INDEX METHODOLOGY

The Index is designed to identify and track companies in industries that support and facilitate the exchange of ideas and information as a basis for commerce. Eligible Index securities include the total investable universe of the software, hardware, media and telecommunications sectors. Morningstar classifies companies into the industry that best reflects each company’s underlying business activities based on the largest source of revenue and income. Industry classification is based on publicly available information about each company, and is primarily obtained from a company’s annual report and Form 10-K. As of the date of this prospectus, the Index includes companies with capitalizations between $300 million and $300 billion, which includes small-, mid- and largecapitalization companies as defined by Morningstar. Morningstar rebalances the number of free float shares of each constituent security in the Index quarterly in March, June, September, and December. Immediate rebalancing occurs if two constituents merge or a company’s free float changes by 10% or more. The Index is reconstituted twice annually in June and December.

INDEX CONSTRUCTION

Morningstar’s Super Sector Index structure represents a unique way to classify companies based on the broad economic spheres in which they operate—manufacturing, service, and information. This organization of sectors is designed to mimic the way economies evolve from dependence on the production of physical products to the delivery of services, which culminates in the exchange of information.

1. Index constituents are drawn from the available pool of liquid U.S.-domiciled stocks that trade on one of the three major exchanges, the American Stock Exchange, NYSE, and NASDAQ. The following security types are excluded from the Index: American depositary receipts; bulletin board stocks; convertible notes; warrants and rights; and limited partnerships.
2. Securities that have more than ten non-trading days in the prior quarter or that have an average daily trading volume over the preceding six months that falls in the bottom quartile are excluded. Securities meeting all of the above-listed criteria are considered for inclusion in the Morningstar Sector Indexes.
3. Each company is assigned to one of 129 Morningstar industries based on the firm’s primary source of revenue. The industries are classified into one of 12 sectors. The sectors are organized under one of three Super Sectors—the Information Economy, the Service Economy, and the Manufacturing Economy. All of the companies in the Information Economy Super Sector are included in the Index.
4. Index constituents are weighted according to their free float of shares outstanding. The free float is defined as a firm’s outstanding shares adjusted for block ownership to reflect only shares available for investment. The types of block ownership that are considered during float adjustment are cross ownership, government ownership, private ownership, and restricted shares.
5. Morningstar rebalances the number of free float shares of each constituent security in the Index quarterly in March, June, September, and December. Immediate rebalancing occurs if two constituents merge or a company’s free float changes by 10% or more. The Index is reconstituted (stocks are added or removed from the Index) twice annually in June and December.

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.

Software/Hardware Sector Risk. Competitive pressures may have a significant effect on the financial condition of companies in the software and hardware sectors. Also, many of the products and services offered by software and hardware companies are subject to the risks of short product cycles and rapid obsolescence. Companies in the software and hardware sectors also may be subject to competition from new market entrants. Such companies also may be subject to risks relating to research and development costs and the availability and price of components. As product cycles shorten and manufacturing capacity increases, these companies could become increasingly subject to aggressive pricing, which hampers profitability.

Media Sector Risk. Companies engaged in design, production or distribution of goods or services for the media industry (including television or radio broadcasting or manufacturing, publishing, recordings and musical instruments, motion pictures and photography) may become obsolete quickly. Media companies are subject to risks which include cyclicality of revenues and earnings, a decrease in the discretionary income of targeted individuals, changing consumer tastes and interests, fierce competition in the industry and the potential for increased government regulation. Media company revenues are dependent in large part on advertising spending. A weakening general economy or a shift from online to other forms of advertising may lead to a reduction in discretionary spending on online advertising. Additionally, companies engaged in the media industry can be significantly affected by federal deregulation of cable and broadcasting, competitive pressures and government regulation.

Telecommunications Sector Risk. The telecommunications sector is subject to extensive government regulation. The costs of complying with governmental regulations, delays or failure to receive required regulatory approvals or the enactment of new adverse regulatory requirements may adversely affect the business of the telecommunications companies. The telecommunications sector can also be significantly affected by intense competition, including competition with alternative technologies such as wireless communications, product compatibility, consumer preferences, rapid obsolescence and research and development of new products. Other risks include those related to regulatory changes, such as the uncertainties resulting from such companies’ diversification into new domestic and international businesses, as well as agreements by any such companies linking future rate increases to inflation or other factors not directly related to the actual operating profits of the enterprise.

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 quarterly 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.

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.

License Agreement Term Risk. The Investment Adviser’s license agreement with the Index Provider to use the Index has a five-year term, and is renewable thereafter on an annual basis. There can be no assurance that the license agreement will be renewed or extended at the end of that term, or that the Investment Adviser will be able to enter into another agreement with the Index Provider to use the Index. If no agreement is entered into at the end of the five-year term, the Investment Adviser may be required to obtain a replacement Index Provider on behalf of the Fund.

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.

Claymore ETFs are listed on the NYSE Arca depending on the individual ETF listing, the same way as are 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 during normal trading hours. The Fund issues and redeems shares at NAV only in large blocks of 150,000 shares (each block of 150,000 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.

Morningstar Information Super Sector Index is a service mark of Morningstar, Inc. and has been licensed for use for certain purposes by Claymore Advisors LLC. The Claymore/ Morningstar Information Super Sector Index ETF, is not sponsored, endorsed, sold or promoted by Morningstar, and Morningstar makes no representation regarding the advisability of investing in the Claymore/Morningstar Information Super Sector Index ETF.