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Claymore Gold Bullion Trust converts to an ETF


Claymore Investments’ Gold Bullion Trust has met the requirements of its automatic conversion feature and will be converting into an open-end exchange-traded fund.

The fund was previously a closed-end investment trust, the units and warrants of which were offered to the public under a prospectus dated 19 May 2009 and issued at the closing of its initial public offering.

As set out in the prospectus, the fund was to automatically convert into an ETF if, commencing after 28 November 2009, the daily weighted average trading price of the fund units was greater than a discount of two per cent of the net asset value per fund unit for that day, for a period of ten consecutive trading days.

The conversion test has been met and the fund intends to file a preliminary prospectus qualifying the continuous distribution of its hedged common class units, as well as a new class of non-hedged common class units, on or about 14 December 2009. The fund will also change its name to the Claymore Gold Bullion ETF.

The conversion of the fund to an ETF shall be effective upon the issuance of a receipt for a final prospectus in relation to the continuous offering of the units, which conversion is expected to be completed in January 2010. Claymore has a patent pending in Canada for the ETF conversion process.

By converting to an ETF, the fund is expected to provide unitholders with several benefits including more efficient trading as the market price of the fund’s units on the TSX should be closer to its intrinsic net asset value, as well as greater market liquidity. The conversion to an ETF will not change the investment objective or investment restrictions of the fund.

"We are pleased to be able to provide investors interested in holding gold bullion with an exchange traded fund structure through which they can meet their investment objective. The Claymore Gold Bullion ETF will bring enhanced liquidity to the marketplace in a secure and low-cost manner," says Som Seif, president of Claymore Investments.

The investment objective of the fund is to replicate the performance of the price of gold bullion, less the fund’s expenses and fees. The fund does not anticipate making regular distributions on its fund units. The fund invests in holdings of pure, gold bullion, in 400 troy ounce international bar sizes, and does not speculate with regard to short-term changes in gold prices.

Given that gold bullion is priced in US dollars, the fund currently hedges substantially all of the fund’s US dollar currency value back to the Canadian dollar, providing exposure to gold while reducing the currency risk for Canadian investors. In connection with the conversion of the fund to an ETF, the fund intends to qualify an additional class of non-hedged units of the fund.

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