Reliance Gold Savings Fund

An Open Ended Fund of Fund Scheme

Gold A foundation asset class for wealth creation Gold a unique asset plays many roles within an investors portfolio. Indian consumers consider gold jewellery as an investment and are well aware of golds benefits as a store of value. Gold is also recognized as a tradable asset.

It is one of the foundation assets for Indian households and a means to accumulate wealth from a long term perspective. Gold investment has been in the culture of Indian tradition and has been on rise amongst the modern investors as well, due to the financial uncertainty and inflationary pressures.

Sector View & Outlook

Overview: Gold prices have recently breached the high made during 2011 and currently hovers around 1879 USD/Oz. Gold remains one of the key beneficiaries of stimulus measures. Bullishness infused by various stimulus measures round the world is fading fast. Most of the commodity rallied significantly after third Quantitative Easing 3 (QE3). Rally in majority of metals except gold, seems to be running out of steam. Though it is believed that the effect of stimulus takes time to percolate and manifest itself into higher demand, its effectiveness still remains questionable. Many have started wondering whether such measures will have a sustainable impact on global commodities and financial markets.


Global data releases were used to gauge the strength in global economy. However, during recent times such data releases are used to anticipate additional stimulus measures. This shows the dire state of global economy and the lack of confidence among market participants. Any additional stimulus, that infuses liquidity, is the only hope on which market player can rationalize the optimistic growth outlook. No doubt, liquidity remains a pre-requisite for sustained growth but liquidity alone cannot drive sustained growth, it should be accompanied by conducive external environment for sustainable growth. Currently, growth is a major challenge and its not liquidity. US dollar index, that shows the value of dollar against the other major world currencies, has corrected by more than 5% from the high of 84.10 reached during July, 2012. Investors also have sold some amount of US treasuries and US dollar to bet riskier assets. As a result most of the financial and commodity markets around the world have appreciated; many commodities have gained more than 10 % over last three months. The anticipated pick up in global activities will probably not justify such a steep run up in prices. Gold remains the only exception that probably will benefit for the current environment. Demand for gold continues to improve. Total quantum of gold held in all known ETFs is at record high levels 82.61 Million Oz as on 5th Oct, 2012. Central banks continue to accumulate gold, recently Philippines and Russia added close to 35 tons of gold in their reserves. . Many other national, including Kazakhstan and South Korea have added significant amount of gold. However, not all purchases will be disclosed due to confidentiality. After a long phase of sluggish physical demand in India, Jewellery demand seems to be gaining some traction as rupee has appreciated and gold prices have stabilized a little. Again, annual physical demand from China is likely to surpass that from India any time soon. Thus, fundamental outlook for gold remain positive. Outlook: From a slightly longer term perspective there are two probable outcomes, possibly. Either, we are going to experience inflationary environment - good growth with higher inflationary or deflationary environment no growth with non positive inflation. If history is any guide, either of these scenarios may be positive for gold prices. The US FOMCs extension of rate guidance and the launch of an open-ended asset purchase programme suggest higher inflation is likely to be tolerated in exchange for stronger growth and job creation. However, uncertainties around US Fiscal cliff persists along with slower global growth will keep expectations low.


Europe continues to remain the paramount risk factor that can suffocate global growth. Peripheral countries in Europe, namely PIGS (Portugal, Ireland, Greece and Spain) have employment rates ranging between 34% and 56%, elsewhere Germany, Netherland, Belgium and Austria have very low unemployment rate. Such dispersion across countries is fatal to social and economic ties. Again, Chinas attempts to boost liquidity and speed up infrastructure project approvals are steps in positive direction but they may take a long time to induce confidence, if at all it does. Increasing number of people are getting convinced that world is heading towards a longer period of weak growth than earlier anticipated. All the above factors are favorable for gold as gold is seen as an alternative asset which performs during such uncertain times. Again, currency debasement, fear of inflation and record low interest rates are conducive for higher gold prices. Strong physical demand in terms of Bars, Coins, ETFs, and Jewellery may continue to support higher gold prices. We believe that central banks may continue to accumulate gold to safe guard against currency debasement and currency volatility thereby may increasing the overall demand for gold. On the supply side, the strikes, struggles and violence, since last two months, in South Africa are disrupting precious metals supply. The strikes started in platinum mines are spreading throughout the country and have disrupted gold supply as well. South Africa supplied close to 7% of global gold in 2011. Any supply disruption may lead to gold price rally. Deepavali and Dhanteras fall in November and are considered very auspicious days to accumulate gold in India. Overall, the outlook for gold remains positive and the upcoming marriage and festival season can provide further impetus. Common Source for Gold View: Bloomberg, Reuters, World Gold Council

Investment Case for Gold an asset class apart

The yello metal con ow ntinues to br reach its high (YOY) sinc 2001. h ce 2000 1800 1600 1400 1200 1000 800 600 400 200 0 2001 20 002 2003 2004 200 05 2006 2007 2008 2009 2010 1 2011 298.5 54.25 35 417.75 456.89 54 41 730.4 845.84 1032.7 1226.56 1431.25 1900.23

Past Perfor rmance may or may not be sus stained in future The above gr e. raph gives an illu ustration of the p performance of G Gold on th the basis of historical data til 30 December 2011, if investe directly. The s ll r, ed same should not be construed as an indication, pr romise, or a e ovide a basis for comparison with any other inve r estment guarantee o a forecast of any returns. The details may not necessarily pro avenues. R Readers are adv vised to seek independent profe essional advice and arrive at an informed inves n stment decision before making any investments. So ource: Bloomberg Gold (USD/Oz g, z).

The grap above shows the ope close hig and low from 2001 t 30st Dece ph en, gh till ember, 2011. The figure in the graph indicates the m movement of gold prices every year. f s es cutive years d driven by recovery in key sectors of de emand The gold price have risen for 11 consec nd omic uncertain nty. an continued global econo Official sectors were the biggest threat of Gold supp over last t O s ply two decades and had bee net en se ellers. They have turned net buyer o only after 21 years and changed the Demand/S 1 Supply Dynamics. Many central ba D anks, like Chin have hug appetite for gold and m likely con na, ge may ntinue to accumulatin gold. o ng The performan of gold has not only b nce been strong, b its volatility also remai but ined relatively low, y pr roviding a fou undation for a well diversified portfolio. Asset allocatio with gold a A on aims to provide an opport tunity to earn returns on the portfolio o over a pe eriod Gold as asset over centurie has mainta G es ained its value against infla e ation.

Fro being an alternative investmen option, g has gaiined the sta of mu om n e nt gold atus ust
have i any portf in folio

In line with this growing gold investment demand combined with Indias culture for buying gold, Reliance Mutual Fund offers Reliance Gold Savings Fund that would enable investors to invest in gold the mutual fund way. Positioning of the Fund
Reliance Gold Savings Fund, is the first gold fund of fund in the industry which opens a new avenue for investing in gold as an asset class. The fund seeks to provide returns of gold through investments in R* Shares Gold Exchange Traded Fund, which in turn invest in physical gold. It enables you to reap the returns of gold in a paper form without the need of a demat account.

It is a passively managed fund which would enable an investor to save for gold in a convenient manner either through lump sum investment or through systematic investment - the mutual fund way from a long term perspective. It aims to give investors the opportunity to participate in the bullion market in a relatively cost effective and convenient way as you can directly purchase and sell the units at the AMC.

Investment Philosophy
A modern way of accumulating Gold the mutual fund way. An investment opportunity which enables an investor to allocate gold a foundation asset to his portfolio in a systematic way. This fund would enable you to add the yellow metal which is usually considered hedge to inflation and diversify your portfolio in a convenient way. Passively managed Fund of Fund investing in Open-ended R* Shares Gold Exchange Traded Fund Invests exclusively in R* Shares Gold Exchange Traded Fund which in turn invests in physical gold which shall be of fineness( or purity) of 995 parts per 1000 ( 99.5 % ) or higher Portfolio focused on providing returns that closely correspond to the returns provided by R* Shares Gold Exchange Traded Fund

Benefits of Investing in Reliance Gold Savings Fund

Open door for non - demat a/c holders: Investors can invest in this fund through the physical mode across the country thereby making it easily available and convenient for non demat a/c holders Systematic Investment Plan (SIP): a long term disciplined investment technique under which you invest a fixed sum of money on a monthly or quarterly basis in a scheme at the prevailing NAV. This allows you to save and invest regularly while you are earning. This investment technique enables you the following benefits: Small, regular investments: A simple way to enter the market by investing small amounts. Small but regular investments go a long way in creating wealth over time Rupee cost averaging: Fewer units during rising markets and more units during falling markets, thereby reduces the average cost per unit No need for timing the markets: No need to select the right time and quantity to buy and sell as timing the market is time consuming and risky. It eliminates the need to actively track the markets. Availability of add-on facilities: Ease of availing add on facilities like Systematic Transfer Plan/ Systematic Withdrawal Plan / Systematic Investment Plan/ auto switch /trigger facility etc. Liquidity: An investor of Reliance Gold Savings Fund can subscribe and redeem units on all business days directly from the AMC, while purchase and sale of gold ETF units is a factor of liquidity on the exchange. Ease of investing: Investing in gold through Reliance Gold Savings Fund, the investor can directly subscribe/ redeem units through the physical mode at the various designated investor service centre across the country thereby making it easily accessible and convenient. Cost Effective: Investing in gold through the Reliance Gold Savings Fund in physical application mode enables you invest in a low cost manner as the investor does not have to incur charges like annual maintenance charges for demat account , delivery brokerages charges, transaction charges incurred for investing through the dematerialized mode.


The investors will be bearing the recurring expenses of the scheme, in addition to the expenses of underlying Scheme. Taxation: Investments in Reliance Gold savings Fund enables you to claim for long term capital gains tax after a period of one year of investments, whereas for physical long term taxation is available after 3 years. The tax benefits are as per the current Income Tax laws & rules and any other law for the time being in force. Please refer to Statement of Additional Information for more details. Readers are advised to seek independent professional advice and consult their tax advisors and arrive at an informed investment decision before making any investments.

Systematic Investing in Gold- An edge to accumulating wealth

It endeavors to inculcate a regular saving habit to your investments in gold through systematic investment plan. It provides an easy and a convenient way to reap the returns of gold through regular and small amount investment. SIP Return as on 30th September,2012 Period SIP Start Date Gold Price (Rs/Gm) (As on 30/09/2012) Total No. of gms accumulated Total Amount Invested in Rs.( Monthly SIP of Rs 5000/Market Value if invested in Gold in Rs. Return on SIP in Gold 1 Year 03/10/2011 3 Year 02/10/2009 5 Year 02/10/2007 10 Years 02/10/2002
Nearly 64 modern tola in 10

3,011.73
22 60,000.00 64,827.26 15.33%

3,011.73
85 180,000.00 256,405.12 24.43%

3,011.73
182 300,000.00 547,355.00 24.32%

3,011.73
639 600,000.00 1,925,163.95 22.07%

Past Performance may or may not be sustained in future. Assumptions - Returns on SIP of Gold are annualized and cumulative investment return for cash flows resulting out of uniform and regular monthly subscriptions have been worked out on Excel spreadsheet function known as XIRR. It is assumed that a SIP of Rs. 5000/- each executed on 2nd of every month has been taken into consideration including the first installment.
Disclaimers - The amounts invested in SIP and the market values of such investments at respective periodic intervals thereof are simulated for illustrative purposes for understanding the concept of SIP. This illustration should not be construed as a promise, guarantee on or a forecast of any minimum returns. The Mutual Fund or the Investment Manager does not assure any safeguard of capital and the illustrated returns are not necessarily indicative of future results and may not necessarily provide a basis for comparison with other investments. SIP does not guarantee or assure any protection against losses in declining market conditions.

Portfolio & Scheme Features As on 30thSeptember, 2012

Asset Allocation as on 30th September, 2012
R* Shares Gold Exchange Traded Fund
Cash and Other Receivables 98.95% 1.05%

Scheme Features
Asset Allocation:
Under normal circumstances, the anticipated asset allocation would be: Instruments Indicative asset allocation (% of total assets) Minimum Units of R* Shares Gold ETF Reverse repo and /or CBLO and/or short-term fixed deposits and/or Schemes which invest predominantly in the money market securities or Liquid Schemes* 95 0 Maximum 100 5 Medium to High Low to Medium Risk Profile

*The Fund Manager may invest in Liquid Schemes of Reliance Mutual Fund. However, the Fund Manager may invest in any other scheme of a mutual fund registered with SEBI, which invest predominantly in the money market securities.

The deviation from the underlying ETF may occur mainly on account of the receipt of cash flows which on an average takes 5 days given the existing operational procedure.

Scheme Features:
Investment Objective The investment objective of the Scheme is to seek to provide returns that closely correspond to returns provided by R* Shares Gold Exchange Traded Fund Minimum Application Amount: Rs. 5,000 and in multiples of Re. 1 thereafter Minimum amount for purchase / redemption / switches Additional Purchase Amount Rs 1000 and in the multiple of Re.1 thereafter Minimum Switch Amount Will be as per the minimum application amount in the respective scheme which may have been opted by the investor for switching the


units/amount where the switch facility is available. Minimum investment amount for investing SIP route is as follows: (1) Rs.100/- per month and in multiples of Re. 1/- thereafter for minimum 60 months (2) Rs.500/- per month and in multiples of Re. 1/- thereafter for minimum 12 months (3) Rs.1000/- per month and in multiples of Re. 1/- thereafter for minimum 6 months (4) Rs.500/- per quarter and in multiples of Re. 1/- thereafter for minimum 12 quarters (5) Rs.1500/- per quarter and in multiples of Re. 1/- thereafter for minimum 4 quarters Entry Load* : Nil *In accordance with the requirements specified by the SEBI circular no. SEBI/IMD/CIR No.4/168230/09 dated June 30, 2009 no entry load will be charged for purchase / additional purchase / switch-in accepted by the Fund with effect from August 01, 2009. Similarly, no entry load will be charged with respect to applications for registrations under systematic investment plans/ systematic transfer plans accepted by the Fund with effect from August 01, 2009. Exit Load: 2%- If redeemed or switched out on or before completion of 1 year from the date of allotment of units, Nil - If redeemed or switched out after the completion of 1 year from the date of allotment of units 11th March , 2011 The Schemes performance will be benchmarked against the price of physical gold.
Hiren Chandaria Rs 2299 Crs ( As on 30/09/2012)

Minimum Investment Amount for Systematic Investment Plan

Load Structure

Inception Date
Benchmark Fund Manager Quarterly AAUM

Disclaimers
The Investors will be bearing the recurring expenses of the scheme, in addition to the expenses of underlying scheme.
The views expressed herein constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. This information is meant for general reading purposes only and is not meant to serve as a professional guide for the readers. Certain factual and statistical (both historical and projected) industry and market data and other information was obtained by Reliance Capital Asset Management Ltd (RCAM). RCAM from independent, third-party sources that it deems to be reliable, some of which have been cited above. However, RCAM has not independently verified any of such data or other information, or the reasonableness of the assumptions upon which such data and other information was based, and there can be no assurance as to the accuracy of such data and other information. Further, many of the statements and assertions contained in these materials reflect the belief of RCAM, which belief may be based in whole or in part on such data and other information. The Sponsor, the Investment Manager, the Trustee or any of their respective directors, employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and opinions given are fair and reasonable. This information is not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument. Recipients of this information should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice, verify the contents and arrive at an informed investment decision before making any investments. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, affiliates or representatives shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in this material. The Sponsor, the Investment Manager, the Trustee, any of their respective directors, employees including the fund managers, affiliates, representatives including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities thereof, of company(ies) / specific economic sectors mentioned herein.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully