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Rise of the Robots VONCERT on a Robotics Basket

September 2016

Cyborgs Half human, half machine

Untold possibilities lie before us

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June 2016

You hear about…

When bodily functions fail, robots can take over.

Scientists predict that humans and machines will become increasingly connected with each other.

With smart skin or so-called exoskeletons, for example, which allow paraplegics and quadriplegics to regain their freedom of movement.

All of this actually exists.

people who have become cyborgs after surgery?

swimming robots powered by muscle cells?

CYBORGS

Robot take on tasks that are mostly - monotonous - tiresome - dangerous - or difficult for us to do

For example, domestic robots:

- Roomba is a success story, and the flagship product of the US firm iRobot.

- Since the market launch of the first Roomba twelve years ago, iRobot has enjoyed a stable global market share of between 66% and 68% – the number two has less than 10%.

- According to the company’s management, the domestic robot segment could be a USD 7 billion market.

Are robots no more than ‘slave labour’ which we exploit?

Yes and no. They can do so much more.

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Image source: shutterstock.com

But robots can also improve human performance – for example in the medical field As robots’ performance capacity increases, there are ever more possible applications opening up. For instance, robotic-assisted surgery: the ISRG product line of Intuitive Surgical, the global market leader in robotic-assisted, minimally invasive surgery, makes it possible to achieve an outstanding degree of precision in operations, enhancing the skill and vision of the surgeon.

The small Roomba has revolutionized floor cleaning.

Industry 4.0 – industrial robots revolutionizing production Above all in the automotive industry

Industrial robots revolutionizing production

Industrial robot sales worldwide by sector (2015)1

Industrial robots are used either in logistics, or for handling, assembling or processing workpieces.

Their massive involvement in everyday production has led to strong productivity gains – Industry 4.0

95'000

53'000

34'600

21'200

7'200

2'100

15'900

18'700

0 50'000 100'000

Automotive

Electrical / electronics

Metals

Plastics / rubber

Food

Pharmaceuticals / cosmetics

Others

Unspecified sector

1 Source: IFR – International Federation of Robotics, June 2015

In 2015, the most industrial robots were supplied to the automotive industry (see chart on the right).

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Chinese ‘hunger’ for automated assistants

The proportion of Chinese robots in the domestic market could rise to 50%

International comparison of robot density1

The rapid takeover of KUKA comes as little surprise, especially given the Chinese ‘hunger’ for automation.

The problem of the ageing population in China, and the attendant threat of a massive loss in productivity, is considerable.

According to the latest IFR figures, China is currently lagging around 45% behind the global average (see chart).

According to a press release issued by the International Federation of Robotics (IFR) on 26 July 2016, the Chinese market for industrial robots is still heavily dependent on imports.

This is to change – the central government has reacted, and the rapid development of automation is to be bolstered by the ‘Made in China 2025’ reform program.

China wants to be in the top 10 most intensively automated countries worldwide by 2020.

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66

54

79

85

36

164

292

314

478

0 100 200 300 400 500

Global average

Asia

US

Europe

China

US

Germany

Japan

Korea

1 Source: IFR – International Federation of Robotics, April 2016 (per 10,000 employees)

VONCERT on a Robotics Basket The driving forces

How investors can profit from further upside potential Robotics basket allows investors to participate

There are many factors influencing the potential for a further rise in robotics going forward.

Among them is the trend toward autonomous driving, which strictly speaking can be allocated to the robotics segment itself.3

McKinsey estimates that both developments – that of robotics and autonomous vehicles – could strengthen each other. For instance, because they could use the same infrastructure:

- recharging stations - service centres - machine-to-machine communication networks

Other possible drivers follow the example of iRobot’s Roomba vacuum cleaner:2

- exponential improvement in 3D sensors and simultaneous localization and mapping

- Smartphone modules become built-in ‘super-computers’ for robots

1 Source: IFR – International Federation of Robotics, April 2016 (per 10,000 employees) 2 Source: seekingalpha.co 3 Source: ‘Ten ways autonomous driving could redefine the automotive world’, published by the consulting firm McKinsey in June 2015

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A tracker certificate with a two-year term opens up the possibility of investing in the exciting robotics segment.

There is a VONCERT on a Robotics Basket available in CHF, EUR or USD.

The three currency classes give interested investors virtually 100% participation, both on the upside and the downside, in an underlying basket of robotics shares.

The basket contains 12 stocks of selected companies from the US, Japan, Germany and Switzerland.

The firms are active in various robotics areas: Industry 4.0, durable household products, electronic devices, aviation and defence, as well as medical devices.

VONCERT on a Robotics Basket Information on composition

Composition1 Country allocation Sector allocation

Company Robotics segment Country

ABB Ltd Production Technology CH

Harmonic Drive Systems Inc

Production Technology JP

Yaskawa Electric Corp Production Technology JP

FARO Technologies Inc Electronic & Electrical

Equipment US

iRobot Corp Household Devices /

Housing US

Intuitive Surgical Inc Care Equipment /

Services US

Cognex Corp Electronic & Electrical

Equipment US

Aerovironment Inc Aviation / Defence US

Krones AG Production Technology DE

FANUC Corp Production Technology JP

CYBERDYNE Inc Care Equipment /

Services JP

THK Co Ltd Production Technology JP

42%

42%

8%

8%

USA

Japan

Switzerland

Germany

67%

11%

11%

5% 6%

Production TechnologyCare Equipment / ServicesElectronic & Electrical EquipmentHousehold Goods & Home ConstructionAerospace & Defense

US and Japanese companies dominate the basket.

1: sources: Bloomberg, Vontobel Termsheets with the legally binding information and other details can be downloaded at any time from www.derinet.ch. All information is indicative and subject to change. 7

VONCERT on a Robotics Basket

SSPA product type Tracker certificate (1300)

Underlying Robotics Basket

Initial fixing 03.10.2016 to 05.10.2016 The calculation agent will determine the corresponding share prices and exchange rates during the initial fixing period at its sole discretion.

Payment date 12.10.2016

Term 2 years

Issuer Vontobel Financial Products Ltd., DIFC Dubai (is not subject to any prudential supervision and has no rating)

Guarantor Vontobel Holding AG, Zurich (Moody's A3)

Key product data VONCERT on a Robotics Basket

Key product data – VONCERT

Currencies CHF USD

Valor / symbol 3345 7085 / ZRRCHV 3345 7086 / ZRRUSV

Issue price CHF 100.90 (incl. front-load fee CHF 0.90)

USD 100.90 (incl. front-load fee USD 0.90)

Reference price CHF 100.00 USD 100.00

Details on derinet.ch Details on derinet.ch

EUR

3345 7087 / ZRREUV

EUR 100.90 (incl. front-load fee EUR 0.90)

EUR 100.00

Details on derinet.ch

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Term sheets with the legally binding information and other details can be downloaded at any time from www.derinet.ch. All information is indicative and subject to change.

In subscription until 30 September 2016,

4:00pm CET

Important information for investors VONCERT on a Robotics Basket

VONCERTs [SSPA product type: tracker certificate (1300)] essentially track the performance of their underlying. When investing in a VONCERT, the same risks must essentially be taken into account as for a direct investment in the underlying, in particular the related foreign currency, market and price risks. VONCERTs do not yield current income and have no capital protection. Significant risks for investors

Economic crises and changes could have a detrimental impact on the shares underlying the participation certificate. New technologies offer the potential of promising business models, but also entail risks. This can lead to corresponding

share price volatility. New competitors could engage the established firms in the index in a fight for market share. Issuer risk Currency risk No capital protection

Legal information & risks for investors

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The Rise of the Robots online at derinet.ch

derinews blog and derinews magazine (CH)

Interview with Christian Tarragona Head of Research & Product Development at KUKA

Rise of the Robots

Robots are being used in an ever increasing number of areas. They have become much more than just ‘slave labour’, and a rosy

future lies in store. Vontobel’s Robotics Basket allows investors to participate in this exciting tech segment themselves.

Thematic investments

>> Click here to read more

Click here to go to derinews Magazine

Interview

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“In five to ten years, Industry 4.0 will certainly be established everywhere”

>> Click here to read more

If you have any questions and/or input, please don’t hesitate to contact us…

Bank Vontobel AG Advisory & Distribution Financial Products Bleicherweg 21 CH-8022 Zurich +41 58 283 78 98 www.derinet.ch

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Legal Note

This publication is for information purposes only and does not represent an investment recommendation or advice and contains neither an offer nor an invitation to make an offer. It does not replace the qualified advice necessary before any purchase decision, in particular as regards all associated risks.

This publication was drawn up by our Financial Products & Distribution organizational unit, and is not the result of financial analysis. The Directives on the Independence of Financial Research issued by the Swiss Bankers Association do not apply to this publication. Any content in this publication originating from other organizational units at Vontobel or third parties are marked as such with reference to the source. The legally applicable product documentation (listing prospectus) consists of the definitive term sheet with the final terms and the issue programme registered with SIX Swiss Exchange. These documents and the brochure “Special Risks in Securities Trading” may be obtained free of charge at www.derinet.ch or from Bank Vontobel AG, Financial Products, CH-8022 Zurich (Tel. +41 (0)58 283 78 88). Past performance must not be taken as an indication or guarantee of future performance. Structured products are not regarded as collective investment schemes within the meaning of the Federal Act on Collective Investment Schemes (CISA), and are therefore not subject to the approval or supervision of the Swiss Financial Market Supervisory Authority FINMA. The value of structured products may depend not only on the performance of the underlying, but also on the creditworthiness of the issuer. The investor is exposed to the risk of the issuer / guarantor defaulting. This publication and the financial products outlined therein are not intended for persons subject to a jurisdiction which limits or prohibits the sale of financial products or the dissemination of this publication and/or the information contained therein. All information is provided without a guarantee.

September 2016 ©Bank Vontobel AG. All rights reserved

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