U.S. Equity Product Suite“Trade 98% of US Equity market with
two trades!”
ETFS Russell 1000® (US Large Cap)ETFS Russell 2000® (US Small Cap)
May 2009
January 2009
2
Contents
• Introduction to ETF Securities• ETF Platform • What are ETFs?• Trading the whole US market! • A volatility and recovery play• Key characteristics and benefits of Russell Indexes• Russell Indexes versus S&P500 and other benchmarks• ETF liquidity Model • Conclusion• Appendix
3
Introducing ETF Securities Limited
• ETF Securities is the innovator and pioneer of ETCs
• World’s first physical gold ETC, ‘An initiative of World Gold Trust Services’
• World’s first oil and carbon ETCs
• World’s first complete ETC platform
– Range of commodities exposure: Physical, Classic, Forward, Short and Leveraged
– 131 ETCs available in multi-currency: USD, Euro, Sterling & AUD
– 6 ETC segments on 6 exchanges globally
– Listed on LSE, Deutsche Boerse, NYSE-Euronext, Borsa Italiana and ASX
• World’s first thematic ETF platform
– 11 commodity-themed ETFs and the Russell 1000 and 2000
– Listed on LSE, Irish Stock Exchange, Borsa Italiana and NYSE-Euronext.
• World’s first Shariah-approved ETCs
• Over US$11 billion in total assets
4
Introducing ETF Exchange
• World’s first 3rd Generation ETF Platform
– Led by a consortium including: Citigroup, Merrill Lynch & ETF Securities
– Swap-based ETF model with multiple swap providers (counterparties)
– Credit diversification across a number consortium members, no reliance on a single bank
– True Liquidity & Competition, largest pool of authorized participants and market makers
(over 20)
• Europe’s Largest Thematic ETF Offering
– 13 new ETFs provide access to sectors not available through ETCs
– For certain commodities, commodity companies offer the only access to the underlying
commodities market
– Equities/Commodities will outperform in different parts of the commodity cycle
– Commodity companies can be a leveraged play on the underlying commodities
5
ETF Securities AUM growth•Over US$ 11 billion in total assets as at May 2009, up over 100% in past year and up over $3bn since the middle of November.
•Physical Gold and Oil ETCs have been largest AUM contributors over past year and this has intensified recently. Interest in agriculture has started to rise recently.
$0
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Energy
Diversified
Precious Metals
Industrial Metals
Agriculture & Livestock
ETF Securities' Asset Growth by SectorFrom October 2006 to May 2009, in billion USD
6
ETF Securities - Competitive Advantages
The management of ETFS pioneered ETCs
Independent of any mutli-service financial institution/bank ETF Securities only business is creating and managing ETFs and ETCs
Largest Sales and Marketing team dedicated to ETFs in Europe Highly customer focused & support customer business needs
5 ETF Securities products in top 10 traded ETFs on LSEETF Securities has more market makers than any of its competitors
Guaranteed tracking on ETCs Swap based ETFs model ensures tracking errors remains minimal
Synthetic replication most robust equity ETF model from a risk perspectivePhysically backed ETCs carry no credit risk, ETCs are 100% collateralised
Track Record
Focus
Service
Liquidity
Efficiency
Safety
7
What are Exchange Traded Funds (ETFs)?
• Open-ended UCITS III funds
• Track the underlying equity index
• Managed by asset managers
• Transparent, low cost, liquid
• Buy & hold investments. No management or maintenance required
• Listed on stock exchanges, trade & settle like equities
• Trade free of stamp duty
• Can be shorted and traded with all the same order types as an equity
8
Equity ETF Platform
Base Currency LSE
LSE (GBx) I SE Euronext
Deutsche Borse
Borsa I taliana TER Sector
UCI TS I I I
Broad Exposure
ETFS Russell 1000 (US Large Cap) USD RONE RONP ETLK RONE ETLY RONE 0.35% USA Yes
ETFS Russell 2000 (US Small Cap) USD RTWO RTWP ETLL RTWO ETLZ RTWO 0.45% USA Yes
Global Sector Exposure
ETFS WNA Global Nuclear Energy USD NUKE NUKP ETLA NUKE ETLN NUKE 0.65% Global Yes
ETFS J anney Global Water USD WATE WATP ETLF WATE ETLT WATE 0.65% Global Yes
ETFS S-Net I TG Global Agri Business USD AGRI AGRP ETLH MOOO ETLV AGRI 0.65% Global Yes
ETFS DAXglobal Alternative Energy EUR ALTE ALTP ETLG ALTE ETLU ALTE 0.65% Global Yes
ETFS Russell Global Coal USD COAL COAP ETLI KOAL - COAL 0.65% Global Yes
ETFS Russell Global Gold (Miners) USD AUCO AUCP ETLJ AUCO - AUCO 0.65% Global Yes
ETFS Russell Global Steel Large Cap USD STEE STEP ETLM STEE - STEE 0.65% Global Yes
ETFS Russell Global Shipping Large Cap USD SHIP SHPP ETLB SHIP - SHIP 0.65% Global Yes
European Sector Exposure
ETFS Dow J ones STOXX 600 Basic Resources EUR BASR BASP ETLC BASR - BASR 0.30% Europe Yes
ETFS Dow J ones STOXX 600 Oil & Gas EUR OILG OILS ETLD OILG - OILG 0.30% Europe Yes
ETFS Dow J ones STOXX 600 Utilities EUR UTIL UTIP ETLE UTIL - UTIL 0.30% Europe Yes
Exchange Codes
9
Trading the whole US market!
• First & Only European ETF issuer to offer ETFs on both market-
leading Russell 1000 and 2000 US equity indexes
• Most Comprehensive and unbiased large-cap and small-cap
barometers of the U.S. equity market
• Highly Liquid, ETFS has more market makers providing liquidity than
any of other ETFs issuers
• Cost Efficient 0.35% & 0.45% TER
• Listed on 5 European exchanges: LSE, Deutsche Boerse, Milan,
NYSE Euronext and the ISE & available in USD, EUR and GBP
10
Volatility Play
• Market Volatility has increased significantly since Lehman’s bankruptcy on Sept 15, 2008• Since then the market* has moved by more than 5% on 18 days compared to 17 days in
the previous 53 years !• US Equity volatility as measured by the VIX index soared to record levels in 2008, double
the 98’ and 02’ spikes.• Russell 1000 outperforms in downswing phase of US business cycle when volatility
and risk aversion is high
*S&P 500
Russell 1000 and 2000 Returns vs. Risk Appetite
-80
-60
-40
-20
0
20
40
60
80
Dec-02 Sep-03 Jun-04 Mar-05 Dec-05 Sep-06 Jun-07 Mar-08 Dec-08
-220
-170
-120
-70
-20
30
80
130
180
VIX Index (Inverted)
Russell 2000 Index
Russell 1000 Index
Annual %Annual %
Rising risk appetite
Falling risk appetite
Source: Bloomberg, Russell Investments
Russell 2000 Outperfmance
Russell 1000 Outperfmance
VIX Equity Implied Volatility (Daily, 1990-2009)
0
10
20
30
40
50
60
70
80
90
Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08
Index
Source: Bloomberg
11
Recovery Play
• Russell 2000 outperforms in upswing phase of US business cycle
• A high beta, aggressive portfolio of small cap businesses for those looking to play the next US upswing
• Russell 2000 has significantly outperformed standard US benchmarks
Russell 1000 and 2000 Returns vs. US Growth
-70
-50
-30
-10
10
30
50
70
90
Dec-02 Sep-03 Jun-04 Mar-05 Dec-05 Sep-06 Jun-07 Mar-08
-12
-7
-2
3
8
13
US Growth (RHS)
Russell 2000
Russell 1000
Annual %Annual %
12
Key characteristics and benefits of Russell Indexes
• Russell Indexes used by more US institutional investors than all other index providers combined – (63% of US Institutional funds, 98% of small cap mandates)– account for more than half of all US institutional equity assets
benchmarked.
• Deepest and most comprehensive market coverage– Russell Indexes represent over 98% of investable universe. – Russell 1000, 90% of US equity market and Russell 2000, 8%
• Completely objective – rule-based, transparent methodology creating ideal benchmarks and
trading vehicles. No sampling, membership reflects the actual market.
Source: Nelson Information’s MarketPlace Web database, 30 June 2008
13
Russell Indexes vs. S&P Indexes and others
• Russell 1000 & 2000 benchmarks capture 98% of US equity market
• S&P500 – only 66%
• 56% of all US equity assets in US are benchmarked to Russell
• Russell 1000 and 2000 and the main benchmarks for US equities
• Objective Rules-based methodology vs. subjective committee based methodology for S&P
• MSCI US indexes have limited acceptance in the US market and currently only capture only 0.1% institutional market share
Source: Russell, Data as of May 30, 2008. Russell Indexes charted by total market capitalization
14
Russell 1000 & 2000 - Outperformance
• Significant outperformance in the long term
• Russell 1000 & 2000 have outperformed other benchmarks over 2008
• Russell 1000 & 2000 have outperformed benchmarks over the last 10 years
• Russell 1000/2000 return volatilities compare favourably with other US asset benchmarks
Returns and Volatility – Asset Benchmarks – 1998-2008
Q4 08 1 Yr 3 Yrs 5 Yrs 10 Yrs
Equity IndicesS&P 500 -22% -37% -23% -10% -13% 20%MSCI USA -22% -38% -25% -13% -15% 20%Russell 1000 -22% -38% -24% -10% -10% 20%Russell 2000 -25% -34% -23% -5% 8% 24%MSCI AC World -22% -42% -22% 0% -2% 16%
Cumulative Returns (USD)Volatility
15
Russell 1000 & 2000 – Performance drivers
Russell 1000 Russell 2000
Index composition
Macro environments
Investment performance
Summary
• Largest-cap US stocks, often global
• Highly diversified growth drivers
• Downswing in US growth
• High and rising inflation
• High and rising risk aversion
• Strong BRICs growth
• Low earnings volatility
• Out-performance of US equity benchmarks
• US consumer discretionary, financials
• Concentrated growth stocks
• Upswing in US growth
• Low and stable inflation
• Low and falling risk aversion
• Strong outperformance vs. Russell 1000, US equity benchmarks in US upturns
• Tend to be “best of breed” stocks
• Leverage up earnings in US growth upswings
16
Conclusion
• Russell 1000, most efficient way to play current US equity volatility
• Russell 2000, most efficient way to play US recovery
• Russell 1000, Russell 2000, used by more US institutional investors than
all other index providers combined
• Swap based ETF model ensures tracking errors remains minimal,
most robust model from a risk perspective
• Highly liquid, more market makers than any of other ETFs issuers
17
ETF Securities - Competitive Advantages
The management of ETFS pioneered ETCs
Independent of any mutli-service financial institution/bank ETF Securities only business is creating and managing ETFs and ETCs
Largest Sales and Marketing team dedicated to ETFs in Europe Highly customer focused & support customer business needs
5 ETF Securities products in top 10 traded ETFs on LSEETF Securities has more market makers than any of its competitors
Guaranteed tracking on ETCs Swap based ETFs model ensures tracking errors remains minimal
Synthetic replication most robust equity ETF model from a risk perspectivePhysically backed ETCs carry no credit risk, ETCs are 100% collateralised
Track Record
Focus
Service
Liquidity
Efficiency
Safety
Appendix
- Russell Indexes Compared- ETFS Russell 1000- ETFS Russell 2000 - Market Makers Contacts- ETF Liquidity Model- ETC Platform- ETF, ETC & ETN Comparison
January 2009
19
ETF Securities & Market Maker Contacts• Website: www.etfsecurities.com• LSE: www.londonstockexchange.com/etcs• Deutsche Boerse:www.deutsche-boerse.com/etcs• NYSE-Euronext: www.euronext.com/etcs• Borsa Italiana: www.borsaitaliana.it/etf • Irish Stock Exchange: www.ise.ie/etf
• ETF Securities contact– +44 20 7448 4330 (UK Representative)– [email protected]
• Market Maker & Authorised Participant contacts:
Flow Traders +31 (0)207 996 777 UBS +44 (0)207 568 8416 HSBC +44 (0)207 991 5187
Nyenburgh +31 (0)205 213 934 Citigroup +44 (0)207 986 2355 Banca IMI +39 02 7261 2196
Morgan Stanley +44 (0)207 425 6365 LaBranche +44 (0)207 965 4566 Susquehanna +353 (0)1802 8018
UniCredit HVB +44 (0)207 826 6921 Merrill Lynch +44 (0)207 996 1034 Winterflood +44 (0)203 100 0105
Barclays Capital +44 (0)207 773 8500 JP Morgan +44 (0)207 779 3129 Societe Generale +44 (0)207 762 5450
Saen Options BV +31 (0)207 974 000 RBS +44 (0)207 678 9218 Commerzbank +49 (0)69 136 22088
20
ETFs – Liquidity Model
• ETF liquidity is determined by the liquidity of the underlying asset
• ETFs are open-ended – creation/redemption process makes them as liquid as
underlying
• Multiple Authorised Participants (APs) & market makers – ensure pricing is
kept very close to the underlying
• Multiple swap providers who act as APs compete for the business adding an
enhanced liquidity feature
• APs provide the market with liquidity – create and redeem by trading the equity
with the issuer of the shares
• APs and market makers guarantee continuous two way prices on exchange
and will execute larger orders by phone
• TRADED VOLUME IS NOT A RELEVANT MEASURE OF LIQUIDITY!
21
Unique benefits of new ETFs
• Independent Issuer, ETF Securities:
– Multiple swap providers platform, unique in Europe
– Swap providers are interchangeable – reduced operational risk
– All swaps fully collateralised
– Multiple market makers (ETFS has more market makers providing liquidity than any
of other ETF issuer)
• Synthetic Replication:
– More accurate and more stable tracking of index
– Full replication of index return
– Ability to provide unique strategies not possible using in-specie model (Leveraged /
Short / Emerging Markets / Commodities)
– No issuer risk (UCITSIII fund)
22
Third Generation – Multiple Swap Backed ETFs
Primary Market
Secondary Market
Exchange/MarketMakers
ETF
Investors
ETFs
Orders/Prices
Cash Securities
Swap provider2
Swap provider 1
Swap provider3
23
Understanding Russell Indexes - “1 + 2 = 3”
• The Russell 3000This broad cap index of the top 3,000 U.S. stocks by market cap covers 98% of the U.S. equity investable universe
• The Russell 1000The largest 1,000 stocks by market cap, the index comprehensively covers the large cap opportunity set
• The Russell 2000The smallest 2,000 stocks and the primary benchmark for small cap investors in the U.S.
1Source: Russell Investments, Data as of June 2008.
Market capitalization = number of shares outstanding x price per share (e.g., Exxon Mobil has 5,283,694,000 shares outstanding times $88.76/ share gives $469.0 billion market cap). Various segments of the market will perform differently at different times (e.g., in year 2000, Russell 3000 was down 7.5%; Russell Midcap was up 8.3%).The market capitalization ranges used above are absolute breakpoints for new members and do not include capitalization banding. Capitalization banding involves the implementation of a +/-2.5% band around certain breakpoints. For further information, please refer to the Russell Indexes construction and methodology document.
Russell U.S. Indexes total market capitalization1
24
Russell 1000 and 2000 – Compared
• Capitalizations (in USD billions)
1.73
2.87
17.57
1.41 1.83
13.1313.87
10.93 10.65 %
13.68 %
Price/Book Dividend yield P/E Ex-Negearnings
Lt grow thforecast-IBES
EPS grow th 5years
Russell 1000 Russell 2000
Russell 1000 Russell 2000
Average market cap ($-WTD) 72.913 0.887
Median market cap 3.098 0.321
Largest company by market cap 421.797 3.283
Smallest company by market cap 0.02 0.01
• Fundamental characteristics
Source: Russell as at As of December 31, 2008
25
ETFS Russell 1000 Fund (US Large Cap)• ETFS Russell 1000 tracks the Russell 1000 Index which measures the performance of the
large-cap segment of the U.S. equity universe
• The top 5 companies are: Exxon Mobil, At&T Inc., Microsoft, Procter & Gamble, and Johnson & Johnson
• A low beta, highly defensive portfolio of large cap business ideally suited to the current environment of high market uncertainty. The Russell 1000 has also outperformed standard asset benchmarks in upswing phases of the US economy
Sector DistributionRussell 1000 Historical Performance Total Returns Mar-04 - Mar-09, USD
50
60
70
80
90
100
110
120
130
140
150
Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09
Index (Mar-04 = 100)
S&P 500
Russell 1000
Financial Services12%
Health Care15%
Producer Durables11%
Materials & Processing
4%
Consumer Discretionary
12%
Technology15%
Utilities8%
Energy13%
Consumer Staples10%
Source: Russell, as at 31-Mar-09
26
Russell 1000 Performance Drivers • Energy and Technology industries the two
most significant growth drivers
• Long run growth tends to be evenly split amongst consumer/services, manufacturing/technology and energy sectors
• More diversified growth base than the Russell 2000
• Russell 1000 components are less cyclical than Russell 2000
• Financial and Consumer components have been a larger drag on overall performance than previous downturn
•
Russell 1000 - Return Contribution by Industry
-30
-20
-10
0
10
20
30
40
50
Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08
Other
Industrials
Health
Utilities
Consumer
Financials
Energy
Technology
Annual Growth (%)
Source: Russell Investments
Russell 1000 Return Contribution by Sector
-30
-20
-10
0
10
20
30
40
50
Dec-02 Sep-03 Jun-04 Mar-05 Dec-05 Sep-06 Jun-07 Mar-08 Dec-08
Other
Industrials and Technology
Energy and Utilities
Consumer and Services
Source: Russell Investments
Annual %
27
ETFS Russell 2000 Fund (US Small Cap)• ETFS Russell 2000 tracks the Russell 2000 Index which measures the performance of the
small-cap segment of the U.S. equity universe
• The top 5 companies are: Alexion Pharmaceuticals, OSI Pharmaceuticals, Myriad Genetics, Railcorp Holdings and Sybase.
• A high beta, aggressive portfolio of small cap businesses for those looking to capitalise on the next US upswing. The Russell 2000 has significantly outperformed standard asset benchmarks in the US
Sector DistributionRussell 2000 Historical Performance Total Returns Mar-04 - Mar-09, USD
50
60
70
80
90
100
110
120
130
140
150
Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09
Index (Mar-04 = 100)
S&P 500
Russell 2000
Materials & Processing
6%Health Care
16%
Energy4%
Financial Services20%
Utilities6%
Consumer Staples4%
Consumer Discretionary
14%
Producer Durables14%
Technology16%
Source: Russell, as at 31-Mar-09
28
Russell 2000 Performance Drivers • Financials and consumer industries the two most
significant growth drivers.
• LR growth tends to be driven by Consumer/Services and Industrials/Technology sectors.
• More concentrated growth base than the Russell 1000.
• More cyclical vs. structural components to the return base.
• More broad-based industry contributions to recent return drops: flight to large-cap safety?
Russell 2000 - Return Contribution by Industry
-60
-40
-20
0
20
40
60
80
Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08
Other
Utilities
Energy
Industrials
Health
Technology
Consumer
Financials
Annual Growth (%)
Source: Russell Investments
Russell 2000 Return Contribution by Sector
-60
-40
-20
0
20
40
60
80
Dec-02 Sep-03 Jun-04 Mar-05 Dec-05 Sep-06 Jun-07 Mar-08 Dec-08
Other
Energy and Utilities
Industrials and Technology
Consumer and Services
Annual %
Source: Russell Investments
29
What are Exchange Traded Commodities (ETCs)?
• Similarities to ETFs:
– Open-ended securities
– Track the underlying commodity price or commodity index
– Asset backed – Physical bullion or Commodity Contracts (Swaps)
– Buy & hold. No management or maintenance required
– Listed on stock exchanges, trade & settle like stocks
– Low cost – MERs 39 bps to 98 bps
– Eligible investments for UCITS
– Trade free of stamp duty
– Long, Short and Leveraged exposures available
• Differences from ETFs:
– ETCs are securities and not funds
30
ETFS Platform
Listing: London, Frankfurt, Amsterdam, Paris and Milan*Shariah compliant precious metal ETC platform
Diversified Broad Energy Agriculture Livestock
ETFS All Commodities £ DJ-AIGCISM ETFS Carbon ETFS Coffee ETFS Lean Hogs
ETFS All Commodities DJ-AIGCISM ETFS Carbon £ ETFS Corn ETFS Live Cattle
ETFS Ex-Energy DJ-AIGCISM ETFS Brent 1mth ETFS Cotton ETFS Livestock DJ-AIGCISM
ETFS Forward All Commodities DJ-AIGCI-F3SM ETFS Brent 1mth £ ETFS Soybean Oil ETFS Forward Lean Hogs
ETFS Forward Ex-Energy DJ-AIGCI-F3SM ETFS Brent 1yr ETFS Soybeans ETFS Forward Live Cattle
ETFS Leveraged All Commodities DJ-AIGCISM ETFS Brent 2yr ETFS Sugar ETFS Forward Livestock DJ-AIGCI-F3SM
ETFS Leveraged Ex-Energy DJ-AIGCISM ETFS Brent 3yr ETFS Wheat ETFS Leveraged Lean Hogs
ETFS Short All Commodities DJ-AIGCISM ETFS Crude Oil ETFS Agriculture £ DJ-AIGCISM ETFS Leveraged Live Cattle
ETFS Short Ex-Energy DJ-AIGCISM ETFS Gasoline ETFS Agriculture DJ-AIGCISM ETFS Leveraged Livestock DJ-AIGCISM
ETFS Heating Oil ETFS Grains £ DJ-AIGCISM ETFS Short Lean Hogs
Industrial Metals ETFS Natural Gas ETFS Grains DJ-AIGCISM ETFS Short Live Cattle
ETFS Aluminium ETFS Natural Gas £ ETFS Softs DJ-AIGCISM ETFS Short Livestock DJ-AIGCISM
ETFS Copper ETFS WTI 1yr ETFS Forward Agriculture DJ-AIGCI-F3SM
ETFS Nickel ETFS WTI 2mth ETFS Forward Grains DJ-AIGCI-F3SM Precious Metals
ETFS Zinc ETFS WTI 2mth £ ETFS Forward Softs DJ-AIGCI-F3SM ETFS GBS
ETFS Industrial Metals DJ-AIGCISM ETFS WTI 2yr ETFS Leveraged Agriculture DJ-AIGCISM ETFS GBS £
ETFS Forward Industrial Metals DJ-AIGCI-F3SM ETFS WTI 3yr ETFS Leveraged Cocoa ETFS Gold
ETFS Leveraged Aluminium ETFS Energy DJ-AIGCISM ETFS Leveraged Coffee ETFS Gold £
ETFS Leveraged Copper ETFS Petroleum DJ-AIGCISM ETFS Leveraged Corn ETFS Silver
ETFS Leveraged Lead ETFS Forward Energy DJ-AIGCI-F3SM ETFS Leveraged Cotton ETFS Precious Metals DJ-AIGCISM
ETFS Leveraged Nickel ETFS Forward Heating Oil ETFS Leveraged Grains DJ-AIGCISM ETFS Leveraged Gold
ETFS Leveraged Tin ETFS Forward Natural Gas ETFS Leveraged Softs DJ-AIGCISM ETFS Leveraged Platinum
ETFS Leveraged Zinc ETFS Forward Petroleum DJ-AIGCI-F3SM ETFS Leveraged Soybean Oil ETFS Leveraged Silver
ETFS Leveraged Industrial Metal DJ-AIGCISM ETFS Leveraged Crude Oil ETFS Leveraged Soybeans ETFS Leveraged Precious Metals DJ-AIGCISM
ETFS Short Aluminium ETFS Leveraged Energy DJ-AIGCISM ETFS Leveraged Sugar ETFS Physical Gold*
ETFS Short Copper ETFS Leveraged Gasoline ETFS Leveraged Wheat ETFS Physical Gold £*
ETFS Short Lead ETFS Leveraged Heating Oil ETFS Short Agriculture DJ-AIGCISM ETFS Physical Palladium*
ETFS Short Nickel ETFS Leveraged Natural Gas ETFS Short Cocoa ETFS Physical Platinum*
ETFS Short Tin ETFS Leveraged Petroleum DJ-AIGCISM ETFS Short Coffee ETFS Physical PM Basket*
ETFS Short Zinc ETFS Short Crude Oil ETFS Short Corn ETFS Physical PM Basket £*
ETFS Short Industrial Metals DJ-AIGCISM ETFS Short Energy DJ-AIGCISM ETFS Short Cotton ETFS Physical Silver*
ETFS Short Gasoline ETFS Short Grains DJ-AIGCISM ETFS Physical Silver £*
ETFS Short Heating Oil ETFS Short Softs DJ-AIGCISM ETFS Short Gold
ETFS Short Natural Gas ETFS Short Soybean Oil ETFS Short Platinum
ETFS Short Petroleum DJ-AIGCISM ETFS Short Soybeans ETFS Short Silver
ETFS Short Sugar ETFS Short Precious Metals DJ-AIGCISM
ETFS Short Wheat
31
ETF, ETC & ETN Comparison
PHYSICALLY-BACKED ETCs
SWAP-BASED ETCsIN-SPECIE-BASED
ETFsSWAP-BASED ETFs ETNs
STRUCTURE Asset-backed Security Asset-backed Security Fund Fund Unsecured Note
UNDERLYING HOLDINGS
Physical Allocated Bullion (audited + published bars)
Swap contract / collateralised or non
Equities & cash (not applicable for commodities)
Index swap plus a basket of non-index securities
Bank balance sheet
ISSUER RISKNo, assets ring-fenced by trustee structure
No, assets ring-fenced by trustee structure
No, assets ring-fenced by fund structure
No, assets ring-fenced by fund structure
Yes, no trustee or ring - fencing
COUNTEPARTY / CREDIT RISK
No 100% allocated bullion
No for collateralised Ucollateralised, exposure to swap counterparty
NoYes. Limited to 10% under UCITS
Yes, bears full exposure to credit worthiness of note issuer
OTHER COUNTEPARTY RISK No No
•Securities lending, dividend enhancement activity and any derivative exposures•Cash management with linked notes•Rebalancing risk (tracking & counterparty)
No No
Tracking Error Management fees Management feesManagement fees,Fund transaction costs,Portfolio drift
Management fees Management fees
EXCHANGE LISTED Yes Yes Yes Yes YesUCITS FUND No No Yes Yes NoUCITS ELIGIBLE Yes Yes Yes Yes No
32
Risk Warnings
Risk Warnings: ETFS Fund Company public limited company (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 as a public limited company. The Company was authorised by the Financial Regulator as a UCITS pursuant to the European Communities (Undertaking for Collective Investment in Transferable Securities) Regulations, 2003 and shall issue a separate class of shares (the “Shares”) representing each Fund. Further information in relation to a particular Fund can be found in the latest prospectus of the Company which should be read in conjunction with the relevant fund supplement (together the “Prospectus”).
An investment in Shares of a particular Fund may or may not be suitable for a particular investor. The price of Shares may go up or down and an investor may not get back the amount invested. Historical performance is not a guarantee for future performance. The Shares will be priced in the base currency of the relevant Fund and so the value of the investment in other currencies will be affected by exchange rate movements. To the extent Shares are traded in other currencies, their value may also be affected by exchange rate movements.
Restricted Investors: The information in this document is designed solely for use in the Republic of Ireland and the Netherlands and complies with the regulatory requirements of these jurisdictions only.
The distribution of the Prospectus and this document and the offering, sale and delivery of Shares in other jurisdictions may be restricted by law. In particular please see the section below headed “Important information for persons resident in particular jurisdictions.”
This document is furnished for the private information of the recipient and must not be copied, given or shown to any other person. Any subscription for Shares should be made on the basis of the Prospectus.
Shares will not be registered under the United States Securities Act of 1933 or qualified under any applicable state securities statutes. The Company will not be registered as investment companies under the US Investment Company Act of 1940.
33
Restricted Investors and DisclaimerDisclaimer: Any investment in Shares carries with it certain risks, including those risks set out in the Prospectus. You should obtain your own independent financial, taxation and legal advice before making any
decisions about any investment in Shares. This information is not an offer of Shares and should not be used as the basis for any investment decision. The Shares of each Fund have been listed on the Irish Stock
Exchange and the Euronext Amsterdam and may be purchased on such exchanges. This information is issued by the Company and does not constitute financial product advice. The Company does not guarantethe
performance of Shares of a Fund and does not accept any responsibility for any omissions or inaccuracies in this document, which it believes to be correct at the time of issue.
Important information for persons resident in particular jurisdictions
Important information for persons resident in Austria:
Any information provided in this document does not constitute an offer to the public or an invitation to the public to make an offer for the acquisition of Shares in the Funds of the Company by Austrian investors. The
Shares are exclusively available to a limited number (less than 100) of individually selected investors in Austria. Therefore, the Prospectus is not a prospectus pursuant to the Austrian Investment Funds Act. This
document, the Prospectus and other materials relating to Shares are strictly confidential and may not be distributed to any person or entity other than the recipients hereof. This document as well as any information
contained herein may not be supplied to the public in Austria or used in connection with any offer for subscription of Shares to the public in Austria. The Shares must not be offered by public advertisement or in any
similar manner in Austria.
Important information for persons resident in Luxembourg:
This document and any offering of Shares does not and is not intended to constitute a public offer of Shares in the Grand Duchy of Luxembourg and as a consequence no notification has been made to the
Luxembourg regulators. Therefore, Shares may not be offered, sold or otherwise marketed in the Grand Duchy of Luxembourg in circumstances that constitute a public offer under Luxembourg law. This document
will not be used for a public offer in the Grand Duchy of Luxembourg of the Shares represented thereby and does not constitute a public offer to anyone in the Grand Duchy of Luxembourg to purchase the Shares.
Important information for persons resident in Spain:
The sale of the Shares in the Funds of the Company which this document refers to have not been registered with the Spanish National Securities Market Commission (“Comision Nacional del Mercado de Valores”)
pursuant to Spanish laws and regulations and do not form part of any public offer of such Shares in Spain. Accordingly, no Shares in the Funds of the Company may be or are presently intended to be publicly
offered, marketed or promoted, nor any public offer in respect thereof made, in Spain, nor may this document or any other offering materials relating to the offer of Shares in Funds be distributed, in the Kingdom of
Spain, by ETF Securities Limited or any other person on their behalf, except in circumstances which do not constitute a public offering and marketing in Spain within the meaning of Spanish laws and in compliance
with all legal and regulatory requirements in relation thereto. This document and any other materials relating to Shares are strictly confidential and may not be distributed to any person or any entity other than its
recipients.
Important information for persons resident in Switzerland:
The Company has not been and will not be authorised by or registered with the Swiss Federal Banking Commission as a foreign collective investment scheme pursuant to Article 120 of the Swiss Federal Act on
Collective Investment Schemes of June 23, 2006. Accordingly, the Shares may not be offered or distributed to the public in or from Switzerland, unless such offer or distribution is addressed to Swiss investors
without any public offering in accordance with the relevant practice of the Swiss Federal Banking Commission. This document may be used in a private placement only and is personal to the addressee. It does not
constitute an offer to any other person and may only be used by those persons to whom it has been handed out in connection with the offer described herein. It may not be used in connection with any other offer
and may neither be copied, used by, distributed or made available to any other person.
Important information for persons resident in United Kingdom:
The distribution in the United Kingdom of this document and any other marketing materials relating to the Company (A) if effected by a person who is not an authorised person under FSMA, is being addressed to, or
directed at, only the following persons: (i) persons who are "Investment Professionals" as defined in Article 19(5) of the FSMA (Financial Promotion) Order 2005 (the "Financial Promotion Order") and (ii) persons
falling within any of the categories of persons described in Article 49 ("High net worth companies, unincorporated associations etc") of the Financial Promotion Order and (iii) any other person to whom it may
otherwise lawfully be distributed in accordance with the Financial Promotion Order and (B) if effected by a person who is an authorised person under FSMA, is being addressed to, or directed at, only the following
persons: (i) persons falling within one of the categories of "Investment Professionals" as defined in Article 14(5) of the FSMA (Promotion of Collective Investment Schemes) (Exemption) Order 2001 (the "Promotion
of CISs Order"), (ii) persons falling within any categories of persons described in Article 22 `("High net worth companies, unincorporated associations etc") of the Promotion of CISs Order and (iii) any other person to
whom it may otherwise lawfully be distributed in accordance with the Promotion of CISs Order. Persons of any other description in the United Kingdom may not receive and should not act or rely on this document or
any other marketing materials relating to Company.
Potential investors in the United Kingdom are advised that all, or most, of the protections afforded by the United Kingdom regulatory system will not apply to an investment in Shares and that compensation will not be
available under the United Kingdom Financial Services Compensation Scheme.Regulated by the Jersey Financial Services Commission.