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The Dollar at Risk:
Driving Forces & How to Diversify
Please read important risk disclosure and Fund related information towards the end of this presentation.
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• Current Account Deficit
—In 2005: $804.9 billion
—Must be financed daily…
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Unwinding Scenarios…
• Higher Domestic Savings
• Lower consumption or higher income
• Higher Foreign Spending
• Higher consumption
• Investment Balance
• Higher Foreign Investment in US
• Lower Dollar
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US Consumer
• Interest rate sensitive
• US driver of world economy
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Asia
• Interest in employment
—Subsidy of exports
• Global overproduction
—High commodity prices
—Low consumer goods prices
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Corporate America
• Margins squeezed
• Accelerated outsourcing
• Lackluster job & real wage growth
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Inflation
• Globalization holds back inflation
• Fed just a tad above 'neutral’
• Interest rate sensitivity
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Investment Balance
• Asia diversifying
• US slowdown impacts investments
• Protectionism
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Dollar
• No longer "risk-free”
—Politically most convenient 'valve’
• Dollar Outlook
—Asian currencies
—Resource based currencies
—Hard currencies
—Gold
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Merk Fund
• Basket of Hard Currencies, Gold
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Disclosure
Since the Fund primarily invests in foreign currencies, changes in currency exchange
rates will affect the value of what the Fund owns and the price of the Fund's shares.
Investing in foreign instruments bears a greater risk than investing in domestic
instruments for reasons such as volatility of currency exchange rates and, in some
cases, limited geographic focus, political and economic instability, and relatively illiquid
markets. The Fund is subject to interest rate risk which is the risk that debt securities in
the Fund's portfolio will decline in value because of increases in market interest rates. As
a non-diversified fund, the Fund will be subject to more investment risk and potential for
volatility than a diversified fund because its portfolio may, at times, focus on a limited
number of issuers. The Fund may also invest in derivative securities which can be
volatile and involve various types and degrees of risk. For a more complete discussion
of these and other Fund risks please refer to the Fund's prospectus.
Disclosure
Before investing you should carefully consider the Fund's investment objectives, risks,
charges and expenses. This and other information is in the prospectus, a copy of which
may be obtained by calling 1-866-MERK FUND or visiting the Fund's website. Please
read the prospectus carefully before you invest. Foreside Fund Services, LLC,
distributor.
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© 2006 MERK INVESTMENTS ®
The Dollar at Risk:
Driving Forces & How to Diversify
www.merkfund.com
© 2006 MERK INVESTMENTS ®