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Commodity Monthly Newsletter: October 2012 Recap
Livestock Spared from Commodity Decline  
Macroeconomic Review: The month of October brought mixed news and negative performance. Commodity momentum slowed considerably on persistent concerns regarding global GDP growth, as the IMF and World Bank cut growth forecasts for China and the world. A disappointing U.S. corporate earnings season was also a significant cause of the decline in commodities. Pessimism overshadowed upbeat economic reports on consumer spending, industrial production, housing starts and U.S. employment. The next few months, however, may offer refuge for natural gas, which could benefit from the cold winter experts anticipate.

Sector Review: Livestock was the best performing and only positive sector in a month of mostly negative performance. Agriculture, energy and precious metals all declined on global growth concerns, along with the worst performing sector, industrial metals, despite tightening of supply due to the current labor strike in South Africa.
CMCI versus Traditional Commodity Indices
(CMCI = UBS Bloomberg Constant Maturity Commodity Index)
Hypothetical Growth of $10,000: November 1, 2002 — October 31, 20121,2,3 
CMCI Growth of $10,000 Graph

Monthly Performance Attribution: CMCI decreased 4.10% for the month of October. Livestock was the best performing sector, contributing 0.11% to Index performance. Precious metals and agriculture were negative for the month, detracting 0.24% and 0.87%, respectively, from Index performance. Energy and industrial metals were the worst performing sectors, detracting 1.14% and 1.99%, respectively, from Index performance.

Roll Impact on Performance (Contango versus Backwardation): The impact of roll yield on CMCI was -0.04% versus 0.14% and -1.34% for the S&P GSCI and the DJ UBS CI, respectively. WTI contango and Brent backwardation both widened. Natural gas contango widened significantly and remained at even more severe levels than during September. Sugar moved further into backwardation and wheat contango widened during the month. Copper moved into backwardation and silver moved into contango, while gold contango narrowed slightly.

Average Annual Returns (%) as of October 31, 20121,3
CMCI Average Annual Returns Table 

CMCI Methodology: CMCI is a next generation commodity index diversified across maturities, minimizing its exposure to the front end of the futures curves. By spreading its exposure across multiple maturities and maintaining a constant maturity per commodity, the Index seeks to mitigate the impacts of negative roll yield in contango environments. For more information on commodity futures, please read: The HAI Contango Report.

White Paper: For more information on next generation indices, please read: Expanding Asset Allocation Programs.

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1CMCI's live inception date is January 1, 2007. All performance information presented for the Index covering the period prior to January 1, 2007 is based on hypothetical, back-tested data. Prior to such date, the Index was not calculated in real time by an independent calculation agent. Hypothetical, back-tested performance has inherent limitations and is not indicative of future results. No representation is being made that any investment will achieve performance similar to that shown. In addition, hypothetical performance does not involve financial risk, and no hypothetical performance can completely account for the impact of financial risk (such as the ability to withstand losses) or other factors in actual trading.

2The graph above illustrates a hypothetical $10,000 investment. Graph source: Van Eck Research, Pertrac, Bloomberg.

3All indices are unmanaged and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. An index's performance is not illustrative of a fund's performance. Indices are not securities in which investments can be made. Results reflect past performance and do not guarantee future results. This performance is historical and is provided to illustrate market trends. The DJ UBS CI is composed of futures contracts on 19 physical commodities. The S&P GSCI is composed of futures contracts on 24 physical commodities, with high energy concentration and limited diversification. Both indices buy and sell short-term (i.e., "front month") futures contracts. In comparison, the UBS CMCI is composed of futures contracts on 27 physical commodities and buys and sells contracts with maturities of three months and, for some commodities, up to three years.

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