r shares gold exchange traded fund

8/13/2019 R Shares Gold Exchange Traded Fund

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R* Shares Gold ExchangeTraded Fund(An Open ended Gold Exchange Traded Fund Scheme)

Scheme Information Document

The particulars of the Scheme have been prepared in accordance with the Securities

and Exchange Board of India (Mutual Funds) Regulations 1996, (herein after referred

to as SEBI (MF) Regulations) as amended till date, and filed with SEBI, along with a

Due Diligence Certificate from the AMC. The units being offered for public subscription

have not been approved or recommended by SEBI nor has SEBI certified the accuracy

or adequacy of the Scheme Information Document.

The Scheme Information Document sets forth concisely the information about the

scheme that a prospective investor ought to know before investing. Before investing,

investors should also ascertain about any further changes to this Scheme Information

Document after the date of this Document from the Mutual Fund / Investor Service

Centres /Website / Distributors or Brokers.

The investors are advised to refer to the Statement of Additional Information (SAI)

for details of Reliance Mutual Fund, Tax and Legal issues and general information

on www.reliancemutual.com

SAI is incorporated by reference (is legally a part of the Scheme Information

Document). For a free copy of the current SAI, please contact your nearest InvestorService Centre or log on to our website wwwreliancemutual.com.

The Scheme Information Document should be read in conjunction with the SAI and

not in isolation.

This Scheme Information Document is dated September 26, 2012.

NAME OF MUTUAL FUND

Reliance Mutual Fund

11th floor & 12th floor, One Indiabulls Centre, Tower 1

Jupiter Mills Compound, 841, Senapati Bapat Marg,

Elphinstone Road, Mumbai - 400 013

Tel No. - 022-30994600

Fax No. - 022-30994699

NAME OF SPONSOR COMPANY

Reliance Capital Limited

Registered Office:

H Block, 1st Floor, Dhirubhai Ambani Knowledge City,

Koparkhairne, Navi Mumbai - 400 710.

Tel. 022 - 30327000, Fax. 022 - 30327202

Website : www.reliancecapital.co.in

NAME OF ASSET MANAGEMENT COMPANY

Reliance Capital Asset Management Limited

Corporate Office:




Tel No. - 022-30994600

Fax No. - 022-30994699

NAME OF TRUSTEE COMPANY

Reliance Capital Trustee Co. Limited

Corporate Office:




Tel No. - 022-30994600

Fax No. - 022-30994699

Continuous offer of the Units of the face value of Rs. 100 each for cash at NAV basedprices (subject to applicable load)


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TABLE OF CONTENTS

HIGHLIGHTS/SUMMARY OF THE SCHEME ...........................................................................................................................................1

I. INTRODUCTION ..........................................................................................................................................................................3

A. RISK FACTORS ............... ................ ............... ................ ............... ................ ............... ................ ............... ................ ............... ................ ............. 3

B. REQUIREMENT OF MINIMUM INVESTORS IN THE SCHEME ................ ............... ................ ............... ................ ............... ................ ............. 5

C. SPECIAL CONSIDERATIONS .............. ................ ............... ................ ............... ................ ............... ................ ............... ................ ............... ........5

D. DEFINITIONS & ABBREVIATIONS ............... ................ ............... ................ ............... ................ ............... ................ ............... ................ ............. 9

E. DUE DILIGENCE BY THE ASSET MANAGEMENT COMPANY ............... ................ ............... ................ ............... ................ ............... ............. 11

II. INFORMATION ABOUT THE SCHEME R* Shares Gold Exchange Traded Fund ..............................................................................12

A. TYPE OF THE SCHEME .............. ................ ............... ................ ............... ................ ............... ................ ............... ................ ............... ............. 12

B. WHAT IS THE INVESTMENT OBJECTIVE OF THE SCHEME? .............. ............... ................ ............... ................ ............... ................ ............... 12

C. HOW WILL THE SCHEME ALLOCATE ITS ASSETS? ............... ............... ................ ............... ................ ............... ................ ............... ............. 12

D. WHERE WILL THE SCHEME INVEST? .............. ............... ................ ............... ................ ............... ................ ............... ................ ............... ..... 12

E. WHAT ARE THE INVESTMENT STRATEGIES? ............... ............... ................ ............... ................ ............... ................ ............... ................ ....... 12

F. FUNDAMENTAL ATTRIBUTES ............... ............... ................ ............... ................ ............... ................ ............... ................ ............... ................ .. 15

G. HOW WILL THE SCHEME BENCHMARK ITS PERFORMANCE? ................ ............... ................ ............... ................ ............... ................ ....... 15

H. WHO MANAGES THE SCHEME? .............. ............... ................ ............... ................ ............... ................ ............... ................ ............... ............. 15

I. WHAT ARE THE INVESTMENT RESTRICTIONS? ............... ............... ................ ............... ................ ............... ................ ............... ................ .. 15

J. HOW HAS THE SCHEME PERFORMED? .............. ............... ................ ............... ................ ............... ................ ............... ................ ............... 17

III. UNITS AND OFFER .....................................................................................................................................................................18

A. NEW FUND OFFER (NFO) ............... ............... ................ ............... ................ ............... ................ ............... ................ ............... ................ ....... 18

B. ONGOING OFFER DETAILS .............. ............... ................ ............... ................ ............... ................ ............... ................ ............... ................ ....... 20

C. PERIODIC DISCLOSURES .............. ............... ................ ............... ................ ............... ................ ............... ................ ............... ................ .......... 28

D. COMPUTATION OF NAV ............... ............... ................ ............... ................ ............... ................ ............... ................ ............... ................ .......... 30

IV. FEES AND EXPENSES .................................................................................................................................................................31

A. NEW FUND OFFER (NFO) EXPENSES ............... ................ ............... ................ ............... ................ ............... ................ ............... ................ .. 31

B. ANNUAL SCHEME RECURRING EXPENSES .............. ............... ................ ............... ................ ............... ................ ............... ................ .......... 31

C. LOAD STRUCTURE............................ ............... ................ ............... ................ ............... ................ ............... ................ ............... ................ ....... 32

D. WAIVER OF LOAD FOR DIRECT APPLICATIONS ............... ............... ................ ............... ................ ............... ................ ............... ................ .. 32

E. TRANSACTION CHARGES ................ ............... ................ ............... ................ ............... ................ ............... ................ ............... ................ ....... 32

V. RIGHTS OF UNITHOLDERS .........................................................................................................................................................34

VI. PENALTIES, PENDING LITIGATION OR PROCEEDINGS, FINDINGS OF INSPECTIONS OR INVESTIGATIONS FOR WHICH ACTIONMAY HAVE BEEN TAKEN OR IS IN THE PROCESS OF BEING TAKEN BY ANY REGULATORY AUTHORITY ..........................................34


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HIGHLIGHTS/SUMMARY OF THE SCHEME

1. INVESTMENT OBJECTIVE

The investment objective is to seek to provide returns that closely correspond to returns provided by price of gold through investment in physicaGold (and Gold related securities as permitted by Regulators from time to time). However, the performance of the scheme may differ from thatof the domestic prices of Gold due to expenses and or other related factors.

However, there can be no assurance that the investment objective of the scheme will be achieved.

2. LIQUIDITY

All investors may sell their units in the stock exchange(s) on which these units are listed on all the trading days of the stock exchangeAlternatively Authorised Participant can directly buy /sell in blocks from the fund in Creation Unit Size.

3. BENCHMARK

As there are no indices catering to the gold sector/securities linked to Gold, currently R* Shares Gold Exchange Traded Fund shall bebenchmarked against the price of Gold.

Purity of Gold: All gold bullion held in the schemes allocated account with the custodian shall be of fineness (or purity) of 995 par ts per 1000(99.5%) or higher.

4. TRANSPARENCY/NAV DISCLOSURE

a) The NAV will be calculated and disclosed at the close of every working day which shall be published in at least two daily newspapers andalso uploaded on the AMFI website and Reliance Mutual Fund website i.e. www.reliancemutual.com.

b) If the NAVs are not available before commencement of business hours on the following day due to any reason, the Fund shall issue a pressrelease providing reasons and explaining when the Fund would be able to publish the NAVs.

c) The information on NAV may be obtained by the Unitholders on any day from the office of the AMC / the office of the Registrar inHyderabad or any of the other Designated Investor Service Centres.

d) Investors may also note that Reliance Mutual Fund shall service its customers through the call center from Monday to Saturday between

8.00 am to 9.00 pm. However, 24x7 facility shall be available for addressing the queries through interactive voice response (IVR) and fohot listing the Reliance Any Time Money Card. Investor may also call our Touch base customer service centre at 3030 1111, callers outsideIndia (Toll Free No. 1800-300-11111), please dial 91-22-30301111.

e) Publication of Abridged Half-yearly Unaudited Financial Results in the newspapers or as may be prescribed under the Regulations fromtime to time.

f) Communication of Portfolio on a half-yearly basis to the Unit holders directly or through the Publications or as may be prescribed undethe Regulations from time to time.

g) Despatch of the Annual Reports of the respective Schemes within the stipulated period as required under the Regulations.

5. LOADS

Entry & Exit Load: Not Applicable

There will be no entry/exit load on R* Shares Gold Exchange Traded Fund bought or sold through the secondary market on the NSE/BSEHowever, an investor would be paying cost in the form of a bid and ask spread and brokerage, as charged by his broker for buying / selling R*Shares Gold Exchange Traded Fund.

As per the Regulations, the redemption price shall not be lower than 93% of NAV and the purchase price shall not be higher than 107% ofthe NAV and the difference between the redemption price and purchase price shall not exceed 7% of the purchase price.

In case, there are no quotes on the NSE and BSE for five trading days consecutively, an investor can sell directly to the fund with an exit loadof 5% of NAV. The payout of such redemptions will be on the respective pay-out day.

6. MINIMUM APPLICATION AMOUNT

Purchases directly from the Mutual Fund would be restricted to Authorised Participants provided the value of units to be purchased is in creationunit size.

The minimum number of Units that can be bought or sold on the exchange is 1 (one) unit and in multiples of 1 unit.

7. CHOICE OF INVESTMENT PLANS

Dividend Payout Option only

8. REPATRIATION

Full Repatriation benefits would be available to NRIs, PIOs and FIIs, subject to applicable conditions/regulations notified by Reserve Bank of Indiafrom time to time

9. LISTING

The units of R* Shares Gold Exchange Traded Fund is listed on the Capital Market Segment of the National Stock Exchange of India (NSE) andBombay Stock Exchange (BSE). The trading will be as per the normal settlement cycle.

The minimum number of units that can be bought or sold through the stock exchange is 1 (one) unit.

The AMC reserves the right to list the units of the Scheme on any other recognized stock exchange.

Investor may please note that erstwhile name of the scheme was Reliance Gold Exchange Traded Fund, the same has beenchanged to R* Shares Gold Exchange Traded Fund w.e.f. from September 17, 2012


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10. The advantages of R* Shares Gold Exchange Traded Fund over direct investment in gold :

1. Investors who want a cost effective and convenient way to invest in gold can get instantaneous exposure to a physical asset viz gold.

2. R* Shares Gold Exchange Traded Fund units can be traded like a share and therefore it provides the ability to buy and sell them quickly atthe ruling market price unlike gold that can be sold only for a discount and by a cumbersome process.

3. The expenses incurred in buying and selling units and the schemes ongoing expenses will be less than the costs associated with buyingand selling of gold and storing and insuring gold bullion in a traditional gold bullion market.

4. Minimum investment in ETF in secondary markets is one unit representing approximately one gram of gold in the beginning and the weightof gold representing 1 unit keeps reducing to the extent of expenses.

5. Helps investors to diversify across asset classes.

6. Investors get an opportunity to access to Gold Bars conforming to LBMA Good Delivery status, in a cost effective manner.

R* Shares Gold Exchange Traded Fund is listed on NSE/BSE and/or may be listed on any other stock exchange(s) as may be decided bythe Reliance Capital Asset Management Ltd. in the form of Gold Exchange Traded Fund tracking the prices of Gold bullion.

11. TRANSACTION CHARGES:

In accordance with SEBI Circular No. IMD/ DF/13/ 2011 dated August 22, 2011, with effect from November 1, 2011, Reliance Capital AssetManagement Limited (RCAM)/ RMF shall deduct a Transaction Charge on per purchase / subscription of Rs. 10,000/- and above, as may bereceived from new investors (an investor who invests for the first time in any mutual fund schemes) and existing investors. Distributors shall beable to choose to opt out of charging the transaction charge. However, the opt-out shall be at distributor level and not investor level i.e. adistributor shall not charge one investor and choose not to charge another investor.

Such charges shall be deducted if the investments are being made through the distributor/agent and that distributor / agent has opted toreceive the transaction charges as mentioned below:

For the new investor a transaction charge of Rs 150/- shall be levied for per purchase / subscription of Rs 10,000 and above; and

For the existing investor a transaction charge of Rs 100/- shall be levied for per purchase / subscription of Rs 10,000 and above.

The transaction charge shall be deducted from the subscription amount and paid to the distributor/agent, as the case may be and the balanceshall be invested. The statement of account shall clearly state that the net investment as gross subscription less transaction charge and give thenumber of units allotted against the net investment.

In case of investments through Systematic Investment Plan (SIP) the transaction charges shall be deducted only if the total commitmentthrough SIP (i.e. amount per SIP installment x No. of installments) amounts to Rs. 10,000/- and above. In such cases, the transaction chargesshall be deducted in 3-4 installments.

Transaction charges shall not be deducted if:

(a) The amount per purchases /subscriptions is less than Rs. 10,000/-;

(b) The transaction pertains to other than purchases/ subscriptions relating to new inflows such as Switch/STP/ DTP, etc.

(c) Purchases/Subscriptions made directly with the Fund through any mode (i.e. not through any distributor/agent).

(d) Subscription made through Exchange Platform irrespective of investment amount.


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I - INTRODUCTION

A. RISK FACTORS

1. STANDARD RISK FACTORS

a) Mutual Funds and securities investments are subject to market risks such as trading volumes, settlement risk, liquidity risk anddefault risk including the possible loss of principal and there is no assurance or guarantee that the objectives of the Scheme will beachieved.

b) As the price / value / interest rates of the securities in which the scheme invests fluctuates, the value of your investment in thescheme may go up or down

c) Past performance of the Sponsor/AMC/Mutual Fund does not guarantee future performance of the scheme.

d) R* Shares Gold Exchange Traded Fund is only the name of the Scheme and does not in any manner indicate either the quality of thescheme or its future prospects and returns.

e) The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond their initial contribution ofRs.1 lakh made by it towards the setting up of the Mutual Fund and such other accretions and additions to the corpus.

f) The present scheme is not a guaranteed or assured return scheme. The Mutual Fund is not guaranteeing or assuring any dividend/bonus. The Mutual Fund is also not assuring that it will make periodical dividend/bonus distributions, though it has every intention ofdoing so. All dividend/bonus distributions are subject to the availability of distributable surplus of the Scheme.

2. SCHEME SPECIFIC RISK FACTORS

Risks associated with investing in Bonds

Investment in Debt is subject to price, credit, and interest rate risk.

The NAV of the Scheme may be affected, inter alia, by changes in the market conditions, interest rates, trading volumes, settlementperiods and transfer procedures.

Investing in Bonds and Fixed Income securities are subject to the risk of an Issuers inability to meet principal and interest paymentsobligation (credit risk) and may also be subject to price volatility due to such factors as interest rate sensitivity, market perception ofthe creditworthiness of the issuer and general market liquidity (market risk).

The timing of transactions in debt obligations, which will often depend on the timing of the Purchases and Redemptions in theScheme, may result in capital appreciation or depreciation because the value of debt obligations generally varies inversely with theprevailing interest rates.

Interest Rate Risk

As with all debt securities, changes in interest rates will affect the Schemes Net Asset Value as the prices of securities generallyincrease as interest rates decline and generally decrease as interest rates rise. Prices of longer-term securities generally fluctuate morein response to interest rate changes than do shorter-term securities. Interest rate movements in the Indian debt markets can bevolatile leading to the possibility of large price movements up or down in debt and money market securities and thereby to possiblylarge movements in the NAV.

Liquidity or Marketability Risk

This refers to the ease at which a security can be sold at or near its true value. The primary measure of liquidity risk is the spreadbetween the bid price and the offer price quoted by a dealer. Liquidity risk is characteristic of the Indian fixed income market.

Credit Risk

Credit risk or default risk refers to the risk which may arise due to default on the part of the issuer of the fixed income security (i.e. wilbe unable to make timely principal and interest payments on the security). Because of this risk debentures are sold at a yield spreadabove those offered on Treasury securities, which are sovereign obligations and generally considered to be free of credit risk. Normallythe value of a fixed income security will fluctuate depending upon the actual changes in the perceived level of credit risk as well asthe actual event of default.

Reinvestment Risk

This risk refers to the interest rate levels at which cash flows received from the securities in the Scheme or from maturities in theScheme are reinvested. The additional income from reinvestment is the interest on interest component. The risk refers to the fall inthe rate for reinvestment of interim cashflows.

Risks associated with various types of securities

CREDIT RISK LIQUIDITY RISK PRICE RISK

Listed Depends on credit quality Relatively Low Depends on duration of instrument

Unlisted Depends on credit quality Relatively High Depends on duration of instrument

Secured Relatively low Relatively Low Depends on duration of instrument

Unsecured Relatively high Relatively High Depends on duration of instrument

Rated Relatively low and depends on the rating Relatively Low Depends on duration of instrument

Unrated Relatively high Relatively High Depends on duration of instrument

Different types of securities in which the scheme would invest as given in the Scheme Information Document carry different levels


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Security 1 -Backed by receivables of personal loans originated by XYZ Bank, Specific Risk Factors: Loss due to default and/or paymentdelay on Receivables, Premature Termination of Facility Agreements, Limited loss cover, Delinquency and Credit Risk, Limited Liquidityand Price Risk, Originator/Collection Agent Risk, Bankruptcy of the Originator, Co-mingling of funds.

Security2 - Senior Series Pass Through Certificates backed by commercial vehicles and two-wheeler loan and loan receivables fromABC Bank Limited

B. REQUIREMENT OF MINIMUM INVESTORS IN THE SCHEME

The Scheme/Plan shall have a minimum of 20 investors and no single investor shall account for more than 25% of the corpus of the Scheme/Plan(s). However, if such limit is breached during the NFO of the Scheme, the Fund will endeavor to ensure that within a period of three monthsor the end of the succeeding calendar quarter from the close of the NFO of the Scheme, whichever is earlier, the Scheme complies with thesetwo conditions. In case the Scheme / Plan(s) does not have a minimum of 20 investors in the stipulated period, the provisions of Regulation39(2)(c) of the SEBI (MF) Regulations would become applicable automatically without any reference from SEBI and accordingly the Scheme/ Plan(s) shall be wound up and the units would be redeemed at applicable NAV.

The two conditions mentioned above shall also be complied within each subsequently calendar quarter thereafter, on an average basis, asspecified by SEBI. If there is a breach of the 25% limit by any investor over the quarter, a rebalancing period of one month would be allowedand thereafter the investor who is in breach of the rule shall be given 15 days notice to redeem his exposure over the 25 % limit. Failure onthe part of the said investor to redeem his exposure over the 25 % limit within the aforesaid 15 days would lead to automatic redemption bythe Mutual Fund on the applicable Net Asset Value on the 15th day of the notice period. The Fund shall adhere to the requirements prescribedby SEBI from time to time in this regard.

As per Circular number SEBI/IMD/CIR NO 10/22701/03 dated December 12, 2003, the above guidelines are not applicable for ExchangeTraded Funds. As R* Shares Gold Exchange Traded Fund is an exchange traded fund, same is not applicable.

C. SPECIAL CONSIDERATIONS

Market Risk

Mutual funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Scheme wil

be achieved. The NAV of the Scheme will react to the prices of gold, Gold Related Instruments and stock market movements. The Unit holdecould lose their investments money over short periods due to fluctuation in the NAV of the Scheme in response to factors such as economicand political developments, changes in interest rates and perceived trends in stock prices market movements, and over longer periods duringmarket downturns.

Additionally,the prices of gold may be affected by several factors such as global gold supply and demand, investors expectations with respectto the rate of inflation, currency exchange rates, interest rates, etc. Crises may motivate large-scale sales of gold, which could decrease thedomestic price of gold.

Some of the key factors affecting gold prices are:

a) Central banks sale: Central banks across the world hold a part of their reserves in gold. The quantum of their sale in the market is one ofthe major determinants of gold prices. A higher supply than anticipated would lead to subdued gold prices and vice versa. Central banksbuy gold to augment their existing reserves and to diversify from other asset classes. This acts as a support factor for gold prices.

b) Producer mining interest: Bringing new mines on-line is a time consuming and at times economically prohibitive process that addsyears onto potential supply increases from mining production. On the other hand, lower production has a positive effect on gold pricesConversely excessive production capacities would lead to a downward movement in gold prices as the supply goes up.

c) Macro-economic factors: A weakening dollar, high inflation, the massive US trade deficits all act in favor of gold prices. The global trend ofrising interest rates also had a positive impact on gold prices. Gold being regarded as a physical asset would lose its luster in a deflationaryenvironment as gold is used effectively as an inflation hedge.

d) Geo political issues: any uncertainty on the political front or any war-like situation always acts as a booster to gold prices. The prices startbuilding up war premiums and hence such movements. Stable situations would typically mean stable gold prices.

e) Seasonal demand: Since the demand for Gold in India is closely tied to the production of jewellery pices tend to increase during the timesof year when the demand for jewelry is the greatest, the demand for metals tends to be strong a few months ahead of these festiveseasons, especially Dussera, Diwali, Akshaya Trithya festival and summer wedding season in in India. Christmas, Mothers Day, ValentinesDay, are also major festive and shopping for Gold.

f) Change in duties & levies:

The gold held by the Custodian of R* Shares Gold Exchange Traded Fund may be subject to loss, damage, theft or restriction of access dueto natural event or human actions. The Trustees may not have adequate sources of recovery if it s gold is lost, damaged, stolen or destroyedand recovery may be limited, even in the event of fraud, to the market value of gold at the time the fraud is discovered.

The custodian will maintain adequate insurance for its bullion and custody business. The liability of the Custodian is limited under theagreement between the AMC and the Custodian which establish the Mutual Funds custody arrangements, or the custody agreements.

Market Trading Risks

Absence of Prior Active Market: Although R* Shares Gold Exchange Traded Fund units described in this Scheme information document are tobe listed on the Exchange, there can be no assurance that an active secondary market will develop or be maintained.

Lack of Market Liquidity

Trading in R* Shares Gold Exchange Traded Fund on the Exchange may be halted because of market conditions or for reasons that in the viewof the market authorities or SEBI, trading in R* Shares Gold Exchange Traded Fund is not advisable. In addition, trading in R* Shares GoldExchange Traded Fund is subject to trading halts caused by extraordinary market volatility and pursuant to Stock Exchange(s) and SEBI circuit


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filter rules. There can be no assurance that the requirements of the market necessary to maintain the list ing of R* Shares Gold Exchange TradedFund will continue to be met or will remain unchanged. R* Shares Gold Exchange Traded Fund may suffer liquidity risk from domestic as well asinternational market.

Time lag in procurement/redemption of physical gold

Procurement of gold bars may take upto 1 month in case of adverse shortage of gold bars. It may not be possible to sell gold bar intentionallyand may delay redemption depending on the market conditions.

R* Shares Gold Exchange Traded Fund may trade at prices other than NAV

R* Shares Gold Exchange Traded Fund may trade above or below its NAV. The NAV of R* Shares Gold Exchange Traded Fund will fluctuate withchanges in the market value of Schemes holdings. The trading prices of R* Shares Gold Exchange Traded Fund will fluctuate in accordancewith changes in their NAVs as well as market supply and demand of R* Shares Gold Exchange Traded Fund. However, given that R* Shares

Gold Exchange Traded Fund can be created and redeemed only in Creation Units directly with the fund, it is expected that large discounts opremiums to the NAVs of R* Shares Gold Exchange Traded Fund may not sustain due to arbitrage possibility available.

Operational Risks

R* Shares Gold Exchange Traded Fund are relatively new product and their value could decrease if unanticipated operational or trading problemsarise.

Regulatory Risk

Any changes in trading regulations by the Exchange or SEBI may affect the ability of Authorised Participants arbitrage resulting into widepremium/ discount to NAV. Although R* Shares Gold Exchange Traded Fund are proposed to be listed on Exchange, the AMC and the Trusteeswill not be liable for delay in listing of Units of the Scheme on Exchange / or due to connectivity problems with the depositories due to theoccurrence of any event beyond their control.

Political Risks

Whereas the Indian market was formerly restrictive, a process of deregulation has been taking place over recent years. This process has involved

removal of trade barriers and protectionist measures, which could adversely affect the value of investments. It is possible that the future changesin the Indian political situation, including political, social or economic instability, diplomatic developments and changes in laws and regulationscould have an effect on the value of investments. Expropriation, confiscatory taxation or other relevant developments could affect the value ofinvestments.

Competition Risks

An investment in R* Shares Gold Exchange Traded Fund may be adversely affected by competition from other methods of investing in goldThe value of the units relates directly to the value of the gold held by the scheme and fluctuations in the price of gold could adversely affectinvestment value of the units.

The R* Shares Gold Exchange Traded Fund is designed to mirror as closely as possible the performance of the price of gold bullion and the valueof units directly relate to the value of the Gold held by the Scheme less the Schemes liabilities (including accrued but unpaid expenses). Goldprices have been quite volatile historically. The price of gold has fluctuated from a low of $ 1537.5/Oz to a high of $1788/Oz between 03

Jan 12 and 25th September 2012 between based on the London LBMA AM Fix

Several factors may affect the price of gold, including:

Global gold supplies and demand, which is inuenced by factors such as forward selling by gold producers, purchases made by goldproducers to unwind gold hedge positions, central bank purchases and sales, and productions and cost levels in major gold producingcountries such as the South Africa, the United States and Australia.

Investors expectations with respect to the rate of ination;

Currency exchange rates;

Interest rates;

Investment and trading activities of hedge funds and commodity funds; and

Global or regional political, economic or nancial events and situations.

In addition, investors should be aware that there is no assurance that gold will maintain its long-term value in terms of purchasing powein the future. In the event that the price of gold declines, the value of investment in units is expected to decline proportionately.

Changes in indirect taxes like custom duties for import, sales tax, VAT or any other levies will have an impact on the valuation of gold andconsequently the NAV of the scheme.

Although, the objective of the Fund is to seek to provide returns that closely correspond to returns provided by price of gold through

investment in physical Gold and Gold related securities, the performance of the scheme may differ from that of the domestic prices ofGold due to expenses and or other related factors

Credit & Interest Rate Risk

The Fund may also invest in Gold Related Instruments, money market instruments, bonds, securitised debts & other debt securities as permittedunder the Regulations which are subject to price, credit and interest rate risk. Trading volumes and settlement periods and transfer proceduresmay restrict liquidity in debt investments.

Right to Limit Redemptions

The Trustee, in the interest of the Unit holders of the Scheme offered in this Scheme information document and keeping in view of theunforeseen circumstances / unusual market conditions, may limit the total number of Units, which can be redeemed on any Working Daydepending on the total Underlying Stock of Gold that can be readily sold in the local market available with the fund.


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Redemption Risk

The Unit Holders may note that even though this is an open-ended scheme, the Scheme would ordinarily repurchase Units in Creation Unitsize. Thus unit holdings less than the Creation Unit size can normally only be sold through the secondary market, unless no quotes are availableon the Exchange for 2 trading days consecutively. Further, the price received upon the redemption of R* Shares Gold Exchange Traded Fundunits may be less than the value of the gold represented by them. The result obtained by subtracting the Funds expenses and liabilities on anyday from the price of the gold owned by the fund on that day is the net asset value of the fund which, when divided by the number of unitsoutstanding on that date, results in the net asset value per unit, or NAV.

Asset Class Risk

The domestic price of gold may vary from time to time. Further, the returns from the types of securities in which a Scheme invests may undeperform returns from the various general securities markets or different asset classes. Different types of securities tend to go through cycles ofout-performance and under performance in comparison of the general securities markets.

Passive Investments

As R* Shares Gold Exchange Traded Fund is not actively managed, the underlying investments may be affected by a general decline in thedomestic price of gold and other instruments invested under the plan. R* Shares Gold Exchange Traded Fund invests in the Gold & securitiesmentioned in the asset allocation regardless of their investment merit. The AMC does not attempt to take defensive positions in decliningmarkets. Further, the fund manager does not make any judgment about the investment merit nor shall attempt to apply any economic, financiaor market analysis.

Tracking Error Risk

Tracking error means the variance between daily returns of the underlying benchmark (gold in this case) and the NAV of the scheme for anygiven period. NAV of the Scheme is dependant on valuation of gold. Gold has to be valued as per the formula provided by SEBI in its circulano. SEBI/IMD/CIR No. 2/65348/06 dated April 21, 2006, Gazeted Notification Dated December 20, 2006 and such other circulars as issuedby SEBI from time to time. NAV so computed may vary from the price of Gold in the domestic market.

Factors such as the fees and expenses of the Scheme, cash balance, changes to the Underlying assets and regulatory policies may affect AMCs

ability to achieve close correlation with the Underlying assets of the scheme. The Schemes returns may therefore deviate from those of itsUnderlying assets.

Tracking error could be the result of a various of factors including but not limited to:

Delay in the purchase or sale of gold due to

Illiquidity of gold,

Delay in realisation of sale proceeds,

Creating a lot size to buy the required amount of gold

The scheme may buy or sell the gold at different points of time during the trading session at the then prevailing prices which may notcorrespond to its closing prices.

The potential for trades to fail, which may result in the Scheme not having acquired gold at a price necessary to track the benchmark price

The holding of a cash position and accrued income prior to distribution of income and payment of accrued expenses.

Disinvestments to meet redemptions, recurring expenses, dividend payouts etc.

Execution of large buy / sell orders Transaction cost (including taxes and insurance premium) and recurring expenses

Realisation of Unit holders funds The scheme will endeavor to minimise the tracking error by

Setting off of incremental subscriptions against redemptions, during liquidity window

Use of gold related derivative instruments, as and when allowed by regulations

Rebalancing of the portfolio

Given the structure of R* Shares Gold Exchange Traded Fund, the AMC expects the tracking error to be lower. The AMC will endeavor to keepthe tracking error as low as possible. Under normal circumstances, such tracking errors are not expected to exceed 2% per annum. Howeverthis may vary when the markets are very volatile.

Tax Issues

Repurchase of R* Shares Gold Exchange Traded Fund by the Fund or sale of R* Shares Gold Exchange Traded Fund by the investor on the StockExchange may attract short or long term capital gain tax depending upon the holding period of the Units. Moreover, converting R* Shares

Gold Exchange Traded Fund units to Gold may also attract Wealth tax. The tax benefits described in this Scheme information document areas available under the present taxation laws and are available subject to relevant conditions. The information given is included only for generapurpose and is based on advice received by the AMC regarding the law and practice currently in force in India and the Unit holders should beaware that the relevant fiscal rules or their interpretation may change. As is the case with any investment, there can be no guarantee that thetax position or the proposed tax position prevailing at the time of an investment or redemption in the Scheme will endure indefinitely. In viewof the individual nature of tax consequences, each investor is advised to consult his / her own professional tax advisor. Gold is subject to indirecttax not restricted to the following: Sales Tax, Octroi, VAT, Stamp Duty, and Custom Duty.

The Mutual Fund is not assuring or guaranteeing that it will be able to make regular periodical distributions/distribute bonus units to its Unitholders though it has every intention to manage the portfolio so as to make periodical income/bonus distributions to Unit holders. Periodicaldistributions will be dependent on the returns achieved by the Asset Management Company through the active management of the portfolioPeriodical distributions may therefore vary from period to period, based on investment results of the portfolio.


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Past performance of the Sponsor/ the AMC/ the Mutual Fund is not indicative of the future performance of the Scheme. R* Shares Gold ExchangeTraded Fund is the name of the Scheme and does not in any manner indicate either the quality of the Scheme; its future prospects or returns.

All dividend distributions are subject to the availability of distributable surplus in the Scheme. When an investor switches from this scheme toanother scheme on a future date, the scheme specific risk factors applicable to such scheme into which he switches, will apply.

Right to Limit Redemption

The Trustee may, in the general interest of the Unit holders of the Scheme under this Scheme Information Document and keeping in view theunforeseen circumstances / unusual market conditions, limit the total number of Units which may be redeemed on any Business Day to 5%of the total number of Units then issued and outstanding under any Scheme / Plan or such other percentage as the Trustee may determineThe Trustee may, at its sole discretion in response to unforeseen circumstances or unusual market conditions including, but not limited to,extreme volatility of the stock, fixed income and money markets, extended suspension of trading on the stock exchanges, natural calamities

communication breakdowns, internal system breakdowns, strikes, bandhs, riots or other situations where the Trustee in consultation with RCAMconsiders that such suspension is necessary, limit the total number of Units which may be redeemed on any Business Day to 5% of the totanumber of Units then in issue or such higher percentage as the Trustee may determine in any particular case.

Any Units, which by virtue of these limitations are not redeemed on a particular Business Day, will be carried forward for redemption to thenext Business Day, in the order of receipt. Redemptions so carried forward will be priced on the basis of the Redemption Price of the BusinessDay on which redemption is made. Under such circumstances, to the extent multiple redemption requests are received at the same time ona single Business Day, redemptions will be made on pro-rata basis, based on the size of each redemption request, the balance amount beingcarried forward for redemption to the next Business Day(s).

The Custodian

The Trustee has appointed Deutsche Bank, who have been approved by SEBI to act as Custodian for Mutual Funds including gold exchangetraded funds vide registration no. IN/CUS/003, as the Custodian for R* Shares Gold Exchange Traded Fund.

The registration of the Custodian is still valid and effective. The custodian shall hold the custody and possession of the securities and investmentof the Fund and will discharge all the functions as are ordinarily discharged by a Custodian. It does not have any power or authority to sell ordispose of or deal with the securities/investment held by it on behalf of the Fund except as instructed by the AMC. The Trustee reserves the

right to change the custodian, if required.

In terms of Custody Agreement in accordance with SEBI Regulations, entered into with Deutsche Bank as amended from time to time, theCustodian shall, inter alia:

Provide post-trading and custodial services to the Mutual Fund;

Keep gold, Gold Related Instruments, securities and other instruments belonging to the Scheme in safe custody;

Ensure smooth inow/outow of gold, Gold Related Instruments, securities and such other instruments as and when necessary, in the bestinterests of the Unit holders;

Ensure that the benets due to the holdings of the Mutual Fund are recovered; and

Be responsible for loss of or damage to the gold, Gold Related Instruments, securities due to negligence on its part or on the part of itsapproved agents.

The Custodian will charge the Mutual Fund, portfolio fee, transaction fee and out-of-pocket expenses in accordance with the terms of theCustody Agreement and as per any modification made thereof from time to time.

Role Of The Custodian

The Custodian is responsible for safekeeping of the Schemes gold deposited with it by an Authorised Participants in connection with the creationof Baskets. The Custodian is responsible for allocating specific bars of gold bullion to the scheme Allocated Account. The Custodian will providethe AMC with regular reports detailing with identifying the gold bars held in the scheme Allocated Account.

The Custodian may also from time to time act as Authorized Participants or purchase or sell gold or units for their own account, as agent fotheir customers and for accounts over which they exercise investment discretion.

Custody Of the Schemes Gold

Custody of the gold bullion deposited with and held by the scheme is provided by the custodian at its Vaults in Mumbai and other places. Thecustodian, as instructed by the AMC, is authorized to accept, on behalf of the AMC, deposits of gold. On the instructions given by the AMCthe custodian allocates gold by selecting bars of gold bullion for deposit to the schemes allocated account.

The AMC and the custodian enter into the custody agreements, which establish the allocated account. The gold deposited with the scheme isheld in the scheme allocated account.

Under the agreement entered into by the AMC and the custodian, the custodian is responsible for the safekeeping of the gold held on behalf ofthe AMC. The custodian is responsible for any loss or damage suffered by the scheme as a direct result of any negligence, fraud or willful defaultin the performance of its duties. The custodians liability is limited to the market value of the gold held in the schemes allocated account atthe time such negligence, fraud or willful default is discovered by the custodian, provided that the custodian promptly notifies the AMC of itsdiscovery. In the event of a loss caused by the failure of the custodian to exercise reasonable care, the AMC has the right to seek recovery withrespect to the loss against the custodian in breach.

Allocated Accounts

An allocated account is an account with a Bank or Custodian, to which individually identified gold bars owned by the account holder are creditedThe gold bars in an allocated gold account are specific to that account and are identified by a list which shows, for each gold bar, the refiner,assay or fineness, serial number and fine weight. The account holder has full ownership of the gold bars and, except as instructed by the accountholder, the Bank or Custodian may not trade, lease or lend the bars.


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Transfer of Gold

At the end of each business day gold is transferred to the schemes allocated account. The custodian allocates specific bars of gold from its goldstocks, so that allocated gold bars represent the amount of gold credited to the extent such amount is representable by whole bars. The bars ofgold should be held directly by the Custodian. The custodian updates its records at the end of each business day to identify the specific bars of goldallocated to the scheme. The withdrawal of gold from the scheme for the purpose of redemption will follow the same procedure in the reverse order

Description Of The Custody Agreements

Reports

The custodian provides the AMC with reports for each business day, no later than the following business day, identifying the movements of goldin and out of the schemes allocated account.

The monthly statement contains sufficient information to identify each bar of gold held in the scheme allocated account and the custodian osubcustodian having possession of such bar.

Sub-Custodians

The custodian may select Subcustodians to perform any of its duties, including holding gold for it. The sub-custodians selected by the custodianswill have to be informed by the custodians to the AMC. Any additions or deletion of subcustodians will have to be reported to the AMC on aperiodic basis.

Custodian may, with the prior written consent of AMC, entrust Gold held in the Account to a specified subcustodian that is eligible to act as acustodian of Gold under applicable laws and regulations (a Sub-Custodian) selected by Custodian with due care. The custodian shall remainresponsible in all respects to its client for safekeeping of the gold kept with such other person, including any associated risks. The custodian ofsecurities shall continue to fulfill all duties to the clients relating to the gold so kept with the other person.

Role of Sub custodian

Safe keeping and segregation of gold bars belonging to the Scheme.

Ensuring proper receipt, safekeeping, accounting and delivery of the gold bars from the place of collection to sub-custodians vault as welas from sub-custodians vault to the counterparty as specified and directed by the Custodian.

Providing security for the gold bars belonging to the Scheme and equipping the vault with security features as per best InternationaStandards and requirements of the Insurer..

Facilitating safe transportation of gold bars belonging to the scheme, by providing armed security, armoured vans and taking otheprecautions.

Providing all other support services and facilities to ensure safe custody of gold bars as well as for uninterrupted operation of the vaults.

The Insurance of the Gold bars will be the responsibility of the Custodian.

Appointment of sub-custodian

Deutsche Bank has appointed a sub-custodian after carrying out necessary due diligence of the sub-custodian in line with RBIs OutsourcingPolicy and best International Practices.

Deutsche Bank may not restrict itself to operating through a single sub-custodian but will explore availing the services of more than onesub custodian based on the clients needs.

Loss / Damage of Physical Gold and Securities

Deutsche Bank will be responsible for loss of / or damage to the physical gold and securities due to fraud, bad faith, negligence,willful neglectdefault, or willful default on its part or on the part of its approved agents.

Location & Segregation of Gold

Gold held for schemes allocated account by the custodian or sub-custodians appointed by the custodians is held at the custodians Vaults inMumbai. The custodians books and records will identify every bar of gold held in the schemes allocated account in its own vault by refiner,assay or fineness, serial number and gross and fine weight.

The AMC may upon reasonable notice, visit the custodians premises and examine the schemes gold held there and the custodians recordsconcerning the schemes allocated account. The AMCs independent auditors may also visit the custodians premises in connection with theiraudit of the financial statements of the scheme.

Insurance

The custodian will ensure adequate insurance for its bullion and custody business. The AMC and the sponsor may subject to confidentialityrestrictions, review this insurance coverage from time to time.

D. DEFINITIONS AND ABBREVIATIONS In this Scheme Information Document, the following words and expressions shall have the meaning specified below, unless the context

otherwise requires:

Applicable Net Asset Value(NAV)

Applicable NAV is the Net Asset Value per Unit at the close of the Business Day on which the applicationfor purchase or redemption/switch is received at the designated investor service centre and is consideredaccepted on that day. An application is considered accepted on that day, subject to it being complete in allrespects and received prior to the cut-off time on that Business Day.

Asset Management Company(AMC/RCAM)/ InvestmentManager

Reliance Capital Asset Management Limited, the Asset Management Company incorporated under theCompanies Act,1956, and authorized by SEBI to act as the Investment Manager to the Schemes ofReliance Mutual Fund.


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Allotment Price Allotment price is the price at which each unit will be allotted and will be equal to the face value ofRs100/- plus premium equivalent to the difference between the face value and price of one gram of goldon the date of allotment.

Application Form Application form for subscribing to Units of R* Shares Gold Exchange Traded Fund as specified in thisScheme Information Document.

AMFI Association of Mutual Fund in India.

Authorised Participants Member of the National Stock Exchange or Bombay Stock Exchange of any other recognised stock exchange orany other person who is appointed by the AMC to act as Authorised Participant as decided by the AMC.

Collecting Bank Branches of Banks for the time being authorized to receive application(s) for units, as mentioned in thisdocument.

Continuous Offer Offer of the Units when the scheme becomes open-ended after the closure of the New Fund Offer.

Custodian Deutsche Bank, NV Mumbai, acting as Custodian to the Scheme, or any other custodian who is appointedby the Trustee.

Crore Ten Million Indian Rupees

Creation unit Creation unit is the number of units of scheme, which is exchanged against a predefined quantity and purityof physical Gold called the Portfolio Deposit and a Cash Component. For redemption of units it is vice-versai.e. fixed number of units of scheme are exchanged for Portfolio Deposit and Cash Component.

Creation Unit is a fixed number of R* Shares Gold Exchange Traded Fund, which is exchanged for PortfolioDeposit which would consist of physical Gold of defined purity and quantity and/or Cash Component. Thefacility of creating/redeeming units in Creation Unit size will be available with the Authorised Participants(whose names will be available on the website of the Fund i.e. (www.reliancemutual.com) on the ongoingbasis. Each creation unit consists of 1000 units of R* Shares Gold Exchange Traded Fund and cashcomponent, if any.

CDSL Central Depository Services (India) Ltd.

Designated Investor ServiceCentres (DISC) / Ofcial pointof acceptance for transaction)

Any location as may be defined by the Asset Management Company from time to time, where investorscan tender the request for subscription, redemption or switching of units, etc.

Depository Depository means a body corporate as defined in the Depositories Act, 1996 (22 of 1996) and includesNational Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL).

Entry Load Load on subscriptions / switch in.

Exit Load Load on redemptions / switch out.

ETF Exchange Traded Fund

Exchange The Stock Exchange Limited, Mumbai or The National Stock Exchange of India Limited or Bombay StockExchange Ltd. or any other exchange where the Units are listed.

Foreign Institutional Investors(FII)

Foreign Institutional Investors, registered with SEBI under the Securities and Exchange Board of India(Foreign Institutional Investors) Regulations, 1995.

Gold Related Instruments Instrument having gold as underlying security, as may be specified by SEBI from time to time

Investment Management

Agreement (IMA)

The Agreement entered into between Reliance Capital Trustee Co. Limited and Reliance Capital Asset

Management Limited by which RCAM has been appointed the Investment Manager for managing the fundsraised by RMF under the various Schemes and all amendments thereof.

Lakh One hundred thousand

LBMA London Bullion Market Association

Large investor Large investor means investors who are eligible to invest in the Scheme and who would be creating units ofR* Shares Gold Exchange Traded Fund in creation unit size by depositing predefined quantity and purity ofphysical gold or cash which should be acceptable by the Custodian for such purposes. Further large investorwould also mean those investors who would be redeeming units of R* Shares Gold Exchange Traded Fundin creation unit size.

However vide addendum dated February 10, 2009, this facility of creation/ redemption of units in CreationUnit Size shall no longer be available to large investors, which may please be noted.

Load A charge that may be levied as a percentage of NAV at the time of entry into the scheme or at the timeof exiting from the scheme.

Local Cheque A Cheque handled locally and drawn on any bank, which is a member of the bankers clearing house located

at the place where the application form is submitted.Mutual Fund Regulations(Regulations)

Securities and Exchange Board of India (Mutual Funds) Regulations as amended from time to time andsuch other Regulations as may be in force from time to time to regulate the activities of Mutual Funds.

Net Asset Value (NAV) Net Asset Value of the Units in each plan of the Scheme is calculated in the manner provided in thisScheme Information Document or as may be prescribed by Regulations from time to time. The NAV will becomputed upto four decimal places.

Non-Resident Indian (NRI) Non-Resident Indian.

NSDL National Securities Depository Ltd

OTC Over the counter.

Person of Indian Origin (PIO) Person of Indian Origin


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Purchase Price Purchase Price to the investor of Units of any of the plans computed in the manner indicated in this SchemeInformation Document.

Portfolio Deposit These are LBMA Good Delivery physical gold bars imported by Banks authorized by RBI to deal in Goldand other securities. The value of gold and other instruments will be linked to the domestic prices of gold.Portfolio Deposit can change from time to time.

Reserve Bank of India (RBI) Reserve Bank of India, established under the Reserve Bank of India Act, 1934.

Reliance Mutual Fund (RMF) /Mutual Fund/the Fund

Reliance Mutual Fund (formerly known as Reliance Capital Mutual Fund), a Trust under Indian Trust Act,1882 and registered with SEBI vide registration number MF/022/95/1 dated June 30, 1995.

Reliance Capital Trustee Co.Limited (RCTC) /Trustee /Trustee Company

Reliance Capital Trustee Co. Limited, a Company incorporated under the Companies Act, 1956, andauthorized by SEBI and by the Trust Deed to act as the Trustee of RMF.

Reliance Capital Limited (RCL)/Sponsor/Settlor

Reliance Capital Limited

Redemption Price Redemption Price to the investor of Units of any of the plans computed in the manner indicated in thisScheme Information Document.

Registrar /Karvy Karvy Computershare Pvt. Ltd., who have been appointed as the Registrar or any other Registrar who isappointed by RCAM.

Statement of AdditionalInformation (SAI)

Statement of Additional Information, the document issued by Reliance Mutual Fund containing details ofReliance Mutual Fund, its constitution, and certain tax, legal and general information. SAI is legally a partof the Scheme Information Document

Scheme R* Shares Gold Exchange Traded Fund, An Open - ended Gold Exchange Traded Fund.

Scheme Information Document(SID)

Scheme Information Document issued by RMF, offering units of R* Shares Gold Exchange Traded Fund forSubscription.

Securities and Exchange Boardof India (SEBI)

Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended from time to time,including by way of circulars or notifications issued by SEBI and the Government of India.

Trust Deed The Trust Deed entered into on April 24, 1995 between the Sponsor and the Trustee, and all amendmentsthereof.

Trust Fund The corpus of the Trust, unit capital and all property belonging to and/or vested in the Trustee.

Tracking Error Tracking error means the variance between daily returns of the underlying benchmark (gold in this case) andthe NAV of the scheme for any given period.

Unit The interest of the investors in any of the plans, of the scheme which consists of each Unit representingone undivided share in the assets of the corresponding plan of the scheme.

Unitholder A person who holds Unit(s) under the scheme.

Unitholders Record Unitholders whose names appear on the unitholders register of the concerned plan/(s) on the date ofdetermination of Dividend/Bonus, subject to realisation of the cheque.

Underlying Stock / Securities Instruments invested in by the Fund manager, other than gold and Gold Related Instruments, for thescheme, subject to the approval of the Regulator and / or in compliance with the Regulations.

Working Day / Business Day Any day, other than a Saturday or Sunday or any day on which Banks in Mumbai are Closed for commercial

transactions or The Stock Exchange, Mumbai and/or National Stock Exchange/ Bombay Stock Exchange areclosed for transactions or a day on which banks are open but The Stock Exchange, Mumbai and/or The NationalStock Exchange/Bombay Stock Exchange are closed for transactions or a day on which sale of units is suspendedby the AMC / Trustee or a day on which normal business could not be transacted due to storms, floods, bandhs,strikes or any other calamities, etc, subject to modifications by RCAM from time to time.

Words and Expressions used in this Scheme Information Document and not dened shall have the same meaning as in the Regulations.

E. DUE DILIGENCE BY THE ASSET MANAGEMENT COMPANY

It is conrmed that:

1. The Scheme Information Document of R* Shares Gold Exchange Traded Fund, forwarded to SEBI, is in accordance with the SEBI (MutuaFunds) Regulations, 1996 and the guidelines and directives issued by SEBI from time to time.

2. All legal requirements connected with the launching of the Scheme as also the guidelines, instructions etc., issued by the Government andany other competent authority in this behalf, have been duly complied with.

3. The disclosures made in the Scheme Information Document are true, fair and adequate to enable the investors to make a well informed

decision regarding investment in the proposed Scheme.

4. The intermediaries named in the Scheme Information Document and Statement of Additional Information are registered with SEBI andtheir registrations are valid, as on date, to the best of our knowledge and belief.

Sd/-

Mumbai Muneesh SudSeptember 26, 2012 Designation: Head - Legal, Secretarial & Compliance

Note:The Due Diligence Certificate as stated above was submitted to the Securities and Exchange Board of India on September 27, 2012.


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II. INFORMATION ABOUT THE SCHEME R* Shares Gold Exchange Traded Fund

A. TYPE OF THE SCHEME

An Open ended Gold Exchange Traded Fund that tracks the domestic prices of gold through investments in physical Gold.

B. WHAT IS THE INVESTMENT OBJECTIVE OF THE SCHEME?

The investment objective is to seek to provide returns that closely correspond to returns provided by price of gold through investment in physicaGold (and Gold related securities as permitted by Regulators from time to time). However, the performance of the scheme may differ from thatof the domestic prices of Gold due to expenses and or other related factors.

However, there can be no assurance that the investment objective of the scheme will be achieved.

C. HOW WILL THE SCHEME ALLOCATE ITS ASSETS?

Under normal circumstances, the anticipated asset allocation would be:

Instruments Indicative asset allocation (% of total assets) Risk Prole

Minimum Maximum

Physical Gold or Gold Related Instruments as permitted by regulatorsfrom time to time#

90% 100% Medium to High

Money Market instruments, Bonds, Debentures, GovernmentSecurities including T-Bills, Securitised Debt* & other debt securitiesas permitted by regulators from time to time

0% 10% Low to Medium

# Presently, investment only in physical gold is allowed as per SEBI guidelines. Investment in gold or gold related instruments may be undertakenas and when permitted by SEBI.

*Upto 10% in securitised debt

Use of gold related derivative instruments, as and when allowed by regulations

The above Asset Allocation Pattern is only indicative. The investment manager in line with the investment objective as may alter the abovepattern for short term and on defensive consideration.

D. WHERE WILL THE SCHEME INVEST?

The Fund will, in general invest a significant part of its corpus in Physical Gold or Gold Related Instruments as permitted by regulators from timeto time (as per the asset allocation mentioned above). Presently, investment only in physical gold is allowed as per SEBI guidelines. Investmentin gold or gold related instruments may be undertaken as and when permitted by SEBI. However pending investments, the surplus amount ofthe Fund shall be invested in securitized debt, other debt securities, bonds and money market instruments as permitted by regulators from timeto time.

Purchase of Gold Bars

The Fund will purchase Gold Bars from the RBI Authorised Banks and Agencies that are Refined at LBMA Registered Refiners (Updated list ofthe Refiners can be obtained from the LBMA Website www.lbma.org.uk).

E. WHAT ARE THE INVESTMENT STRATEGIES?

The fund manager would use a passive approach to try and achieve the investment objective of the scheme. The fund manager shall not tryto beat the Gold Market, but aims to replicate the returns, which commensurate the returns generated, by Gold during that period. It willhowever endeavor to seek temporary defensive positions when markets decline or appear over valued to the extent of its investment in MoneyMarket or other debt securities. The fund manager would not make any judgment about the investment merit of a particular security nor wilit attempt to apply any economic, financial or market analysis. This style of Passive Fund Management would eliminate the risks involved withactive management with regard to over / underperformance vis--vis a benchmark.

The Fund will, in general invest a significant part of its corpus in Physical Gold or Gold Related Instruments as permitted by regulators from timeto time (as per the asset allocation mentioned above). Presently, investment only in physical gold is allowed as per SEBI guidelines. Investmentin gold or gold related instruments may be undertaken as and when permitted by SEBI. However pending investments, the surplus amount ofthe Fund shall be invested in securitized debt, other debt securities, bonds and money market instruments as permitted by regulators from timeto time. Also whenever good investment opportunity is not available in the view of the Fund manager, the Fund will reduce its exposure to goldand Gold Related instruments and during that period the surplus asset of the Fund shall be invested in securitized debt, other debt securities

bonds and money market instruments.However there is no assurance that all such buying and selling activities would necessarily result in benefit for the Fund. The allocation wilbe decided based upon the prevailing market conditions, prices of gold, macro economic environment, and the performance of the corporatesector, the debt market and other considerations. At times, such churning could lead to higher brokerage and transaction costs. To achieve itsprimary objective as mentioned above, the Fund would invest in gold and Gold Related Instruments as permitted by regulators from time totime. To achieve its secondary objective, the fund would invest in securitized debt, other debt securities, bonds and money market securities aspermitted by regulators from time to time.

These securities could include:

Obligations of Indian Companies (both public and private sector) including term deposits with the banks as permitted by SEBI/ RBI fromtime to time and developmental financial institutions


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Certicate of Deposits (CDs)

Commercial paper (CPs)

In Securitized Debt upto 10% of the corpus.

The non-convertible part of convertible securities

Any other domestic xed income securities

Money market instruments permitted by SEBI/ RBI, having maturities upto 1 year in call money market instruments as may be providedby the RBI to meet the liquidity requirements

Any other instruments as allowed by the Regulations from time to time.

The Fund may also enter into Repo, or such other transactions as may be allowed to Mutual Funds from time to time.

Subject to the Regulations, the investments may be in securities which are listed or unlisted, secured or unsecured, rated or unrated, havingvariable maturities, and acquired through secondary market purchases, RBI auctions, open market sales conducted by RBI etc., Initial PublicOffers (IPOs), other public offers, placements, rights, offers, negotiated deals, etc

The Scheme may also enter into repurchase and reverse repurchase obligations in all securities held by it as per the guidelines andRegulations applicable to such transactions.

No investments shall be made in foreign securitised debt.

Investment Process

The AMC will initially decide the quantity of gold to be imported / procured and kept with the Custodian (who acts as a warehouse/ custodianfor the Fund). Against this quantity, AMC issues units to the investor. Therefore the entire corpus (except for some portion to meet liquidity)shall be invested upfront into Gold.

Case for Investing In Gold

The price of gold is the benchmark. All forms of investments carry some degree of risk. Holding gold directly also has risks. However, includinggold in a well-balanced portfolio can help diversify risk. Golds ability to serve as a portfolio diversifiecation is due to its historically low-to-

negative correlation with stocks and bonds. The economic forces that determine the price of gold are different from the forces that determinethe prices of most financial assets. The price of gold depends upon various factors, including the supply and demand for gold, the strength oweakness of major foreign currency especially dollar, the rate of inflation, and interest rates and the current political environment. Gold is notsubject to the risk of default or bankruptcy.

Tracking Error

Tracking error means the variance between daily returns of the underlying benchmark (gold in this case) and the NAV of the scheme for anygiven period. NAV of the Scheme is dependant on valuation of gold. Gold shall be valued based on the formula mentioned in SEBI circular noSEBI/IMD/CIR No. 2/65348/06 dated April 21, 2006, Gazeted Notification Dated December 20, 2006 and such other circulars as issuedby SEBI from time to time. NAV so computed may vary from the price of Gold in the domestic market. Factors such as the fees and expensesof the Scheme, corporate actions, cash balance, changes to the Underlying assets and regulatory policies may affect AMCs ability to achieveclose correlation with the Underlying assets of the scheme. The Schemes returns may therefore deviate from those of its Underlying assets.

Tracking error could be the result of a variety of factors including but not limited to:

Delay in the purchase or sale of gold due to

Illiquidity of gold, Delay in realisation of sale proceeds,

Creating a lot size to buy the required amount of gold

The scheme may buy or sell the gold at different points of time during the trading session at the then prevailing prices which may notcorrespond to its closing prices.

The potential for trades to fail, which may result in the Scheme not having acquired gold at a price necessary to track the benchmark price

The holding of a cash position and accrued income prior to distribution of income and payment of accrued expenses.

Disinvestments to meet redemptions, recurring expenses, dividend payouts etc.

Execution of large buy / sell orders

Transaction cost (including taxes and insurance premium) and recurring expenses

Realisation of Unit holders funds

The scheme will endeavor to minimise the tracking error by

Setting off of incremental subscriptions against redemptions, during liquidity window Use of gold related derivative instruments, as and when allowed by regulations

Rebalancing of the portfolio

Investment Philosophy and Focus

India today is the worlds largest democracy with a vibrant electorate, active Judiciary and civil society groups, and a fiercely independentmedia. For thousand of years, gold has been prized for its parity, its beauty, and above all its unique characteristics as a store of value. In todaysuncertain climate, many investors turn to gold because it is an important and secure asset that can be tapped at any time, under virtually anycircumstances.

But there is another side to gold that is equally important, and that is its day-to-day performance as a stabilizing influence for investmentportfolio. These advantages are currently attracting considerable attention from financial professionals and sophisticated investors worldwide


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Recent independent studies have revealed that traditional diversifiers often fall during times of market stress or stability. On these occasionsmost asset classes (including traditional diversifiers such as bonds and alternative assets) all move together in the same direction. There is nocushioning effect of a diversified portfolio - leaving investors disappointed. However, a small allocation of gold has been proven to significantlyimprove the consistency of portfolio performance, during both stable and unstable financial periods. Greater consistency of performance leadsto a desirable outcome - an investor whose expectations are met.

The consumers and public have realized the benefits of liberalization through increase in the choice and quality of products and decrease inprices. The business and industry have also adjusted themselves with the liberalization and globalization. The unprecedented high level of foreignexchange reserves, upward trend in FDI inflows and the general growth of the economy has given more confidence and encouragement tothe policy-makers to further accelerate its economic reforms and liberalization process. Both at the central and state levels and across politicaparties, in general, there is consensus on further economic liberalization.

The Macro view

India is a major player in the global gold market, both through ownership and annual ow of purchases of gold, and through enormoussuccess in the labour-intensive export-oriented jewellery business.

Modernisation of the gold market has been a long-standing policy goal in India. A key element of modernising any nancial market isshifting away from closed clubs of dealers engaging in private transactions and bilateral negotiation, to a framework with anonymoustrading taking place between participants from all across the country, all of whom are on a level playing field. An essential feature ofmodernisation of finance is the removal of entry barriers, so that it is easy for finance companies to enter and exit any kind of financialactivity. RGF promises to be a step forward for the gold spot market in offering such a trading framework, characterised by nationwideparticipation by households and without entry barriers faced by finance companies.

RGF is a gold spot instrument, which is distinct from gold futures. However, there are synergies between both initiatives, since they bothstrengthen different aspects of the gold market. A strong gold ETF market helps to strengthen the gold futures market, and vice versa.

The Micro View

From the narrow viewpoint of a household also, the RGF offers many benefits. Gold is a part of the portfolio of millions of households in thecountry. For households, the gold ETF offers the following advantages.

Zero concerns about physical security, theft or adulteration when faced with the tasks of custody and spot transactions. A transparent secondary market, which will offer reduced transactions costs when compared with existing OTCtransactions on the gold

spot market. The existing unregulated spot market suffers from acute problems of wide bid -offer spreads, and penalisation of customerson questions of purity.

Once banks and other moneylenders accept the transparency and liquidity of the Gold ETF, it would become possible to pledge GoldETF Units as collateral for loans. This would greatly assist many low-income households by easing the credit constraints that they faceA household which may possess physical gold today would, in comparison, obtain more limited credit access owing to concerns aboutthe purity and liquidity of the physical gold. In contrast, the Gold ETF Units will eliminate concerns about purity, and will offer assuredsecondary market liquidity.

R* Shares Gold Exchange Traded Fund is likely to trade in Units which correspond to 0.1 grams of gold. This would make transactionsaccessible to a large number of households who presently find it difficult to do transactions of 1 gram or 1 tola of gold.

Debt market in India

The Indian Debt market is facing major shift in the recent times. The substantial growth in Mutual Fund collections in the past few years haveprovided an easy route for the investors to channelise their savings into the debt market, which otherwise is largely dominated by Banks andother Institutional investors.

At present, the Indian debt market is dominated by issues of Central Government bonds, Coporate Debentures and PSU Bonds. The newSecuritised instruments are also very attractive in the primary market. Risk associated with securitized Debt or PTCs are credit risk, liquidityrisk and price risk/interest rate risk. The other instruments available for investment are Commercial Papers, Certificate of Deposits, Governmentguaranteed bonds, etc.

Brief details about the instruments are given below as on September 4, 2012.

Instruments Listed/ Unlisted Current Yield Range As on

September 4, 2012.

Liquidity Risk prole

Central Government Securities Listed 8.00%- 8.62% High Low

Corporate Debentures / PSU Bonds Listed 9.17%-9.23% Moderate Low

CDs (short term) Unlisted 8.35%-9.00% High Low

Call Money Unlisted 7.50%- 8.00% High Low

Mibor linked Papers Listed 200-210 bps Low Low

A brief description about yields presently available on Central Govt. Securities /Bonds & Debentures of various maturities is as follows:

Annualised yields (as on September 4, 2012.) are:

Yrs =< 1yr 2-6yrs 7-10yrs 11-20 yrs

Central Government securities 8.15%-8.20% 8.16%-8.44% 8.38%-8.54% 8.54%-8.76%

Debentures / Bonds (AAA rated) 9.17%-9.20% 9.24%-9.26% 9.23%-9.25% -

THE PRICE AND YIELD ON VARIOUS DEBT INSTRUMENTS FLUCTUATE FROM TIME TO TIME DEPENDING UPON THE MACRO ECONOMICSITUATION, INFLATION RATE, OVERALL LIQUIDITY POSITION, FOREIGN EXCHANGE SCENARIO, ETC. ALSO, THE PRICE AND YIELD VARIESACCORDING TO MATURITY PROFILE, CREDIT RISK ETC


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Portfolio Turnover Policy

Given the nature of the scheme, the portfolio turnover ratio may be high and AMC may re-allocate the portfolio according to liquidityrequirements, commensurate with the investment objectives of the scheme. The effect of higher portfolio turnover may result in higherexpenses and transaction costs.

F. FUNDAMENTAL ATTRIBUTES

For the purposes of this section, "fundamental attributes" of the scheme shall mean:

(i) Type of Scheme

An Open ended Gold Exchange Traded Fund that tracks the domestic prices of gold through investments in physical gold.

(ii) Investment Objectives

i. Main Objective: Refer to Section II - B : What is the Investment Objective of the Scheme?

ii. Investment pattern : Refer to Section II - C : How will the Scheme allocate its assets?

(iii) Terms of Issue

a) Liquidity provisions such as repurchase/redemption of units

As R* Shares Gold Exchange Traded Fund is listed on the Exchange, subsequent buying or selling by Unit holders can be made from thesecondary market. The minimum number of Units that can be bought or sold on the exchange is 1 (one) unit. All investors may sell theiunits in the stock exchange(s) on which these units are listed on all the trading days of the stock exchange.

Repurchase / redemption of units as referred to Redemption.

b) Aggregate Fees and expenses charged to the Scheme

i) New Fund Offer (NFO) Expenses : Refer to Section IV - A : New Fund Offer (NFO) Expenses

ii) Annual Scheme Recurring Expenses : Refer to Section IV - B : Annual Scheme Recurring Expenses

c) Any safety net or guarantee provided Not Applicable

In accordance with Regulation 18(15A) of the SEBI (MF) Regulations, the Trustees shall ensure that no change in the fundamentaattributes of the Scheme(s) and the Plan(s) / Option(s) thereunder or the trust or fee and expenses payable or any other change whichwould modify the Scheme(s) and the Plan(s) / Option(s) thereunder and affect the interests of Unitholders is carried out unless:

A written communication about the proposed change is sent to each Unitholder and an advertisement is given in one English dailynewspaper having nationwide circulation as well as in a newspaper published in the language of the region where the Head Office ofthe Mutual Fund is situated; and

The Unitholders are given an option for a period of 30 days to exit at the prevailing Net Asset Value without any exit load.

G. HOW WILL THE SCHEME BENCHMARK ITS PERFORMANCE?

As there are no indices catering to the gold sector/securities linked to Gold, currently R* Shares Gold Exchange Traded Fund shall be benchmarkedagainst the price of Gold.

Purity of Gold: All gold bullion held in the schemes allocated account with the custodian shall be of fineness (or purity) of 995 parts per 1000(99.5%) or higher.

H. WHO MANAGES THE SCHEME?

Name Age Educational

Qualication

Type and Nature of past experience including assignments held

during the past 10 years

Name of the

Scheme managed

Hiren Chandaria 31

Years

Commerce graduate

and Masters in Business

Administration (MMS/

MBA) with Finance

major

Prior to joining mutual fund arena he was a commodity trader with

proprietary desk of Reliance Capital. He had also been working on

analysing various commodities and working on commodity linked

products He has been working with Reliance ADA group since

November 2005. Hiren has undertaken various commodity related

projects during the last few years.

Reliance Gold

Savings Fund

I. WHAT ARE THE INVESTMENT RESTRICTIONS?

The investment policy of the scheme comply with the rules, regulations and guidelines laid out in SEBI (Mutual Funds) Regulations, 1996.

As per the Regulations, gold exchange traded fund scheme shall be subject to the following investment restrictions:

1. The funds of any such scheme shall be invested only in gold or Gold Related Instruments in accordance with its investment objectiveexcept to the extent necessary to meet the liquidity requirements for honouring repurchases or redemptions, as disclosed in the schemeinformation document.

2. Pending deployment of funds of the scheme in securities in terms of the investment objectives and policies of the scheme, the MutuaFund can invest the fund of the scheme in short term deposits of scheduled commercial banks subject to the guidelines as applicable fromtime to time

Where the cash in the scheme is parked in short term deposits of Scheduled Commercial Banks pending deployment, the scheme shalabide by the following guidelines:

Short Term for parking of funds shall be treated as a period not exceeding 91 days.

Such short-term deposits shall be held in the name of the Scheme.

The scheme shall not park more than 15% of the net assets in short term deposit(s) of all the scheduled commercial banks puttogether. However, such limit may be raised to 20% with prior approval of the Trustee.


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Parking of funds in short term deposits of associate and sponsor scheduled commercial banks together shall not exceed 20% of totadeployment by the Mutual Fund in short term deposits.

The scheme shall not park more than 10% of the net assets in short term deposit(s), with any one scheduled commercial bankincluding its subsidiaries.

The scheme shall not park funds in short term deposit of a bank, which has invested in the Scheme

Further, as per the Seventh Schedule, the following investment limitations are currently applicable to its investments in the Underlying Stock:

1. The scheme shall not invest more than 15% of its NAV in debt >instruments issued by a single issuer which are rated not below investmentgrade by a credit rating agency authorised to carry out such activity under the Act. Such investment limit may be extended to 20% of theNAV of the scheme with the prior >approval of the Board of Trustees and the Board of asset management company or any Committeeconstituted thereof:

Provided that such limit shall not be applicable for investments in Government securities. Provided further that investment within such limit can be made in mortgaged backed securitised debt which are rated not below investment

grade by a credit rating agency registered with the Board.

2. No mutual fund scheme shall invest more than thirty percent of its net assets in money market instruments of an issuer:

Provided that such limit shall not be applicable for investments in Government securities, treasury bills and collateralized borrowing andlending obligations.

3. The Scheme shall not invest more than 10% of its NAV in unrated debt instruments issued by a single issuer and the total of suchinstruments shall not exceed 25% of the NAV of the Scheme. All such investments will be made with the prior approval of the Board ofTrustees and the Board of asset management company or any Committee constituted thereof.

Note:Debentures, irrespective of any residual maturity period (above or below one year), shall attract the investment restrictions asapplicable for debt instruments as specified above. Further, it is clarified that the investment limits mentioned above are applicable to aldebt securities which are issued by public bodies/institutions such as electricity boards, municipal corporations, state transport corporationsetc. guaranteed by either centra

r shares gold exchange traded fund

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