ETFs are investment funds with shares that trade throughout the day on stock exchanges during normal trading hours. ETFs combine the advantages of investing in index funds, including diversification and low costs, coupled with the liquidity and flexibility of investing in individual stocks. ETFs are a rapidly-growing investment vehicle that allow investors to participate in various indexes in a single investment.

ETFs share many of the characteristics of individual securities and traditional mutual funds, but they operate differently, giving them certain advantages over other investment solutions. With traditional mutual funds, an individual investor usually buys or redeems shares directly with the fund company. When shareholders redeem shares, the fund manager may have to sell securities to meet those redemptions, possibly incurring capital gains that will eventually be passed on to the fund's shareholders. ETFs, on the other hand, are traded like individual stocks. Investors buy and sell shares on a stock exchange through a broker or brokerage account during normal operating hours. Authorized participants engage in "in-kind" transactions with the fund itself, trading baskets of securities for very large blocks of shares called "creation baskets." These transactions, which result in the creation or redemption of ETF shares, occur at net asset value (NAV). Market trades by individual investors occur at market prices rather than NAV. There is little or no need to keep cash on hand that would require the fund to purchase or sell portfolio securities, pay brokerage commissions, and possibly realize capital gains. This keeps costs down and limits the distribution of capital gains to shareholders.

The NAV of a Fund's Shares will generally fluctuate with changes in the market value of the Fund's holdings. The market prices of the Shares will generally fluctuate in accordance with changes in NAV as well as the relative supply of and demand for the Shares on the NYSE Arca. The Investment Adviser cannot predict whether the Shares will trade below, at or above their NAV. Price differences may be due, in large part, to the fact that supply and demand forces at work in the secondary trading market for the Shares will be closely related to, but not identical to, the same forces influencing the prices of the stocks of the Index trading individually or in the aggregate at any point in time. However, given that the Shares can be purchased and redeemed in Creation Units (unlike shares of many closed-end funds, which frequently trade at appreciable discounts from, and sometimes premiums to, their NAV), the Investment Adviser believes that large discounts or premiums to the NAV of the Shares should not be sustained.

The trading price of an ETF is expected to be approximately equal to the trading value of the underlying securities held in the fund plus any undistributed net income. The ETF's market value will trade during the day based on supply and demand, but generally are expected to trade at or close to the fund's NAV.

The benefits of investing in ETFs are:

• Buy and sell at any time during the trading day.
• Diversification offers potentially lower risk than individual securities.
• Ability to have exposure to a portfolio of stocks or bonds.
• No redemption fees when units are sold on the exchange. Customary brokerage commissions and other transactional fees may apply.
• Visible underlying index/security. Easy-to-track investment.
• Flexibility to buy on margin or sell short.
• Relatively cost-efficient.
• Tax efficient, with potential for relatively low capital gains tax liabilities.

The following chart illustrates the difference between Claymore ETFs and traditional mutual funds:

The Funds redeem shares at NAV only in large blocks of varying amounts of shares (each block of shares is called a "Creation Unit"), or multiples thereof. Only broker-dealers or large institutional investors with creation and redemption agreements, called Authorized Participants ("APs"), can purchase or redeem these Creation Units. Creation Unit size varies depending on the ETF. Please see the individual ETF prospectus for more information. Investors are advised to consult their brokers, dealers or financial advisors before redeeming Claymore ETFs.

There are no redemption fees when Claymore ETFs are sold on the exchange. Only customary brokerage fees and other transactional fees apply. When Claymore ETFs are redeemed directly from a fund certain discounts or fees apply. See the individual Claymore ETFs fund prospectuses for details. Because investors will generally be able to sell Claymore ETFs at the market price on the exchange through a registered broker or dealer, subject only to customary brokerage commissions, investors are advised to consult their brokers, dealers or investment advisors before redeeming Claymore ETFs.

Most investors will buy and sell Shares of the Funds in secondary market transactions through brokers. Shares of the Funds will be listed for trading on the secondary markets. Shares can be bought and sold throughout the trading day like other publicly traded shares. There is no minimum investment. Although Shares are generally purchased and sold in "round lots" of 100 Shares, brokerage firms typically permit investors to purchase or sell Shares in smaller "odd lots," at no per-share price differential. When buying or selling Shares through a broker, you will incur customary brokerage commissions and charges. Investors may acquire Shares directly from the Funds, and shareholders may tender their Shares for redemption directly to the Funds, only in Creation Units. Except when aggregated in Creation Units, Shares are not redeemable securities of the Funds.

There is a contractual fee waiver currently in place for Claymore's ETFs through either December 31, 2011 (based on the individual Fund) to the extent necessary in keeping each Fund's expense ratio from exceeding the percentages as stated in the prospectus. Some expenses fall outside of these expense caps and actual expenses will be higher than cited in the prospectus. Actual Fund expenses can be found in each Fund's respective prospectus. For those Claymore ETFs with an inception date of June 1, 2007 or thereafter, the following applies: Each Fund's expense cap ratio for its initial fiscal year is based on an assumed average asset level of $100 million. If assets are lower than $100 million, the expense ratio will be higher due to the inclusion of offering costs during the first 12 months of operations. If average assets of the Fund exceed $100 million during the Fund's first 12 months, the expense ratio may be lower. Please read each Fund's prospectus for more information.

Fully registered full-service or discount brokers are eligible to sell Claymore ETFs. Also, broker-dealers or large institutional investors with creation and redemption agreements and called Authorized Participants ("APs") can purchase or redeem in Creation Units.

Claymore ETFs may be appropriate for investors seeking a relatively low-cost investment that features a portfolio that is composed of a variety of securities designed to track a particular index, sector or industry.

Claymore is unable to provide this service to you directly. Depending on the types of plans offered, your broker may be able to offer this feature.

The liquidity of an ETF is a reflection of its trading volume and of the liquidity of the underlying stocks in the constituent index. Claymore ETFs are traded on the stock exchange which provides individual investors a more liquid market for their shares.

The bid price is the highest price a buyer is willing to purchase for a security, and the ask price is the lowest price at which a seller is prepared to sell a security at any given point in time.

Yes. Claymore ETFs may be sold short subject to the terms of your individual brokerage account.

Yes. Claymore ETFs can be purchased on margin through your brokerage account. They are generally subject to the same terms that apply to common stock. Check with your broker for details specific to your account.

Adjustments to Claymore ETFs are directly related to adjustments in the fund's underlying index. See the individual fund prospectus for rebalance rules for each Claymore ETF.