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Claymore Securities, Inc.
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PERFORMANCE PARTNERS ABOUT CLAYMORE CEFs LITERATURE
OLA
Old Mutual/Claymore Long-Short Fund

COMMON SHARES

DAILY DATA   as of 3/19/10
Closing Share Price  $8.74 
Closing NAV  $9.30 
Premium/(Discount)  (6.02%) 
52-Week Average Premium/Discount  (13.93%) 
Current Distribution Rate1  10.98% 
Daily Volume  81,295 
Quarterly Dividend Per Share2  $0.24000 
Ex-Dividend Date  3/11/10 
Payable Date  3/31/10 
52 Week High/Low Share Price3  $8.84/$7.08 
52 Week High/Low NAV3  $9.59/$8.82 
Intraday Trading Information  NYSE 

Data subject to change on a daily basis.

 

WEEKLY DATA   as of 3/19/10
Closing Share Price  $8.74 
Closing NAV  $9.30 
Closing Volume  81,295 
Premium/(Discount)  (6.02%) 
Distribution Rate  10.98% 
Total Managed Assets  $176,748,732 
Shares Outstanding  19,005,240 
Percent Leveraged From Preferred Shares  0.00% 

Data subject to change on a daily basis.

 

SEMI-ANNUAL DATA   as of 12/31/09
Fiscal Year-End  12/31 
Expense Ratio (Total Fund)4  2.42% 
Expense Ratio (Common Shares)4  2.42% 
Portfolio Turnover5  256% 
Portfolio Manager  Analytic Investors, LLC. 
Investment Adviser  Claymore Advisors 

Data subject to change on a daily basis.

INCEPTION INFORMATION

Common Shares6
Inception Date August 25, 2005
NYSE Symbol OLA
NAV Symbol XOLAX
The Wall Street Journal  Listing OldMtlClyLngShrt
CUSIP 68003N103
Inception Share Price $20.00
Inception NAV $19.10

QUARTERLY TOTAL RETURNS
as of 12/31/09

MARKET PRICE
NAV
2009 YTD 22.85 % 3.51 %
1 Year 22.85 % 3.51 %
3 Year -12.22 % -11.67 %
5 Year - -
Since Inception -8.08 % -6.19 %

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 quarterly 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 Expense ratio is annualized. 1.77% is operating expense, and 0.65% is dividends on short securities.

5 Not annualized

6 Based on the prospectus information.

INVESTMENT OBJECTIVE

Old Mutual/Claymore Long-Short Fund (the "Fund") invests in a diversified portfolio of common stocks and other equity securities managed by Analytic Investors, Inc. The Fund's investment objective is to seek a high level of current income and gains with a secondary objective of long-term capital appreciation. Analytic uses quantitative techniques to develop an equity portfolio for the Fund with a level of diversification and risk similar to that of the S&P 500 Index, but which attempts to outperform the S&P 500 Index over full market cycles through individual security selection and other techniques. In addition to purchasing equity securities (i.e., taking long positions), Analytic attempts to identify stocks in the S&P 500 Index that it believes will underperform relative to the average stock in the universe and will sell the securities short on behalf of the Fund. Alternatively, Analytic may underweight these securities relative to the weights of securities in the S&P 500 Index. The Fund intends to take long equity positions equal to approximately 130% of the Fund’s net assets and short equity positions of approximately 30% of net assets, although the Fund’s long/short exposure is expected to vary over time based on Analytic’s assessment of market conditions and other factors.

The Fund will also opportunistically employ a strategy of writing (selling) call options on equity indexes and, to a lesser extent, individual securities held in the Fund’s portfolio. The Fund initially intends to write call options representing approximately 80% to 90% of its net assets, although the extent of the Fund’s use of written call options is expected to vary over time based on Analytic’s assessment of market conditions and other factors (such that it may range from 0% to 100% of net assets). To the extent used, the option strategy is designed to generate gains from option premiums in an attempt to enhance distributions payable to the Fund’s shareholders and to reduce overall portfolio risk.

Fund Highlights

• The Fund's investment objective is to seek a high level of current income and gains with a secondary objective of long-term capital appreciation

• The Fund's equity portfolio seeks to outperform and offer lower volatility over full market cycles than the S&P 500 Index

• The Fund will invest in a diversified portfolio of common stocks and other equity securities utilizing a 130% long / 30% short strategy, although the Fund’s long/short exposure is expected to vary over time based on Analytic’s assessment of market conditions and other factors, and opportunistically employing a strategy of writing (selling) covered calls on equity indexes and, to a lesser extent, its portfolio securities, representing approximately 80-90% of its net assets

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

Why did the Fund reduce its quarterly dividend in June 2009?

Describe the long/short equity approach What types of options strategies (covered calls) are used in OLA? What is the frequency of distributions? 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 does it work?

OLA FUND MANAGER

The Fund’s investment portfolio will be managed by Analytic Investors, LLC (“Analytic”). The firm was founded in 1970 and is a wholly-owned subsidiary of Old Mutual (US) Holdings Inc., more commonly known as Old Mutual Asset Management. Old Mutual Asset Management is a subsidiary of Old Mutual plc, a multi-national financial services firm headquartered in London and listed on the London Stock Exchange (Ticker: OML). Analytic specializes in the creation and continuous management of optioned-equity and optioned-debt portfolios for mutual funds, foundations, insurance companies, endowments, profit-sharing plans, funds-of-hedge funds and individual investors. Among other investments, Analytic currently manages two mutual funds that utilize long-short equity strategies: the Analytic Defensive Equity Fund and the Analytic Global Long-Short Fund.

INVESTMENT TEAM

Portfolio Management

Roger G. Clarke, Ph.D. | Chairman

Roger Clarke is responsible for directing the development of the firm’s investment strategies and research agenda.

Recognized as an authority with more than 30 years experience in quantitative investment research, Roger has authored numerous articles and papers including two tutorials for the CFA Institute. He has served as a member of the editorial boards of the Journal of Portfolio Management and the Financial Analysts Journal. He also served on the faculty of Brigham Young University for eight years where he specialized in investment and options theory and continues to lecture as a guest professor. He concurrently serves as President of a non-profit organization.

• Joined firm in 1985 (served as Principal and Chairman of TSA Capital Management, a firm that merged with Analytic in 1996)
• 31 years of investment experience
• Recipient of the Graham and Dodd Scroll from the Financial Analysts Federation and the Roger F. Murray Award from the Institute for Quantitative Research in Finance.
• Ph.D. – Finance and M.S. – Economics, Stanford University; M.B.A., B.A. – Physics, Brigham Young University

Harinda de Silva, Ph.D., CFA | President & Portfolio Manager

Harindra (“Harin”) de Silva is responsible for the firm’s strategic direction and the ongoing development of its investment processes. As a portfolio manager, Harin focuses on the ongoing research effort for equity and global asset allocation strategies.

Harin has authored several articles and studies on finance-related topics including stock market anomalies, market volatility and asset valuation. He, along with his colleagues Roger Clarke and Stephen Thorley, was recognized with the prestigious Graham and Dodd Award of Excellence for their research published in the Financial Analysts Journal in 2002 and 2005. Prior to joining Analytic Investors, Harin was a Principal at Analysis Group, Inc., where he was responsible for providing economic research services to institutional investors including investment managers, large pension funds, and endowments.

• Joined firm in 1995
• 22 years of investment experience
• Ph.D. – Finance, University of California, Irvine; M.B.A., M.S. – Economic Forecasting, University of Rochester; B.S. – Mechanical Engineering – University of Manchester Institute of Science and Technology

Dennis M. Bein, CFA | Chief Investment Officer & Portfolio Manager

As Chief Investment Officer, Dennis Bein oversees the implementation of the firm’s investment strategies. He is a major contributor to the firm’s ongoing research efforts as well as new product development and strategy applications. As a portfolio manager, Dennis focuses on day-to-day portfolio management and research related to equity-based investment strategies.

Prior to joining Analytic Investors, Dennis was a Senior Consultant for Analysis Group, Inc., where he provided investment consulting services for institutional investors and plan sponsors. He advised pension fund managers on topics such as investment objective definition, asset allocation analysis, manager selection and manager performance evaluation.

• Joined firm in 1995
• 18 years of investment experience
• M.B.A. – Anderson Graduate School of Management, University of California, Riverside; B.A. – Business Administration, University of California, Riverside

Gregory M. McMurran | Chief Investment Officer & Portfolio Manager

As Chief Investment Officer, Greg McMurran oversees the implementation of the firm’s investment strategies. He is a major contributor to the firm’s ongoing research efforts as well as new product development and strategy applications. As a portfolio manager, Greg focuses on day-to-day portfolio management and research related to derivatives-based investment strategies.

With 30 years of quantitative research, portfolio management and trading experience, Greg has an extensive background in managing quantitative investment portfolios. Greg is also recognized as an authority on options valuation and strategies and has authored several articles.

• Joined firm in 1976
• 32 years of investment experience
• M.A. – Economics, California State University, Fullerton; B.A. – Economics, University of California, Irvine

 

OLA Investment Manager
Analytic Investors, LLC.
555 West Fifth Street
50th Floor
Los Angeles CA, 90013

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.aninvestor.com

RISKS AND OTHER CONSIDERATIONS


There can be no assurance that the Fund will achieve its investment objectives. The value of the Fund will fluctuate with the value of the underlying securities. Historically, 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.

Equity Securities and Related Market Risk. The Fund will ordinarily have substantial exposure (both long and short) to common stocks and other equity securities in pursuing its investment objectives and policies. The market price of common stocks and other equity securities in which the Fund invests may go up or down, sometimes rapidly or unpredictably. Equity securities may decline in value due to factors affecting equity securities markets generally, particular industries represented in those markets or the issuer itself. The values of equity securities may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. The value of equity securities may also decline for a number of other reasons which directly relate to the issuer, such as management performance, financial leverage, the issuer’s historical and prospective earnings, the value of its assets and reduced demand for its goods and services. Equity securities generally have greater price volatility than bonds and other debt securities.

Short Sales Risk. The Fund is expected to make substantial use of short sales for investment and risk management purposes, including when Analytic anticipates that the market price of securities will decline or will underperform relative to other securities held in the Fund’s portfolio. The Fund initially intends to take short equity positions in an amount equal to approximately 20% of the Fund’s net assets at the time of sale, but reserves the flexibility to hold short equity positions of up 70% of net assets. Short sales are transactions in which the Fund sells a security or other instrument (such as an option, forward, futures or other derivative contract) that it does not own. When the Fund engages in a short sale on a security, it must borrow the security sold short and deliver it to the counterparty. The Fund will ordinarily have to pay a fee or premium to borrow particular securities and be obligated to repay the lender of the security any dividends or interest that accrue on the security during the period of the loan. The amount of any gain from a short sale will be decreased, and the amount of any loss increased, by the amount of the premium, dividends, interest or expenses the Fund pays in connection with the short sale. Short sales expose the Fund to the risk that it will be required to cover its short position at a time when the securities have appreciated in value, thus resulting in a loss to the Fund. The Fund will ordinarily engage in short sales where it does not own or have the immediate right to acquire the security sold short at no additional cost. The Fund’s loss on a short sale could theoretically be unlimited in a case where the Fund is unable, for whatever reason, to close out its short position. Analytic’s use of short sales in combination with long positions in the Fund’s portfolio in an attempt to improve performance or reduce overall portfolio risk may not be successful and may result in greater losses or lower positive returns than if the Fund held only long positions. It is possible that the Fund’s long equity positions will decline in value at the same time that the value of its short equity positions increase, thereby increasing potential losses to the Fund. In addition, the Fund’s short selling strategies will limit its ability to fully benefit from increases in the equity markets.

Fund Distributions Risk. The distributions shareholders receive from the Fund are based primarily on the dividends it earns from its equity investments as well as the gains the Fund receives from writing options and using other derivative instruments, closing out short sales and selling portfolio securities, each of which can vary widely over the short and long term. The dividend income from the Fund’s investments in equity securities will be influenced by both general economic activity and issuer-specific factors. In the event of a recession or adverse events affecting a specific industry or issuer, an issuer of equity securities held by the Fund may reduce the dividends paid on such securities. If prevailing market interest rates decline, interest rates on any debt instruments held by the Fund, and shareholders’ income from the Fund, would likely decline as well.

There are various risks associated with the Option Strategy. The purchaser of an index option written by the Fund has the right to any appreciation in the cash value of the index over the strike price on the expiration date. Therefore, as the writer of an index call option, the Fund forgoes the opportunity to profit from increases in the index over the strike price of the option. However, the Fund has retained the risk of loss (net of premiums received) should the price of the Fund’s portfolio securities decline. Similarly, as the writer of a call option on an individual security held in the Fund’s portfolio, 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 (net of premiums received) should the price of the underlying security decline. The value of options written by the Fund, which will be priced daily, will be affected by, among other factors, changes in the value of underlying securities (including those comprising an index), changes in the dividend rates of underlying securities, changes in interest rates, changes in the actual or perceived volatility of the stock market and underlying securities and the remaining time to an option’s expiration. The value of an option also may be adversely affected if the market for the option is reduced or becomes less liquid.

Other Derivatives Risk. In addition to options, the Fund may use a variety of derivative instruments (including both long and short positions) in an attempt to enhance the Fund’s investment returns or to hedge against market and other risks in the portfolio, including futures contracts, options on futures contracts, forward contracts and swap agreements. The Fund also may use derivatives to gain exposure to equity and other securities in which the Fund may invest (e.g., pending investment of the proceeds of this offering). Derivatives are subject to a number of risks described elsewhere in this prospectus, such as liquidity risk, equity securities risk, issuer risk, interest rate risk, credit risk, leveraging risk, counterparty risk, management risk and, if applicable, medium and smaller company 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 a derivative may not correlate perfectly with an underlying asset, interest rate or index. 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. The Fund may enter into derivatives transactions that may in certain circumstances produce effects similar to leverage and expose the Fund to related risks.

Counterparty Risk. The Fund will be subject to risk with respect to the counterparties to the derivative contracts purchased or sold by the Fund. 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 these circumstances.

Tax Risk. The Fund’s positions in many equity index call options and futures contracts, certain foreign currency contracts and certain options on futures contracts and foreign currencies will be subject to mark-to-market treatment, and gains will be recognized based on the fair market value of the instruments on October 31 and December 31 (or, if disposed of, upon disposition). Under this system, 60% of the gains or losses from such equity index call options, futures contracts (including, unless the Fund elects otherwise, foreign currency futures contracts) and certain options on futures contracts and foreign currencies will be treated as long-term capital gains or losses and 40% will be treated as short-term capital gains or losses. The Fund may elect to treat gains or losses from foreign currency positions as capital gains or losses; net short-term gains arising therefrom, to the extent not offset by capital losses, together with profits from the foreign currency positions producing ordinary income for which such an election is not made, will be taxable as ordinary income. Such short-term gains will be subject to ordinary income tax rates to the extent not offset by short-term capital losses. Other call option premiums received by the Fund will be recognized upon exercise, lapse or other disposition of the option and generally will be treated by the Fund as short-term capital gain or loss, as will gains or losses upon closing of short positions. Some of the call options and other devices employed by the Fund reduce risk to the Fund by substantially diminishing its risk of loss in offsetting positions in substantially similar or related property, thereby giving rise to ‘‘straddles’’ under the federal income tax rules. The straddle rules require the Fund to defer certain losses on positions within a straddle and terminate or suspend the holding period for certain securities in which the Fund does not yet have a long-term holding period or has not yet satisfied the holding period required for qualified dividend income. Thus, the Fund cannot assure you as to any level of short-term or long-term capital gains distributions and cannot assure you as to any ratio of quarterly distributions to capital gain distributions. In addition, certain of the Fund’s call writing activities and investments in futures contracts and foreign currency contracts may affect the character, timing and recognition of income and could cause the Fund to liquidate other investments in order to satisfy its distributions requirements. See ‘‘Tax Matters.’’ Please see ‘‘Distributions’’ for a description of additional risks associated with the tax characterization of the Fund’s distributions to Common Shareholders.

Medium and Smaller Company Risk. The Fund may invest significantly in companies with medium-sized market capitalizations (such as those included in the S&P 500 Index) and also reserves the flexibility to invest in companies with small market capitalizations. The general risks associated with the types of securities in which the Fund invests are particularly pronounced for securities issued by companies with medium and 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 medium and 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.

Focused Investment Risk. Although the Fund has a policy not to concentrate investments in any particular industry, it may (consistent with that policy) invest up to 25% of its assets in any particular industry. To the extent that the Fund focuses its investments in a particular industry, the net asset value of the Fund will be more susceptible to events or factors affecting companies in that industry. These may include, but are not limited to, governmental regulation, inflation, rising interest rates, cost increases in raw materials, fuel and other operating expenses, technological innovations that may render existing products and equipment obsolete, competition from new entrants, high research and development costs, increased costs associated with compliance with environmental or other regulation and other economic, market, political or other developments specific to that industry. Also, the Fund may have greater risk to the extent that it invests a substantial portion of its assets in companies in related industries, such as technology or financial and business services, which may share common characteristics, are often subject to similar business risks and regulatory burdens, and whose securities may react similarly to the types of events and factors described above. The Fund will also be subject to focused investment risks to the extent that it invests a substantial portion of its assets in a small number of issuers or in a particular country or geographic region.

Interest Rate Risk. Generally, when market interest rates rise, the prices of debt obligations fall, and vice versa. Interest rate risk is the risk that any debt securities in the Fund’s portfolio will decline in value because of increases in market interest rates. During periods of declining interest rates, an issuer of debt securities may exercise an option to redeem securities prior to maturity, forcing the Fund to invest in lower-yielding securities. During periods of rising interest rates, the average life of certain types of securities may be extended due to slower than expected payments. This may lock in a below market yield, increase the security’s duration and reduce the security’s value. Rising interest rates may also have an adverse impact on the equity markets or particular equity securities. Because market interest rates are currently near their lowest levels in many years, there is a greater risk that the Fund’s investments will decline in value as market interest rates rise. Any use of leverage by the Fund will tend to increase interest rate risk.

Credit Risk. Credit risk is the risk that one or more debt obligations in the Fund’s portfolio will decline in price, or fail to pay interest or principal when due, because the issuer of the obligation or borrower experiences an actual or perceived decline in its financial status. The Fund will limit its investments in debt securities to those that are of investment grade quality at the time of investment (i.e., Baa or above by Moody’s or BBB or above by S&P, or securities that are unrated but judged to be of comparable quality by Analytic). However, investment grade debt securities are subject to some degree of credit risk and the risk of default. Debt securities of investment grade quality in the lowest investment grade category may be considered to possess speculative characteristics by certain ratings agencies.

Leverage Risk. Proceeds from the Fund’s use of short sales will often be used to purchase long equity positions, which may result in a form of financial leverage. The Fund may also enter into transactions that include, among others, futures contracts, loans of portfolio securities, swap contracts and other derivatives, as well as when-issued, delayed delivery or forward commitment transactions, that may in some circumstances give rise to a form of financial leverage. Although it has no current intention to do so, the Fund reserves the flexibility to issue preferred shares or debt securities, borrow money or use reverse repurchase agreements or dollar rolls to add leverage to its portfolio, and will limit these forms of leverage, if used, to 30% of the Fund’s total assets (including the proceeds of the leverage) at the time utilized. The Fund manages some of its derivative positions by maintaining an amount of cash or liquid securities in a segregated account equal to the face value of those positions. The Fund may also offset derivatives positions against one another or against other assets to manage effective market exposure resulting from derivatives in its portfolio. To the extent that the Fund does not segregate liquid assets or otherwise cover its obligations under such transactions (e.g., through offsetting positions), such transactions will be treated as senior securities representing indebtedness (‘‘borrowings’’) for purposes of the requirement under the 1940 Act that the Fund may not enter into any such transactions if the Fund’s borrowings would thereby exceed 331/3% of its total assets. In addition, to the extent that any offsetting positions do not behave in relation to one another as expected, the Fund may perform as if it were leveraged. The Fund’s use of leverage would create the opportunity for increased Common Share net income but also would result in special risks for Common Shareholders. There is no assurance that the Fund’s leveraging strategies will be successful. Leverage creates the likelihood of greater volatility of net asset value and market price of and distributions on Common Shares. Because the fees received by the Investment Adviser and the Investment Sub-Adviser are based on the total managed assets of the Fund (including assets represented by any preferred shares and certain other forms of leverage outstanding), the Investment Adviser and the Investment Sub-Adviser have a financial incentive for the Fund to issue preferred shares or utilize such leverage, which may create a conflict of interest between the Investment Adviser and the Investment Sub-Adviser, on the one hand, and the Common Shareholders, on the other hand.

Management Risk. The Fund is subject to management risk because its portfolio is actively managed. Analytic and the individual portfolio managers will apply investment techniques and risk analyses in making investment decisions for the Fund, but there can be no guarantee that these will produce the desired results. Management risk is particularly significant for the Fund because the Option Strategy, short selling and other derivatives strategies that may be used by the Fund involve sophisticated investment techniques to be implemented by Analytic, and there can be no guarantee that these techniques will be successful. The Investment Adviser has a limited history advising registered investment companies such as the Fund, although the principals of the Investment Adviser have experience serving registered investment companies and providing packaged products to advisors and their clients.

Foreign (Non-U.S.) Investment Risk. The Fund’s investments in ADRs and other securities of foreign issuers involve special risks. For example, the value of these investments may decline in response to unfavorable political and legal developments, unreliable or untimely information, or economic and financial instability. There may be less publicly available information about a foreign company than a U.S. company. Foreign companies are not generally subject to uniform accounting, auditing and financial standards and requirements comparable to those standards applicable to U.S. companies. Similar foreign investment risks may apply to futures contracts and other derivative instruments in which the Fund invests that trade on foreign exchanges. The value of derivative and other instruments denominated in or that pay revenues in foreign currencies may fluctuate based on changes in the value of those currencies relative to the U.S. dollar, and a decline in applicable foreign exchange rates could reduce the value of such instruments held by the Fund. Foreign settlement procedures also may involve additional risks.

Inflation/Deflation Risk. Inflation risk is the risk that the value of assets or income from the Fund’s investments will be worth less in the future as inflation decreases the value of payments at future dates. As inflation increases, the real value of the Fund’s portfolio could decline. Deflation risk is the risk that prices throughout the economy decline over time. Deflation may have an adverse effect on the creditworthiness of issuers and may make issuer default more likely, which may result in a decline in the value of the Fund’s portfolio.

Liquidity Risk. The Fund may invest up to 20% of its total assets in illiquid securities (determined using the Securities and Exchange Commission’s standard applicable to open-end investment companies, i.e., securities that cannot be disposed of within seven days in the ordinary course of business at approximately the value at which the Fund has valued the securities). Illiquid securities may trade at a discount from comparable, more liquid investments and may be subject to wide fluctuations in market value. Also, the Fund may not be able to readily dispose of illiquid securities when it would be beneficial at a favorable time or price or at prices approximating those at which the Fund currently values them.

Other Investment Companies Risk. The Fund may invest in securities of other open-or closed-end investment companies, including ETFs, to the extent that such investments are consistent with the Fund’s investment objectives and policies and permissible under the 1940 Act. As a stockholder in an investment company, the Fund will bear its ratable share of that investment company’s expenses, and would remain subject to payment of the Fund’s investment management fees with respect to the assets so invested. Common Shareholders would therefore be subject to duplicative expenses to the extent the Fund invests in other investment companies. In addition, these other investment companies may utilize financial leverage, in which case an investment would subject the Fund to additional risks associated with leverage.

Market Disruption and Geopolitical Risk. The war with Iraq, its aftermath and the continuing occupation of Iraq is likely to have a substantial impact on the U.S. and world economies and securities markets. The nature, scope and duration of the war and occupation and the potential costs of rebuilding the Iraqi infrastructure cannot be predicted with any certainty. Terrorist attacks on the World Trade Center and the Pentagon on September 11, 2001 closed some of the U.S. securities markets for a four-day period and similar future events cannot be ruled out. The war and occupation, terrorism and related geopolitical risks have led to, and may in the future lead to, increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets generally. Those events could also have an acute effect on individual issuers or related groups of issuers. These risks could also adversely affect individual issuers and securities markets, interest rates, secondary trading, ratings, credit, inflation and other factors relating to the Common Shares.
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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