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Filed pursuant to Rule 433. Registration Statement Nos. 333-184147 and 333-184147-01. BUILDING TOMORROW [TM] RBS Rogers Enhanced Commodity ETNs |
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"Commodities are real things that are always likely to be worth something to
somebody." -- Jim Rogers
Commodities play a role in our lives every day. From taking your []rst sip of
coffee in the morning to turning off your lights in the evening, our reliance
on commodities is overwhelming.
Why Commodities?
Population Growth
Currently the world population is around 7 billion. People require "things" and
a growing population will continue to influence the world's supply and demand.
Emerging Markets
The Far East, with a population of roughly 3 billion, has continued to
modernize. Developed and developing nations such as China, Japan and Malaysia,
and Singapore have been the main drivers behind this increased demand.
Global Supply and Demand
Continued industrialization and progress of developed and developing countries
may require:
[] More energy in the form of commodities such as gas and oil.
[] Agricultural products such as wheat, rice, and corn.
[] Industrial metals, copper and aluminum for housing and building
construction.
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Commodities are Everywhere!
In our lives, there are certain products we use every day. We take these things
for granted but without them, our lives would be drastically different. How many
commodities can you spot in this picture?
Figure 1.1
Spot the Commodities
# Item Commodity
--- ------------ ----------------
1 Child's cup Crude oil,
Rubber
--- ------------ ----------------
2 Door Aluminum
handle
--- ------------ ----------------
3 Clothes Cotton
--- ------------ ----------------
4 Breakfast Corn, Orange,
Rice, Wheat
--- ------------ ----------------
5 Cell phone Copper, Crude
oil, Natural gas
--- ------------ ----------------
6 Glasses Aluminum,
Copper, Gold,
Nickel
--- ------------ ----------------
7 Refrigerator Aluminum,
Copper, Iron,
Lead, Nickel,
Tin
--- ------------ ----------------
8 Coffee mug Coffee, Sugar
--- ------------ ----------------
9 Laptop Copper, Lead,
Platinum, Zinc
--- ------------ ----------------
10 Cabinet Lumber
--- ------------ ----------------
11 Sink Copper, Lead,
Nickel, Zinc
--- ------------ ----------------
Commodities, Stocks and Bonds
An important part of any portfolio is to make sure you have assets that behave
differently in different markets. Commodities can provide diversification for
investors who are invested in other asset classes such as stocks and bonds:
[] Can help protect against inflation
[] Returns less correlated with traditional asset classes like stocks and
bonds.
Figure 1.2
Annualized Index Portfolio Volatility and Returns for 10/31/2007 --
10/31/2012(1)
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You can not invest directly in an index. (1)Index Returns are before investment
fees and expenses. Theoretical Investing Returns assume 0.10%, 0.10% and 0.95%
annual expense ratios for investment in funds or notes tracking the stock, bond
and commodity indices shown, respectively. 5-year returns shown reflect
annualized stock index loss of approximately 1% and bond and commodity index
gains of approximately 6% and 2%, respectively. Not indicative of future
results. Volatilities and returns vary significantly over different time
periods. Individual RICI Enhanced(SM) Commodity Sector Indices returns and
volatilities over this 5-year period varied greatly from those of the RICI
Enhanced(SM) Commodity Total Return Index shown.
2
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Jim Rogers: Prominent Stock Market and Commodities Investor
In 1970, Jim Rogers co-founded the Quantum fund. After his achieved success in
the hedge fund business, Jim withdrew from active trading business at the age of
37 and set off on a motorcycle trip around the world in the beginning of the
1990s. He published his views and experiences from the trip in a best seller
called, "Investment Biker". At the turn of the millennium, he undertook a second
around the world trip, this time traveling through 116 countries.
Rogers recognized the potential growth of developing economies. Partly based on
his first-hand sighting and experiences, Jim launched the Rogers International
Commodity Index[R] (RICI([R])) in the late 1990's. In 2004, Rogers published
"Hot Commodities", in which he described opportunities offered by the
commodities markets in connection with the growth of emerging markets. Jim
currently resides in Singapore with his wife and two daughters.
The RICI Enhanced(SM) Commodity Total Return Index
The RICI EnhancedSM Commodity Total Return Index is broadly diversified among 36
commodities which are broken down into four sub indices including energy,
agriculture, precious metals and industrial metals. The Index was developed for
investors who believe that returns on commodities futures contracts are strongly
driven by seasonality, term structure and supply and demand.
Features of the Index include:
[] Always participates in the commodities market
[] Rebalanced semi-annually
[] Weights are based on expected global consumption patterns and liquidity
[] Strategic rollover calendar used to select contracts
RICI Enhanced(SM) Commodity Total Return Index compared with traditional
commodity index concepts
RICI Enhanced(SM) Commodity Traditional Commodity Indices
Total Return Index
-------------------- -------------------------------- --------------------------------
Underlying contracts Various maturity segments Mainly front-month futures
diversi[]cation depending on the commodity contracts
-------------------- -------------------------------- --------------------------------
Rollover cycle Depending on the commodity, Monthly, depending on the expiry
less frequent than traditional dates of all futures contracts
indices, thus resulting in lower
cost
-------------------- -------------------------------- --------------------------------
Rule Based Yes Yes
-------------------- -------------------------------- --------------------------------
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The Strategy
The RBS ETNs are designed to provide commodity exposure on the basis of expected
economic global demand. By investing in futures contracts with varying
maturities, the Index seeks to maximize returns when there are significant price
differences between near dated and future dated commodity contracts. This is
unlike many commodity investments in the market today which invest solely in
front month contracts. A strategic rollover calendar is defined for each
commodity in the index to address specific conditions such as the seasonality,
liquidity and term structure of each commodity contract.
Determining the rollover calendar Rollover Calendar:
for individual commodities The rollover calendar defines the universe of available
contracts that are selected by the strategy's filtering
criteria.
All available futures contracts Futures contracts
Since commodities are difficult to store, financial
investors gain access mainly through futures markets
or indices made up of commodity futures contracts. A
futures contract mainly is an agreement to buy or sell
a specified asset for a certain price agreed today, with
delivery and payment occurring at a future date.
Filtering criteria applied based on seasonal
patterns and cycles Seasonality of goods
(only for energy and grains) Many commodities have a season or time period
where they grow or are more frequently used. For
example, corn is harvested in the fall months and
most people use oil to heat their homes in the winter
months.
Liquidity
(except for precious metals, rubber Liquidity
and palm oil) Some futures contracts are more liquid than others.
Liquidity refers to the level of activity in the market
place relative to other available contracts. Certain
contracts may be traded more frequently than others.
Contracts are selected according to the
individual rollover calendar for each Term structure
commodity. Rollover based on liquidity and Returns of the commodities futures contracts are
futures curves.
(term structure) contingent on the time frame the contract is held and
the expiration of the contract.
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Rogers Enhanced Family of ETNs
The Royal Bank of Scotland plc Rogers Enhanced family of ETNs ("RBS ETNs") gives
investors the flexibility of investing in the broad-based RICI EnhancedSM
Commodity Total Return Index or in specific sectors via the Enhanced Sector
ETNs. This provides the capability to use the sector indices as building blocks
to help meet financial objectives and goals.
RICI Enhanced(SM) Commodity Total Return Index ETN Ticker: RGRC
Commodities Target Weights Commodities Target Weights
----------------- -------------- ----------------- --------------
WTI Crude Oil 13.00% Corn 7.00%
----------------- -------------- ----------------- --------------
Brent Crude Oil 10.00% Sugar 3.25%
----------------- -------------- ----------------- --------------
Natural Gas 7.00% Wheat 3.00%
----------------- -------------- ----------------- --------------
RBOB Gasoline 4.00% Soybeans 3.00%
----------------- -------------- ----------------- --------------
Heating Oil 4.00% Coffee 3.00%
----------------- -------------- ----------------- --------------
Gas Oil 3.00% Live Cattle 2.50%
----------------- -------------- ----------------- --------------
Energy 41.00% Cotton 2.00%
----------------- -------------- ----------------- --------------
Aluminum 4.00% Soybean Oil 2.00%
----------------- -------------- ----------------- --------------
Copper 4.00% Lean Hogs 2.00%
----------------- -------------- ----------------- --------------
Zinc 2.00% Kansas City Wheat 2.00%
----------------- -------------- ----------------- --------------
Lead 1.50% Cocoa 1.50%
----------------- -------------- ----------------- --------------
Nickel 1.00% Soybean Meal 1.25%
----------------- -------------- ----------------- --------------
Tin 0.50% Rubber 1.00%
----------------- -------------- ----------------- --------------
Industrial Metals 13.00% Coffee Robusta 1.00%
----------------- -------------- ----------------- --------------
Gold 4.00% Palm Oil 1.00%
----------------- -------------- ----------------- --------------
Silver 2.00% Lumber 0.50%
----------------- -------------- ----------------- --------------
Platinum 1.00% Orange Juice 0.50%
----------------- -------------- ----------------- --------------
Palladium 1.00% Rice 0.50%
----------------- -------------- ----------------- --------------
Precious Metals 8.00% Oats 0.50%
----------------- -------------- ----------------- --------------
Minneapolis Wheat 0.50%
----------------- --------------
Agriculture 38.00%
----------------- -------------- ----------------- --------------
Overall Total 100.00%
----------------- -------------- ----------------- --------------
RICI Enhanced(SM) Energy Total Return Index ETN Ticker: RGRE
[] One reason for frequent changes in the price of energy commodities is
global supply and demand.
[] Prices for energy commodities are affected by political events, labor
activity, direct government intervention such as embargos, or supply
disruptions in the major oil producing regions of the world such as Iran or
Iraq.
Component's Name Target Weights
---------------- --------------
WTI Crude 31.71%
---------------- --------------
Brent Crude 24.39%
---------------- --------------
Natural Gas 17.07%
---------------- --------------
Gasoline RBOB 9.76%
---------------- --------------
Heating Oil 9.76%
---------------- --------------
Gas Oil 7.32%
---------------- --------------
Total 100.00%
---------------- --------------
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RICI Enhanced(SM) Agriculture Total Return Index ETN Ticker: RGRA
[] Growing populations have contributed to the scarcity of certain
agricultural products translating into decreased supply and increased
demand.
[] The Index seeks to provide investors access to a wide range of agricultural
commodities including grains, seed oils, soft commodities, livestock, and
fibres.
Component's Target Component's Target
Name Weights Name Weights
----------------- ------- ----------------- -------
Corn 18.42% Cocoa 3.95%
----------------- ------- ----------------- -------
Sugar 8.55% Soymeal 3.29%
----------------- ------- ----------------- -------
Wheat 7.89% Coffee Robusta 2.63%
----------------- ------- ----------------- -------
Soybean 7.89% Rubber 2.63%
----------------- ------- ----------------- -------
Coffee 7.89% Palm Oil 2.63%
----------------- ------- ----------------- -------
Live Cattle 6.58% Minneapolis Wheat 1.32%
----------------- ------- ----------------- -------
Kansas City Wheat 5.26% Oats 1.32%
----------------- ------- ----------------- -------
Lean Hogs 5.26% Lumber 1.32%
----------------- ------- ----------------- -------
Soybean Oil 5.26% Rice 1.32%
----------------- ------- ----------------- -------
Cotton 5.26% Orange Juice 1.32%
----------------- ------- ----------------- -------
Total 100.00%
----------------- ------- ----------------- -------
RICI Enhanced(SM) Precious Metals Total Return Index ETN Ticker: RGRP
[] Precious metals are used as a store of wealth in volatile markets as well
as for jewelry and other applications.
[] Their weightings are based on their global consumption levels worldwide and
supply constraints.
Component's Name Target Weights
---------------- --------------
Gold 50.00%
---------------- --------------
Silver 25.00%
---------------- --------------
Platinum 12.50%
---------------- --------------
Palladium 12.50%
---------------- --------------
Total 100.00%
---------------- --------------
RICI Enhanced(SM) Industrial Metals Total Return Index ETN Ticker: RGRI
[] Industrial or base metals are vital for industrial development as they are
found in most electronics and technological devices.
[] In recent years, industrialization in the developing world has driven up
demand of industrial metals.
Component's Name Target Weights
---------------- --------------
Copper 30.77%
---------------- --------------
Aluminium 30.77%
---------------- --------------
Zinc 15.38%
---------------- --------------
Lead 11.54%
---------------- --------------
Nickel 7.69%
---------------- --------------
Tin 3.85%
---------------- --------------
Total 100.00%
---------------- --------------
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RBS Rogers Enhanced ETN Lineup:
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www.rbs.com/etnUS | TOLL FREE: 855-RBS-ETPS
CERTAIN RISK CONSIDERATIONS: The RBS ETNs involve risks not associated with an
investment in conventional debt securities, including a possible loss of some or
all of your investment. The level of the relevant RICI EnhancedSM Index must
increase by an amount suf[]cient to offset the aggregate investor fee applicable
to the RBS ETNs in order for you to receive at least the principal amount of
your investment back at maturity or upon early repurchase or redemption. The RBS
ETNs and the RICI EnhancedSM Indices do not provide exposure to spot prices of
the relevant commodities and, consequently, may not be represenative of an
investment that provides exposure to the spot prices of the relevant commodities
or buying and holding the relevant commodities. The prices of commodities are
volatile and are affected by numerous factors. The RICI EnhancedSM Indices may
include futures contracts on non-U.S. exchanges and trading on such exchanges
may be subject to different and greater risks than trading on U.S. exchanges and
trading on such exchanges may be subject to different and greater risks than
trading on U.S. exchanges. Even though the RBS ETNs are listed on the NYSE Arca,
a trading market may not develop and the liquidity of the RBS ETNs may be
limited and/or vary over time, as The Royal Bank of Scotland plc ("RBS plc") is
not required to maintain any listing of the RBS ETNs.The RBS ETNs are not
principal protected and do not pay interest. Any payment on the RBS ETNs is
subject to the ability of RBS plc, as the issuer, and The Royal Bank of Scotland
Group plc ("RBS Group"), as the guarantor, to pay their respective obligations
when they become due. You should carefully consider whether the RBS ETNs are
suited to your particular circumstances before you decide to purchase them. We
urge you to consult with your investment, legal, accounting, tax and other
advisors with respect to any investment in the RBS ETNs. The RBS ETNs are not
suitable for all investors. You should carefully read the relevant pricing
supplement and prospectus, including the more detailed explanation of the risks
involved in any investment in the RBS ETNs as described in the "Risk Factors"
section of the pricing supplement, before investing.
IMPORTANT INFORMATION: RBS plc and RBS Group have []led a registration statement
(including a prospectus) with the U.S. Securities and Exchange Commission (SEC)
for the offering of RBS ETNs to which this communication relates. Before you
invest in any RBS ETNs, you should read the prospectus in that registration
statement and other documents that have been []led by RBS plc and RBS Group with
the SEC for more complete information about RBS plc and RBS Group, and the
offering. You may get these documents for free by visiting EDGAR on the SEC's
web site at www.sec.gov. Alternatively, RBS plc, RBS Securities Inc. (RBSSI) or
any dealer participating in the offering will arrange to send you the prospectus
and the pricing supplement at no charge if you request it by calling
1-855-RBS-ETPS (toll-free).
The RBS ETNs are not sponsored, endorsed, sold or promoted by Beeland Interests
Inc. ("Beeland Interests"), James B. Rogers, Jr. or Diapason Commodities
Management SA ("Diapason").[] Neither Beeland Interests, James B. Rogers, Jr.
nor Diapason makes any representation or warranty, express or implied, nor
accepts any responsibility, regarding the accuracy or completeness of this
document, or the advisability of investing in securities or commodities
generally, or in the RBS ETNs or in futures particularly. "Jim Rogers", "James
Beeland Rogers, Jr.", "Rogers", "Rogers International Commodity Index", "RICI",
"RICI Enhanced", and the names of all other RICI EnhancedSM Indices mentioned
herein are trademarks, service marks and/or registered marks of Beeland
Interests, Inc., which is owned and controlled by James Beeland Rogers, Jr., and
are used subject to license.[] The personal names and likeness of Jim
Rogers/James Beeland Rogers, Jr. are owned and licensed by James Beeland Rogers,
Jr.
NEITHER BEELAND INTERESTS NOR DIAPASON, NOR ANY OF THEIR RESPECTIVE AFFILIATES
OR AGENTS, GUARANTEES THE ACCURACY AND/OR THE COMPLETENESS OF THE ROGERS
INTERNATIONAL COMMODITY INDEX ("RICI"), THE RICI ENHANCED, ANY SUB-INDEX
THEREOF, OR ANY DATA INCLUDED THEREIN.[] SUCH PERSON SHALL NOT HAVE ANY
LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN AND MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY OWNERS OF THE RBS
ETNS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE RICI, THE RICI ENHANCED,
ANY SUB-INDEX THEREOF, ANY DATA INCLUDED THEREIN OR THE RBS ETNS.[] NEITHER
BEELAND INTERESTS NOR DIAPASON, NOR ANY OF THEIR RESPECTIVE AFFILIATES OR
AGENTS, MAKES ANY EXPRESS OR IMPLIED WARRANTIES, AND EACH EXPRESSLY DISCLAIMS
ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE
WITH RESPECT TO THE RICI, THE RICI ENHANCED, ANY SUB INDEX THEREOF, OR ANY DATA
INCLUDED THEREIN.[] WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL
BEELAND INTERESTS, DIAPASON OR ANY OF THEIR RESPECTIVE AFFILIATES OR AGENTS HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL, OR
CONSEQUENTIAL DAMAGES OR LOSSES, EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF.
NEITHER THE INDICATION THAT SECURITIES OR OTHER FINANCIAL PRODUCTS OFFERED
HEREIN ARE BASED ON DATA PROVIDED BY ICE DATA LLP, NOR THE USE OF THE TRADEMARKS
OF ICE DATA LLP IN CONNECTION WITH SECURITIES OR OTHER FINANCIAL PRODUCTS
DERIVED FROM SUCH DATA IN ANY WAY SUGGESTS OR IMPLIES A REPRESENTATION OR
OPINION BY ICE DATA OR ANY OF ITS AFFILIATES AS TO THE ATTRACTIVENESS OF
INVESTMENT IN ANY SECURITIES OR OTHER FINANCIAL PRODUCTS BASED UPON OR DERIVED
FROM SUCH DATA. ICE DATA IS NOT THE ISSUER OF ANY SUCH SECURITIES OR OTHER
FINANCIAL PRODUCTS AND MAKES NO EXPRESS OR IMPLIED WARRANTIES WHATSOEVER,
INCLUDING BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE WITH RESPECT TO SUCH DATA INCLUDED OR REFLECTED THEREIN, NOR
AS TO RESULTS TO BE OBTAINED BY ANY PERSON OR ANY ENTITY FROM THE USE OF THE
DATA INCLUDED OR REFLECTED THEREIN.
The RICI EnhancedSM Indices referred to herein are calculated by NYSE Arca, Inc.
("NYSE Arca"), a wholly-owned subsidiary of NYSE Euronext. The RBS ETNs, which
are based on such RICI EnhancedSM Indices, are not issued, sponsored, endorsed,
sold or promoted by NYSE Arca, and NYSE Arca makes no representation regarding
the advisability of investing in such product.
NYSE ARCA MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAMS
ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WIH
RESPECT TO THE INDICES OR ANY DATA INCLUDED THEREIN. IN NO EVENT SHALL NYSE ARCA
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Copyright [C] 2012 RBS Securities Inc. All rights reserved. RBS Securities Inc.,
a U.S. registered broker-dealer, member of FINRA and SIPC, is an indirect
wholly-owned subsidiary of The Royal Bank of Scotland plc and an af[]liate of
RBS NV.
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