Charteris Treasury P f li M L dPortfolio Managers Ltd

The DMS Charteris Gold & Precious Metals Fund

Fund Presentation

October 2020

For Professional investors only. Not for consumer use

• Background 3

• Objective(s)

• Commodity Performance

4

5y

• Irving Fisher

5

7

• Merits of holding Bullion vs. Equities

R l ti V l Ch t

12

16• Relative Value Charts

• Silver Demand

16

20

• Cycle Analysis 23

For professional intermediaries only 2

Ian Williams Chartered FCSI became a Chartered Wealth Manager in 2013, Lead manager of the DMS Charteris Gold & Precious Metals Fund. Correctly predicted $2 000 Gold price in July 2008 Daily Telegraph feature

ManagerCorrectly predicted $2,000 Gold price in July 2008 Daily Telegraph feature. Citywire plus rating in 2020, Citywire A Rating in 2009, 2010, 2011 & awarded Alpha Manager in 2011 for previously managed UK Gilt fund

iw@charteris.co.uk

2016 Top UK mutual Fund across all sectors calendar year - up 133.95% *Source FE 2019 Top UK mutual Fund across all sectors calendar year - up 51.96% *Source FT 2020 YTD (31 Dec 19 1 Sep 20) up 48 37 % *S FE

Performance

2020 YTD (31 Dec 19 – 1 Sep 20) - up 48.37 % *Source FE

UK UCITS Structure

ACD – DMS Investment Management. DMS is the worldwide leader in Fund governance with t d i f $350b

Framework

assets under service of $350bn

Depositary & Custodian – Credit Agricole (AAA). CACEIS Bank, UK Branch

3

– The fund mainly invests in gold and silver mining companies with a market 

Fund objectiveThe Fund seeks to provide capital growth through investment in a diversified portfolio of shares in companies whose core business is involved in the mining, refining, financing, production and marketing of gold and or precious metals.

g pcapitalisation of more than $500m.

– The fund does not buy the underlying physical precious metals.

– The fund is long only. It does & will not short or hedge bullion in any way.

– The fund can hold up to 10% in other funds, such as Gold and Silver ETFs 

Concentrated portfolioValuation‐based approach

Activelymanaged

,(exchange‐traded funds) and ETCs (exchange‐traded certificates) at manager’s discretion.

– The fund does not invest directly in South d i il d idomiciled companies.

– The fund does not invest in general miners such as zinc, copper and iron ore, for instance.

Conviction led Liquid portfolioLong term

4

Our processHow do we build portfolios?

Macro overlayCentral bank policy, market overview 

• Top‐down macroeconomic view drives our expectations for the underlying precious metals prices. 

• Our focused, active management approach dictates bottom‐up sector and stock selection decisions based on identifying businesses that are

& technical analysis

Bear market strategyBull market strategydecisions based on identifying businesses that are best placed to benefit from the bullish or bearish global macro trends we feel will influence the asset class.

gyLow or no silver bullion and no silver miner exposure

gyGold & silver miners up to near 100% of the portfolio

Bull market strategy

1. Overweight silver relative to gold

2. Overweight mid‐caps relative to large‐caps

3 Overweight gold/silver mining stocks relative to

Asset classCash, equities, gold, silver, other precious metals

Asset classCash, equities, gold, silver, other precious metals

3. Overweight gold/silver mining stocks relative to physical gold/silver

4. Approx. 2% cash exposureStock universeList of stocks that fit the sector themes and asset classes

Stock universeList of stocks that fit the sector themes and asset classes

Bear market strategy

1. Underweight silver relative to gold (no silver miners or silver metal/bullion)

2. Overweight streaming/royalty companies and larger cap index constituents

Stock screeningThorough stock selection process

cap index constituents

3. Maximum 10% cash exposure

Portfolio20‐50 stocks that make up the 

For professional intermediaries only 5

portfolio (typically 25‐40)

L t P i $1 845 00

Gold priceSource: Charteris, Bloomberg (as at June 2020)

Last Price $1,845.001,950

Gold very close to an all time high

1,500an all‐time high priced in USD Dollars

1,050

Dollars

600

150

1999

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6

Precious metals prices performance in an inflationary backdrop

Gold price in tandem with the Fed’s balance sheetSource: Charteris, Bloomberg (as at Jan 2020)

– History suggests that investors, including other central banks buy gold when they see how much the Feds balance sheet is 

d

800

900

1000

expanding. 

– Covid‐19 has resulted in the biggest global fiscal and monetary policy stimulus seen since WW2.

– Under QE 1, 2, and 3 the Fed’s balance sheet  500

600

700

Q , ,rose by $4trn in the six years after Financial Crisis. It has risen a further £2trn in March/April and is on course to rise at least another $2trn – a rise of 100%.

– The Bank of Russia has been ahead of the 200

300

400

The Bank of Russia has been ahead of the pack in switching its US Treasury bonds into gold, taking over a year to undertake the switch due to the size. The Bank still might have a bit more to do. We expect a lot of other central banks to follow suit

0

100

200

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020other central banks to follow suit.

Gold Spot ($/Oz) US Condition of All Federal Reserve Banks Total Assets

7

M V = P TM is for money M0, M1, M2, M3, M4?

V is for Velocity The amount money changes hands

P is for Price Average Price Level

T i f T t l O t t V l f t ti f G d & S i

8

T is for Total Output Volume of transactions for Goods & Services

Real M2 Money StockSource: Federal Reserve Bank of St Louis (as at June 2020)

Monetary base; TotalSource: Federal Reserve Bank of St Louis (as at June 2020)

6,950

7,400

7,850

5,100,000

5,600

6,050

6,500

4,100,000

4,250

4,700

5,1503,100,000

2,900

3,350

3,800

1,100,000

2,100,000

2,000

2,450

2000

2000

2001

2002

2003

2003

2004

2005

2006

2006

2007

2008

2009

2009

2010

2011

2012

2012

2013

2014

2015

2015

2016

2017

2018

2018

2019

2020

100,000

2000

2000

2001

2002

2003

2003

2004

2005

2006

2006

2007

2008

2009

2009

2010

2011

2012

2012

2013

2014

2015

2015

2016

2017

2018

2018

2019

2020

9Source: Federal Reserve Bank of St Louis

Velocity of M2 Money StockSource: Federal Reserve Bank of St Louis (as at Jan 2020)

Labour Force participation rateSource: Federal Reserve Bank of St Louis (as at Jan 2020)

3

6868

2

63

58

1

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

2019 53

1948

1951

1954

1957

1960

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1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

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2011

2014

2017

2020

10

Last Price $23.45

Silver priceSource: Charteris, Bloomberg (as at June 2020)

Last Price $23.45

52

57

Silver spot price in USD Dollars

37

42

47USD Dollars

It h l d G ld

22

27

32 It has lagged Gold

7

12

17

2

1999

2000

2001

2002

2002

2003

2004

2005

2005

2006

2007

2008

2008

2009

2010

2011

2011

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2014

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2017

2018

2019

2020

11

Gold vs. Silver (both in USD) since 2000   (% rebased – M0)Source: Charteris, Bloomberg (as at June 2020)

1000

800

900

1000

Silver spot price is much more volatile

600

700

much more volatile than Gold spot price

400

500

100

200

300

01999 2004 2009 2014 2019

XAU Curncy XAG Curncy

12

P iti• Listed securities traditionally outperform Bullion in a Bull Market due to the operational gearing (i.e. Fixed or 

semi‐fixed costs vs. rising revenue stream)

Positives

• Listed securities have the ability to pay dividends to investors

• Listed equities have capability to make fresh discoveries due to their exploration activities (Cap‐Ex)

• Listed equities can be subject to take over activity from larger miners E g Barrick taking Randgold• Listed equities can be subject to take‐over activity from larger miners. E.g. Barrick taking Randgold

• Good Managements can enhance shareholder value

Negatives• Gold & Silver Mines eventually run out of Gold/SilverGold & Silver Mines eventually run out of Gold/Silver

• Gold & Silver Mines can suffer from Flood, Earthquakes, Politics, theft etc

13

• Bad management can waste shareholder value

Gold vs. Silver vs. HUI Index (all in USD) since 2000Source: Charteris, Bloomberg (as at June 2020)

800

900

1000

600

700

400

500

100

200

300

0

100

1999 2004 2009 2014 2019

XAU Curncy XAG Curncy HUI Index

14

(as at 30 Jun 20)

Gold in Canadian Dollar C$ Gold in Euro €

2,125

2,475

Gold in Canadian Dollar C$Source: Charteris, Bloomberg

1,500

1,750

Source: Charteris, Bloomberg

1,075

1,425

1,775

750

1,000

1,250

All time high in CAD All time high in EUR375

725

2000

2000

2001

2002

2003

2003

2004

2005

2006

2006

2007

2008

2009

2009

2010

2011

2012

2012

2013

2014

2015

2015

2016

2017

2018

2018

2019

2020

250

500

2000

2000

2001

2002

2003

2003

2004

2005

2006

2006

2007

2008

2009

2009

2010

2011

2012

2012

2013

2014

2015

2015

2016

2017

2018

2018

2019

2020

1,550

Gold in Pound Sterling £Source: Charteris, Bloomberg

195 150210,150

Gold in Japanese Yen Source: Charteris, Bloomberg

950

1,150

1,350

105,150120,150135,150150,150165,150180,150195,150

All time high in GBP150

350

550

750

15015,15030,15045,15060,15075,15090,150

All time high in JPY

15

150

2000

2000

2001

2002

2003

2003

2004

2005

2006

2006

2007

2008

2009

2009

2010

2011

2012

2012

2013

2014

2015

2015

2016

2017

2018

2018

2019

2020

150

2000

2000

2001

2002

2003

2003

2004

2005

2006

2006

2007

2008

2009

2009

2010

2011

2012

2012

2013

2014

2015

2015

2016

2017

2018

2018

2019

2020

Gold (CMX) 20 year seasonal (1989-2019)Source: Equityclock

Silver (CMX) 20 year seasonal (1989-2019)Source: Equityclock

16

17

(as at 30 Jun 20)

28

30 Classic End of mega‐cycle

selling climax low

Gold price / Gold Shares Ratio 2000 - PresentSource: Charteris, Bloomberg

Gold equities Cheap

24

26

28 selling climax low p

18

20

22

12

14

16

6

8

10

2

4

1983

1984

1985

1986

1987

1988

1989

1990

1991

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1994

1995

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2018

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2020

Gold equities expensive

18

(as at 30 Jun 20)

Gold price / Silver Price Ratio 1949 - Present

Silver Cheap

130

140

Source: Charteris, Bloomberg

p

100

110

120

80

90

50

60

70

30

40

50

Silver Expensive

10

20

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

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2000

2002

2004

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2010

2012

2014

2016

2018

2020

19

Commodities E i

GSCI / S&P 500 Ratio 1970 - PresentExpensive

10

Source: Charteris, Bloomberg

5

Commodities Cheap

0

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Silver Expensive0.05

Silver / S&P 500 Ratio 1989 - PresentSource: Charteris, Bloomberg

0.02

0.03

0.04

SilverCh

0.00

0.01

990

992

994

996

998

000

002

004

006

008

010

012

014

016

018

020

20

Cheap19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20

Total annual Global Silver supply in decline Silver scrap at 20yr lows

80090010001100

Total annual Global Silver supply in declineSource: Charteris, Silver Institute

Silver scrap at 20yr lowsSource: Charteris, Silver Institute

250

300

350

200300400500600700800

50

100

150

200

250

0100200

1950

1960

1970

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

0

50

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

1000

Silver Fabrication demand charging higherSource: Charteris, Silver Institute

1000

Silver industrial demand near record highsSource: Charteris, Silver Institute

500600700800900

400500600700800900

0100200300400

7 9 1 3 5 7 9 1 3 5 7 9 1 3 5 7 9 1 3 5 7 9

0100200300400

60 63 66 69 72 75 78 81 84 87 90 93 96 99 02 05 08 11 14 17

21

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019 196

196

196

196

197

197

197

198

198

198

199

199

199

199

200

200

200

201

201

201

{as at 30 Sept 20)

Market capitalisation

large‐cap ($2bn – $200bn)35.17%

Mid cap ($300m ‐ $2bn)

Stock Country Weight

Wheaton Precious Canada 4.92%Canada79%

Share domicile holding

Market capitalisation

Mid cap ($300m  $2bn)49.4%

Small cap ($0m ‐ $300m)12.6%

Agnico Eagle Canada 4.70%

MAG Silver Canada 4.50%

K92 Mining Canada 4 34%

UK12.25%

USA3 79% Cash

2.83%

K92 Mining Canada 4.34%

Polymetal UK 4.03%

Teranga Gold Canada 3.98%

3.79%

Australia2.09%

CashSilvercorp Canada 3.93%

Royal Gold USA 3.79%

First Majestic Canada 3.76%

2.83%

Metal breakdown

Gold

Highland Gold UK 3.70%

Total of top 10 41.86%

56.85%

Silver43.15%

PalladiumPalladium0.00%

Platinum0.00%

22

• Correlation: gold is inversely correlated to other asset classes (especially bonds) which in the current environment makes it an appropriate option for model portfolios.

h ld h d h lf f h• Momentum: the strong move up in prices we could see in the second half of 2020 may happen   sooner and perhaps most aggressively in the price of silver (43% of the fund), which is at near all‐time lows against gold.

• Valuations: mining shares are still cheap relative to gold itself, so investors are not paying excessive   valuations to increase their exposure to buy the fund for the expected returns ahead. 

• Flows: many investors are underweight precious metals as an asset class, and investor sentiment can turn quickly,

• Active management: the switch from outperforming giant blue chips to mid‐caps has yet to take place and we have positioned the portfolio with that potential outcome in mind.

• Policy: the Central Bank of Russia has been ahead of the pack in switching its US Treasury bonds into• Policy: the Central Bank of Russia has been ahead of the pack in switching its US Treasury bonds into gold, taking over a year to undertake the switch due to the size – and it still might have a bit more to do. Other central banks could follow suit.

• Macro backdrop: should Covid‐19‐driven QE play out, it could be bullish for all real asset inflation hedges including gold and other precious metals.

• Dividends: one of the few sectors that may see dividends increase this year as revenue is going up and costs (oil is 30% of an average miner’s cost, for instance) are going down. The current 1.5% yield on the fund covers the annual management charge.

• Experience: fund manager and team are experienced in managing the fund through different economic cycles.y

• Proven outperformance: best‐performing fund out of more than 2,500 UK‐based funds in 2016 and 2019, according to FE Analytics, the fund data provider.

For professional intermediaries only 23

Bloomberg Ticker Codes WCHGEIA LN Equity          (Inst Acc Class) Thomson Reuters Codes LP68418916                              (Inst Acc Class)g q y ( )WCHGEII Equity                 (Inst Inc Class)WGPMERA LN Equity (A Inc Class)WGPMERI LN Equity         (A Acc Class)WCHGERA LN Equity         (B Acc Class)WCHGERI LN Equity (B Inc Class)

( )LP68418917                              (Inst Inc Class)LP68418912                              (A Acc Class)LP68418913                              (A Inc Class)LP68418914                              (B Acc Class)LP68418915 (B Inc Class)WCHGERI LN Equity          (B Inc Class) LP68418915                              (B Inc Class)

AMC 1% (Institutional/Clean Classes) OCF 1 52% (I Classes) (as at 29 Feb 20)AMC 1% (Institutional/Clean Classes)1.25% (A Classes)1.75% (B Classes)

OCF 1.52% (I Classes)                           (as at 29 Feb 20)1.79% (A Classes)                         (as at 29 Feb 20)2.28% (B Classes)                         (as at 29 Feb 20) 

ISIN Identifiers GB00BYQ2JY43                 (Inst Acc Class)GB00BYQ2JZ59                 (Inst Inc Class)GB00BYQ2JS82                 (A Acc Class)GB00BYQ2JT99                 (A Inc Class)GB00BYQ2JW29 (B Acc Class)

MEXID HTMTE (Inst Acc Class) Citicode / FE Code ICC2 (Inst Acc Class)

GB00BYQ2JW29               (B Acc Class)GB00BYQ2JX36)               (B Inc Class)

MEXID HTMTE          (Inst Acc Class)HTMTF          (Inst Inc Class)HTMTA          (A Acc Class)HTMTB          (A Inc Class)HTMTC          (B Acc Class)

Citicode / FE Code ICC2               (Inst Acc Class)ICC3               (Inst Inc Class)I3RH               (A Acc Class)I3RI                 (A Inc Class)ICC0                (B Acc Class)

24

HTMTD          (B Inc Class) ICC1                (B Inc Class)

Past performance should not be used as a guide to future performance All performance information is based on the Institutional Accumulation share classPast performance should not be used as a guide to future performance. All performance information is based on the Institutional Accumulation share class unless otherwise stated.

The al e of this in estment and the income from it can go do n as ell as p it ma be affected b e change rate ariations and o ma not get back theThe value of this investment and the income from it can go down as well as up, it may be affected by exchange rate variations and you may not get back the amount that you invested.

Th tl k d i thi t ti t th i f th I t t M t th ti f ti d h ld t b i t t dThe outlook expressed in this presentation represents the views of the Investment Manager at the time of preparation and should not be interpreted as investment advice.

h l d l d h h h d d b h h l h h b fThe asset splits detailed within this presentation are correct as at the reporting period and are subject to change, whilst operating within the objectives of the Fund.

This presentation should be viewed in conjunction with the Fund’s Key Investor Information Document (KIID), which will exclusively form the basis of any application and the Fund’s prospectus. A comprehensive list of risk factors is detailed in the KIID and the Principal Prospectus and an investment should not be contemplated until the risk are fully considered and understood.

This presentation is issued by Charteris Treasury Portfolio Managers Ltd. The KIID and Prospectus are available from the ACD, DMS Investment Management Services (UK) Ltd at dmsgovernance.com or Charteris at charteris.co.uk.

Charteris Treasury Portfolio Managers Ltd is authorised and regulated by the Financial Conduct Authority (company reference number 114952). 

25

y g g y y ( p y )