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PERFORMANCE PARTNERS ABOUT CLAYMORE CEFs LITERATURE
AGC
Advent/Claymore Global Convertible Securities & Income Fund

COMMON SHARES

DAILY DATA   as of 3/16/10
Closing Share Price  $8.63 
Closing NAV  $9.20 
Premium/(Discount)  (6.20%) 
52-week Average Premium/Discount  (9.72%) 
Current Distribution Rate1  9.23% 
Monthly Dividend Per Share2  $0.06640 
Ex-Dividend Date  3/11/10 
Payable Date   3/31/10 
Daily Volume  125,588 
52 Week High/Low Share Price3  $8.92/$4.67 
52 Week High/Low NAV3  $9.36/$6.02 
Intraday Trading Information  NYSE 

Data subject to change on a daily basis.

 

WEEKLY DATA   as of 3/12/10
Closing Share Price  $8.64 
Closing NAV  $9.18 
Closing Volume  42,515 
Premium/(Discount)  (5.88%) 
Distribution Rate  9.22% 
Total Managed Assets  $462,544,715 
Shares Outstanding  31,867,616 
Percent Leveraged From Preferred Shares  36.75% 

Data subject to change on a daily basis.

 

SEMI-ANNUAL DATA   as of 10/31/09
Fiscal Year-End  10/31 
Portfolio Manager  Advent Capital Management 
Investment Adviser  Claymore Advisors 
Expense Ratio (Common Shares)5  2.34% 
Portfolio Turnover Rate6  166% 
   

Data subject to change on a daily basis.

INCEPTION INFORMATION

Common Shares4
Inception Date May 24, 2007
NYSE Symbol AGC
NAV Symbol XAGCX
The Wall Street Journal  Listing AdventClayGlConvSecs
CUSIP 007639107
Inception Share Price $20.00
Inception NAV $19.10

Auction Market Preferred Shares
Total Preferred Assets $170,000,000
Share Price $25,000
1940 Act Asset Coverage Ratio7 272%

QUARTERLY TOTAL RETURNS
as of 12/31/09

MARKET PRICE
NAV
2009 YTD 56.46 % 53.32 %
1 Year 56.46 % 53.32 %
3 Year - -
Since Inception -20.32 % -16.91 %

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 the initial offering price of $20.00 per share for market price returns or initial net asset value (NAV) of $19.10 per share 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.

1 Latest declared monthly dividend per share annualized and divided by the current share price. To the extent any portion of the current distribution is estimated to be sourced from something other than income, such as return of capital, the source would be disclosed on a Section 19a-1 letter located under the “Fund News” section of the “News & Literature” section of the Fund’s website. The distribution rate may include net investment income, capital gains and/or return of capital. The distribution rate alone is not indicative of Fund performance.

2 Dividend per share is subject to change on the ex-dividend date. The distribution amount may include net investment income, capital gains and/or return of capital. The distribution amount alone is not indicative of Fund performance.

3 Figures are based on market close.

4 Based on the prospectus information.

5 Expense ratio is annualized.

6 Not Annualized

7 The Fund is required to maintain, with respect to the AMPS, as of the last business day of each month in which any AMPS are outstanding, asset coverage of at least 200% with respect to senior securities which are beneficial interests in the Fund.

INVESTMENT OBJECTIVE

Advent/Claymore Global Convertible Securities & Income Fund (the “Fund”) is a diversified, closed-end management investment company. The Fund’s investment objective is to provide total return, through a combination of capital appreciation and current income. There can be no assurance that the Fund will achieve its investment objective.

Under normal market conditions, the Fund will invest at least 80% of its Managed Assets in a diversified portfolio of convertible securities and non-convertible income-producing securities, each of U.S. and non-U.S. issuers. Within this general investment policy, the Fund will follow, under normal market conditions, the following investment parameters:

• the Fund will invest at least 50% of its Managed Assets in convertible securities;
• the Fund may invest up to 40% of its Managed Assets in non-convertible income-producing securities; and
• the Fund will invest at least 50% of its Managed Assets in foreign securities.

The portion of the Fund’s Managed Assets invested in convertible securities, non-convertible income-producing securities and foreign securities will vary from time to time consistent with the Fund’s investment objective, changes in equity prices and changes in interest rates and other economic and market factors. The Fund may invest in securities of any credit quality, including securities that are of below investment grade quality without restrictions on maintaining a minimum weighted average portfolio rating of investment grade with respect to the portion of the Fund’s managed assets invested in convertible securities. Securities of below investment grade quality are regarded as having speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal and are commonly referred to as “junk bonds” or “high yield securities.” In furtherance of the Fund’s investment objective, the Fund intends to engage in an option strategy of writing (selling) covered call options on up to 25% of the securities held in the Fund’s portfolio, to seek to generate current gains from option premiums as a means to enhance distributions payable to the holders of common shares.

For periodic shareholder reports and recent fund-specific filings, please visit the U.S. Securities and Exchange Commission (“SEC”) website via the following link, click here.

FREQUENTLY ASKED QUESTIONS

How much experience does the manager have with managing convertible, equity and fixed-income securities?

What is Advent's investment process? What evaluation process does Advent use when selecting convertible securities? Why a Leveraged Fund? Describe the differences between closed-end and open-end funds? What does the "Ex-Div" or the "Ex-Dividend" date refer to? What is the DRIP and how is its price determined?

AGC FUND MANAGER

Advent Capital Management, LLC ("Advent") is a registered investment advisor, based in New York, which specializes in convertible, equity and high-yield securities for institutional and individual investors. The firm was established in 1995 by Tracy Maitland, former Director in the Convertible Securities Department in the Capital Markets Division at Merrill Lynch. Advent’s investment discipline is credit-driven and risk-averse while seeking to maximize total return.

Investment Philosophy...is to achieve superior returns while minimizing risk in the convertible, equity and high-yield markets. Advent seeks convertible, equity and high-yield securities with attractive risk/reward characteristics that will provide downside protection. Advent focuses on credit and cash flow in order to achieve its investment goals. To reduce risk further, Advent manages a fully diversified portfolio. Position sizes typically range between 1% and 5%, resulting in a portfolio of between 50 and 80 issues.

Investment Process...Advent manages securities by using a strict four-step investment process: (1) screen the convertible, equity and high-yield universes, ect. for securities; (2) analyze credit quality to confirm downside protection; (3) analyze fundamentals to identify catalysts for favorable performance; and (4) continually monitor the portfolio to determine whether each holding is maintaining its investment potential.

Investment Team...the portfolio managers have an average of 20 years experience in convertible, equity and high-yield securities.

INVESTMENT TEAM

Portfolio Management

Tracy V. Maitland | President, Chief Investment Officer

Mr. Maitland serves as Chief Investment Officer of Advent Capital Management, LLC. Prior to founding Advent, Mr. Maitland was a Director in the Convertible Securities Department in the Capital Markets Division at Merrill Lynch. As the major distribution link for Merrill Lynch between investors and issuers, Mr. Maitland gained a unique perspective investing and trading in convertibles and equities. While at Merrill Lynch for 13 years, Mr. Maitland advised institutions on investing in convertibles, fixed income and equities. He is a graduate of Columbia University.

F. Barry Nelson, CFA | Senior Vice President, Portfolio Manager

Mr. Nelson serves as Senior Portfolio Manager. Prior to joining Advent, Mr. Nelson was Lead Manager of Value Line Convertible Fund and Value Line Multinational Fund, and Research Director of Value Line Convertibles Survey. Under Mr. Nelson's management, Value Line Convertible Fund rose to #1 among 41 convertible funds monitored by Lipper Analytical Services. The Value Line Convertibles Survey was cited as the top-performing investment letter by Hulbert Financial Digest. His earlier experience includes international research at NatWest Securities, Research Director of Louis Nicoud & Associates, and Portfolio Manager of Value Line U.S. Government Securities Fund, named the #1 U.S. Government Bond Fund by Money magazine after five years, and Portfolio Manager of Value Line Aggressive Income Trust, a high yield fund. Mr. Nelson is a graduate of New York University and St. John's University Business School.

Hart Woodson | Managing Director

Mr. Woodson is a co-portfolio manager on the ACM Global Convertible Strategy. In 2002 he ‘wrote the book’ on convertibles with Global Convertible Investing. He was previously a Senior Vice President at GAMCO Investors, Inc. where he managed the Gabelli Global Convertible Securities Fund since its inception in 1994. Prior to joining GAMCO predecessor Gabelli Asset Management in 1993, Mr. Woodson was a Vice President of ABN AMRO Bank in The Netherlands in New Issues and Syndication. Earlier, he worked for AMRO Bank in New York in the Capital Markets Group. He was also a Credit Analyst at Meridien International Bank. Mr. Woodson received a master’s degree from Columbia University in international affairs, specializing in international finance and banking. He received a bachelor’s degree in history and international relations from Trinity College.

Paul L. Latronica | Managing Director

Mr. Latronica is an Associate Portfolio Manager for the Advent Claymore Convertible Securities and Income Fund. His responsibilities include portfolio selection, trading and investment analysis. Prior to joining ACM, Mr. Latronica worked two terms at Alliance Capital Management where he was an Account Manager for the International Closed End Division and also a Portfolio Accountant in the Municipal Bond Division. Between those positions at Alliance, he worked as an Administrator in Fixed Income Portfolios at Oppenheimer Capital Management. Mr. Latronica is a graduate of Franklin & Marshall College and Fordham University Business School.

Richard Rosen | Managing Director

Mr. Rosen serves as Associate Portfolio Manager on the closed- end mutual funds. Prior to joining Advent, Mr. Rosen was a Senior Managing Director at MacKay Shields, where he was the head of the Value Equity group and was Lead Portfolio Manager of the Large Cap Value portfolios. His earlier experience includes Managing Director at Prudential Investments, where he was a Senior Portfolio Manager for Value equity portfolios, and Vice President at Marine Midland Bank where he managed Value equity portfolios and was Vice Chairman of the Investment Strategy Group. He is a graduate of Drew University and received his MBA from the Boston University Graduate School of Management. He is also a Chartered Financial Analyst (CFA). Mr. Rosen has 25 years of investment experience.

Tony Huang, CFA | Vice President

Mr. Huang serves as an Associate Portfolio Manager on the Advent Claymore Enhanced Growth and Income Fund . Prior to joining Advent, Mr. Huang was at Essex Investment Management in Boston where he headed the technology sector research coverage and managed Essex’s diversified Research Fund. Prior to Essex, Mr. Huang was employed at two hedge funds with technology and telecommunications responsibilities and began his career at Fidelity Investment covering the same sectors. He graduated from the University of Pennsylvania’s Wharton School with a B.S. in Economics, concentration in Finance.

 

AGC Investment Manager
Advent Capital Management, LLC
1065 Avenue of the Americas
31st Floor
New York NY, 10018

If you would like to view the Investment Manager's website, you may click on the link below. It is important to note that by clicking on the link, you will be leaving this website and any information viewed there is not the property of Claymore Securities, Inc.

www.adventcap.com

RISKS AND OTHER CONSIDERATIONS

Risk is inherent in all investing. Therefore, before investing in the Fund’s common shares, you should consider the following risks carefully. The Fund is intended for investors seeking current income and capital appreciation. The Fund is a diversified, closed-end management investment company designed primarily as a long-term investment and is not meant to provide a vehicle for those who wish to play short-term swings in the market. An investment in the common shares of the Fund should not be considered a complete investment program. Each common shareholder should take into account the Fund’s investment objective as well as the common shareholder’s other investments when considering an investment in the Fund. There can be no assurance that the Fund will achieve its investment objective. Your common shares at any point in time may be worth less than you invested, even after taking into account the reinvestment of Fund dividends and distributions.

Limited Operating History. The Fund is a newly organized, diversified, closed end management investment company with limited operating history.

Investment and Market Discount Risk. An investment in the Fund’s common shares is subject to investment risk, including the possible loss of the entire amount that you invest. Your investment in common shares represents an indirect investment in the securities owned by the Fund, substantially all of which are traded on securities exchanges or in the over-the-counter markets. The value of these securities, like other market investments, may move up or down, sometimes rapidly and unpredictably. Your common shares at any point in time may be worth less than what you invested, even after taking into account the reinvestment of Fund dividends and distributions. In addition, shares of closed-end management investment companies frequently trade at a discount from their net asset value. This risk may be greater for investors expecting to sell their shares of the Fund soon after completion of the public offering. The shares of the Fund were designed primarily for long-term investors, and investors in the common shares should not view the Fund as a vehicle for trading purposes.

Convertible Securities Risk. The Fund is not limited in the percentage of its assets that may be invested in convertible securities. Convertible securities generally offer lower interest or dividend yields than nonconvertible securities of similar quality. The market values of convertible securities tend to decline as interest rates increase and, conversely, to increase as interest rates decline. However, the convertible security’s market value tends to reflect the market price of the common stock of the issuing company when that stock price is greater than the convertible’s “conversion price.” The conversion price is defined as the predetermined price at which the convertible security could be exchanged for the associated stock. As the market price of the underlying common stock declines (other than in distressed situations), the price of the convertible security tends to be influenced more by the yield of the convertible security. Thus, it may not decline in price to the same extent as the underlying common stock. In the event of a liquidation of the issuing company, holders of convertible securities would generally be paid after the company’s creditors, but before the company’s common stockholders. Consequently, an issuer’s convertible securities generally entail more risk than its debt securities, but less risk than its common stock.

Structured and Synthetic Convertible Securities Risk. The value of structured convertible securities can be affected by interest rate changes and credit risks of the issuer. Such securities may be structured in ways that limit their potential for capital appreciation and the entire value of the security may be at a risk of loss depending on the performance of the underlying equity security. Structured convertible securities may be less liquid than other convertible securities. The value of a synthetic convertible security will respond differently to market fluctuations than a convertible security because a synthetic convertible security is composed of two or more separate securities, each with its own market value. In addition, if the value of the underlying common stock or the level of the index involved in the convertible component falls below the exercise price of the warrant or option, the warrant or option may lose all value.

Interest Rate Risk. Convertible securities and non-convertible income producing securities are subject to certain risks, including (i) if interest rates go up, the value of convertible securities and non-convertible income-producing securities in the Fund’s portfolio generally will decline; (ii) during periods of declining interest rates, the issuer of a security may exercise its option to prepay principal earlier than scheduled, forcing the Fund to reinvest in lower yielding securities (call or prepayment risk); and (iii) during periods of rising interest rates, the average life of certain types of securities may be extended because of slower than expected principal payments (extension risk).

Credit Risk. Credit risk is the risk that one or more securities in the Fund’s portfolio will decline in price, or fail to pay interest or principal when due, because the issuer of the security experiences a decline in its financial status. The Fund’s investments in convertible and non-convertible debt securities involve credit risk. However, in general, lower rated securities carry a greater degree of risk that the issuer will lose its ability to make interest and principal payments, which could have a negative impact on the Fund’s net asset value or dividends.

Lower Grade Securities Risk. The Fund may invest in securities of any credit quality, including securities that are of below investment grade quality (rated below Baa3- by Moody’s or below BBB- by S&P and Fitch or, if unrated, determined by the Investment Manager to be of comparable quality). Securities of below investment grade quality are regarded as having speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal and are commonly referred to as “junk bonds” or “high yield securities.” Investing in lower grade securities involves additional risks, including credit risk. These securities may become the subject of bankruptcy proceedings or otherwise subsequently default as to the repayment of principal and/or payment of interest or be downgraded to ratings in the lower rating categories (Ca or lower by Moody’s or CC or lower by S&P). The value of these securities is affected by the creditworthiness of the issuers of the securities and by general economic and specific industry conditions. Issuers of lower grade securities are not perceived to be as strong financially as those with higher credit ratings, so the securities are usually considered speculative investments. These issuers are generally more vulnerable to financial setbacks and recession than more creditworthy issuers, which may impair their ability to make interest and principal payments. Lower grade securities tend to be less liquid than higher grade securities.

Preferred Securities Risks. There are special risks associated with investing in preferred equity securities, including: Deferral. Preferred securities may include provisions that permit the issuer, at its discretion, to defer distributions for a stated period without any adverse consequences to the issuer. If the Fund owns a preferred security that is deferring its distributions, the Fund may be required to report income for tax purposes although it has not yet received such income. Non-cumulative Dividends. Some preferred stocks are non-cumulative, meaning that the dividends do not accumulate and need not ever be paid. A portion of the portfolio may include investments in non-cumulative preferred securities, whereby the issuer does not have an obligation to make up any arrearages to its shareholders. Should an issuer of a non-cumulative preferred stock held by the Fund determine not to pay dividends on such stock, the amount of dividends the Fund pays may be adversely affected. There is no assurance that dividends or distributions on noncumulative preferred stocks in which the Fund invests will be declared or otherwise made payable. Subordination. Preferred securities are subordinated to bonds and other debt instruments in a company’s capital structure in terms of priority to corporate income and liquidation payments, and therefore will be subject to greater credit risk than more senior debt instruments. Liquidity. Preferred securities may be substantially less liquid than many other securities, such as common stocks or U.S. government securities. Limited Voting Rights. Generally, preferred security holders (such as the Fund) have no voting rights with respect to the issuing company unless preferred dividends have been in arrears for a specified number of periods, at which time the preferred security holders may have the right to elect a number of directors to the issuer’s board. Generally, once all the arrearages have been paid, the preferred security holders no longer have voting rights. Special Redemption Rights. In certain varying circumstances, an issuer of preferred securities may redeem the securities prior to a specified date. For instance, for certain types of preferred securities, a redemption may be triggered by a change in federal income tax or securities laws. As with call provisions, a redemption by the issuer may negatively impact the return of the security held by the Fund.

Foreign Securities Risk. The Fund will invest at least 50% of its Managed Assets in foreign securities. Investments in foreign securities may involve unique risks compared to investing in securities of U.S. issuers. These risks are more pronounced to the extent that the Fund invests a significant portion of its non-U.S investments in one region or in the securities of emerging market issuers. These risks may include: • less information about non-U.S. issuers or markets may be available due to less rigorous disclosure or accounting standards or regulatory practices; • many non-U.S. markets are smaller, less liquid and more volatile. In a changing market, the Investment Manager may not be able to sell the Fund’s portfolio securities at times, in amounts and at prices it considers desirable; • an adverse effect of currency exchange rates or controls on the value of the Fund’s investments; • the economies of non-U.S. countries may grow at slower rates than expected or may experience a downturn or recession; • economic, political and social developments may adversely affect the securities markets; and • withholding and other non-U.S. taxes may decrease the Fund’s return.

Foreign Currency Risk. The value of the securities denominated or quoted in foreign currencies may be adversely affected by fluctuations in the relative currency exchange rates and by exchange control regulations. The Fund’s investment performance may be negatively affected by a devaluation of a currency in which the Fund’s investments are denominated or quoted. Further, the Fund’s investment performance may be significantly affected, either positively or negatively, by currency exchange rates because the U.S. dollar value of securities denominated or quoted in another currency will increase or decrease in response to changes in the value of such currency in relation to the U.S. dollar.

Derivatives Risk. 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. If the Investment Manager’s prediction of movements in the direction of the securities and interest rate markets is inaccurate, the consequences to the Fund may leave the Fund in a worse position than if it had not used such strategies. Derivatives are subject to a number of risks described elsewhere in this prospectus, such as liquidity risk, equity securities risk, issuer risk, credit risk, interest rate risk, leveraging risk, counterparty risk, management risk and, if applicable, smaller companies risk. They also involve the risk of mispricing or improper valuation, the risk of ambiguous documentation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. 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 when that would be beneficial. The use of derivatives also may increase the amount of taxes payable by shareholders.

Equity Securities Risk. Equity securities risk is the risk that the value of the securities held by the Fund will fall due to general market and economic conditions, perceptions regarding the industries in which the issuers of securities held by the Fund participate or factors relating to specific companies in which the Fund invests. Stock of an issuer in the Fund’s portfolio may decline in price if the issuer fails to make anticipated dividend payments because, among other reasons, the issuer of the security experiences a decline in its financial condition. Common stock in which the Fund may invest is structurally subordinated to preferred stock, bonds and other debt instruments in a company’s capital structure, in terms of priority to corporate income, and therefore will be subject to greater dividend risk than preferred stock or debt instruments of such issuers. In addition, while common stock has historically generated higher average returns than fixed income securities, common stock has also experienced significantly more volatility in those returns. An adverse event, such as an unfavorable earnings report, may depress the value of common stock of an issuer held by the Fund. Also, the price of common stock of an issuer is sensitive to general movements in the stock market. A drop in the stock market may depress the price of most or all of the common stocks held by the Fund.

Risk Associated with the Fund’s Covered Call Option Writing Strategy. The ability of the Fund to achieve its investment objective of providing total return through a combination of current income and capital appreciation is partially dependent on the successful implementation of its covered call option strategy. There are significant differences between the securities and options markets that could result in an imperfect correlation between these markets, causing a given transaction not to achieve its objectives. A decision as to whether, when and how to use options involves the exercise of skill and judgment, and even a well conceived transaction may be unsuccessful to some degree because of market behavior or unexpected events. As the writer of a covered call option, the Fund forgoes, during the option’s life, the opportunity to profit from increases in the market value of the security covering the call option above the sum of the premium and the strike price of the call, but has retained the risk of loss should the price of the underlying security decline. As the Fund writes covered calls over more of its portfolio, its ability to benefit from capital appreciation becomes more limited. With respect to exchange-traded options, there can be no assurance that a liquid market will exist when the Fund seeks to close out an option position on an options exchange. If the Fund were unable to close out a covered call option that it had written on a security, it would not be able to sell the underlying security unless the option expired without exercise. The Fund may also write (sell) over-the-counter options (“OTC options”). Options written by the Fund with respect to non-U.S. securities, indices or sectors generally will be OTC options. OTC options differ from exchange listed options in that they are two-party contracts, with exercise price, premium and other terms negotiated between buyer and seller, and generally do not have as much market liquidity as exchange-listed options.

Counterparty Risk. The Fund will be subject to credit risk with respect to the counterparties to the derivative contracts entered into directly by the Fund or held by special purpose or structured vehicles in which the Fund invests. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. The Fund may obtain only a limited recovery or may obtain no recovery in such circumstances.

Financial Leverage Risk. Although the use of Financial Leverage by the Fund may create an opportunity for increased return for the common shares, it also results in additional risks and can magnify the effect of any losses. If the income and gains earned on securities purchased with the Financial Leverage proceeds are greater than the cost of the Financial Leverage, the common shares’ return will be greater than if Financial Leverage had not been used. Conversely, if the income or gains from the securities purchased with such proceeds does not cover the cost of Financial Leverage, the return to the common shares will be less than if Financial Leverage had not been used. There is no assurance that a Financial Leveraging strategy will be successful. Financial Leverage involves risks and special considerations for common shareholders including: • the likelihood of greater volatility of net asset value and market price of the common shares than a comparable portfolio without Financial Leverage; • the risk that fluctuations in interest rates on Borrowings and short term debt or in the dividend rates on any Preferred Shares that the Fund may pay will reduce the return to the common shareholders or will result in fluctuations in the dividends paid on the common shares; • the effect of Financial Leverage in a declining market, which is likely to cause a greater decline in the net asset value of the common shares than if the Fund were not leveraged, which may result in a greater decline in the market price of the common shares; and • when the Fund uses Financial Leverage, the investment advisory fee payable to the Adviser and the Investment Manager will be higher than if the Fund did not use Financial Leverage. Certain types of Financial Leverage may result in the Fund being subject to covenants relating to asset coverage and Fund composition requirements. The Fund may be subject to certain restrictions on investments imposed by guidelines of one or more rating agencies, which may issue ratings for the Preferred Shares, Borrowings or other leverage securities issued by the Fund. These guidelines may impose asset coverage or Fund composition requirements that are more stringent than those imposed by the Investment Company Act of 1940, as amended (the “Investment Company Act”). The Investment Manager does not believe that these covenants or guidelines will impede it from managing the Fund’s portfolio in accordance with the Fund’s investment objective and policies.

Liquidity Risk. The Fund may invest without limit in Rule 144A Securities, certain of which may be deemed to be liquid in accordance with procedures adopted by the Board of Trustees. The Fund may invest in other securities for which there is no readily available trading market or are otherwise illiquid. The Investment Manager does not anticipate that the Fund will invest more than 15% of its total Managed Assets in illiquid securities (other than Rule 144A Securities). Although many of the Rule 144A Securities in which the Fund invests may be, in the view of the Investment Manager, liquid, if qualified institutional buyers are unwilling to purchase these Rule 144A Securities, they may become illiquid. Illiquid securities may be difficult to dispose of at a fair price at the times when the Fund believes it is desirable to do so. The market price of illiquid securities generally is more volatile than that of more liquid securities, which may adversely affect the price that the Fund pays for or recovers upon the sale of illiquid securities. Illiquid securities are also more difficult to value and the Investment Manager’s judgment may play a greater role in the valuation process. Investment of the Fund’s assets in illiquid securities may restrict the Fund’s ability to take advantage of market opportunities. The risks associated with illiquid securities may be particularly acute in situations in which the Fund’s operations require cash and could result in the Fund borrowing to meet its short-term needs or incurring losses on the sale of illiquid securities.

Smaller Company Risk. The general risks associated with corporate income-producing and equity securities are particularly pronounced for securities issued by companies with smaller market capitalizations. These companies may have limited product lines, markets or financial resources, or they may depend on a few key employees. As a result, they may be subject to greater levels of credit, market and issuer risk. Securities of smaller companies may trade less frequently and in lesser volume than more widely held securities and their values may fluctuate more sharply than other securities. Companies with medium-sized market capitalizations may have risks similar to those of smaller companies.

REIT, Mortgage-Related and Asset-Backed Securities Risks. Investing in REITs involves certain unique risks in addition to investing in the real estate industry in general. REITs are subject to interest rate risks (especially mortgage REITs) and the risk of default by lessees or borrowers. An equity REIT may be affected by changes in the value of the underlying properties owned by the REIT. A mortgage REIT may be affected by the ability of the issuers of its portfolio mortgages to repay their obligations. REITs whose underlying assets are concentrated in properties used by a particular industry are also subject to risks associated with such industry. REITs may have limited financial resources, their securities trade less frequently and in a limited volume, and may be subject to more abrupt or erratic price movements than larger company securities. In addition to REITs, the Fund may invest in a variety of other mortgage related securities, including commercial mortgage securities and other mortgage-backed instruments. Rising interest rates tend to extend the duration of mortgage-related securities, making them more sensitive to changes in interest rates, and may reduce the market value of the securities. In addition, mortgage-related securities are subject to prepayment risk—the risk that borrowers may pay off their mortgages sooner than expected, particularly when interest rates decline. This can reduce the Fund’s returns because the Fund may have to reinvest that money at lower prevailing interest rates. The Fund’s investments in other asset-backed securities are subject to risks similar to those associated with mortgage-backed securities, as well as additional risks associated with the nature of the assets and the servicing of those assets.

Income Trust and Master Limited Partnership Risks. Investments in income trusts and master limited partnership (“MLP”) interests are subject to the risks generally applicable to companies in the energy and natural resources sectors, including commodity pricing risk, supply and demand risk, depletion risk and exploration risk. There are certain tax risks associated with the income trusts in which the Company may invest, including the possibility that Canadian and U.S. taxing authorities may challenge the deductibility of certain interest payments and certain other costs and expenses inherent in the structure of certain income trusts and the risk that U.S. taxing authorities could challenge the Fund’s treatment for federal income tax purposes of the income trusts or MLPs in which the Fund invests. These tax risks, and any adverse determination with respect thereto, could have a negative impact on the after-tax income available for distribution by the income trusts or MLPs and/or the value of the Fund’s investments. There can be no assurance that future changes to Canadian and U.S. tax laws or tax rules would not adversely affect the Fund’s investments in income trusts or MLPs or the value of the Fund’s common stock.

Dividend Capture Trading Risk. The Fund’s dividend capture trading depends upon the Investment Manager’s ability to anticipate the dividend policies of the companies in which it chooses to invest and to identify and exploit opportunities such as the announcement of major corporate actions, such as restructuring initiatives or a special dividend, that may lead to high current dividend income. It is difficult to anticipate the level of dividends that companies will pay in any given timeframe. Companies’ dividend policies are heavily influenced by the current economic climate and the favorable federal tax treatment afforded to dividends. Challenging economic conditions, affecting either the market as a whole or a specific investment in the Fund’s portfolio, may limit the opportunity to benefit from the current dividend policies of the companies in which the Fund invests or may cause such companies to reduce or eliminate their dividends. In addition, a change in the favorable provisions of the federal tax laws may limit the ability of holders of common shares to benefit from dividend increases, may effect a widespread reduction in announced dividends and may adversely impact the valuation of the shares of dividend-paying companies. The dividend income received by the Fund may be offset by declines in the price of the securities on which such dividends are issued, which may result in losses to the Fund if the decline in price exceeds the amount of the dividend. The use of dividend capture trades will expose the Fund to increased trading costs. The Fund’s dividend capture trading strategy may limit the Fund’s ability to meet certain holding period requirements for dividends that it receives to qualify for the reduced federal income tax rates applicable to qualified dividends under the Internal Revenue Code of 1986, as amended (the “Code”).

Reinvestment Risk. Reinvestment risk is the risk that income from the Fund’s portfolio will decline if and when the Fund invests the proceeds from matured, traded or called obligations at market interest rates that are below the portfolio’s current earnings rate. A decline in income could affect the common shares’ market price or their overall returns.

Inflation Risk. Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Fund’s common shares and distributions thereon can decline. In addition, during any periods of rising inflation, the interest or dividend rates payable by the Fund on any Financial Leverage the Fund may have issued would likely increase, which would tend to further reduce returns to holders of the Fund’s common shares.

Management Risk. The Investment Manager’s judgment about the attractiveness, relative value or potential appreciation of a particular sector, security or investment strategy may prove to be incorrect, and there can be no assurance that the investment decisions made by the Investment Manager will prove beneficial to the Fund.

Market Disruption Risk. The terrorist attacks in the United States on September 11, 2001 had a disruptive effect on the securities markets. The war in Iraq also has resulted in recent market volatility and may have long term effects on the U.S. and worldwide financial markets and may cause further economic uncertainties in the United States and worldwide. The Fund cannot predict the effects of the war or similar events in the future on the U.S. economy and securities markets.

Anti-Takeover Provisions. The Fund’s Agreement and Declaration of Trust includes provisions that could limit the ability of other entities or persons to acquire control of the Fund or convert the Fund to open-end status. These provisions could deprive the holders of common shares of opportunities to sell their common shares at a premium over the then current market price of the common shares or at net asset value. In addition, if the Fund issues Preferred Shares, the holders of the Preferred Shares will have voting rights that could deprive holders of common shares of such opportunities.

Risks of Investing in AMPS. There also risks associated with investing in Auction Market Preferred Shares or AMPS. The AMPS are redeemable, in whole or in part, at the option of the Fund on any dividend payment date for the AMPS, and will be subject to mandatory redemption in certain circumstances. The AMPS will not be listed on an exchange. You may only buy or sell AMPS through an order placed at an auction with or through a broker-dealer that has entered into an agreement with the auction agent and the Fund or in a secondary market maintained by certain broker-dealers. These broker-dealers are not required to maintain this market, and it may not provide you with liquidity.

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.
Investors should carefully consider the investment objectives and policies, risk considerations, charges and ongoing expenses of any investment product before investing. For more information, please contact a securities representative or Claymore Securities, Inc., 2455 Corporate West Drive, Lisle, Illinois 60532, 800-345-7999.

NOT FDIC-INSURED | NOT BANK-GUARANTEED | MAY LOSE VALUE

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