Austrian Golden Opportunities Fund

Prepared for And Deflation

Ronald-Peter Stöferle & Mark J. Valek Executive Summary I

Quo Vadis… The Fund and its Objectives

► Real (inflation-adjusted) growth in uncertain times ► Active protection against Inflation/Deflation ► Absolute Return, Global Macro approach ► Target return 8% p.a. ► Modest Drawdown-Risk (Ø Volatility between 10 and 12%) ► Diversification to traditional and equity portfolios

…Inflation or Deflation? Our Investment Approach

► Identifying the respective inflation momentum utilizing the „Incrementum-Inflation-Signal“. ► Strategies are implemented based on our know-how in the Inflation/Deflation portfolio via precious metals, equities and commodities. ► Budget for tactical opportunities for other themes using perspective.

Sources: Societe Generale, Incrementum AG

2 Executive Summary II

Austrian Economics for Investors Our Investment Philosophy

► Insights of the Austrian School of Economics are the intellectual foundation of our macro-analyses. ► In contrast to traditional tenets the Austrian School recognizes the “fiat money” and fractional reserve banking system as the major cause of the ongoing crisis.

Conservative Risk Profile Characteristics of the Fund

► No benchmark, Absolute Return approach ► Active asset allocation for Inflation or Deflation by means of diversified basket of securities ► Significantly lower volatility (between 10-12%) compared to mining stocks (about 50%) and silver (about 35%) ► UCITS IV Funds

Sources: Societe Generale, Fed St. Louis, Incrementum AG

3 The Path Out Of Over-indebtedness

The higher the national , the higher the interest in (Price-)inflation

„Inflation or deflation are just two foreign words for bankruptcy“ Carl Fürstenberg

Source: Societe Generale, Incrementum AG 4 Deflation Or Inflation?

5 The Tug Of War

Team Blue: Deflationary Forces Team Red: Inflationary Forces

► Balance Sheet Deleveraging: Undercapitalized ► Zero interest rate policy recovering from the crisis are reluctant to lend ► Communications Policy (forward guidance) ► Deleveraging: Over-indebted consumers are reluctant to ► Operation Twist borrow ► Quantitative Easing ► Regulation: Basel III ► Currency Devaluation (Currency Wars) ► High Demand to hold Money (low inflation exp.)* ► Eligibility Criteria for Collateral (ECB) ► Productivity gains ► Defaults and Bail-ins (Greece, Cyprus)

*Low velocity according to the Monetarist Paradigm

6 Deflating vs. Inflating

8000 4000

7500 3500

7000

3000

6500

) USD) 2500

6000 M0 (bn M0 (bn 2000 5500 M0 (bn USD

M2 minus M2 minus 1500 5000

4500 1000

4000 500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

M2 minus Monetary Base Monetary Base

Sources: Federal Reserve St. Louis, Incrementum AG

7 Inflation vs. Deflation: Monetary Tectonics

The interplay between Inflation and Deflation can be compared to the permanent reciprocal pressure of two tectonic plates

► Systematic indebtedness is potentially highly deflationary

► Central bankers want to avoid deflation at all costs

► Balancing act between credit- deflation and central - inflation poses significant dangers

► Investors should prepare for both scenarios: inflationary AND deflationary periods Increasing pressure of two tectonic plates: Beneath a calm surface, pressure increases gradually and finally erupts into sudden thrusts on the surface.

8 The Fund

“The most important thing to remember is that inflation is not an act of God, that inflation is not a catastrophe of the elements or a disease that comes like the plague. Inflation is a policy.

9 Our Investment Approach

Inflation/Deflation- Tactical Opportunities strategy

0%-25 % 0%-100% Risk Contribution 1 Risk Contribution 2

Portfolio

Volatility on average: 10-12%

Risk Management / Compliance Control

10 1. Inflation/Deflation-Strategy Prepared For Inflation And Deflation

Monetary Seismograph ► In the long run, price inflation is a monetary phenomenon. Due to the phenomena of monetary tectonics, inflationary and deflationary phases may alternate.

► To measure how much monetary inflation is spilling into the real , we use a number of -based indicators.

Indikator 1 Indikator 2 Signal aktuell: short -0,25 Signal aktuell: short -0,25 ► Our proprietary method of measurement can be 2,00 0,80 1,90 0,70 1,80 compared to a “monetary seismograph”. Its 0,60 1,70 1,60 0,50 1,50 0,40 measurement results in the “Incrementum Inflation 1,40 0,30 1,30 0,20 1,20 Signal” , which indicates the prevailing inflation 1,10 0,10 1,00 0,00 trend.

info: Momentum kurz 65 info: Momentum lang 150 Signal Möglichkeit 75% -25% Signal Möglichkeit 50% -25%

Indikator 3 Indikator 4 Signal aktuell: short -0,25 Signal aktuell: short -0,25 5,00 4,60 ► According to the respective signal, positions for 4,40 4,50 4,20 4,00 rising, neutral or falling inflation will be taken. 4,00 3,50 3,80 3,60 3,00 3,40 2,50 3,20 2,00 3,00

info: Momentum lang 150 info: Momentum mittel 100 Signal Möglichkeit 50% -25% Signal Möglichkeit 50% -25%

Incrementum Inflation Signal Overall Signal short -50%

11 Market-based Indicators Gauge The Inflation Momentum

12

10

8

6 Uncovered Money Substitute

Base Money

4 Trillion Trillion USD

2

0

Increasing inflation tendency Neutral inflation tendency Decreasing inflation tendency

Sources: Fed St. Louis, Incrementum AG

12 Our “Monetary Seismograph” Incrementum Inflation Signal:

Disinflation Deflation Deflation Disinflation late 1990s scare 2001 2008, 2009 Late 2011- Sooner or later current monetary 2009 -2011 Commodity Boom 1999 - 2008 Inflation will hit Reflation the road…

2,5

2

1,5

1 Increasing Increasing Inflation

0,5

0 Currently, still

no green light -0,5 for inflation- sensitive asset -1 classes!!

-1,5 0,75

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Decreasing Decreasing inflation Incrementum Inflation Signal DJ UBS Commodity Index Spot

Sources: Bloomberg, Incrementum AG

13 During Rising Inflation: Only commodities and commodity stocks rally

Performance of Asset Classes during different Inflation Regimes

30%

25%

20%

15%

10%

5%

0% Average Return Average

-5%

-10%

-15% Falling Inflation Stable Inflation Rising Inflation

Equities Fixed Income US TIPS Global REITs Energy Equities Mining Equities Precious Metals Commodities

Return characteristics of the Fund – indicative values

Sources: Wellington Asset Management, Incrementum AG

14 Inflation Signal Disciplines Positioning:

► Incrementum Inflation Signal captures the medium to long term inflation Momentum.

► The inflation portfolio of the strategy is a diversified portfolio of energy stocks, mining stocks and commodities.

► The signal does not unconditionally trigger a positioning of the portfolio.

► A position in opposition to the signal is forbidden

► The Signal may only be overruled for reduction of risk.

15 2. Tactical Opportunities-Portfolio (0 – 25%)

► In addition to the inflation / deflation strategy, we have defined investment themes, which in our opinion, provide exceptional opportunities for tactical positioning.

Cornerstone of the tactical opportunities-portfolio:

► Investment themes are identified on the basis of Austrian Economics. ► Austrian Theory is used in combination with technical timing signals. ► Each tactical position has a strict risk budget.

► In concrete terms, we track the impact of the aggressive reflationary policies of the Bank of Japan. In this context, we expect sooner or later a strong reaction in the bond and currency markets.

► Strong currency depreciation in Japan (USD/JPY, XAU/JPY) ► Inflation in Japan (rising yields of JGB‘S) ► Rising volatility/turbulence in the stock market ► Sharp stock market correction as a result of tapering (S&P and Nasdaq short)

“There is no security in life, only opportunity” Mark Twain

16 The Consequence Of Printing Money From The Liquidity Trap To Price Inflation

Debt level in % of GDP

Development of average interest rates

Sources: Incrementum AG, Federal Reserve St. Louis

17 Risk Measurement Integral To The Process

Volatility of the Fund

Target Volatility of Fund ► UCITS IV compliant Fund

► Value at Risk and volatility is US Treasury Future (10Y) controlled by independent units.

Internal VaR Limit ► Fund management / Risk manager ► Independent risk management of VaR Limit as of Prospect the fund administrator

DJUBS Commodity Index ► Target volatility of the fund is 10% to Gold in USD 12% p.a.

► Risk reduction through a balanced S&P 500 portfolio.

Silver in USD ► Order compliance is carried out by the administrator. Gold Mining Equities

-60% -40% -20% 0% 20% 40% 60%

max. VaR (99%/20d) average Volatility p.a.

Calculation: max. VaR of rolling daily 260 periods, data from 1995 to 2013

Sources: Bloomberg, Incrementum AG

18 The Fund As Part Of A Balanced Portfolio Allocation According Inflation Expectations

Stable Inflation Expectations High Probability of unstable Inflation Expectation

5% 15% 25%

30% Equities Fixed Income Fund

65%

60%

Sources: Incrementum AG, Indicative Values

19 Opportunities And Risks Of The Fund

Opportunities

► Participation in an actively managed portfolio, which can profit from rising and falling prices. ► The fund may achieve above average returns especially in pronounced inflationary or deflationary periods. ► The fund allows participation in different asset classes (equities, commodity-linked securities, currencies, derivatives, bonds). ► Capital preservation is top priority.

Risks

► Risks associated with bonds (rising yields, country risk, counterparty and default risk), stock markets (market-, sector- and company-specific risks), commodity markets (price volatility) and currencies (foreign exchange risk) may lead to loss of capital. ► Negative performance is possible. Fluctuations and pronounced sideways phases will arise from time to time. ► Below average performance is possible during long-lasting periods of price stability and disinflation. ► Phases in which short term inflation and inflation expectations fluctuate greatly, can be disadvantageous to the performance of the fund.

20 General Fund Data

Fund name Austrian Economics Golden Opportunities Fund Launch February 2014 Fund type open Liquidity Weekly (later daily) Investable for UCITS Fund of Funds Yes Accounting year Calendar year ISIN (Institutional Share Class) LI0226274285 ISIN (Retail Share Class) LI0226274319 Management Fee: Institutional Share Class 1.20% Management Fee: Retail Share Class 1.75% Performance fee 15% High Water Mark Yes Hurdle HVPI +1% Custodian & administrator fee (all in) 0,30% Currency tranches EUR, USD (currently not launched yet) Risk approach Qualified approach (VaR approach) Fund domicile Principality of Liechtenstein Management company IFOS AG Legal Basis UCITS IV Asset Manager Incrementum AG Liechtenstein Custodian VP Bank Liechtenstein Supervisory authority Financial Market Authority Liechtenstein Auditor Ernst & Young

21 Austrian Economics

“Political decrees can never override economic laws”

Eugen von Böhm-Bawerk

22 Why We Think Differently: „Austrian Economics“ – an Alternative Investment Philosophy

► The insights of the Austrian School serve as a theoretical basis for our analysis of the economic crisis.

► In contrast to traditional schools of thought, Austrian Economics recognizes the fiat system as the cause of the ongoing crisis.

► The theory provides extensive information about the long- term correlations between indebtedness, inflation and monetary instability.

► The activities of central banks have rarely been of such critical relevance. Understanding the interactions between inflation and deflation is therefore a key factor for all investors.

The Austrian School of Economics was founded by in Vienna at the end of the 19th century. Within the framework of ► Gold and silver are perceived as monetary precious metals Austrian Economics, groundbreaking studies of economic phenomena such as value, exchange, entrepreneurial profit or due to their unique properties. From this background, other interest rate have been developed and gradually expanded into a commodities will be considered in a different way. comprehensive theory of money and business cycles. In contrast to other schools of thought, “Austrians“ have consistently been warning against long-term consequences of inflationary, government-regulated .

23

Why do we think differently: „Austrian Economics“ – an alternative investment philosophy

► Followers of the Austrian School were highly successful in anticipating major economic events. Austrians forecast the Great Depression, the stagflationary environment of the 1970s as well as the bursting of the dotcom and housing bubble.

► Followers of the Austrian School anticipate that the current extreme monetary and fiscal policy interventions will not lead to a self-sustaining recovery, but rather to further turmoil in the capital markets.

► But: The understanding of the Austrian School is by itself not a “panacea” for the investor! ► It can recognize and explain malinvestments which are caused by government intervention of prices and interest rates. ► The Austrian School does not provide temporal forecasts about when exactly the dissolving of capital misallocation will happen.

You can get further informations about the Austrian School on your homepage: www.incrementum.li/austrian-school-of-economics

24 About us

“Talent wins games, but teamwork and intelligence wins championships.” Michael Jordan

25 About Incrementum AG

► Incrementum AG is an owner/managed asset manager & wealth manager based in the Principality of Liechtenstein. Our business focus in the management of investment funds that we believe to be unique.

► The investment philosophy is based on the principles of the Austrian School of Economics.

► Our core competency are in fields of:

► “Austrian Investing” ► Precious metal investments ► Absolute return strategies ► Bottom up fundamental research

► Partners of Incrementum AG have more than 140 years of combined experience in the banking and asset management business. In addition the majority have already taken an active and successful part in entrepreneurial activities.

History of Incrementum Incrementum AG; Liechtenstein (2013)

Incrementum Advisors S.A.; Uruguay (2010)

Incrementum Panamá S.A. (2009) Incrementum Advisors AG; Schweiz (2008) 2009 2010 2011 2012 2013 2014 2015

26 Organizational chart of Incrementum AG

Board of Directors Stefan M. Kremeth, President & CEO* Ronald P. Stöferle, Member* Alexandre Kaufmann, Member Mark J. Valek, Member Sören Sammann, Member Fritz Christen, Member Peter Nünlist, Member* (* Executive Board Members)

Compliance Internal Audits Strategus GmbH APG, Vaduz Peter Furrer Claudia Jehle Ospelt

External Audits Risk Management APG, Vaduz Douglas G. Moser Walter Rutz

Incrementum Uno Austrian Economics Marketing & Incrementum Strategy+ Stefan M. Kremeth Golden Opportunities Administration Stefan M. Kremeth Fritz Christen Mark J. Valek Peter Nünlist Peter Nünlist Ronald P. Stöferle Ronald P. Stöferle

27 About us

Mag. Ronald-Peter Stöferle, CMT

Ronald is founding Partner and Investment Manager at Incrementum AG. Previously, he worked for seven years in the research team of Erste Group in Vienna. In 2006 he began writing his annual "In GOLD we TRUST" reports, that provoked international interest and was referred to as "the of all gold publications" by . Besides precious metals analysis Ronald was also responsible for the analysis of the energy sector. Additionally he managed two gold mining baskets and a silver mining basket.

Ronald’s education comprises a Master's degree in business administration at the Vienna University of Economics and Business Administration. He is a Chartered Market Technician (CMT) and Certified Financial Technician (CFTe). In addition to his work at Incrementum he is member and lecturer at the Institute of Value based Economics and lecturer at the Academy of the Vienna Stock Exchange.

28 About us

Mark J. Valek, CAIA

Mark is founding Partner and Investment Manager of Incrementum AG. Previously, he worked for more than ten years at Raiffeisen Capital Management. Ultimately he was fund manager in the multi-asset strategies team, which managed a total of over five billion . He was responsible for inflation hedging strategies and alternative investments. Previously, he worked as fund analyst and portfolio manager for the company. During his studies Mark worked in equity trading at Raiffeisen Zentralbank and at Merrill Lynch Private Banking in Vienna and Frankfurt.

Mark’s education includes a degree in business administration from the Vienna University of Economics and Business Administration majoring in Investment Banking. He is CAIA charterholder and Certified Portfolio Manager. Next to his work at Incrementum he is a member of the Institute of Value based Economics and lecturer at the Academy of the Vienna Stock Exchange.

29 Advisory Board

► We try to constantly question the prevailing consensus opinion. Critical analysis, unconventional thinking and „out of the box“ approaches are the cornerstone of our investment philosophy.

► The manifold professional and cultural backgrounds of the members of our advisory board results in a very wide range of perspectives.

► The investment team and advisory board discuss quarterly investment cases, macro themes, political and philosophical issues as well as future scenarios.

► The board also gives critical feedback and challenges the Fund Management regarding new potential investment themes.

► The highlights of our meetings will be released in regular publications.

30 Advisory Board

James G. Rickards

James Rickards is the author of the national bestseller, Currency Wars: The Making of the Next Global Crisis, (Penguin, 2011) and the forthcoming, The Death of Money: The Coming Collapse of the International Monetary System (Penguin, 2014). He is a Partner in Tangent Capital Partners, a merchant bank based in New York. He is also a counselor and investment advisor and has held senior positions at Citibank, Long- Term Capital Management and Caxton Associates.

James is a visiting lecturer at Johns Hopkins University and the School of Advanced International Studies. He has delivered papers on risk at Singularity University, the Applied Physics Laboratory and the Los Alamos National Laboratory and has written numerous articles on risk management. He is an advisor on capital markets to the Director of National Intelligence and the Office of the Secretary of Defense. He holds an LL.M. (Taxation) from the NYU School of Law; a J.D. from the University of Pennsylvania Law School; an M.A. in from SAIS and a B.A. from Johns Hopkins (with honors).

Heinz Blasnik

After earning his Matura at the Theresianischen Akademie, Heinz has started his career as an independent stock and bond trader. From 1985 he has worked as chief trader at the first Austrian discount brokerage. At the end of 1988 he emigrated to South Africa where he set up a precious metal trading company for ten years. In the late 90s he returned to Vienna, where he earned a degree in business administration at Vienna University of Business Administration and Economics and immersed parallel in the literature of the Austrian School of economics.

Currently, Heinz is an independent trader and market analyst for the consulting firm Hedgefund Consultants Ltd. He regularly publishes for the independent research house Asianomics in . Heinz primarily is responsible for his blog acting-man.com on which he analyzes the developments in the financial markets from an Austrian point of view. His trenchant analyzes are regularly quoted on Zerohedge.com, Seeking Alpha and Marc Faber’s “Gloom, Boom & Doom Report”.

31

Advisory Board

Rahim Taghizadegan

Rahim is the founder and director of the institute for value-based economics, an independent research institute in economical and philosophical issues, domiciled in Vienna. He is bestselling author and international popular speaker. Rahim studied physics, economics and sociology in Vienna and Lausanne. Furthermore he has been on study trips in the U.S. (including seminars with Nobel Laureate Vernon L. Smith and the doyen of the Austrian School Israel M. Kirzner). Then Rahim worked in the fields of economics (research Fellow of the Atlas Economic Research Foundation in the U.S.), space research (ESOC, US Naval Observatory, astronomical institute) and journalism (Santiago Times). He also taught at the Universität Liechtenstein, Wirtschaftsuniversität Wien and Universität Halle/Salle.

As an interdisciplinary thinker, he dedicates himself to the discovery of modern illusions, uncovering of lost knowledge and the connection of countless emerging threads of today’s thinking. Link wertewirtschaft.org

Zac Bharucha

Zac was born in London in 1963. He studied economics and at the University of Exeter and then completed a Master’s degree in Finance with honors. He started his career in finance at the investment bank Kleinwort Benson and became later an equity portfolio manager at Phillips and Drew Fund Management (UBS Asset Management). Zac was responsible for managing more than $ 1 billion in institutional assets at AMP Asset Management in 1994. Afterwards he moved to M & G in London. Since 1998 he has developed absolute return strategies and specializes more and more in equities and commodities. After 25 years in asset management, he retired from professional life in 2011 and wrote his first book about market timing.

32

Disclaimer

This document is for information only and does not constitute investment advice, an investment recommendation or a solicitation to buy or sell, but is merely a summary of key aspects of the fund. In particular, the document is not intended to replace individual investment or other advice. The information needs to be read in conjunction with the current (where applicable: full and simplified) prospectus as these documents are solely relevant. It is therefore necessary to carefully and thoroughly read the current prospectus before investing in this fund. Subscription of shares will only be accepted on the basis of the current (where applicable: full and simplified) prospectus. The full prospectus, simplified prospectus, contractual terms and latest annual report can be obtained free of charge from the Management Company, Custodian Bank, all selling agents in Liechtenstein and abroad and on the web site of the Liechtenstein Investment Fund Association (LAFV; www.lafv.li). The information contained in this publication is based on the knowledge available at the time of preparation and is subject to change without notice. The authors were diligent with the selection of information, but assume no liability for the accuracy, completeness or timeliness of the information provided. This fund is domiciled in the Principality of Liechtenstein and might be further registered for public offering in other countries. Detailed information on the public offering in other countries can be found in the current (where applicable: full and simplified) prospectus. Due to different registration proceedings, no guarantee can be given that the fund and – if applicable – sub-funds are or will be registered in every jurisdiction and at the same time. Please note, that in any country where a fund is not registered for public offering, they may, subject to applicable local regulation, only be distributed in the course of ‘private placements’ or institutional investments. Shares in funds are not offered for sale in countries where such sale is prohibited by law. This fund is not registered under the United States Securities Act of 1933. Fund units must therefore not be offered or sold in the United States neither for or on account of US persons (in the context of the definitions for the purposes of US federal laws on securities, goods and taxes, including Regulation S in relation to the United States Securities Act of 1933). Subsequent unit transfers in the United States and/or to US persons are not permitted. Any documents related to this fund must not be circulated in the United States. Past performance is not a guide to future performance. Values may fall as well as rise and you may not get back the amount you invested. Income from investments may fluctuate. Changes in rates of exchange may have an adverse effect on the value, price or income of investments. You should obtain professional advice on the risks of the investment and its tax implications, where appropriate, before proceeding with any investment. All charts are sourced from Incrementum AG. Contact

Fund Management:

Ronald P. Stöferle

Telephone: +423 237 26 63 E-Mail: [email protected] Institutional Sales:

Mark J. Valek Harald Steinbichler Telephone: +423 237 26 64 Telephon: +43 664 851 64 42 E-Mail: [email protected] E-Mail: [email protected]

Incrementum AG axessum GmbH Landstrasse 1, Haymogasse 96 9490 Vaduz 1230 Wien Liechtenstein Austria

www.incrementum.li www.axessum.com

34