBIA-MISC an
annual fee equal to 0.10% of the Fund's average daily Managed Assets up to $250
million, 0.06% on the next $250 million of the Fund's average daily Managed
Assets, and 0.03% of the Fund's average daily Managed Assets in excess of $500
million, with a minimum annual fee of $100,000.
16
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Notes to Financial Statements
JANUARY 31, 2004 (UNAUDITED) -- CONTINUED
Certain officers and/or trustees of the Fund are officers and/or directors of
the Adviser and the Servicing Agent.
NOTE 3 -- PORTFOLIO SECURITIES:
- --------------------------------------------------------------------------------
Purchases and sales of investment securities, excluding short-term investments,
for the period August 27, 2003 (commencement of investment operations) through
January 31, 2004, aggregated $287,165,847 and $115,378,626, respectively.
The Federal income tax cost basis of the Fund's investments at January 31, 2004,
was $180,276,332 and net unrealized appreciation was $3,147,730, which consisted
of aggregate gross unrealized appreciation of $5,691,465 and aggregate gross
unrealized depreciation of $2,543,735.
NOTE 4 -- CAPITAL:
- --------------------------------------------------------------------------------
There are an unlimited number of $.001 par value common shares of beneficial
interest authorized. Of the 7,910,993 common shares outstanding at January 31,
2004, the Adviser owned 6,981 shares. The Fund issued 7,100,000 common shares in
its initial public offering on August 27, 2003. These common shares were issued
at $15.00 per share before the underwriting discount of $0.675 per share. An
additional 600,000 common shares and 175,000 common shares were issued on
September 10, 2003 and October 10, 2003, respectively. These common shares were
also issued at $15.00 per share before the underwriting discount of $0.675 per
share. Organization expenses amounting to $31,465 were borne by the Adviser and
the Servicing Agent. Offering costs of $236,459 (representing $0.03 per common
share) were offset against proceeds of the offering and have been charged to
paid-in capital in excess of par of the common shares. MBIA Capital Management
Corp. and Claymore Securities, Inc. have agreed to pay all offering costs (other
than the sales load) exceeding $0.03 per common share of the Fund.
Transactions in common shares for the period from August 27, 2003 (commencement
of investment operations) through January 31, 2004, were as follows:
Common shares outstanding -- beginning of period ................ 6,981
Common shares issued in connection with initial public offering . 7,100,000
Underwriters' exercising the over-allotment option .............. 775,000
Reinvestment of dividends ....................................... 29,012
---------
Common shares outstanding-- end of period ....................... 7,910,993
=========
17 www.mbiaclaymore.com
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Notes to Financial Statements
JANUARY 31, 2004 (UNAUDITED) -- CONTINUED
On October 27, 2003 the Fund issued 1,389 shares of Auction Market Preferred
Shares, Series M7 and 1,389 shares of Auction Market Preferred Shares, Series
W28. The preferred shares have a liquidation value of $25,000 per share plus any
accumulated unpaid dividends. Underwriting discounts of $694,500 and offering
costs of $290,000 incurred in connection with the Fund's offering of preferred
shares have been charged to paid-in capital in excess of par of the common
shares. As of January 31, 2004, the Fund had 1,389 shares each of Auction Market
Preferred Shares, Series M7 and W28, outstanding.
Dividends on the preferred shares are cumulative at a rate that is set by
auction procedures. The dividend rate range on the preferred shares of the Fund
for the period ended January 31, 2004, were as follows:
SERIES LOW HIGH AT 01/31/04
------ ----- ----- -----------
M7 0.75% 1.40% 0.94%
W28 1.05% 1.05% 1.05%
The Fund is subject to certain limitations and restrictions while preferred
shares are outstanding. Failure to comply with these limitations and
restrictions could preclude the Fund from declaring any dividends or
distributions to common shareholders or repurchasing common shares and/or could
trigger the mandatory redemption of preferred shares at their liquidation value
plus any accrued dividends. Preferred shares, which are entitled to one vote per
share, generally vote with the common shares but vote separately as a class to
elect two Trustees and on any matters affecting the rights of preferred shares.
NOTE 5 -- SUBSEQUENT DIVIDEND DECLARATIONS - COMMON SHAREHOLDERS:
- --------------------------------------------------------------------------------
The Fund has declared the following dividends to common shareholders:
RATE PER DECLARATION EX-DIVIDEND RECORD PAYABLE
SHARE DATE DATE DATE DATE
-------- ----------- ----------- -------- --------
$0.07 02/17/04 03/04/04 03/08/04 03/15/04
0.07 03/15/04 04/06/04 04/08/04 04/15/04
18
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Additional Information Regarding the Fund's Trustees (Unaudited)
NAME,
ADDRESS*, TERM OF
AGE AND TERM OF OFFICE**
POSITION(S) AND LENGTH PRINCIPAL OCCUPATION DURING
HELD WITH OF TIME THE PAST FIVE YEARS AND OTHER DIRECTORSHIPS
REGISTRANT SERVED OTHER AFFILIATIONS HELD BY TRUSTEES
- -----------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES:
- -----------------------------------------------------------------------------------------------------------------------------------
Mark Jurish Since 2003 Founder and Chief Executive Officer of None
Age: 44 Larch Lane Advisors LLC. Prior to
Trustee forming Larch Lane, Mr. Jurish was
Managing Director at Paloma
Partners, a firm that he
joined in 1988.
- -----------------------------------------------------------------------------------------------------------------------------------
Ronald A. Since 2003 Founding partner, Nyberg and Director, Juvenile Diabetes Research
Nyberg Gustafson, a law firm specializing Foundation, Chicago Chapter, and
Age: 50 in corporate law, estate planning Edward Hospital Foundation,
Trustee and business transactions Naperville, IL; Trustee, North Park
(2000-present). Formerly, Executive University, Chicago; Trustee, Advent
Vice President, General Counsel Claymore Convertible Securities and
and Corporate Secretary of Van Income Fund, Western Asset/Claymore
Kampen Investments (1982-1999). U.S. Treasury Inflation Protected
Former associate of Query & Harrow, Securities Fund, Dreman/Claymore
a law firm(1978-1982). Dividend & Income Fund, and
Western Asset/Claymore U.S. Treasury
Inflation Protected Securities Fund 2.
- -----------------------------------------------------------------------------------------------------------------------------------
Jerry S. Since 2003 Professor of Insurance and Risk Harleysville Group, Inc; Century
Rosenbloom Management at the Wharton School Shares Trust; Mutual Risk
Age: 64 of the University of Pennsylvania and Management; and Annuity & Life RE
Trustee Academic Director of the Certified Holdings.
Employee Benefit Specialist (CEBS)
Program, co-sponsored by the Wharton
School and the International Foundation
of Employee Benefit Plans
- -----------------------------------------------------------------------------------------------------------------------------------
Ronald E. Since 2003 Former Vice President, Manager and Trustee, Advent Claymore Convertible
Toupin, Jr. Portfolio Manager of Nuveen Asset Securities and Income Fund, Western
Age: 45 Management (1998-1999), Vice Asset/Claymore U.S. Treasury Inflation
Trustee President and Portfolio Manager of Protected Securities Fund, Dreman/
Nuveen Investment Advisory Corporation Claymore Dividend & Income Fund,
(1992-1999), Vice President and Manager and Western Asset/Claymore U.S.
of Nuveen Unit Investment Trusts Treasury Inflation Protected s
(1991-1998), and Assistant Vice Securitie Fund 2.
Presidentand Portfolio Manager of
Nuveen Unit Trusts (1988-1990),
each of John Nuveen & Company, Inc.
(1982-1999).
- -----------------------------------------------------------------------------------------------------------------------------------
* The business address of each Trustee is c/o MBIA Capital/Claymore Managed
Duration Investment Grade Municipal Fund, 113 King Street, Armonk, New York
10504.
** The Trustees of each class shall be elected at an annual meeting of the
shareholders or special meeting in lieu thereof called for that purpose, and
each Trustee elected shall hold office until his or her successor shall have
been elected and shall have qualified. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death, resignation,
removal, bankruptcy, adjudicated incompetence or other incapacity to perform
the duties of the office, or removal, of a Trustee.
19 www.mbiaclaymore.com
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Additional Information Regarding the Fund's Trustees (Unaudited) -- continued
NAME,
ADDRESS*, TERM OF
AGE AND TERM OF OFFICE**
POSITION(S) AND LENGTH PRINCIPAL OCCUPATION DURING
HELD WITH OF TIME THE PAST FIVE YEARS AND OTHER DIRECTORSHIPS
REGISTRANT SERVED OTHER AFFILIATIONS HELD BY TRUSTEES
- -----------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES:
- -----------------------------------------------------------------------------------------------------------------------------------
Clifford D. Since 2003 President of MBIA Capital None
Corso Management Corp. and Chief
Age: 42 Investment Officer, MBIA Insurance
Trustee and Corp.; Vice President of the 1838
President Investment Advisors Funds
- -----------------------------------------------------------------------------------------------------------------------------------
Nicholas Since 2003 Senior Managing Director and General Trustee, Advent Claymore Convertible
Dalmaso Counsel of Claymore Advisors, LLC and Securities and Income Fund, Western
Age: 38 Claymore Securities, Inc. (2001-present). Asset/Claymore U.S. Treasury Inflation
Trustee Manager, Claymore Fund Management Protected Securities Fund, F&C/
Company, LLC, Vice President Boyar Value Claymore Preferred Securities &
Fund. Vice President and Assistant Income Fund, Inc., Flaherty &
Secretary of F&C/Claymore Preferred Crumrine/Claymore Total Return
Securities & Income Fund, Inc. Fund, Inc., Dreman/Claymore
(2002-present), Flaherty & Crumrine/ Dividend & Income Fund, and
Claymore Total Return Fund, Inc. Western Asset/Claymore U.S. Treasury
(2003-present) and Chief Legal and Inflation Protected Securities Fund 2.
Executive Officer of Dreman/Claymore
Dividend & Income Fund (2004-present).
Formerly, Assistant General Counsel,
John Nuveen and Company, Inc. (1999-2001).
Former Vice President and Associate
General Counsel of Van Kampen Investments,
Inc. (1992-1999).
- -----------------------------------------------------------------------------------------------------------------------------------
* The business address of each Trustee is c/o MBIA Capital/Claymore Managed
Duration Investment Grade Municipal Fund, 113 King Street, Armonk, New York
10504.
** The Trustees of each class shall be elected at an annual meeting of the
shareholders or special meeting in lieu thereof called for that purpose, and
each Trustee elected shall hold office until his or her successor shall have
been elected and shall have qualified. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death, resignation,
removal, bankruptcy, adjudicated incompetence or other incapacity to perform
the duties of the office, or removal, of a Trustee.
20
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Dividend Reinvestment Plan (Unaudited)
Pursuant to the Fund's Automatic Dividend Reinvestment Plan (the "Plan"), unless
a shareholder is ineligible or elects otherwise, all dividend and capital gains
distributions are automatically reinvested by The Bank of New York ("BONY"), as
agent for shareholders in administering the Plan (the "Plan Agent"), in
additional common shares of the Fund. Shareholders whose shares are held in the
name of a broker or nominee should contact such broker or nominee to confirm
that they are eligible to participate in the Plan. Shareholders who are
ineligible or who elect not to participate in the Plan will receive all
dividends and distributions in cash paid by check mailed directly to the
shareholder of record (or, if the shares are held in street or other nominee
name, then to such nominee) by BONY, as dividend paying agent. Such shareholders
may elect not to participate in the Plan and to receive all distributions of
dividends and capital gains in cash by sending written instructions to BONY, as
dividend paying agent, at the address set forth below. Participation in the Plan
is completely voluntary and may be terminated or resumed at any time without
penalty by written notice if received by the Plan Agent not less than ten days
prior to any dividend record date; otherwise, such termination will be effective
with respect to any subsequently declared dividend or capital gains
distribution.
Whenever the Fund declares an ordinary income dividend or a capital gain
dividend (collectively referred to as "dividends") payable in cash,
non-participants in the Plan will receive cash, and participants in the Plan
will receive the equivalent in common shares. The shares are acquired by the
Plan Agent for the participant's account, depending upon the circumstances
described below, either (i) through receipt of additional unissued but
authorized common shares from the Fund ("newly issued shares") or (ii) by
purchase of outstanding common shares on the open market ("open-market
purchases") on the NYSE or elsewhere. If, on the dividend payment date, the
market price per common share plus estimated brokerage commissions is greater
than the net asset value per common share (such condition being referred to
herein as "market premium"), the Plan Agent will invest the dividend amount in
newly issued shares on behalf of the participant. The number of newly issued
common shares to be credited to the participant's account will be determined by
dividing the dollar amount of the dividend by the net asset value per share on
the payment date, provided that, if the net asset value per share is less than
or equal to 95% of the market price per share on the payment date, the dollar
amount of the dividend will be divided by 95% of the market price per share on
the payment date. If on the dividend payment date the net asset value per share
is greater than the market value plus estimated brokerage commissions (such
condition being referred to herein as "market discount"), the Plan Agent will
invest the dividend amount in shares acquired on behalf of the participant in
open-market purchases.
21 www.mbiaclaymore.com
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
Dividend Reinvestment Plan (Unaudited) -- continued
If, before the Plan Agent has completed its open-market purchases, the market
price of the common shares exceeds the net asset value per share, the average
per share purchase price paid by the Plan Agent may exceed the net asset value
of the Fund's shares, resulting in the acquisition of fewer shares than if the
dividend had been paid in newly issued shares on the dividend payment date.
Because of the foregoing difficulty with respect to open-market purchases, the
Plan provides that if the Plan Agent is unable to invest the full dividend
amount in open-market purchases during the purchase period or if the market
discount shifts to a market premium during the purchase period, the Plan Agent
may cease making open-market purchases and may invest the uninvested portion of
the dividend amount in newly issued shares at the net asset value per share at
the close of business on the last purchase date; provided that, if the net asset
value per share is less than 95% of the market price per share on the payment
date, the dollar amount of the dividend will be divided by 95% of the market
price per share on the payment date.
The Plan Agent maintains all shareholders' accounts in the Plan and furnishes
written confirmation of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Plan Agent in the name of the participant, and
each shareholder's proxy will include those shares purchased or received
pursuant to the Plan. The Plan Agent will forward all proxy solicitation
materials to participants and vote proxies for shares held pursuant to the Plan
in accordance with the instructions of the participants.
There will be no brokerage charges with respect to shares issued directly by the
Fund as a result of dividends or capital gains distributions payable either in
shares or in cash. However, each participant will pay a pro rata share of
brokerage commissions incurred with respect to the Plan Agent's open-market
purchases in connection with the reinvestment of dividends. The automatic
reinvestment of dividends and distributions will not relieve participants of any
Federal, state or local income tax that may be payable (or required to be
withheld) on such dividends.
The Fund reserves the right to amend or terminate the Plan. There is no direct
service charge to participants in the Plan; however, the Fund reserves the right
to amend the Plan to include a service charge payable by the participants. All
questions and correspondence concerning the Plan should be directed to the Plan
Agent at The Bank of New York, 101 Barclay Street, 20W, New York, New York 10286
or by phone at 800-701-8178.
22
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23 www.mbiaclaymore.com
[This Page is Intentionally Left Blank]
24
[BLANK PAGE]
Fund Information
BOARD OF TRUSTEES
Clifford D. Corso
Nicholas Dalmaso
Mark Jurish
Ronald A. Nyberg
Jerry S. Rosenbloom
Ronald E. Toupin, Jr
OFFICERS
Clifford D. Corso
PRESIDENT
Michael R. Jacobson
VICE PRESIDENT AND SECRETARY
Marc D. Morris
TREASURER
INVESTMENT ADVISOR
MBIA Capital Management Corp.
113 King Street
Armonk, New York 10504
ADMINISTRATOR
MBIA Municipal Investors
Service Corporation
113 King Street
Armonk, NY 10504
SERVICING AGENT
Claymore Securities, Inc.
Wheaton, Illinois
CUSTODIAN, TRANSFER AGENT AND
AUCTION AGENT
The Bank of New York
New York, New York
LEGAL COUNSEL
Simpson Thacher & Bartlett LLP
New York, New York
QUESTIONS CONCERNING YOUR SHARES OF
MBIA CAPITAL/CLAYMORE MANAGED DURATION INVESTMENT GRADE MUNICIPAL FUND
o If your shares are held in a Brokerage Account, contact your Broker.
o If you have physical possession of your shares in certificate form, contact
the Fund's Transfer Agent:
The Bank of New York
101 Barclay Street
New York, New York 10286
800-701-8178
The Fund has adopted the Adviser's proxy voting policies and procedures to
govern the voting of proxies relating to the voting securities of the Fund. You
may obtain a copy of these proxy voting procedures, without charge, by calling
(800) 345-7999.
This report is sent to shareholders of MBIA Capital/Claymore Managed Duration
Investment Grade Municipal Fund for their information. It is not a Prospectus,
circular or representation intended for use in the purchase or sale of shares of
the Fund or of any securities mentioned in this report.
MBIA Capital Management Corp. MZF
113 King Street LISTED
Armonk, New York 10504 NYSE
ITEM 2: Code of Ethics
Not applicable at this time.
ITEM 3: Audit Committee Financial Expert
Not applicable at this time.
ITEM 4: Principal Accountant Fees and Services
Not applicable at this time.
ITEM 5: Audit Committee of Listed Registrants
Not applicable at this time.
ITEM 6: (Reserved)
ITEM 7: Disclosure of Proxy Voting Policies and Procedures for Closed-
End Management Investment Companies
Not applicable at this time.
ITEM 8: (Reserved)
ITEM 9: CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial
officers, or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule 30a-3(c)
under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR
270.30a-3(c))) are effective, as of a date within 90 days of the filing date of
the report that includes the disclosure required by this paragraph, based on
their evaluation of these controls and procedures required by Rule 30a-3(b)
under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under
the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR
270.30a-3(d)) that occurred during the registrant's last fiscal half-year (the
registrant's second fiscal half-year in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 10: EXHIBITS. The following exhibits are attached hereto:
(a)(1) not applicable at this time
(a)(2) certifications
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
MBIA Capital/Claymore Managed Duration Investment Grade Municipal Fund
BY: /s/ Clifford D. Corso
---------------------
Clifford D. Corso
President
Date: March 29, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
BY: /s/ Clifford D. Corso
---------------------
Clifford D. Corso
President
(Principal Executive Officer)
Date: March 29, 2004
BY: /s/ Marc D. Morris
------------------
Marc D. Morris
Treasurer
(Principal Financial Officer)
Date: March 29, 2004