FTC Update as of July 30, 2010

Summer rally in Equities, strong Euro - dollar tumbling, German bonds down � US bonds again stronger. Base metals rallying while gold is correcting. Outlier of the month: wheat and cocoa prices explode.

It was quite a stress with the stress test. First there were intense discussions whether the results should be published at all and if so to which extend followed by huge doubts about the significance of the as expected results. By hook or by crook: Europe’s leading banks were happy about their attested stress resistance with the seven failures being no surprise at all. The equity markets joined in and started a rally that was obviously driven by bank stocks: The respective MSCI sector index gained around 22 percent.
Further positive news changed the risk regime at least for the moment: The International Monetary Fund increased its growth prognosis for 2010 by 0.4 percentage points to 4.6 percent while dampening inflationary fears: The IMF expects inflation to stay low. Other highlights: strong signs from the German economy (IFO index positive, exports increasing and stabilization of the labor market), productivity gains in the US industry and a slightly lower US unemployment rate (9.5 percent). A soft version of President Obama’s initial banking reform came into force rather presenting new business opportunities for the US investment banks than tighter restrictions.
Some warning signs like the still extremely weak real estate markets and the clouded consumer confidence in the US were hardly noticed. We saw a broad reversal in the asset classes driven by new risk appetite. Equities recovered from their June declines, the Dollar index changed into a new downtrend (mainly based on the new strength of the Euro), commodities – especially base metals started a new rally. Coffee and wheat exploded. The wheat future traded in Chicago rose by 38 percent within days. Gold on the other hand was massively sold and is trading around USD 100 below its July high. The performance of bonds and interest rates in Europe and the US diverged.
The 3 month Euribor closed significantly higher (0.72 vs. 0.59 percent) while the 3 month dollar rate continued its decline. Prices of German Government bonds dropped for the first time this year pushing the yield up to 2.7 percent while US-notes were still in demand increasing prices.

Review of monthly results
The directional changes in currencies and equities as well as in parts of the commodity and interest rate sectors posed a though situation for the trend following systems of the futures funds. Nevertheless the contribution from trend following was still positive but mainly due to risk filters that kicked in.
The ultra long term component of the system was drastically reduced and the position sizes of the shorter term systems in markets with increasing volatility adjusted. Therefore the performance was less affected by the trend changes in equities and US Dollar but helped by the stable winners (US-bonds, Japanese Yen and British Pound).
During the month the short term trend following components initiated positions along the newly developed trends in equities, dollar and base metals that positively contributed to the performance. In the end the trend following components of both the diversified as well as the FTC Commodity Fund Alpha were positive. Also the new momentum and mean reversion models posted profits in July.
Given the volatility classification of our funds the monthly results are excellent. Preliminary figures suggest that most of the CTAs have ended this month with losses. Amongst them also rather low volatility as well as very big fund managers.
The FTC Gideon I, our equity fund of fund with futures overlay once again posted a small plus in July. As in June the result was solely due to the performance of the futures systems. Since the drop of equity prices in May the fund of fund model is on the sidelines and is at the time of this writing approximately 2 percent away (based on the MSCI World local) from new entry levels. We therefore expect the system to invest again shortly.

New systems
At the end of June two newly developed systems were implemented in the diversified futures funds (FTC Classic and Dynamic) both having a zero correlation to the classic trend following strategies. One is trading a mean reversion of yield spreads in a universe of 10 to 20 year government bonds while the other is a momentum based carry model on 3 month interest rates of four major currencies. Our systems arsenal has grown to 21 now.

Legal Disclaimer:
The contents of this documentation are intended solely for reasons of not-binding information and shall neither be interpreted as an offer nor as a solicitation to buy or sell, or a recommendation in favour of, any financial instruments. Offering memorandums, annual reports, semi-annual reports as amended from time to time of all funds mentioned herein can be obtained in particular with FTC Capital GmbH. On request we will announce further institutions which provide fund specific documents as well as the date of the last publication of the offering memorandum in Austria or in jurisdictions in which the funds are authorised for public distribution.
Authorisation for public distribution:
FTC Gideon I (AT0000499785): Austria, Germany
FTC Futures Fund Classic (LU0082076828): Austria, Luxembourg
FTC Futures Fund Dynamic (GI000A0H01K6): Austria
FTC Commodity Fund Alpha (GI000A0H01J8): Austria

Information for USA:
Investment products and information mentioned on the following pages are not intended for distribution in the US. Therefore, they do not apply to US residents according to Rule 902, Regulation S, Securities Act 1933 (in particular American citizens or persons permanently resident in the US).
Warning notice and risks:
Each investment is subject to a risk. Fund prices may rise or fall. Performance data refer to the past. Past performance is no reliable indicator for future results. Warning: The results of investments can go down as well as up and may be affected by changes in rates of exchange. Performance data does not consider any front end load.
No warranty is made as to the accuracy, completeness of actuality of the information contained in this document.
Warning notice for FTC Futures Fund Dynamic: This fund denominates in USD. The return may increase or drop due to fluctuations of currencies.