Note: One of the magnifying glasses in the gallery is transparent, the other is white. If youuse the transparent glass, then you could create a circle of any color and group it with the transparent--so now you could have a yellow, green or blue glass on your magnifying glass!
Search the forums for magnifying glass. THere are plenty of tutorials and videos out there.
Hint: background needs to be same color as the "hidden text." Also, the glass is the middle layer of a sandwich--the background and "hidden text" are the bread. So make sure you put the magnifying glass down before you put down the "hidden text" or use the drop down to change the order.
Jim Hollis has a great example of a flashlight that works the same way on his website "Teachers Love Smart Boards."