commodity equities “les patrimoniales”

Commodity Equities“Les Patrimoniales”

Pau, June 16th, 2011

Arnaud du PlessisGlobal Commodity TeamSenior Portfolio Manager

This material is solely for the attention of “professional” investors (see more details and definitions at the end of the presentation).

Table of Contents

01 Supporting drivers for commodities02 Commodity Outlook

– Energy

– Mining

– Gold

– Agriculture

03 Commodity Equities in Asset Allocation : Exemple of gold equities04 Commodity Expertise05 Appendix06 Q & A

Supporting Drivers For Commodities

01

Big picture supportive for commodity equities

Developed Emerging

Growth Low, improving High, stable / decelerating?

Interest rates Low, to edge up Rising

Inflation Low, rising (energy)

High, rising (soft commodities)

A favourable environment for commodities A favourable environment for commodities

Growth: More homogenous Improving macroeconomic data in the West; reconstruction in MENA and Japan: => commodity demand likely to be less dependant on Asian and Latam emerging countries

Rates: expected to edge upDeveloped countries about to start a cycle of rising rates, but no sharp upturn anticipated

Interest rate hikes to continue in emerging markets in an attempt to curb inflation, but close to the end

Inflation: commodity-driven. A rising pressure for all countriesAs commodity inflation will result more and more from supply issues than from growth, monetary policies could be less efficient to stop rising prices.

Commodity inflation: should drive more investments into hard assets

Our view on the super cycle

The next decade:– Global demand will continue to be strong for commodities, still supported mainly by

urbanization and industrialization in Emerging countries– Demand response to higher prices will be slow: a long, difficult and costly process– Main drivers for commodity prices will come increasingly from supply constraints

Supply constraints + Inflation: another leg of the Super Cycle ahead Supply constraints + Inflation: another leg of the Super Cycle ahead

Demand from developed countries matched with full supply availability

10 years of booming commodity demand from Emerging countries;

Supply constraints on a rising trend

Source: Reuters

Our general view on Commodities markets

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

2.9

3.1

3.3

3.5

3.7

3.9

4.1

Global Demand Proxy - Deviation from Trend

GS Commodity Index

Commodity prices are expected to remain very firm as supply constraints increase market imbalance for most commodities. The last series of companies reports have shown very poor figures on production volumes.

High prices driven by supply constraints, likely to limit the impact of rising interest rates

Consensus is revising upwards estimates for 2011

Global demand for commodities Global demand from China

Supply constraints over time

Supply constraints becoming the supporting factor for prices Supply constraints becoming the supporting factor for prices

Gold Environment

Source: US Global Investors

Commodity Outlook02

Production most at risk MMbbl/day

% OPEC spare capacity

Egypt 0.7 14%Libya 1.6 30%

Algeria 1.3 24%Yemen 0.3 5%Total 3.9 74%

Energy: Short term supply risks Unrest in several countries puts short term supply at risk For the moment, only part of the Libyan production is disrupted OPEC spare capacity represents 6% of world production (5.2mmbbls/day), of which 70% is in Saudi Arabia Countries most at risk represent 74% of the spare capacity which explains the nervousness on the oil price

Oil prices will factor in a higher political risk premium in the future Oil prices will factor in a higher political risk premium in the future

Oil price spikes how much should be political premiums?

Source: Financial Times

Energy: Long term supply constraints

Source: UN, McKinsey

Depletion of existing fields: 5% per year = 4mmbbls/day = 1 Iran per year

Geopolitical risk: New fields in more challenging areas = higher finding & development costs

OPEC market power to increase: 40% of oil production and 77% of reserves

Operating risk: Impact of Macondo oil spill on resource access and costs

Easing of Supply constraints to come from the rapid development in Iraq and Brazil

Supply constraints will put a floor on price levels Supply constraints will put a floor on price levels

Reserve replacement Production costs ($/b)

Production increasing more rapidly than discoveries

Copper: Constraints deriving from risk exposure of new mines

Source: Macquarie, SG Cross Asset Research, Brook Hunt1: country risk derived from Global Insight’s country risk rankings

■ New supply: little to come …………………………………..and more risky

■ A continued deficit in copper concentrates markets

25-35 year reserves, but associated risk going higher 25-35 year reserves, but associated risk going higher

2.7% expected deficit in 2011.

Inventories below 4 weeks; ETF impact

■ Deteriorating accessibility: geology, technology, costs, environment….

■ Deteriorating infrastructure: harbours, railways, roads, power, water, …

Source: Brook Hunt*: all new discoveries over 4 millions tons of contained copper

Copper: Constraints through the supply chain

*

Manager’s views on Gold marketGold demand by sector 2010

Jew ellery52%

Private Investment

19%

Official Holdings

16%Other

Fabrication11%

Lost and unaccounted

2%

Source: GFMS

Gold year-on-year returns since 1970

-40

-20

0

20

40

60

-5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9

Real short-term Fed funds rate (%)

YoY

retu

rns

(%)

Attractive macro and fundamental outlook Attractive macro and fundamental outlook

Today

Historical price evolution of the physical Gold and Gold equities

Relative valuation

Gold: two main factors strongly in place

Sovereign risk remains high in Europe

Japan and US could be the next

Source: Bloomberg

Rising currencies volatility

Dollar leading position much debated

Gold: reinforced save haven appeal Gold: reinforced save haven appeal

Search for safe havenCurrency alternative

What could happen with US Debt…

Source : WGC, BofA Merril Lynch Global Commodities Research

Central Bank: reserves diversification – In a new Era

Market imbalance as Central Banks sales have dried up

Reserve diversification still strongly needed

Market imbalance as Central Banks sales have dried up

Reserve diversification still strongly needed

Central banks are once again net buyers after being net sellers for 21 years

Gold accounts for only 5% of reserves of BRIC Central Banks compared to >50% in developed countries

5

5,5

6

6,5

7

7,5

8

8,5

9

9,5

2000 2010 2020 2030 2040 2050

Soft commodity : strong demand growth

Source : United Nations, USDA, Bloomberg

Change in global population

(bn inhbts)

20

25

30

35

40

45

1980 1985 1990 1995 2000 2005 2010 E

Global meat consumption

(kg/capita/yr)

0

20

40

60

80

100

120

140

2007 2009 2011 2013 2015 2017 2019 2021

US biofuel production quotas

(bn l)Demography

Economy

Energy

Soft commodity : supply constraints

Source : USDA, FAO, IPCC

0

0,1

0,2

0,3

0,4

0,5

0,6

1950 1960 1970 1980 1990 2000 2010 2020

Global arable land

(ha/inhbt)

None

Slight

Moderate

Severe

Very severe

Not listed

Severity of Human induced soil degradation

Impact of global warming on farmland productivity

Urbanisation

Soil degradation

Climate change

Commodity Equities in asset allocation: Example of Gold Equities

03

Amundi Rendez-Vous March 2011- page 20

Gold Equities : diversification within a Global Equity portfolio

Low correlation with Global equities

0

50

100

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300

350

400

450

500

Jun-

94

Jun-

96

Jun-

98

Jun-

00

Jun-

02

Jun-

04

Jun-

06

Jun-

08

Jun-

10

Equity Gold Mines

Asymmetry of returns Higher returns with higher volatility

Strong diversification benefits with Gold Equities Strong diversification benefits with Gold Equities

Data : MSCI AC World Investable Market U$, DJTM World Gold Mining U$, June 1994- December 2010

Data : MSCI AC World Investable Market U$, DJTM World Gold Mining U$, Monthly returns matrix, June 1994- December 2010

Amundi Rendez-Vous March 2011- page 21

Gold equities in a global portfolio: 2 examples

Gold Equities allocations generate more performance without added risk

Gold Equities performance asymmetry enables to control volatility

Source : Datastream, Amundi Research

Data: MSCI AC World Investable Market U$, DJTM WORLD GOLD MINING U$; June 1994- December 2010

Gold Equities Allocation improve Risk/Return Profile Gold Equities Allocation improve Risk/Return Profile

Commodity Expertise04

Commodity equities: the obvious winners of higher prices

High cash flows to continue Producers to reduce further debt levels and turn net cash positive Cash flow generation quicker than capital expenditure

Cash Flows

Cash surplus to be returned to shareholders through dividends and share buybacks

More return than with physical commodities

High returns

M&A 2010 a record year for M&A. For example in mining with over $134bn M&A strong start in 2011

Favorable factors for equity shareholders Favorable factors for equity shareholders

Return of M&A activities – most recent deals

M&A the only option for quick production growth M&A the only option for quick production growth

Cash$6.3b38%DaniscoDuPont FoodAgriculture

Equity$513 m31%RichfieldNewgoldGoldPrecious

Cash$7.8 bn30%EquinoxBarrick GoldCopperMaterial

SectorSub-

sector Acquirer Target Premium Size Deal Structure

Energy Coal Alpha Natural Massey 31% $8.5 bn Cash + Equity

Energy Oil Drilling Ensco Pride 24% $8.5 bn Cash + Equity

Material Copper MinMetals Equinox 23% $6.5 bn Cash

Precious Gold Newmont Fronteer 37% $2.3 bn Cash

Cash$6.3b38%DaniscoDuPont FoodAgriculture

Equity$513 m31%RichfieldNewgoldGoldPrecious

Cash$7.8 bn30%EquinoxBarrick GoldCopperMaterial

SectorSub-

sector Acquirer Target Premium Size Deal Structure

Energy Coal Alpha Natural Massey 31% $8.5 bn Cash + Equity

Energy Oil Drilling Ensco Pride 24% $8.5 bn Cash + Equity

Material Copper MinMetals Equinox 23% $6.5 bn Cash

Precious Gold Newmont Fronteer 37% $2.3 bn Cash

In the portfolio

Source : Datastream

Equities outperform physical commodities in the long run

0

100

200

300

400

500

600

700

800

900

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

GSCI Commodity Tot Return Ind MSCI Wrld Energy MSCI Wrld Metals & Mining FT Gold Mines Dax Agribusiness

The fund does not invest directly in commodities, but through equities only. Rather than adding to price pressure and speculation

We hold a long term-approach, as our goal is to identify throughout the entire value chain the sectors and companies that will most benefit from supply/demand imbalance and best deliver on their growth potential through a strong and sustainable development. The minimum recommended investment horizon is 5 years.

Investment Philosophy

USD 3.3 bn AuM (04/30/2011)

19 years average experience

Global Commodity Equity team

Global Resources Anne Ruffin (Head of the team since 98)

USD 1 250m Henrietta Lance Annualised excess return of 2.0% - IR of 0.321

Energy & Renewables Stéphane Soussan USD 320 m Annualised excess return of 5.0% - IR of 0.531

Gold Arnaud du Plessis USD 728 m Annualised excess return of 4.5% - IR of 0.431

Agriculture & Water Nicolas Fragneau USD 496 m Annualised excess return of 4.2% - IR of 0.433

Global Mining Anne Ruffin USD 517 m Annualised excess return of 3.8% - IR of 0.922

1since Dec 31, 98 2 since Apr 26, 10 3since Dec 12, 07

Amundi capabilities in commodity expertise: Global Resources

Annualised return as of 30th April 2011 1 Y 3 Y 5 Y 7Y 10Y Since inception

Composite Global Resources 25.0% 3.6% 8.6% 17.3% 15.3% 14.4%

Benchmark* 27.0% 5.4% 9.2% 15.9% 14.1% 12.6%

Benchmark

Performance in USD since inception (31 December 1998)

*Benchmark : 1/3 MSCI World Materials – 1/3 MSCI World Energy – 1/3 FTSE Gold Mines

Source: Amundi Gross performance in USD as at the end of April 2011.

Past performance does not prejudge future results, nor is it a guarantee of future returns

Composite Global Resources

Calendar yr returns (gross)

Composite Bench Out-perf

1999 40.3% 18.9% 21.2%

2000 -13.2% -9.3% -3.9%

2001 -0.5% 0.3% -0.8%

2002 11.0% 10.6% 0.4%

2003 42.0% 36.2% 5.8%

2004 12.2% 11.6% 0.6%

2005 29% 25.4% 3.6%

2006 22.4% 20.3% 2.4%

2007 35.6% 29.0% 6.6%

2008 -39.3% -34.6% -4.7%

2009 44.0% 38.6% 5.6%

2010 21.2% 21.1% 0.1%

2011 YTD 7.0% 8.0% -1.0%

Consistent outperformance over the past 12 years

0

100

200

300

400

500

600

700

800

janv-99 janv-00 janv-01 janv-02 janv-03 janv-04 janv-05 janv-06 janv-07 janv-08 janv-09 janv-10 janv-11

Amundi capabilities in commodity expertise: Global Gold

Annualised return as of 30th April 2011 1 Y 3 Y 5 Y 7Y 10Y Since inception

Composite Global Equities – Gold 24.3% 11.8% 8.3% 18.3% 21.2% 18.2%

FT Gold Mines 20.4% 14.0% 9.3% 16.8% 19.0% 13.6%

Benchmark

Performance of Gold Equities composite in USD since inception (31 December 1998)

Composite Global Equities - Gold

Source: Amundi. Gross performance in USD

Past performance does not prejudge future results, nor is it a guarantee of future returns.

Annualised excess return since Dec 31 1998: 4.6%Information ratio since Dec 31 1998: 0.50

Calendar yr returns (gross)


1999 111.16 57.60 53.56

2000 -30.86 -31.25 0.39

2001 12.58 23.67 -11.09

2002 58.48 55.48 3.00

2003 52.28 41.90 10.38

2004 -3.23 -7.72 4.49

2005 32.77 28.75 4.02

2006 24.71 13.29 11.43

2007 18.5 21.94 -3.43

2008 -31.00 -19.24 -11.75

2009 42.41 30.50 11.91

2010 31.85 29.59 2.26

2011 YTD 2.10 0.91 1.19


50

100

150

200

250

300

janv-04 janv-05 janv-06 janv-07 janv-08 janv-09 janv-10 janv-11

Composite Bench


Annualised return as of 30th April 2011 1 Y 3 Y 5 Y 7Y Since inception

Composite Global Energy 18.0% 0.2% 2.1% 11.9% 12.6%

Benchmark* 15.6% 1.1% 2.9% 10.4% 11.3%

Benchmark

Performance in EUR since inception (01 January 2004)

*Benchmark : MSCI WORLD ENERGY (DS)

Source: Amundi Gross performance in EUR as at the end of April 2011.

Past performance does not prejudge future results, nor is it a guarantee of future returns

Composite: 150M EUR

Global EnergyCalendar yr returns (gross)


2004 18.4% 18.9% -0.5%

2005 61.7% 48.4% 13.3%

2006 2.9% 5.4% -2.5%

2007 23.1% 17.1% 6.0%

2008 -39.9% -34.9% -5.0%

2009 29.9% 22.3% 7.6%

2010 20.2% 19.7% 0.6%

-0.1%5.4%5.3% 2011 YTD

Amundi capabilities in commodity expertise: Global Agriculture

30/04/2011 (USD) 2011 (Ytd) 2010 2009 2008Inception

(31/03/08) ann

Composite Global Agriculture 8.0% 22.06% 64.5% - 47.9% 4.0%

S&P Composite 7.9% 19.0% 41.6% - 44.1% - 0.1%

20

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100

110

120

mars-08

juin-08

sept.-08

déc.-08

mars-09

juin-09

sept.-09

déc.-09

mars-10

juin-10

sept.-10

déc.-10

mars-11

Composite Global Agriculture Benchmark S&P composite

Source : AmundiFrom inception to 31 August 2010: S&P Global Natural Resources Agriculture From 31 August 2010: S&P Global Agribusiness

Appendix05

Anne Ruffin

Head of Commodity Equities

Senior Portfolio Manager

Global Resources; Global Mining

Anne is Head of the Global Commodity Equity team and has been managing Commodity Equity portfolios since 1998, including LCL Actions Or Monde.

Prior to that, she worked as an Auditor with Ernst & Young 1988-1991 within the oil department. Anne Ruffin joined Amundi in 1991 where she worked as a Financial Engineer until 1994, a Financial Analyst on commodities 1995-1998, and then a Global commodity Portfolio Manager 1998 - 2010.

Anne holds a Masters in Banking & Finance and in Financial Engineering (1988) from Ecole Supérieure de Commerce de Paris, one of France’s top Business schools. She is also a Graduate of the French Society of Security Analysts (SFAF).

Global Commodity Equity Team

Arnaud du Plessis joined Amundi in November and has taken responsibility of the Gold expertise, in close cooperation with Anne.

Arnaud was previously head of cyclicals at Natixis Asset Management (2002-2010). He co-managed gold equities and cyclical funds. More particularly, he was in charge of precious metals and basic materials , as well as energy.

Prior to that, he worked as a European equities portfolio manager with Credit Lyonnais Asset Management (1998-2002) after being Head of derivative trading (1989-1998).Arnaud started his career with Patrice Wargny SA in 1988 as an option broker.

Arnaud is a Graduate of Institut Supérieur de Gestion and also of the French Society of Security Analysts (SFAF).

Arnaud du Plessis


Global Gold


Stéphane Soussan

Portfolio Manager

Global Energy , Renewable Energy

Stéphane started out as a Fund Manager Assistant at Sinopia Asset Management in 1996. He joined Oddo in 1998 as a sell-side Analyst for oil and metal sectors and went on to Exane BNP Paribas in 2001 where he was a sell-side Analyst for the oil sector.

In 2008 he joined the Global Resources team as a portfolio manager focusing on energy and renewable energy sectors.

Stéphane is a graduate from ESSEC, he has a Master of finance from IEP and is a SFAF member (Société Française des Analystes Financiers). He has more than 14 years experience in asset management.

Research team

Nicolas joined Amundi in 2006 as a Commodity Equity portfolio manager within the Global Commodity Equity team.

Prior to joining the company he worked as a North American & Energy equity portfolio manager at Raymond James Asset Management after joining in 2000. He began his career at Cap Gemini in 1999 as an IT developer.

Nicolas holds a Masters degree in Management Science (Specialization in Finance) from the University of Paris IX Dauphine (2000). He is a graduated of the French Society of Security Analysts (SFAF) and the CEFA (2003).

Nicolas Fragneau

Portfolio Manager

Global Agriculture, Fishery, Water


Henrietta Lance started her career in London in 1985 with Prudential Bache. In 1989 she moved to Paris to specialise in European equities first working for François Dufour Kervern. In 1992 she joined Société Générale and then in 1999 she moved to Exane before returning to Société Générale Asset Management in early 2007. She joined the Global Resources team in October 2008.

Henrietta graduated from Edinburgh University, she holds the CIIA and is a SFAF member (Société Française des Analystes Financiers). She has more than 25 years experience in asset management.

Henrietta Lance


Global Chemicals and other Materials

commodity equities “les patrimoniales”

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