INDEX METHODOLOGY

The Beacon Global Exchanges, Brokers & Asset Managers Index is comprised of firms which operate a security exchange, a brokerage or an asset management firm as a primary business. All stocks in the Beacon EB&A Index are selected from the global universe of asset managers, brokers, and exchanges (the “Index universe”) as defined herein. Beacon compiles the Index universe primarily by reference to the classification system of Global Industry Classification Standard (“GICS”). The Index universe includes all firms classified by GICS to be in either the “Asset Management & Custody Banks” or the “Investment Banking and Brokerage” sub-industries. Custody banks in the GICS “Asset Management & Custody Banks” sub-industry are excluded from the Index. However, investment banks in the GICS “Investment Banking and Brokerage” sub-industry may be included in the Index if such investment banks also operate a brokerage or asset management firm as a primary business. Exchanges are a subset of companies included in the “Specialized Finance” subindustry by GICS, and Beacon determines via publicly available information whether each Specialized Finance company qualifies as an exchange by operating a public marketplace with access to clearing services for trading any or all of the following: equity (including common and preferred stocks), exchange-traded funds, closed-end funds, fixed income, options, or futures. The Index universe also includes firms classified as “Investment Brokerage - Regional,” “Investment Brokerage - National,” and “Asset Management” as defined by Hemscott Data via publicly available sources. Beacon does not guarantee the inclusion of all relevant companies in the Index universe.

The Index constituent selection methodology was developed by Beacon as a quantitative approach to selecting stocks from the Index universe. The constituent selection model evaluates and selects stocks from the Index universe using a proprietary, 100% rules-based methodology developed by Beacon. The Index constituent selection methodology utilizes multi-factor proprietary selection rules to identify those stocks that offer the greatest potential from a risk/return perspective. The approach is specifically designed to enhance investment applications and investability. The Index is adjusted semi-annually.

INDEX CONSTRUCTION

1. Potential Index constituents include all equities trading on U.S. and international exchanges from within the Index universe as defined above. As of the date of this Prospectus, the market capitalization of the Index constituents ranged from approximately $50 million to approximately $45 billion.
2. Each company is ranked using a 100% quantitative rules-based methodology that includes composite scoring of several growth-oriented, multi-factor filters, and is sorted from highest to lowest.
3. The approximately 100 highest-ranking companies are chosen and given a modified market cap weighting with a maximum weight of 5%.
4. The constituent selection process and Index rebalance is repeated semi-annually.

RISKS AND OTHER CONSIDERATIONS

Investors should consider the following risk factors and special considerations associated with investing in the Fund, which may cause you to lose money.

Investment Risk. An investment in the Fund is subject to investment risk, including the possible loss of the entire principal amount that you invest.

Equity Risk. A principal risk of investing in the Fund is equity risk, which 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. For example, an adverse event, such as an unfavorable earnings report, may depress the value of equity securities of an issuer held by the Fund; the price of common stock of an issuer may be particularly sensitive to general movements in the stock market; or a drop in the stock market may depress the price of most or all of the common stocks and other equity securities held by the Fund. In addition, common 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 is subordinated to preferred stocks, 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 stocks or debt instruments of such issuers. In addition, while broad market measures of common stocks have historically generated higher average returns than fixed income securities, common stocks have also experienced significantly more volatility in those returns.

Exchanges, Brokers & Asset Managers Industries Risk. Because the Index is concentrated in the exchanges, brokers and asset managers industries, the Fund may be adversely affected by the performance of those securities and may be subject to price volatility. In addition, the Fund may be more susceptible to any single economic, market, political or regulatory occurrence affecting those industries. Specifically, companies in the exchanges, brokers or asset managers industries are subject to extensive government regulation that affects the scope of their activities, the prices they can charge and the amount of capital they must maintain. These regulations are subject to change at any time, and such changes may have an adverse impact on the operations of companies in these industries. The exchanges, brokers or asset managers industries can be significantly affected by stock and bond market activity, brokerage commission structures, and a competitive environment combined with the high operating leverage inherent in companies in these industries. In times of general turmoil in the credit and/or securities markets, such high operating leverage may threaten the ability of companies in these industries to survive. In addition, the deterioration of the credit markets since late 2007 generally has caused an adverse impact in a broad range of markets, including U.S. and international credit and interbank money markets generally, thereby affecting a wide range of financial institutions and markets. This situation has created instability in the financial markets and caused certain companies in the exchanges, brokers or asset managers industries to incur large losses. Numerous companies in those industries have experienced substantial declines in the valuations of their assets, taken action to raise capital (such as the issuance of debt or equity securities), or even ceased operations. These actions have caused the securities of many companies in those industries to experience a dramatic decline in value. Moreover, companies in those industries have avoided collapse due to intervention by the U.S. regulatory authorities (such as the Federal Deposit Insurance Corporation or the Federal Reserve System), but such interventions have often not averted a substantial decline in the value of such companies’ common stock.

Foreign Investment Risk. The Fund’s investments in non-U.S. issuers may involve unique risks compared to investing in securities of U.S. issuers, including, among others, greater market volatility than U.S. securities and less complete financial information than for U.S. issuers. In addition, adverse political, economic or social developments could undermine the value of the Fund’s investments or prevent the Fund from realizing the full value of its investments. Financial reporting standards for companies based in foreign markets differ from those in the United States. Finally, the value of the currency of the country in which the Fund has invested could decline relative to the value of the U.S. dollar, which may affect the value of the investment to U.S. investors. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts, or to pass through to them any voting rights with respect to the deposited securities.

Small and Medium-Sized Company Risk. Investing in securities of small and medium-sized companies involves greater risk than is customarily associated with investing in more established companies. These companies’ stocks may be more volatile and less liquid than those of more established companies. These stocks may have returns that vary, sometimes significantly, from the overall stock market.

Master Limited Partnership Risk. Investments in securities of MLPs involve risks that differ from an investment in common stock. Holders of the units of MLPs have more limited control and limited rights to vote on matters affecting the partnership. There are also certain tax risks associated with an investment in units of MLPs. In addition, conflicts of interest may exist between common unit holders, subordinated unit holders and the general partner of a MLP, including a conflict arising as a result of incentive distribution payments.

Non-Correlation Risk. The Fund’s return may not match the return of the Index for a number of reasons. For example, the Fund incurs a number of operating expenses not applicable to the Index, and incurs costs in buying and selling securities, especially when rebalancing the Fund’s securities holdings to reflect changes in the composition of the Index. Since the Index constituents may vary on a semi-annual basis, the Fund’s costs associated with rebalancing may be greater than those incurred by other exchange-traded funds that track indices whose composition changes less frequently.

The Fund may not be fully invested at times, either as a result of cash flows into the Fund or reserves of cash held by the Fund to meet redemptions and expenses. If the Fund utilizes a sampling approach or futures or other derivative positions, its return may not correlate as well with the return on the Index, as would be the case if it purchased all of the stocks in the Index with the same weightings as the Index.

Replication Management Risk. Unlike many investment companies, the Fund is not “actively” managed. Therefore, it would not necessarily sell a stock because the stock’s issuer was in financial trouble unless that stock is removed from the Index.

Issuer-Specific Changes. The value of an individual security or particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. The value of securities of smaller issuers can be more volatile than that of larger issuers.

Non-Diversified Fund Risk. The Fund is considered non-diversified and can invest a greater portion of assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single investment could cause greater fluctuations in share price than would occur in a diversified fund.

As with any investment, you should consider how your investment will be taxed. The tax information contained in the prospectus is provided as general information. Investors should consult their own tax professional about the tax consequences of an investment as Claymore Securities, Inc. does not offer tax advice.

Claymore ETFs are listed on the NYSE Arca, depending on the ETF listing, the same way as shares of a publicly-traded company. Claymore ETFs can be purchased through most brokerage accounts. They can be bought and sold throughout the day on the NYSE Arca, depending on the ETF listing, during normal trading hours. The Fund issues and redeems shares at NAV only in large blocks of 80,000 shares (each block of 80,000 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.

Investors buying or selling ETF shares on the secondary market may incur brokerage costs and other transactional fees. Shares of ETFs may fluctuate in price due to daily changes in trading volume. At times, shares may not have a high volume of trading. Except when aggregated in Creation Units, Shares are not redeemable securities of the Fund.

Deliveries of Fund securities to redeeming investors generally will be made within three business days. Due to the schedule of holidays in certain countries, however, the delivery of in-kind redemption proceeds may take longer than three business days after the day on which the redemption request is received in proper form. In such cases, the local market settlement procedures will not commence until the end of the local holiday periods. See the Fund’s SAI for a list of the local holidays in the foreign countries relevant to the Funds.

The Product(s) is not sponsored, endorsed, sold or promoted by Beacon Indexes LLC (“Licensor”). Licensor makes no representation or warranty, express or implied, regarding the advisability of investing in securities generally or in the product(s) particularly or the ability of the Beacon Global Exchanges, Brokers & Asset Managers Index (“Index”) to track general market performance. Licensor’s only relationship to the Claymore Advisors, LLC (“Licensee”) is the licensing of the Index which is determined, composed and calculated by Licensor without regard to the Licensee or the Product(s). Licensor has no obligation to take the needs of the Licensee or the owners of the Product(s) into consideration in determining, composing or calculating the Index. Licensor shall not be liable to any person for any error in the Index nor shall it be under any obligation to advise any person of any error therein.

Claymore Advisors, LLC, an affiliate of Claymore Securities, Inc., serves as the investment adviser.