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June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
June 2012   monthly sales presentation usd mexico
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June 2012 monthly sales presentation usd mexico

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  • 1. Monthly Commodity ThemesJune 2012
  • 2. Contents Product Offering………………………………………………………………………………………..................... The Macro Context…………………......………………………………………………............................................................ Scenario Analysis: What performs when growth is falling?.……………………............................................................ What’s driving the gold price and 2012/13 outlook.......................................................................................................... Using a physical precious metals basket as a portfolio diversifier………………….......................................................... Platinum and Palladium: the industrial precious metals................................................................................................... Copper: Canary in the coalmine...................................................................................................................................... Hedged Commodity ETPs – How do they work and how can they be used? ................................................................ Performance Tables...………………….………………………………………………………………………...................…..... Equities………………………………………………………………………………...................................…..............................................….. - Commodities………………………………………………………...……………………................................................................................... FX………………………………………………………………………………………………............................................................................. Appendix - (1) Scenario Analysis: What Performs When Growth is Rising?..................................…....................................................................…... •Page 2 For Professional Investors Only, Not For Public Dissemination
  • 3. Our product offerings Commodity ETCs Currency ETCs Equity ETFs Diversified Broad Agriculture Long or Short US Equities Industrial Metals USD/EUR/GBP vs G10 Commodities Energy USD vs EMs (CNY & INR) European Equities Livestock Thematic Equities Precious Metals Long (1x) Long (1x) Long (1x) Short (-1x) Short (-1x) Double Short (-2x) Double Leveraged (2x) Triple Long (3x) Double Leveraged (2x) Physical (1x) Triple Short (-3x) Forward (1x)These products are listed on one or more of the following exchanges: London, New York, Tokyo, Frankfurt, Amsterdam, Paris, Sydney, Milan and DublinPage 3 For Professional Investors Only, Not For Public Dissemination
  • 4. ETPs: a practical primer to product structure Stock Exchange Exchange Traded Product • Intra day trading on exchange • Open-ended security • All asset classes • Delta-one, short & leveraged Physically Backed Collateralised • Hold 100% of constituent • Hold less than 100% of the Uncollateralised constituent assets • Unsecured risks to the issuer assets • Use collateral to cover risks or a bank balance sheet. • No lending allowed arising from securities lending or swap exposure • ETFS Metal Securities Limited • ETFS Commodities • Gold Bullion Securities Securities Limited • ETFS Oil Securities Limited Limited • ETFS Foreign Exchange • ETFS Industrial Metal Limited Securities LimitedPage 4 For Professional Investors Only, Not For Public Dissemination
  • 5. ETCsInstrument to facilitate investment in commodities Increased demand for commodities exposure Investor Demand Limited investment options to invest in commodities because European Undertakings for Collective Investment in The Challenge Transferable Securities funds (UCITS) are not allowed to invest in physical commodities or derivatives directly and they need to be diversified There is a need for a new exchange traded instrument to provide a simple access to commodities in a more flexible way (single commodity) with close correlation to the underlying Creation of ETCs to replicate the characteristics of an exchange Introduction of ETCs traded UCITS fund □ Open ended, cost efficient, transparent and bankruptcy remote □ Trustee structure and English-law security charges provide significant protections against issuer and counterparty risk □ ETCs are eligible for investment by UCITS funds as transferable securities that do not embed a derivativePage 5 For Professional Investors Only, Not For Public Dissemination
  • 6. The Macro Context
  • 7. Greek concerns spur flight to safety Even following Greece’s orderly debt restructuring earlier this year, its debt remains above 120% of GDP, a level considered unsustainable by most analysts. With pro-reform parties knocked out of power in Greece’s early May elections, there are growing concerns that Greece may opt for a disorderly default and leave the Euro. Fears of possible highly disruptive contagion are keeping investors on the sidelines. Spain and Italy – Spain in particular – have also been dragged back towards crisis, with government bond spreads widening sharply as fiscal and growth concerns have returned. Therefore, while the initial Greek debt restructuring and large liquidity interventions by the ECB staved off a broad European sovereign crisis earlier this year, the root structural problems are far from being resolved. This will likely keep markets on edge and keep central banks in easing mode for the foreseeable future. Investors Flee to Safety Spanish and Italian Bond Spreads Surge % (10-yr US Treasury and German Bund yields)4.0 10-yr spreads to German Bunds (Bps), From May 19, 2010 to May 18, 2012 600 Spain Italy3.5 5003.0 4002.52.0 300 US Germany1.5 2001.0 1000.5 Source: Bloomberg, ETF Securities 0 Apr-10 Feb-11 Apr-11 Feb-12 Apr-12 Aug-10 Sep-10 Oct-10 Mar-11 Aug-11 Sep-11 Oct-11 Mar-12 May-10 Dec-10 Jan-11 May-11 Dec-11 Jan-12 May-12 Jun-10 Jul-10 Nov-10 Jun-11 Jul-11 Nov-110.0 Source: Bloomberg, ETF Securities Page 7 For Professional Investors Only, Not For Public Dissemination
  • 8. Mixed global growth prospects US jobs, housing and manufacturing data have been improving, supporting the household sector. Despite a weak payrolls report for May, over 2 million jobs have been added to US economy over the past 15 months. The manufacturing ISM has been on a rising trend since November 2011, helping drive a global industrial recovery. The Eurozone, however, has been showing distinct signs of economic weakness, with most countries in recession and only Germany currently managing to hold growth above zero. China’s economy has slowed, but with GDP growth of 8.1% in 1Q 2012, it is still strong. China’s authorities are now reacting strongly, cutting bank reserve requirements, easing credit controls and announcing new fiscal stimulus. While the growth moderation may continue in the near-term, the substantial fiscal and monetary resources available should help support continued healthy growth. Manufacturing PMI: Europe, China and US Index level, Monthly Data, From May 31, 2007 to May 31, 2012 % More Stimulus to Come % 65 25 10 China Reserve Ratio Requirement 60 20 Chinese CPI 7 55 50 15 4 45 10 1 40 35 5 -2 30 Source: Bloomberg, ETF Securities EU PMI US PMI China PMI 25 0 -5 Nov 07 Nov 08 Nov 09 Nov 10 Nov 11 May 07 May 08 May 09 May 10 May 11 May 12 Source: ETF Securities, BloombergPage 8 For Professional Investors Only, Not For Public Dissemination
  • 9. Accommodative monetary policy here to stay Low interest rates and more liquidity to offset fiscal retrenchment and support weak financial sectors are likely to remain key features of the global central bank policy in 2012. The US Federal Reserve committed to loose monetary policy until late 2014. Potential for QE3. Bank of England pumped another £50bn into the UK economy at the beginning of February, with the Bank of Japan also adding ¥10tn (approx. US$125bn) to its asset purchase scheme during the same period. The ECB balance sheet is expanding rapidly: the second round of Long-Term Refinancing Operation (LTRO) at the end of February 2012 added €530bn to bank balance sheets after pumping in €489bn in December 2011. Banks have the liquidity for 3 years. China has reduced bank reserve requirements three times in past six months to support the real economy and more recently has started to relax credit controls. Gold price vs. US real interest rate US Base Money * % p.a. Daily data, 03/23/1977 - 03/23/2012 USD/oz Monthly, in US$bn, April 30, 1960 - April 30, 2012 -10 22503,000 Real interest rate (inverted)* Gold spot price (RHS axis)2,500 -6 17502,000 -2 12501,500 2 7501,000 500 6 250 0 10 -250 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Mar 77 Mar 82 Mar 87 Mar 92 Mar 97 Mar 02 Mar 07 Mar 12Source: Bloomberg, ETF Securities Source: Bloomberg, ETF Securities* Currency in circulation and commercial banks reserves with the US Federal Reserve. From first available data. * 2 year US governement bond rates ajusted for current month inflation rate (per annum). Page 9 For Professional Investors Only, Not For Public Dissemination
  • 10. Long-term structural factors remain commodity supportive Despite near-term volatility, long-term structural factors remain supportive of commodity prices. The continued industrialisation and increasing incomes of large population developing economies such as China and India are supporting long-term commodity demand. Supply remains constrained and increasingly difficult to access, pushing commodity prices higher. More recently, high and rising developed economy debt levels and unprecedented monetary expansion have increased demand for “hard assets” as a hedge against inflation and potential currency debasement. Rising per Capita Incomes Drive Commodity Demand 9,000 $US Asian Development Rates Energy Use (Kg of oil equivalent per capita) 45,000 USA Japan (t=0, 1962) 40,000Gross National Income (per capita) Korea (t=0, 1974) Australia 35,000 6,000 China (t=0, 1995) 30,000 Russia India (t=0, 2002) Germany 25,000 France Japan Malaysia (t=0, 1973) UK 20,000 3,000 Italy Malaysia 15,000 India China China Mexico 10,000 Brazil Egypt India 5,000 Data: Annual 0 Source: World Bank, ETF Securities - 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 GDP per capita (current US$) Time (years) Sources: World Bank, ETF Securities Data: As of 2008. Page 10 For Professional Investors Only, Not For Public Dissemination
  • 11. Strategies for 2012 – barbell approaches in favour US economic recovery has continued but most of Europe remains in recession. The still substantial macro and political risks are keeping investors cautious and aiding demand for risk hedges. ‘Barbell’ strategies are thus preferred. An uncertain economic outlook, coupled with the flood of central bank stimulus has historically been supportive of defensive assets such as precious metals - gold in particular - high dividend yield stocks and areas where investors feel there is more certainty. Supply shocks in commodity markets are constraining supplies and in turn providing price support: □ Middle-East upheaval has added a supply risk premium to oil prices that has reduced recently but is unlikely to disappear. □ Social unrest in South Africa has lifted platinum and palladium prices as supplies have been reduced. □ Copper faced with supply disruptions last year and this year on labour strikes and weather problems in Chile. Strong income stream and defensive equities: □ Gold mining companies provide investors with an indirect exposure to the gold price. □ Companies with a history of providing stable dividends can give investors exposure to stable income streams.Page 11 For Professional Investors Only, Not For Public Dissemination
  • 12. Scenario Analysis: What performs when growth is falling?
  • 13. -5% -4% -3% -2% -1% 0% 1% 2% 3% 4% ETFS SugarPage 13 ETFS Physical Gold ETFS Gold ETFS Precious Metals DJ-UBSCI SM ETFS Physical PM Basket ETFS Silver ETFS Physical Silver ETFS Platinum ETFS Physical Platinum Source: Bloomberg, ETF Securities ETFS Physical Palladium ETFS Coffee ETFS Forward Softs DJ-UBSCI SM ETFS Forward Natural Gas ETFS Forward Lean Hogs ETFS Cocoa ETFS Soybeans ETFS Forward Ex-Energy DJ-UBSCI SM ETFS Lead ETFS Physical Lead ETFS Forward Agriculture DJ-UBSCI SM ETFS Forward Livestock DJ-UBSCI SM ETFS Forward All Commodities DJ-… ETFS Forward Grains DJ-UBSCI SM ETFS Forward Live Cattle ETFS Forward Heating Oil For Professional Investors Only, Not For Public Dissemination ETFS Forward Energy DJ-UBSCI SM ETFS Gasoline ETFS Soybean Oil ETFS Nickel ETFS Physical Nickel ETFS Forward Petroleum DJ-UBSCI SM the above indexes during the worst 20% months of growth performance over the past 5 years. ETFS Corn outperformed when growth is falling ETFS Brent 2yr ETFS Forward Brent Crude ETFS Forward WTI Crude Oil ETFS WTI 3yr ETFS Copper ETFS Physical Copper ETFS Zinc ETFS Physical Zinc ETFS Wheat ETFS WTI 2yr ETFS Brent 1yr ETFS Forward Industrial Metals DJ-… ETFS Brent 3yr Long gold, precious metals and sugar ETCs have ETFS Physical Aluminum ETFS Tin ETFS Physical Tin ETFS WTI 1yr ETFS Aluminium ETFS Brent 1mth ETFS Carbon Growth is calculated as the simple average of US ISM and EU PMI growth on a 3 month moving average basis. The chart above looks at the performance of ETFS WTI 2mth ETFS Cotton
  • 14. Long IVSTOXX, gold miners and agribusiness haveoutperformed when growth is falling10% 8% 6% 4% 2% 0%-2%-4% ETFX DAXglobal Gold Mining Fund ETFX DAXglobal Shipping Fund ETFX Russell 2000 US Small Cap Fund ETFX DAXglobal Alternative Energy Fund ETFX WNA Global Nuclear Energy Fund ETFX Dow Jones Global Select Dividend ETFX AEX® Fund ETFX AMX® Fund ETFX-BofAML IVSTOXX ETF ETFX DAXglobal Coal Mining Fund ETFX DAXglobal Coal Mining Fund ETFX S-Net ITG Global Agri Business Fund Fund Source: Bloomberg, ETF Securities Growth is calculated as the simple average of US ISM and EU PMI growth on a 3 month moving average basis. The chart above looks at the performance of the above indexes during the worst 20% months of growth performance over the past 5 years.Page 14 For Professional Investors Only, Not For Public Dissemination
  • 15. What’s driving the gold price and 2012/13 outlook
  • 16. The world has changed: reserve currencies are being debased Historically, gold has tended to perform best during periods of low real interest rates and during periods of high monetary expansion. Most major reserve currency central banks have put in place quantitative and other forms of highly expansionary monetary policy in order to support banks, financial markets and growth. Given continued large debt burdens and weak financial systems, these policies are likely to remain in place for some time. The large increases in money supply have raised currency debasement fears and have kept investor demand for gold as an alternative store of value.US$ millions Federal Reserve Balance Sheet €millions ECB Balance Sheet2,500,000 Weekly, From Apr 20, 1999 to Mar 20, 2012 Weekly, From Apr 20, 1999 to Mar 20, 2012 3,250,000 2,750,0002,000,000 2,250,0001,500,000 1,750,000 1,250,0001,000,000 750,000 500,000 250,000 Source: Bloomberg, ETF Securities Source: ECB, ETF Securities 0 -250,000 Oct-1999 Oct-2000 Oct-2001 Oct-2002 Oct-2003 Oct-2004 Oct-2005 Oct-2006 Oct-2007 Oct-2008 Oct-2009 Oct-2010 Oct-2011 Oct-1999 Oct-2000 Oct-2001 Oct-2002 Oct-2003 Oct-2004 Oct-2005 Oct-2006 Oct-2007 Oct-2008 Oct-2009 Oct-2010 Oct-2011 Apr-1999 Apr-2000 Apr-2001 Apr-2002 Apr-2003 Apr-2004 Apr-2005 Apr-2006 Apr-2007 Apr-2008 Apr-2009 Apr-2010 Apr-2011 Apr-2012 Apr-1999 Apr-2000 Apr-2001 Apr-2002 Apr-2003 Apr-2004 Apr-2005 Apr-2006 Apr-2007 Apr-2008 Apr-2009 Apr-2010 Apr-2011 Apr-2012 Page 16 For Professional Investors Only, Not For Public Dissemination
  • 17. Central banks have switched from net sellers to large netbuyers of gold Private investors are not the only ones buying gold. The official sector (mostly central banks) have also been increasing holdings, with monetary authorities accounting for 10% of global gold demand in 2011 according to the World Gold Council (May 2012). These investors were a net annual supplier of 12% into the market between 2001 and 2009, indicating a net switch of over 20 percentage points in gold’s global supply/demand balance. Rising official net purchases have been spearheaded by surplus emerging market countries. These countries have been looking to diversify their foreign exchange holdings on rising sovereign debt concerns across much of the developed world. Latest IMF data shows that central banks remained strong net gold buyers through the first 4 months of 2012. Official Gold Sales (% Total Global Supply) Annual, Past 10 Years , 2001 - 2011 20% 15% 10% 5% 0% -5% -10% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: ETF Securities, GFMS Thomson Reuters, World Gold CouncilPage 17 For Professional Investors Only, Not For Public Dissemination
  • 18. China a growing force driving physical demand for gold China is a growing force driving global gold demand. At the end of Q4 2011 China accounted for 25% of total world gold demand, up from only 9% 10 years ago. Jewelry, investment and manufacturing are all seeing large increases in demand. In the same way that the combination of China’s rising per capita income and its large population is driving a structural increase in demand for a wide range of commodities and other goods, gold is also seeing a structural upward shift in demand as China and other emerging market economies continue to develop. Over the past year China’s imports of gold through Hong Kong have soared. While these numbers may be affected by factors other than pure new demand (for example, use as trade collateral), they are generally regarded as one of the better windows onto what is otherwise quite an opaque market. Jan-Apr gold imports through HK are already more than half last year’s full year numbers, indicating continued robust China gold demand this year. China Gold Imports from Hong Kong Global Gold Consumption by Country Annual (2012 excluded), 2001-2012 % demandTonnes Tonnes (LHS axis) and % of Global Demand (Labels) 500 25%250 China imports (tonnes, LHS axis) % global demand 2011 (Q4) 450 25% 2001 (Q4) 400 20%200 21% 350 21% 300 15%150 15% 250 200 10%100 150 9% 7% 100 5% 50 5% 50 4% 3% 1% 0 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Jan - Apr 2012* 0 India China* Germany Turkey USASource: World Gold Council, ETF Securities. Countries listed are the top 5 global gold consumers as at end Q4 2011. Consumption defined as Source: Thomson Reuters GFMS, World Gold Council, Hong Kong Census and Statistics Department, ETF Securitiesinvestment and jewellery demand.* Greater China including Taiwan, Hong Kong Note: Global gold demand is as of Q1 2012, as latest available.Page 18 For Professional Investors Only, Not For Public Dissemination
  • 19. Emerging market gold reserve holdings still low China’s central bank gold holdings stand at around only 1.7% of total reserves. This compares to a world average of 12% and 76% for the US. Most large developed countries hold more than 60% of their reserves in gold and this level has been increasing recently. Given that China’s total reserves now stand at US$3.3tn, an increase in its gold reserve holdings just to the world’s average of around 11% would equate to over US$350bn of gold purchases at today’s prices or 194mn ounces, around 1.5 times the world’s total annual gold output. An increase to US levels would be equivalent to around 10 years of current annual gold output. Central Bank Gold Holdings as % of Total Reserves % Total Reserves, Quarterly data, From Q3 2001 to Q3 2011 90 China France Germany India United States 80 70 60 50 40 30 20 10 0 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Source: World, Gold Council, ETF SecuritiesPage 19 For Professional Investors Only, Not For Public Dissemination
  • 20. Gold still a small part of global portfolio assets Gold accounts for just 1% of global financial portfolios according to World Gold Council estimates. Low weighting despite the fact that gold market liquidity is extremely high with around US$250bn traded daily based on London Bullion Market Association estimates1. On these numbers, if gold holdings were to increase to just 2% of global financial portfolios, it would be equal to nearly 6 years of 2011 annual gold supply. Global Portfolio Allocations Across Financial Markets Gold Alternatives 1% 4% Money Markets 9% Bonds 49% Equities 37% Figures estimated as at December 2010, World Gold Council study 1LBMA Gold Turnover Survey for Q1 2011. http://www.lbma.org.uk/assets/Loco_London_Liquidity_Surveyrv.pdfPage 20 For Professional Investors Only, Not For Public Dissemination
  • 21. Is gold in a “bubble?” The rise of the gold price in recent years has been relatively steady, even taking recent price volatility into account. The pace of price gains so far is still just a fraction of those seen in previous asset “bubble” episodes such as the gold price rise in the 1972-1982 period and the NASDAQ dot.com bubble of 1995-2005. So far the gold price has not experienced the typical exponential rise seen in the run-up to the collapse of previous asset price bubbles. Is Gold in a Bubble? Index level, Daily data rebased to 100 3,200 Gold Price (31/08/1968 - 31/08/1985) Gold Price (24/05/2002 - 24/05/2012) 2,800 NASDAQ Index (31/08/1988 - 31/08/2005) 2,400 2,000 1,600 1,200 800 400 0 0 1 2 3 4 5 6 7 8 9 10 12 13 14 15 16 Number of Years Source: Bloomberg, ETF SecuritiesPage 21 For Professional Investors Only, Not For Public Dissemination
  • 22. Gold investor positioning Most investors in gold ETPs have medium-to-long term time horizons, buying for portfolio diversification and as a hedge for inflation, risk and currency debasement. In August and September 2011 when prices corrected sharply, gold ETP holdings held firm and rose further in October. During the most recent gold price correction gold ETP holdings have also held relatively firm. Most of the short-term speculative investment takes place in the gold futures market as reflected in sharp swings in futures positioning during both upward and downward price corrections. After building up large net longs in Jan and Feb 2012, net speculative longs have now dropped back to end 2008 lows, indicating that much of the speculative froth in the market has been cleared.Gold Global ETP Holdings (mn oz) COMEX GoldDaily Data, From 25 Apr 07 to 25 May 2012 Daily Data, From Jun 01, 2011 to Jun 01, 201290 000 contracts 000 contracts 50080 Trading Volume (LHS) 450 300 Net Non-Commercial Positions70 40060 350 25050 300 25040 200 20030 15020 100 15010 50 0 0 100 Apr 07 Apr 08 Apr 09 Apr 10 Apr 11 Jun 11 Aug 11 Oct 11 Apr 12 Sources: ETF Securities, Bloomberg Dec 11 Feb 12 Apr 12 Jun 12Sources: ETF Securities, Bloomberg Page 22 For Professional Investors Only, Not For Public Dissemination
  • 23. Using a physical precious metals basket as aportfolio diversifier
  • 24. ETFS Physical PM Basket (PHPM) A basket of all four precious metals: Gold, Silver, Platinum and Palladium. Methodology: fixed quantity of metal with implied US dollar weights changing based on relative performance over time. Tracks spot prices less the annual management fee (0.44% per annum as at 31 May 2012). ETFS Physical PM Basket – Metal Weights Metal 24/04/2007* 31/05/2012 Palladium 11.7% 10.0% Platinum 20.3% 11.5% Silver 25.8% 27.5% Gold 42.2% 51.1% Source: ETF Securities. * Listing date.Page 24 For Professional Investors Only, Not For Public Dissemination
  • 25. Precious metals vs broad commodity indexes • Precious metals as a group have outperformed most major asset classes, including most broad commodity benchmarks over the past ten years. • They have also tended to have a lower correlation with most global equity benchmarks. • Volatility has been modestly higher than broad commodities and similar or lower than most equity benchmarks. Asset Class Returns (EUR returns to 22 May 2012) Cumulative Returns (EUR) Correlations with Sharpe Eurostoxx Volatility YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs FTSE 100 S&P 500 DAX30 Ratio 50 Physical PM Basket 5% 7% 83% 104% 163% 0.09 0.00 0.04 0.02 18.7% 0.489 DJ-UBS Commodity 3 Month Forward Index -3% -7% 31% 7% 121% 0.38 0.29 0.32 0.28 16% 0.44 EuroStoxx 50 Index -3% -19% 0% -42% -15% 0.86 1.00 0.52 0.94 26% -0.10 S&P 500 Index 7% 13% 74% 2% 8% 0.50 0.52 1.00 0.56 23% -0.01 MSCI AC World Index 4% 2% 49% -10% 14% 0.76 0.76 0.89 0.76 18% 0.02 Hedge Fund Multi Strategy Index 7% 14% 38% 20% 34% -0.05 -0.01 -0.01 0.00 10% 0.19 EUR/USD Currency -2% -9% -9% -5% 38% 0.00 0.13 -0.32 0.09 10% 0.21All returns, correlations and volatilities are based on actual index data or underlying commodity prices excluding fees. Returns are in EUR, dates are from the 22nd May 2002to the 22nd May 2012, unless otherwise stated. Sharpe ratios are based on 10 year returns, 10 year volatility and a risk free rate of 1.04% (average of US 5Yr rates over 1Physical PM Basket includes gold, silver, platinum and palladium. Weights as of 31/5/12 were gold-51%, silver-28%, Palladium 11%, platinum 10%.Source: ETF Securities, BloombergPage 25 For Professional Investors Only, Not For Public Dissemination
  • 26. Historical event hedge properties Precious metals have historically outperformed when equity markets perform poorly. Return during EuroStoxx Worst 20% (EUR) Source: Bloomberg, Monthly Data in EUR, From Mar 02 to Apr 12 2% 0% 1.8% 1.2% 0.6% -2% -1.1% -4% -6% -6.1% -6.3% -8% -7.1% -10% Gold Spot EuroStoxx 50 CS Hedge Fund Multi Precious Metals DAXglobal Gold Miners S&P 500 MSCI World Strategy Note: Based on weakest 20% of trading months of the EuroStoxx 50 over the period.Page 26 For Professional Investors Only, Not For Public Dissemination
  • 27. Platinum: supply and demand drivers SUPPLY DEMAND Mine production represents over 80% of total The portion of platinum demand coming from platinum supply (as of 2011). Europe, North America and Japan has decreased substantially in the past five years. The biggest platinum producer is South Africa, with 60% of global supply, followed by Russia and North At global aggregate level, emerging markets have America. been playing a more prominent role1. Scrap supply is becoming a more prominent The two largest sources of demand for platinum source of platinum and now accounts for almost are Chinese jewellery sales and European 20% of global platinum supply. autocatalysts (primarily for diesel vehicles)1. World Platinum Supply Thousands oz, Yearly, From 2002 to 2011 Evolution of Gross Platinum Demand by Region and Application Thoudands oz, Yearly, 2007 vs 2011 10,000 3,500 Old Jewellery Scrap Autocatalyst Scrap Total Mine Production Other Petroleum Medical & Biomedical 9,000 Jewellery Investment Glass 3,000 Electrical Chemical Autocatalyst 34% 8,000 2,500 29% 7,000 26% 6,000 2,000 5,000 18% 19% 1,500 16% 16% 15% 14% 4,000 13% 1,000 3,000 2,000 500 1,000 0 2007 2011 2007 2011 2007 2011 2007 2011 2007 2011 0 Europe Japan North America China RoW -500 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Johnson Matthey, ETF Securities Source: GFMS, ETF Securities The percentages show the portion of total platinum demand that is attributable to each region. 1 Johnson MattheyPage 27 For Professional Investors Only, Not For Public Dissemination
  • 28. Palladium: supply and demand drivers SUPPLY DEMAND Mine production represents over 80% of total US and China were the largest drivers of palladium supply (as of 2011). autocatalyst demand for palladium, followed by Europe. Most demand is from gasoline vehicles2. The biggest palladium producer is Russia, which accounts for 32% of total palladium supply. South Despite slowing global growth, palladium Africa is the 2nd biggest producer with 31% of total consumption has risen across most regions since supply. 2007. Japan and North America were exceptions. Scrap supply represents the 3rd largest source of Palladium autocatalyst demand rose 5% in 2011 to palladium supply, accounting for 20% of global an 11-year high, strengthening palladium supply in 2011. dominance in the gasoline market and also penetrating the diesel market. World Palladium Supply Evolution of Gross Palladium Demand by Region and Application Thousands oz, Yearly, From 2002 to 2011 Thoudands oz, Yearly, 2007 vs 201110,000 3,000 Old Jewellery Scrap Autocatalyst Scrap Total Mine Production Petroleum Medical & Biomedical Jewellery 9,000 Investment Glass Electrical Chemical Autocatalyst 2,500 8,000 27% 20% 7,000 2,000 23% 22% 20% 20% 6,000 19% 1,500 17% 15% 16% 5,000 4,000 1,000 3,000 500 2,000 1,000 0 2007 2011 2007 2011 2007 2011 2007 2011 2007 2011 0 Europe Japan North America China RoW -500 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Source: GFMS, ETF Securities Source: Johnson Matthey, ETF Securities The percentages show the portion of total palladium demand that is attributable to each region. 2 Johnson MattheyPage 28 For Professional Investors Only, Not For Public Dissemination
  • 29. China auto market now larger than US and Europeanmarkets China accounted for 26% of platinum demand and 22% of Auto Sales* in US, Eurozone** and China palladium demand in 2011. Units, Monthly, From April 30, 2005 to April 30, 20122,000,000 Chinese palladium consumption is US China Europe1,800,000 mostly driven by gasoline1,600,000 autocatalysts, in contrast to1,400,000 platinum demand which the is1,200,000 dominated by jewelry production.1,000,000 800,000 China’s auto sales have almost 600,000 quadrupled in the past 6 years, 400,000 overtaking Europe in 2008 and the 200,000 US in 2009. 0 2005 2006 2007 2008 2009 2010 2011 2012Source: Bloomberg, ETF Securities* Cars and light trucks sales** Total EU27 + EFTAPage 29 For Professional Investors Only, Not For Public Dissemination
  • 30. Platinum and palladium prices linked to the global industrialcycle and China demand Platinum and Palladium Prices vs. US ISM Manufacturing Index Annual %, Monthly, 30 April 1996 - 30 April 2012200% Platinum US ISM Manufacturing (RHS) Series3 Both platinum and palladium are heavily used150% in industrial production, resembling industrial metals in terms of their short-term price100% drivers and gearing into the economic cycle. Concerns about the Eurozone crisis and 50% slowing Chinese activity have dragged palladium prices lower this year despite 0% improvements in the global auto market. -50% Although emerging market demand will be a key driver of palladium prices in the medium--100% term, short-term price moves are often driven Apr 96 Apr 98 Apr 00 Apr 02 Apr 04 Apr 06 Apr 08 Apr 10 Apr 12 by risk sentiment.Source: Bloomberg, ETF Securities The Impact of China Auto Subsidies on Auto Sales* Recent signals of monetary easing and fiscal Units, Monthly, From April 30, 2005 to April 30, 2012 stimulus by Chinas policy-makers are likely to2,080,000 Units (LHS, units) % Change (RHS, 3m moving average of YoY % change) 120 add fundamental support to demand and1,820,000 100 prices. 801,560,000 In particular, this week the Chinese 60 government said it will resume its subsidy1,300,000 40 program aimed at encouraging rural residents1,040,000 20 to trade in their old vehicles for new, fuel - efficient models. 780,000 -20 In 2009, China launched a similar program, 520,000 Mar 2009 to Dec 2009: Chinas state council introduces auto May 2012: Chinas -40 providing tax incentives and subsidies to rural 260,000 subsidies to rural residents government announced -60 dwellers. This move helped bolster the auto they will soon resume the auto subsidy to farmers market and was a key factor in pushing China 0 -80 2006 2007 2008 2009 2010 2011 2012 to surpass the US in terms of vehicle sales. Source: Bloomberg, ETF Securities * Cars and light trucks salesPage 30 For Professional Investors Only, Not For Public Dissemination
  • 31. Copper: the canary in the coal mine?
  • 32. Global industrial cycle a key driver of industrial metals prices Strong correlation between US growth in manufacturing and industrial metals price growth on an annual basis, reflecting the importance of raw materials in the production process. While China is the largest consumer of copper, the stabilisation of the US economy, supported by rising manufacturing activity and jobs is likely to assist demand for copper. Four out of the last seven cycle lows for industrial metals prices have occurred around current growth levels, with only the financial crisis reaching lower levels. The average timeframe from the weakest growth to the highest for industrial metals prices has been 13 months since 1992. Industrial Metals vs. US Manufacturing Annual % Monthly, 31 March 1992 - 30 April 2012 140% 120% 100% Industrial Metals* US ISM Manufacturing (RHS) 80% 60% 40% 20% 0% -20% -40% -60% Source: Bloomberg * DJ-UBS Industrial Metals Total Return Sub-Index SM -80% Jan-92 Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Monthly, 06/30/2005 – 06/30/2011Page 32 For Professional Investors Only, Not For Public Dissemination
  • 33. Copper deficit expected in 2012 Demand is expected to outstrip supply in 2012 leading the International Copper Study Group (ICSG) to expect that the global copper market will fall into deficit this year (March 20, 2012 ICSG analysis). Lowest LME inventory levels since November 2008 have led to a rise in copper prices in recent months. BREE forecasts copper prices to average US$8430 in 2012, on the back of lower investment demand compared to 2011. Copper prices are then forecast to strengthen by around 5% to US$8830 per tonne in 2013, reflecting the increasing tightness of the physical market. Copper Inventory and Price Copper Supply, Demand and Balance Monthly Data, From 31/12/1989 to 30/04/2012 000 tonnes 000 tonnes 1,200 12 Source: BREE, Annual Data, From 2000 to 2012 LME Copper Stocks (metric tonnes) LME Inventory (1,000 Metric tons) 1,500 1,500 fcast 1,000 SHFE Copper Deliverable stocks (metric tonnes) 10 LME Copper Spot (RHS) 1,000 1,000 US$1,000/ Metric tons US$1,000/ Metric tons 800 8 500 500 600 6 0 0 400 4 Balance (RHS) -500 -500 200 2 Supply (YoY Chge, LHS) Source: Bloomberg, ETF Securities Demand (YoY Chge, LHS) 0 0 -1,000 -1,000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Bureau of Resources and Energy Economics (BREE)Page 33 For Professional Investors Only, Not For Public Dissemination
  • 34. Copper conundrum? Attractive Shanghai-London copper futures premium in late 2011 appear to have been the driver of an import spike. Chinese imports have been the source of rising copper inventories in China in recent months. Chinese copper inventory levels are the highest since 2002. The jump in stock levels have historically unwound over the ensuing 3-6 months, as is occurring currently.000 Imports Boosted by Chinese Premium USD/t 000 Chinese Re-stocking Drives Imports 000tonnes tonnes tonnes500 1250 500 250 Thousands China Copper Imports (lhs) SHFE - LME copper price (4mth lag) (rhs) China Copper Imports (lhs) SHFE Copper Deliverable stocks (rhs)400 750 400 200300 250 300 150 0200 -250 200 100100 -750 100 50 Source: Bloomberg, ETF Securities Source: Bloomberg, ETF Securities 0 -1250 0 0 Jan-2007 Jan-2008 Jan-2009 Jan-2010 Jan-2011 Jan-2012 Jan-2007 Jan-2008 Jan-2009 Jan-2010 Jan-2011 Jan-2012Page 34 For Professional Investors Only, Not For Public Dissemination
  • 35. Performance tables by asset class and sector
  • 36. Equity Cumulative Returns (Base Currency) Correlations with ETFX Products FTSE Eurostoxx Volatility Apr 12 YTD 1 Yr 3 Yrs 5 Yrs S&P 500 DAX30 100 502x Leveraged Equity ETFsETFX FTSE® 100 Leveraged (2x) Fund* -13% -7% -22% 36% n.a. 1.00 0.89 0.70 0.88 40%ETFX DAX® 2x Long Fund -9% 17% -29% 43% -55% 0.83 0.94 0.63 1.00 52%ETFX FTSE® MIB Leveraged (2x) Fund* -10% -20% -61% n.a. n.a. 0.83 0.95 0.68 0.88 57%2x Short Equity ETFsETFX FTSE® 100 Super Short Strategy (2x) Fund* 12% 0% -3% n.a. n.a. -1.00 -0.90 -0.70 -0.89 37%ETFX DAX® 2x Short Fund* 9% -20% -1% -63% n.a. -0.88 -0.95 -0.72 -1.00 48%ETFX FTSE® MIB Super Short Strategy (2x) Fund* 7% 10% 53% n.a. n.a. -0.83 -0.95 -0.68 -0.88 56%US Equity ETFsETFX Russell 2000 US Small Cap Fund -5% 3% -7% 64% -5% 0.48 0.54 0.92 0.56 27%Thematic Equity ETFsETFX WNA Global Nuclear Energy Fund -10% -4% -23% -4% -38% 0.63 0.64 0.69 0.63 20%ETFX S-Net ITG Global Agri Business Fund -8% 2% -12% 25% 36% 0.57 0.56 0.73 0.57 26%ETFX DAXglobal Alternative Energy Fund -5% -11% -32% -40% -52% 0.68 0.68 0.60 0.65 25%ETFX DAXglobal Coal Mining Fund -16% -17% -41% 29% -5% 0.48 0.48 0.62 0.48 41%ETFX DAXglobal Gold Mining Fund -9% -18% -26% 1% 21% 0.27 0.22 0.24 0.20 36%ETFX DAXglobal Shipping Fund -14% 2% -30% -19% -64% 0.46 0.46 0.42 0.44 29%ETFX DJ-UBS All Commodities 3 Month Forward Fund -3% -5% -16% 19% 1% 0.39 0.35 0.29 0.32 17%ETFX AEX® Fund -3% -3% -12% 26% -33% 0.90 0.95 0.57 0.87 26%ETFX AMX® Fund -5% 7% -21% 44% -22% 0.78 0.78 0.52 0.73 22%ETFX Dow Jones Global Select Dividend Fund -5% 1% -9% 57% -13% 0.76 0.76 0.61 0.71 19%ETFX-BofAML IVSTOXX ETF* 10% -22% 24% -62% 30% -0.42 -0.49 -0.27 -0.46 55%Source: Bloomberg, ETF Securities ndAll returns, correlations and volatilities are based on actual index data or underlying commodity prices excluding fees. Returns are in USD, dates are from the 22 May 2002 (10 Yrs), 2007 (5 Yrs), nd st nd nd2009 (3 Yrs), 22 May 2011 (1 Yr), 31 December 2011 (YTD) and from 22 April to 22 May 2012 (May 12).* Correlations and volatility are calculated since inception.Page 36 For Professional Investors Only, Not For Public Dissemination
  • 37. Precious metals Cumulative Returns (USD) Correlations with Sharpe FTSE Eurostox Volatility May 12 YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs S&P 500 DAX30 Ratio 100 x 50Precious Metals SMETFS Precious Metals DJ-UBSCI * -4% 0% -3% 70% 128% 391% 0.26 0.23 0.03 0.23 23% 0.72ETFS Physical Platinum -6% 8% -17% 27% 13% 170% 0.24 0.22 0.09 0.22 24% 0.39ETFS Physical Palladium -8% -3% -15% 162% 63% 71% 0.28 0.25 0.12 0.23 37% 0.12ETFS Physical Silver -10% 0% -19% 91% 115% 482% 0.15 0.13 0.00 0.14 38% 0.48ETFS Physical Gold -3% 3% 5% 65% 139% 399% 0.15 0.11 -0.03 0.11 20% 0.84ETFS Physical PM Basket -4% 3% -3% 66% 93% 262% 0.23 0.19 0.03 0.19 20% 0.64ETFS Gold* -3% 0% 3% 61% 127% 356% 0.20 0.17 -0.02 0.17 20% 0.78ETFS Silver* -8% 1% -20% 87% 105% 435% 0.34 0.31 0.10 0.30 36% 0.49ETFS Platinum* -6% 4% -18% 21% 9% 229% 0.32 0.30 0.15 0.29 25% 0.47Source: Bloomberg, ETF Securities ndAll returns, correlations and volatilities are based on actual index data or underlying commodity prices excluding fees. Returns are in USD, dates are from the 22 May 2002 (10 Yrs), 2007 (5 Yrs), nd st nd nd2009 (3 Yrs), 22 May 2011 (1 Yr), 31 December 2011 (YTD) and from 22 April to 22 May 2012 (May 12). Correlations and volatilities are correlation and annual volatility of daily returns over nd ndperiod from 22 May 2002 to 22 May 2012, unless otherwise stated. Sharpe ratios are based on 10 year returns, 10 year volatility and a risk free rate of 1.04% (average of US 5Yr rates over 1year).* These products track indices priced off futures returns.Page 37 For Professional Investors Only, Not For Public Dissemination
  • 38. Industrial metals Cumulative Returns (USD) Correlations with Sharpe FTSE Eurostox Volatility May 12 YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs S&P 500 DAX30 Ratio 100 x 50Industrial Metals SMETFS Industrial Metals DJ-UBSCI * -3% -1% -18% 34% -36% 197% 0.50 0.49 0.29 0.47 27% 0.39 SMETFS Forward Industrial Metals DJ-UBSCI-F3 * -3% -1% -18% 37% -29% 297% 0.50 0.49 0.30 0.47 26% 0.53ETFS Aluminium* -2% -2% -22% 20% -47% 21% 0.41 0.41 0.24 0.40 24% 0.04ETFS Copper* -4% 1% -14% 55% 0% 469% 0.50 0.48 0.29 0.46 32% 0.55ETFS Zinc* -4% 3% -13% 11% -56% 99% 0.41 0.39 0.22 0.37 35% 0.17ETFS Nickel* -4% -10% -25% 28% -67% 252% 0.36 0.34 0.21 0.33 41% 0.30ETFS Tin* -7% 2% -27% 48% 54% 554% 0.36 0.34 0.22 0.33 32% 0.62ETFS Lead* -5% -4% -21% 27% -11% 499% 0.42 0.39 0.24 0.38 38% 0.49Source: Bloomberg, ETF Securities ndAll returns, correlations and volatilities are based on actual index data or underlying commodity prices excluding fees. Returns are in USD, dates are from the 22 May 2002 (10 Yrs), 2007 (5 Yrs), nd st nd nd2009 (3 Yrs), 22 May 2011 (1 Yr), 31 December 2011 (YTD) and from 22 April to 22 May 2012 (May 12). Correlations and volatilities are correlation and annual volatility of daily returns over nd ndperiod from 22 May 2002 to 22 May 2012, unless otherwise stated. Sharpe ratios are based on 10 year returns, 10 year volatility and a risk free rate of 1.04% (average of US 5Yr rates over 1year).* These products track indices priced off futures returns.Page 38 For Professional Investors Only, Not For Public Dissemination
  • 39. Agriculture Cumulative Returns (USD) Correlations with Sharpe FTSE Eurostox Volatility May 12 YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs S&P 500 DAX30 Ratio 100 x 50Agriculture SMETFS Agriculture DJ-UBSCI * -4% -3% -17% 19% 29% 65% 0.35 0.32 0.23 0.30 21% 0.19 SMETFS Forward Agriculture DJ-UBSCI-F3 * -4% -7% -18% 25% 48% 156% 0.36 0.33 0.23 0.31 20% 0.44 SMETFS Grains DJ-UBSCI * 0% 3% -14% 6% 20% 51% 0.29 0.26 0.18 0.25 25% 0.12 SMETFS Forward Grains DJ-UBSCI-F3 * -1% -2% -16% 7% 33% 129% 0.30 0.27 0.19 0.26 24% 0.31ETFS Wheat* 8% 3% -27% -37% -34% -40% 0.22 0.20 0.15 0.19 34% -0.18ETFS Corn* -3% -7% -20% 10% -3% -21% 0.24 0.22 0.15 0.21 30% -0.11ETFS Soybeans* -4% 13% -1% 32% 81% 264% 0.28 0.25 0.17 0.24 27% 0.48 SMETFS Softs DJ-UBSCI * -9% -16% -25% 40% 38% 33% 0.32 0.30 0.21 0.28 22% 0.08 SMETFS Forward Softs DJ-UBSCI-F3 * -9% -18% -25% 66% 76% 132% 0.34 0.31 0.22 0.30 20% 0.38ETFS Sugar* -8% -9% 7% 48% 74% 107% 0.20 0.18 0.11 0.16 35% 0.19ETFS Cotton* -19% -18% -45% 47% 10% -31% 0.24 0.23 0.17 0.22 30% -0.16ETFS Coffee* -2% -25% -38% 6% 4% 3% 0.24 0.23 0.17 0.22 31% -0.02ETFS Soybean Oil* -9% -5% -16% 10% 7% 115% 0.33 0.29 0.22 0.28 26% 0.26ETFS Cocoa* -1% 3% -26% -19% -3% 17% 0.22 0.21 0.13 0.19 32% 0.02Source: Bloomberg, ETF Securities ndAll returns, correlations and volatilities are based on actual index data or underlying commodity prices excluding fees. Returns are in USD, dates are from the 22 May 2002 (10 Yrs), 2007 (5 nd st nd ndYrs), 2009 (3 Yrs), 22 May 2011 (1 Yr), 31 December 2011 (YTD) and from 22 April to 22 May 2012 (May 12). Correlations and volatilities are correlation and annual volatility of daily nd ndreturns over period from 22 May 2002 to 22 May 2012, unless otherwise stated. Sharpe ratios are based on 10 year returns, 10 year volatility and a risk free rate of 1.04% (average of US 5Yrrates over 1 year).* These products track indices priced off futures returns.Page 39 For Professional Investors Only, Not For Public Dissemination
  • 40. Energy Cumulative Returns (USD) Correlations with Sharpe Eurostoxx Volatility May 12 YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs FTSE 100 S&P 500 DAX30 Ratio 50 Energy SM ETFS Energy DJ-UBSCI * -1% -9% -23% -27% -63% -37% 0.29 0.27 0.21 0.25 32% -0.17 SM ETFS Forward Energy DJ-UBSCI-F3 * -2% -7% -19% -15% -43% 82% 0.32 0.30 0.23 0.28 27% 0.19 SM ETFS Petroleum DJ-UBSCI * -10% -3% -4% 21% -19% 121% 0.35 0.31 0.25 0.25 34% 0.21 SM ETFS Forward Petroleum DJ-UBSCI-F3 * -10% -3% -4% 33% 16% 384% 0.37 0.33 0.26 0.25 31% 0.52 ETFS Natural Gas* 26% -27% -58% -81% -95% -97% 0.09 0.10 0.08 0.10 47% -0.67 ETFS Forward Natural Gas* 19% -17% -49% -71% -89% -82% 0.11 0.11 0.08 0.11 35% -0.48 ETFS WTI Crude Oil* -11% -9% -10% 4% -33% 76% 0.36 0.32 0.26 0.30 35% 0.14 ETFS WTI Forward Crude Oil* -11% -8% -8% 22% 9% 346% 0.36 0.32 0.25 0.30 33% 0.46 ETFS Brent Crude* -9% 2% 3% 58% 17% 281% 0.36 0.32 0.25 0.30 33% 0.40 ETFS Forward Brent Crude* -9% 2% 1% 53% 22% 351% 0.37 0.33 0.26 0.31 30% 0.50 ETFS Gasoline* -8% 8% 9% 64% 12% 217% 0.32 0.28 0.22 0.25 37% 0.30 ETFS Heating Oil* -9% 0% -1% 43% 2% 184% 0.30 0.27 0.21 0.25 34% 0.29 ETFS Forward Heating Oil* -8% 1% 0% 43% 17% 381% 0.32 0.28 0.22 0.26 30% 0.53 ETFS Brent 1 mth** -8% 3% 5% 69% 19% 260% 0.35 0.31 0.23 0.28 35% 0.36 ETFS WTI 2 mth** -11% -9% -10% 12% -7% 208% 0.36 0.32 0.26 0.30 35% 0.31 ETFS Brent 1yr** -8% 3% 1% 52% 44% 533% 0.38 0.34 0.26 0.32 27% 0.71 ETFS Brent 2yr** -6% 3% 0% 43% 50% 535% 0.37 0.33 0.24 0.30 24% 0.81 ETFS Brent 3yr** -5% 2% -2% 33% 50% n.a. 0.43 0.40 0.30 0.38 24% n.a. ETFS WTI 1yr** -10% -4% -6% 30% 29% 444% 0.39 0.35 0.27 0.33 28% 0.63 ETFS WTI 2yr** -12% -4% -15% 16% 26% 641% 0.24 0.28 -0.01 0.23 29% 0.73 ETFS WTI 3yr** -10% -4% -16% 10% 26% 604% 0.22 0.26 -0.02 0.22 28% 0.74 ETFS Carbon** 0% 0% -57% -58% -70% n.a. 0.19 0.21 0.06 0.20 40% n.a.Source: Bloomberg, ETF Securities ndAll returns, correlations and volatilities are based on actual index data or underlying commodity prices excluding fees. Returns are in USD, dates are from the 22 May 2002 (10 Yrs), 2007 (5 Yrs), nd st nd nd2009 (3 Yrs), 22 May 2011 (1 Yr), 31 December 2011 (YTD) and from 22 April to 22 May 2012 (May 12). Correlations and volatilities are correlation and annual volatility of daily returns over nd ndperiod from 22 May 2002 to 22 May 2012, unless otherwise stated. Sharpe ratios are based on 10 year returns, 10 year volatility and a risk free rate of 1.04% (average of US 5Yr rates over 1year).*These products track indices priced off futures returns.** These products track futures prices directly.Page 40 For Professional Investors Only, Not For Public Dissemination
  • 41. Appendix (1):Scenario analysis: what performs when growth is rising
  • 42. 0% 1% 2% 3% 4% 5% 6% 7% -1% ETFS Physical PalladiumPage 42 ETFS Copper ETFS Physical Copper ETFS Zinc ETFS Physical Zinc ETFS Forward Industrial Metals DJ-UBSCI SM ETFS Nickel ETFS Physical Nickel was Rising ETFS Lead ETFS Physical Lead Source: Bloomberg, ETF Securities ETFS Cotton ETFS Physical Silver ETFS Physical Aluminum ETFS Gasoline ETFS Tin ETFS Physical Tin ETFS Silver ETFS Aluminium ETFS Forward Softs DJ-UBSCI SM ETFS Brent 1mth ETFS WTI 1yr ETFS Brent 1yr ETFS Forward Heating Oil ETFS WTI 2mth ETFS Physical PM Basket For Professional Investors Only, Not For Public Dissemination ETFS Forward Brent Crude ETFS Forward Petroleum DJ-UBSCI SM ETFS Physical Platinum ETFS WTI 2yr ETFS Precious Metals DJ-UBSCI SM the above indexes during the best 20% months of growth performance over the past 5 years. ETFS Platinum ETFS Brent 2yr ETFS Forward Ex-Energy DJ-UBSCI SM ETFS Forward All Commodities DJ-UBSCI SM ETFS Brent 3yr ETFS Forward WTI Crude Oil ETFS WTI 3yr ETFS Gold ETFS Sugar ETFS Physical Gold ETFS Forward Energy DJ-UBSCI SM ETFS Carbon ETFS Cocoa ETFS Coffee ETFS Forward Agriculture DJ-UBSCI SM ETFS Forward Lean Hogs ETFS Forward Livestock DJ-UBSCI SM ETFS Forward Live Cattle ETFS Soybean Oil ETFS Soybeans ETFS Forward Grains DJ-UBSCI SM ETFS Forward Natural Gas Growth is calculated as the simple average of US ISM and EU PMI growth on a 3 month moving average basis. The chart above looks at the performance of Palladium and Copper ETCs Outperformed when Growth ETFS Corn ETFS Wheat
  • 43. Important Information General This communication has been provided by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Services Authority. The products discussed in this document are issued by ETFS Commodity Securities Limited (“CSL”), ETFS Hedged Commodity Securities Limited (“HCSL”), ETFS Foreign Exchange Limited (“FXL”), ETFS Industrial Metal Securities Limited (“IML”), ETFS Metal Securities Limited (“MSL”), ETFS Oil Securities Limited (“OSL”), Gold Bullion Securities Limited (“GBS” and together with CSL, HCSL, FXL, IML, MSL and OSL the “Issuers”) and ETFX Fund Company plc (the “Company”). Each Issuer is regulated by the Jersey Financial Services Commission. The Company is an open-ended investment company with variable capital having segregated liability between its sub-funds (each a “Fund”) and is organised under the laws of Ireland. The Company is regulated, and has been authorised as a UCITS by the Central Bank of Ireland (the “Financial Regulator”) pursuant to the European Communities (Undertaking for Collective Investment in Transferable Securities) Regulations, 2003 (as amended). When being made within Italy, this communication is for the exclusive use of the “qualified investors” and its circulation among the public is prohibited. When being made within Switzerland, this communication is for the exclusive use by “Qualified Investors” (within the meaning of Article 10 of Section 3 of the Swiss Collective Investment Schemes Act (“CISA”) and its circulation among the public is prohibited. 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Securities offered by the Issuers and the Company are aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant Issuer or the Company which includes, inter alia, information on certain risks associated with an investment. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may be priced in US Dollars, Euros, or Sterling, and the value of the investment in other currencies will be affected by exchange rate movements. Investments in the securities of the Issuers or the shares of the Company which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. 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The prospectuses (and any supplements thereto) for each of the Issuers may be distributed to investors in France, Germany, Italy and the Netherlands. This document is not a financial analysis pursuant to Section 34b of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) and consequently does not meet all legal requirements to warrant the objectivity of a financial analysis and is also not subject to the ban on trading prior to the publication of a financial analysis. This document is not addressed to or intended directly or indirectly, to (a) any persons who do not qualify as qualified investors (gekwalificeerde beleggers) within the meaning of section 1:1 of the Dutch Financial Supervision Act as amended from time to time; and/or (b) in circumstances where other exemptions or dispensations from the prohibition the Dutch Financial Supervision Act or the Exemption Regulation of the Act on Financial Supervision apply. None of the Issuers is required to have a license pursuant to the Dutch Financial Supervision Act as it is exempt from any licensing requirements and is not regulated by the Netherlands Authority for the Financial Markets and consequently no prudential and conduct of business supervision will be exercised. For Austrian, Danish, Finnish, Portuguese, Spanish and Swedish Investors: The prospectuses (and any supplements thereto) for each of CSL, HCSL, IML, MSL and FXL have been passported from the United Kingdom into Austria, Denmark, Finland, Portugal, Spain, Sweden and have been filed with Österreichische Finanzmarktaufsicht (Austrian Financial Market Authority) in Austria, Finanstilsynet (Financial Supervisory Authority) in Denmark, Finanssivalvonta (Finnish Financial Supervisory Authority) in Finland, , Comissão do Mercado de Valores Mobiliários (Portuguese Securities Market Commission) in Portugal, Comisión Nacional del Mercado de Valores (Securities Market Commission) in Spain and the Finansinspektionen (Financial Supervisory Authority) in Sweden. The prospectuses (and any supplements thereto) for these entities may be distributed to investors in Austria, Finland, Portugal, Spain, Denmark and Sweden. For Belgian Investors: The prospectus (and any supplements thereto) for GBS has been passported from the United Kingdom into Belgium and has been filed with the Commission Bancair, Financiére et des Assurances in Belgium. The prospectus (and any supplements thereto) for GBS may be distributed to investors in Belgium.Page 43 For Professional Investors Only, Not For Public Dissemination
  • 44. Other than as set out above investors may contact ETFS UK at +44 (0)20 7448 4330 or at info@etfsecurities.com to obtain copies of prospectuses and related regulatory documentation, including annual reports. Other than as separately indicated, thiscommunication is being made on a “private placement” basis and is intended solely for the professional / institutional recipient to which it is delivered.Securities issued by each of the Issuers are direct, limited recourse obligations of the relevant Issuer alone and are not obligations of or guaranteed by any of UBS AG (“UBS”), Merrill Lynch Commodities Inc. (“MLCI”), Merrill Lynch International (“MLI”),Bank of America Corporation (“BAC”), Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A., Morgan Stanley & Co International plc, Morgan Stanley & Co. Incorporated, Deutsche Bank AG any of theiraffiliates or anyone else or any of their affiliates. Each of UBS, MLCI, MLI, BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A., Morgan Stanley & Co International plc, Morgan Stanley & Co.Incorporated and Deutsche Bank AG disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might have in respect of this document or its contents otherwise arising in connection herewith.“Dow Jones,” “UBS”, DJ-UBS CISM,”, “DJ-UBS CI-F3SM,” and any related indices or sub-indices are service marks of Dow Jones Trademark Holdings LLC (“Dow Jones”), CME Group Index Services LLC (“CME Indexes”), UBS or UBS Securities LLC(“UBS Securities”), as the case may be, and have been licensed for use by the Issuer. The securities issued by CSL and HCSL although based on components of the Dow Jones UBS Commodity IndexM are not sponsored, endorsed, sold or promotedby Dow Jones, CME Indexes, UBS, UBS Securities or any of their respective subsidiaries or affiliates, and none of Dow Jones, CME Indexes, UBS, UBS Securities, or any of their respective subsidiaries or affiliates, makes any representation regardingthe advisability of investing in such product.The Morgan Stanley Indices are the exclusive property of Morgan Stanley & Co. Incorporated (“Morgan Stanley”). Morgan Stanley and the Morgan Stanley index names are service mark(s) of Morgan Stanley or its affiliates and have been licensed foruse for certain purposes by ETF Securities Limited in respect of the securities issued by FXL. The securities issued by FXL are not sponsored, endorsed, or promoted by Morgan Stanley, and Morgan Stanley bears no liability with respect to any suchfinancial securities. The prospectus of FXL contains a more detailed description of the limited relationship Morgan Stanley has with FXL and any related financial securities. No purchaser, seller or holder of securities issued by FXL, or any other personor entity, should use or refer to any Morgan Stanley trade name, trademark or service mark to sponsor, endorse, market or promote this product without first contacting Morgan Stanley to determine whether Morgan Stanley’s permission is required.Under no circumstances may any person or entity claim any affiliation with Morgan Stanley without the prior written permission of Morgan Stanley.FundsThis document has prepared for delivery to professional investors in the Republic of Ireland and other countries of the European Union/European Economic Area in which certain of the Funds are registered with the local financial regulator. Pleasecontact ETFS UK at +44 (0)20 7448 4330 or at info@etfsecurities.com for further information of the Company and details as to which countries and to which category of investors this document can be communicated. For Danish Investors: This document cannot be communicated to investors in Denmark except in response to their unsolicited request. For Dutch Investors: Each Fund has been registered with the Netherlands Authority for the Financial Markets following the UCITS passport-procedure pursuant to section 2:72 of the Dutch Financial Supervision Act. For French investors: Any subscription for shares of the Funds will be made on the basis of the terms of the prospectus, the simplified prospectus and any supplements or addenda thereto. The Company is a UCITS governed by Irish legislation and approved by the Financial Regulator as UCITS compliant with European regulations although may not have to comply with the same rules as those applicable to a similar product approved in France. Certain of the Funds have been registered for marketing in France by the Authority Financial Markets (Autorité des Marchés Financiers) and may be distributed to investors in France. Copies of all documents (i.e. the prospectus, the simplified prospectus, any supplements or addenda thereto, the latest annual reports and the memorandum of incorporation and articles of association) are available in France, free of charge, at the French Centralizing Agent, Société Générale, Securities Services, at 29 Boulevard Haussmann – 75009 Paris – France. For German investors: The offering of the shares of the ETFX AEX® Fund and of the ETFX AMX® Fund has not been notified to the German Financial Services Supervisory Authority in accordance with Section 132 of the Investment Act. Shares of the ETFX AEX® Fund and of the ETFX AMX® Fund may not be publicly offered to the investors of the Federal Republic of Germany. The offering of the shares of the remaining Funds has been notified to the German Financial Services Supervisory Authority in accordance with section 132 of the German Investment Act. The prospectus, the simplified prospectuses, any supplements or addenda thereto, copies of the Memorandum and Articles of Association of the Company and the annual and semi-annual report can be obtained free of charge upon request at the Paying and Information Agent in Germany, HSBC Trinkaus & Burkhardt AG, Königsallee 21-23, 40212 Düsseldorf. The current offering and redemption prices as well as the net asset value and possible notifications of the investors can also be requested free of charge at the same address. In Germany the shares will be settled as co-owner shares in a Global Bearer certificate issued by Clearstream Banking AG. This type of settlement only occurs in Germany because there is no direct link between the English and German clearing and settlement systems Crest and Clearstream. For this reason the ISIN used for trading of the shares in Germany differs from the ISIN used in other countries. For Norwegian Investors: The Company and certain of the Funds have been registered with the Financial Supervisory Authority of Norway (Finanstilsynet), and may be marketed and sold to professional investors in Norway. Other than as separately indicated, this communication is being made on a “private placement” basis and is intended solely for the professional / institutional recipient to which it is delivered. None of the index providers of the Funds referred to herein nor their licensors make any warranty or representation whatsoever either as to the results obtained from use of the relevant indices and/or the figures at which such indices stand at any particular day or otherwise. None of the index providers shall be liable to any person for any errors or significant delays in the relevant indices nor shall be under any obligation to advise any person of any error or significant delay therein.Page 44 For Professional Investors Only, Not For Public Dissemination

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