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Section A - Introduction and warnings
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Element
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Description of Element
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Disclosure requirement
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A.1
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Standard Warning
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This summary should be read as an introduction to this Base Prospectus. Any decision to
invest in the Certificates should be based on consideration of this Base Prospectus as a whole by the investor. Where a
claim relating to the information contained in this Base Prospectus is brought before a court, the plaintiff investor
might, under the national legislation of the Member States, have to bear the costs of translating this Base Prospectus
before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary
including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together
with the other parts of this Base Prospectus or it does not provide, when read together with the other parts of this Base
Prospectus, key information in order to aid investors when considering whether to invest in the Certificates.
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A.2
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Disclosure of consent for use of the Base Prospectus for subsequent resale or final
placement of securities by financial intermediaries
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The Issuer has consented to the use of the Base Prospectus, and has accepted responsibility
for the content of the Base Prospectus, with respect to subsequent resale or final placement by way of public offer of
the Certificates by any financial intermediary in any of Austria, Belgium, Denmark, Finland, France, Germany, Italy,
Luxembourg, The Netherlands, Norway, Portugal, Spain, Sweden and the United Kingdom which is an investment firm within
the meaning of MiFID and which is authorised in accordance with MiFID in any member state. Such consent applies to any
such resale or final placement by way of public offer during the period of 12 months from the date of the Base Prospectus
unless such consent is withdrawn prior to that date by notice published on the website of the Portfolio Adviser
(www.sourceetf.com). Other than the right of the Issuer to withdraw the consent, no other conditions are attached to the
consent described in this paragraph.
In the event of an offer being made by a financial intermediary, this financial
intermediary will provide information to investors on the terms and conditions of the offer at the time the offer is
made.
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Section B - Issuer
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Element
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Description of Element
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Disclosure requirement
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B.1
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Legal and Commercial Name of the Issuer
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Source Physical Markets Public Limited Company (the "Issuer").
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B.2
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Domicile
/Legal Form /Legislation /Country of Incorporation
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The Issuer is a public limited liability company incorporated in Ireland under the Irish
Companies Acts 1963 to 2009 (which has been repealed and replaced by the Irish Companies Act 2014) with registered number
471344.
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B.16
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Control of Issuer
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All the issued shares of the Issuer are held to the order of Deutsche International Finance
(Ireland) Limited (the "Share Trustee") under the terms of a declaration of trust dated 12 June
2009 under which the Share Trustee holds them on trust for charitable purposes. The Share Trustee has no beneficial
interest in and derives no benefit (other than its fees for acting as Share Trustee) from its holding of the shares in
the Issuer.
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B.17
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Credit ratings
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Not applicable - the Certificates will not be rated.
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B.20
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Special Purpose Vehicle
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The Issuer has been established as a special purpose vehicle for the purposes of issuing
asset backed securities.
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B.21
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Principal activities and global overview of parties
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The Issuer is a special purpose vehicle whose sole business is the issue of asset backed
securities. The Issuer has established a programme (the "Programme"), described in the Base
Prospectus, under which it can, from time to time, issue series (each, a "Series") of secured
exchange traded certificates linked to one of gold, silver, platinum or palladium (each a "Precious
Metal") (the "Certificates"). Each Series of Certificates will be separate (or
"ring-fenced") from each other Series of Certificates.
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A number of other parties have roles in connection with the Programme:
Arranger and Portfolio Advisor: Source UK Services Limited, a
private limited company established in England, will act as the arranger (the "Arranger") and the
portfolio advisor (the "Portfolio Advisor") in respect of the Programme. As Arranger, Source UK
Services Limited has arranged the establishment of the Programme for the Issuer and as Portfolio Advisor, Source UK
Services Limited is principally responsible for providing certain advisory services
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Trustee: Deutsche Trustee Company Limited will act as trustee in
respect of each Series of Certificates (the "Trustee"). The Trustee acts as trustee for the
Certificateholders of each Series of Certificates and also as security trustee (holding the benefit of the security
granted by the Issuer over certain of its assets in respect of a Series on trust for the Certificateholders and other
transaction parties in respect of that Series).
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Portfolio Administrator and Account Bank: Wells Fargo Bank,
N.A., will act as portfolio administrator (the "Portfolio Administrator") and account bank (the
"Account Bank") in respect of each Series of Certificates. As Portfolio Administrator it will
make various non-discretionary determinations that affect the Certificates of a Series, including but not limited to,
determining the Per Certificate Entitlement for a Series and the Cash Amount payable or the Delivery Amount deliverable
on a redemption of Certificates. As Account Bank it will conduct certain money management functions for the Issuer in
relation to all Series of Certificates.
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Principal Paying Agent: Deutsche Bank AG, London Branch will act
as principal paying agent (the "Principal Paying Agent") in respect of
each Series of Certificates. As principal paying agent it will make certain payments in respect of the
Certificates.
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Custodian: JPMorgan Chase Bank, National Association will act as
custodian (the "Custodian") in respect of each Series of
Certificates. As Custodian, it will hold in custody at its London vault premises, on behalf of the Issuer, a
quantity of the relevant Precious Metal relating to such Series.
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Registrar: Computershare Investor Services (Ireland) Limited
will act as registrar (the "Registrar") in respect of each Series of
Certificates. As Registrar, it will provide registrar and CREST transfer agency services to the Issuer in
connection with the Certificates.
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Precious Metals Counterparty: JPMorgan
Chase Bank, N.A. will act as the precious metals counterparty (the "Precious Metals
Counterparty") to the Issuer in respect of the purchase and sale of Precious Metals.
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Authorised Participants: Each entity appointed as an authorised
participant under the Programme (each an "Authorised Participant") is authorised to subscribe for
the Certificates of a Series in respect of which they are acting as Authorised Participants in consideration of cash
payment, physical delivery of the relevant Precious Metal or a combination of both. A Series of Certificates may have
different Authorised Participants to the other Series, and the Authorised Participants for a particular Series will be
specified in the Final Terms for that Series.
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B.22
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No Financial Statements
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Not applicable - as the Issuer has commenced operations and prepared financial statements
since incorporation.
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B.23
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Key historical financial information
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31 Dec
2014
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31 Dec
2013
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$
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$
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ASSETS
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|
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Cash and cash equivalents
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9
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235,953
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244,244
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Other receivables
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10
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1,587,220
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35,674
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Financial assets designated at fair value through profit or loss
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12
|
1,919,987,722
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1,760,107,625
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Total assets
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1,921,810,895
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1,760,387,543
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LIABILITIES AND EQUITY
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Current Liabilities
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Other payables
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14
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2,262,047
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708,552
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Financial liabilities designated at fair value through profit or loss
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13
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1,919,491,086
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1,759,621,604
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Total liabilities
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1,921,753,133
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4,056,394,777
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Shareholders' Funds-Equity
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Share capital
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15
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55,512
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55,512
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Revenue reserves
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2,250
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1,875
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Total equity
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57,762
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57,387
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Total liabilities and equity
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1,921,810,895
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1,760,387,543
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B.24
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Material adverse change
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Not Applicable - There has been no material adverse change in the prospects of the Issuer
since the date of its last published audited financial statements.
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B.25
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Description of underlying assets
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The underlying assets for a Series of Certificates is the specified pool of a particular
Precious Metal recorded in the relevant custody accounts of the Issuer with the Custodian from time to time. On any
date, such pool is expected to comprise an amount of the relevant Precious Metal no less than the aggregate of the Per
Certificate Entitlement to such Precious Metal for all outstanding Certificates of such Series.
"Per Certificate Entitlement" means the per Certificate entitlement
to the underlying Precious Metal specified in the Final Terms (the "Initial Per Certificate
Entitlement") which is thereafter reduced by the Reduction Percentage.
"Reduction Percentage" means the percentage rate by which the
Initial Per Certificate Entitlement will reduce on a daily basis on the assumption that the daily rate will be the per
annum rate specified in the Final Terms divided by 365 and applied accordingly.
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B.26
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Investment management
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Not applicable - there is no active management of the assets of the Issuer.
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B.27
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Further issuances backed by same pool of assets
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Not applicable - the Issuer will not issue further securities backed by the same pool of
assets.
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B.29
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Description of the flow of funds
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Save to the extent that the Authorised Participant as subscribed for the issue of
Certificates in whole or in part by the physical delivery of the relevant Precious Metal in respect of the Series (the
"Underlying Precious Metal"), the net proceeds from each issue of Certificates will be used (a)
to purchase the Underlying Precious Metal and (b) to pay any listing fees incurred in connection with the listing of the
Certificates.
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The Certificates will not bear interest.
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On redemption, a Certificateholder will, in respect of a Certificate, receive on a date on
or before the third business day following the relevant Eligible Redemption Valuation Date(being any business day) (in
each case the "Settlement Date"):
1. an amount in US
dollars determined by the Portfolio Administrator equal to the amount of received by the Issuer in respect of the sale of
the relevant amount of the Underlying Precious Metal in respect of such Certificates less all expenses, fees and charges
incurred or to be incurred by the Issuer in respect of such redemption, subject to a minimum of US$0.01 (the
"Cash Amount");
or, if requested by the Certificateholder and certain conditions being
fulfilled,
2. an amount of
the Underlying Precious Metal determined by the Portfolio Administrator equal to:
1. the aggregate Per Certificate
Entitlement to the Underlying Precious Metal at the relevant Eligible Redemption Valuation Date; less
2. an amount of the Underlying Precious
Metal equal in value (as determined by the Portfolio Administrator by reference to prevailing market conditions) to all
expenses, fees and charges incurred or to be incurred in connection with such redemption,
(the "Delivery Amount").
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B.30
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Originators of securitised assets
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Not applicable - there are no originators of the Precious Metals
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Section C - Securities
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Element
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Description of Element
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Disclosure requirement
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C.1
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Type and class of securities being offered and/or admitted to trading.
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The Issuer may issue secured exchange traded Precious Metal linked certificates. Each
Series may be issued in tranches (each a "Tranche") on the same or different issue
dates.
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Underlying Precious Metal: Gold
ISIN: IE00B579F325 & DE000A1MECS1
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C.2
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Currency
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US dollars
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C.8
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Rights attached to the securities
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Payment of redemption amount
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Each Certificate gives the holder the right to receive the applicable payment (or in
certain circumstances, the delivery of an amount of the Underlying Precious Metal) on its redemption, as described in
C.9.
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Status and Security
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The Certificates constitute secured, limited recourse obligations of the Issuer.
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The Certificates will be secured pursuant to the security deed entered into by the Trustee
and the Issuer (the "Security Deed") in favour of the Trustee for itself and for the
other parties listed and entitles to payment in the Payment Priorities (the "Secured Creditors"),
as follows:
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(a) a first fixed charge over all of the Issuer's rights, title
and interest in and to the Underlying Precious Metal from time to time standing to the credit of the unallocated account
of the Issuer with the Custodian, in which the Custodian holds the Underlying Precious Metal on an unallocated basis (the
"Secured Unallocated Account") and all rights and sums derived therefrom from time to
time;
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(b) a first fixed charge over all of the Issuer's rights, title and
interest in and to the Underlying Precious Metal from time to time standing to the credit of the unallocated account of
the Issuer with the Custodian, in which the Custodian holds the Underlying Precious Metal to which the Certificates are
linked, on an allocated basis (the "Secured Allocated Account") and all rights and sums derived
therefrom from time to time; and
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(c) an assignment by way of security of the Issuer's rights, title and
interest in and to each of the transaction documents relating to the Programme to the extent that they relate to the
Certificates and any sums payable thereunder including the Issuer's rights to any sums held by any other party thereto to
meet payments due in respect of the Certificates, but only to the extent that the same relates to the
Certificates.
In addition, the Certificates will be secured by a security agreement (the
"Security Agreement") between the Issuer and the Trustee which creates in favour of the
Trustee, a New York law governed security interest over the cash account maintained by the Account Bank in respect of the
Certificates (the "Issuer Cash Account").
(collectively, the "Security").
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Limited Recourse
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In respect of any Series of Certificates, the Certificateholders shall have recourse only
to the property of the Issuer which is subject to the Security (the "Secured Property") in
respect of such Series of Certificates. If the net proceeds of the realisation of the Secured Property are not sufficient
to make all payments due in respect of the Certificates and due to each other creditor relating to the Certificates, no
other assets of the Issuer will be available to meet such shortfall, the claims of the Certificateholders and any other
creditors relating to the Certificates in respect of any such shortfall shall be extinguished. No party will be able to
petition for the winding-up of the Issuer as a consequence of any such shortfall.
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Events of Default
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If any of the following events ("Certificate Events of Default")
occurs, the Trustee shall, if so directed and may, at its discretion, give notice to the Issuer that the Certificates
are, and they shall immediately become, due and payable:
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1. the Issuer fails to pay any amounts due in respect of the
Certificates or deliver any Underlying Precious Metal due in respect of the Certificates within 5 business days of the
due date for payment or delivery, other than as contemplated by the conditions of the Certificates;
2. the Issuer defaults in the performance or observance of any of
its other obligations under the Certificates or any of the other documents relating to the issue of the Certificates or
any of the covenants of the Issuer contained in the trust deed between the Issuer, the Trustee and the Portfolio Adviser
which default is incapable of remedy or, if in the opinion of the Trustee capable of remedy, is not in the opinion of the
Trustee remedied within 30 days after notice of such default shall have been given to the Issuer by the
Trustee;
3. an insolvency event occurs in relation to the Issuer;
or
4. it is or will become unlawful for the Issuer to perform or
comply with any of its obligations under or in respect of the Certificates or any of the other documents relating to the
issue of the Certificates.
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Governing law
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The Certificates, the Trust Deed and the Registrar Agreement will be governed by Irish
law. All other transaction documents relating to the Programme will be governed by English law.
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C.9
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In addition to the rights attached to the securities set out in C.8 above:
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Interest
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Not Applicable - No interest shall accrue and be payable on the Certificates.
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Redemption
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Final Redemption
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All Certificates that have not been previously redeemed or purchased or cancelled will be
redeemed on the date specified in the Final Terms as the final maturity date (the "Final Maturity
Date") by payment of the relevant Cash Amount (as defined above) in respect of such Certificates.
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Certificateholder Optional Redemption
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The Issuer shall at the option of a Certificateholder, redeem some or all of the
Certificate held by such Certificateholder in respect of any Eligible Redemption Valuation Date by payment of the
relevant Cash Amount on the relevant Settlement Date ("Cash Settlement"), unless it is specified
in the redemption notice:
1. that the Certificateholder is electing for settlement by the transfer
of the Delivery Amount of the relevant Underlying Precious Metal ("Physical
Delivery");
2. the number and account name of an unallocated account in London with
a member of the LBMA or the LPPM where the relevant Delivery Amount should be delivered; and
3. contains a representation and warranty from the Certificateholder
that (a) it is not a UCITS fund; and (b) the request for Physical Settlement and acceptance of the Delivery Amount is in
accordance with all laws and regulations applicable to the Certificateholder.
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Automatic Redemption for CREST Reasons
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If on any date notice is received by or on behalf of the Issuer that a Certificateholder
has or will cease to have an account with CREST, any Certificates held by such Certificateholder shall be automatically
redeemed as if such Certificateholder had delivery a redemption notice on such date (or if that date is not an Eligible
Redemption Valuation Date, the next Eligible Redemption Valuation Date) and Cash Settlement shall apply to such
redemption.
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Optional Redemption in whole
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The Issuer may redeem all (but not some only) of the Certificates in respect of any
Eligible Redemption Valuation Date by payment of the relevant Cash Amount in the relevant Settlement Date, provided the
Issuer has given not less than 60 days' notice of its intention to redeem all of the Certificates on such Eligible
Redemption Valuation Date to the Trustee, the Certificateholders, other parties to the transaction documents relating to
the Programme and any stock exchange on which the Certificates are listed.
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Mandatory Redemption
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The Issuer shall instruct the Portfolio Administrator to sell all of the Secured Property
and apply the sales proceeds (less all expenses, fees and charges) in accordance with the Payment Priorities and redeem
each outstanding Certificate, in the event of:
1. changes in tax law which may result in withholding to be applied to
payments made by the Issuer in respect of the Certificates, the cost of the Issuer complying with its obligations in
respect of the Programme being material increased or result in an increased VAT cost to the Issuer;
2. the resignation or termination of the appointment of the Trustee,
Custodian or Portfolio Administrator and a successor is not appointed within the prescribed timeframe;
3. the Certificates cease to be, or notice is received that the
Certificates will cease to be held in uncertificated form and accepted for clearance through CREST; or
4. if at any time the Portfolio Administrator determines and notifies
the Issuer that the aggregate number of Certificates outstanding on any day after the first anniversary of the issue date
of the first Tranche of Certificates is less than 1,000,000.
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Trustee: The Trustee in respect of the Certificates shall be
Deutsche Trust Company Limited.
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C.10
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Derivative component of interest
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Not applicable - the Certificates do not bear interest at a prescribed rate.
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C.11
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Admission to Trading
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Application has been made to The Irish Stock Exchange Limited for the Certificates to be
admitted to the Official List and trading on its regulated market.
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Application has been made to the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse)
for certain Certificates to be admitted to the official list of the Frankfurt Stock Exchange and to be admitted to
listing and trading on the Regulated Market (General Standard) (Regulierter Markt General Standard) of the Frankfurt
Stock Exchange.
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Application will be made for certain Certificates to be admitted to the Official List
maintained by the UK Listing Authority for the purpose of Part VI of the Financial Services and Markets Act 2000 and the
Financial Services Act 2012 and trading on the regulated market of the London Stock Exchange plc.
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Application will also be made for certain Certificates to be admitted to listing on the
main segment of the SIX Swiss Exchange.
Application will also be made for certain Certificates to be admitted to listing on the
Borsa Italiana ETFplus market of the Italian Stock Exchange (Borsa Italiana S.p.A.).
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C.12
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Minimum denomination
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The Certificates are being treated by the Issuer for the purposes of Annexes V and VII of
Commission Regulation No. 809/2004 of 29 April 2004, as amended as having a minimum denomination of less than
€100,000.
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C.15
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Value of the investment is affected by the value of the underlying instruments
|
Issue Price: $125.1674
On redemption, a Certificateholder will, in respect of a Certificate, receive on the
relevant Settlement Date (a) the Cash Amount; or (b) the Delivery Amount as determined in accordance with the Conditions
from time to time.
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C.16
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Expiration/ Maturity date
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Maturity Date: 31/12/2100
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C.17
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Settlement
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The Certificates will be held in uncertificated form in accordance with the Irish Companies
Act 1990 (Uncertificated Securities) Regulations 1996 (S.I. No. 68 of 1996), as amended by the Irish Companies Act 1990
(Uncertificated Securities) (Amendment) Regulations 2005 (S.I. No. 693 of 2005) and such other regulations made under
section 1086 of the Irish Companies Act 2014 having force within Ireland as are applicable to Euroclear UK & Ireland
Limited (formerly known as CRESTCo Limited) ("CREST") and/or the CREST relevant system from time
to time in force (the "Regulations").
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The Issuer will apply for the Certificates to be accepted for clearance through
CREST. The Certificates are participating securities for the purposes of the Regulations.
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C.18
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Description of return
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On redemption, a Certificateholder will, in respect of a Certificate, receive on a date on
the relevant Settlement Date:
1. an amount in US
dollars determined by the Portfolio Administrator equal to the amount of received by the Issuer in respect of the sale of
the relevant Underlying Precious Metal in respect of such Certificates less all expenses, fees and charges incurred or to
be incurred by the Issuer in respect of such redemption, subject to a minimum of US$0.01; or
2. an amount of
the Underlying Precious Metal determined by the Portfolio Administrator equal to:
1. the aggregate Per Certificate
Entitlement to the Underlying Precious Metal at the relevant Eligible Redemption Valuation Date; less
2. an amount of the Underlying Precious
Metal equal in value (as determined by the Portfolio Administrator by reference to prevailing market conditions) to all
expenses, fees and charges incurred or to be incurred in connection with such redemption.
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C.19
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Final price / exercise price
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On redemption at maturity, a Certificateholder will, in respect of a Certificate, receive
on the Final Maturity Date an amount in US dollars determined by the Portfolio Administrator equal to the amount of
received by the Issuer in respect of the sale of the relevant Underlying Precious Metal in respect of such Certificates
less all expenses, fees and charges incurred or to be incurred by the Issuer in respect of such redemption, subject to a
minimum of US$0.01.
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C.20
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Type of underlying and where information on underlying can be found
|
Information on the past and the future performance and volatility of gold prices can be
found at Reuters Screen page "XAUUSDPM" or Bloomberg ticker "GOLDLNPM".
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Section D - Risks
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Element
|
Description of Element
|
Disclosure requirement
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D.2
|
Key risks specific to the Issuer
|
The Issuer has been established as a special purpose vehicle for the purpose of
establishing the Programme and issuing multiple series of asset backed securities, holding the Underlying Precious Metal
for each Series, through the Custodian, and entering into, and performing its obligations under, agreements related to
the foregoing. The Issuer has, and will have, no assets other than its issued and paid-up share capital, such fees (as
agreed) payable to it in connection with the issue of Certificates or entry into other obligations from time to time and
any Secured Property and any other assets on which Certificates or other obligations are secured.
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The Issuer is an Irish company. Under Irish law, upon an insolvency of an Irish company,
when applying the proceeds of assets subject to fixed security which may have been realised in the course of a
liquidation or receivership, the claims of a limited category of preferential creditors will take priority over the
claims of creditors holding the relevant fixed security.
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Section E - Offer
|
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Element
|
Description of Element
|
Disclosure requirement
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E.2b
|
Reasons for the offer and use of proceeds
|
Not applicable - the reasons for the offer and use of proceeds are not different from
making profit and/or hedging.
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E.3
|
Terms and conditions of the offer
|
Offers and sales of the Certificates to an investor by an Authorised Participant will be
made, in accordance with any terms and other arrangements in place between such Authorised Participant and such investor
including as to price, allocations and settlement arrangements. Neither the Issuer nor the Arranger will be a party to
any such arrangements with investors (except where the Arranger itself offers Certificates to an investor) and,
accordingly, this Base Prospectus and any Final Terms may not contain such information and, in such case, an investor
must obtain such information from the relevant Authorised Participant or the Arranger, as applicable. Investors should
however note the following:
Amount of the offer: The number of Certificates subject to the
offer will be determined on the basis of the demand for the Certificates and prevailing market conditions and be
published, provided that the aggregate number of all Certificates of any and all Series outstanding from time to
time shall not in any event exceed 1,000,000,000 (the "Programme Limit").
Offer Price: The offer price per Certificate will be equal to
the Issue Price, subject to any applicable fees and commissions of the person offering such Certificate.
Offer Period: Certificates may be offered to an investor at any
time between the Issue Date of the first Tranche of a Series of Certificates and the Maturity Date of such
Series.
Issue Date: 18/05/2016
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E.4
|
Material interests in the offer
|
Source UK Services Limited which is acting as Portfolio Adviser and Arranger in respect of
the Programme has a relationship with certain Authorised Participants under the Programme and may have a relationship
with future Authorised Participants appointed to the Programme. Such relationships may therefore potentially give rise to
conflicts of interest which are adverse to the interests of the Certificateholders.
The Authorised Participants and/or their affiliates actively trade in commodities
markets. These activities could give rise to conflicts of interest which are adverse to the interests of the
Certificateholders and could adversely affect the market value of the Certificates.
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E.7
|
Expenses chargeable to Investors
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In connection with the redemption of any Certificate at the option of a Certificateholder,
a redemption notice fee of up to US$500.00 will be payable by the relevant Certificateholder.
The Cash Amount payable or the Delivery Amount deliverable, as applicable, in respect of
any redemption is calculated net of all expenses, fees and charges incurred or to be incurred in connection
therewith.
From time to time, in respect of Certificates, a portion of the Underlying Precious Metal
equal to the aggregate of the daily amounts by which the Per Certificate Entitlement to such Underlying Precious Metal
has been reduced by the Reduction Percentage over the relevant period (the "Combined Fees") will
be withdrawn from the relevant Secured Custody Accounts and sold on behalf of the Issuer and the proceeds thereof, in the
normal course, paid to the Portfolio Adviser in consideration for its services as Portfolio Adviser and also its
agreement to pay the fees and expenses due to the other service providers in connection with the Programme (but not
including any indemnities granted in favour of the other service providers).
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