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Overview
The ETC Securities are designed to provide
investors with exposure to a metal without having to take physical
delivery of the metal. The underlying "Metal" for the ETC Securities is:
gold.
Each ETC Security relates to a specific amount
in weight of Metal, specified in the Final Terms, known as the
"Metal Entitlement per ETC
Security".
On any particular day, the ETC Security can be
viewed as giving an exposure to that ------amount of Metal as the
amount payable in respect of each ETC Security and the value per
ETC Security (the "Value per ETC
Security") is linked to the value of the Metal. In order to
back its obligations under the ETC Securities, the Issuer will seek
to hold enough Metal to meet its obligations under the ETC
Securities. The precise amount it holds at any time may be more or
less than the aggregate amount of the Metal Entitlement per ETC
Security to reflect the periodic payment of product fees. The
proceeds from the disposal of the underlying Metal, plus any
interest received on the proceeds of such disposal less any
negative interest, net of any deductions, will equal the amount due
under the ETC Securities (subject to certain minimum amounts
owed).
The Metal will be held for the Issuer by
JPMorgan Chase Bank, N.A. (or any successor or replacement) (the
"Secured Account
Custodian") and will be generally held on an "allocated"
basis. This means that specifically identifiable physical items of
the Metal are allocated to the Issuer and are segregated from metal
held for other clients of the custodian. However, for operational
purposes, small amounts of Metal may be held on an "unallocated"
basis. This means that the Secured Account Custodian maintains an
account in the name of the Issuer which shows them as being
entitled to delivery of a particular amount of the Metal but
without specific physical metal having been identified. Where Metal
is held on an "unallocated" basis the right to delivery is a purely
contractual right and, as such, the Issuer is an unsecured creditor
of the custodian and is exposed to the credit risk of the
custodian.
Security
The obligations of the Issuer under the ETC
Securities will be secured pursuant to a security deed governed by
the laws of Ireland and a security deed governed by English law by
security interests over the rights of the Issuer under the
agreements entered into by it in respect of the ETC Securities and
any underlying Metal. The assets and property that are the subject
of such security interests are known as "Secured Property" for this Series.
Securityholders will not, by reason of holding such Series, have
any claim against the Secured Property with respect to any other
series of ETC Securities. The security will become enforceable if
payment of the redemption amount in respect of such ETC Securities
is not made when due on the Scheduled Maturity Date or the
Scheduled Early Redemption Date (defined below) (if
applicable).
Final Redemption
Amount
On the Scheduled Maturity Date, each ETC
Security will become due and payable at an amount (the
"Final Redemption Amount")
equal to the greater of (i) the Final Metal Redemption Amount
(defined below) plus the Specified Interest Amount (defined below)
and (ii) 10 per cent. of the issue price per ETC Security as at the
series issue date (the "Minimum
Debt Principal Amount") plus the Specified
Interest Amount. The "Final Metal
Redemption Amount" is determined by multiplying (i) the
Metal Entitlement per ETC Security as at the Final Redemption
Valuation Date (defined below); and (ii) the volume-weighted
average prices per metal unit at which the Metal Agent (defined
below) is able to sell the underlying Metal ("Average Metal Sale Price") during the
Final Redemption Disposal Period (defined below).
The "Final
Redemption Disposal Period" is the period which lasts for
the number of days specified in the Final Terms, which shall start
from (but exclude) the date falling four non-disrupted business
days following the Final Redemption Valuation Date.
"Final
Redemption Valuation Date" is the date specified in the
Final Terms or, if such day is not a business day, the next
following business day.
"Specified
Interest Amount" is the amount of interest per ETC Security
equal to that ETC Security's pro
rata share of the amount of interest which has accrued (if
any) on the proceeds of realisation of the underlying Metal
deposited into the Series Cash Account (defined below) during or
relating to the relevant redemption disposal period. Whilst
interest may accrue at a positive, zero or negative rate on the
Series Cash Account, the Specified Interest Amount is subject to a
minimum of zero and any negative interest shall instead be deducted
from the proceeds of the sale of the underlying Metal.
Early Redemption
Amount
If any of the early redemption events occur,
each ETC Security will become due and payable at an amount (the
"Early Redemption Amount")
equal to the greater of (i) the Early Metal Redemption Amount
(defined below) plus the Specified Interest Amount and (ii) the
Minimum Debt Principal Amount plus the Specified Interest
Amount.
The "Early
Metal Redemption Amount" is determined by multiplying (i)
the Metal Entitlement per ETC Security as at the Early Redemption
Valuation Date (defined below); and (ii) the Average Metal Sale
Price during the Early Redemption Disposal Period (defined
below).
The "Early
Redemption Disposal Period" is the period which lasts for
the number of days specified in the Final Terms, which shall start
from (but exclude) the date falling four non-disrupted business
days following the Early Redemption Valuation Date.
The "Scheduled
Early Redemption Date" is the 8th business day following the
Early Redemption Disposal Period.
The "Early
Redemption Valuation Date" is the date of the occurrence of
an early redemption event or the date on which the Trustee gives
notice that, due to the occurrence of an event of default, the ETC
Securities shall become due and payable at their Early Redemption
Amount on the Scheduled Early Redemption Date, or, if such day is
not a business day, the next following business day.
There can be no assurance that the Final
Redemption Amount or Early Redemption Amount, as applicable, will
be greater than or equal to the amount invested by any
securityholder.
If the Final Metal Redemption Amount or Early
Redemption Amount, as applicable, plus the Specified Interest
Amount falls below the Minimum Debt Principal Amount plus the
Specified Interest Amount, then due to the limited recourse nature
of the ETC Securities, securityholders are unlikely to receive
payment of the Final Redemption Amount or Early Redemption Amount,
as applicable, in full and may receive zero.
The Final Redemption Amount or Early Redemption
Amount per ETC Security, as applicable, will be determined by
reference to the Average Metal Sale Price of the underlying Metal
held in respect of the ETC Securities sold during the Final
Redemption Disposal Period or Early Redemption Disposal Period, as
applicable, by JPMorgan Chase Bank N.A. (or any successor or
replacement) as "Metal
Agent", net of associated deductions and taxes. The Issuer
will, on or prior to the Scheduled Maturity Date or Scheduled Early
Redemption Date, publish the determination of the Final Redemption
Amount or Early Redemption Amount, as applicable, (which shall
include publication of the price, volume and date of each sale of
underlying Metal during the relevant redemption disposal period,
including information on any fees, deductions and/or taxes imposed
on such sale, and the determination of the Average Metal Sale
Price) on the website maintained on behalf of the Issuer at
www.etf.dws.com (or such other website notified by the Issuer for
the ETC Securities from time to time).
The Metal Agent will pay the aggregate proceeds
of such disposals (converted, if necessary, into the currency of
the ETC Securities) to the cash account for the Series (the
"Series Cash Account")
maintained by J.P. Morgan SE
as "Account Bank" as
directed by the Programme Administrator (defined below).
Interest
The ETC Securities will not pay periodic
interest. On early or final redemption of the ETC Securities, a
Specified Interest Amount may be payable by the Issuer as part of
the Final Redemption Amount or Early Redemption Amount payable per
ETC Security, as the case may be.
Fees
The ETC Securities are subject to a product fee
that accrues on a daily basis. Accrued product fee is paid by a
daily reduction in the Metal Entitlement per ETC Security which, as
a result of such reduction, operates as a charge on
securityholders. The Issuer will, using the Metal Agent,
periodically realise Metal equal to such charge and the proceeds
will be credited to the Series Cash Account maintained by the
Account Bank in relation to the ETC Securities and used by the
Issuer to pay the product fee to the Programme Administrator in
accordance with the Programme Administrator Agreement. Such
realisation will happen on a periodic (typically weekly) basis. The
Programme Administrator Agreement provides that the Programme
Administrator will use the product fee in relation to each Series
of ETC Securities to pay on behalf of the Issuer the costs of the
Programme (as set out in the schedule to the Programme
Administrator Agreement) relating to such Series of ETC Securities
and the Issuer more generally.
Events of Default and Early Redemption
Events
The ETC Securities may become due and payable
prior to their Scheduled Maturity Date in connection with the
occurrence of any of the following events:
(i)
certain legal or regulatory changes occur in relation to the Issuer
and the Issuer gives a notice of redemption;
(ii)
any agent in relation to the ETC Securities resigns or their
appointment is terminated and the Issuer gives notice that no
successor or replacement has been appointed within a 60 calendar
day period;
(iii)
the Value per ETC Security is less than or equal to 20 per cent. of
the issue price as at the series issue date for two consecutive
valuation days and the determination agent gives the relevant
notice;
(iv)
the Issuer will, or there is a substantial likelihood that it will,
be required to make a payment in respect of VAT or be required to
account for VAT in respect of a delivery of Metal from or to an
authorised participant (whether or not such VAT is
recoverable);
(v)
an Issuer Call Redemption Event occurs (as discussed further below
under "Issuer Call Redemption
Event");
(vi)
the Issuer becomes entitled to serve a VAT redemption event notice
and the Trustee gives the relevant notice as directed by the
requisite number of securityholders; or
(vii) an
event of default occurs under the ETC Securities. These include
certain breaches by the Issuer of its obligations that are not
cured within the applicable cure period and certain insolvency
events with respect to the Issuer.
Issuer Call Redemption
Event
The Issuer may elect to redeem the ETC
Securities early on giving not less than 30 calendar days' notice
to securityholders (an "Issuer
Call Redemption Event").
Limited Recourse and
Ranking
The ETC Securities will rank equally amongst
themselves. The rights of securityholders are limited in recourse
to the Secured Property. As such, once the Secured Property has
been realised and the net proceeds distributed, none of the parties
or anyone acting on their behalves may take further steps against
the Issuer or its directors, officers, members or administrator to
recover any further sum and no debt will be owed by the Issuer in
respect of such sum. Any proceeds of the Secured Property will be
applied in accordance with the priorities of payments set out in
the terms and conditions and, therefore, the rights of
securityholders will rank in accordance therewith. As a result of
such provisions, the securityholders may not receive in full the
final redemption amount or early redemption amount payable in
respect of an ETC Security.
Withholding Tax
All payments in respect of the ETC Securities
shall be made net of and after allowance for any withholding or
deduction for, or on account of, any taxes. In the event that any
withholding or deduction for, or on account of, any taxes applies
to payments in respect of the ETC Securities, securityholders will
be subject to such tax or deduction and shall not be entitled to
receive amounts to compensate for any such tax or deduction. No
event of default will occur as a result of any such withholding or
deduction.
Governing Law
The ETC Securities will be governed by the laws
of Ireland. There will be two security deeds relating to the ETC
Securities; one will be governed by the laws of Ireland and the
other will be governed by English law.
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