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May 2014

investing in a rising
rate environment
Axel Merk
President & CIO
Merk Investments
lot lovestmeot ptofessloool ose ooly.
lease read lmporLanL rlsk dlsclosure lnformauon Lowards Lhe end of Lhls presenLauon.
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
U.S. Bond Market Annual Returns*

Source: Merk Investments, Bloomberg, Barclays Capital
* Measured by Barclays U.S. Aggregate Bond Index
Period: Jan. 1, 1977 - Dec. 31, 2013

Merk Investments LLC
U.S. bond market posted its 3rd
negative calendar year return since 1977
8ond MarkeL 8eLurns
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Who ls Leadlng ?ear-1o-
uaLe?
9.3%
6.5%
2.9%
2.3%
2.2%
-0.8%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Commodites Gold TIPS Stocks Nominal Bonds Dollar
Year-to-Date Performance* (12/31/2013 - 04/22/2014)
*Holding period returns; not annualized. Source: Merk Investments, Bloomberg
Stocks: S&P 500 Total Return Index; Nominal Bonds: Barclays U.S. Aggregate Bond Index;
TIPS: Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index; Gold: Gold spot price;
Commodities: Dow Jones-UBS Commodity Total Return Index; Dollar: Bloomberg Dollar Index. Merk Investments, LLC
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Strategy Within Bonds Strategy With Alternatives
Short Duration
Pros: Low duration risk
Cons: Opportunity cost
Building a diversied portfolio with
the inclusion of alternative asset
classes:

Pros:
Historically outperformed bonds
when rates rose
Low correlation may add
diversication benets
May enhance the overall portfolios
risk-adjusted return
Cons:
Potentially unfamiliar risks
associated with alternative asset
classes, e.g. foreign exchange risk
Potentially higher volatility or
liquidity risk
Floating rate
Pros: Low duration risk
Cons: Liquidity risk
High yield
Pros: Higher income
Cons:
- Substantial credit risk
- Liquidity risk
- Equity correlation
Nontraditional
Pros: Higher exibility
Cons:
- Strategies vary widely
- Often traditional sub-strategies
- May not deliver uncorrelated returns
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When 8aLes Are 8lslng.
new Sherl ln 1own.
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unemploymenL
SLrucLural or Cycllcal?
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
Apr-64 Apr-69 Apr-74 Apr-79 Apr-84 Apr-89 Apr-94 Apr-99 Apr-04 Apr-09 Apr-14
U.S. Long-Term Unemployment*
Long-term unemployed as % of total unemployed
Unemployment Rate
Source: Merk Investments, Bureau of Labor Statistics
* Unemployed for 27 weeks or longer. Period: April 1964 - March 2014; monthly data.
Merk Investments, LLC
50-year average: 16.6%
50-year average: 6.1%
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0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Y
e
a
r
-
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v
e
r
-
y
e
a
r

g
r
o
w
t
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(
%
)

U.S. Average Hourly Earnings (All Employees)
Year-over-Year Growth (%)
U.S. Average Hourly Earnings Yearly % Change (All Employees)
Source: Merk Investments, Bureau of Labor Statistics
Period: March 2007 - March 2014; monthly data
Merk Investments, LLC
www.merkinvestments.com 7 2014 Merk Investments
no Wage lnauon?
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Y
e
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a
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(
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Median Weekly Earnings of Full-Time Wage and Salary Workers
Year-over-Year Growth (%)
Source: Merk Investments, Bureau of Labor Statistics
Period: 2007Q1 - 2014Q1; quarterly data Merk Investments, LLC
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?es Wage lnauon!
Peadwlnds Lo 8ecovery?
www.merkinvestments.com 9 2014 Merk Investments
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
3.0
3.5
4.0
4.5
5.0
5.5
6.0
Mar-08 Nov-08 Jul-09 Mar-10 Nov-10 Jul-11 Mar-12 Nov-12 Jul-13 Mar-14
3
0
-
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U.S. Existing Home Sales vs. 30-Year Mortgage Rates
Existing Home Sales (LHS)* 30-Year Mortgage Rate (RHS)**
*Seasonally adjusted annual rate **Fixed renance, national average
Source: Merk Investments, Bloomberg. Period: Mar. 2008 - Mar. 2014; monthly data.
Merk Investments LLC
Existing home sales started to decline
following the rise in mortgage rates
?ellen's led
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lCMC - Who's voung ln
2013?
Source: Merk Investments, Federal Reserve. As of April 22, 2014.
* Fischer is nominated as the next Fed Vice Chair. Powell is nominated for a second term after his rst term ends January 31, 2014. Brainard is nominated to join the
Board of Governors.
** Regional Fed presidents (except for the New York Fed) serve one-year terms on a rotating basis.


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Merk Investments, LLC
www.merkinvestments.com 11 2014 Merk Investments
A World ln uebL
1ry Lo ouLgrow debL load
8alse Laxes
Lower expendlLures
8esLrucLure (defaulL)
rlnL money

To manage their debt load, governments may
www.merkinvestments.com 12 2014 Merk Investments
#CurrencyWars Scorecard
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14
1-Year Change in Central Bank Balance Sheets
(as of March, 31 2014)
Bank of England
U.S. Federal Reserve
Bank of Japan
European Central Bank
Source: Merk Investments, U.S. Fed, ECB, BOE, BOJ. Period: March 2013 - March 2014; monthly data.
Merk Investments LLC
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LC8: WhaLever lL 1akes
2.0?
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lenLy of Sumulus
Already?
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14
Spanish 5-year Yield vs U.S. 5-year Yield
Spain 5-year yield
US 5-year yield
Source: Merk Investments, Bloomberg. Period: 7/1/2012 - 4/22/2014
Merk Investments, LLC
www.merkinvestments.com 15 2014 Merk Investments
negauve ueposlL 8aLes?
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14
E
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R

m
n

ECB Deposit Facility and Current Accounts (EUR mn)
ECB Deposit Facility Current Accounts (covering reserve requirements)
Source: Merk Investments, European Central Bank. Period: 1/1/2011 - 4/22/2014
Merk Investments, LLC
Deposit rate cut to 0%
2nd LTRO
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8lslng 8aLes.
www.merkfunds.com 17 2013 MERK Investments
Threats

Economic growth?
! Higher cost nancing debt?

Equity valuation?
! Stock market correction?
Fed Promises?
! Ination?
! Dollar at risk?
A world of debt?
! Not back to normal?


Opportunities

Rebalance portfolio
! Reduce equity exposure?
! Re-assess bond exposure?

Consider alternatives
! Currencies as Diversier?
! Gold as hedge?
Merk Outlook
! #yendoomed?
! Euro resilient?
! Chinese yuan?

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8ond MarkeL Crash?
Performance in Periods of Rising Interest Rates*
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Who is Merk?
THOUGHT
LEADER
Global
Economic
Expertise
Primary
source of info
for media &
investment
pros
Regular
speaker at
conferences
Original
Research
Insight into
major
central
banks
Prudent
quantitative
modeling

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Who ls Merk?
www.merkinvestments.com 19 2014 Merk Investments
Merk: Managing Dollar & Currency Risk
Low correlation to traditional asset classes
Low volatility: downside resilience
Well suited for active management
Concerned about the markets? Currencies may help
Currencies: Return Diversiers Downside Resilience
www.merkfunds.com 20 2013 MERK Investments
Currency AsseL Class
www.merkinvestments.com 20 2014 Merk Investments
-0.71
-11.61
-33.23
-60.99
-2.48
-3.83
-13.27
-16.04
-4.36
-7.04
-17.63
-23.67
-70.00
-60.00
-30.00
-40.00
-30.00
-20.00
-10.00
0.00
Currency Non-Directional Currency Directional US Equities International Equities
Crlsls llash 2011 urawdown
Lqulues & Currencles
Performance in Stock Market Downturns
Past performance is not indicative of future results. Source: Bloomberg, Merk Investments

Currency Non-Directional: DBCRUSI Index. Currency Directional: Inverse of DXY Index.
US Equities: S&P 500 Total Return Index. International Equities: MSCI EAFE Index. It is used as a proxy for the international equity market
performance in developed markets outside the U.S. & Canada.


2014 Merk Investments, LLC
www.merkfunds.com 21 2013 MERK Investments
Crisis: October 9, 2007 March, 9, 2009
Flash: April 26, 2010 July 5, 2010
2011 Drawdown: April 26, 2011 October 3, 2011
Currencies
Directional
Currencies
Non-directional
www.merkinvestments.com 21 2014 Merk Investments
45.9%
41.5%
46.9%
38.6%
40.3%
40.8%
38.5%
50.7%
46.6%
30.9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Australia Canada Switzerland Eurozone UK Japan Norway New
Zealand
Sweden Singapore
Currency Return Contribution for U.S.-based Investors
in International Equity Portfolios
Average monthly return contribution from currencies as % of total monthly returns
Source: Merk Investments, Bloomberg
* Period: 03/31/2004 - 03/31/2014; calculation based on monthly returns Merk Investments LLC
Equity indexes referenced in the chart: Australia: S&P/ASX 200 Index; Canada: S&PTSX Composite Index; Switzerland: Swiss Market Index; Eurozone: Euro Stoxx
50 Index; UK: FTSE 100 Index; Japan: Nikkei 225 Index; Norway: OBX Index; New Zealand: NZX 50 Index; Sweden: OMX 30 Index; Singapore FTSE Straits Index
www.merkinvestments.com 22 2014 Merk Investments
Currencles Mauer
55.2%
63.1%
-6.7%
42.5%
22.2%
-55.8%
57.1%
26.3%
39.3%
50.8%
-80.0%
-60.0%
-40.0%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
Australia Canada Switzerland Eurozone UK Japan Norway New
Zealand
Sweden Singapore
10-Year Correlations of Monthly Returns of
Currencies and Respective Local Stock Market Indexes*
10-year correlation of monthly returns
Source: Merk Investments, Bloomberg
* Period: 03/31/2004 - 03/31/2014; calculation based on monthly returns Merk Investments LLC
Equity indexes referenced in the chart: Australia: S&P/ASX 200 Index; Canada: S&PTSX Composite Index; Switzerland: Swiss Market Index; Eurozone: Euro Stoxx
50 Index; UK: FTSE 100 Index; Japan: Nikkei 225 Index; Norway: OBX Index; New Zealand: NZX 50 Index; Sweden: OMX 30 Index; Singapore FTSE Straits Index
www.merkinvestments.com 23 2014 Merk Investments
Pedglng lx 8lsk?
lovetse u.5. uollot (lov. u\) loJex. o meosote of tbe lovetse voloe of tbe uolteJ 5totes Jollot telouve to o bosket of fotelqo cotteocles
locloJloq uk, Il, C8l, cAu, cnl ooJ 5k.
ueotscbe 8ook cotteocy ketotos (u8ck) loJex. oo epool-welqbteJ bleoJ of tbe most wlJely oseJ lovestmeot sttoteqles omooq ocuve
cotteocy moooqets. lt coptotes looq tetm systemouc tetotos ovolloble lo tbe wotlJ cotteocy motkets.
www.merkfunds.com 24 2013 MERK FUNDS" www.merkinvestments.com 24 2014 Merk Investments
Currency lnvesLmenL
Approaches
A8CACPLS 1C Cu88LnC? lnvLS1lnC
" 8askeL of Currencles
" Managed 8askeL of Currencles
ulrecuonal non-ulrecuonal
" Long / ShorL
" AbsoluLe 8eLurns
uollar lndex u8 Currency lndex
Low Correlauon
Large
Cap
Small
Cap
Intl
Equity
EM
Equity
US
Bonds
TIPS EM
Bonds
Commo
dities
Real
Estate
Hedge
Funds
I.DXY DBCR
Large Cap 1.00 0.94 0.61 0.53 (0.36) 0.00 0.46 0.52 0.81 0.57 0.45 0.30
Small Cap 1.00 0.55 0.49 (0.33) 0.00 0.43 0.49 0.81 0.54 0.41 0.29
Intl Equity 1.00 0.81 (0.23) 0.09 0.79 0.51 0.40 0.61 0.57 0.37
EM Equity 1.00 (0.20) 0.10 0.77 0.50 0.39 0.60 0.37 0.43
US Bonds 1.00 0.29 (0.11) (0.26) (0.19) (0.15) (0.04) (0.20)
TIPS 1.00 0.13 0.17 0.07 0.10 0.11 0.02
EM Bonds 1.00 0.48 0.34 0.51 0.52 0.32
Commodities 1.00 0.39 0.51 0.45 0.26
Real Estate 1.00 0.33 0.34 0.21
Hedge Funds 1.00 0.33 0.37
Inverse DXY 1.00 0.01
DBCR 1.00
All data as of 12/31/2013. Calculations based on daily data 12/31/2008 12/31/2013
The following indices are used as proxies for the respective asset classes:
Large Cap Domestic Equity: S&P500 US Bonds: JPM US Bonds Real Estate: FTSE/NAREIT US All REIT
Small Cap Domestic Equity: Russell 2000 TIPS: Barclays US Treasury TIPS Hedge Funds: HFRX Global Hedge Fund
International Developed Equity (Int Equity): MSCI EAFE EM Bonds: JPM EM Bond Index EMBi Global G10 Currencies: Inverse DXY US Dollar
EM Equity: MSCI Emerging Markets Commodities: DJ Liquid Commodity DBCR: Deutsche Bank Currency Returns Index
SOURCE: Merk Investments, Bloomberg, Hedge Fund Research (HFR)
Core Indices Currencies Alternatives
Currencles (u8C8)
correlauon wlLh oLher
asseL classes -0.20 Lo
+0.43
cotteocles low cottelouoo to ttoJluoool osset closses moy ptovlJe
potqollo Jlvetslfcouoo beoefts.
www.merkinvestments.com 25 2014 Merk Investments
cotteocles bove blstotlcolly sbowo fovotoble klsk-ketoto
compoteJ to otbet Alts.
Source: 8loomberg, Merk lnvesLmenLs.
erlod: 06/30/2012-03/31/2014.
Acuvely Managed Currency 8askeL represenLed by Merk AbsoluLe
8eLurn Currency lund.
Pedge lunds represenLed by Lhe Pl8x Clobal Pedge lund lndex.
8eal LsLaLe represenLed by Lhe l1SL nA8Ll1 uS ALL 8Ll1s lndex.
Llquld CommodlLy represenLed by Lhe u8 Llquld CommodlLy lndex.



www.merkfunds.com 26 2013 MERK Investments
8lsk-8eLurn vs. AL1S
www.merkinvestments.com 26 2014 Merk Investments
letfotmooce Joto tepteseots post petfotmooce ooJ ls oo qootootee of fotote tesolts.

2
SLandard uevlauon ls a measure of volaullLy.
Managed luLures represenLed by Lhe MornlngsLar ulversled luLures lndex (ull).
Currency non-ulrecuonal represenLed by Lhe ueuLsche 8ank Currency 8eLurns lndex.
Currency ulrecuonal represenLed by Lhe lnverse u.S. uollar (lnv. ux?) lndex.
An lnvesLor cannoL lnvesL dlrecLly ln an lndex.
Merk Absolute Return
Fund (MABFX)
Currency
Non-Directional
Currency Directional
Hedge Funds
Liquid Commodity
Real Estate
Managed Futures
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0%
A
n
n
u
a
l
i
z
e
d

R
e
t
u
r
n
s

Annualized Standard Deviation
2
of Returns
Actively Managed
Currency Basket

Merk lnvesLmenLs

27
www.merkinvestments.com 27 2014 Merk Investments
1PCuCP1 LLAuL8
lndusLry leader ln currency research and
prlmary source for Lhe medla
Crlglnal lnslghL, commenLarles and
analysls on currencles and Lhe global
economy
8CuuC1 LLAuL8
LargesL u.S. muLual fund
advlser focuslng
excluslvely on currencles
roducL lnnovaLor AuM: $400 mllllon
LxCL1lCnAL 1LAM
llaL organlzauonal
sLrucLure
CulLural dlverslLy
8alance of quanuLauve
and quallLauve skllls
QUANTITATIVE QUALITATIVE
Alpha Modeling
Quant Portfolio Optimization
Macro-Economic Research
Macro, Policy Analytics
Financial Analysis
Portfolio Analytics
TEAM APPROACH
Axel Merk, President &CIO
WILLIAM
POOLE
VICE
PRESIDENT
M.Sc. Financial
Engineering
UC Berkeley
M.Sc. Finance &
Econ Stuttgart
Germany
FINANCIAL
ANALYST
Ph.D. Coursework
Imperial College
B.A. Economics
Trinity College
CAIA Level III
Candidate
PRESIDENT & CIO
M.Sc. Computer
Science Brown
University
B.A. Economics
Brown University
SR FINANCIAL
ANALYST
Passed Level III
CFA Exam
M.Sc. Intl Affairs
Intl Fin & Policy
Columbia Univ
B.A. Economics
Shanghai, China
SR ECONOMIC
ADVISER
Ph.D. Economics
M.B.A.
University of
Chicago
Former St. Louis
Fed President
Former Brown U
Economics Chair
DANIEL
LUCAS
NICK
REECE
YUAN
FANG
Merk Portfolio
Management Team
AXEL
MERK
www.merkfunds.com 28 2013 MERK Investments
Merk oruollo 1eam
www.merkinvestments.com 28 2014 Merk Investments
CFA Level II
Candidate
Passed Level III
CFA Exam
lovestots moy eobooce lovestmeot tetotos wblle poteouolly teJocloq
tlsk by oJJloq o cotteocy compooeot to tbelt potqollos.
Merk 8esearch
Merk Insights
www.merkinvestments.com 29 2014 Merk Investments
ulsclosure
This presentation was prepared by Merk Investments, LLC. Information presented is for
general information purposes only and does not constitute an offer to sell, or a
solicitation of an offer to buy, any investment security. The information presented is the
current view of the presenter and subject to change without notice. An investment in a
strategy described herein has risks, including the risk of losing some or all of the
invested capital. Before embarking on a described investment program, an investor
should carefully consider the risks and suitability of the described strategy based on their
own investment objectives and financial position. Past performance is no guarantee of
future results.

The information presented may include opinions, projections and other forward-looking
statements. Due to numerous factors, actual events may differ substantially from those
presented. Merk Investments assumes no duty to update any such forward-looking
statements or any other information or opinions in this document. Any information and
statistical data contained herein derived from third party sources are believed to be
reliable, but Merk Investments does not represent that they are accurate, and they
should not be relied on as such or be the basis for an investment decision.
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May 2014
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Axel Merk
President & CIO
Merk Investments