MAY 1, 2014

PORTFOLIO STRATEGY & RESEARCH GROUP

Commodity and Foreign Exchange Market Data NORTH AMERICA

April 2014

KEVIN FLANAGAN Morgan Stanley Wealth Management Chief Fixed Income Strategist Managing Director [email protected] +1 914 225 4621 JON MACKAY Morgan Stanley Wealth Management Senior Fixed Income Strategist Managing Director [email protected] +1 212 296 5100

Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States. This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. Past performance is not necessarily a guide to future performance. Please refer to important information, disclosures and qualifications at the end of this material.

MAY 1, 2014

PORTFOLIO STRATEGY & RESEARCH GROUP

Table of Contents •

Spot Gold

3

•

NYMEX Crude Oil

4

•

Thomson Reuters / Jefferies CRB Index

5

•

U.S. Dollar Index

6

•

U.S. Dollar / Japanese Yen

7

•

Euro / U.S. Dollar

8

•

British Pound / U.S. Dollar

9

•

Risks Related to Commodities & FX

10

•

Disclosures

12

Please refer to important information, disclosures and qualifications at the end of this material.

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MAY 1, 2014

PORTFOLIO STRATEGY & RESEARCH GROUP

Spot Gold Monthly – January 1985 to March 2014 2,000

U.S. Dollars

1,700 1,400 1,284

1,100 800 500

Mar-14

Oct-12

Apr-11

Nov-09

May-08

Dec-06

Jun-05

Jan-04

Jul-02

Feb-01

Aug-99

Mar-98

Sep-96

Apr-95

Oct-93

May-92

Nov-90

Jun-89

Dec-87

Jul-86

Jan-85

200

Date

Source: Bloomberg. Data as of April 30, 2014. Spot gold is the month end price in U.S. dollars for one ounce of gold bullion. Please refer to important information, disclosures and qualifications at the end of this material.

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MAY 1, 2014

PORTFOLIO STRATEGY & RESEARCH GROUP

NYMEX Crude Oil Daily Spot WTI – January 2000 to April 2014 150

U.S. Dollars

130 110 100

90 70 50 30

Apr-14

Mar-13

Feb-12

Jan-11

Nov-09

Oct-08

Sep-07

Aug-06

Jul-05

May-04

Apr-03

Mar-02

Feb-01

Jan-00

10

Date

Source: Bloomberg. Data as of April 30, 2014. NYMEX WTI Crude Oil: A crude stream produced in Texas and southern Oklahoma which serves as a reference or "marker" for pricing a number of other crude streams and which is traded in the domestic spot market at Cushing, Oklahoma. The Daily Spot WTI is the price in U.S. dollars per barrel. Please refer to important information, disclosures and qualifications at the end of this material.

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MAY 1, 2014

PORTFOLIO STRATEGY & RESEARCH GROUP

Thomson Reuters / Jefferies CRB Index Daily – January 2000 to April 2014 500 450

Index

400 350 312

300 250 200 150 Apr-14

Mar-13

Feb-12

Jan-11

Nov-09

Oct-08

Sep-07

Aug-06

Jul-05

May-04

Apr-03

Mar-02

Feb-01

Jan-00

100

Date

Source: Bloomberg. Data as of April 30, 2014. The Thomson Reuters/Jefferies Commodities Research Bureau (CRB) Index is a measure of price movements of 19 sensitive commodities whose markets are influenced by changes in economic conditions. It was originally established in 1957 to be an early indication of impending changes in business activity. The Index covers six major categories which include grains, soft commodities, energy, industrials, precious metals and livestock. Please refer to important information, disclosures and qualifications at the end of this material.

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MAY 1, 2014

PORTFOLIO STRATEGY & RESEARCH GROUP

U.S. Dollar Index (DXY) Daily – January 1985 to April 2014 170 160 150

Index

140 130 120 110 100 90 80

79.6

Apr-14

Dec-12

Jul-11

Feb-10

Sep-08

May-07

Dec-05

Jul-04

Feb-03

Oct-01

May-00

Dec-98

Jul-97

Mar-96

Oct-94

May-93

Dec-91

Aug-90

Mar-89

Oct-87

May-86

Jan-85

70

Date

Source: Bloomberg. Data as of April 30, 2014. The U.S. Dollar Index (DXY) indicates the general international value of the U.S Dollar. The DXY is a month end value of exchange rates between the U.S Dollar and six major world currencies , which include: the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and the Swiss Franc. Please refer to important information, disclosures and qualifications at the end of this material.

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MAY 1, 2014

PORTFOLIO STRATEGY & RESEARCH GROUP

U.S. Dollar / Japanese Yen Monthly Average – January 1985 to March 2014 280 250

Yen

220 190 160 130 103

100 Mar-14

Oct-12

Apr-11

Nov-09

May-08

Dec-06

Jun-05

Jan-04

Jul-02

Feb-01

Aug-99

Mar-98

Sep-96

Apr-95

Oct-93

May-92

Nov-90

Jun-89

Dec-87

Jul-86

Jan-85

70

Date

Source: Bloomberg. Data as of April 30, 2014. Monthly average exchange rate for 1 U.S. Dollar in Japanese Yen. Please refer to important information, disclosures and qualifications at the end of this material.

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MAY 1, 2014

PORTFOLIO STRATEGY & RESEARCH GROUP

Euro / U.S. Dollar Monthly Average – January 1999 to March 2014

1.60

U.S. Dollar

1.50 1.40 1.38

1.30 1.20 1.10 1.00 0.90 Mar-14

Apr-13

Jun-12

Jul-11

Aug-10

Oct-09

Nov-08

Dec-07

Feb-07

Mar-06

Apr-05

Jun-04

Jul-03

Aug-02

Sep-01

Nov-00

Dec-99

Jan-99

0.80

Date

Source: Bloomberg. Data as of April 30, 2014. Monthly average exchange rate for 1 Euro (European Union currency) in U.S. Dollars. Please refer to important information, disclosures and qualifications at the end of this material.

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MAY 1, 2014

PORTFOLIO STRATEGY & RESEARCH GROUP

British Pound / U.S. Dollar Monthly Average – January 1985 to March 2014 2.20

U.S. Dollar

2.00 1.80 1.67

1.60 1.40 1.20

Mar-14

Oct-12

Apr-11

Nov-09

May-08

Dec-06

Jun-05

Jan-04

Jul-02

Feb-01

Aug-99

Mar-98

Sep-96

Apr-95

Oct-93

May-92

Nov-90

Jun-89

Dec-87

Jul-86

Jan-85

1.00

Date

Source: Bloomberg. Data as of April 30, 2014. Monthly average exchange rate for 1 British Pound (United Kingdom Currency) in U.S. Dollars. Please refer to important information, disclosures and qualifications at the end of this material.

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PORTFOLIO STRATEGY & RESEARCH GROUP

MAY 1, 2014

Risks Related to Investments in Commodities & Foreign Exchange Commodities Risk Investing in commodities entails significant risks. Investments in commodities or in securities or other instruments linked to the prices of commodities or commodity based indices are speculative, and prices for commodities or the level of the commodity based indices may fluctuate significantly over short periods, affecting the value of these investments. Commodity prices may be affected by a variety of factors at any time, including but not limited to, (i) changes in supply and demand relationships, (ii) governmental programs and policies, (iii) national and international political and economic events, war and terrorist events, (iv) changes in interest and exchange rates, (v) trading activities in commodities and related contracts, (vi) pestilence, technological change and weather, and (vii) the price volatility of a commodity. In addition, the commodities markets are subject to temporary distortions or other disruptions due to various factors, including lack of liquidity, participation of speculators and government intervention. As a result, the market value of investments in commodities or commodity linked instruments will vary and may result in a significant loss of the amount initially invested. Foreign Exchange Risk Before undertaking foreign exchange transactions you should understand the associated risks. Engaging in foreign currency transactions entails more varied risks than those normally associated with transactions in domestic securities markets. Attention should be paid to market, credit, governmental currency intervention, and liquidity risks. Before engaging in a foreign exchange transaction you should consider your investment objectives, level of investment experience, and risk tolerance and be aware of the risks associated with foreign exchange trading. Foreign currencies may have significant price movements, even within the same day, and any currency held in an account may lose value against other currencies. Exchange rate fluctuations can effectively raise or lower prices and can cause financial planning difficulties for companies and individuals. Governmental Currency Intervention Risk Intervention in the currency markets by the countries issuing the currencies relevant to your investment could materially and adversely affect the value of your investment. Specific currencies’ exchange rates are volatile and are affected by numerous factors specific to each foreign country. Foreign currency exchange rates can be fixed by the sovereign government, allowed to float within range of exchange rates set by the government, or left to float freely. Credit Risk Credit risk arises from uncertainty over a counterparty’s ability to meet its obligations. For foreign exchange transactions, between the time of the trade and the settlement, there is an extension of credit, and hence an acceptance of credit risk, by both parties. Liquidity Risk All investment activities are subject to liquidity risk which is the risk that an asset can’t be bought or sold quickly enough to prevent or minimize a loss, due to a lack of a liquid market. However, given the size and nature of the foreign exchange market, liquidity risk is less of a danger than in most financial markets. Significant price and rate movements may take place in the underlying foreign exchange markets that will not be reflected immediately in the price of your investment. There is no systematic reporting of last-sale information for foreign currencies. Therefore, the absence of last-sale information and the limited availability of quotations to individual may make it difficult for many investors to obtain timely, accurate data about the state of the underlying foreign exchange markets. In addition, suspensions or disruptions of market trading in currencies may adversely affect the value of your investment. The currency markets are subject to temporary distortions or other disruptions due to various factors, including government regulation and intervention, the lack of liquidity in the markets, and the participation of speculators. Please refer to important information, disclosures and qualifications at the end of this material.

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PORTFOLIO STRATEGY & RESEARCH GROUP

MAY 1, 2014

Risks Related to Investments in Commodities & Foreign Exchange (cont’d) Interest Rate Policy Risk Interest Rate policy may have a negative effect on carry trade performance. Prevailing short term interest rates are significantly influenced by government action, through the levels of official cash rates, as an instrument of monetary policy. As governments wish to encourage economic activity, they may reduce the official cash rate in order to lower the cost of money and increase the money supply. Conversely, as governments wish to reduce economic activity, particularly for the purpose of stemming inflationary pressures, they may increase the official cash rate in order to raise the cost of money and decrease the money supply. FDIC Insurance The foreign currency deposits maintained at the United States branches of JPMorgan Chase by Morgan Stanley Smith Barney LLC are insured by the FDIC for the United States dollar equivalent value of the deposit up to the FDIC insurance limits applicable to deposits of United States dollars. FDIC insurance is not available for amounts held at banks or branches located outside of the U.S. For information about FDIC insurance, visit http://www.fdic.gov/ SIPC Insurance Foreign exchange balances held at JPMorgan Chase through your Morgan Stanley Smith Barney LLC foreign exchange account are not insured by the Securities Investor Protection Corporation (SIPC). The Securities Investor Protection Corporation (“SIPC”) provides certain protection for customers’ cash and securities in the event of a brokerage firm’s bankruptcy, other financial difficulties, or if customers’ assets are missing. SIPC insurance does not apply to precious metals or other commodities.

Please refer to important information, disclosures and qualifications at the end of this material.

11

PORTFOLIO STRATEGY & RESEARCH GROUP

MAY 1, 2014

Disclosures The author(s) (if any authors are noted) principally responsible for the preparation of this material receive compensation based upon various factors, including quality and accuracy of their work, firm revenues (including trading and capital markets revenues), client feedback and competitive factors. Morgan Stanley Wealth Management is involved in many businesses that may relate to companies, securities or instruments mentioned in this material. This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security/instrument, or to participate in any trading strategy. Any such offer would be made only after a prospective investor had completed its own independent investigation of the securities, instruments or transactions, and received all information it required to make its own investment decision, including, where applicable, a review of any offering circular or memorandum describing such security or instrument. That information would contain material information not contained herein and to which prospective participants are referred. This material is based on public information as of the specified date, and may be stale thereafter. We have no obligation to tell you when information herein may change. We make no representation or warranty with respect to the accuracy or completeness of this material. Morgan Stanley Wealth Management has no obligation to provide updated information on the securities/instruments mentioned herein. The securities/instruments discussed in this material may not be suitable for all investors. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Morgan Stanley Wealth Management recommends that investors independently evaluate specific investments and strategies, and encourages investors to seek the advice of a financial advisor. The value of and income from investments may vary because of changes in interest rates, foreign exchange rates, default rates, prepayment rates, securities/instruments prices, market indexes, operational or financial conditions of companies and other issuers or other factors. Estimates of future performance are based on assumptions that may not be realized. Actual events may differ from those assumed and changes to any assumptions may have a material impact on any projections or estimates. Other events not taken into account may occur and may significantly affect the projections or estimates. Certain assumptions may have been made for modeling purposes only to simplify the presentation and/or calculation of any projections or estimates, and Morgan Stanley Wealth Management does not represent that any such assumptions will reflect actual future events. Accordingly, there can be no assurance that estimated returns or projections will be realized or that actual returns or performance results will not materially differ from those estimated herein. This material should not be viewed as advice or recommendations with respect to asset allocation or any particular investment. This information is not intended to, and should not, form a primary basis for any investment decisions that you may make. Morgan Stanley Wealth Management is not acting as a fiduciary under either the Employee Retirement Income Security Act of 1974, as amended or under section 4975 of the Internal Revenue Code of 1986 as amended in providing this material. Morgan Stanley Wealth Management and its affiliates do not render advice on tax and tax accounting matters to clients. This material was not intended or written to be used, and it cannot be used or relied upon by any recipient, for any purpose, including the purpose of avoiding penalties that may be imposed on the taxpayer under U.S. federal tax laws. Each client should consult his/her personal tax and/or legal advisor to learn about any potential tax or other implications that may result from acting on a particular recommendation. International investing entails greater risk, as well as greater potential rewards compared to U.S. investing. These risks include political and economic uncertainties of foreign countries as well as the risk of currency fluctuations. These risks are magnified in countries with emerging markets, since these countries may have relatively unstable governments and less established markets and economies. Investing in commodities entails significant risks. Commodity prices may be affected by a variety of factors at any time, including but not limited to, (i) changes in supply and demand relationships, (ii) governmental programs and policies, (iii) national and international political and economic events, war and terrorist events, (iv) changes in interest and exchange rates, (v) trading activities in commodities and related contracts, (vi) pestilence, technological change and weather, and (vii) the price volatility of a commodity. In addition, the commodities markets are subject to temporary distortions or other disruptions due to various factors, including lack of liquidity, participation of speculators and government intervention. Physical precious metals are non-regulated products. Precious metals are speculative investments, which may experience short-term and long term price volatility. The value of precious metals investments may fluctuate and may appreciate or decline, depending on market conditions. If sold in a declining market, the price you receive may be less than your original investment. Unlike bonds and stocks, precious metals do not make interest or dividend payments. Therefore, precious metals may not be suitable for investors who require current income. Precious metals are commodities that should be safely stored, which may impose additional costs on the investor. The Securities Investor Protection Corporation (“SIPC”) provides certain protection for customers’ cash and securities in the event of a brokerage firm’s bankruptcy, other financial difficulties, or if customers’ assets are missing. SIPC insurance does not apply to precious metals or other commodities

Please refer to important information, disclosures and qualifications at the end of this material.

12

PORTFOLIO STRATEGY & RESEARCH GROUP

MAY 1, 2014

Disclosures (cont.) Investing in foreign markets entails greater risks than those normally associated with domestic markets, such as political, currency, economic and market risks. Investing in currency involves additional special risks such as credit, interest rate fluctuations, derivative investment risk, and domestic and foreign inflation rates, which can be volatile and may be less liquid than other securities and more sensitive to the effect of varied economic conditions. In addition, international investing entails greater risk, as well as greater potential rewards compared to U.S. investing. These risks include political and economic uncertainties of foreign countries as well as the risk of currency fluctuations. These risks are magnified in countries with emerging markets, since these countries may have relatively unstable governments and less established markets and economies. The indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes only and do not represent the performance of any specific investment. The indices selected by Morgan Stanley Wealth Management to measure performance are representative of broad asset classes. Morgan Stanley Wealth Management retains the right to change representative indices at any time. This material is disseminated in Australia to “retail clients” within the meaning of the Australian Corporations Act by Morgan Stanley Wealth Management Australia Pty Ltd (A.B.N. 19 009 145 555, holder of Australian financial services license No. 240813). Morgan Stanley Wealth Management is not incorporated under the People's Republic of China ("PRC") law and the research in relation to this report is conducted outside the PRC. This report will be distributed only upon request of a specific recipient. This report does not constitute an offer to sell or the solicitation of an offer to buy any securities in the PRC. PRC investors must have the relevant qualifications to invest in such securities and must be responsible for obtaining all relevant approvals, licenses, verifications and or registrations from PRC's relevant governmental authorities. Morgan Stanley Private Wealth Management Ltd, authorized by the Prudential Regulatory Authority and regulated by the Financial Conduct Authority and the Prudential Regulatory Authority, approves for the purpose of section 21 of the Financial Services and Markets Act 2000, research for distribution in the United Kingdom. Morgan Stanley Wealth Management is not acting as a municipal advisor and the opinions or views contained herein are not intended to be, and do not constitute, advice within the meaning of Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This material is disseminated in the United States of America by Morgan Stanley Smith Barney LLC. Third-party data providers make no warranties or representations of any kind relating to the accuracy, completeness, or timeliness of the data they provide and shall not have liability for any damages of any kind relating to such data. Morgan Stanley Wealth Management research, or any portion thereof, may not be reprinted, sold or redistributed without the written consent of Morgan Stanley Smith Barney LLC. © 2014 Morgan Stanley Smith Barney LLC. Member SIPC.

Please refer to important information, disclosures and qualifications at the end of this material.

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