(An open ended Arbitrage Scheme)

MAY 2017

Reliance Arbitrage Advantage Fund (An open ended Arbitrage Scheme)

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Cash Future Arbitrage.

28 March 2015 Buy Stock A Cash Rs. 100

28 April 2015 Sell Stock A

Future Rs. 101

Profit of Rs. 1 over 1 Month on investment of Rs. 100

The cash market price converges with the futures price at the end of the month, so

one can make a very low risk return of (101-100)*12/100 = 12% p.a.

This trade effectively captures the interest rate component in the equity futures

market and does not involve taking any directional exposure to the equity market.

Please note that the investment money does not include margin money deposited in case of future since margin is deposited

in the form of fixed deposit which earns interest .

Buying in one market and selling in another simultaneously to take advantage of

a temporary price differential is called arbitrage.

Capturing Difference between future & Spot - HDFC bank

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Arbitrage trade unwound at parity

Past performance may or may not be sustained in future.

Disclaimer: The above simulation is for illustration purposes only and should not be constructed as a promise or minimum returns or safeguard of

capital. No assurance can be given that prices of stock and stock futures will correlate perfectly on expiry date of stock futures. The AMC/Mutual Fund

is not guaranteeing, promising or forecasting any returns.

Source: ACE Equity

940

960

980

1000

1020

1040

1060

1080

1100

1120

1140

2-M

ar

5-M

ar

8-M

ar

11-M

ar

14-M

ar

17-M

ar

20-M

ar

23-M

ar

26-M

ar

29-M

ar

1-Ap

r

4-Ap

r

7-Ap

r

10-A

pr

13-A

pr

Future Cash

Spread 245 bps

A good alternative for conservative investors

Ideal Investment horizon 3 to 6 months to invest when

markets are uncertain and volatile

Status of Equity Fund, thus tax efficient way of

investment

Endeveours to provide positive returns

No directional exposure

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Funds that have more than 65% allocation to equities are classified as equity oriented funds and dividend from equity oriented fund is exempted as per provision of the Income Tax Act, 1961hence dividend from them is tax free. (“The Act”)

• Tax on Long Term Capital gain exempted and short term, capital gain @ 15% as per provision of Section 10 (38) of The

• DDT for equity funds is Nil however on debt funds for Individuals is at 28.84% and for other than - Individuals is at 34.61% on gross up basis as per provision of 115R of The Act.

• STT on sale of equity oriented mutual funds is applicable at 0.001%.

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Tax Analysis for Illustration purposes

Note : The illustration above is based on prevailing income tax regulation in India subject to changes from time to time

# For equity oriented funds, to avail Long Term Capital Gains (LTCG) benefit, holding period is 12 months from the date of investment. Securities transaction tax (STT) will be deducted on equity funds at the time of redemption and switch to the other schemes. ^For other than equity oriented funds, to avail Long Term Capital Gains (LTCG) benefit, holding period is 36 months from the date of investment. @As per Finance Act (2) of 2014. *The returns mentioned above are just for illustration purpose and is not an indication of performance * The illustration is based on highest tax brackets.

For Dividend Option Pre Tax* DDT STT

w.e.f 1st April

2015, Effective

Post tax@

Debt Funds Return – Individual^ 8.50% 28.84% 0.00% 6.05%

Debt Funds Return – Non-Individual^ 8.50% 34.61% 0.00% 5.56%

Arbitrage Fund Return# 8.50% 0.00% 0.001% 8.50%

We remain optimistic on the arbitrage opportunities going forward. Some of

these opportunities may arise due to :

• Corporate India‘s earnings growth in expected to recover in FY18 and is expected to move up sharply thereafter.

• With key events like Union Budget, RBI policy, US Fed meeting etc. now over the near term uncertainty surrounding these events are likely settle down.

• FII interest in Indian Equities is expected to revive on the back of reasonable stability in Global markets, making a case for improved spreads from current level.

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• Generates income through arbitrage opportunities arising out of pricing mismatch in a security between different markets or as a result of special situations.

• Reliance Arbitrage Advantage fund is positioned as a pure arbitrage fund with Completely hedged positions that attempts to neutralize market risk (volatility) and targets absolute returns irrespective of market conditions.

• Aims to have prudent balance of safety, returns and liquidity

• Reliance Arbitrage Advantage Fund would be an apt product for those investors who want to remain conservative and invest in relatively less risky portfolio.

• Reliance Arbitrage Advantage Fund endeavors to offer dividend under dividend plan on monthly basis as well as on adhoc basis* subject to availability of distributable surplus

*Subject to approval of Trustees

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Past performance may or may not be sustained in future. Dividend distribution is subject to availability & adequacy of

distributable surplus. The Mutual Fund is not assuring that it will make periodical dividend distributions, though it has every

intention of doing so. After the payment of dividend, the per unit NAV falls to the extent of the dividend payout and distribution

taxes, if any. Performance of dividend plan/option would be net of applicable statutory levy, if any. Face value of Rs.10 per

unit.* NAV on the 1st transaction day after Record Date, which includes the mark to market impact also.

Source: MFI

Dividend Plan

Record Date Rate (Re/ Unit) Cum Dividend NAV *EX Dividend NAV

24-Apr-17 0.15 12.1609 12.0109

26-Dec-16 0.15 12.0911 11.9411

26-Sep-16 0.15 12.0571 11.9071

27-Jun-16 0.15 12.0021 11.8521

28-Mar-16 0.15 11.9634 11.8134

28-Dec-15 0.15 11.9517 11.8017

29-Sep-15 0.15 11.9313 11.7813

29-Jun-15 0.25 12.0094 11.7594

23-Mar-15 0.40 12.0806 11.6806

26-Nov-14 0.15 11.8829 11.7329

Dividend Plan

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Past performance may or may not be sustained in future. Dividend distribution is subject to availability & adequacy of

distributable surplus. The Mutual Fund is not assuring that it will make periodical dividend distributions, though it has every

intention of doing so. After the payment of dividend, the per unit NAV falls to the extent of the dividend payout and distribution

taxes, if any. Performance of dividend plan/option would be net of applicable statutory levy, if any. Face value of Rs.10 per

unit.* NAV on the 1st transaction day after Record Date, which includes the mark to market impact also.

Source: MFI

Monthly Dividend Plan – Last 1 year

Record Date Rate (Re/ Unit) Cum Dividend NAV *EX Dividend NAV

24-Apr-17 0.05 10.6223 10.5723

20-Feb-17 0.05 10.5733 10.5233

23-Jan-17 0.05 10.5695 10.5195

26-Dec-16 0.05 10.5798 10.5298

21-Nov-16 0.05 10.5824 10.5324

24-Oct-16 0.05 10.5719 10.5219

26-Sep-16 0.05 10.5681 10.5181

30-Aug-16 0.05 10.5686 10.5186

25-Jul-16 0.05 10.5539 10.5039

27-Jun-16 0.05 10.5376 10.4876

23-May-16 0.05 10.5283 10.4783

25-Apr-16 0.05 10.5289 10.4789

Monthly Dividend Option

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Investment Objective

The investment objective of the scheme is to generate income by taking advantage of arbitrage opportunities the potentially exist between cash and derivative market and within the derivative segment along with investment in debt securities & money market instruments. However, there can be no assurance or guarantee that the investment objective of the Scheme will be achieved

Fund Manager Payal Wadhwa Kaipunjal - (Managing Scheme Since Jan 2017)

Direct Plan & Other than Direct Plan

(a) Growth Plan

(1) Growth Option

(b) Dividend Plan

(1) Dividend Payout Option

(2) Dividend Reinvestment Option

(c) Monthly Dividend Plan

(1) Dividend Payout Option

(2) Dividend Reinvestment Option

Direct Plan is only for investors who purchase /subscribe Units in a Scheme

directly with the Fund (i.e. investments not routed through an AMFI Registration

Number (ARN) Holder).

Minimum Investment Rs. 5000 & in multiples of Re 1 thereafter

Entry Load* : Nil

Exit Load :

0.25% if redeemed/switched on or before completion of 1 month from the date of

allotment of units.

Nil if redeemed/switched after completion of 1 month from the date of allotment of

units.

*In accordance with the requirements specified by the SEBI circular no. SEBI/IM D/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.

Choice of Plans/Options

Load Structure

Scheme Features as on 30th April 2017

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Asset Allocation As on 30th April 2017

Equities 66.55%

Derivatives, MFU, Debt &

Money Market Instruments

Cash and Other Receivables

33.45%

Benchmark Crisil Liquid Fund Index

Fund Manager Payal Wadhwa Kaipunjal (Managing

Scheme Since Jan 2017)

Corpus - Month End AUM (Rs. In

Crore) April 2017

Rs. 4824.13 Crores

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Portfolio as on 30th April 2017

Portfolio – Top 10 Equity Holding

Note: The sectors mentioned in the table is not a recommendation to buy/sell in the said sectors. The scheme currently holding investments in the said sectors and may or may not have future position in the same. The stocks mentioned forms a part of the portfolio of the

scheme and may or may not form a part of the portfolio in future. Please read Scheme Information Document carefully for more details and risk factors.

Stock Allocation (%)Reliance Industries Limited 3.31

Vedanta Limited 2.86

ITC Limited 2.66

Tata Steel Limited 2.44

JSW Steel Limited 2.23

Aurobindo Pharma Limited 1.96

Oil & Natural Gas Corporation Limited 1.78

Hindalco Industries Limited 1.71

Sun Pharmaceutical Industries Limited 1.58

Adani Ports and Special Economic Zone Limited 1.50

Scheme Specific Risk Factors: Trading volumes and settlement periods may restrict liquidity in equity and debt investments. 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, settlement periods and transfer procedures. The NAV may also be subjected to risk associated with investment in derivatives, foreign securities or script lending as may be permissible by the Scheme Information Document.

Disclaimers

• The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. Certain factual and statistical information (historical as well as projected) pertaining to Industry and markets have been obtained from independent third-party sources, which are deemed to be reliable. It may be noted that since Reliance Nippon Life Asset Management Limited (formerly Reliance Capital Asset Management Limited)RNLAM has not independently verified the accuracy or authenticity of such information or data, or for that matter the reasonableness of the assumptions upon which such data and information has been processed or arrived at; RNLAM does not in any manner assures the accuracy or authenticity of such data and information. Some of the statements & assertions contained in these materials may reflect RNLAM’s views or opinions, which in turn may have been formed on the basis of such data or information.

• Before making any investments, the readers are advised to seek independent professional advice, verify the contents in order to arrive at an informed investment decision. None of the Sponsors, the Investment Manager, the Trustee, their respective directors, employees, affiliates or representatives shall be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material.

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

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Not for distribution, only for internal consumption.