Claymore Investments, Inc. recently launched a new structured solution by Merrill Lynch Canada Inc, the Merrill Lynch Claymore International Fundamental Index Accelerator Securities, Series 2, an equity-based security that provides exposure to international equity markets.

It is issued in two separate securities — a CAD security priced in Canadian dollars and a USD security priced in U.S. dollars

This is the third launch of Accelerator products by Merrill Lynch based on the Fundamental Indexes.

These Accelerator securities provide an accelerated return on the positive price return of an underlying benchmark basket of indices which are based on a Fundamental Index (FTSE RAFI index series) approach.

Fundamental indexing is a strategy driven index methodology which weights constituents based on four fundamental factors, including: total sales, total cash flow, total cash dividends and total book equity value.

The securities will provide exposure if the value of the reference basket at maturity is equal to or less than the initial value of the reference basket; the return will be directly proportionate to the decrease in the value of the reference basket. In no event, however, will investors receive less than 20% of the original principal amount.

Reference basket and weighted in each market are as follows:

  • FTSE RAFI Europe Index — weight of 50% Exposure to European equities from 16 countries;
  • FTSE RAFI Japan Index — weight of 35% Exposure to Japanese equities;
  • FTSE RAFI Hong Kong/China Index — weight of 15% Exposure to Hong Kong & China equities.



The anticipated acceleration factor for each security will be: 145% acceleration on the CAD security and 165% acceleration on the USD security. In addition, each of the securities will have no currency exposure.

An investment in Accelerator securities entails market related risks, including risk of loss investment. The return provided by Accelerator securities will not reflect the total return of an investment in the underlying benchmark basket of indices or the securities which make up the indices.

Individual investors should contact their broker or investment advisor for further information concerning Accelerator securities. Both securities are available through FundSERV – MER 338 (CAD security), MER 339 (USD security).