CHARTERIS TREASURY PORTFOLIO MANAGERS LTD CHARTERIS TREASURY PORTFOLIO MANAGERS IS AUTHORISED AND REGULATED BY THE FINANCIAL SERVICES AUTHORITY (FSA)

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1 CHARTERIS TREASURY PORTFOLIO MANAGERS LTD WAY CHARTERIS Gold Fund August 2010 CHARTERIS TREASURY PORTFOLIO MANAGERS IS AUTHORISED AND REGULATED BY THE FINANCIAL SERVICES AUTHORITY (FSA) 1

2 Charteris Treasury Portfolio Managers Limited Charteris Treasury Portfolio Managers was established in 1984 as an Investment Management Company. Charteris is fully licensed by the Financial Services Authority. The investment team have in aggregate over 100 years experience of global financial markets. Bespoke portfolio management services Funds under management a. Private Clients b. Personal Pension Funds (SIPPS) c. Number ONE Performing UK Gilt Fund since launch in Dec 2006 (Source Lipper). ) Morningstar 5* rated Fund. d. Morningstar 4* Rated & CityWire A Rated FTSE 100 Equity Fund Regulated by FSA Low Risk Category 2

3 The Fund Bullet Points The Fund is Long-only Non-Leveraged. It will not short or hedge Gold or Gold Assets in any way. The Fund will not employ any form of leverage The Fund gives investors exposure to the Gold price under a regulated NURS (Non Ucits Retail Scheme) The Fund will invest predominately in Blue Chip Gold mining companies The Fund can also invest in smaller Gold mining companies The Fund can hold up to 10% in other funds i.e. Gold ETF s (Exchange Traded Funds) The Fund can also invest in Gold ETC s (Exchange Traded Certificates) Custodian State Street Bank and Trust Fund Administration Sharefunds Limited 3

4 Key Decisions about Inclusion of Gold Stocks The quality of the company i.e. Quality of Management etc The Quality of the Asset Base i.e. Proven & profitable Gold Reserves The Beta to a given move in the underlying commodity i.e. Cost of production relative to the current price Geographical Location of the Asset Base and Domicile of the Company No stock will represent more than 10% of portfolio 4

5 Merits of Gold shares vs. Gold Bullion Gold Shares traditionally outperform Gold Bullion in a Bull Market due to the operational gearing (i.e. Fixed or semi-fixed costs vs. rising revenue stream) Gold shares have the ability to pay dividends to shareholders Gold mining companies can make discoveries due to their exploration activities Gold mining companies can be subject to take-over activity from larger Gold miners 5

6 Ian Williams Director/Fund Manager FCSI Ian has spent the last 35 years trading in Equities, Commodities and G7 Government Bonds, covering sales, research, market making and proprietary trading. He was a member of the London Stock Exchange for many years before joining Chase Manhattan Bank (now JP Morgan). He subsequently worked for Dresdner e Kleinwort Benson and Guinness Mahon (now Investec) ec) before e becoming Chairman & Chief Executive of Charteris Treasury Portfolio Managers. Ian runs the 5* rated City Financial Strategic Gilt Fund which is the top performing Gilt Fund in the UK since it s launch in December 2006 (source Lipper) as well as The 4* rated Elite Charteris Premium Income Fund. Ian is a Fellow of the Chartered Securities Institute. Nick Taylor Director/Fund Manager FCSI Nick Taylor has 38 years of international investment management experience, gained at Morgan Grenfell, Invesco, was Managing Director at Cigna International Investment Advisors and Matheson Investment Management. An award-winning manager, Nicholas has run Equity portfolios for a broad range of investors, including institutional pension funds, such as the Cadbury Schweppes Pension Fund alongside running several million pounds of private client portfolios and investment trusts. Nick is also a Fellow of the Chartered ed Securities es Institute. 6

7 Gold Price In USD Source: Bloomberg 7

8 Gold Price In Euros Source: Bloomberg This chart dispels the myth that the Bull market in GOLD is just the residual of the bear market in the US Dollar 8

9 This Chart shows the Real i.e. inflation adjusted price of Gold. 9

10 This chart shows the relationship between Oil & Gold 10

11 This chart measures Gold s relative cheapness/dearness against the Dow Jones Industrial Average 11

12 This Chart shows the relationship between Gold (in White) & Gold mining companies (In Red) as represented by the HUI Index 12

13 Source: GFMS - Bloomberg 13

14 This Chart shows QE in practice.ie the new Dollars created since the collapse of Lehman Brothers. 14

15 The T-Bonds held by Foreign Central Banks & Foreign Sovereign Wealth Funds. Gold represents a tiny sum in contrast 15

16 Gold Price In YEN Source: Bloomberg This chart dispels the myth that deflation is negative for Gold. The Japanese economy has suffered deflation for the last 10 years but Gold in Yen has tripled. 16

17 2. Track Record Over the last 7 years the ISA (Individual Saving Account) of Ian Williams which resembles the concept of the Fund i.e. a discretionary long only non leveraged portfolio has achieved an annual compound return of 28% per annum over the 7 year period.* Achieved by a large concentration of resource stocks at expense the decision to concentrate the portfolio in this sector was based on Charteris cycle research of the underlying commodities and the equities that relate to them. Annual return over 7 year period on a per annum basis 28 % (per annum) Total compound return over 7 year period 462 % Total Return of XAU ( Gold Share Index ) 145% (13.7% per annum) Past Performance shouldn t be seen as an indication of future performance. This example is for illustrative purposes only. * Source available on request 17

18 EMPERICAL End periodinvestment Total Return Fund XAU INDEX XAU Units XAU Price XAU Value XAU Total XAU FIGURES valuation in following Index Compound end period end period at time of period Return Index Compound Return % p.a. new money Return % p.a. Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul , Jan Jul Past Performance should not be seen as an indication of future performance. This example is for illustrative purposes only. Note: These figures are for an ISA portfolio with new monies invested during period covered. The ISA s have been subject to independent scrutiny by our auditors in accordance with the requirements of the Inland Revenue and the Financial Services Authority. 18

19 Portfolio XAU= ISA Portfolio of IAN WILLIAMS (Blue) & the XAU Grid share Index (Pink) 19

20 Appendix Some of the relevant cycles Gold Cycles Year Month Weekly Day Bold print denotes the cycle under which it is commonly known as. 20

21 Cycles Bonds & Commodities have similar length cycles (inversely related) Certain Cycles are well known The 54 Year cycle is known as the Kondratieff Cycle It was discovered by Nikolai Kondratieff (a Russian economist who analysed the price of Wheat in England going back to the 12 th Century) Kuznets Cycle Approx 18 year real estate cycle named after Simon Kuznets (an American economist who won the Nobel Prize for his work in identifying this cycle) The 9-11 year Jaguar cycle named after Clement Jaguar (a French economist). This cycle is predominant in Commodity Markets The 40 month cycle is known as the Kitchen cycle named after Professor Joseph Kitchin of Harvard University. This cycle is present in share prices, interest rates, commodities & many more totally unrelated items 21

22 Other Funds run by Charteris City Financial Strategic Gilt Fund (Managed by Ian Williams) is the top pperforming UK Gilt Fund in the IMA UK Gilt Sector over its inaugural 3 year period. It was launched in December Morning Star 5* rated Fund. (source: Lipper & Morning Star) Elite Charteris Premium Income Fund (Managed by Ian Williams & Nick Taylor) A Morning Star 4* rated & CityWire A Rated Fund which invests in FTSE 100 companies which h aims to deliver an high h yield to Investors by writing covered call options. 22

23 Contact t Details Charteris Treasury Portfolio Managers 8 Lovat Lane London EC3R 8DW Phone: +44 (0) Fax : +44 (0) iw@charteris.co.uk Web Site 23

24 Key Information and Risk Warnings This presentation is issued by Charteris Treasury Portfolio Management Ltd which h is authorised and regulated by the Financial Services Authority Past performance is not a guide to future performance and investors may not get back the full amount invested The price of shares and any income from them may fall as well as rise On redemption of holdings investors may not receive back the full amount invested. Management and other fees may reduce the capital invested The information provided d does not constitute t advice or a personal recommendation for which the duty of suitability would be owed by us and you should seek your own advice as to the suitability of any investment matter mentioned here Professional advisers should be aware that this document is intended for their use only and this document is not to be shown or given to any retail investors The presentation is made on the basis of our current understanding of United Kingdom Tax laws, which may be subject to change in the future 24