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Managed Duration Investment Grade Municipal Fund

Fund Resources
Fact Card

Common Shares

Daily Data

Closing Market Price$13.93
Closing NAV$15.17
52-week Average Premium/Discount-7.55%
Current Distribution Rate14.61%
Monthly Dividend Per Share2$0.05350
Ex-Dividend Date10/12/2016
Payable Date10/31/2016
Daily Volume15,370
52 Week High/Low Market Price$15.00/$13.17
52 Week High/Low NAV$15.69/$14.70
Intraday Trading InformationNYSE

Weekly Data

Closing Market Price$13.93
Closing NAV$15.17
Closing Volume15,370
Distribution Rate4.61%
Total Managed Assets$172,613,221
Common Shares Outstanding6,800,476
Percent Leveraged340.23%
52-Week Average Premium/Discount-7.55%

Semi-Annual Data

Fiscal Year-End7/31
Portfolio Manager Cutwater Investor Services Corp.
Shareholder Servicing Agent Guggenheim Funds Distributors, LLC
Expense Ratio (Common Shares)41.33%
Portfolio Turnover Rate8%

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Since Inception returns assume a purchase of common shares at each Fund’s initial offering price for market price returns or the Fund’s initial net asset value (NAV) for NAV returns. Returns for periods of less than one year are not annualized. All distributions are assumed to be reinvested either in accordance with the dividend reinvestment plan (DRIP) for market price returns or NAV for NAV returns. Until the DRIP price is available from the Plan Agent, the market price returns reflect the reinvestment at the closing market price on the last business day of the month. Once the DRIP is available around mid-month, the market price returns are updated to reflect reinvestment at the DRIP price. All returns include the deduction of management fees, operating expenses and all other fund expenses, and do not reflect the deduction of brokerage commissions or taxes that investors may pay on distributions or the sale of shares. Please refer to the most recent annual or semi-annual report for additional information.

Distributions are not guaranteed and are subject to change.

1 Latest declared distribution per share annualized and divided by the current share price.

2 Distributions may be paid from sources of income other than ordinary income, such as short term capital gains, long term capital gains or return of capital. If a distribution consists of something other than ordinary income, a 19(a) notice detailing the anticipated source(s) of the distribution will be made available. The 19(a) notice will be posted to the Fund’s website and to the Depository Trust & Clearing Corporation so that brokers can distribute such notices to Shareholders of the Fund. Section 19(a) notices are provided for informational purposes only and not for tax reporting purposes. The final determination of the source and tax characteristics of all distributions in a particular year will be made after the end of the year. This information is not legal or tax advice. Consult a professional regarding your specific legal or tax matters.

3 Represents the amount of financial leverage the Fund currently employs as a percentage of total Fund assets.

4 Expense ratios are annualized and reflect the funds operating expense, including interest expense and net of fee waivers, as of the most recent annual or semi-annual report. The expense ratio, including interest expense and excluding fee waivers was 1.58%.

Investment Objective

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. There can be no assurance that the Fund’s investment objective will be realized.

Under normal market conditions, the Fund seeks to achieve its objective by investing at least 80% of its total assets in municipal bonds of investment grade quality [those rated Baa or higher by Moody’s Investors Service, Inc. ("Moody's") or BBB or higher by either Standard & Poor's Ratings Group ("S&P"), or Fitch, Inc. ("Fitch"), or unrated municipal securities considered by the Fund's investment adviser to be of comparable quality and will normally invest substantially all of its total assets in securities of investment grade quality.

For periodic shareholder reports and recent fund-specific filings, please visit the U.S. Securities and Exchange Commission (“SEC”) website via the following: http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001235511

Frequently Asked Questions

What are municipal bonds?

Municipal bonds are debt instruments issued by state and local governments for the purpose of financing projects such as new schools, health care facilities and general infrastructure construction and improvement projects. In that municipal bond investors are generally allowed to exclude interest paid on a municipal bond from regular federal, and, if applicable, state and local income tax, municipal bonds  may yield less than other debt instruments having similar attributes such as credit quality and duration.

What is duration?

Duration is the dollar-value weighted-average timing of a bond’s cash flows and is a measure of the price sensitivity of a fixed income security relative to changes in interest rates.

Why is Cutwater Investor Services Corp. managing the duration of this Fund?

Cutwater Investor Services Corp.* manages the Fund’s duration to attempt to provide shareholders with the highest amount of risk-adjusted return while seeking to reduce the volatility of the Fund’s income and net asset value. The management of the Fund’s duration may include the utilization of a variety of hedging strategies. There can be no assurance that duration management will be successful in preserving the net asset value of any of the Fund.

What does the “Ex-Div” or the “Ex-Dividend” date refer to?

Every month the Fund pays dividends and those investors who purchase the Fund before the ex-dividend date will receive the next dividend distribution. Investors who purchase on or after the ex-dividend date will not receive the next dividend distribution. The value of the dividend is subtracted from the Fund’s NAV on the ex-dividend date each month. So when the NAV is reported with an “ex-div” behind it, this means that the amount of the dividend has already been taken out of the NAV.

Describe the differences between closed-end and open-end funds?

An open-end fund may be purchased or sold at NAV. An open-end fund will issue new shares when an investor wants to purchases shares in the fund and will sell assets to redeem shares when an investor wants to sell shares. When selling an open-end fund the price the seller receives is established at the close of the market when the NAV is calculated. Unlike the open-end fund, a closed-end fund has a limited number of shares outstanding and trades on an exchange at the market price based on supply and demand. An investor may purchase or sell shares at market price while the exchange is open. The common shares may trade at a discount or premium to the NAV.

What is the DRIP and how does it work?

DRIP is the Dividend Reinvestment Plan. The number of shares of common stock distributed to participants in the Plan in lieu of a cash dividend is determined in the following manner. Whenever the market price per share of the Fund’s common stock is equal to or exceeds the net asset value per share on the valuation date, participants in the Plan will be issued new shares valued at the higher of net asset value or 95% of the then-current market value. Otherwise, the Administrator will buy shares of the common stock in the open market, on the NYSE or elsewhere.


The Fund’s prospectus offers a more thorough discussion of the risks and considerations associated with an investment in the Fund. Such risks and considerations include, but are not limited to: Investment Risk, Market and Selection Risk, Municipal Bond Market Risk, Interest Rate Risk, Credit Risk, Reinvestment Risk, Leverage Risk, Hedging Risk, Derivatives Risk, Anti-Takeover Provisions Risk, Market Disruption Risk, Auction Market Preferred Shares Risk and Non- Diversification Risk.

Fund Manager(s)

The Cutwater team of fixed-income professionals uses a combination of surveillance, risk management, fundamental, quantitative and technical analysis to continuously assess interest-rate, security and liquidity risks to their investment-grade bond holdings. Cutwater Investor Services Corp. intends to seek consistently attractive risk-adjusted returns in the Fund through careful selection of the bond portfolio, ongoing management of the duration and the employment of an actively-managed hedging strategy. Unless you are notified to the contrary, the products and services mentioned are not insured by the FDIC (or by any governmental entity) and are not guaranteed by or obligations of The Bank of New York Mellon Corporation or any of its affiliates.

Investment Team

Portfolio Management

James B. DiChiaro | Senior Portfolio Manager

James joined Insight’s Fixed Income Group as a senior portfolio manager in January 2015, following BNY Mellon’s acquisition of Cutwater Asset Management (Cutwater). He originally joined Cutwater in 1999 and has worked in the financial services industry since 1998. James’s responsibilities include managing the firm’s municipal assets (taxable and tax-exempt) and money market portfolios. He constructs and implements portfolio strategies for a diverse client base including insurance companies, separately managed accounts and closed-end bond funds. Previously at Cutwater, James began his career working with the Conduit Group, structuring medium-term notes for Meridian Funding Company and performing the treasury role for an MBIA sponsored asset-backed commercial paper conduit, Triple-A One Funding Corporation. Prior to that, he worked for Merrill Lynch supporting their ABS trading desk. James holds a BS degree from Fordham University and an MBA from Pace University.

Gerard Berrigan | Head of US Fixed Income

Gerard joined Insight’s Fixed Income Group as Head of US Fixed Income in January 2015, following BNY Mellon’s acquisition of Cutwater Asset Management (Cutwater). He originally joined Cutwater in June 1994 and has worked in the financial services industry since 1984 with specific experience in securities and trading. Gerard’s responsibilities include overseeing all aspects of portfolio management for North America. Previously, he worked at the Federal National Mortgage Association as a member of the Portfolio Management and Treasury Groups where he developed and applied expertise in ABS, MBS and portfolio hedging. Gerard also worked at First Boston Corp. developing and implementing investment strategies for the firm's public finance clients. He has a BS degree from Bucknell University and an MBA from Columbia University. Gerard holds Series 7 and 63 licenses from the Financial Industry Regulatory Authority (FINRA).

Jason Celente, CFA | Senior Portfolio Manager

Jason joined Insight's Fixed Income Group as a senior portfolio manager in January 2015, following BNY Mellon's acquisition of Cutwater Asset Management (Cutwater). He originally began his financial services career at Cutwater in 1997 and has been part of the investment management team since 1999. Jason's responsibilities include participating in bi-weekly corporate credit and portfolio strategy meetings and then implementing those strategies by determining credit selection and sector allocation. Prior to this, Jason was an investment accountant for Cutwater's asset-liability portfolios and short-term mutual funds. He has a BS degree from Colgate University and an MBA from the Stern School of Business at New York University. Jason holds Series 7 and 63 licences from the Financial Industry Regulatory Authority (FINRA) and is a CFA charterholder.

MZF Investment Adviser
Cutwater Investor Services Corp.
200 Park Avenue, 7th Floor
New York, NY 10166


There can be no assurance that the Fund will achieve its investment objective. The value of the Fund will fluctuate with the value of the underlying securities. Closed-end funds often trade at a discount to their net asset value. Risk is inherent in all investing, including the loss of your entire principal. Therefore, before investing you should consider the following risks carefully.

An investment in the Fund may not be suitable for investors who are, or as a result of this investment would become, subject to the Federal Alternative Minimum Tax (“AMT”) because the securities in the Fund may pay interest that is subject to taxation under the AMT. Special rules apply to corporate holders. Additionally, any capital gains dividends will be subject to capital gains taxes.

Market Risk and Selection Risk

Market risk is the risk that the municipal bond market will go down in value, including the possibility that the market will go down sharply and unpredictably. Selection risk is the risk that the securities that the Fund’s investment adviser, Cutwater Investor Services Corp. ("Cutwater"), selects will underperform the municipal bond market, the relevant market indices, or other funds with similar investment objectives and investment strategies.

Municipal Bond Market Risk

The amount of public information available about the municipal bonds in the Fund’s portfolio is generally less than that for corporate equities or bonds, and the investment performance of the Fund may therefore be more dependent on the analytical abilities of Cutwater than that of an equity fund or taxable bond fund.  The ability of municipal issuers to make timely payments of interest and principal may be diminished during general economic downturns and as governmental cost burdens are reallocated among federal, state and local governments. In addition, laws enacted in the future by Congress or state legislatures or referenda could extend the time for payment of principal and/or interest, or impose other constraints on enforcement of such obligations, or on the ability of municipalities to levy taxes. In the event of bankruptcy of an issuer, the Fund could experience delays in collecting principal and interest and the Fund may not, in all circumstances, be able to collect all principal and interest to which it is entitled.

Revenue bonds issued by state or local agencies to finance the development of low-income, multi-family housing involve special risks in addition to those associated with municipal securities generally, including that the underlying properties may not generate sufficient income to pay expenses and interest costs. Such securities are generally non-recourse against the property owner, may be junior to the rights of others with an interest in the properties, may pay interest that changes based in part on the financial performance of the property, may be prepayable without penalty and may be used to finance the construction of housing developments which, until completed and rented, do not generate income to pay interest. Increases in interest rates payable on senior obligations may make it more difficult for issuers to meet payment obligations on subordinated bonds.

Municipal leases and certificates of participation involve special risks not normally associated with general obligations or revenue bonds. Leases and installment purchase or conditional sale contracts (which normally provide for title to the leased asset to pass eventually to the governmental issuer) have evolved as a means for governmental issuers to acquire property and equipment without meeting the constitutional and statutory requirements for the issuance of debt. Such debt issuance limitations are usually deemed to be inapplicable because of the inclusion in many leases or contracts of “non-appropriation” clauses that relieve the governmental issuer of any obligation to make future payments under the lease or contract unless money is appropriated for such purpose by the appropriate legislative body on a yearly or other periodic basis. In addition, such leases or contracts may be subject to temporary abatement of payments in the event the governmental issuer is prevented from maintaining occupancy of the leased premises or utilizing the leased equipment. Although the obligations may be secured by the leased equipment or facilities, the disposition of the property in the event of non-appropriation or foreclosure might prove difficult, time consuming and costly, and may result in a delay in recovering or the failure to fully recover ownership of the assets.

Certificates of participation, which represent interests in unmanaged pools of municipal leases or installment contracts, involve the same risks as the underlying municipal leases. In addition, the Fund may be dependent upon the municipal authority issuing the certificate of participation to exercise remedies with respect to the underlying securities. Certificates of participation also entail a risk of default or bankruptcy, both of the issuer of the municipal lease and also the municipal agency issuing the certificate of participation.

Municipal securities, like other debt obligations, are subject to the risk of nonpayment. The ability of issuers of municipal securities to make timely payments of interest and principal may be adversely impacted in general economic downturns and as relative governmental cost burdens are allocated and reallocated among federal, state and local governmental units. Such nonpayment would result in a reduction of income to the Fund and could result in a reduction in the value of the municipal security experiencing nonpayment and a potential decrease in the net asset value of the Fund. A decline in income could affect the Fund’s ability to pay dividends on the common shares.

Interest Rate and Credit Risk

The Fund invests in municipal bonds which are subject to interest rate and credit risk. Interest rate risk is the risk that prices of municipal bonds generally increase when interest rates decline and decrease when interest rates increase. Prices of longer term securities generally change more in response to interest rate changes than prices of shorter-term securities. The common share net asset value and market price per common share of the Fund will fluctuate more in response to changes in market interest rates when the Fund invests primarily in longer-term bonds rather than shorter-term bonds. The Fund’s use of leverage by the issuance of Auction Market Preferred Shares (“AMPS”) and any investment in inverse floating obligations may increase interest rate risk. Market interest rates for investment grade municipal bonds in which the Fund primarily invests have declined significantly below the historical average rates for such bonds and market interest rates are near historical lows. These levels increase the risk that these rates will rise in the future (which would cause the value of the Fund’s net assets to decline). Credit risk is the risk that the issuer will be unable to pay the interest or principal when due. The degree of credit risk depends on both the financial condition of the issuer and the terms of the obligation. The Fund intends to invest at least 80% of its total assets in municipal bonds that are rated investment grade by S&P, Moody’s or Fitch. It may also invest in unrated and non-investment-grade-rated municipal bonds.

Variable and Floating Rate Securities

Variable and floating rate instruments involve certain obligations that may carry variable or floating rates of interest, and may involve a conditional or unconditional demand feature. Such instruments bear interest at rates which are not fixed, but which vary with changes in specified market rates or indices. The interest rates on these securities may be reset daily, weekly, quarterly, or some other reset period, and may have a set floor or ceiling on interest rate changes. There is a risk that the current interest rate on such obligations may not accurately reflect existing market interest rates.

Call and Redemption Risk

Certain municipal bonds are structured so that the issuer may call the bond for redemption prior to maturity. If this happens to a municipal bond held by the Fund, the Fund may lose income and may have to invest the proceeds in municipal bonds with lower yields.

Private Activity Bonds

The Fund may invest in certain tax exempt securities classified as ‘‘private activity bonds.’’ These bonds may subject certain investors in the Fund to the AMT. The Fund may invest up to 25% of its total assets in municipal bonds subject to the AMT. The Fund is not restricted with respect to investing in private activity bonds that are not subject to the AMT.


Leverage creates certain risks for common shareholders, including higher volatility of both the net asset value and the market price of the common shares, because common shareholders bear the effects of changes in the value of the Fund’s investments. Leverage also creates the risk that the investment return on the Fund’s common shares will be reduced to the extent the dividends paid on preferred shares and other expenses of the preferred shares exceed the income earned by the Fund on its investments. If the Fund is liquidated, preferred shareholders will be entitled to receive liquidating distributions before any distribution is made to common shareholders. When the Fund uses leverage, the fees paid to Cutwater and the Fund’s Servicing Agent, Guggenheim Funds Distributors, LLC, will be higher than if leverage was not used.

Inflation Risk

Inflation risk is the risk that the value of assets or income from an investment will be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the common shares and distributions can decline. In addition, during periods of rising inflation, preferred share dividend rates would likely increase, which would tend to further reduce returns to common shareholders.

Portfolio Strategies

The Fund may engage in various portfolio strategies both to seek to hedge its portfolio against adverse effects from movements in interest rates and in the securities markets generally and to seek to increase the return of the Fund. These strategies include the use of derivatives such as exchange traded financial futures and option contracts, options on futures contracts, or over-the-counter dealer transactions in caps, swap agreements or swaptions, the risks of which are summarized in the description of Derivatives Risk. Such strategies subject the Fund to the risk that, if Cutwater incorrectly forecasts market values, interest rates or other applicable factors, the Fund’s performance could suffer. Certain of these strategies may provide investment leverage to the Fund’s portfolio and result in many of the same risks of leverage to the holders of the Fund’s common shares as discussed in the description of Leverage. The Fund is not required to use derivatives or other portfolio strategies and may not do so. Distributions by the Fund of any income or gain realized on the Fund’s hedging transactions generally will not be exempt from regular Federal income tax. There can be no assurance that the Fund’s portfolio strategies will be effective.

Derivatives Risk

Derivatives are financial contracts whose value depends on, or is derived from, the value of an underlying asset, reference rate or index, or the relationship between two indices. The Fund may invest in a variety of derivative instruments for hedging purposes, such as exchange-traded financial futures and option contracts, options on futures contracts, or over-the-counter dealer transactions in caps, swap agreements or swaptions. The Fund may use derivatives as a substitute for taking a position in an underlying security or other asset and/or as part of a strategy designed to reduce exposure to other risks, such as interest rate risk. The Fund also may use derivatives to add leverage to the portfolio. The Fund’s use of derivative instruments involves risks different from, and possibly greater than, the risks associated with investing directly in securities and other traditional investments. Derivatives are subject to a number of risks such as liquidity risk, interest rate risk, credit risk, leveraging risk, counterparty risk, the risk of ambiguous documentation and selection risk. They also involve the risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. Under the terms of certain derivative instruments, the Fund could lose more than the principal amount invested. The use of derivatives also may increase the amount of taxes payable by common shareholders. Also, suitable derivative transactions may not be available in all circumstances and there can be no assurance that the Fund will engage in these transactions to reduce exposure to other risks when that would be beneficial.

Affiliated Underwritings

Provisions of the Investment Company Act of 1940, as amended, and the rules and regulations thereunder (the ‘‘1940 Act’’), may limit the Fund’s purchases of municipal bonds in the new issue or secondary market for which BNY Mellon acts as underwriter or receives fees for services provided to issuers or underwriters thereof.  However, based upon current market conditions, the size of the Fund and the current amount of outstanding preferred shares, Cutwater believes that such inability should not adversely affect the Fund’s ability to achieve its investment objective.

Anti-takeover Provisions

The Fund’s Amended and Restated Agreement and Declaration of Trust dated as of July 21, 2003 (the ‘‘Declaration’’) and By-laws include provisions that could limit the ability of other entities or persons to acquire control of the Fund or to change the composition of its Board of Trustees. Such provisions could limit the ability of common shareholders to sell their shares at a premium over prevailing market prices by discouraging a third party from seeking to obtain control of the Fund.

Risk of Investing in Auction Market Preferred Shares (AMPS)

The AMPS market continues to remain illiquid as auctions for nearly all AMPS continue to fail. A failed auction is not a default, nor does it require the redemption of a fund’s auction-rate preferred shares. Provisions in the Fund’s offering documents provide a mechanism to set a maximum rate in the event of a failed auction, and, thus, investors will continue to be entitled to receive payment for holding these AMPS.

Recent Market Developments Risk

Global and domestic financial markets have experienced periods of unprecedented turmoil. Recently, markets have witnessed more stabilized economic activity as expectations for an economic recovery increased. However, risks to a robust resumption of growth persist. Continuing uncertainty as to the status of the euro and the European Monetary Union has created significant volatility in currency and financial markets generally. A return to unfavorable economic conditions or sustained economic slowdown could adversely impact the Fund’s portfolio. Financial market conditions, as well as various social and political tensions in the US and around the world, have contributed to increased market volatility and may have long-term effects on the US and worldwide financial markets and cause further economic uncertainties or deterioration in the US and worldwide. Cutwater does not know how long the financial markets will continue to be affected by these events and cannot predict the effects of these or similar events in the future on the US and global economies and securities markets.

* Investment advisory services for the Fund are provided by Insight Investment, through Cutwater Investor Services Corp. (CISC). CISC is a unit of parent company Cutwater Holdings, LLC, also known as Cutwater Asset Management. Cutwater Asset Management is an indirect, wholly owned subsidiary of BNY Mellon, a global investments company that delivers investment management and investment services in 35 countries and more than 100 markets. Cutwater is one of four SEC-registered investment advisers using the brand Insight Investment (Cutwater Asset Management Corp. (CAMC), Cutwater Investor Services Corp. (CISC), Pareto New York LLC (PNY) and Pareto Investment Management Limited (PIML)) and it is associated with a broader group of global investment managers that also (individually and collectively) use the corporate brand Insight Investment and may be referred to as “Insight”, “Insight Group” or “Insight Investment”.  CISC and CAMC may also be referred to, collectively, as Cutwater Asset Management.

Guggenheim Investments represents the investment management business of Guggenheim Partners, LLC ("Guggenheim"). Guggenheim Funds Distributors, LLC is an affiliate of Guggenheim.

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